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Chapter 21

MCS 3040 Chapter Notes - Chapter 21: Severance Package, Absenteeism, Unemployment Benefits

Marketing and Consumer Studies
Course Code
MCS 3040
Joseph Radocchia

of 5
Chapter 21
Terminating the Employment Relationship
Ending the Relationship
In many cases, the employment relationship ends nicely (retirement, employee resigns to pursue other
position, contract is up etc.)
Implied term in employment contracts that says employer can fire employee without notice for “just
Term is subject to legislation that may give certain types of employees rights in case of dismissal
Implied term that an employer can fire employee w/ reasonable notice as well
Provincial & federal employment standards legislation provides for notice periods
Dismissals for Just Cause
Just Cause: Employee conduct that amounts to a fundamental breach of the employment contract
If there’s just cause an employer can fire employee without notice
It’s Just cause if the employee is guilty of…
Serious misconduct
Habitual neglect of duty
Conduct incompatible w/ duties or prejudicial to the employers business
Willful disobedience in a matter of substance
Serious Misconduct
Serious Misconduct: Intentional, harmful conduct of the employee that permits the employer to dismiss
without notice
Progressive discipline policy: A system that follows a sequence of employee discipline from less to more
serious punishment
Minor infractions may be sufficient to dismiss as serious misconduct if the cumulative effect is
1 act of misconduct may be grounds for dismissal if serious enough
Condonation: Employer behavior that indicates to the employee that misconduct is being overlooked
Habitual Neglect of Duty
Habitual Neglect of duty: Persistent failure to perform employment duties
Important to this ground is whether warnings were issued, whether there was any excuse for the
absence and whether the absence occurred at a critical time for the employer
Hard to establish lateness & absenteeism as grounds for dismissal b/c courts will decide if employee
had valid excuse, whether warnings were given, time was ever made up etc.
Incompetence: Lack of ability, knowledge, or qualification to perform employment obligations.
The substandard level of performance must be evident after employee has been given a
warning/opportunity to improve
Employee can give excuses inadequate training, inexperience etc.
Conduct Incompatible
Conduct incompatible: Personal behavior that is conflicting with employment duties or harmful to the
employer’s business.
Eg. Excepting inappropriate gifts from employer’s clients
Can be conduct outside of working hours as well
Willful Disobedience
Willful Disobedience: Intentional failure to carry out lawful & reasonable orders]
Employer will have to establish that instructions were given to employee that were unambiguous and
that the employee had no reasonable reason for disobeying
Other Causes
May include harassment, disruption of corporate culture, consumption of alcohol/drugs in workplace, & drug
May be excused if…
Conduct was a single act
Conduct was condoned somewhat
Employee had disability
Non-Cause & Near Cause
Its important to note that sometimes what seems to be a good cause for dismissal isn’t
In the absence of just cause, the employer who wishes to terminate an employee is required to give
notice or pay in lieu of notice
Reasonable Notice: A period of time for an employee to find alternative employment prior to dismissal
Determined in relation to factors such as age, length of service, availability of employment and the
status of the employee
Risks in Just Cause Dismissal
Since an employee isn’t entitled to compensation when dismissed for cause, the employee is more
likely to bring suit against employer
Therefore an employer should consider these costs when dismissing an employee for cause
Dismissal with Notice
An employee who has been hired for an indefinite period of time may be fired at any time without
cause as long as the employer gives notice of termination (or pay in lieu)
The period of notice required to terminate an indefinite-term employement contract would either be
the time period agreed upon in the contract, period specified in employment standards legislation, or
reasonable notice
Reasonable Notice Periods
In determining how much notice to give, the primary factors to consider are:
1. Character of employment
This refers to whether the employee held a high-status position in the organization
Rational is that it takes a higher-level employee longer to find alternative employment than lower level
2. Length of Service
A longer-term employee is entitled to more notice than a shorter term employee
Rational is that a longer-term employee doesn’t have the same job degree or breadth of experience as
an employee who has had several shorter-term jobs
Longer-term employee has a smaller range of comparable re-employment prospects
3. Age
Older employees, particularly 50+, are entitled to more notice than young ones
B/c many employers are unwilling to hire older persons
4. Availability of similar employment
The more opportunities available, the shorter the period of notice to which the employee is entitled
This may be gauged by expert opinion of job openings, advertisings etc.
Developments in Notice
Although the above factors are of prime importance in determining reasonable notice, it’s not a complete list.
Other factors that may lengthen notice…
A high degree of specialization
Inducement to join an organization
Company policy
Custom and industry practice
Personal characteristics
Economic climate
Risks in Dismissal with Notice
Calculation of reasonable notice is a task with a lot of uncertainty
Most courts list the factors & then states period of notice without indicating whether 1 factor has been
given more weight than another
Constructive Dismissal
Constructive Dismissal: Employer conduct that amounts to a breach of a fundamental term of the
employment contract
Employer doesn’t have the right to make a fundamental change to employment contract without
employee consent
Fundamental Changes
Fundamental Term: A term that is considered to be essential to the contract
A minor change probably won’t trigger constructive dismissal
The employment contract MIGHT reserve the right for the employer the right to make certain
unilateral changes without triggering a constructive dismissal
Fundamental changes usually include adverse changes in salary/benefits, job function, responsibility,
& the power/reporting structures etc.
Bad Behavior
Although most constructive dismissal cases involve demotions & pay cuts, unacceptable & unethical
practices by an employer may amount to constructive dismissal as well
Humiliating/abusive behavior can also count (eg. Yelling, swearing, threats etc.)
Risks in Constructive Dismissal
A change in a fundamental term of an employment contract can trigger constructive dismissal
Before making changes to an employee’s job, employers need to consider the nature of the change,
whether change is acceptable to employee, why it’s being made, and whether any contractual
previsions permit the contemplated change
Wrongful Dismissal Suits
Wrongful dismissal suit may arise when an employee thinks there is no just cause for their dismissal,
employee thinks they were given inadequate dismissal etc.
Manner of Dismissal
An employer who conducts dismissal “in bad faith” may be vulnerable to additional damages beyond
those required for reasonable notice
The circumstances have become known as The “Wallace bump”
Some other examples of bad faith from supreme court
Refusing to provide a deserved letter of reference
Terminating while on disability leave
Failing to communicate termination decision in timely manner
Communicating false allegations to potential employers
Since Wallace courts have found other circumstances…
Failing to conduct proper investigation prior to dismissal
Conducting termination insensitively
Withholding statutory severance
Escorting employee out of the door
Wrongful Dismissal Damages
Once a court decides how many months’ notice a successful claimant is entitled to, general approach is
to multiply this # by the salary & benefits that the employee was entitled to for each month