Termination of Employment
Employers have the freedom to arrange their workforce as they believe is necessary. In some unfortunate instances, such as when the need to downsize operations, restructure a department, or increase efficiency, this may entail terminating an employee’s employment. Employers are able to terminate an employee’s employment even where the employee has committed no fault, however, this decision should never be made without careful consideration. Where the employer has made the decision that it is in their best interests to terminate an employee’s employment, the employer should be aware that multiple options available to make design the process to fit the unique circumstances of any effected employee.
The Employment Standards Act
The Employment Standards Act, RSBC 1996, c. 113 allows an employer to terminate an employee’s employment upon providing a prescribed amount of minimum advance notice, or payment of the employee’s wages for the prescribed time.
In order to avail itself of the option of terminating an employee’s employment with only the minimum notice required by the Act, the employer must have a legally binding, and properly drafted, employment agreement with the employee. If the employee does not have such an employment agreement, he or she may be entitled to a length of notice of termination determined by the common law. This amount of notice is often longer than what is provided by the Employment Standards Act.
If you have any questions about your employment agreement, or employment agreements in general, one of our employment lawyers would be pleased to assist you.
Employers should weigh their options to design a termination strategy that provides maximum benefit to both the effected employee(s) and the organization. These options include:
- A lump-sum payment;
- A salary and benefits continuance;
- A salary benefits continuance, subject to limitations;
- Benefit continuance along with open-ended salary;
- Benefit continuance, salary and working notice;
- Working notice;
- Working notice in combination with a lump sum payment; or
- Working notice in combination with salary and benefit continuance
If an employee is found to be entitled to notice at common law, and it is agreed that he or she is entitled to a notice period of three months (for example), the employee’s termination strategy may be designed as follows:
The employee’s duties may be amended to include providing assistance with the transition for a period of one month, after which time the employee may be paid a salary in either a lump-sum or in the form of salary continuance for a period of two months.
The benefit continuance along with an open-ended salary option might be a suitable option for an employee who is entitled to a significant amount of notice. Instead of committing to a lengthy notice period, the employee can be advised that benefits and salary will continue for a specific period before being reassessed, such as if the employee is able to successfully find alternate employment. If the employee finds other employment during that time, the employer may not have to pay for the entire notice period.
Termination of an employee’s employment carries significant legal ramifications. It is therefore important that an employer consult with a qualified labour and employment lawyer to minimize or eliminate any potential negative repercussions of making such a decision. Should you have any questions about terminating an employee’s employment, or if you have recently been terminated and would like to discuss your legal position, please contact one of our employment lawyers.