I want to fire an employee – what are my obligations?
An employer may terminate an employee’s employment at any time by providing notice or payment in lieu of notice, provided there are no discriminatory reasons for the dismissal.
The minimum notice (or payment in lieu of notice) requirements are set out in the Employment Standards Act of BC. After 3 months of consecutive employment an employee is entitled to one week of wages. This is increased to two weeks after one year of consecutive employment, and after three years of consecutive employment, an employee is entitled to one week of wages per year of service up to a maximum of eight weeks. However, these minimum amounts can be altered by three things: the employment contract, common law (law created by the decisions of judges rather than statutes), and cause for dismissal.
Employment Contract
An employment contract is the agreement between the employer and the employee and will take precedent over both the Employment Standards Act and common law. The employment contract can limit the amount an employer owes an employee to any stated amount provided that the amount is equal to, or above, the Employment Standards minimum amount. However, any provision limiting the employee’s entitlement to the Employment Standards minimum must be explicit and clear as to the intention to limit the employee’s entitlement to the minimum amount. If these provisions are not drafted well, they can be unenforceable. As both an employer and an employee it is exceptionally important to ask a lawyer to review your employment contract.
Common Law
If there are no termination provisions in the employment contract, then common law will apply to increase any entitlement above the Employment Standards minimums.
Common law assesses an employee’s entitlement to notice or payment in lieu of notice by considering the Bardal factors. The Bardal factors include:
- the character of the employment;
- the length of service of the employee;
- the age of the employee; and,
- the availability of similar employment, having regard to the experience, training and qualifications of the employee.
A rough rule of thumb is one month per year of employment which is significantly more than the employment standard minimums. However, the amount under common law will be adjusted on a sliding scale based on the Bardal factors. For example, an employee, in an entry level job who has been employed for three years may be entitled to a notice period or payment in lieu of less than three months. But, an employee with a specialized management position who has been employed for three years is likely to be entitled to over three months of notice or payment in lieu. Each case requires an individualized assessment of each factor.
If an employee is paid the Employment Standards minimum without accounting for the common law notice period or payment in lieu, the employee may have a wrongful dismissal action against the employer to make up the difference.
Just Cause or “For Cause”
An allegation of cause for the dismissal may also change the employee’s entitlement to notice or payment in lieu. If there is cause for dismissing an employee, an employer need not provide notice or any payment to the employee. However, a “for cause” dismissal requires serious employee misconduct during an employment contract such that the employment relationship cannot continue or be repaired. This is a high standard and is often not met.
Often employers will allege reasons for the employee’s dismissal, yet still pay the employment standard minimum “in good faith”. Likely, these are cases where the employer does not have reasons for the dismissal that amount to just cause in law. If the alleged reasons for dismissal do not meet the legal threshold for just cause, the employer must provide the employee with the full amount of notice or payment in lieu pursuant to the contract of employment, or common law. A “for cause” dismissal is either established or it is not, an employer cannot use meagre reasons to reduce their obligation to the employee.
In all circumstances where you as an employer is dismissing an employee or, you as an employee has been dismissed it is beneficial to obtain independent legal advice. Each circumstance is unique!