An employers guide to termination notice periods

As an employer, at some point you will have to end the employment relationship with a worker. It's not always pleasant, but it's an inevitable part of running a business. If not handled well, it could lead to costly wrongful dismissal claims.

One critical aspect of terminating an employee in accordance with employment standards is providing the correct notice period. Notice periods refer to formally informing an employee about the end of their employment (usually in writing) and the period between when the notice is issued and their last day of employment.

In this article, we'll explain everything you should know about notice periods in accordance with the law, why sufficient notice is essential for both the employee and employer and the best practices for managing notice periods to avoid legal risks.

What is the legal framework of notice period for termination of employment?

The legalities of terminating an employee, including providing a notice of termination, depend on the following:

• The employment contract

• Common law notices

• Length of Service

• The employment standards of the province or jurisdiction where you conduct business.

Employment Standards legislation in most Canadian jurisdictions provide that an employee is entitled to receive a certain termination notice period after they have completed a length of service of at least 3-months. Failure to provide termination notice to an employee that is eligible and entitled to receive it may lead to a wrongful dismissal claim against the employer.

It's crucial to be familiar with your employees' rights under relevant legislation and common law. Several factors can influence the notice required, such as the employee's length of service with your company, their age, or how difficult it would be for them to get alternative employment. That's why it's important to have watertight employment contracts with clear, well-drafted termination clauses that explicitly set out the conditions for terminating an employee in line with minimum statutory requirements.

A well-drafted termination clause will take precedence over common law notice and protect you from wrongful dismissal claims that could amount to hundreds of thousands of dollars in damages.

For help drafting a termination clause, BrightHR offers an online database of employment contracts, policy templates, guides and more.

Significance for employers

There are several reasons why it’s important that you know what employment legislations apply to termination of employment. During an employee notice period, you must continue the employee's regular employment during the statutory notice period (the time between issuing a written notice of termination and the employee's last day with the business).

In the last few weeks of your employee's time with you, it's vital to maintain your obligations to the employee, such as continuing to provide their benefits, paying them their regular wages, and being responsible for their health & safety.

You must also ensure you aren't terminating the employee because of a protected characteristic, or your business could be subject to discrimination claims.

How to calculate your employee's notice periods

Calculating notice periods is fairly straightforward. Although notice period as prescribed in employment legislation vary by province, one thing is common between them. The longer an employee has been with your business, the longer the notice period they're entitled to.

As an example let's take a look at the termination notice for Ontario, Mantitoba and Prince Edward Island displayed in the tables below:

For more information on your province's exact termination notice period requirements, check your employment standards. And for any questions you may have it’s best to speak to an employment relations advisor.

Exceptional cases where employees are not entitled to notice periods

In some cases, some employees can be terminated for just cause on the spot without termination notice or payment in lieu of written notice. However, the terminated employee in such situation would be entitled to receive unpaid regular wages and statutory entitlements, such as accrued vacation pay.

If you let an employee, go for just cause, such as misconduct issues like assault, theft or fraud, you would not have to provide them with written notice.

The same also goes for employees who:

• Abandon their job

• Have less than 3 months of employment

• Are being laid off

• At the end of a fixed-term contract

Providing working notice vs payment in lieu (termination pay)

You are not required to allow a terminated employee work their termination period. Their employment can be terminated immediately if you provide them with termination pay in lieu of notice. You pay this as a lump sum or as a salary continuation as you terminate them, which is the same amount they would have made if they worked during their notice period.

The timeframe for making this payment is usually on the next payday after they're terminated or seven days after they've been terminated. Again, it is important to review the employment standards legislation applicable to your jurisdiction as this timeframe varies.

If you choose to go this route, it's best practice to make sure you're paying your employees the correct amount, as any discrepancies in payment can result in employee claims. This is also another area where having a clear termination clause comes into effect. Where the terms are unclear, you could have to pay the employee according to common law notice entitlements, which could go up to 24 months or more.

Similarly, employers must abide to what is provided in their termination clause. Failure to follow the termination procedure set out in the clause or miss the timeframe to provide termination pay may lead to a repudiation or breach of contract claim.

Where an employer breaches the employment contract (termination clause) in the course of the termination period (e.g., the employee is not provided with notice, payments, or other entitlements), this can result in a legal claim for repudiation of the employment contract. Consequently, the employee may be entitled to common law reasonable termination damages.

Best practices for managing notice periods

Parting with an employee shouldn't be challenging or disrupt your business operations. When handled properly, it can result in a smooth and effective transition. Here are some tips to help you manage notice periods:

Plan for the transition period

Sufficient notice periods can be great for your business as they give the outgoing employee enough time to develop a handover process. They'll have enough time to transfer their responsibilities and knowledge to whoever takes on their role and to clear out their information from company systems such as emails and databases.

Treat departing employees with respect

 While they work out their notice period, ensure that the employee is treated with professional courtesy. At the same time, a termination letter should ensure that the employee is expected to maintain a professional performance level, or they could be subjected to disciplinary action and loss their entitlement to termination pay. This will help maintain a positive workplace culture and mitigate a drop in performance in your workforce.

Communicate with team members/other employees

You don't need to explain why the employee is being terminated in detail, but it's important to inform relevant team members and stakeholders that their colleague is being let go. Effective communication helps manage productivity and morale and address any concerns others may have.

Mitigating legal risks with BrightHR

Managing notice periods with professionalism and empathy while ending the employment relationship is essential to maintaining a healthy workplace culture. Parting ways with an employee is never easy, but with the right HR software and support from reliable employment relations experts, you can navigate this process and mitigate lag risks.

With 24/7 access to HR experts, you can be sure you're always acting in line with employment legislation. Plus, with our extensive library of documents, checklists and policies, you'll have no trouble accessing an employment contract with professionally drafted termination clauses to minimize potential legal challenges.

Interested in learning more about how we can support you through terminating an employee compliantly? Book a FREE demo today!