Employment Law and Wrongful Dismissal (for Employers)

Author: Patrice B. Newman, Lawyer
First Posted: Feb. 9, 2010
Revised:

Ms. Newman represents both employers and employees. This article contains information to assist employers with understanding their rights.

Employer's Frequently Asked Questions

1. Are you thinking of firing an employee?
2. Do I have to pay the fired employee severance pay?
3. What if I had good reasons to fire my employee?
4. What is the "duty of good faith"?
5. The lawsuit is over, now what?

1. Are you thinking of terminating an employee?

For the most part, nobody likes firing employees, even when the employee is not performing well. However, there are steps that you can and should take to limit your liability in this situation. "Properly" firing an employee can be tricky in British Columbia. If you are considering terminating an employee, you should first make sure that you are well informed under the law in order to protect your rights and prevent future litigation.

2. Do I have to pay the fired employee severance pay?

Unless you have very good reasons for firing your employee, you will likely have to provide the employee with working notice, or with some financial compensation in lieu of that notice. In British Columbia, when you end an employment contract, there are 3 different 3 ways to measure notice periods:

1. the Employment Standards Act;
2. law made in trial ("case law"); and
3. collective agreements (for union-based employees).

If your employees are unionized and have a collective agreement, termination will be governed by that contract, and you will be required to deal with the union, rather than individual employees. The Employment Standards Act is a law that sets the bare minimum standards for compensation and conditions of employment. This law provides that when the employee is fired, he is entitled to as little as one week's pay or as much as eight week's pay. The upper limits awarded at trial are currently about 24 months of pay. Trial judges make these awards based on the facts, and on previous legal decisions. Factors such as age, seniority, managerial responsibilities, and the availability of similar employment are all considered. Before you fire an employee, and especially in the case of upper management or long-term employees, consult your lawyer. She can give you advice which may avoid a difficult and costly lawsuit.

3. What if I had good reasons to fire my employee?

You may think you have good reasons to fire an employee, but a judge may disagree. You have to have "just cause," in the legal sense of the words. In cases of theft, fraud, dishonesty or blatant insubordination, courts generally agree that an employer may fire for "just cause," with warning and without compensation. Unfortunately, most cases are not that black and white.

If you wish to terminate an employee for just cause, it is extremely important to document the employee's failings in his or her personnel file. The employee should get written warnings and an opportunity to correct their failings before termination is considered. You cannot fire an employee or lay them off just because business is bad, unless you are prepared to pay them compensation.

4. What is "the duty of good faith"?

The Supreme Court of Canada has recently added a new wrinkle to the difficulties employers face in firing an unproductive employee. The "duty of good faith" requires employers to treat fired employees with honesty, dignity, and compassion when firing them. Failure to do so can cost you additional damages on top of any severance pay you might already owe the employee. Before you run afoul of this requirement, get competent legal advice.

5. The lawsuit is over, now what?

If a departing employee has successfully sued you for wrongful dismissal, you know all too well that you likely could have limited your damages by having an employment contract that addressed termination. Smart employers act pro-actively, and put a contract into place at the outset of the employment relationship. The topic of termination is a lot easier to discuss when the parties are getting along. Ask your employment lawyer to draft a contract that is suitable for your particular company, and avoid the costs and time that lawsuits involve, from the outset.

Summary

If you are planning to terminate an employee, or are being sued by a former employee, you should speak with a lawyer immediately. Your lawyer will help you make decisions regarding the best way to move forward, and the appropriate length of a notice period.

Finally, ensure that your interests are protected. If you are operating your business without a written employment contract that clearly addresses the expectations surrounding termination, you are opening yourself up to potential litigation. Don't learn the hard way. Hiring a lawyer to draft you a sensible, fair contract will likely cost a lot less than heading up the courthouse steps.