It is all too easy to write a termination letter that does not comply with the law. Here are some common pitfalls and tips for ensuring that your termination letter is legally sound:
- Tip #1 – Consider whether you may be using out-of-date precedent: This one is most common. Sometimes employers use and reuse the same termination letter for years. While the letter was drafted by a lawyer at one point in time, it has not been reviewed by a lawyer in years. Employment laws have changed in the meantime, and the termination letter has become unlawful. If your company uses a precedent termination letter, have your employment lawyer review it at least once a year.
- Tip #2 – Ensure that the letter states that the employee is being provided with at least the minimum requirements under the Employment Standards Act, 2000: If the employee’s employment is terminated without cause, they must be provided with a specific amount of notice of termination, and, if applicable, severance pay. If the termination letter provides less termination and severance pay than what the Employment Standards Act, 2000 says the employee should get, it may be unlawful. Be aware that even employees who are paid solely on the basis of commission are entitled to termination pay. Similarly, if the termination letter does not provide for the employee’s benefits to continue during the time period that they receive termination pay, it may be illegal.
- Tip #3 – Provide Valid Consideration: If you are asking the employee to sign a legal release on or after termination, you must offer them something that more than just the termination and severance pay that they are otherwise entitled to under the Employment Standards Act, 2000. You cannot offer an employee something that they already entitled under the law in exchange for their signature on a release. You must offer something them something in addition to their existing legal entitlements.
- Tip #4 – Do not Attempt to Rely on an Employment Contract that is Invalid: Often, in a termination letter, an employer will reference an employment contract signed years ago, such as a termination provision limiting the employee’s entitlements on termination. For the same reason as Tip #1, above, you should ensure that the contract language that you want to repeat in your termination letter is still legally valid. Some common termination provisions found in older employment contracts have been deemed invalid and inapplicable in recent court decisions.
- Tip #5 – Be Careful when Alleging a Reason for the Termination: If the termination is without cause, there is no general requirement for an employer to provide a reason for the termination. However, if the termination is with cause, you generally must provide a reason. It is important to get the exact reason for a with-cause termination right. If you terminate an employee’s employment for cause for a reason that turns out to be false or flimsy, they could sue for additional damages on that basis.
If you have questions about writing a legally sound termination letter, or if you think that your termination letter is unlawful, contact one of the lawyers at Whitten & Lublin for assistance.
Author: Simone Ostrowski, Whitten & Lublin