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Letting an employee go can be very difficult process for an employer.

Terminating an employee in Canada requires preparation, fairness, and legal awareness, as well careful planning for both employer and employee.

“Ultimately, a termination is the last thing you want to do. But at some point, if they don't have the skill to do the job, then it's time to take that final step,” says Frank Newman, founder and CEO of Newman Human Resources Consulting. “You want to make sure you’re very selective in terms of how you plan it and where you’re going to have that difficult conversation.”

Even when the business decision is justified, termination is emotionally difficult and could even require having security present just in case a situation develops. Employers should communicate with empathy, avoid humiliating the employee, and give them space to process the information.

They should allow that employee to collect personal belongings privately or offer to pack their items for later pickup if they prefer and try to discourage them from ‘saying goodbye’ to colleagues, suggesting they reach out to them afterwards.

As well, employers must ensure they have a contingency plan in place just in case the employee is home sick on the day of their termination meeting or must return company-related equipment such as a laptop or phone.

Research important

“Make sure you do your research,” urges Frank, adding personal circumstances surrounding the employee should always be considered. “Is there any kind of medical issues involved? Is it that employee’s birthday? You have to be considerate of the individual.”

He also said their emotional state upon receiving the news must also be taken into consideration.

“Check with them to make sure they’re okay to drive home because as a manager, you have an obligation to make sure they get home safely,” says Frank. “People may be an emotional wreck or be so distressed that something untoward happens. So, you’re thinking about keeping them safe and the company safe.”

In terms of location, he stresses a termination conversation take place with at least one witness present in a private area, perhaps towards the end of the day when there’s fewer people in the workplace.

“I’ve had cases where people have asked me to conduct a termination in a public place, which is not generally recommended,” says Frank. “But as your having that conversation, you want to make sure that, first of all, it isn't a long conversation because from the company point of view, you don’t want to get into too much detail because that could later be used against you in court.”

Documentation vital

Documentation is vital, especially if the termination relates to performance. Employers should maintain written records of performance evaluations, coaching sessions, warnings, and any disciplinary actions. A consistent record shows the decision was based on legitimate business reasons rather than discrimination or arbitrary judgment.

“You have the Employment Standards Act, which basically describes how much severance or notice that you need to provide to an employee,” he says. “But employees have recourses. If they’re not happy, they can go to the Human Rights Tribunal of Ontario to say they’ve been discriminated against.”

Employment contracts can significantly limit or expand an employer’s obligations.

Many contracts include termination clauses that set out the notice period or severance owed. For these clauses to be enforceable, they must meet statutory minimums and be clearly written. Reviewing the contract beforehand helps avoid surprises and ensures the termination package is legally defensible.

Frank says employers should remember in a termination situation, the statutory minimum in terms of wages must be paid within seven days of the business’ next payroll cycle.

“But if you’re giving something over and above the Employment Standards amount, you can then have a negotiated payout and it can be your pay cycle. So, in terms of structuring settlements, especially if it’s an organizational change, some companies will provide a lump sum, others may provide continuation of salary, or they will negotiate in terms of what’s best for the employee.”

Legal requirements

Canadian employers are legally required to issue a Record of Employment (ROE) whenever an individual’s employment ends. This document is critical for Employment Insurance (EI) eligibility. Providing the ROE promptly demonstrates professionalism and helps the employee transition more smoothly.

Making that transition as smooth as possible can be important since the employee being let go may still be a potential ambassador for the company. 

“Companies need to be conscious of that and treat people with respect, because again, that employee will share the story of their termination everywhere,” says Frank, noting an employer doesn’t want to be targeted on social media. “It’s kind of like of bad customer service. You get bad customer service; you tell 10 people. You receive good customer service, and you tell one person.”

He also recommends providing, if possible, outplacement support for individuals such a career coach to assist them in their transition to new job opportunities. 

“Looking for a new job is a process,” says Frank. “People have to learn how to market themselves with a resume or LinkedIn or networking.”

In terms of the aftermath in the workplace following a termination, managers should inform relevant staff about changes in responsibilities without sharing confidential details. Over-explaining or criticizing the former employee can expose the organization to liability and harm morale. 

“You have to take the time to work with staff and make sure the expectations you now have are clear,” says Frank. “You also want to discourage any gossip and protect the reputation of the person that has just left.”

Tips to remember when dealing with a termination

Understand your legal obligations under the ESA

Before initiating a termination, employers must understand the minimum standards set out in the Employment Standards Act, 2000 (ESA). These include notice of termination, termination pay, and, where applicable, severance pay. 

Review the employment contract carefully

A termination clause in the employment agreement can significantly limit the amount of notice or pay in lieu an employer must provide, but only if the clause is valid and enforceable. Ontario courts regularly strike down termination clauses that even potentially violate the ESA. 

Consider whether “Just Cause” exists 

Ontario law sets a very high bar for terminating an employee for cause without notice. Misconduct must be serious, progressive discipline should be documented, and the behaviour must fundamentally breach the employment relationship. Employers often overestimate what constitutes cause.

Assess all forms of compensation

Employers must consider vacation pay, benefits continuation, bonuses, commissions, car allowances, and any other forms of compensation the employee regularly received. Common-law damages may require including all components of the employee’s compensation package during the notice period unless explicitly and lawfully excluded in the contract.

Prepare a clear, respectful termination meeting

Plan the meeting in advance, choose a private setting, and have two employer representatives present (typically HR and the direct manager). Be brief, factual, and respectful. The goal is to reduce the risk of claims based on bad faith conduct or mental distress.

Provide a well-drafted termination letter

The termination letter is a legal document that should outline the employee’s entitlements, last day of employment, continuation of benefits, return-of-property expectations, and details regarding any separation package. Ambiguities can lead to disputes. 

Decide whether to offer a separation package

Many employers choose to offer a separation package that exceeds ESA minimums to secure a full and final release. This can limit future liability and avoid litigation. Packages often include additional pay, continued benefits, and sometimes outplacement services. 

Manage benefits and group insurance continuation

Under the ESA, benefits must continue through the statutory notice period, and often through the common-law notice period unless explicitly excluded in a valid contract. Notify your benefits provider promptly and ensure that continuation is handled seamlessly to avoid gaps in coverage.

Protect confidential information and company property

Have a clear plan for retrieving laptops, phones, access cards, and confidential files. Disable system access promptly after the termination meeting. Remind the employee of their ongoing confidentiality and non-solicitation obligations, if applicable. 

Document everything

Record performance issues, disciplinary steps, meeting notes, and the reasons for termination. If the termination is restructuring-related, document the business reasons to show it was not discriminatory or retaliatory. Thorough records demonstrate fairness and compliance if the decision is later challenged.