We updated this publication on April 5, 2023.

The hiring process and the termination process are equally important stages of the employment relationship. And both are full of legal minefields for employers. It’s critical that you put the time in both up-front to ensure you’re hiring the right people in the first place, and at the back end to ensure you’re ending employment relationships in a way that complies with the law and minimizes your liability exposure. To help you when hiring and firing employees, here are 12 key do’s – and don’ts.

6 Key Hiring Do’s & Don’ts

Hiring is an important part of the employment process: once you’ve hired an employee, it will be difficult for you to later end the relationship if, for example, the employee just isn’t working out. So, it’s critical that you put the time in up-front to ensure you’re hiring the right people. This means you must gather information about applicants. But take care to get the information you need in a way that both respects applicants’ rights and minimizes your own exposure.

1. Do require all applicants to submit a (well-drafted) employment application

First contact between an applicant and an employer is typically by way of an employment application or a resume. Even if an applicant provides a resume, it’s still good practice to require them to your form of application.

Information. The application form will allow you to gather the specific information you wants for your evaluation. There’s some information to which you’re entitled – and some to which you’re not. It’s important that you draft an application form that collects only the information to which you’re entitled, and all you need to evaluate the applicant. An employer can ask for:

• Some personal information such as the employee’s name and address.
• Confirmation of the applicant’s legal entitlement to work in Canada.
• Schools the applicant attended, degrees obtained and training programs. But avoid asking for dates because it could be construed as an indirect means of inquiring about age, a protected ground of discrimination under human rights laws.
• The applicant’s past employer(s), their names, addresses, reason for leaving the job, and whether you can contact the applicant’s previous employer(s).

Binding Acknowledgements. The application form can also be a way to obtain the applicant’s binding acknowledgement that the information they provide on the application form is accurate. This is valuable if you hire the applicant and later discovers they weren’t truthful on the application form. However, to rely on such acknowledgements later, they need to be carefully drafted.

2. Do check applicant references

Asking applicants for references is another useful way to obtain important information. However, many employers never actually follow-up by contacting the references. You should only ask for references if you’re going to check with them; if you ask but don’t follow-up and miss discovering something that might have prevented an incident or accident, you could be liable. Keep a record of the references you contacted and what the reference said; you might need this information down the road to justify why you did or did not decide to hire an applicant. And remember to listen carefully: you might need to “read between the lines” to understand what the previous employer(s) is trying to say.

3. Don’t ask interview questions that violate human rights laws

When interviewing an applicant, take care not to seek information that’s related to any of the personal characteristics protected under human rights laws, even inadvertently. The personal characteristics protected under human rights laws varies depending on the applicable law, but they typically include, sex (including maternity and/or parental leave and sexual harassment), mental disability, physical disability (including use of medically-authorized marijuana), gender expression, gender orientation and/or sexual orientation, religion, and family status (among others). Examples of personal characteristics protected under human rights laws and common interview questions about each include:

Race. There are no permissible questions about an applicant’s race, colour or physical characteristics, although questions about language fluency are okay if that is a genuine requirement of the job.

Creed / Religion. Similarly, there are no permissible questions about an applicant’s creed or religious affiliations.

Age. And no permissible questions about an applicant’s age or birth date, though you can inquire whether a younger applicant is legally old enough to work.

4. Do be careful using social media to screen applicants

Social media, like Facebook, LinkedIn and Instagram, is a rich source of information about job applicants. But there are real risks to using social media to screen them.

Consent. Depending on the privacy laws that apply, you might require consent to go on an applicant’s social media – even if it’s publicly available and isn’t protected with privacy settings. Breach of privacy laws can result in a privacy commissioner complaint, and these are expensive, time-consuming and often public. While you could try to argue that the applicant’s submission of an application is implied consent for all reasonable collection, use and disclosure incidental to processing the application, it’s much safer to get the applicant’s express consent on the application form or at an interview.

