How To Fire An Employee: Employee termination in Canada GUIDE

Payroll Management

As an employer, you may want to know what your specific duties and responsibilities are when you terminate an employee. When it comes to firing an employee in Canada, beyond understanding how a company’s payroll is impacted, employers must understand and accurately adhere to the outlined Canadian employment standards and the human rights legislation.

Employee termination and firing are easily among the most vital components of Canadian employment legislation, covering minimum standards for all aspects, including severance pay and termination notice. The extent of these standards is also based on provincial jurisdiction. Each province and territory has jurisdiction over the majority of employment-related matters. At the same time, certain but not all, workers are protected under federal laws.

Although each province has its specific employment legislation that sets out minimum standards and minimum notice of termination entitlements, most laws concerning minimum standards and minimum notice of termination entitlements are similar.

This quick-look comparison chart lays out the workplace standards across the provinces and can help you understand your requirements under the legislature. This resource provides the mandatory minimum notice and payments required when firing an employee.

Employer Requirements Under the Law

In Canada, an employer can fire employees at any time, for any reason. The Canadian legislation defines Termination With Cause as “when an employee is dismissed for a serious reason related to the employee’s conduct,” where Termination Without Cause is termination for reasons that are not related to misconduct.

Before terminating an employee, it is common practice for employers to obtain legal advice to help them through the process and protect themselves. 

Canadian employers have several factors to consider when determining what is reasonable cause when firing an employee. These include:  

  • Length of tenure or service: Employees that have worked their entire career at one singular employer are entitled to more notice than those who have worked at the same employer for a shorter amount of time. 
  • Age: When an employee is close to retirement age, then they are entitled to more notice. 
  • Availability of comparable employment: The terminated employee may have special considerations for their next job, such as relocating and, therefore, may be entitled to more notice. 
  • The character of employment: If a position is seen as “unique” or demands a higher salary, then it would be more difficult for the individual to find comparable roles. In these cases, employees are entitled to more notice.    

Once an employee has been terminated, companies must comply with the standards outlined within the employment legislation. If you are an employer firing an employee without cause, you are required to provide your employees with a “reasonable” amount of notice and/or severance pay. Remember, you must dispense the appropriate tax slips to your employees. 

Under Canadian law, terminated employees have the right to being treated fairly and with dignity. To ensure a smooth process, employers should have employees read and sign a written contract outlining employment and any information regarding potential termination of the working relationship. 

Don’t forget, there are many different scenarios to consider when you are terminating an employee, including those who are drawing dividends, or part-time employees and contractors.  

Need more help? This great toolkit by The HR Council can help you navigate employee termination with ease while complying with Canadian law. Don’t forget to check out the Knit blog for more information on people management and managing payroll.

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