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Valid reasons for terminating employment in Canada depend on the employment agreement. Generally, but not in every instance, employers in Canada must provide evidence of ‘just cause’ when terminating an employment contract. This protects the employer from complaints of ‘unjust dismissal’. The reasons that meet just cause for termination range from incompetence on the part of an employee, to neglect of duties or severe misconduct. Individual contracts of employment will often include a termination clause that details what constitutes just cause dismissal.
Provinces such as Ontario, allow for ‘without cause’ termination, meaning that employers can terminate an employment at any time without a reason. Where instances of without cause termination occur, employers are required to give reasonable notice or pay, in lieu of notice.
An employer cannot terminate a contract of employment for discriminatory reasons or to ‘get back’ at an employee who is enforcing rights of employment.
The Canada Labour Code outlines how an employer should go about terminating an employment contract. Certain provinces allow for ‘without cause’ dismissal but most require an employer to explain the reason(s) for a dismissal, i.e. provide ‘just cause’.
Generally, when terminating a contract, the employer should give ‘reasonable notice’ to the employee, usually around 2 weeks in advance of the termination date. An alternative procedure is to offer severance payment, in lieu of a notice period.
Employees who intend to resign should provide ‘reasonable notice’. Employees are not required to explain their reasons for quitting. The notice period is usually stipulated in the individual employment agreement but generally, employees are required to provide their resignation notice in writing, 2 weeks in advance of leaving.
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Canada’s labor code and the various human’s rights acts enshrine certain employee protections in place but, provided the employment agreement is well thought out, it is not overly difficult to terminate an employment contract in Canada.
The primary legal risk employers face when terminating a contract of employment in Canada are complaints of ‘unjust dismissal’. To mitigate risks, employers should enforce detailed employment agreements that are compliant with provincial legislation. Before terminating an employee’s contract, the employer must be confident that the reason(s) for terminating an employee’s contract meet the criteria for ‘just cause’ dismissal.
