Terminating an employment relationship should not be decided without planning and consideration of potential obligations (and liability).
Liability for reasonable notice, or pay in lieu of notice, must be considered.
Before you decide to terminate an employee, below is a checklist that will be helpful to review before a decision to terminate is made.
This checklist will also help identify what potential obligations may be owing by you to the terminated employee.
1. Review the employee's letter of employment or employment agreement. Is there an enforceable clause for minimum notice under the Employment Standards Act, 2000? Is there a valid “for cause” termination clause?
2. Review the circumstances of the employee's hire. Was the employee recruited?
3. Review significant changes in relation to the employee's position, role, salary, location, or other material terms of employment to determine if the substratum of the employment relationship has been amended or varied materially and, therefore, whether the employment agreement potentially no longer reflects current terms.
4. Determine the termination date and calculate, if possible, what is owing to the employee for all accrued remuneration to that date, including salary, vacation pay, commission, incentives and bonus, if any.
5. Is the termination for “just cause” due to misconduct? If so, is there adequate documentary records of past issues and warnings? Have the relevant individuals been interviewed, and is there a record of those interviews? Has the individual been given an opportunity to respond and answer to any issues and allegations? Is the higher standard of “wilful misconduct” under the Employment Standards Act, 2000 triggered?
6. Compile all relevant codes of conduct or policies applicable to the termination and ensure that you have complied with your own policies. In addition, where applicable, ensure that you have evidence that the employee was aware of the policies.
7. If the termination is for performance reasons, is there enough documentation to establish: (a) lack of performance; (b) progressive warnings related to failure or refusal to maintain performance at reasonable and objective standards; and (c) the consequences of failing to do so?
8. Are there related medical or disability issues that need to be considered and accommodated?
9. Are there other human rights or statutorily-protected employment rights that need to be addressed (for example, return to work following maternity, parental, WSIB or emergency leaves)?
10. If the termination is not for just cause, what is the period of notice of termination required by agreement, by statute or implied by common law?
11. Will the notice period be worked by the employee in whole or part? If payment is to be made in lieu of notice of termination, will remuneration be continued or paid out? Calculate the statutory termination and severance pay, if applicable. Calculate the offered common law notice pay in lieu (or salary continuance), if any. Verify if the employee has any accrued, but unpaid, vacation pay up to the proposed date of termination, including pro-rated.
12. Consider any statutory and contractual obligation(s) to continue benefits during notice periods and any conditions or exceptions to such obligations.
13. Will the termination offer be made subject to mitigation or not subject to mitigation by the departing employee?
14. Review the target employee’s specific compensation terms and entitlements in the twelve weeks prior to the proposed termination date, at least. Are there any specific requirements related to pensions, RRSPs, LTIPs, stock options, etc.?
15. Are there any outstanding loans or advances to the employee?
16. Are there company supplies, documents, confidential information, computers, keys, FOBs, credit cards, automobiles, equipment or other property to be returned by employee?
17. Are there employee obligations post-termination, including solicitation of customers or non-competition?
18. Are there client or competitor lists that need to be identified with reference to non-competition provisions?
19. Determine appropriate timing for the meeting to provide notice of termination. Consider who should attend at that meeting. Is any security necessary?
20. Consider issues relating to employment references and/or providing a confirmation of employment letter. Who will be responsible for post-termination employment references?
21. Did the employee sign a confidentiality agreement and, if so, should that be confirmed, including any specific duty or reference to any specific confidential information?
Careful review and planning must be undertaken before any employee is terminated. Alternatively, a costly mistake may be made.
This is summary only, intended to be for your general information only.
We strongly recommend that you contact us, or other qualified, employment law counsel, for specific advice that may apply to, or be helpful for, any:
- termination of any employee, with or without cause;
- suspension of any employee, with or without pay;
- workplace harassment/sexual harassment complaint; and
- workplace investigation of any kind,
before you initiate or take any steps, including to avoid a potentially costly misstep.