Your SlideShare is downloading. ×
Created by Laura McFarland – Human Resources Manager
January 2014
Training Material
T ABLE OF C ONTENTS
EXECUTIVE SUMMARY .......................................................................................
EXECUTIVE SUMMARY
Terminating an employee, for any reason, can be a very stressful situation for both managers and human
r...
TYPES OF TERMINATIONS
Terminations can affect an individual employee or can be widespread throughout an organization. The
...
INVOLUNTARY TERMINATIONS
E C O N OM IC R E A S ON S :
When times are tough, layoffs and plant closures or business bankrup...
All communications with the employee should be documented, including the date and time of the
discussion, and any feedback...
Following the above steps in such situations could put the business, or other employees, at severe risk so
it would not be...
Under the employment standards legislation, the minimum notice ranges from one week to eight weeks.
The notice period, or ...
THE TERMINATION MEETING
PREPARATION TIME
It is important to take time to review the personnel file and any previously docu...
An effective termination meeting allows the employee to preserve dignity, while providing as smooth of a
transition out of...
EMPLOYMENT STANDARD REGULATIONS:
D ECLARING J UST C AUSE

OR

N OT ?

An employer has every right to terminate an employee...
In British Columbia, reasonable notice is based on four key factors as follows:
•
•
•
•

Length of service;
The age of the...
time, and most importantly, what notice provisions apply in the event that the employer chooses to
terminate the employee....
notice. The reasons for this are obvious. The disgruntled employee may affect morale or there is a risk
that the employee ...
If the employer chooses to pay either lump sum or salary and benefit continuance, the employer should
obtain a written rel...
3. The employer should also request the return of all equipment, documents, keys, passes, credit
cards, cell phones, lapto...
things around without having to take further disciplinary action. However, if the results are still not
acceptable it is c...
Upcoming SlideShare
Loading in...5
×

Human Resources Insight - Termination- Training Manual

1,435

Published on

Published in: Business, Technology
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,435
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
64
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Transcript of "Human Resources Insight - Termination- Training Manual"

  1. 1. Created by Laura McFarland – Human Resources Manager January 2014 Training Material
  2. 2. T ABLE OF C ONTENTS EXECUTIVE SUMMARY .................................................................................................................................. 3 TYPES OF TERMINATIONS................................................................................................................................. 4 ADMINISTRATIVE AND VOLUNTARY TERMINATIONS............................................................................................. 4 INVOLUNTARY TERMINATIONS .......................................................................................................................... 5 PERFORMANCE ISSUES .................................................................................................................................... 5 PROGRESSIVE DISCIPLINE PROCESS ............................................................................................................ 6 CONDUCTING EXIT INTERVIEWS .................................................................................................................... 8 THE TERMINATION MEETING ......................................................................................................................... 9 EMPLOYEE QUESTIONS.................................................................................................................................. 10 APPROPRIATE COMMUNICATION STRATEGIES ................................................................................................. 10 EMPLOYMENT STANDARD REGULATIONS:........................................................................................... 11 ALLEGING JUST CAUSE OR NOT? ............................................................................................................... 11 TERMINATION W ITH NOTICE ....................................................................................................................... 11 EXISTENCE OF AN EMPLOYMENT CONTRACT ................................................................................................... 12 ILLNESS/DISABILITY.................................................................................................................................... 13 SEVERANCE PACKAGES ............................................................................................................................. 13 REFERENCES ............................................................................................................................................ 15 IMPLEMENTATION ....................................................................................................................................... 15 CONCLUSION................................................................................................................................................. 18
  3. 3. EXECUTIVE SUMMARY Terminating an employee, for any reason, can be a very stressful situation for both managers and human resources personnel. Job loss is a major event for an employee, and the loss of an employee can have a significant impact on the team or department, as well. Proper preparation prior to the termination can help to ensure it is done in a way that allows the employee(s) to leave with dignity, while mitigating risk to the organization. It is also important to maintain confidentiality about the reason for termination, while providing sufficient information to the staff to minimize disruptions internally. This requires preparation, and possibly scripting, to assist managers with dealing with awkward questions about the situation. Sometimes, it is necessary to eliminate a position that has become redundant, or layoff employees due to business slowdowns. Other times, terminations may be due to poor performance or inappropriate conduct. Regardless of the reason, it is important to terminate the business relationship in a professional manner, with appropriate notice, and in a way that meets at least the minimum legislative requirements for your jurisdiction. No matter how much preparation you do, or how many policies or procedures you put in place, terminating an employee is never a pleasant task. There are many steps you can take to make the process more effective and efficient, and you may get better at handling these uncomfortable situations, but most managers and human resources personnel still consider it to be one of the least liked parts of the job.
