Breaking Up Is Hard To Do

Letting someone go is not a job anyone likes to do. But sometimes it’s the only solution. Poor performance cost you money and people are supposed to make you money.

If, despite numerous opportunities to remedy the situation, you have to let someone go, or if it’s simply a cost cutting exercise, whatever the reason it’s no fun.

Doing it without proper thought can also be expensive, so always take legal advice if in doubt.

Fortunately, there are several steps you can take to reduce the chances of being sued. But that’s not the only concern. Letting someone go in a dignified manner, offering help to find another position, and providing references – if this is appropriate (see later) all help to ease the pain that the individual will undoubtedly feel.

Some good practices to incorporate into your procedures include:

1. The Employment Contract

A well-written employment contract can help you avoid a legal battle after the deed is done. Be sure to review it for provisions that limit your ability to fire, such as:

• Contractually guaranteed employment for a fixed period of time
• Conditions that limit firing to specific causes

The contract should specifically spell out an employee's obligations to you. If the employee isn't performing well, chances are that they are in breach of the contract, giving you the legal right to terminate the relationship.

If there is no written contract, the law takes the view that the employment relationship is an on-going one of indefinite duration. The relationship can be terminated for just cause, reasonable notice, or payment in lieu of notice. But, a written contract is strongly recommended. No, let me rephrase that… it’s essential.

2. Reasonable Notice

The Employment Standards Act (ESA) for Ontario imposes a mandatory minimum notice period of one week per year worked. But in case after case, the courts have stressed that the ESA is a minimum guideline only. For those outside Ontario, check your own Employment Standards Act to be safe.

In determining the appropriate notice period, courts take into account several factors:

• The employee's position
• The work performed
• The ability to find other work
• Length of service
• Age
• Security provisions in contract
• Whether they were persuaded or coaxed away from another job to start this one

The employee is entitled, during the notice period, to whatever benefits they were receiving during the employment. This may include vacation pay, insurance, and health/dental care.
In wrongful dismissal claims, courts have awarded substantial sums for mental distress, or punitive damages, which can be a very bitter pill for the former employer to swallow.

Although punitive damages are rarely awarded in wrongful dismissal cases, they are awarded in cases where the employer dismissed the employee in an unseemly way (ie: claiming just cause when none existed).

Mental distress claims tend to be successful where mental suffering was caused by an unkind or improper behaviour during the firing (ie: physically escorting an employee out of the building in front of peers).

3. Just Cause

If you fire an employee for cause (ie: theft) you must pay them amounts owing, but do not need to give them notice. However, it is often difficult to establish cause for dismissal in the courts.

The onus is on the employer and the standard of proof required is very high.

Be sure to have followed these steps before dismissing an employee:

• Proper warnings and providing opportunities to improve
• These should be clear, concise and in writing
• If a specific problem occurs, confront the employee (verbally and in writing)
• Give the employee a chance to explain
• Check performance appraisals
• Check raises/bonuses/incentive payments to ensure that you're your actions are consistent with the position that the employee is not performing well

Tip: If you regularly let some employees engage in prohibited conduct, you'll be on shaky legal ground if you fire others for the same reason.

4. Conducting a Safe Exit Interview

Follow this list to ensure a safe dismissal session:

• Have two people present, in case there is a dispute about who said what
• One person should speak, while the other takes notes
• Say clearly why you are letting the employee go
• Remind them of the warnings you gave
• Ask the employee to return all documents and records belonging to the company
• Remind the employee of their obligation to maintain the confidentiality of the company's business after their departure
• Make arrangements for the employee to remove their personal belongings at your mutual convenience
• Provide payment for outstanding salary, commission, vacation time etc.
• If the employee disputes the amount, make a record of their version, check out the facts, and get back to them

Always listen to the employee, but don’t argue with them. Things said in the heat of the moment may come back to haunt you later. Do not call the employee incompetent or dishonest as such statements may later form the basis for a defamation suit.

5. The Final Checklist

• Consult your legal advisor
• Review and comply with the contract of employment
• Review and comply with any written company procedures regarding firing (ie: manuals, internal policies)
• Ensure you follow the same procedures as were followed in similar situations with other employees – be consistent
• Give the employee adequate and documented warnings that they will be fired unless improvements are made
• Conduct a sound exit interview with a witness present
• Do not discuss the circumstances surrounding the termination with anyone other than the employee to avoid a defamation/character claim
• Consider offering a termination package that the employee may receive upon executing and delivering a release of liability to you.
  
  Tip: If you are asked to give a letter of recommendation, or are called upon by a prospective new employer, or headhunter, for a person who was fired, either don’t say anything or just confirm the position held and dates of service. Anything else could lead to trouble.