The Courts have always been a place for dismissed employees to be compensated for wrongful dismissal. A person who is terminated without cause and without proper notice, is awarded damages. Typically, these damages are based on an assessment of a number of factors, including the employee’s age, education, length of service, position, responsibilities and the availability of comparable employment elsewhere. As a general rule of thumb, notice periods generally range from 2 - 4 weeks per year of service. There are exceptions, of course.

The damages for a typical wrongful dismissal case include, not only the loss of wages, but the loss of benefits and other perks that the employee was entitled to receive during the notice period. Often benefits cease when the employee is terminated because of the contract with the insurance company. The employer’s obligation to pay the employee for the cost of those benefits during the notice period does not end just because the insurance company won’t cover. Instead, the employer is required to top up the severance package to reflect the loss of these benefits. It is then in the hands of the employee to find coverage with the money that has been provided.

So, why is it important how an employee is let go if they are going to be paid for a reasonable notice period anyway? The short answer is this: if you handle firing badly, the employee could be entitled by the Court to additional compensation that is payable by you.

First of all, the Courts have historically recognized that in some cases, the termination of employment may cause the employee to suffer mental distress. They may become depressed, need medical treatment and are generally unable to work. If this reaction is something that could have been anticipated at the time of hiring of this employee, the Court will award additional compensation for mental distress damages related to the firing. This reaction can happen whether or not the termination is handled with kid gloves, or in a very confrontational way. Obviously, the risk of a mental distress claim goes up significantly if the termination is mishandled. For example, screaming "you’re fired" in front of several people is humiliating to the dismissed employee. It is more apt to provoke a strong psychological reaction that, depending on the mental makeup of the individual, could be quite debilitating.

Secondly, the Courts have awarded punitive damages where the conduct of the employer is particularly outrageous. The purpose of punitive damages is to punish the employer for some conduct which the Court wishes to deter. While letting someone go in a particularly nasty way may give an employer a momentary feeling of revenge for some perceived wrong doing on the part of the employee, if the employee succeeds on their wrongful dismissal claim, the employer risks an additional amount having to be paid as punishment for the way in which the employee has been dismissed.

More recently, the Courts have started to look at the employer - employee relationship, and how the termination is handled, when considering the length of the notice period. Where aggravated damages might have been given before, the Courts are simply extending the amount of notice that the employee might be entitled to receive. What was a six-month notice period could quickly turn to nine month’s severance.

In some cases, the extension of the notice period can prove particularly expensive. For example, if the employee would be entitled to exercise certain stock options after a certain date, or their pension would vest, this can prove very expensive for the employer. The extra couple of months’ notice could amount to substantially more than the salary for that period.

Terminations of employment should be handled carefully and thoughtfully. Here are some general rules to follow:

1. The termination should be handled in a private setting, not in an open area;

2. The employer should have a second person present as a witness, and possibly to provide comfort to the dismissed employee if they break down;

3. Don’t drag it out. The employee should simply be advised that they are being let go, presented with the severance package, if one is warranted, and any turnover issues addressed;

4. Treat the employee the way you would want to be treated if you were sitting on the other side of the table: with respect for their situation;

5. Immediately after the meeting is concluded, do a detailed note of what was said. Note any acknowledgement by the employee that they were expecting the termination or that they have enjoyed working there, etcetera. If the employee was calm throughout the meeting, then note that as well.