Ending the employment contract can be one of the most complex and difficult actions an employer will ever take with an employee. Legal issues can abound so be sure to familiarize yourself with the following terms and what procedures you need to keep in mind as an employer.
Resignations
While it would seem there's not much to say about resignations, they are not as clear-cut at times as an employee handing their manager a letter. As Kathryn J. Filsinger points out in Employment Law for Business and Human Resources Professionals, "there are some cases that suggest that an employee may retract a written resignation up to the time that the employer formally communicates its acceptance of the letter." If, in your workplace, it is also common practice to accept verbal resignations as regular practice, you are opening yourself up to convoluted scenarios where employees may decide to change their minds. Therefore, it is a good idea to create a standard template letter you can hand to the employee acknowledging that you accept their resignation, given on a specific date.
Likewise, there are times in the heat of a moment where an employee may hand back keys or other company property and state either to co-workers or managers that they are not coming back. A similar letter of acceptance of the resignation should be served and the intent will be considered binding. However, if the statements are vague - such as "I can't wait until I find another job and can get out of this place" the courts will not recognize it as a resignation.
Terminations With and Without Cause
The old adage "anyone can be terminated" may still have some validity, but more and more court cases are complicating the situation. Whereas in the past an employer simply had to provide notice or pay in lieu of notice and could terminate anyone, there are now exceptions to that rule.
First, however, let's differentiate between "with cause" terminations and "without cause." With cause terminations include any situation where the employee has failed to meet the standards of the company's policies and procedures. Infractions can include subjects such as: attendance issues, poor performance, health and safety violations, theft or harassment. These infractions are generally not one-time occurrences (except in extreme cases where the work environment might be in jeopardy if the employee remains) and a with cause termination should be backed up with extensive documentation of progressive discipline.
Without cause terminations, on the other hand, occur for a variety of reasons where the documentation is not ample enough to warrant "with cause." For example, if the employee is doing their job adequately but is not fitting in to the culture a "without cause" termination is usually the employer's choice. They can also occur when there is a frustration of contract and the employee is no longer physically capable of conducting the work; when a temporary lay-off becomes permanent due to lack of work; or when the structure of the company is changing to the extent where the employee's job no longer exists.
As mentioned previously, there are exceptions to these rules and more are occurring in the courts all the time. One of the most significant changes has been the condition that an employee who has been injured at work in the past year needs to be treated with special consideration. If there has been lost time (on a WSIB claim) and the employee has now returned to work, an employer must be exceptionally careful about terminating within the following 12 months. The reasoning is that the employer could very well have caused the injury through lack of Health & Safety procedures; consequently the injury has made the employee's ability to search for other jobs much more difficult. Even terminating such an employee with cause for attendance issues could prove a legal conundrum: if the employee has a difficult time waking up or moving around due to their former injury, they may be late more than they were before the accident. In such cases, it's the employer's responsibility to work with - and accommodate - this employee.
Another important factor to consider is that the traditional 90-day probationary period is not so cut-and-dry anymore. It used to be that employers could use this three-month trial to determine if the worker was a good fit and could terminate without having to provide notice or pay in lieu of notice if they were not. However, each situation is unique now and more often than not, it is safer to give 1-2 weeks' notice before terminating during the probationary period or pay them an additional 1-2 weeks of pay if letting them go immediately.
Constructive Dismissal vs. Wrongful Dismissal
There are similarities to these two fundamental breaches of the employment contract but employers frequently confuse the two terms.
According to employment lawyer Karen Zvulony, in her online article What is Constructive Dismissal?, "As a general rule, employees who quit their employment are not entitled to compensation from their employer. However the exception to this general rule is where an employee quits because their employer unilaterally and fundamentally changed the conditions of employment. The law classifies such situations as 'constructive dismissal.' In other words, the employer did not directly dismiss the employee but the employer changed the job so completely that the employment contract was effectively at an end."
Wrongful dismissal, on the other hand, occurs when an employer fails to provide adequate notice during a termination. Essentially, constructive dismissal can become wrongful dismissal - as illustrated in the example below.
Ted was hired by a warehouse to work the night shift, driving a forklift and stocking shelves. His contract states he will work overnight and receive a premium pay for working the shift. During the summer, the business slows considerably and the employer decides to switch the night crew to a day shift so they can help with other tasks around the building.
The employer does not give the night shift an official letter which would give them adequate notice (one week for each year of service, up to eight weeks maximum) that their job is changing. Instead, it is mentioned verbally by their manager that the following week they are to report to work at 6 a.m. instead of 10 p.m. and will lose their night shift premium.
Ted is understandably upset - he has responsibility for looking after his 2-year-old during the day until his wife returns from her job at 3 p.m. He approaches his manager with his concerns, but is told that the warehouse owner has made the decision and that's the end of it. Ted resigns, knowing that he cannot work the day shift and still provide suitable care to his family. His employer then ceases his pay without further compensation.
Because Ted was not given notice of this dramatic change to his schedule and daily work tasks, he has suffered constructive dismissal. In addition, since he was not paid any termination pay, he was also wrongfully dismissed. Even though Ted technically "resigned" it was because he had to, due to the employer's drastic changes. According to a court of law, the employer would be responsible in this case for providing Ted additional termination pay, as though they had terminated him "without cause."
As Painless as Possible
Terminations can cause companies drastic amounts of money if they are not done correctly and some situations - especially with long-standing employees - are so involved that it is best to consult with Human Resources or an employment lawyer before proceeding. Before ending an employment contract, it is always wise to put yourself in the shoes of the employee and ensure you are treating them as fairly as possible according to the circumstances.
Sources
Filsinger, Kathryn J. Employment Law for Business and Human Resources Professionals. Toronto: Emond Montgomery, 2005.
Zvulony, Karen. What is Constructive Dismissal? Zvulony & Co.
Becky Norman - Since graduating from the University of Wisconsin-Stevens Point with a B.A. in Honors English (Writing Minor), Becky Norman has moved to ...
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