Reasonableness. Regardless of consent, however, the collection of personal information about the applicant from their social media accounts must still be reasonable. So, consider whether a social media background check is truly reasonable – whether you really need it – in the circumstances, or whether it’s an “unreasonable invasion of privacy” (though this won’t likely affect admissibility as evidence in a non-unionized context).

Lawful. And even if it’s reasonable, the collection of must also be lawful. Check the terms of use for the relevant social media platform; using the platform to screen employees might be an invalid use.

Passwords. Don’t ask applicants for their social media passwords. It’s likely highly invasive of their privacy rights because it’s probably overinclusive given you can access irrelevant and private information, like family group chats. It’s also likely actionable by the applicant and violates the social media platform’s terms of use. And privacy commissioners don’t like it either.

(In) Accuracy. Even if you get past the privacy law issues, the information might not be accurate: employees might edit their online footprints to try to eliminate potentially damaging or revealing information. And be sure you know whose profile or information you’re looking at; screening an applicant named “John MacDonald” using Google or Facebook is risky. Even relatively unique names can be problematic.

Human Rights. And, you never know what you might learn – and you can’t unlearn it. Much more information is typically visible on social media than on a resume, like ethnicity, religion, health, disabilities or family commitments. The information might reveal the applicant has characteristics placing them in one of the protected groups under human rights laws – information that could taint the hiring decision with discrimination or give rise to a human rights complaint by the applicant alleging it. To help avoid or minimize human rights complications, consider whether you should do the social media screen in-house or outsource it.

5. Do be careful what you say – and don’t make promises

Be careful what you say to an applicant to persuade them to join your ranks, particularly if they already have a secure job. If you make promises of improved employment terms, like a higher salary or a promotion, that sway (or “induce”) the applicant your way, they could be entitled to a lengthier notice period upon termination of their employment – even if their length of service was relatively brief, and even if you kept the promises (though including a termination and an entire agreement clause in the employment contract might help).

6. Do use a written employment contract – before you agree on the employment terms.

There are several reasons why a written employment contract is good practice, and there are a number of key terms that every employment contract should include. First, it’s important that the employment terms be set at the time of hiring/start of employment: once that employment offer is made and accepted, it’s binding – and the employer can’t unilaterally withdraw it or change it or impose new employment conditions that fundamentally change the employment relationship unless it gives the employee prior notice or something of sufficient value in exchange. The 2023 decision in Dornan v. New Brunswick (Health) is a grim reminder to employers of the cost of doing just that. Don’t finalize the terms of the contract until you put it in writing and make sure offer letters are carefully drafted. Second, clear employment terms help avoid disputes, and the associated costs and time to resolve them, later. Finally, an employment contract will go a long way towards facilitating the end of the employment relationship and protect certain employer’s rights – but courts are extremely protective of employees and scrutinize contract terms closely so legal counsel in drafting the contract is highly valuable.

6 Key Firing Do’s & Don’ts

Terminating the employment relationship is an equally important part of the employment process. It’s just as critical that the employer put the time in at the backend to ensure it’s carrying out the termination process the right way – and there are as many minefields as there are in the hiring process. Once the employer has terminated the relationship, it’s often too late to go back in time and retroactively fix mistakes or mend emotional damage. Courts take the view that employees are at their most vulnerable at the time of termination and will protect them from the more powerful employer – so mistakes during the termination process can be expensive. This means taking the time to think it through and plan and avoiding acting in the heat of the moment.

1. Do pick the right (legal) reason for the termination

There are two primary ways in which an employment relationship can be terminated: the employer can terminate it, or the employee can voluntarily terminate it through resignation or retirement. If the employer chooses to terminate the employment relationship, it must decide whether it’s doing so for cause, or without cause. The decision has legal ramifications, so carefully considering and choosing the right one can significantly affect an employer’s liability exposure.

