“… there is never really a good time to terminate an employee…”

So says Adjudicator François Bastien, in rejecting a claim for moral damages under the Canada Labour Code.The Case

In Bank of Canada v. Laflèche,  Ms. Laflèche, a senior representative of the Bank of Canada for the Quebec region, was terminated January 18th, 2010 at a company meeting in Ottawa.  In addition to pay in lieu of notice she sought moral damages, arguing that her termination was delayed until the January 18th company meeting in Ottawa specifically for the purposes of terminating her publically in front of all her colleagues, and humiliating her.

There was debate as to whether the meeting could have and should have taken place before Christmas, as the evidence suggested the decision to terminate was made in early December.

The bank testified that it never terminates an employee at Christmas time, as this is considered insensitive to the employee.  Adjudicator Bastien accepted this testimony, and it was part of the reason why he found no ulterior motive by the bank in scheduling the meeting for January in Ottawa.  The Adjudicator found that the bank followed its “normal procedure” in terminating Ms. Laflèche and the place and time of the meeting did not merit an award of moral damages.

Moral Damages and the timing of termination

Moral damages are generally only awarded if the employee experiences mental distress from the manner of termination.  Such distress must be more than the “normal” distress faced by a terminated employee.

The comment from Adjudicator Bastien, that there is never really a good time to terminate an employee, implies that moral damages are unlikely to flow automatically from a Christmas termination.  Courts and adjudicators assess all of the circumstances surrounding the termination and if the timing is the only factor, absent any other factors, it is unlikely that moral damages will be awarded.

Terminations at Christmas

Many human resource professionals believe it is heartless and Scrooge-like to terminate an employee during the 2 week period before Christmas.  It is perceived by some as an insensitive action.  From a liability perspective, there has always been some concern that terminating an employee at Christmas – or on their birthday, or when it is known that a major life event is about to occur – might result in an award of moral damages.

Do Adjudicator Bastien’s comments mean Christmas is now open season for terminations?

Certainly not.

While it is true there is never a good time to terminate an employee, and while Adjudicator Bastien’s comments can now be cited to support that statement, all it takes is one sympathetic judge or adjudicator to decide that a Christmas time termination was insensitive.  While it may not automatically give reason for moral damages, there are still other ways for decision makers to show their displeasure, such as awarding a notice period on the upper end of the acceptable range.

That said, if there is good reason to terminate an employee at Christmas – such as behaviour from the employee that simply cannot be tolerated and requires immediate action – the time of year need not be a defining factor in how or when the employee is terminated.

Don’t try to avoid holiday pay through a pre-Christmas termination

Do not make the mistake, however, of thinking that terminating an employee before Christmas, will automatically allow you to avoid upcoming paid leave or holiday pay. An interesting South Australian decision found that employers cannot count on avoiding these payments through a pre-Christmas termination.   In Wanders v. Richard Mining Services PTY Ltd. [2012] SAIRC 46, the South Australian Industrial Relations Court held that an employer cannot avoid liability for approved leave that coincides with a notice period.  The employee was dismissed in early December, and the employer gave him 4 weeks’ notice.  However, the notice period coincided with a shut-down period and several public holidays.  The court held that the employee had been deprived of his annual leave and holiday as it had been incorporated into the notice period.  The employer was ordered to pay the employee for the annual leave as well as the 4 week notice period.

Holiday pay and notice periods in Canada are always affected by legislation and the circumstances of dismissal.  However, if the employee can prove that the primary motive in terminating pre-Christmas was an attempt to avoid holiday pay, a claim for that pay – and perhaps even for moral damages – may succeed.

What to take away

Avoid being Scrooge.  If you can stay away from Christmas terminations, then do so.  However, there is never a perfect time to terminate an employee, and conversely, there is no wrong time, at law, to terminate an employee.  If circumstances require a pre-Christmas termination, execute it as sensitively as possible in the circumstances.  While the issue of moral damages may be raised if the employee files a claim for wrongful termination, rest assured that the time of year will not automatically result in a larger payout if the employee is successful.