  4. 4. TYPES OF TERMINATIONS Terminations can affect an individual employee or can be widespread throughout an organization. The reasons for terminating employment can be classified as administrative, voluntary or involuntary. Administrative terminations generally refer to situations where the employment relationship ends as a result of retirement, permanent or long-term disability, or death. Voluntary terminations occur when an employee resigns from the organization, such as to pursue other opportunities, or is considered to have resigned as a result of job abandonment. Involuntary terminations include reasons such as poor performance, misconduct or economic slowdowns, where the employer must take steps to end the business relationship. Most companies have a specific policy and a set of procedures to ensure that terminations are carried out as professionally as possible, while mitigating risk to the organization. ADMINISTRATIVE AND VOLUNTARY TERMINATIONS As part of the natural employment life cycle, employees will leave your organization. Sometimes, employees feel that they cannot meet their personal career goals, or reach their maximum potential, in their current position. If they do not see an opportunity for advancement within your organization, these employees start to seek external opportunities and resign to accept another offer of employment when the opportunity arises. You can increase the likelihood of retaining these valued employees by offering career counselling, working with employees to learn and develop skills necessary for internal advancement, and maintaining open communication. However, some employees will still decide to spread their wings and accept external offers. Another reason employees will leave an organization is due to internal conflict, or feelings of unfair practices. Sometimes these reasons are unfounded, but you may find that a higher turnover in one department or team could be caused by ineffective management or poor working conditions. Similar reasons can also increase the instances of employee absences and lost productivity. Employees who are absent as a result of illness or injury may end up severing the employment relationship: to find more suitable work to accommodate their disability, due to a permanent disability, or death. Such losses are often unavoidable but can still have a long-lasting impact in the workplace. Another common reason for voluntary terminations is retirement. Most employees will retire as soon as they can withdraw their pension, or have saved sufficient funds to provide them with an adequate retirement income. This may be the least disruptive cause for voluntary termination as employees usually plan ahead for retirement. Often, employees will provide employers with a long notice period so that the position can be filled and a new employee trained prior to the retirement date. Sometimes, retirement can also be used as a way of reducing excess supply of labour by encouraging early retirements rather than laying off employees. This can make staff reductions much easier for an employer.
