What are the Different Types of Dismissal in Employment Law?
Termination of employment can seem like a daunting, frightening procedure. While it’s not an easy situation for any employee, it’s helpful to know the basics, as there are many different types of dismissal in employment law.
Ending the Contractual Agreement
Every employment relationship is by definition a contractual agreement – even if you don’t have a written and signed piece of paper, there is still a contract governing the terms of the arrangement. Some of these terms are unique to each employment – what job they perform, how much they’ll be paid, what their obligations are. Others are common or implied – the agreement that the employee will not deliberately take action to hurt the employer, or that the employer will take steps to provide a safe working environment.
Notice and Pay in Lieu of Notice
In a dismissal, the employer is terminating the contract. Inherent in every contract is the requirement for the employer to give notice of this termination to the employee, meant to provide them an opportunity to take that time to look for replacement work. By default, every employee is entitled to common law notice, the amount of time a court believes it will take them to find comparable alternative employment. There are many factors that go into determining this amount of notice, but the four primary ones are the employee’s 1) age, 2) length of service, 3) character of employment, and 4) availability of similar employment.
This default entitlement can be changed, however, by a written employment contract that specifies a different entitlement upon termination of employment, called a termination provision. This provision can provide for a set or formulaic amount of notice, but it cannot provide for less than the minimum entitlements under the applicable employment legislation.
If an employer fails to provide adequate notice to an employee, they are required to compensate for this by paying an amount equivalent to what the employee would have earned if the notice had been provided. Employers often choose this route, paying what are colloquially called “severance packages” and terminating the employee immediately. However, it is important that the employer pay the employee all the amounts they would have received if notice had been given – aside from base salary, employers are required to compensate for benefits, pension contributions, commissions, bonuses, and any other amounts payable during the notice period.
Often times, employers will require the employee to sign a release of claims to receive their severance package, but this can only be requested for amounts that the employee is receiving beyond those already guaranteed by the legislation and/or their employment contract.
Dismissal for Just Cause
In cases where the employee has committed severe misconduct, the employer is entitled to sever the employment relationship without notice – this called termination for just cause. Given the severity of the penalty, there is a very high threshold in Canada to prove that the employee committed the misconduct, and that the conduct warrants summary dismissal. Even in cases where the employee has done something wrong, courts may decide that that it does not constitute just cause, and require the employer to pay the employee damages.
Bad Faith Discharge
Courts recognize that employees are in a difficult and vulnerable situation when they are terminated, and therefore require employers to treat them with honesty and good faith in the course of dismissal. There are many actions that constitute a violation of this duty, including dishonesty in the reason for the dismissal, failing to pay or threatening to withhold statutory payments, asserting just cause without proper basis, or conducting the termination in a particularly humiliating way.
Additionally, whether they assert cause or not, employers are not allowed to terminate an employee for a discriminatory reason, or in retaliation for an employee making a complaint of harassment, statutory violations, or discrimination.
Doing any of the above bad faith discharges, the employer can be liable for extraordinary damages beyond any amounts they may have to pay to satisfy the employee’s right to pay in lieu of notice.
Constructive Dismissal
Sometimes the employer does not terminate the employee, but nonetheless takes some action that constitutes a termination of the employment agreement, called a constructive dismissal. There are many different forms of constructive dismissal: it can be a reduction of the employee’s salary, a change in their duties, title, or reporting, discriminatory conduct, harassment, or a failure to provide a safe working environment. If an employer is found to have constructively dismissed an employee, it is treated as though they have terminated them without notice and will be liable for damages based on termination entitlements.
Not every change constitutes a constructive dismissal, but an employee can respond in one of three ways: 1) they can accept the change, 2) they can reject it, resign, and start a lawsuit, or 3) they can stay and vocally protest the changes. However, there is a limit to these options, as employees who wait too long may be found to have passively agreed to the changes.
How can Whitten and Lublin help?
With the different types of dismissal in employment law, often employees can find themselves overwhelmed when faced with a dismissal or an offer of a severance package. If you are an employee navigating the termination of your employment, Whitten & Lublin is here to assist you. Contact us online or by phone at (416) 640-2667.
Author – Aaron Zaltzman