Understanding Employee Dismissal in Ontario
When considering what is required to terminate an employee in Ontario, the employer must understanding that this is a significant decision that requires careful consideration and a commitment to treating employees with good faith. Ontario’s employment laws emphasize not only the need for just cause but also the importance of fair treatment throughout the employment relationship. Failing to adhere to these principles can lead to costly legal disputes and damage to an employer’s reputation.
Bad Faith in Recent Caselaw
In the recent case of Scarrow v. Walkey et al. (2024 ONSC 3876), the Superior Court of Justice ordered Walkey and his companies to pay a total of $434,980 in damages for constructive dismissal. This amount includes compensation for reasonable notice, unpaid wages, a retirement allowance, aggravated damages, and punitive damages.
Walkey unlawfully laid off Scarrow, requiring him to perform unpaid work during this period. When Walkey suggested illegal payment arrangements for Scarrow’s return, the employee declined and subsequently sued for constructive dismissal. Since Walkey did not defend the case, Scarrow’s allegations were treated as factual admissions.
A critical error on Walkey’s part was not formalizing a written employment agreement despite employing Scarrow since 1979. He had promised a retirement allowance in exchange for a reduced salary but failed to document this agreement. Instead, an oral agreement noted by Scarrow was enforced by the court, which recognized an implied term that the allowance was payable upon termination without cause.
The court highlighted Walkey’s bad faith actions, including the failure to provide proper notice and refusing to pay statutory entitlements. This case serves as a cautionary tale about the importance of maintaining good faith in employment practices.
What Constitutes Dismissal?
Dismissal refers to the termination of an employee’s contract of employment. This can occur for various reasons, including performance issues, misconduct, or organizational changes. However, regardless of the reason, employers must approach the termination process with caution and integrity.
The Role of Good Faith
Good faith in employment relationships means acting honestly, fairly, and in a manner that respects the dignity of all employees. When it comes to dismissing an employee, this principle is essential. Employers should strive to ensure that terminations are conducted in a way that minimizes distress and maintains respect for the individual, and particularly for circumstances involving performance issues. Here are some key considerations:
- Open Communication: Employers should maintain transparent communication regarding performance expectations and any concerns. Regular feedback can help employees understand where they stand and provide opportunities for improvement.
- Support and Resources: Before making a dismissal decision, employers should consider whether they have provided sufficient support, such as training or mentorship, to help the employee succeed. Investing in employees’ development demonstrates a commitment to their growth.
- Fair Process: Employers should follow a fair process when considering termination. This includes conducting a thorough investigation into any performance or misconduct issues, allowing employees the opportunity to respond, and documenting all steps taken.
The Importance of Documentation
Proper documentation is crucial throughout the employment relationship, especially leading up to a dismissal. If the dismissal is related to performance or misconduct concerns, employers should keep detailed records of performance evaluations, any incidents of concern, and efforts made to support the employee. This documentation serves several purposes:
- Evidence of Fair Treatment: Should a dismissal be challenged, thorough documentation can demonstrate that the employer acted in good faith, providing a clear account of the employee’s performance and the steps taken to address any issues.
- Support for Decision-Making: Records can help employers make informed decisions about whether dismissal is the appropriate course of action or if additional support is warranted.
- Mitigating Legal Risks: Clear documentation can help defend against wrongful dismissal claims, showing that the employer approached the situation thoughtfully and fairly.
Considering Alternatives to Dismissal
Before deciding to dismiss an employee for performance or misconduct concerns, employers should explore alternatives that uphold the principle of good faith. This might include:
- Performance Improvement Plans: If an employee is struggling, offering a structured plan that outlines specific goals and timelines for improvement can demonstrate the employer’s commitment to the employee’s success.
- Temporary Adjustments: In cases of personal issues affecting performance, a temporary reassignment of duties or reduced hours might provide the employee with the space needed to address their challenges.
- Clear communication: If conflicts arise, clear communication can help resolve issues in a constructive manner, allowing both parties to express their concerns and work toward a solution.
Termination with Respect
If termination is unavoidable, it is vital for employers to approach the process with respect and compassion. Providing adequate notice or severance pay, and offering support during the transition, can help maintain goodwill and protect the employer’s reputation.
Conclusion
Dismissing an employee in Ontario requires a thoughtful and respectful approach that emphasizes good faith. Employers should focus on open communication, fair processes, and documentation while exploring alternatives to dismissal whenever possible. By prioritizing the dignity and well-being of employees, employers can foster a more positive workplace culture and reduce the risk of legal disputes. In situations of uncertainty, seeking legal advice before proceeding with termination can help ensure compliance with employment laws and reinforce a commitment to treating employees fairly. Ultimately, a fair and compassionate approach not only protects the employer but also contributes to a healthier work environment for all.
If you are an employer and asking what is required to terminate an employee in Ontario, we encourage you to seek legal advice. We at Whitten & Lublin are happy to provide insight and advice into your specific circumstances. If you are looking for employment lawyers and would like more information about what Whitten & Lublin can do for you, please contact us online platform or by calling (416) 640-2667 today.
Author – Rachel Patten