Managing Employment Transitions: Tips for Employees and Employers

Employment transitions occur when employees make job changes and employers hire or release employees. New employment relationships are often an exciting time for both parties; however, these transitions can raise many practical questions, especially for employees, as they consider their notice requirements, contractual obligations, and managing a smooth exit. What should an employee do to ensure they move from one job to the next with their professional reputation intact? And what should employers do to manage these comings and goings? There are important steps each party can take to ensure a smooth transition while mitigating the associated legal risks.

Tips for Employees

1. Provide Adequate Notice of Resignation. Notice requirements are typically set out in employment contracts and in employment standards legislation. Failing to give adequate notice is a potential breach of an employment contract, and in some cases a potential breach of the applicable employment standards legislation. If the start date for a new job conflicts with notice obligations, this should be discussed with both the new employer and current employer. Start and end dates are often negotiable. The current employer may agree to an earlier end date than what is stated in the employment contract. The new employer should also be flexible about start date and will appreciate the employee’s desire to honour existing commitments.
2. Leave Work in Order. The best reputational measure one can take when resigning to accept a job elsewhere is to leave their work in order. Complete what can be reasonably completed in the notice period and document the status of any outstanding work that needs to be transitioned to another employee. Assisting with knowledge transfer leaves a positive impression on the way out the door.
3. Review the Current Employment Contract and Any Ongoing Obligations. Some employee obligations continue even after employment ends. For example, employees must maintain the confidentiality of confidential information learned in the context of their employment. What constitutes “confidential information” is sometimes expressly defined in the employment contract, but it generally means internal information about the business and affairs of the employer that is not public knowledge. Some employment contracts contain non-solicitation clauses that prohibit soliciting employees or clients away from the former employer for a period of time. Fiduciary employees – i.e. senior or executive-level employees who hold significant trust or exercise the authority to act on behalf of the organization – may also be bound by other continuing duties following the end of the employment relationship. It is a good idea for employees to review their existing employment contract and legal obligations to ensure they are conducting themselves accordingly.

Tips for the Former Employer

1. Remind the Employee of Ongoing Post-Employment Obligations. Be up front about ongoing obligations and how the employer interprets them. Refer the employee to the source of these obligations, whether they arise from the employment contract or another document. Common post-employment obligations include confidentiality, non-solicitation, and non-competition clauses.
2. Clearly Outline Final Compensation Entitlements. Advise of when and how the employer will make the employee’s final pay. If the employee typically earned a bonus or other incentive compensation, inform the employee whether they are entitled to it and, if so, what amount will be paid.
3. Address Other Transitional “Housekeeping Items”. Inform the employee when their group benefits will terminate and any steps they can take to convert their benefits to a personal plan. Advise the employee when and how they can expect to receive their Record of Employment. Request that the employee keep their contact information up to date so that the former employer can issue the employee’s T4 without delay at tax time. Provide a designated contact person for the employee in the event they need to follow up on any items following their departure from the organization. Taking these proactive steps sets expectations and provides certainty for everyone involved.

Tips for the New Employer

1. Be Flexible When Negotiating Start Dates. While there is an eagerness to onboard a new employee and get them started, ensuring they have the time they need to fulfill existing notice obligations mitigates risk for the employer and employee. It is rare for a former employer to take legal action against a departing employee for failing to give adequate notice of resignation (most often characterized as a form of breach of contract), but it is not unheard of. For example, if the lack of notice means that the former employer cannot meet a client commitment and this results in a direct financial loss, this creates legal risk to both the employee (for the breach of contract) and to the new employer (for inducing the employee’s breach of contract).
2. Respect the New Hire’s Ongoing Obligations to their Former Employer. Throughout the hiring and onboarding process, be cautious not to accidentally solicit confidential information. The focus of recruitment should be on qualifications and should avoid any unintended disclosure. Keep discussion of past work experience general and stay away from specifics of client information and proprietary work product.
3. Provide Feedback During the Probationary Employment Period. Providing feedback during the employee’s probationary period is key to setting expectations and giving the new employee a fair opportunity to meet them. The length of the probationary period should be specified in the employee’s contract of employment. As a guide, the Nova Scotia Labour Standards Code allows for employment to be terminated without notice during the first three months of employment, and it is typical for employers to use this period to assess an employee’s suitability.  

Bonus Tip: The Value of Written Employment Contracts

Both employees and employers benefit from written employment contracts. Employment contracts typically document the employee’s job description, reporting relationships, compensation, vacation entitlement, benefits, and terms governing the termination of employment as well as post-employment obligations. They can also address terms that may be important to the employer, such as protection of confidential information. Generally speaking, a well-drafted employment contract clarifies what the parties have agreed to in their relationship. In the event there is a dispute or difference between the employee and the employer, a written contract can assist in clarifying the nature of the dispute and what needs to be resolved.

Key Take Aways

Whether someone is coming or going, there are a number of important steps employees and employers can take during an employment transition.

Clearly addressing expectations and legal obligations up front is generally the most effective way to mitigate legal and reputational risk to both employees and employers.

Written employment contracts provide both employees and employers with a level of certainty about their rights and obligations when entering and exiting an employment relationship.