Planning Ahead to Deal With Termination Without Cause

by Brian Bell - Pace Law Firm: When a formal offer of employment is presented, termination is probably the last thing either the employer or the employee wants to think about.  But in this global  economy, there are no guarantees of employment until retired.   A considerable number of employers believe that on a termination “without cause” (ie. due to downsizing, business  downturn, and so on) all they need to do is provide the minimum as set out in the Employment Standards Act: 2000, Ontario.  By doing so, it might well be said that the employer is risking the fact that the costs of any wrongful dismissal will be less than they need to otherwise  pay out.

In a recent issue of Lawyers Weekly, author David Lublin points to a recent decision where the court with respect to the termination of a long serviced employee, awarded punitive damages in addition to full common law reasonable notice of 22 months (Brito v. Canac Kitchens [2011] O.J. No. 1117).

The employee had been provided with the Employment Standards minimum at the time of his termination without cause.

I have also had clients who after 20+ years of employment with the same employer receive the bare minimum that is required by the legislation.  And in this current uncertain economy, this thinking will likely continue.  So what to do?

In any offer of employment, companies should consider incorporating specific clauses dealing with termination without cause.  The offer of employment should spell out what the process would be should the employee be let go.  Essentially, such an approach gives the employee knowledge of what termination pay they might receive should they be terminated, and the employer is able to manage costs and risks based on the agreement between the two of them.

Neither party likes surprises. Neither party likes to spend unnecessary resources.  Planning ahead allows both the employee and the employer to manage their objectives.