Stuart Rudner here with another Rudner Law video employment law update.
So today I want to try to clarify some of the terms that we use in the world of employment law relating to dismissals. Fired, let go, laid off, terminated, furloughed, dismissed, turfed. Those and many more terms are often used interchangeably, but it’s important to understand the different legal scenarios and requirements so you can understand your rights as an employer or an employee. The reality: layoffs, as we often talk about, are temporary.
In 2020 I heard the term furloughed more often than I had in 20 plus years of practice. Prior to that I only heard furloughed when talking to clients from countries like the UK. If your employer ends your employment, that is a dismissal and there are only two types of dismissal in Canada: with or without cause. The difference is that if there is just cause for dismissal, you don’t get any notice, any pay, any severance. If there is no cause, if it’s a dismissal without cause, then you do. When people talk about being fired they usually mean being dismissed with cause. When they talk about being let go they’re usually talking about someone who is being dismissed without cause, which brings up another source of common misconception.
What are you entitled to when you’re dismissed without cause? We discussed this in much more detail on our website and on other posts but we often hear people talk about severance or termination pay, or pay in lieu, etc,. The reality in a dismissal without cause situation, which is the vast majority of dismissals in Canada, the employer has the choice of providing notice of dismissal, or pay in lieu, or a combination of the two. It shocks many people that there is nothing unlawful about giving someone notice of dismissal or working notice, which literally means that the employee is told that their employment will end in the future but until then they have to continue working. Of course that’s not always practical. Most dismissals involve some sort of pay in lieu of notice, which gets even more complicated because there is statutory termination pay, pay in lieu of notice pursuant to common law, which is often referred to as severance, and in some jurisdictions, like Ontario, statutory severance pay in isolated circumstances.
It’s really important to understand what applies in a given situation to understand your rights and your obligations. So pay in lieu of notice can be paid as a lump sum, or a salary and benefit continuance. We often hear the term garden leave which refers to situations where someone is being paid and continues to receive their benefits but they’re not required to work. That is essentially a form of pay in lieu of notice. It does conjure up a lovely image of someone sitting in their garden drinking tea and tending to their plants but the bottom line is they’re still an employee, they’re still being paid, and if they go work somewhere else they’re effectively resigning, but that is their pay in lieu of notice.
So in summary, it’s always interesting to hear the many different terms that people use when referring to the termination of employment and I will invite anybody watching this to tweet to @rudnerlaw with any of the more creative terms that you’ve heard in relation to dismissals or terminations. But no matter what you call them, if an employer permanently ends someone’s employment, that’s a dismissal or a termination. It can be with or without cause, although the majority are without cause. If it’s temporary, then we’re talking about a temporary layoff not a dismissal. If you are dismissed without cause, which can include things like constructive dismissal or even a temporary layoff that exceeds the permissible time frame, then you’re entitled to notice or pay in lieu, or a combination of the two.
Now many people come to us confused because they don’t understand the difference between termination pay or severance pay, or layoff or dismissal. The bottom line is that whether you are an employer or an employee, you really want to make an informed decision when it comes to these really critical incidents which can expose you to significant liability or cause you to leave a lot of money on the table. If you’re the employee and you don’t understand your rights, as I often say, if you think you might need an employment lawyer, you probably do, so feel free to contact us by email, by text, by phone, or using our online form. However you do it, make sure you get proper information before you make a decision.
Thanks for tuning in, have a great day.