When dismissing an employee from their job, employers should take care to draft a proper termination letter. A termination letter should describe the reasons for termination and make reference to the applicable legal requirements regarding the amount of notice owed to the employee.

Lack of Transparency in Termination Letters Can Have Legal Consequences

In the case of Russell v. The Brick Warehouse, the plaintiff was a dismissed employee who claimed he was entitled to reasonable notice as established by the common law. He was employed with The Brick for over 36 years and argued for a notice period of 24 months. The plaintiff sought additional notice over and above 24 months due to the extraordinary circumstances of the COVID-19 pandemic.

The plaintiff’s claim was based on the factors for determining reasonable notice at common law. These factors are often referred to as the “Bardal factors” as they were initially set out in the case of Bardal v. The Globe & Mail and are as follows:

1. Length of employment;
2. Character of the employment;
3. Age; and
4. Availability of similar employment for the employee considering their training, experience and qualifications.

The Ontario Superior Court of Justice in Russell found that the Bardal factors supported a notice period of 24 months. The Court further found that the termination letter provided to the plaintiff employee failed to reflect the length of his employment and history of loyalty to the company. It also lacked any statement regarding the employee’s statutory entitlements under the Employment Standards Act if he declined the offered severance pay.

Given the lack of transparency of the plaintiff’s statutory entitlements in the termination letter, the Court awarded the plaintiff $25,000 in moral damages, stating:

More importantly, the termination letter did not advise that if Russell declined the offer, he would be immediately provided with his statutory entitlements under the ESA. I find this to be a serious defect with the termination letter, as it implies employees will know that they can demand their statutory entitlements forthwith upon rejection of these types of offers. This defect reflects a failure by The Brick to deal fairly with Russell. By failing to include this proviso in the termination letter, The Brick was not being honest and forthright with Russell.

In addition to the lack of transparency about the employee’s statutory entitlements, the court also found that the employer also failed in its duties to the employee during termination in the following ways:

• It failed to advise the plaintiff that his employee benefits would be extended in accordance with the statutory notice period, even if he did not accept the employer’s offered severance pay;
• The offer did not meet other statutory requirements, including the amount of vacation pay that would accrue over the statutory notice period; and
• The mental distress suffered by the plaintiff as a result of the lack of fair dealing and conduct of the employer in the termination.

Termination Clauses in Employment Contracts

Employers and employees cannot contract out of the provisions of the Employment Standards Act. As a result, termination clauses within employment contracts must be adequately drafted and meet the minimum standards of the Act.

Termination letters should also reference the relevant rights and obligations set out in the Act and explain the amount of notice owing and provided in detail. Employers face potential liability for wrongful dismissal claims if they are not transparent in their efforts to clearly set out employees’ statutory entitlements to reasonable notice in the process of their termination.

What are my Termination Rights as an Employee?

Under Ontario’s Employment Standards Act, a person’s employment is terminated if the employer:

• dismisses or stops employing an employee, including where an employee is no longer employed due to the bankruptcy or insolvency of the employer;
• “constructively” dismissed an employee and the employee resigns, in response, within a reasonable time;
• lays an employee off for a period that is longer than a “temporary layoff“.

Employees may not be entitled to reasonable notice (or pay in lieu thereof) if they have committed willful misconduct or neglected their employment duties. They may also not be entitled to reasonable notice in cases of temporary lay-offs or where they are on a probationary period of three months or less.

Employees should understand their entitlement to reasonable notice based on the length of their employment as per the Employment Standards Act. They should also be aware of their entitlements under the termination clauses of their employment contracts and the effect of termination on their severance pay and employee benefits.

Contact Grosman Gale Fletcher Hopkins LLP in Toronto for Advice on Reasonable Notice

At Grosman Gale Fletcher Hopkins LLP, our highly-experienced employment lawyers advise employers and employees on termination issues, including wrongful dismissal matters. We help employers draft termination letters that properly set out employee entitlements and reduce the risk of wrongful dismissal litigation. We also review proposed severance packages for employees to ensure their rights are properly represented. To find out how we can help you with your employment matter, contact us online or by phone at 416-364-9599 to schedule a consultation.