As an employer, it is essential to effectively manage terminations. While each termination is unique, the following employee termination checklist serves as a general reference tool for the termination of an individual’s employment.
- Determine the Type of Termination
A. With Cause
Termination for cause is an extremely high threshold for employers to meet and is reserved for terrible workplace misconduct. In order to assist with any termination for cause, note any instances of progressive discipline, for example, an escalation from verbal warnings, to written warnings, to performance improvement plans.
B. Without Cause
If an employee is terminated without cause, the employer is required to provide the employee with either (1) working notice of termination, or (2) pay in lieu of notice pursuant to the applicable legislation.
- Calculate the Statutory Notice Period Owed to the Employee:
Federally regulated employment is governed by the Canada Labour Code, R.S.C., 1985, c. L-2 (the “CLC”). The basic calculation of the statutory notice period under the CLC is as follows:
- 2 weeks’ notice or pay in lieu of notice; and
- Severance pay (if applicable) in the amount of the greater of (i) the number of years of completed service x 2 days, or 5 days’ wages.
i. In Ontario, the legislation governing the employee’s relationship is the Employment Standards Act, 2000, S.O. 2000, c. 41 (the “ESA”). The basic calculation of the statutory notice period under the ESA is as follows:
Notice of termination or pay in lieu; and
|Years of Employment||Notice Required|
|Less than 3 months||None required|
|3 months to less than 1 year||1 week|
|1 year to less than 3 years||2 weeks|
|3 years to less than 4 years||3 weeks|
|4 years to less than 5 years||4 weeks|
|5 years to less than 6 years||5 weeks|
|6 years to less than 7 years||6 weeks|
|7 years to less than 8 years||7 weeks|
|8 years or more||8 weeks|
ii. Severance (if applicable):
(a) Number of completed years worked (up to 26 weeks maximum); and
(b) Number of completed months of employment, divided by 12
C. Note: Potential Common Law Notice Obligation
As part of the employee termination checklist, check for common law notice obligations, if any. An employee may be entitled to common law notice of termination unless the employee’s employment contract restricts this entitlement. Common law notice is determined by considering multiple factors, including age, years of service, position, and the availability of similar employment.
If you wish to provide the employee with an increased payment in excess of the minimum statutory entitlements, it is recommended that this increased payment be described as an “additional payment”, as opposed to “common law” pay.
- Obligations Pertaining to Benefits
A. Determine what benefits are required to be continued for the employee, and for what period of time, keeping in mind the statutory notice period and the requirements under the employee’s employment contract and/or benefits plans.
B. Consider whether there are any conversion rights regarding any of the employee’s benefits.
- Additional Items that May be Offered Upon Termination
- (i) Outplacement services; and/or
- (ii) Letter of reference or letter confirming employment.
- Restrictions on the Employee Regarding Post-Employment Activities
- Return of Company Property
Examples of company property include a company vehicle, laptop, cell phone, and credit card.
- Termination Letter
An extremely important part of the employee termination checklist is the termination letter. Make sure to include the above-mentioned points in a summarized letter to be provided to the employee upon termination.
It is advised that the employee execute a release upon termination which relinquishes the employee’s right to make any future claims against the employer relating to their employment or the termination thereof.
- Removal of Employee Access
This includes the removal of any access tools to the building, computer network, and company databases.
- Final Paycheque and Record of Employment
The employee’s final paycheck should account for any compensation owed to the employee, including accrued paid time off, bonus and/or commissions pay, and reimbursement of accrued business expenses.
Prepare and file the Record of Employment upon termination.
The information set out above is not intended to be taken as legal advice or an opinion. For specific legal advice relating to your matter, you should refer to employment lawyers. If you have any questions regarding the information contained in this checklist, please do not hesitate to contact us online or call us at (416) 640-2667.