As an employer, it’s unavoidable that staff will leave your company.
However, it isn’t just as simple as their employment coming to an end. To make sure you’re acting lawfully, it’s vital you understand the different types of employment termination.
Failure to do so could cause unneeded stress and anguish for you and your employee, in what could be an already difficult time.
In this guide, we’ll discuss the various types of termination, how to terminate an employee legally, and, the notice period required.
What is a Termination of an Employment Contract?
Termination of an employment contract is when an employee’s work with a company ends. The contract may be terminated by an employee through a resignation, or by an employer through a termination.
In Canada, you’re entitled to terminate an employee’s contract for any reason apart from discrimination. You may also choose to temporarily lay off an employee.
What is a Temporary Layoff in Canada?
A temporary layoff occurs when an employer reduces or stops an employee’s work without ending their employment relationship.
Temporary layoffs often occur when there is a shortage of work or when the employee is seasonal.
Depending on the jurisdiction, the maximum time an employee can be on temporary layoff varies.
Different Types of Termination of Employment Contract
There are various types of termination that you need to be aware of. It’s key that you understand these when you are terminating employment at your company.
- Termination with just cause.
- Termination without cause.
How to Terminate an Employee
When you decide to end someone’s employment, provide them with a termination of employment letter. This letter provides formal notice of your choice to end the employment, as well as any payments or benefits owed to them.
Hold a face-to-face meeting after and explain your reasons for termination. Employees deserve to know the reasons behind your decision.
What is Just Cause for Termination of Employment?
Just cause for termination means there’s legally sufficient reason for terminating employment. The following are reasons for termination of the contract:
- Sexual harassment.
- Workplace bullying.
- Conflict of interest.
- Culpable absenteeism.
- Disrespectful behaviour.
What Constitutes Unlawful Termination?
As an employer, you need to be aware of what can be classed as unlawful termination of an employment contract. Wrongfully dismissing employees could lead to legal claims.
An employee could be considered to be wrongfully dismissed if:
- When an employee is dismissed without receiving the minimum statutory notice of termination or pay in lieu thereof.
- When there is a significant change made to an employee’s job without their consent, as this could result in a constructive dismissal.
Employee Rights on Termination of Employment
You must be aware of your employee’s rights when you terminate their employment.
Alongside the notice period, you can also provide termination pay.
Also known as severance pay, this package is made up of the following:
- Pay through to the date of termination.
- Severance pay (if applicable).
- Any accrued vacation time.
- Any benefits of employment continued through the statutory notice period.
- Any additional payments.
What is the Minimum Period of Notice for Terminating Employment?
The notice required for a termination varies across Canada. Make sure the notice you’re giving matches the province you’re based in.
The Employee Standards Act (ESA) states you can terminate the employment of someone who has been employed for three months or more, providing proper notice of termination or pay in-lieu has been given. For employees with less than three months of service, a notice of termination is not required.
The notice period required is as follows:
- If employed for less than one year but more than three months: one weeks’ notice.
- If employed for one year but less than three years: two weeks’ notice.
- If employed for three to eight years: one weeks’ notice for every year.
- If employed for eight years or more: eight weeks’ notice.
The ESA in Alberta states you may end the employment by either paying termination pay, giving the correct termination notice – or a combination of both. It’s key you understand the notice period for employees:
- If employed for more than 90 days but less than two years: one weeks’ notice.
- If employed for two years but less than four years: two weeks’ notice.
- If employed for four years but less than six years: four weeks’ notice.
- If employed for six years but less than eight years: five weeks’ notice.
- If employed for eight years but less than ten years: six weeks’ notice.
- If employed for ten years or more: eight weeks’ notice.
The ESA in British Columbia states that to end employment, employers can give written working notice, pay compensation or a combination of both. The following are the notice periods required:
- If employed for three months or less: no notice required.
- If employed for more than three months but less than a year: one weeks’ notice.
- If employed for more than a year but less than three years: two weeks’ notice.
- If employed for more than three years: three weeks’ notice, plus one week of notice/pay after each additional year of employment (to a maximum of eight weeks).
Get Help With Employee Termination Today With BrightHR
It’s vital you understand how to act lawfully when terminating employment. Failure to provide the correct notice period could lead to a breach of employment law.
If you need assistance with termination, BrightHR has a handy tool that will make the whole process easier for you.