Skip to Main Content

Firing an employee: what to know

A female worker cries after getting fired. Stock photo by Getty Images

Terminating an employee can be an unpleasant and complicated business. There are legal rights and responsibilities at play, and an employer who ignores them could pay a steep price in court. Here are some of the basics behind terminating a worker.

Know the applicable laws

The laws governing termination vary depending on the employer and province. Federally regulated business like Canada Post or chartered banks must adhere to the Canada Labour Code.

Other businesses typically must follow the laws in their province or territory. Be sure to find the employment standards act governing your business.

With cause or without?

Broadly speaking, you’re firing somebody either with cause or without cause.

With cause means they’ve done something to deserve it. Continual sloppiness, incompetence, negligence, dishonesty, and theft are common examples.

Without cause means you’re not firing them for any disciplinary reason. It could be due to budget shortfalls or a lack of work for them to do.

Firing with cause

Court and labour tribunals can be hard on employers who abruptly fire a worker, even if it seems like you had good cause. Of course, it can depend on the nature of the offence, but even an egregious offence might not be as terrible as you think.

In 2001, the Supreme Court of Canada ruled “an effective balance must be struck between the severity of an employee’s misconduct and the sanction imposed.”

A remarkable example is Kenneth Ditchburn, a salesman who got in a drunken fight with a client. He was fired, but sued his employer. A judge agreed with Ditchburn, since it was an isolated blemish from an otherwise well-behaved and long-serving employee.

An employer should try to show that a misbehaving employee was warned and given chances to correct their behavior instead of being fired outright after one misstep.

You can do this with written warnings, performance reviews and face-to-face discussions.

Constructive dismissal

Some employers try to avoid firing an employee and instead induce them to quit by cutting their hours, changing their duties, harassing them or reducing their salary or benefits.

While the targeted employee might quit, this is still tantamount to firing them. It’s called constructive dismissal, and the employee could file a complaint or lawsuit over it.

Notice and termination pay

If you’re firing someone with cause, you don’t have to give them notice but may still need to provide severance pay.

If you’re axing someone without cause, you have to provide reasonable notice or pay in lieu of notice (or sometimes both).

Exactly how much notice or money can depend on several factors, including the type of job, the length of service, the employee’s age and availability of similar employment. Provincial and federal laws vary on exactly how to calculate this.

Group termination

A mass termination can be subject to more legal requirements than a single one. Large-scale firings may require you to provide official notice to the federal or provincial labour ministry.

Typically, a “group” termination means firing 50 or more employees within a four-week window.

Read more:

Employment Standards Acts: