It might be necessary to terminate an employment contract, even when you’re just starting out. Since your HR team is not yet in place to guide you, here are some points you might want to consider before going ahead with your decision.
1. Progressive sanctions
Dismissal is the final sanction. Unless you are dealing with serious misconduct, you must notify your employee about any breaches and give him the opportunity to correct them before considering this option. You must also assess if the breaches are voluntary or involuntary, i.e., outside the employee’s control. If voluntary, for example, being late numerous times without valid reason or insubordination, you must first provide oral and written warnings, followed by suspensions (where appropriate) before deciding to dismiss. The court will review the progression of sanctions to determine whether the employer gave the employee sufficient tools and time to remedy his conduct. Keep a record on-file!
2. Some useful information to gather before deciding to dismiss
You should know and/or obtain the following in order to assess the risks involved in deciding to terminate an employment:
- The employee’s years of service
- The hiring circumstances – did you solicit the employee when he had a stable, paying job?
- The importance of the position held and responsibilities
- Details about the employee’s total remuneration
- The “real” reasons for termination and the evidence in support of these reasons:
- Serious reasons/serious misconduct?
- With or without cause?
- Abolition of the position?
- Restructuring?
- Is there a contract of employment or written modifications to the conditions of employment?
- Is the contract for a fixed or indeterminate period?
- Is there a clause regarding severance pay in the event of termination?
- Is there a non-competition or non-solicitation clause?
3. Recourse after dismissal
Under the Act respecting labour standards (hereinafter the “LSA”), an employee with more than two (2) years of uninterrupted service can file a complaint under section 124 LSA for dismissal without good and sufficient cause. A labour tribunal that finds in favour of an employee can order that the employee be reinstated and order the employer to pay the wages lost between the date of dismissal and the tribunal’s decision, which roughly translates into a period of at least one-and-a-half years. Compensatory indemnities may be added to this minus any income earned by the employee since the dismissal. In short, the financial impact can be rather significant!
Note, however, that just because an employee does not have two (2) years of uninterrupted service does not mean that he cannot file other complaints under the LSA. The employee has several other recourses, with similar financial risks, at his disposal, such as an action for prohibited practices (s 122 LSA) or psychological harassment.
Furthermore, an employee can always decide to file a complaint under the Civil Code of Québec in the absence of reasonable notice of termination. Below is a table summarizing the different recourses available to an employee:
4. Reasonable notice or indemnity when terminating employment
There are minimal notices or indemnities in place thereof under the LSA. However, under the Civil Code of Québec, an employer is also obliged to provide a reasonable notice or indemnity when terminating a contract of employment without serious reason. Such notice is based on the employee’s years of service, duties, age and remuneration. If you decide to pay an indemnity that exceeds the minimum prescribed by the LSA, we recommend that you have the employee sign a full release and discharge waiving any present or future claim the employee may have against the business. Prepare your termination of employment documents properly so that you are protected.
5. Check whether a non-competition or non-solicitation clause applies
A non-competition clause in the employment contract does not apply if you terminate the contract of employment without a serious reason. The employee, however, remains bound by his duty of loyalty to the employer and cannot, for example, make derogatory comments in public about the business so as to harm its reputation.
6. Schedule a formal employment termination meeting
Now that the employee’s file has been well prepared, make sure you take the proper steps to inform him that his employment is terminated.
Invite the employee to a meeting, preferably held in the presence of another person. Document the meeting and provide the employee with a termination of employment letter. You should treat the employee with respect and good faith, both during and following the meeting, regardless of the reason for terminating the employment.
7. Issue a certificate of work and record of employment
Once the employment contract is terminated, the employee can request a certificate of work that describes the nature and length of his employment, the start and end date of his duties and the name and address of your business. The certificate of work is not a letter or recommendation discussing the employee’s skills. Remember that you must also issue a record of employment within five (5) days of terminating the employment and pay careful attention to the reason you provide for termination!
8. Refrain from disclosing information about the employee’s work performance when providing references to potential employers
Unless you have the employee’s express consent in writing, you cannot provide information on the quality of his work performance or the reasons for termination. Some of this information is considered confidential personal information and you could find yourself facing an action for damages.
Conclusion
Terminating an employee’s employment is not easy. To avoid embarrassment, make sure you are well-prepared and have complied with the law and best practices. Our labour and employment law team is available to guide you through this process and we encourage you to consult us and discuss how best to handle your affairs!