One of the more stark contrasts between Canadian and American law is the law around terminations of employment. This may be rooted in the fundamental difference between the American “at will” concept versus the Canadian contract-based employment relationship. In other words, unless a contract says otherwise, in the US, an employee is hired “at will” and can be terminated with little to no notice.

Any Canadian employer – and certainly any American employer with a branch in Canada – will tell you that termination of employment requires a careful look at the employment contract to determine the parameters in which the termination can occur. If the contract doesn’t survive a court’s scrutiny, in many situations, an employer is often looking at paying an employee 3-5 weeks per year of service if the termination is found to be wrongful.

What is not necessarily in the contract, however, is the Canadian requirement to terminate only in good faith and without public humiliation. In other words, even when terminating an employee, Canadians have to be nice about it.

There are a number of cases that have awarded additional damages to a terminated employee if the employer conducted the discharge in a publicly humiliating or unnecessarily cruel manner. Terminations should be in person and the employee is entitled to know the grounds for dismissal.

A recent example is the case of Soost v Merrill Lynch Canada Inc in which an Alberta court awarded the terminated employee damages for wrongful dismissal. Not only was the employer found to have not had grounds for termination, but the court held that ” the Defendant’s actions in purporting to dismiss Soost for cause were both unfair and insensitive.”

For more details on the facts of the case, Christina Catenacci has done a great summary entitled, The importance of notice and manner of dismissal over on the First Reference Blog.

The bottom line is that Canadian employers always need to proceed slowly, with caution and with a hefty paper trail to back up the reasons for the termination. Now, in light of the damages award in Soost, there is even more financial incentive to be decent about it. It could get expensive otherwise.

Update: The Alberta Court of Appeal reduced the plaintiff’s damages award from $2.2 million to $600,000, doing away with the bad faith damages aspect of the lower courts award. Read the decision here and my post about it here.