Episode 1: Responding To A Termination
You have just received your marching orders at work. What do you do now? In this podcast, Bram Lecker, Principal of Lecker & Associates discusses exactly how employees should respond to a termination. He offers insight on for-cause and not-for-cause terminations and addresses the rare circumstances where employers can let go of employees without any severance. He provides examples of what constructive dismissal looks like, speaks about the difference between severance and notice pay and when you might be entitled to more than the minimums, along with the “extras” often overlooked by employers.
Transcript: Responding To A Termination
Bryan Goman: “The Employee Rights Podcast” is presented by Lecker & Associates, employment lawyers representing Ontario workers for over 35 years.
Today on the podcast, we’ll be speaking with Bram Lecker, principal of Lecker & Associates about responding to a termination. I’m Bryan Goman, and this is The Employee Rights Podcast.
Bram, an employee’s just been let go from their company, and their employer wants them to sign a termination agreement. What should they do?
Bram Lecker: The most cardinal rule is to sign nothing before you’ve spoken to somebody who is experienced, knowledgeable in the matters, either a lawyer or a human resource professional. It’s an important document. Generally, people who are terminated without cause have rights. You don’t want to sign it away unless those rights are being met.
Bryan: If you’ve already signed the document, do you have any recourse or rights at that point?
Bram: A difficult situation because most judges, mainly if it ever comes to it, will look at the document and be governed by it. If the document, the settlement offer, for example, does not meet the minimums under what’s called the Employment Standards Act, it can be voided.
Bryan: We’ll get into the minimums in just a little bit. An important distinction here is whether someone is terminated for‑cause or not‑for‑cause. Can you talk about the difference and how this affects your rights to compensation?
Bram: Somebody who is terminated without cause is essentially an innocent party before the courts. It’s not a question of am I entitled to something, or am I entitled to severance? It’s how much.
The only exempt to that is somebody who has been terminated for‑cause, which involves gross and serious breaches of the employment relationship ‑‑ theft, misappropriation, drunkenness, perpetual lateness, insubordination, and in some cases, lack of performance.
If any of those things are found, and the employer has a burden to prove those things, then that voids the obligation for the employer to pay severance. But it’s difficult for the employer to prove.
Bryan: There’s also something called constructive dismissal. Can you explain this?
Bram: Constructive dismissal is when the employer unilaterally makes a change or creates a set of circumstances which would compel the employee to leave their employment. Basically, breaches the terms of employment, breaks the deal.
There’s three areas. Changing the person’s employment, in other words, taking an executive and making them sweep up the floors the next day. It’s a gross example, but a unilateral change without the person’s consent.
Secondly, creating a toxic work environment. Such as a person comes to work every day, they’re being yelled and screamed at, and intimidated. They get sick in going to work.
Thirdly, a situation where the employer’s decided, unilaterally once again, to reduce the person’s remuneration. Not just their salary, but any aspect of it, to a value of more than 10 to 15 percent. Any of those things constitute a constructive dismissal. Therefore, it’s the same as a termination.
Bryan: In a not‑for‑cause…
Bram: In a not‑for‑cause, yes.
Bryan: We mentioned that in a not‑for‑cause dismissal, you’re entitled to severance pay, but there’s also something called notice pay. Can you talk about the difference between these two?
Bram: Severance and notice can be the same. Severance means the payment of money in return for the termination of employment as part of the package.
There’s two types of notice ‑‑ working notice and notice in lieu. Working notice is the fact that you’re given notice to termination, but you stay at the job for a period of time until the notice period expires, which is relatively rare.
Notice in lieu is paying a person out their salary in a structured way, either week by week or month by month, until the expiry of the notice period. Severance is a one‑shot lump‑sum payment that’s made, or there can be a combination of all three.
Bryan: We mentioned earlier there’s minimums that the Employment Standards Act stipulates. What are the minimums for notice and severance?
Bram: The minimums under the provincial legislation ‑‑ every province has essentially the same ‑‑ range from one week per year of employment to in the circumstances of somebody being there for five years or more.