  5. 5. INVOLUNTARY TERMINATIONS E C O N OM IC R E A S ON S : When times are tough, layoffs and plant closures or business bankruptcies can lead to temporary or permanent employment disruptions for many employees. As an HR professional, large-scale terminations can be extremely difficult, and compounded when it happens at certain times of the year, such as Christmas. However, finding the right balance, between demand for labour and internal supply, is a critical part of any human resources position. Layoffs can be temporary, indefinite or permanent. A temporary layoff occurs when the employer stops the employee’s work due to economic circumstances without severing the employee/employer relationship. In this case, it is expected that the employee will be called back to work at a later date. Sometimes, the employer will lay off employees for a stated period of time, such as 2-4 weeks, or it could be indefinite depending on the situation. A permanent layoff would result in the employee being eligible for termination pay since the relationship is being severed and it is not expected that the employee will be called back to work at a later date. When large scale layoffs, or company closures, are the reason for terminating employment, it is important to adhere to legislation pertaining to such situations. For example, the Employment Standards Act includes mass termination rules stipulating different notice periods depending on the number of employees to be terminated. PERFORMANCE ISSUES When you first hire an employee, it is important to set out your expectations so that the employee knows the standards to be met, and you have a standard of performance to measure against. Ongoing feedback is the key to ensuring the employee knows how they are doing, and has the opportunity to improve performance or seek additional training when performance is lacking. Whether formal or informal performance reviews are conducted, it is important to document all reviews and provide a copy of your notes to the employee. For informal sessions, this can be done by a simple email summary of the discussion. Upon the first signs of poor performance, you should take action. You can start with a conversation with the employee to determine if there is an underlying problem affecting work performance. However, you should review your company’s policies to ensure that the steps you take are in line with such policies, as well as the employment offer letter or collective agreement. Establish reasonable standards of conduct and clearly communicate this to the employee. These standards should be provided in writing, stated clearly, and provide a place for the employee to sign as acknowledgement of receipt and understanding. Encourage the employee to ask questions if anything is unclear. These written standards should also include mention of the fact that failure to adhere to policies or uphold standards could eventually lead to termination. Signing the document often helps the employee to recognize the severity of the situation and the commitment they are making to improve their performance or behaviour.
  6. 6. All communications with the employee should be documented, including the date and time of the discussion, and any feedback provided during the meeting. If you suspect a meeting will go badly, or just want moral support, it is a good idea to have someone else present in the meeting. However, since all discussions should remain confidential, it is not appropriate to include the employee’s colleagues in the meeting, but possibly another manager, or Human Resources representative. PROGRESSIVE DISCIPLINE PROCESS In the event that an employee violates company policy, exhibits problematic behaviour, or underperforms as per expected standards, a system of progressive discipline should be utilized. Generally, employees are provided three opportunities to correct the undesirable behaviours, with the final step being severance of the employment relationship. Reference to the progressive discipline process often occurs even before an employee joins your organization. Some employment contracts specifically state the steps to be included in the disciplinary process, and the obligations for both the potential employee and the employer when terminating the employment relationship. Similar information is often included in the employee handbook, provided to the employee either prior to joining the organization or during the orientation session. In general, the steps in the disciplinary process include: Verbal Warnings; Written Warnings; Suspension With/Without Pay Termination. The verbal warning is usually the first step in the disciplinary process. Although it is a verbal warning, you should document the date, time, and details of the conversation with the employee. Make note of the incident or undesirable behaviour and any recommendations made during the discussion. This provides a paper trail for further disciplinary action. The second step in the process is usually the written warning, implemented when the verbal warning did not achieve desired results or when the behaviour is of a more serious nature. In addition to documenting the information above, as used for the verbal warning, this also details the corrective actions to be taken and serves as a final notice that such behaviour cannot, and will not, be tolerated. It also states that further deterioration of performance, or incidence of undesirable behaviour, can result in termination of employment. Some companies will use suspensions as a third step in the disciplinary process. Suspensions can be paid or unpaid time away from work to allow the employee to think about his or her behaviour and decide how to rectify the situation rather than face termination. You should always review local legislation regarding the impact of unpaid suspensions, as this can sometimes be viewed as constructive dismissal. Different rules are also applied depending on whether the workplace is a unionized, or non-unionized, environment. Although the above steps outline the ideal process for terminating an employee, some situations arise that require immediate action. In the case of misconduct such as theft, sexual or other violent assault, suspension (followed by investigation) or termination often occurs immediately.
