I want to be fair to my employees but don’t want to be taken to the cleaners when I have to let someone go. How do I protect myself?
Canadian employment law requires a hotel or restaurant operator to give reasonable notice, or compensation in lieu, when terminating an employee without cause. Cause can include theft, insubordination, breach of trust and other situations that leave continued employment untenable. It does not include economic downturn, corporate restructuring or the voluntary elimination of a position.
Courts consider a wide range of factors when deciding what is reasonable. This often produces unpredictable outcomes and exposes employers to significant unexpected costs, if not handled properly.
To avoid that uncertainty, it’s best to agree on an employee’s severance entitlement in advance and to include this in the initial job offer.
The employee’s entitlement can be based on whatever he would have earned during a specified number of weeks or months, a mathematical formula or a fixed amount. It can represent a golden handshake or something far more modest. It cannot be less than the minimum amounts set out in provincial employment standards legislation, otherwise the parties are free to agree on whatever arrangement they want.
The more modest the package, however, the more it will be scrutinized by the courts for flaws or inconsistencies that would allow it to be set aside. As with all legal agreements, care in drafting employment contracts is critical.
For more resources on Labour Laws in Canada, visit hsrdc.gc.ca.
About Len Polsky: Len has over 27 years of civil litigation experience, including mediation, trial and appellate work. He has appeared before the Supreme Court of Canada, Alberta Court of Appeal, Northwest Territories Court of Appeal, Alberta Court of Queen’s Bench and the Northwest Territories Supreme Court.
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