In a large company which has over 2.5 million payroll, an additional 1 week per year of employment to a maximum of 26. The best you can get out of the Employment Standards, and we call them minimums, are 8 plus 26 weeks.
Bryan: As we mentioned, these are minimums. Are there scenarios where an employee who’s been terminated can expect more than the minimum?
Bram: Yes. If it’s a non‑cause dismissal, once again, in addition to the minimums, of course, look at how long it’s going to take somebody to find a comparable position based on three factors in the main.
There are other minor factors, but three factors in the main of their age, length of service, and type of position.
The longer you’ve been with a company, the more senior you are and the older you are, it’s said that it’s going to take longer to find a position. Therefore, you are required to be given more notice to protect your income until you find comparable employment. That’s the law of wrongful dismissal, and it’s an addition to the statutory minimums.
Bryan: What if you’re not offered any severance at all?
Bram: If you’re not offered any severance at all, it’s probably because either your employer has alleged cause, which is, as I said before, it’s difficult to do. The employer has to, for example, by way of warnings to you establish that you’re doing something which is irredeemably breaching the employment relationship.
Or the employer feels that you’re going to go from one employment to the next, so therefore there’s no loss of income. They take the chance that, well, Jim’s being fired, but he’s going to find a job tomorrow, so it doesn’t matter.
Or the employer’s taking the position that you’re not an employee and that you’re an independent contractor. All those three scenarios have a very weak legal background. It’s very, very difficult for an employer, for example, to not have to pay the minimums under the Employment Standards Act as a start.
Bryan: What about extras beyond severance? What extras can be negotiated by an employment lawyer?
Bram: In addition to the minimums and the wrongful dismissal amounts ‑‑ I’ll going to give an example of a middle‑level manager who’s in their 40s and they’ve been with the company for 20 years. Generally speaking, that person’s going to get anywhere from 10 to 12 months in that scenario.
We would generally look at their remuneration, which is usually illustrated in their T4 from the year before, and add on any other collateral benefits, such as health benefits, such as car allowances. Even in certain cases, fitness memberships, golf club memberships. Anything that they derived by virtue of their employment.
Let’s say they were supposed to take a course or an upgrade that the employer was paying for in those 12 months. All of that in all those circumstances, the employee has to be made whole. The courts will compensate the person for the loss of the value of those benefits.
Bryan: Beyond those, is there anything else that we should be considering?
Bram: These days, based on the corporate culture, let’s say from Silicon Valley or European‑based companies, will often be inclined and they are encouraged by the courts to offer things like retraining or outplacement assistance.
That involves the employer providing monies or subsidies for these services which will help somebody to find a job. The theory is that the faster the person finds a job, of course, the less they’re going to need to be compensated. It’s quite an enlightened and modern way of thinking of it. It’s a good strategy.
Bryan: Are lawsuits against your employer expensive? Are there any processes that can reduce the resources that an employee needs? Because as we know, often an employee is just a single person going up against, sometimes, a very large corporation who may have access to all kinds of legal services and things like that. Are there any processes that work in favor of the employee?
The easy way to explain that is justice delayed is justice denied. The courts in Canada have sanctioned procedures. We call them summary judgement applications or motions, where in a straightforward case, a non‑cause dismissal where all we have to prove is the person’s age, length of service, and type of position.
We could make application to the court on a summary basis. It usually involves a hearing within four to six months of the time we open up a file. This enables a judge to make a determination to how much compensation notice should be awarded.
In most situations, that will occur around the time the person has been able to find a job, which of course makes them whole without significantly suffering pain as a result of loss of their employment.
Just around the time the person has been able to recapture some of their income, a judge has come out and said, “This is what the person’s entitled to.” It’s a very effective and efficient, and therefore inexpensive way to determine these disputes. In many cases, employers will agree to it.
There’s also mediation procedures where the parties get together in an organized scenario before this summary judgement to try and resolve the matter. Between the two, it’s fairly quick. Therefore, in most circumstances, it’s a lot less expensive.
Bryan: Great. Thanks a lot, Bram.
Bram: You’re welcome.
The Employee Rights Podcast is presented by Lecker & Associates.
Podcast produced by Bryan Goman; Transcription by CastingWords.
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