Many employers have policies about termination, and specifically about what an employee is entitled to if terminated without cause.It is a good idea to try to manage the cost of terminations, but it needs to be done properly to be effective.
Oliver v. Sure Grip Controls is a recent case where a termination policy was reviewed. The employer tried to limit its liability by reference to the policy set out in the employee handbook. The employer had gone to the trouble of having the handbook reviewed and signed by the employee, but the handbook included this underlined statement:
I understand that the Sure Grip Controls Inc Management Team Handbook is not a contract of employment and should not be deemed as such.
The court decided that the employer, by its own words in the handbook, had defeated its argument that the handbook limited the employee’s rights on termination.
It is not clear where the statement came from, but we often see such statements in employment policies that originate in the United States. There, such a statement is used to ensure that employment remains “at will” with the employer retaining the right to terminate an employee at any time without notice or compensation. That does not work for Canadian employers where the obligation is to provide reasonable notice in the event of termination without just cause. That obligation can only be modified by an enforceable contract that meets minimum employment standards set by statute. In other words, a Canadian employer that wants its termination policies to be binding should not have anything like the statement above.
It is possible to have a policy that manages an employer’s liability for termination without just cause, but it is always better to have a clear contractual provision to that effect. You can find a discussion of these issues in our 2013 Client Conference materials here.