No one likes to fire people.
Let me start again: No one, aside from Donald Trump or Mitt Romney, likes to fire people. For most people, the decision to let someone go is difficult and unpleasant. If you own or run a business, however, at some point you are going to need to have an unpleasant conversation that ends with a cardboard box of personal belongings. Before that though, it is important to know some of the basic rules around how much notice or severance pay an employer must provide to employees being let go without cause.
Just to be clear, we are not discussing “with cause” terminations. There are two ways an employer can let an employee go: with cause and without cause. With cause terminations deal with situations where the employee has materially breached the terms of their employment contract or has done something bad for which they have received a previous warning. The rules around with cause terminations are actually fairly nuanced, so we say any more about it here (but look for a future post on that topic). Without cause terminations arise when employee has not engaged in misconduct or breached the terms of their employment contract, but it just isn’t working out. (Again, the reasons for a without cause termination merit their own post, which will be forthcoming.) Also, we are talking about employment law, not labour law, which deals only with unionized employees.
If you are going to let someone go without cause, you need to provide them with reasonable notice, which can be working notice or payment instead of notice. For example you could give the employee 2 weeks’ notice or 2 weeks’ termination pay (severance). Section 63 of the Employment Standards Act sets out the minimum amounts of notice an employer must provide, which ranges from 1 to 8 weeks depending on length of service.
Sounds simple, right? Not so fast. Those are only the statutory minimums that an employer is required to provide to an employee that has been terminated without a valid reason. The Courts have found that employees are generally entitled to longer notice periods than those set out in the Act. There is no succinct formula for this “common law notice” however; it comes down to a weighing of various factors which include details about the employee and their position.
For example, a 50 year old operations manager of a railway who has been in that position for 18 years would merit more notice (i.e. more termination pay) than a 22 year old sales clerk who has worked at a retail store for 3 years. The reason for this is that it is going to be more difficult for the 50 year old to find a comparable railway management position than it is for the 22 year old to find a job running the register at a retail store.
The amount of notice to which an employee is entitled will also be governed by the terms of the written employment contract, which may specify the minimum amounts of notice from the Act, or some other amount which has been negotiated between the employer and employee. (The importance of written employment contracts is discussed in a separate post here.)
Ultimately, the amount of notice to which the employee is entitled on termination depends on the Act, the employee, their job, and what the employer has included in the employment contract. Employers should consider all of these factors and consult their lawyer before terminating an employee.