  7. 7. Following the above steps in such situations could put the business, or other employees, at severe risk so it would not be appropriate to continue the employment relationship. This immediate termination is often based on “just cause”. To terminate employment with “just cause”, an employer should be able to demonstrate that: · The employee was aware of performance standards; the standards were reasonable and were clearly communicated; · The employee was notified of inappropriate conduct or poor performance in a timely manner, with an adequate paper trail showing the discussions and steps taken to try to rectify the issues; · It was clearly communicated to the employee that reasonable timeframes were being provided to improve behaviour or performance, and the possibility of termination could result unless standards were met or there were no further incidents of inappropriate conduct; and · After all reasonable attempts to work with the employee, the standards were not met, or the undesirable behaviours were repeated, and termination was the only alternative. Proving “just cause” for termination is very difficult to define, or uphold, but generally includes behaviour of a very serious nature such as: · Criminal acts; · Wilful misconduct or disobedience; · Blatant disregard for safety rules - putting themselves or others at risk for injury · Deliberate neglect of duty or gross incompetence; or · Significant breach of a workplace policy. Such action must be of such a critical nature that it effectively undermines the employment relationship. In terminating an employee with “just cause” the onus is on the employer to prove that termination was the only alternative based on the misconduct. Should it be found that the employer cannot prove “just cause” the terminated employee may be entitled to damages for wrongful dismissal. Providing proper severance packages An employer has the right to terminate employment at any time, for any reason, as long as it does not breach an employment contract or collective agreement, and is done within legislated parameters. When an employee is being terminated without “just cause”, non-unionized employees are eligible to receive reasonable notice of termination or payment in lieu of notice. Please reference provincial employment standards legislation with respect to the requirement to maintain benefit coverage during required Notice periods. In cases where the employee has engaged in behaviour that can be considered “cause” for dismissal, employers are generally not required to provide payment in lieu of notice. It is important to know, and understand, the employer’s obligations under the Employment Standards Act. If the minimum payment is not provided, the employer can face further damages over and above the legislated payment for “in lieu of notice”.
  8. 8. Under the employment standards legislation, the minimum notice ranges from one week to eight weeks. The notice period, or amount of compensation in lieu of notice, is based primarily on the service period with the employer. Some jurisdictions also require individual severance pay for employees who meet specific criteria. Other factors such as the age of the terminated employee and the position held can become a critical part of the equation, especially if challenged for wrongful dismissal. Sometimes, the savings on salary expenses from the termination is lost when legal costs are escalated, so it may be in your best interest to pay slightly more than the required amount up front and avoid legal action. You can refer to the HR Downloads Severance Policy for more information. CONDUCTING EXIT INTERVIEWS Voluntary terminations can become very expensive for an employer so it is important to identify the reasons employees are leaving the organization. Exit interviews are a great way to obtain feedback from employees at a time when they are willing to be very honest and feel they have nothing to lose from a candid discussion about their perception of the organization, management, and their position. Such interviews are often conducted when employees voluntarily terminate employment, but some organizations conduct exit interviews with all departing personnel regardless of the circumstances. Although some employees may be bitter upon leaving the organization, exit interviews can identify trends such as poor management, ineffective compensation strategies, or undesirable working conditions that result in higher turnover. Such information can help human resources personnel to review and revise policies, work with management to improve performance, or revise job descriptions or working conditions to help reduce turnover rates.
