March 5, 2003by Israel Foulon LLP
Things to keep in mind when terminating an employee
Once an organization has decided to terminate an employee, there are a number of factors to consider. Failure to observe these points may result in unnecessary litigation and poor morale and productivity for those left behind in the workplace.
Decide on the termination package
By law, every termination of employment must be clear, concise and confirmed in writing. Among other things the letter should set out the effective date of the termination.
If the employment is terminated without cause, regardless of the package being offered, the statutory minimum should be paid immediately in full.
You should also consider the following:
- determining if the terms of termination are governed by an employment agreement;
- providing salary continuation on a regular payroll basis for the period of reasonable notice;
- providing an incentive provision for securing new employment;
- continuing benefits during the period of reasonable notice;
- determining whether the employee has a right to convert any benefits to an individual plan;
- providing relocation counselling;
- reimbursing reasonable legal fees;
- providing a letter of reference;
- covering outstanding commissions, bonuses and profit sharing;
- identifying any outstanding loans or cash advances that have been made to the employee; and
- paying any unused vacation time and pay.
Typically if the termination is for just cause, no severance package should be offered. Employers should seek legal advice to determine if they have just cause to terminate an employee.
The termination meeting
Ensure the meeting is held in a private location.
Hold the meeting in the employee’s office, boardroom or meeting room. This allows the employer to control the duration of the meeting and to leave the meeting at will. The employee will be able to remain in one place and will not have to face other employees in the halls.
There is no consensus regarding the best day of the week to conduct a termination meeting. The termination should be done early in the week, which will allow the employee time before the weekend to come to terms with the decision and to obtain legal advice if required. It’s a good idea to have the meeting either just before lunch or late in the afternoon so the employee can depart without having to face co-workers.
At least two people from management should be present for the meeting. The employee’s immediate supervisor should lead the communication. It may also be useful to show that senior management agrees with the decision to terminate.
In the meeting itself get right to the point by telling the employee his employment is being terminated. A clean break is often in the best interest of both the employee and the company. The meeting should take no more than 15 minutes. If the termination is for cause, specify the reasons concisely but do not go into a list of shortcomings.
If a severance package is being offered to the employee, carefully explain the terms. Emphasize the support being provided such as financial support, relocation counselling, a letter of recommendation and co-operation on references. Provide the employee with two copies of the severance letter and a release. Explain when the employee should respond to the offer and to whom the response should be communicated to.
Avoid re-hashing or arguing and explain that the decision is final but agree to meet again in a few days to discuss it further if the employee wishes.
The employee must be instructed to return all company property in his possession. The company should specify what must be returned and by what date.
The employee should not be pressured to clear out his office immediately. A mutual time may be arranged outside of business hours to complete this task.
The company should determine whether there are any expense accounts outstanding and advise the employee to submit an expense claim at his earliest convenience.
The employee should be advised whom to contact at the company with questions relating to the severance package.
- accept the employee’s agreement to the severance package during this meeting;
- accept a signed release during this meeting;
- discuss other employees and their futures;
- become emotional, make jokes or appear uncaring; or
- engage in a detailed discussion regarding performance issues if the employee is being terminated for poor performance.
After the termination meeting
Everyone who attended the meeting should make notes about what happened and what was said. These notes should be dated and signed.
Somebody should be assigned the task of speaking to the employee’s immediate associates as soon as possible after termination. They should be told of the decision without recriminations, blame or detailed reasons. Mention what support is being provided, such as financial support and counselling to assist the employee in his job search efforts.
Discuss how the employee’s former responsibilities will be handled and discuss how his incoming phone calls will be answered and how client or customer contacts will be notified of the departure. This is particularly delicate for terminations where cause is alleged for fraudulent or similar acts. One employee should be responsible for answering reference calls. Care should be taken on what is relayed to the caller. An internal memo should be circulated to other employees.
For external announcements a list of all of the employee’s outside contacts should be created. Either telephone or visit the contacts who are important to the company. Act quickly to avoid misinformation and rumours.
When preparing the employee’s reference letter, only include information the organization feels comfortable with. An employer should not misstate the virtues of the employee as this may open the employer to legal action by a subsequent employer. Where a positive letter of reference cannot be provided, an employer can still provide a letter confirming dates worked, position held and salary.
Prepare and forward the employee’s record of employment within five days of the last day of work. If the employee has not responded to the severance offer by this time, typically the employer will want to pay the statutory minimum entitlement to avoid a complaint.
Consider whether it is necessary to change the locks to your premises or computer access codes.
By applying these steps, organizations will be in a position to effectively and efficiently manage a termination and reduce the legal and business exposure that can accompany a termination.
Peter Israel is the senior partner in the Toronto law firm of Israel Foulon LLP – Employment and Labour Lawyers. He can be reached at 416-640-1550 or firstname.lastname@example.org. A version of this article originally appeared in the Carswell publication, Canadian Employment Law Today.