Breaking Up (With Employees) Is Hard To Do - Do Employers Have To Say Why?
The simple answer is that the Employment Standards Act of Ontario does not require an employer to give an employee a reason why their employment is being terminated. There are, however, some situations where it is advisable for an employer to provide the reason for their termination decision. Where an employer asserts just cause for the employee’s termination, the termination letter should specify what behaviour the employee engaged in (or failed to engage in) that forms the basis for the termination which ousts them from any termination package. An employer that fails to do so risks not being able to rely on the reasons or grounds which it was aware of but chose not to include when it proceeded with the termination[i]
However, in without just cause terminations, employers often do not (or should not) specify the basis for their decision, other than to say it is without cause.
Why?
1. Legal Concerns: Employers must be cautious about providing specific reasons to avoid potential legal liabilities. If the reasons given could be misinterpreted by the employee as suggesting an illegal or improper purpose for the termination, or used against the employer in legal proceedings, they may opt for a more general explanation to minimize risks. For example,
Defamation or Mental Distress Damages: Providing false or damaging untrue reasons for termination could lead to a defamation claim or, as in the Lightburn v. Mid Island Consumer Services Co-Operative [ii]decision, damages for mental distress. Employers should be cautious about what information they share regarding the termination to avoid damaging the employee's reputation or causing them harm.
Discrimination Claims: If the termination reasons suggest factors such as race, gender, age, religion, disability, or other protected characteristics were considered by the employer in making their decision (which, to be clear, is prohibited by the Human Rights Code), they will lead to claims of discrimination. Of course, employers must ensure that termination decisions are based on legitimate business reasons and not discriminatory motives (even in part) and that no discriminatory grounds are cited or implied in termination letters.
Retaliation Claims: If an employee believes they were terminated in retaliation for engaging in protected activities such as whistleblowing or filing a complaint against the employer, they may pursue legal action. Employers need to ensure that nothing in the termination letter suggests the termination decision was retaliatory in nature and that the reasons provided for the termination do not overtly reflect retaliation or lead to an inference that the termination was related in any way to the employee enforcing their rights.
Confidentiality: In some cases, the reasons for termination may involve sensitive or confidential information about the company, other employees, or clients. Revealing these details in a written document could breach confidentiality agreements or damage relationships. Therefore, employers do not disclose such information on the basis of confidentiality.
2. Avoiding Conflict: Often employers perceive that providing detailed reasons could escalate tensions between the employer and the terminated employee, leading to disputes, grievances, or lawsuits. Employers may choose to keep explanations vague to prevent further conflict. Providing reasons for the termination might also create conflict with your remaining workers if the departing in employee shares the reason (or their interpretation of the reason) with their former co-workers.
3. Company Policy: Some companies have a policy of not disclosing specific reasons for termination to protect the privacy and reputation of both the employer and the employee involved or to avoid any confusion.
4. Subjectivity of Performance Issues: Performance-related terminations can sometimes involve subjective assessments. Employers may feel that providing specific reasons could be interpreted differently by the terminated employee, leading to a debate in the termination meeting, disagreements or disputes.
5. Perception/ Brand Management: Employers may want to maintain a positive image both internally and externally. Offering vague reasons can help mitigate negative perceptions of the company's culture or management practices.
When Should an Employer detail the reasons for termination?
In addition to just cause terminations, the following are also good grounds for listing the reason(s) for termination:
1. Closure: It's essential for employers to balance the above-noted concerns with the terminated employee's need for clarity and closure. Often providing such closure will ensure that an employee is more accepting of the employer’s decision and any concerns surrounding the termination are resolved.
2. Feedback for Improvement: Providing some level of feedback or guidance can help the employee understand areas for improvement in future roles and facilitate a smoother transition.
3. Clarity and Dispelling Assumptions: I have seen demand letters asserting that the employer has engaged in discrimination because no reason, or no other reason, for the termination was proffered by the Company. In such situations, it is in the best interests of the employer to not only have clear documentation supporting the reasons for termination but to generally describe and list those non-discriminatory reasons in the termination letter. This can help defend against potential legal claims by demonstrating that the decision was based on legitimate business reasons.
4. Maintaining a Relationship: In some cases, particularly with smaller companies, the employer wants to maintain an ongoing relationship with the employee. For example, where the termination is due to a slowdown in demand for the company’s services, but they would welcome the employee back in the future. In such cases, it’s a good idea to provide a reason in the termination letter that is consistent with what is said in the termination meeting itself.
I have seen my fair share of termination letters which provide no reason for termination at all. I’m reminded of the statement by George Washington that states “it’s better to offer no excuse than a bad one.” However, each situation is unique, and employers should carefully consider the content of the letter and the appropriateness or inappropriateness of providing reasons in the circumstances.
Happy drafting!
[i] Brantford (City) and Bradford Professional Fire Fighter Assn. (Glover), Re, 2017 CarswellOnt 1496
- In this decision in which the Union grieved a suspension imposed on the griever, Arbitrator Surdykowski stated as follows with respect to just cause for discipline:
o “… except in extraordinary circumstances, in a discipline case the employer's case for just cause is limited to the reasons given when the discipline was imposed. When an employer decides to impose discipline, it chooses the reasons or grounds upon which it relies for doing so. A consequence of exercising this choice is that as a matter of procedural and substantive fairness the employer will not be permitted to rely at arbitration on reasons or grounds which it was or ought to reasonably have been aware of but chose not to include when it gave its reasons for imposing the discipline.” (para. 63).
[ii] Lightburn v Mid Island Consumer Services Co-Operative, 1984 CarswellBC 807
