The employer’s duty upon termination is one of the most complex areas of employment law. Employers who fail to meet the mark are open to legal claims for wrongful dismissal, various statutory claims under the Employment Standards Act, and possibly claims under the Human Rights Code and Workers Compensation Act. Federally regulated employers are subject to rules under the Canada Labour Code.
This page deals only with termination under the Employment Standards Act. Review these other pages concerning termination:
It is always best practice to consult an employment lawyer prior to dismissing an employee. In some situations claims can be headed off entirely with advance legal advice; in other situations claims cannot be entirely avoided, but the potential liability can be limited if appropriate action is taken in advance of the termination. The cost of obtaining legal advice is often negligible in comparison with the potential liability of a wrongful dismissal lawsuit, not to mention the stress and worry of a legal dispute.
The Employment Standards Act and termination
Section 63 of the Employment Standards Act sets out the employer’s obligation to pay severance on termination without cause. Under the Act, severance is referred to as “compensation for length of service”. An employee is entitled to the following compensation for length of service:
- After three months of employment, one week of notice;
- After 12 months of employment, two weeks of notice;
- After three years of employment, three weeks of notice, plus one additional week for each completed year of service, to a maximum of eight weeks’ wages.
Wages are calculated as follows:
(a) total all the employee’s weekly wages, at the regular wage, during the last 8 weeks in which the employee worked normal or average hours of work,
(b) divide the total by 8, and
(c) multiply the result by the number of weeks’ wages the employer is liable to pay.
Compensation for length of service must be paid “on termination”, along with accrued wages, vacation pay, and banked time, which must be paid within 48 hours. The employee need not sign a Release in order to receive their compensation for length of service. Failure to pay compensation for length of service can result in fines from the Director of Employment Standards.
Risk of wrongful dismissal
It is essential to note that compensation for length of service under Section 63 is the employee’s minimum entitlement at law. In order to rely on Section 63 to limit its severance obligation, the employer must enter into a written contract of employment specifically referring to the Employment Standards Act, and that contract must be valid and enforceable. If there is no written employment contract and the employer terminates by providing only the severance required by Section 63, it is likely a wrongful dismissal.
An employment contract drafted by an employment lawyer, and implemented according to their advice, is the single best way to protect your business from wrongful dismissal lawsuits.
The information provided on this page is a general overview of the termination rules set out in the BC Employment Standards Act. It should not be taken as legal advice. For answers to specific questions about your workplace obligations, contact EmployRight and speak with one of our employment lawyers.