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If you want to fire an employee, you should make sure you do it right.
Every province and territory has an employment standard act
that defines what qualifies as “termination” of employment. A
termination can occur for a number of reasons such as a layoff, firing
or the company going bankrupt.
Constructive dismissal is when an employer makes a significant
change to the terms of employment without the employee’s consent such as
reducing the employee’s work hours drastically. Constructive dismissal,
or “quitting with cause” as it is also known, also happens when the
employer abuses or harasses the employee to an extent where a reasonable
person would not be able to continue to work.
The employer's failure to meet its contractual obligations
distinguishes a constructive dismissal from an ordinary resignation.
These cases result in a claim for pay-in-lieu of termination notice, and
sometimes, depending on the severity of the employer's actions,
In a non-unionized employment context, employee suspensions
often create uncertainty as to whether the employer has authority to
suspend the employee or whether the suspension amounts to constructive
In the Supreme Court of Canada case, Potter v. New Brunswick Legal Aid Services Commission,
the employer suspended an employee with pay indefinitely while the
parties negotiated a buyout of the employment contract just prior to the
employee's return from sick leave. The employee claimed the suspension
constituted constructive dismissal and commenced litigation. The
employer submitted that the employee's actions in withdrawing from
negotiations and suing the employer amounted to voluntary resignation.
The Supreme Court stated constructive dismissal can take two forms:
- a single unilateral act by the employer that breaches an essential term of an employee's employment contract; or
- a series of acts by the employer that, taken together,
show the employer no longer intends to be bound by the employment
The SCC chose not to create a rigid framework for determining
whether a particular suspension is reasonable and justified. Each case
depends on the nature and circumstances of the suspension. However, the
court presented factors to consider when determining if a suspension
under an implied authority is reasonable and justified:
- the duration of the suspension;
- whether the suspension is with pay; and
- whether the employer demonstrated good faith, including the demonstration of legitimate business reasons for the suspension.
An employee who does not receive proper termination notice must
be paid “termination pay in lieu of notice.” Generally, this is
calculated by multiplying the employee’s regular weekly wage by the
number of weeks of notice the employee is owed. For instance, if the
employee is owed three weeks of notice and is only given one, the
remaining two weeks must be paid out.
In addition to termination, an employee may also qualify for
“severance pay”, which is also set out in the employment standards act
and in common law. Severance pay is compensation for an employee’s
seniority and length of service with one employer.