Navigating the end of an employment relationship in Canada is fraught with legal complexity, a reality that often leaves both employers and employees uncertain about their rights and obligations. According to prominent employment lawyer Howard Levitt, writing with Peter Carey in the Financial Post, the web of regulations and common law precedents can be daunting. However, adhering to a clear set of principles can prevent costly missteps.
The Legal Landscape: More Than Just the Minimum Standards
Levitt emphasizes that the foundational Employment Standards Act (ESA) in provinces like Ontario merely sets the floor for employee rights, not the ceiling. The courts have consistently ruled that common law rights often dramatically supersede these minimum entitlements. A prime example is termination notice. While the ESA stipulates a minimum notice period, common law notice is typically several times greater.
A critical pitfall for employers lies in termination clauses within employment contracts. Levitt warns that if such a clause could potentially result in an employee receiving less than the ESA minimums, courts are likely to deem the entire clause unenforceable. This triggers the more substantial common law notice requirements. He notes that Ontario courts are particularly skeptical of these clauses and frequently find ingenious ways to invalidate them.
A Checklist for Employers: What Not to Do
Levitt provides a straightforward list of prohibitions for employers to consider before proceeding with a dismissal. First and foremost, do not terminate an employee who is essential to your daily operations. He recounts receiving numerous calls from panicked employers who fired the sole individual with access to critical company passwords for email, banking, or software systems.
Similarly, companies must ensure they are not firing someone whose role is mandated by statute, such as a safety officer in a regulated industry, before a replacement is fully trained and in place. Another key directive is that employers are under no legal obligation to provide a reason for dismissal. If an employer wishes to end the employment without cause, they can simply thank the employee for their service and provide the appropriate severance or working notice.
The Honesty Imperative and Bad Faith Dismissals
However, if an employer chooses to give a reason for the termination, Levitt stresses that they must be completely honest. A common and costly mistake is to "sugarcoat" the dismissal by citing a corporate reorganization when the true reason is poor performance. This kind of dishonesty, even if well-intentioned, can be construed by courts as acting in bad faith.
Such bad faith conduct can significantly increase the damages awarded to an employee if the matter proceeds to litigation. The core message for businesses is clear: while you may not need a reason to fire someone, you must ensure you have secured all necessary operational knowledge and, if you do provide a reason, it must be truthful to avoid exacerbating legal liability.
