Finding the right balance between statutory minimums and common-law notice
By Jeffrey R. Smith
“We’re moving in another direction.”
“We’re making some changes.”
“We’re cutting your position.”
These are words no employee wants to hear, and are difficult for an HR person to say. But sometimes they’re necessary, and employers are entitled to act on them whenever they want. Some think it’s difficult to fire employees in Canada, but it really isn’t. There is a high bar to prove just cause, but dismissal without cause is fairly simple — as long as the employer provides appropriate notice or pay in lieu.
And that’s where it can get a little difficult for employers, at least financially. If an employee has been around for a while, the employer may have to provide a good amount of notice or shell out a substantial package. While employment standards minimums aren’t too onerous, an employer courts trouble if it offers just that to a dismissed employee — unless it has an employment contract that specifically limits notice to the legislated minimums. There are piles and piles of cases that show the amount of notice, or pay in lieu of, employees are entitled to in the event of their dismissal.
I’ve heard instances of an employer informing an employee of her dismissal and telling the employee she doesn’t have to come in anymore, but she’ll still be paid for the next month or so. That’s all fine and dandy, but unless the employee has a short term of service, that month of paycheques while at home is only the beginning. A popular concept for notice of dismissal has been a “rule of thumb” of one month per year of service. Though this has been discredited by many, including some courts, it’s not a bad place to start when estimating to what an employee is entitled — though courts have indicated maximums in the neighbourhood of 24 to 30 months for very long-term employees.
As I mentioned above, employment contracts with termination clauses that limit common-law notice entitlement can be effective, as long as they stay at or above the statutory minimums and employees are given the opportunity to consult legal advice before signing. Ultimately, an employer wants to avoid legal entanglement when dismissing an employee, so sometimes it’s better to be on the safe side and offer good severance packages without going overboard — as some may feel some wrongful dismissal cases have done.
What do you think is a fair amount of notice of dismissal without cause? Is the one-month “rule of thumb” fair and reasonable, or is it too much of a burden for employers?
Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective. He can be reached at [email protected] or visit www.employmentlawtoday.com for more information.