  9. 9. THE TERMINATION MEETING PREPARATION TIME It is important to take time to review the personnel file and any previously documented meetings before the actual termination meeting. Think carefully about what would be appropriate to say and try to avoid anything that may be considered inappropriate. You may think that the employee is lazy, for instance, but that would not be appropriate to say during this discussion. Stick to the facts, avoid personal or character attacks, keep your emotions in check, and try to keep the meeting as brief as possible. Since these meetings can be very emotional, be prepared with a checklist of company property that must be obtained from the employee such as desk keys, cell phone, and security pass. You don’t want to forget any of these important items if the discussion does not go as well as expected. A terminated employee will go through a range of emotions. You should be prepared with a box of tissues, a glass of water. TREATMENT OF THE EMPLOYEE DURING THE TERMINATION PROCESS Termination meetings should be carefully thought out and planned. In most cases, the disciplinary process has been carried out, or previous discussions have taken place, and the employee should be very aware of the circumstances leading to the termination. A termination checklist can help to ensure that all steps are carried out in the proper sequence, and nothing gets overlooked during the emotional part of the process. The meeting should take place in a private office or meeting room that is free of distraction. You may also want another manager, or human resources representative, to be present for morale support. The timing of the meeting is also important. It is often advisable to avoid terminations on Fridays because it can be difficult for the employee to seek legal advice or support services over the weekend. It is also recommended that terminations be conducted at the beginning of the shift so that the employee doesn’t later feel resentful for having worked a full day and then being terminated at the end of the shift. It is also easier for those involved in delivering the termination letter as you don’t have to spend the day stressing about how the meeting will go, and it also allows time throughout the day to address the remaining employees. The written termination letter should be prepared before the meeting and provided to the employee promptly. The discussion should start by stating that the decision is final and you are not here to discuss it. Clearly state the effective date of the termination, whether immediate or at some later date, and the reasons for this decision. There is no need to go into a detailed description of the reasons, or rehash all previous discussions – if the disciplinary process was carried out effectively, then this discussion should not come as a surprise to the employee. You should, however, be willing to answer any questions about the process as the employee reacts to the termination. This reaction is often based on fear and anxiety, so show empathy towards the situation. Termination can be detrimental to an employee’s financial circumstances, and significantly impact their family and even their health. If the reasons for termination are based on economic decisions, it is important to reassure the employee that it has nothing to do with their performance. Offer to provide a reference, or even prepare a reference letter, to assist with future job searches.
  10. 10. An effective termination meeting allows the employee to preserve dignity, while providing as smooth of a transition out of the organization as possible. Even the most experienced managers find termination meetings to be a source of stress and anxiety, but planning for the meeting and following a well-designed process can help to alleviate costly mistakes. It is also recommended that you keep the meeting as brief as possible, to reaffirm that the decision has been made and talking about it will not change your mind. Be very cautious to avoid saying anything that can be used against you in any future legal proceedings. After the meeting has ended, you will want to document the situation for your records and retain these notes for reference should the former employee take legal action. E MPLOYEE Q UESTIONS Employees may be overwhelmed by the situation and may not be thinking clearly. Be prepared to answer a number of questions. The employee may be concerned about tying up loose ends for work in progress, may want an opportunity to say good-bye to colleagues, and want to collect their personal belongings. You should have a plan for how to address these aspects of the situation before the termination meeting begins. Other questions the employee will have will be about the financial consequences of your decision. The amount of the final payment, including vacation pay, severance pay, payment in lieu of notice, and accumulated sick time should be available to discuss with the employee, if payment is not enclosed with the termination letter. Also, provide a copy of the Record of Employment (ROE), or commit to the date it will be available and agree on how you will provide the ROE to the employee. The employee may also be concerned about future references from the company. Again, depending on the circumstances, you may want to provide a reference letter, or offer to provide a reference to assist with the employee’s job search. A PPROPRIATE C OMMUNICATION S TRATEGIES Once the termination meeting has concluded, the next step is to advise staff, and possibly clients, of the employee’s departure. It is critical that details regarding employee discipline and terminations are discussed only with those who absolutely need to be aware of the situation and the information shared must be limited to what that individual needs to know. Conversations with other department personnel and clients should never disclose facts about the reasons for termination, or that the former employee was in fact terminated. Simply state that the employee is no longer with the company and provide information about who to contact for tasks previously completed by that individual.
