Frequently Asked Questions
TERMINATIONS FOR EMPLOYEES
To put it simply – getting fired stinks. Even if you saw it coming, there’s almost always a feeling during that termination meeting that the rug is being pulled out from under you. We understand that it’s a tough blow, and we’re truly sorry that you’re having to go through this.
Our job is to protect your rights throughout this process. Too often we see employers offer their employees inadequate or insufficient exit packages because they bet that you won’t do exactly what you’ve just done – call a lawyer. There are certain things that employers owe you if they are letting you go, and other things which they should do but often don’t without a little prodding from a lawyer.
Here are the top questions that we routinely get about workplace terminations:
If you’ve come to us to review your exit package and then hire us to represent you, the first step that we take is to write to your employer and let them know that you have hired us as your lawyers. That means two things – the deadline that they imposed on your replying to their offer goes away, and they will now communicate directly with us instead of with you.
In most cases our first step is what is known as a ‘demand letter.’ That’s a detailed letter that we will write on your behalf (and you will of course review) that sets out your position on your termination, your circumstances, and what we believe that you should be entitled to receive. From there the employer or their lawyers will usually respond with a similar letter or a phone call, at which point we can begin back and forth negotiations.
While we are not afraid to file a claim (sue), we rarely advise that as a first step. In most cases even if the employer is not reasonable then their lawyers are, and we often can make great headway with negotiating, or looking at an early mediation. If they are not being reasonable at all though, we will gladly discuss your litigation options and next steps with you to see what you would like to do next. Remember – we advise you, but you are always in the driver’s seat.
The first thing that happens even before we have our first consultation is that we review your written employment contract (if you had one) and any other relevant paperwork that you had signed during your work to determine if you and your employer had agreed what you would be owed if your employment was terminated. If you did have a written employment contract, we will read it very closely to see if it was valid, and if any of the limitations it imposed were legally binding.
If you had no written contract, or we believe that your written contract was not legally binding, we assess your case based on judge-made law and cases of other people who have been in similar scenarios. The law looks at 4 key factors – your age, how long you were with the employer, the nature of the work that you were doing, and your likelihood of finding something new. This is all a rough analysis of how long it might reasonably take you to find new employment. We say that calculating this number is an art, not a science, but we have some helpful tools that we use to support our assessment, such as the questionnaire you filled out prior to your consultation which provides us with extremely helpful data. Learn more about that here.
The answer to this question is partly a financial one, and we cannot give you financial advice. We can however (provided you authorize us to do so in writing) connect with your financial advisors, and work together to make sure your package is set up in the best way possible for your personal finances.
Both amounts are based upon what we call a ‘notice period,’ or how long it would reasonably take you to find similar employment. The lump sum pays out that amount of your earnings into one payment, whereas salary continuance stretches it out as regular salary payments, as though you were still on payroll for the entire period. Depending on the length of your notice period there may be tax implications (earning a large amount of income within a tax year instead of spreading it out) and other financial considerations that you will want to weigh.
From our perspective, a lump sum generally will not have any conditions attached to it, which could let you retain that income while seeking a new job earlier. It also guarantees your payment amount, and may be more tax-effective depending on your circumstances. An offer of salary continuance will likely come with a ‘claw back,’ wherein you will have to let the employer know as soon as you’ve found new work, and once you are re-employed you will likely have to forfeit 50% of the remaining amount. Your employer is not supposed to provide you a windfall, but they are responsible for ‘keeping you whole’ until you find something new.
Yes, you can apply for EI as soon as you are let go, and your employer will send your Record of Employment directly to Service Canada so you do not need to submit it in person.
However, there are two major things to think about with this answer. First, EI will not pay any money while you are receiving severance payments from your employer. Even if you agree to a lump sum settlement that represents X number of months, you cannot start collecting EI until that time period has run out.
If you are still negotiating, and were hoping to collect EI in the meantime, speak with us first. We understand that you may be dependent on having a source of income to cover your necessities, but collecting EI can add a complicated wrinkle to your settlement negotiations, and possibly delay your payout depending on how the employer decides to proceed. You can start the application process early, but speak with us before you make any claims.
Yes, it very likely would. Not only are these sorts of comments never acceptable, but they are protected by human rights legislation. Human rights codes across the province are laws that protect employees from being discriminated against based on personal characteristics such as their age, race, place of origin, sexual orientation, disability, etc. While comments about these areas are generally unacceptable, if they were made in connection with your termination then it is important to let us know right away so that we can ask more questions.
If these sorts of comments were made, the onus is on your employer to prove that they had nothing to do with your termination. They will have to prove that they had a legitimate business case to terminate your employment, which is often an uphill battle. Otherwise you may be looking at a human rights matter, which may change the direction of how we push forward with your legal case. Learn more about that here.
Many people use the phrase ‘constructive dismissal’ without knowing what it really means. A constructive dismissal is where your employer has decided on their own to make a significant and substantial change to the terms of your employment contract without you agreeing to the change. In other words, they have decided to stop playing by the agreed-upon rules, and so you’ve effectively been let go without being told those exact words.
