Canada: Managing Terminations: Q&A

Thank you to those who attended the Aird & Berlis Workplace Law webinar on September 26, covering the topic of Managing Terminations. We were thrilled to have over 3600 registrants participate. A number of important follow up questions were asked, which generally revealed some common areas of confusion for employers: performance management & progressive discipline; working notice periods; and continuation of benefits during the notice period. We endeavour to shed some light on those topics below.

Performance Management & Progressive Discipline

Q: If there are instances of different “bad behaviour”, can you progressively discipline an employee even though the conduct differs?

A: Yes – different kinds of misconduct can be cumulative. However, employers should be careful to distinguish between misconduct, carelessness and poor performance. Cases of poor performance, but not culpable behaviour, could require different preliminary actions, such as training or re-assignment, whereas misconduct generally lends itself to warnings and discipline as a tool to improve/correct behaviour. Employers, particularly those in unionized environments, should avoid “re-starting” the progressive discipline chain based upon the character of the misconduct.

Q: How long should a Performance Improvement Plan (“PIP”) be?

A: There is no rule as to what length of a PIP is appropriate. However, PIPs can last 30, 60 or 90 days, depending on how long it will likely take to improve the specific issue. The more time the PIP has taken, without improvement, the more reliance could be placed upon it to justify termination (however, the PIP will have to be lengthy and commensurate with the employee’s length of service if used for this purpose).

Q: How many warnings have to be given, and do they have to be in writing?

A: Though there is no hard and fast rule as to the number of warnings, for discipline to be progressive, there must be multiple steps in the process. A single warning letter is not likely to constitute progressive discipline. Ultimately, the company will be in the best position to show it has considered alternatives before termination (if no single event has justified termination).

While warnings should ideally be face-to-face, the most important step is to document your progressive discipline actions. Accurate and comprehensive documenting is important, especially if later faced with defending a wrongful termination claim or grievance for unjust dismissal. It will be helpful to consult counsel to develop a consistent internal policy and discipline cycle that best suits your organization.

Q: Are there special considerations for warnings given to employees who have cited mental health issues?

A: Yes. In such cases, the employer has to be mindful that discipline must be free from discrimination, and from potentially relying on events that were not culpable, but due to the employee’s medical/mental health circumstances. Employers should consider strategies such as referring the employee to an employee assistance plan and obtaining information from the employer’s treating doctors before considering imposing discipline.

Working Notice Periods

Q: Do all conditions of employment have to remain the same during a working notice period? What happens if an employee “behaves badly” during a working notice period?

A: It is in an employer’s best interest that all conditions remain the same during the working notice period, with strict enforcement and clearly defined exceptions to the normal policies and rules. This becomes especially important when an employee with an upcoming termination date may feel justified in a lax treatment of the employer’s policies, or worse. Generally, working notice periods are most successful when expectations are clearly laid out, such as an adjustment to attendance expectations to allow the employee time to attend interviews. This will preclude a finding that the employer effectively engaged in a constructive dismissal during the working notice period and invalidate the notice period granted.

In a separation package, it is prudent to remind the employee that they not only continue to be subject to the employer’s policies, but that they may be terminated for cause in the event of a breach of those policies, disparagement of the employer, or other misconduct that would justify the immediate termination of their employment. Further, the separation package should be conditional on the employee remaining employed and in good standing during the working notice period.

Notice Periods and Continuation of Benefits

Q: Which benefits have to be continued during the notice period?

A: Notice period obligations include the payment of whatever benefits the employee was otherwise entitled to, including benefits such as group health care and dental premiums, life insurance, and short and long-term disability insurance. When creating a separation package for an employee who has been terminated without cause, the package must include the continuation of benefits throughout the statutory notice period.

Uncertainty arises, however, when insurance companies refuse to continue to insure an employee after they are no longer actively employed, and after the end of a statutory notice period.

Absent obtaining a release from a departed employee, the employer can, in certain circumstances, become the de facto insurer for benefit coverage, including becoming liable for LTD if the employee does become disabled during the common law notice period (if/as applicable). For example, in Egan v. Alcatel Canada, the former employee was successful at court in obtaining long-term disability payments (in addition to common law notice payments) from her employer for an illness that occurred during the common law notice period, but for which the insurer had not covered. While it is still permissible for an employer to contract out of providing benefits during the common law notice period (so long as coverage is maintained for the statutory minimum notice period), it is recommended that either a clear release is obtained and/or arrangements are made with the insurer regarding common law coverage.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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