  11. 11. EMPLOYMENT STANDARD REGULATIONS: D ECLARING J UST C AUSE OR N OT ? An employer has every right to terminate an employee’s employment with or without just cause.1 if the employer has just cause to terminate an employee’s employment, then no notice or severance is required. The employer should state fairly the reasons for the termination and provide a brief explanation. The employer should be honest and forthright in its comments. It is important to consider and research the issue carefully before a just cause allegation is made. The courts have held that employers expose themselves to lengthier notice periods, punitive damages, and special costs if the employer is unable to prove the just cause alleged. T ERMINATION W ITH N OTICE In the event that the employer does not wish to allege just cause, or just cause does not exist, the employer has the unfettered right to dismiss an employee without just cause by providing both minimum notice under the Employment Standards Act2 and common law notice. The British Columbia Employment Standards Act provides that where no just cause is alleged, the employer must provide the following compensation as determined by an employee’s length of service: After 3 consecutive months of employment After 12 consecutive months of employment After 3 years of employment 1 weeks of wages 2 weeks of wages an amount equal to 3 week’s wages, plus one additional week’s wages for each year of employment to a maximum of 8 weeks’ notice Working Notice of termination outlined above can also be provided. In addition to minimum notice under Employment Standards Act, an employer, absent a written employment agreement or policy manual setting out termination, will be required to provide the employee with what is referred to as common law notice. The employer should review BC court decisions to determine an employee’s reasonable notice entitlement. This research will likely produce a range of potential notice awards which could then be used to design a severance package. 1. Just cause can cover a wide range of reasons for terminating an employee’s employment. This may include theft, or chronic absenteeism. An employer also may be justified in terminating an employee for poor performance, provided the employer gives the employee a warning that unless their performance improves, over a reasonable period of time, the employment will be terminated. (This warning should be documented in writing.) 2 Employment Standards Act, R.S.B.C 1996
  12. 12. In British Columbia, reasonable notice is based on four key factors as follows: • • • • Length of service; The age of the employee The type of position held, including salary, and whether supervisory responsibilities are present; and The availability of similar employment in the job market at the time of termination. Generally, the courts award longer notice periods to long term employees than to short term employees. Likewise, a court will usually award higher notice periods to older employees than to younger ones. In addition, the court will likely award lengthier notice to an employee at the management level who supervises a number of employees over an employee who holds a position which has no supervisory functions. The theory being is that it is more difficult for a general manager to obtain a similar position than an employee who occupies a clerical position. The last criterion is also important. If a particular industry is going through an economic downturn, then it is likely that more employees in that sector are chasing fewer jobs and there is a stronger likelihood that the length of notice will be longer. E XISTENCE OF AN E MPLOYMENT C ONTRACT The common law provides that absent a written employment agreement, there is an implied term of a contract of employment for an indefinite duration that the contract can only be terminated by providing the employee with reasonable notice. However, that implied term can be varied by express provisions in an employee’s employment contract. It must be clear that the amount of notice provided for in the written employment contract cannot be less than minimum notice under the Employment Standards Act referred to above. In one BC court decision, the court held that a termination provision in the employment agreement was unenforceable because it permitted the employer to dismiss the employee any time with 30 days’ notice. The court held that even though the employee was only entitled to less than 30 day’s notice at the time of dismissal, the 30 day notice provision would have been contrary to the Employment Standards Act if the employee had worked for 5 years or longer. The court held that it was either practical or reasonable “to leave the individual employee in the position of having to keep an eye on the relationship between the statutory minimum and the contractual term”. The employer can also establish an employee policy manual which provides for notice of termination, again, providing that the notice provided for in the employment manual is not less than an employee’s entitlement under the Employment Standards Act. However, it is absolutely critical that the employer bring this policy manual to the attention of all new employees who are hired. It should do so by requiring them to sign a memorandum confirming they have read the employee policy manual including the termination provisions. The employer should enter into written contracts of employment with all of its employees. These can be written on the employer’s letterhead and can be written in the form of a letter confirming the terms of the employment such as confirmation of the position, start date, salary, compensation and benefits, vacation
