Next, an employer should consider whether the employment relationship is provincially or federally regulated. This is important because employers that are federally regulated are governed by the Canada Labour Code. Provincially regulated employers are governed by provincial legislation in respect of notice, severance and other legal obligations. The distinction is important because the law as it applies to federally regulated employers under the Canada Labour Code differs in important respects from that which apply in most provinces. For example, the Canada Labour Code “unjust dismissal” provisions significantly restrict an employer’s ability to terminate without cause similar to a unionized workplace. If an employer is unsure how the employment relationship is regulated, legal advice should be sought.
3. Legal obligations flowing from terminations for cause
If proven, an employer can lawfully terminate an employee’s employment with immediate effect, for cause. A termination for cause does not require the employer to give notice or to pay any amount in lieu of notice. However, the threshold to prove cause is high. The onus rests with the employer to prove that the conduct occurred and that the conduct caused a fundamental breakdown of the employment relationship. Generally speaking, for less serious forms of misconduct, an employer must first warn the employee and give them an opportunity to correct the conduct. It is therefore important to seek legal advice if an employer is unsure about whether conduct is serious enough to warrant a termination without notice. An employee can challenge a termination for cause and be awarded an amount of damages equal to what the employee would have been paid had the termination been done without cause.
4. Legal obligations flowing from without cause terminations
Generally, an employer can lawfully terminate an employee’s employment at any time by giving notice to the employee that the employment relationship will terminate at the end of a specified notice period. This is referred to as “working notice”. Alternatively, an employer can terminate the employment relationship immediately and instead pay the employee an amount that represents the salary and benefits that would have been paid to the employee had the employee worked during the notice period. The obligation to give notice is an implied term of every employment contract. If an employer does not comply with its notice obligations, it will be exposed to wrongful dismissal claims for damages equal to the amount of notice that should have been given.