For cause. If the employer terminates an employee’s employment for just cause, the employee isn’t entitled to notice of termination or pay in lieu of that notice. But just cause requires the employer to meet a very high threshold: it’s a two-part test, and the employer must prove both the facts that establish the impugned conduct upon which it relies, and that the nature and degree of that conduct was “fundamentally or directly inconsistent with the employee’s obligations to his or her employer”. In every case, whether particular misconduct amounts to just cause for termination depends on all of the circumstances, and it’s rare that a single incident of misconduct will meet the test. Too often, the employer’s reflection on whether it can meet the threshold is retrospective: it discharges the employee, then seeks to justify it. This, however, is often too late and can be an expensive mistake. It’s impossible for the employer to be 100% certain, but don’t terminate for just cause unless reasonably confident the employee’s misconduct is sufficiently severe to meet the threshold. If an employee simply isn’t working out but the employer can’t meet the just cause threshold, it can choose to terminate the employment relationship without cause.

Without cause. An employer can terminate an employee’s employment without just cause but must give the employee the appropriate period of notice of the employment termination or pay in lieu of that notice.

2. Do ascertain notice & prepare the separation package in advance when termination is without cause

The decision to terminate an employee’s employment is a serious one, with consequences for both employee and employer. Take the time to properly prepare to implement that decision:

Notice. For a without-cause termination, determine in advance the notice or pay in lieu of notice to which the employee is entitled – or that you want to offer – and can pay it by salary continuance, lump sum, or a combination. Look to one of these three sources to ascertain the amount of notice to which an employee is entitled:

• Statutory Notice. Every employee is entitled to the minimum notice under the relevant employment standards legislation upon termination without cause.
• Contractual Notice. It’s open to an employer to limit the amount of notice to which an employee is entitled on termination without cause by including a “termination clause” in the employment contract. A court will typically enforce such a clause if the contract itself is enforceable and the termination clause is clear, unambiguous and doesn’t violate the minimum requirements of the employment standards legislation. But courts look at these clauses especially closely so they must be well-drafted to hold up.
• Common Law “Reasonable Notice”. If the employment is for an indefinite term and there’s no (or no enforceable) employment contract with a termination clause, the employee will also be entitled to common law (law based on judges’ decisions) “reasonable notice”. This is often higher – sometimes significantly – than the minimum statutory notice (so often effectively inclusive of that notice entitlement), and sometimes higher than that to which the employee is entitled under an enforceable contractual termination clause. Reasonable notice varies depending on the all the circumstances, including the employee’s age, the length of employment, the nature of the employment and the availability of alternate employment, and can be higher during recessionary times. Relying on any “rule of thumb” or “cap” can be dangerous. However, the employee is under a duty to mitigate their damages: to take all reasonable steps to reduce their lost wages (essentially to try to get another job). If an employee fulfills this duty and gets another job the employer can reduce the amount of reasonable notice compensation to which the employee is entitled by the amount the employee actually earned.
• Balance of the Term. If the employment is for a fixed term and there’s no (or no enforceable) fixed-term employment contract with a termination clause, the employee is entitled to payment for the remaining balance of the term. And in some provinces and territories, the employee isn’t subject to the duty to mitigate their damages in the case of a fixed-term contract. As the 2023 decision in Dornan v. New Brunswick (Health) demonstrates, this can be a hefty amount.

Gratuitous Payment. If the termination is without cause and you’re paying the employee a significant amount, or the contract doesn’t conclusively determine the severance amount payable, you can consider asking the employee to sign a release in exchange for the payment, especially if you’re paying the employee more than the employment standards legislation requires and/or not paying the exact amount set out in the employment contract. But you can’t ask an employee to sign a release if all you’re offering is the statutory notice; the employee is entitled to this no matter what, so a release isn’t binding – and a court wouldn’t like it either.

Other Terms. You can also consider other separation terms that might be required, appropriate or welcome in the circumstances, at sometimes minimal expense to you, such as outplacement counselling, relocation expenses and/or a letter of reference.

