Employee Termination FAQ for Payroll, HR, and Managers

November 3, 2015 Annie Chong

Recently, we hosted a webinar on Employee Termination Best Practices featuring 2 subject matter experts on Payroll and Human Resources. We received some excellent questions before and after the webinar, and here they are for your reference.

Please note that this FAQ does not constitute legal advice.

Common Employee Termination Questions Answered

1. Is there a standard probationary period for employees where no notice of termination is required? Are new employees automatically deemed to be on probation? Can you extend a probationary period?

Most probationary periods are between six and nine months. However, the existence of a probationary period is not automatically assumed to exist, and if the first few months of employment are to consist of a probationary period that must be spelled out in a written contract of employment or employment offer letter. Little or no notice of termination is generally required during the probationary period by either the employee or the employer. However, particularly for a longer probationary period and depending on the jurisdiction in question, employment standards termination provisions may apply with respect to notice of termination (or pay in lieu of notice), for example, after three months of employment.

A probationary period cannot be extended without the express consent of an employee. However, an employment contract could stipulate that the employer in its sole discretion may decide to extend the probationary period (e.g., for a further three months). The employer could also potentially get the employee to agree to an extension of the probationary period – particularly if the individual would otherwise be facing termination of employment. It is also important to remember that a probationary review (and possible subsequent termination) must be completed prior to the end of the probationary period, and even a probationary employee cannot simply be terminated on a whim. He or she must be provided with adequate direction and guidance, and be provided with an opportunity to learn and improve his or her performance on the job before resorting to termination of employment for unsuitability.

2. What are your benefit continuance obligations when an employee is terminated?

Employment standards legislation in some jurisdictions (especially Ontario) requires benefits to be continued during the statutory notice period. However, it is also a good practice to continue to provide coverage (or at least provide funds that would allow the employee to purchase his or her own coverage (and notify the employer it is doing so for that purpose) if the benefits carrier refuses to continue to provide coverage) during the lengthier common law notice period as well. Particularly with respect to disability insurance, an employer’s liability can be huge if a former employee becomes permanently disabled during the common law notice period and that person’s disability insurance was cancelled.

Because the obligation during the common law notice period is to keep the employee “whole” while the individual looks for another job that applies with respect to the individual’s entire remuneration package, including benefits. This does not mean, however, that the employer is obligated to provide an employee who does not have disability insurance as part of his or her benefits package with such insurance during the statutory or common law notice periods.

3. Do you have to issue the employee a T4 right away if they terminate mid-year?

Employers are not required to produce a T4 slip (RL-1 slip for Quebec) if the employee terminates part way through the year. The deadline to issue a T4 and/or RL-1 (Quebec) slip is on or before the last day of February following the calendar year.

4. Do I owe employees for banked overtime or pay vacation on their working notice period?

Employers should pay employees any outstanding banked overtime on termination. Vacation pay is calculated on the working notice as this represents regular wages per employment standards.

5. If an employee is terminated with working notice and a statutory holiday falls during their working notice period, do we need to pay them for the statutory holiday?

Generally speaking, you would be required to pay statutory holiday pay if it falls within the working notice period. You should consult with the provincial employment standards legislation in which the employee works in order to determine if the employee is eligible based on the qualifying condition. Keep in mind, each jurisdiction has different requirements when it comes to entitlements to statutory holiday pay.

6. Do we have to revise an ROE if a person on leave retires or passes away?

In certain situations, employers must issue amended ROEs. Amendments are required when the employer needs to correct or change information reported on the original ROE and the ROE has already been distributed. Employers are also required to prepare an amended form if Service Canada requests it.

7. I know that employment/labour standards requires that employers pay employees their final wages within a certain time if the employer ends the employment relationship. Does this also apply if the employee quits?

The answer depends on the jurisdiction in which the employee works. Most jurisdictions do not differentiate between an employer-initiated termination and an employee-initiated one for paying final amounts owing. The exceptions are Alberta and British Columbia.

In Alberta
If an employee quits and, where required, provides the proper amount of notice (one week for employees employed more than three months, but less than two years and two weeks for those who have worked for their employer for two or more years), employers must pay the employee his or her final wages within three days after the date of termination. If the employee does not give the employer the required amounts of notice, the deadline for making final payments is 10 consecutive days after the date on which notice would have ended if the employee had provided the proper amount of notice. If the employee is not required to provide notice, the employer must pay all wages and other payments (e.g., overtime pay, statutory holiday pay, vacation pay, etc.) no later than 10 days after the employee’s last day of work.

In British Columbia
Employers must pay wages owing to employees upon termination within six days of the employee’s last day of work.

Provincial Employment Standards Links

Keep on Learning

Did you like this resource? Want to become a People Management superhero? Subscribe today.

About the Author

Annie Chong

Annie Chong is Manager of the Payroll Consulting Group at Carswell, a Thomson Reuters Business, where she oversees the content and delivery of critical payroll and employment information through Carswell's leading source of payroll information and hotline support and co-author of the Payroll Audit toolkit product.

More Resources by Annie Chong
Previous Tweet
Avanti Software
Avanti Software

CRA has been making a strong push to have all payments made electronically and there are a number of option...

Next Video
Employee Termination Best Practices
Employee Termination Best Practices

Brian Kreissl and Annie Chong of Carswell, a Thomson Reuters Company share what HR, Payroll, and managers n...