Terminations are a difficult time for everyone involved. They are often emotionally charged and stressful for all parties. For employers, they are one of the most strictly legislated aspects of employment. Unfortunately, those who try to rush through the process can end up with costly mistakes. It’s crucial that employers understand all aspects of termination and prepare for one long before termination is even considered. This requires both planning and accurate execution of that plan. When done correctly, employers can keep their workplace compliant, conduct the process relatively smoothly, and prevent fallout with the terminated employee and the remaining workforce. Keep the following considerations in mind so you can prepare for the next termination meeting.
1. There are different types of terminations
There are several types of terminations, each with its own requirements. Employees could be terminated because of deliberate misconduct, also known as termination with cause, in which case employers must ensure each step of their progressive discipline process is accurately documented and that they did their due diligence when arriving at their decision to terminate. Employees could also be terminated without cause, meaning that the employee is not at fault for the decision. Termination decisions could be related to a shortage of work based on organizational restructuring or permanent layoffs caused by work reductions. Employers must ensure they meet the legislative and contractual requirements in every termination decision.
2. It all starts from the beginning
The termination process begins long before the employee is even considered for potential termination. In fact, it begins before day one of the employee’s onboarding. Employers must have well-written termination clauses in their employment contracts to ensure terminations go smoothly and do not adversely affect the organization. Termination clauses must provide at least the minimum legislative requirements, including any required benefits, and must not infringe on any employment standards. Employment contracts should also have a probationary period clause that explains how the employee’s probationary period limits the employer’s notice obligations upon termination. It’s a good idea to seek legal advice on all your contracts.
3. You’ve got to watch what you pay
If an employee is terminated without cause, employers must consider which is appropriate for the situation: notice or pay in lieu. Working notice means providing the employee you terminate with a future date they will no longer be employed, and expecting the employee to work until that date. The date must meet legislative minimums, as well. Pay in lieu of notice, also known as termination pay, is given when someone is terminated and dismissed from employment immediately. Employers have to ensure the pay equals what the employee would have earned for the time they would have worked if you gave them notice.
In some cases, employers must also provide severance pay. Severance pay is distinct from termination pay, and the obligation to pay it varies across jurisdictions. It is meant to compensate workers for the value of their tenure and the loss of seniority they will experience due to the termination. However, severance pay is not required in all termination situations.
4. You may owe additional entitlements
You should also consider whether you need to give common law entitlements when terminating without cause. Common law varies by jurisdiction, and you’ll need to compensate the employee sufficiently. What is considered sufficient varies and requires consideration of other factors, such as the employee’s age, years of service, or the nature of their employment. Additional entitlements owed to the employee may also be found in the termination clause of the employment contract.
Every termination is unique. Employers should consider every possible outcome and the best approach for each situation. Most importantly, employers must ensure they remain compliant and follow through on all legislated minimums and requirements. To learn more about navigating terminations, and much more, request a demo to see how HRdownloads can support you and your business with our policy templates and Live HR Advice.