Termination Letter. The termination letter is extremely important: it’s the document the employee will take away, reflect upon, take to legal counsel and if there’s litigation, put into evidence. So, take the time to prepare it carefully, to seek appropriate legal counsel on it and to get it as right as possible. It’s good practice to clearly set out the amount and nature of the payments you’re making and how and when you’ll will make them, whether benefits will cease or continue and until when, and a contact person. Some employment standards legislation requires the employer to state the reasons for termination in writing. The letter can also address the return of employer property and, if applicable, the terms of any release you’re asking the employee to sign in exchange for the payment (though this can be tricky and legal counsel is warranted).

3. Do plan ahead for the employment termination

Generally, it’s a good idea to hold a termination meeting, whether it’s with cause or without, to advise the employee of the termination of their employment. To do it right, this meeting requires forethought and advance planning:

Location. Meet privately and away from co-workers, and in a “neutral” location, like a boardroom, if possible.

People. Consider whether to have an additional management-side witness present.

Transportation & Security. Consider setting up and offering transportation home for the employee. Depending on the employee and the circumstances, also consider whether on-site security, including to escort the employee from the premises after the meeting, is appropriate.

Documents. Give the employee a written termination letter and any other key documents, like benefits transition forms and the Record of Employment (ensure it’s consistent with the reason set out in the termination letter and in the meeting) at the end of the meeting, all of which the employer should have prepared in advance.

4. Don’t violate the applicable employment standards legislation

You should always comply with all your obligations under the applicable employment (or labour) standards legislation, including when terminating an employee’s employment. If you don’t comply you risk an employment standards complaint and/or a legal action for wrongful dismissal – and courts are harsh with employers that fail to comply with this legislation. Compliance in the context of an employment termination typically includes:

Pay the statutory amount. If the employment termination is without cause, pay the employee the minimum amount to which they’re entitled under the employment standards legislation – even if the employee refuses to accept any additional severance offer and/or to sign a release.

Pay accrued wages & accumulated vacation pay. Employees are entitled to all accrued wages and accumulated vacation within a specified time after termination; clearly state how and when you’ll pay these.

Disclose the reasons. Some employment standards legislation specifically requires this for a termination with just cause (for example, section 30(2) of the N.B. Employment Standards Act) and failure to comply could lead a court to decide there was no cause – regardless of the facts. So, if it’s required, clearly state the reason for termination consistent with what was said in the termination meeting.

5. Do always terminate with dignity or be prepared to pay the price

Courts have been clear that employees are particularly vulnerable at the time of termination, and employers have a legal duty not to treat employees unfairly, dishonestly or insensitively in the manner in which they terminate an employee’s employment. So, no matter the reason for or the circumstances of the termination, always be respectful and professional throughout the termination process – and never engage unfair, dishonest or insensitive conduct. An employer that breaches this duty of good faith and fair dealing in the manner of dismissal is exposed to liability to financially compensate the employee (so-called “Wallace” damages) if there is subsequent litigation around the termination. The 2023 decision in Dornan v. New Brunswick (Health) offers employers a lesson in what not to do – and the costs of breaching this duty.

6. Don’t jump the gun if an employee resigns

Employees do often voluntarily end the employment relationship themselves by resigning – but sometimes it’s in the heat of the moment. Don’t be too quick to accept such a resignation. Courts know that an employee’s emotions can run high, and so they often give the employee a bit of time to revoke a resignation tendered in such circumstances. However, do fully document the circumstances leading up to and in which an employee resigned and accept it – in writing – when it’s tendered; just be prepared to handle a revocation if it comes up. And don’t cut the employee off before the resignation notice ends. A court could decide that by doing so, you actually terminated the employee’s employment and you’re on the hook for pay in lieu of notice. However, if it’s not appropriate that the employee remain in the workplace during the resignation notice period, you can continue to pay the employee but require that they not attend work.

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Please contact your McInnes Cooper lawyer or any member of our Labour & Employment Team @ McInnes Cooper to discuss how we can help you with your hiring and firing decisions.