Relationships | Contracts | Dismissals
Double Diamond Law advises and represents a wide variety of individuals and companies in regards to non-unionized, employment issues. Most commonly, we deal with the various issues revolving around the hiring of employees and the termination of employment contracts. Our clients range from senior executives to service industry workers; from professionals to government employees; from large corporations to sole proprietorships.
COMMENCING THE EMPLOYMENT RELATIONSHIP
For the Employer: Our service starts at the beginning stages of the employment relationship, drafting individualized and broad-based employment contracts, including confidentiality, non-competition, and severance agreements. Remember, it is much more challenging to enforce provisions of an employment contract if it is signed after the employee has commenced working. So, do not delay this process. If certain terms are not dealt with explicitly, employers may find themselves relying on the Courts to settle any disputes. We encourage being pro-active so that the company can better predict the outcome of any dispute or disagreement, and to avoid costly litigation down the road.
The Employment Standards Act sets minimum standards for compensation and conditions of employment in the Province. These standards must be adhered to and so human resources staff should be very familiar with the requirements of this legislation. If the employer does not have such a staff person, then we recommend consulting with a lawyer to ensure that the Employment Standards Act is being followed. Failure to do so may invalidate parts of the employment contract and may result in a complaint to the Employment Standards Branch.
For the Employee: A contract is meant to be a mutually acceptable arrangement. As an employee, you should consider your options carefully before signing any employment agreement. We want you to make sure that you understand what you are agreeing to, so that you do not have regrets when things do not progress as originally hoped.
TERMINATION OF THE EMPLOYMENT CONTRACT
Many issues arise upon termination. Most people are familiar with the term “severance” but many do not understand where it comes from. Generally, there is an unwritten term in every employment contract that the contract cannot be terminated without reasonable notice being given, or pay in lieu of notice – also known as “severance”. This applies to both parties, although the length of notice for each will likely be different. However, if there is just cause, the employment contract can be terminated immediately, without any notice at all. We caution though, that each situation depends on the individual circumstances, including whether there is a specific term in the contract dealing with termination which may override the general principle. To know for sure, you should always discuss the contract with a lawyer before acting.
You should also be aware of the other issues that arise upon termination such as Employment Standards requirements, benefits continuation, human rights complaints, employment insurance claims and vacation pay.
For the Employer: In general, just cause can be challenging to establish without a well documented case against the employee. Just cause can result from the culmination of a number of incidents of misconduct, or sometimes, just one egregious act. In many circumstances, the employer is expected to warn the employee and impose less serious sanctions for misconduct before relying on the drastic remedy of termination. Each case will depend upon its own circumstances. Accordingly, keeping detailed records of any form of misconduct will assist if the employer finds the need to terminate in this fashion. Before dismissing an employee for cause, we recommend that the company consult with a lawyer to determine whether cause exists or can be established if the matter proceeds to Court. We also recommend consulting a lawyer to develop an exit strategy for the employee in order to minimize disruption to the workplace, and to maximize the ability to handle the matter in a dignified, non-confrontational way.
If the employer wishes to terminate the contract without cause, there are a many different ways to achieve this. Much will depend upon how much notice is required and whether the employer wants the employee to work for some or all of the notice period. To best determine the applicable notice period and which strategy to employ, we recommend consulting with a lawyer. We also recommend consulting a lawyer to develop an exit strategy for the employee in order to minimize disruption to the workplace, and to maximize the ability to handle the matter in a dignified, non-confrontational way.
For the Employee: Put simplistically, employers have just cause to terminate your employment if you breach – fail to abide by – the employment contract. Typically, this requires a number of acts of misconduct, or a very serious single act of misconduct, before termination with just cause is justified. In instances such as occasional tardiness or inattention, the employer would normally be expected to first give a warning, as well as the opportunity to remedy the failings before firing the employee. As well, an employee cannot be fired simply because business is bad or their services are simply no longer required. Notice of termination or severance should be given in these circumstances.
However, if an employee steals from their employer, lies to their employer, or demonstrates extreme insolence, the employer may be within their rights to terminate with just cause. With just cause, the employer does not have to provide any notice or pay any severance.
If your employer does not have just cause to fire you, you must be given reasonable notice, or compensation in lieu of reasonable notice. This could be described as an appropriate period of time to prepare for the end of the employment relationship. Depending on the type of job, the length of employment, your age, and the opportunities to find similar employment, it can be as long as 12 to 24 months. During this period, you are owed your salary and the value of your regular benefits. Depending on how it is paid, the amount of income tax owing will vary. To find out more about income tax liability and severance pay you should consult with your lawyer. If you do not receive reasonable notice or compensation in lieu of that notice, then you have been wrongfully dismissed.
In British Columbia, the minimum standards for termination compensation are found in the Employment Standards Act. The standards range from one week’s pay after three months of service, up to eight week’s pay after eight years or more. However, these are just minimum standards, so you may be entitled to much more compensation by virtue of the law of wrongful dismissal.
Constructive dismissal is a complex concept. Simply put, it is a wrongful dismissal that occurs without the employment contract being overtly terminated. It occurs when the employment contract has been breached in a significant way as a result of a change in the employment relationship. The most common example is when an employee is demoted. In some circumstances, the employment environment has become so unbearable due to conditions put in place by the employer that the Courts have decided that the employee was constructively dismissed.
There are no exact definitions of what does or does not constitute a constructive dismissal as each case depends upon its own circumstances. As well, and most importantly, a constructive dismissal does not automatically entitle the employee to stop working. These are complicated situations which should only be handled with the benefit of legal advice. If you think you have been constructively dismissed, consult a lawyer before acting.