  13. 13. time, and most importantly, what notice provisions apply in the event that the employer chooses to terminate the employee. Most employment lawyers advise the employer to adopt the minimum notice under the Employment Standards Act, which can be done by the inclusion of a simple paragraph. This may be appropriate for junior level employees such as clerical staff or first line supervisors; however, there is case law which suggests that the more senior the person becomes within the employer’s organization, the less enforceable will be the provisions limiting notice to Employment Standards notice. In other words, if an employee joins an employer as a first line supervisor at a salary of $30, 0000 per year and then rises after ten years to the position of General Manager with a salary of $150,000 per year, it is unlikely the court will enforce the minimum notice provisions. Once the employee reaches the higher management positions, consideration should be given to amending the employment contract to provide for lengthier notice. I LLNESS /D ISABILITY If the employee is ill or is disabled at the time of dismissal or if there is a risk that he or she may become ill or disabled during the notice period, then the employer should consult with a lawyer before proceeding with a termination. The employer should seriously consider whether dismissing an employee while they are ill or disabled raises an issue of alleged discrimination because of a disability. An employee may have a complaint under the Human Rights Act. In some cases, an employer has a duty to accommodate the disability. Depending on the circumstances, the prudent thing would be to postpone the decision to dismiss the employee until the employee has recovered from their disability or illness. An employer typically puts the employee on an unpaid leave of absence or the employee may be entitled to long term disability, therefore, great care should be taken when dealing with an ill or disabled employee. In the event that the employer chooses to terminate an employee, most group insurance plans discontinue benefits including long term disability coverage and life insurance upon the termination of the employee. An employer has a duty to inform an employee at the time of dismissal of any existing options to convert the group insurance coverage to a private or individual plan. Usually the employee has 30 days to convert to the private policies. An employer should advise the employee in writing of the option to convert to a private plan and the time period in which the employee must do so. Otherwise, the employer may run the risk of being saddled with a significant lump sum disability or life insurance award if the employee falls ill during the notice. S EVERANCE P ACKAGES The common law does not recognize a severance package per se. The common law provides that an employer is required to provide reasonable working notice of dismissal. The whole purpose of working notice of dismissal is to permit the employee a reasonable amount of time to look for alternative work while being paid his or her regular compensation. However, once the employer makes the determination that the employee must go, the employer usually does not want the employee working through his or her
  14. 14. notice. The reasons for this are obvious. The disgruntled employee may affect morale or there is a risk that the employee will harm the business interest of the employer. In the event the employer chooses to provide the employee with a severance package and the employee has been wrongfully dismissed, the issue becomes whether the severance package is an adequate one. An employer has two options: They can provide the employee with a lump sum payment, or salary and benefit continuance. A lump sum payment provides certainty to both the employee and the employer. Usually the lump sum payment is offered in exchange for the employee signing a release which releases the employer from any and all claims related to employment. The employee receives the money up front and the employee has no further obligations to the employer. An example of how this might work is where an employer determines, after receiving legal advice, that an employee, based on the four criteria described earlier, is entitled to six months’ notice. An employer may offer an employee one of two choices: Salary continuance for six months or a lump sum payment of four months. The latter option benefits both the employer and the employee. The employer’s liability is only for four months and the employee can obtain four months’ severance and obtain another job without reporting mitigation income. However, a lump sum payment does not force the employee to go out and look for alternative work. If the employee finds a job within a month, then the employee obtains a substantial windfall. Another way to structure is that salary and benefits continue during the six months’ notice, but in the event that the employee obtains a job, all salary and benefits cease and the employee receive a 50 per cent payment of the remaining salary. This provides an employee incentive to look for work. The advantage of salary and benefit continuance is that it spreads the employer’s costs out over time and gives the employer an opportunity to take advantage of any mitigation income the employee might earn during the notice period. However, once again, the courts have held that salary and benefits will only succeed if the length of the salary and benefits continuance is equivalent to the common law reasonable notice and if the employer continues salary and all benefits. Further, the courts have held that in order for this approach to work the notice period chosen by the employer must be at the high end of the common law range. One disadvantage of the salary and continuance benefits is that most insurance carriers will not permit the employee to continue long term disability benefits for persons who are no longer actively employed. Most employees accept this but an employer can purchase special disability insurance to cover the employee during the period of salary and benefit continuance. It is very important to continue other benefits during the notice period including car allowance, medical services plan payments and bonus if accrued during the notice period.
