Employers, it’s insanely easy to mess up a termination letter when you’re terminating an employee.
The termination letter is important because it lays out how you will treat an employee upon termination. Getting things wrong can result in a disgruntled employee and/or needing to pay a larger severance package.
Here are some common pitfalls to avoid:
1. Follow what the employment contract says about termination to a tee. If you offer something less than the contract provides for, you will not be able to rely on any termination clause precluding reasonable notice of termination. The biggest ones I see are terminating benefits too early, not providing minimum payments in a timely manner, breaching the Employment Standards Act, or providing less notice than the contract provides for.
2. If the company is providing more than the employee’s minimum entitlements under the Employment Standards Act, and a Release is attached to the termination letter, make it clear that if they do not sign the Release, that they will still receive their minimum entitlements.
3. Do not change any term of employment during the minimum statutory termination period, which is up to 8 weeks. Do not alter any allowances (vehicle, cell phone, etc.), do not change their benefits plan, do not reduce hours, do not remove access to any type of remuneration.
4. Make the letter easy to understand. The more convoluted the letter is, the more likely the employee will seek independent legal advice and seek a larger package. Clarity could include things like assigning a monetary value to the notice period offered, making it clear who they can ask questions of, providing comprehensive information about logistics of leaving the company and what will happen to all aspects of their compensation.
5. Reusing templates used in a previous termination should also be avoided. Employers should have all termination letters and calculations reviewed multiple times before the final version is signed.
6. Make sure you payout accrued and unused vacation pay, as well as vacation pay during the statutory notice period. If you want to be a real pro, tell the employee in the termination letter how much vacation they have accrued and the amount of pay they will receive.
7. Give the employee a reasonable amount of time to sign the release so that they can seek legal advice. In no circumstance should you ask the employee to sign the release at the termination meeting.
8. Most importantly, treat the employee with compassion. Get coaching about how to carry out the termination meeting with sensitivity. If they ask for an extension to respond to the package, give it. If they ask for reasonable improvements, provide it to them. If they ask for a reference letter, give one.
Please let me know if I can help with any of the above by emailing me at [email protected].
