We have been advising employers for over 25 years.
Employment Contracts are Important
Usually, my first question for a new client is “Do you require all new hires to sign an employment contract?”
For more information on the benefits of using an employment agreement, click here.
As a result of these benefits, most employers have now introduced employment contracts which contain a termination clause.
Employers should know however that the cost of employee terminations is not always limited to the amount of money the employee is entitled to receive under the termination clause.
Employment Contracts Are Not Always Enough
As a result, I ask my employer clients to call me before terminating any employee.
Here are five questions I ask my clients:
- Did the employee sign an employment contract before starting work? If not, the termination clause in the employment contract is likely not enforceable and the termination will likely be more expensive. In this scenario, the employer may decide not to proceed with the termination.
- Is the employee pregnant or returning from pregnancy/parental leave? If so, the termination could lead to problems under the Employment Standards Act and/or the Human Rights Code. For more information on the rights of pregnant employees, click here
- Is the employee disabled or returning from an injury or a sick leave? If so, the termination can lead to problems under the Workplace Safety & Insurance Act or the Human Rights Code. For more information on the rights of disabled employees, click here
- Has the employee ever claimed that the employer has not complied with the Employment Standards Act, the Occupational Health & Safety Act, and/or the Human Rights Code? For example, has the employee recently complained that her supervisor sexually harassed her? If so, the termination could lead to a violation of the anti-reprisal provisions contained in one of these laws.
- If the employee has not signed a legally enforceable termination clause I will want to know whether the employer is terminating for misconduct. If not, I will want to know the person’s age, position, length of service and how long it will likely take the employee to find alternative employment. Then I am in a position to tell the employer how much the termination could cost. For information on the law of wrongful dismissal, click here
A client recently informed me by email that he intended to terminate an employee during the probationary period. He wanted to confirm the employee was owed no termination pay under the employment contract. I confirmed the answer and asked the above noted questions. It turns out the employee was returning to work from a disability leave just before the probationary period expired. By sending the email and consulting me the client was able to avoid a potential legal minefield.
For the past 25 years, Doug MacLeod of the MacLeod Law Firm has been advising and representing employers in connection with employee terminations. If you have any questions, you can contact him at 416 317-9894 or at [email protected]
In the recent decision of Andros v Colliers Macaulay Nicolls Inc., the Ontario Court of Appeal (“OCA”) found yet another termination clause to be unenforceable. In this decision, the OCA reaffirmed and clarified various principles surrounding the enforceability of such clauses.
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