This means that if you are formally terminated and offered an exit package, that is not a constructive dismissal. Also, not every change that an employer makes to your work meets the threshold of a constructive dismissal. If your hours or pay are slightly reduced, this may not meet the legal test for constructive dismissal. If you agree to the change, this also will rule out a constructive dismissal. Remember this needs to be a significant change, and one that you do not agree with, at which point we can advise as to your next steps. Learn more about constructive dismissal here.
The short answer is yes – you should be paid out these amounts, partly on account of the law in some provinces, and partly on account of how judge-made law has viewed employees who have been terminated.
Some employment standards legislation requires certain payments for employees who have been let go. Ontario’s Employment Standards Act, for example, stipulates that an employee’s extended benefits must continue for at least the length of the notice period outlined within that same law. However, recent cases have taken a broader view when it comes to things such as bonuses. In short, the law states that an employee should be ‘kept whole’ throughout the entire notice period, whether that’s a shorter time as outlined in their contract, or a longer period based on some of the factors outlined above.
Ultimately some of the moving pieces can be complicated if you are no longer working there. For example, some benefits providers may refuse to continue coverage for an employee no longer on payroll. If you are negotiating your package though then it will really come down to dollars and cents, such as an amount added to your package in lieu of discontinued benefits.
Just cause, or ‘just cause for summary dismissal’ as it’s formally known, is like the capital punishment of employment law. If your employer feels that you have done something seriously wrong, or behaved in a way that was so out of line with their standards, then they may have tried to send you out the door without an exit package.
What employers often don’t realize, though, is that the legal standard for cause is very different than what they think constitutes cause. Courts do not take kindly to an unwarranted allegation of just cause, and employers can actually be penalized for acting in bad faith in how they ended your employment. Also, there is strong case law that says unless an employee’s conduct was truly unimaginable, they should at least be entitled to their minimum amounts under employment standards legislation.
When we work with a client who has been terminated for cause, we work closely with them to determine if the employer actually had just cause to terminate (hint: they usually didn’t). We will then incorporate this into our strategy to help you determine the appropriate next steps. Learn more about just cause here.
A reference letter can be a helpful tool in helping you find your next job. Unfortunately though, if you left your role in the heat of the moment, it may not have been the first thing on your mind.
Rest assured that we have not forgotten about it. When we negotiate an employee’s exit package, we work to include a positive reference letter as part of the deal. We also try to make sure that any phone calls made from a future employer are to someone you approve of, and that they will echo the positive tone of the letter. Many companies are hesitant to provide much detail in reference letters (a fear commonly seen in the US) but we push hard to make them happen to your satisfaction.
Once you have been let go from your job, you are responsible under the law for looking for new work, and your former employer is legally responsible for keeping you whole until you find something comparable to what you had before. The challenge, though, is what if you find something that’s not comparable?
The reality is that it depends on the details. If you find a similar role but the pay may be a few dollars less or the benefits are not quite the same, this will likely still be considered re-employment, and will count towards whatever money your former employer may owe you. If however you can only find something at a minimum wage, or a significant demotion that you have to take in order to simply survive, the law says that no, this minimal income should not be held against you for the purposes of calculating your severance.
The same goes for starting your own business. If you start up a new entrepreneurial venture and become successful, then congratulations! At that point you should not need to rely on your employer’s support because you’re earning your own income. If however your business earnings are minimal, then the court will likely not count it against your severance entitlement.
The statute of limitations in law generally says that you have two years to file a civil lawsuit against your employer. If you are looking to make a complaint through the human rights tribunal then that timeline may be shortened to one year (unless there are extenuating circumstances), and if your complaint involves a union then there may be other shorter timelines as well.
However, there is one major hiccup to all of this. If you sign off on your exit package, you have almost certainly signed a release stating that you promise not to take any legal action against your former employer. That is effectively the trade-off for you receiving any extra money. In fact, the release usually says that if you were to file a claim after signing, they could use that release as what we call in law an ‘estoppel,’ or a direct blockade against your legal action moving forward. This is why it is always good to seek legal advice before signing off.
If only we had a crystal ball! Every employment file is different, and depending on how the employer wishes to proceed will determine our advice on your next steps. If we are able to negotiate something within a series of letters and phone calls with the employer’s lawyer, we may be able to resolve your case in a few weeks to a few months.
When it comes to cost, we will work with you to provide realistic expectations at every step. Obviously costs can vary depending on how long your matter takes to resolve, but we have a number of alternate fee arrangements available that may make it easier for you to make decisions.
If however things take a challenging turn and you decide to litigate, or move through the human rights tribunal, these can be much lengthier processes with a lot of moving pieces at play. Rest assured though that even in those processes there may be room for negotiation and for bringing about an earlier settlement. We will always keep you up-to-date on your timelines and what the next steps might look like.