Long-service employees can have very significant entitlements. Even at lower levels, this is true now - in the wake of the Court of Appeal's Di Tomaso case last year (discussion here), long-service clerical and unskilled labourers can now be entitled to notice periods up to two years (and possibly higher in exceptional circumstances).
These concerns can be avoided, with advance planning. If you implemented a written contract with the employee at the point of hire with a good termination clause, then your liabilities might be limited to those in the termination clause. In some cases, the issue arises for successor employers, where a business was purchased with the employment relationships intact - if this is a concern, make sure that the vendor severs the employment relationships involved first, and you'll need further legal advice if you intend to make new offers of employment to their employees, because such a severance may not work. Whether it's an asset purchase or share purchase, if the purchaser just assumes the employment relationship without more, they'll be buying into potentially dysfunctional employment relationships with the prospect of significant liability.
But, without advance planning, sometimes you have to take the cards you end up with, and do the best you can.
The first thing to know is that there are ways of bringing in employment contracts even after the point of hire. But you need legal advice to do so, and by the time you know you want to get rid of the person, it's probably too late to do so.
So let's look at how you can get rid of a long-term employee, while trying to avoid a hefty payment in lieu of notice:
(1) Dismissal for Just Cause
It's an option, but usually not a good one. If an employee has engaged in misconduct rising to a certain threshold, you are entitled to terminate summarily without notice. (Depending on the nature of the misconduct, a trail of progressive discipline is often necessary.)
If the reason you want to be rid of the employee tracks to a singular (and recent) egregious episode, such as theft (which you can prove), then this may be prudent. If there has been an ongoing series of more minor problems, with documented discipline, but the misconduct has continued, then this could be an option.
However, in most of these cases that I see, the employer's decision that they want to be rid of such an employee is based on a series of minor incidents which the employer accepted, permitted, and tolerated, but there's a recent "straw that broke the camel's back". The employer now wants to be rid of the employee, and the employee doesn't realize he or she has done anything wrong in the first place.
In such cases, a dismissal for cause becomes a project, not an action, and one that's usually impractical. The first thing that you need to do is clarify expectations for conduct and make sure that the employee knows that, moving forward, the various shenanigans which may have gone on in the past are not permissible. (This needs to be done carefully, too. Employers have a wide range of power in the workplace, but unilateral changes which go to the heart of the employment relationship may generate a constructive dismissal, triggering notice obligations - the very thing you're trying to avoid. Also, there are times when, while implementing these changes, you need to bear in mind your human rights obligations.) Then you need to start disciplining if the employee fails to meet these new standards of conduct. At some point, maybe soon or maybe not, you may have built a case sufficient that a Court might find just cause.
If you've already decided that you want to be rid of the employee, this is not an easy approach.
(2) Convince the Employee to Quit
This is one that I usually file away with "bad ideas". Taking actions against an employee simply for the purpose of trying to get them to leave is almost constructive dismissal by definition. But it's seldom that simple. For instance, in the situation where the employer has lost control over the employee, the employer might just be able to hope that its legitimate efforts to get the employment relationship back under control might persuade the employee to look elsewhere. It's unwise to count on this, though.
It's also possible to offer a voluntary separation package of less than an employee's full common law notice entitlements. (Essentially, paying the employee to resign.) The employee may or may not accept this, and trying to be too...persuasive...can amount to constructive dismissal. (Indeed, you need a lawyer's assistance for this approach: When you're implicitly telling an employee that you don't want him around anymore, you need to be careful with you do it.)
(3) Dismissal on Actual Notice
This is unusual, and carries with it risks and problems, but in some scenarios can be effective. Indeed, this is an employer's obligation when it wants to fire somebody without just cause. (It doesn't usually happen; normally, an employer prefers to breach this obligation and provide pay in lieu of notice instead.) But for an employer unable to afford to pay the departing employee *and* the departing employee's replacement, it's an option to consult a lawyer about.
One of the major practical difficulties with this is that you're then relying on an individual for a lengthy period of time who knows that they aren't going to be there long. You run the risk of misconduct, whether intentional or through carelessness. To that extent, you need to monitor the employee's performance to make sure they're still doing their job, and go down the 'discipline' road if necessary and appropriate.
(In some cases, statutory severance will still be owed at the end of the notice period. This isn't usually true of smaller employers, however.)
This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.