There is a legal prescription for firing employees, but not all employers care to follow it.
Eyebrows were raised last week when the chief executive officer of AOL Inc., Tim Armstrong, fired a staffer during a mass conference call. He later apologized, but the damage was done. This raises the legal question, what is the right and wrong way to fire an employee?
Asserting just cause
In my experience, the No. 1 human resources error when terminating an employee is asserting misconduct where there is none. In Canadian dismissal law, there is misconduct and then there is serious misconduct, such as theft, dishonesty or fraud. Only the latter will justify summary discharge without severance and it must be proven by the employer, not simply perceived. Anything short of serious misconduct requires warnings or severance in lieu.
Too often, employers use a strategy of asserting there is serious misconduct – by exaggerating minor mistakes or transgressions or even conjuring up delinquency – and use it as a bargaining chip for future severance negotiations or to dissuade other employees from suing. But this perspective, and the advice of lawyers who give it, fails to appreciate the implications. Strategic allegations of misconduct lead to enhanced damage awards, revenge lawsuits, increased legal fees and negative media exposure. If your case for misconduct is flimsy, rethink it from the outset rather than risk having a judge tell you that you are wrong.
Reasons for termination
Does the reason for a dismissal need to be explained, in writing or at the termination meeting? The Supreme Court of Canada has said there is a duty to be candid to employees during the termination process but this duty only extends so far. If the termination is because of restructuring, lack of work, a poor fit or "we just don't like you any more" then simply saying the termination is "without cause" is perfectly acceptable. If the dismissal is for misconduct, then this should be explained and in as much detail as is necessary to identify the reasons and why the employer believes they are serious.
Conduct of termination
The only reason AOL made the news was because the termination was public. Humiliating dismissed employees in front of their peers – whether by conference call or marching them out of the office – will be costly, even more so if the employee's future job prospects are affected. If you are going to dismiss an employee, regardless of the reason, be selective with the timing and sensitive to the situation.
Being reasonable and sensitive to employees at the time of their termination has been the law of the land since the Supreme Court's decision in Wallace V. Univted Grain Growers Ltd. in 1997, which found that there is a duty not to make a termination any more difficult than it needs to be for the employee. What this means an employer cannot do varies from one case to the next, but examples include taking steps to prejudice an employee's ability to find other work, being untruthful or misleading, or being overly insensitive, all of which will garner the wrath of the courts.
Employers are not required to provide references to dismissed employees or to agree to speak favourably if asked by a prospective employer. However, not providing a reference to a deserving employee can influence how a judge decides a case too, since the time it takes for an ex-employee to find a new position affects the severance awarded. If there are concerns about giving a reference, consider providing a letter confirming the employee's tenure, position and key duties instead.
Record of employment
Employers are required to provide a form to dismissed employees called a record of employment, which is used to claim employment insurance. Coding the ROE incorrectly can delay the employee's application and in some cases have it rejected, which is the type of treatment frowned upon by the courts. This often happens by mistake, underscoring why terminations are not for amateurs. Get advice.
In a recent case, a judge overturned a termination agreement signed on the spot because the employee believed he had no other option. This demonstrates how the courts are uncomfortable with any such agreement that does not reflect that the employee gave it full consideration. Never provide a dismissed employee less than a few days to consider a severance offer and do not accept any release or agreement signed on the spot.
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