Discipline and termination

State procedures

Are there state-specific laws on the procedures employers must follow with regard to discipline and grievance procedures?

For employees that are not unionized, there is no specific statutory requirement relating to discipline or grievance procedures. However, given the fact that employees with two years of service or more can file a complaint for unjust termination, employers are generally well advised to apply the rule of progressive discipline and impose a sanction that is proportional to the offence committed. With respect to the termination of employment based on the employee’s poor performance, the employee must have been given a reasonable opportunity to meet the required standards of performance and must have been formally advised that their employment may be terminated. Generally, a unionized employee who is dismissed may file a grievance contesting their dismissal. This grievance will generally be heard by a single arbitrator. If the grievance is granted, the employee will likely be reinstated with full back-pay. 

At-will or notice

At-will status and/or notice period?

There is no concept of ‘at-will’ employment in Canada. In terminating the employment of an employee without cause, an employer must provide notice of termination or pay in lieu of notice to the employee in accordance with the Labor Standards Act and, in the case of non-unionized employees, in compliance with the Civil Code.

The employer must comply with any contractual severance or termination pay provisions contained in the relevant employment agreement. Notwithstanding the terms of the employment agreement, the employer must also ensure that each employee receives at least the minimum statutory notice entitlements under the Labor Standards Act. The minimum statutory notice to be given to each employee being terminated under Labor Standards Act is as follows:

Number of years of uninterrupted service

Required notice

More than 3 months, but less than 1 year

1 week

1 year or more, but less than 5 years

2 weeks

5 years or more, but less than 10 years

4 weeks

10 years or more

8 weeks

However, certain employees are not subject to the minimum notice of termination periods, including:

  • employees who have been employed by the employer for three months or less;
  • employees whose contract for a fixed term or for a specific undertaking expires;
  • employees who have committed a serious fault; and
  • employees for whom the end of the employment contract or the layoff is a result of a superior force.

Moreover, under Québec law, the employer must also ensure that the contractual indemnity provided to the employee is reasonable.

In awarding damages in respect of an employer’s failure to provide reasonable notice, courts have consistently established the reasonable notice to be within a range between the minimum standards set out under the Labor Standards Act, from one week to 24 months, with a recent court decision in Québec having granted as high as 27 months.

Accordingly, what is reasonable depends on a consideration of all the relevant factors in each case, which may include:

  • the type of work done and the position of the employee;
  • the degree of expertise or training involved;
  • the length of service;
  • the age of the employee;
  • the level of responsibility (ie, supervisory or managerial, whether employees report to the individual and the capacity to make company decisions);
  • the availability of alternative employment in the industry for the employee;
  • the nature of the industry;
  • custom in the trade or business regarding termination;
  • any special circumstances in which the work is carried on; and
  • whether the employee was induced or solicited from their former employment.

Employers often seek to design and adhere to a formula or guideline for the calculation of reasonable notice. However, assessing reasonable notice is not an exact science and should be done on a case-by-case basis.

Following the termination of employment, an employee has an obligation to mitigate whatever losses or damages that they may otherwise suffer. However, the onus of proving that an employee has not mitigated their damages rests on the employer in all subsequent litigation.

In awarding damages in lieu of reasonable notice, the courts have not limited employee claims to the wages and salary that they would have received, but instead have in certain cases allowed other damages that flow from a termination. Accordingly, in addition to regular wages and salary, the following items should be considered:

  • loss of salary increases;
  • vacation pay;
  • health, disability and other insurance plans;
  • pension benefits;
  • bonuses (if part of the contract and not discretionary);
  • stock option plans;
  • profit-sharing (if part of the contract and not discretionary);
  • company car (or at least that portion attributable to personal use);
  • reimbursement of expenses;
  • loss of commissions;
  • overtime;
  • dividends on shares in the company if they are compulsorily reacquired on termination;
  • club memberships; and
  • other non-discretionary payments to which the employees would be entitled.

In light of the foregoing, it is recommended that any indemnity in lieu of notice or reasonable notice that is remitted to an employee which is above the statutory minimum be conditional on the execution of a full and final release and discharge in favor of the employer.

What restrictions apply to the above?

An employer may not terminate an employee for a prohibited ground – for example, based on:

  • an employee’s leave for reason of illness, maternity leave, parental leave or any other leave provided under the Labor Standards Act;
  • the fact that an employee exercised a right under a law; or
  • the fact that an employee filed a worker’s compensation claim.
Final paychecks

Are there state-specific rules on when final paychecks are due after termination?

The Labor Standards, Pay Equity and Health and Safety Commission recommends that final pay checks be issued immediately at the time of termination, or at the latest at the pay period immediately following the termination. In the case of a temporary layoff, a termination indemnity must be paid no later than six months after the date of layoff.