Because there are so many moving parts to be managed – administrative, emotional, and financial – dismissing an employee can be one of the most challenging tasks an employer faces.
By contrast, employers who consider the issue of severance in advance can ease the transition by creating certainty and reducing the scope for conflict. The tricky parts, of course, are determining how much notice to give and/or severance to pay your employees and making sure their employment contracts are properly drafted.
BC Employment Standards laws set out the minimum notice or monetary compensation you must provide when dismissing an employee (unless the employee is fired for “just cause”). However, many employees are entitled to much longer periods of notice / higher amounts of severance under the Canadian common law doctrine of wrongful dismissal. Even where an employee receives his or her maximum compensation under the Employment Standards Act (ESA), he or she may claim additional notice or severance through the courts.
Unfortunately for business owners, there is no one formula the courts follow to calculate common law severance – two different judges faced with the same set of facts might award different amounts. Because of this, many employers and employees often settle without going to court.
Obviously, the better option is to include a clear, unambiguous severance clause in all your employment contracts. When properly worded, such clauses comply with the ESA, limit your financial exposure, and reduce the likelihood of a legal challenge by the employee. Learn more about how we can help with your employment contracts here.
If you’ve decided to dismiss an employee, or you’re considering it, but are unsure about their rights and/or your responsibilities, we can help – whether or not a written contract is in place. And for employers wanting to adopt Sustainable Employment™ workplace practices, we can support you in being fair and respectful, even in the end-phase of the employment relationship.
Read our Sustainable Employment Guidelines for Ending the Employment Relationship here.