You are an employer running a business in Alberta. After considerable thought, or after a workplace incident, you have decided to “let go” of that problematic employee. How do you do it and stay on the right side of the law? First of all, contact a lawyer specializing in employment law in Alberta. Termination or dismissal from employment starts well before the termination meeting and requires careful consideration of possible consequences and proper documentation leading up to the dismissal. 

To get you started, here are some quick details on dismissing an employee in Alberta.

Several preliminary questions need to be asked:

• Is it a dismissal for cause or without cause? See below.
• Are there Human Rights concerns? See below
• Is there a written contract?
• Is this a “lay-off”? The Employment Standards Code has specific rules for laying off an employee.
• Jurisdiction questions:
  • Is the employment relationship governed by Alberta law?
  • Is it a Federally regulated workplace? This article addresses non-union employees who are not subject to the Canada Labour Code.
  • Is it non-union or union? This article deals with non-union terminations of employment. If the workplace is unionized, terminations are governed by the collective agreement and labour law statutes.

Introduction

Employment law is contract law with several unique statutory and common law influences such as the Employment Standards Code, the Alberta Human Rights Code, and others. Start by reviewing the written employment contract, if there is one. Even without a written agreement, a contract exists between you (the employer) and the employee. It is also important to be familiar with relevant company policy or an Employee Handbook, if you have one, as well as the employee’s file. 

Just Cause or Without Just Cause

As a general rule, just cause for dismissal is a last resort option due to the significant consequences to the employee and increased liability risks to the employer. If there are sufficient grounds to justify a termination for cause, the employee is not entitled to contractual damages for notice of dismissal, although the employee remains entitled to unpaid wages and benefits up to the date of dismissal. Serious misconduct can justify termination without notice in some circumstances – just cause is fact-specific and the employer bears the burden of proving it if challenged. Performance problems, poor fit or isolated errors do not automatically amount to cause. Progressive discipline, clear expectations and reliable documentation are often important when misconduct is not severe enough to justify immediate dismissal. 

Without Just Cause terminations still require care

An employer may end employment without cause at any time for any reason, subject to several important restrictions. As the employer you are empowered to make difficult decisions about the future of the business including downsizing or replacing inefficient employees. The employer’s primary contractual obligation is to provide contractual or reasonable working notice of termination or pay in lieu of that notice. If proper notice is provided, you have complied with your contractual obligations to the employee and there is nothing wrongful about the dismissal.  How much notice and how to provide that notice is a complicated assessment and seeking legal advice is recommended. A critical part of assessing the amount of notice to give the employee includes the following:

• Is there a written employment contract with an enforceable termination provision?
• Is there a statutory protected leave of absence, such as parental leave, medical leave and others.
• Are there human rights considerations such as race, age, gender and others?
• How will the dismissal of this employee affect morale in the workplace and will the loss of this employee create any gaps in skills or knowledge.

Human rights and protected leaves

Timing matters. A termination connected to disability, pregnancy, family status or another protected ground can create human-rights exposure. Employers should also check whether the employee is on, returning from or eligible for a job-protected leave. A legitimate business reason does not eliminate the need to assess discrimination and accommodation issues.

The meeting and follow-through

The termination meeting should be brief, respectful and consistent with the written letter. Having more than one person in the meeting is recommended. In a without-cause dismissal, the employer is not required to give a reason for the dismissal, depending on the situation. A with-cause dismissal is a more sensitive process requiring preparation. Questions about what to say in the meeting, whether a letter of reference will be provided, the employee’s access to computer systems and the return of company property should all be considered prior to the meeting. Employers should plan final pay, end or conversion of benefits, company property, data access, records of employment, confidentiality obligations and internal communications. Employers should also consider equity benefits such as stock options. A carefully managed and respectful departure can reduce liability and risk to the employer.

A Practical Checklist

Before taking the next significant step, consider the following:

• Preserve the contracts, correspondence, financial records and other documents that explain the relationship.
• Write down the key dates while they are still fresh, such as ROE submission and final pay.
• Obtain legal advice where the amount, risk or long-term consequence is material.
• Have a plan in case the employee rejects the severance offer or initiates a legal action.

Frequently Asked Questions

Can an Alberta employer terminate without cause?

Yes, but with important conditions and restrictions. The answer depends on the employment agreement, the reason for termination, statutory requirements and any human-rights or protected-leave issues. Employers should assess these before finalizing the termination.

When can an employee be terminated for just cause?

Just cause for dismissal is a legally sensitive matter requiring advice from an employment lawyer. In general, just cause involves serious misconduct by an employee, often with dishonesty or a pattern of behaviour contrary to the continuation of the employment relationship. It is a matter of degree and if the employer is unable to justify a with-cause dismissal, additional damages may be claimed by the dismissed employee.

Do employers have to give working notice?

This is a qualified, yes. The employer is contractually required to provide working notice, meaning the employee continues to work over the notice period. The employee is not entitled to a lump sum severance payment, unless the employer chooses to provide payment instead of working notice. It is in the employer’s discretion to provide working notice or payment instead of notice, but this discretion is subject to the terms of the employment agreement, the Employment Standards Code, Human Rights Code, and other applicable laws.

What documents should be reviewed before termination?

It is ideal for an employer to begin documenting an employee’s file well before a termination of employment, particularly when performance or misconduct is involved.  Reviewing the employee’s file and noting important events or dates will guide the decision on notice. The employment contract, if any, is a key document. As well as any relevant company policy. Payroll records should also be reviewed. Have a clear understanding of statutory requirements including employment standards, issuing final pay, and the Record of Employment.

Can an employee on medical leave be terminated?

If you are faced with this situation, it is important to get proper legal advice before dismissing an employee on a leave of absence. An employer is entitled to terminate an employee subject to the conditions of a statute-protected leave of absence. An employee dismissed during a medical leave raises the possibility the employee was dismissed due to a disability which is a protected ground under the Alberta Human Rights Code. Depending on the situation, there are options for an employer wanting to dismiss an employee on medical leave.

Should the employer ask for a release?

A Release has the benefit of contractually concluding an employment matter and bringing finality and peace of mind for the employer. By signing the Release, the employee is agreeing that the matter is resolved and that they will not bring any further legal action against the employer. While it is good practice to have a Release in a severance negotiation, there are situations when requiring a Release is not proper. For example, requiring a Release when the termination clause in the employment contract does not contemplate a Release, may have the effect of invalidating the termination clause. In summary, including a Release depends on the situation.

What should happen to benefits after termination?

Every situation needs to be evaluated based on the terms of employment, the terms of the benefits provider, and the nature of the dismissal. Often benefits end on the date of termination based on the terms of the benefit plan. In some situations, benefits may be continued or may be transitioned to other plans. It is important to understand the effect of a termination of employment on each specific employment benefit and to advise the employee of their options at the time of dismissal. As a starting point, speak to the benefits provider, review the employment contract and review company policy

How Getz Collins and Associates Can Help

Getz Collins and Associates has offices in Calgary and Strathmore and serves clients throughout Alberta. The firm’s employer practice can help clients review documents, understand legal options, negotiate practical solutions and, where required, pursue or defend formal proceedings. For advice about a specific matter, contact the firm to arrange a consultation.