  15. 15. If the employer chooses to pay either lump sum or salary and benefit continuance, the employer should obtain a written release where the employee releases the employer from any and all claims related to their employment. If the employer chooses to provide the employee with lump sum severance, then the employer is required to make statutory deductions to account for income tax, CPP and EI, and must remit such amounts to the Canada Revenue Agency. R EFERENCES An employer has no obligation to provide a letter of reference to an employee. However, it may be a bargaining chip during negotiations for a severance package. If the employer does decide to provide a written reference, it should be fair and balanced. In addition, if a potential employer follows up on a written reference, an employer should not deviate from the written reference. If so, the employer can expose themselves to liability I MPLEMENTATION Once the employer has chosen the type of severance package to be offered, the employer should carefully consider how the actual dismissal will be implemented. The employer should take the following into consideration: 1. An employer should never terminate an employee on a Thursday or Friday. The termination should occur on a Monday or Tuesday. The reason for this is that if a termination occurs on a Friday, the employee cannot do anything during the weekend to consider his or her options, look for alternative work, speak to an accountant or financial manager or even seek legal advice. By terminating the employee at the beginning of a week, it allows the employee several working days to react constructively to the dismissal rather than go home and stew about the dismissal all weekend without being able to take any positive steps to “get on with their lives”. 2. The dismissal should be carried out by a supervisor and the employee should be provided with a letter of termination at that time. The employee should be told about the dismissal in private and not in front of any other employees. The employer should have a human resources or another person with them to act as a witness of anything that might be said. Conversation should be kept to a minimum and the employer should refrain from debating with the employee. The termination should happen in a businesslike manner. If the employee is dismissed in front of another employee or degrading and abusive language are used during the dismissal process, an employer may be faced with Wallace damages for the manner in which the termination occurred.
  16. 16. 3. The employer should also request the return of all equipment, documents, keys, passes, credit cards, cell phones, laptops, and any other equipment owned by the employer. Most human resource managers will have prepared a checklist in advance of what items the employee has in their possession. 4. It is appropriate either to allow the employee to take their personal belongings at the time of dismissal, or arrange for a mutually convenient time after hours for the employee to return, under escort, to retrieve their personal belongings. Again, the employee should be allowed to do so with as much dignity as possible. 5. Care should be taken to ensure that confidential information contained on a computer, or sensitive or confidential information concerning the employer’s customer lists, pricing, and other trade secrets be preserved. 6. The employer may have to arrange to change locks or access codes. 7. The employer should also decide how the dismissal will be announced to other employees, customers, suppliers and other persons that may have been in contact with the employee. If cause is being alleged, the employer should be very careful in terms of how this is handled. In most cases, a simple statement that the employer and employee have parted company should be enough reason. 8. Finally, the employee must be provided with a Record of Employment with the appropriate code filled in within three business days of the dismissal. C ONCLUSION Not all employment relationships are severed on a voluntary basis which can be very costly for an employer and strategies should be implemented to minimize the loss of valued employees. Understanding the reasons why employees are leaving your organization, can help to identify changes necessary to improve the overall working environment and retain those top performers that you spend so much time recruiting. The success of hiring a great employee can be short-lived unless the necessary steps are taken to retain this talent. Terminations caused by poor performance can be disruptive to the department, but are often required to preserve employee morale. Some employers will avoid conflict situations as long as possible, including putting up with inappropriate conduct or poor performance from an employee, rather than starting the disciplinary process. Unfortunately, a disruptive employee, or one that does not seem to pull their weight, can have a negative effect on the rest of the staff. When employees see that an underperforming colleague is allowed to continue down such a path, the top performers may become resentful and the result can be lower productivity or higher turnover. Poor performance or inappropriate conduct should be addressed as soon after the incident as possible, or upon noticing deteriorating performance. In some cases, working with the employee can help to turn
  17. 17. things around without having to take further disciplinary action. However, if the results are still not acceptable it is critical to act quickly, document all discussions and adhere to legislated requirements for your jurisdiction before terminating employment. As stated above, terminating employees, regardless of the reason, is not an easy task. However, it is a situation that all managers, and human resources representatives, must deal with from time to time. Avoiding costly legal mistakes, and allowing employees to leave with dignity to pursue the next phase of their career, is the best possible outcome for all involved.

×