Our employment lawyers know that having to terminate employees can be incredibly stressful and sad. Decisions like these impact someone’s job and financial security and most employers do not make them lightly.
But when they do, dismissing employees without following proper rules or law can cost an employer fortunes. Here we talk about some of the most common mistakes employers can make while terminating employees:
Termination Notice Pitfalls for BC Employers: Employment Standards Act
Most employers in British Columbia are familiar with the Employment Standards Act (the “ESA”). It is only natural, then, that when it comes time to part ways with an employee many employers look to the Act to determine how to proceed.
Reading the Act many employers assume that, depending on the length of service of the employee, they only have to provide an employee a maximum of 8 weeks’ notice, or pay in lieu of notice, for a without-cause termination. Incorrect.
Read below for the 3 most common termination mistakes employers make.
With or Without Case Terminations
In BC, most employees are terminated ‘without cause’. This generally means things did not work out for a variety of reasons, the employer is willing to provide the employee with a reasonable sum of money or notice so that the employee can move on.
The ‘with cause’ termination refers to situations an employer can terminate an employee without providing him/her with any money or notice. These situations are rare and generally involve fraud, crime, gross negligence, etc. You can read about wrongful dismissals in BC.
If you’re unsure whether your termination situation qualifies as ‘with cause’ or ‘without cause’, contact YLaw or call us today to protect your business and stay compliant.
This article focused on common mistakes made when an employer terminates employees ‘without cause’.
Mistake #1: The Insufficient Notice Pitfall
Employers should know that the ESA is a set of guaranteed minimums:
- minimum wage,
- minimum vacation pay/time,
- minimum sick leave,
- minimum notice of termination, etc.).
If an employer wants to terminate an employee without cause, AND the employer only wants to provide the minimum notice of said termination, then the employer must have a written employment contract that specifically, and clearly, limits the employee’s notice entitlement to the minimums contained in the Act.
An employer can contract with an employee to provide them with more notice than what is contained in the Act but they cannot contract with an employee to provide less notice than what is required by the Act.[1]
If an employee is not limited to the minimum notice required under the Act, then they are entitled to notice or pay in lieu of notice calculated at common law.
See more on severance pay entitlements.
Visit our page on employment contracts in BC for more insight.
The common law notice period typically runs from 2-4 months of notice on the low end to 24-26 months on the high end.
The employee’s age, length of service, and the availability of similar employment will determine where on that scale an employee falls:
If you’re unsure whether your employment contracts meet legal standards, schedule a consultation with YLaw or call us today to avoid costly mistakes.
Mistake #2: The Unclear Contract Pitfall
It is very important that the terms in an employment contract are:
- As per the specific laws of BC
- Are clear and precise
- There are no vagueness or alternative interpretation
- Special wording is used to ensure the contract is enforceable.
If even one of the terms of the employment contract contravenes the requirements of the Act , then the entire contract could be void which would place the employer at substantial risk.
If the contract is not enforceable, then the employer will not be able to rely on the termination clause that limits the employee’s notice period to the Act minimums. This may result in the employer losing fortunes on severance pay.
Don’t let an unclear or outdated contract cost your business—email or call YLaw to review your employment agreements today.
Mistake #3: The Delayed Employment Contract Pitfall
Many employers bring on employees when they are busy, experiencing significant growth, and need the extra help.
It is not uncommon that in these circumstances an employer and employee may agree on some terms like hours, responsibilities, and pay, and agree that a contract will be signed when the employer has time to get to it. The employee starts working, receives wages, and then at some point thereafter receives and signs a contract from the employer that contains a clause that limits her severance to the Act minimums.
Fast forward 6 years, the employer is now terminating that employee without cause and expects to only have to provide her with the Act minimum 6 weeks’ notice or pay in lieu thereof. Unwittingly, the employer has placed themselves at risk here.
The Requirements of the Employment Contract
An employment contract requires three elements:
- offer,
- acceptance, and
- consideration.
In the situation above, a verbal contract was formed between the employee and the employer when the employee started working. The employer offered work, the employee accepted, the employer received work product, and the employee received pay: a binding contract.
With the delayed written and signed contract, the employee may be entitled to notice or pay as per the common law, which can be significantly more than the ESA.
Explore our employment law services for employers and businesses.
Conclusion on Employee Dismissals or Terminations
The pitfalls above highlight the importance of the following principles for employers:
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Clarity – is that contract doing what it is supposed to do?
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Organization – am I certain I have written contracts for all my employees?
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Timing – when and how were these contracts implemented?
[1] Note – the Act does not apply to certain exempt professions which are described in the Employment Standards Regulations
Contact YLaw today or send us a message to ensure your termination practices and contracts are legally compliant.
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