Canada: Notice Of Termination Of Employment In Quebec — Latest Pronouncements From The Quebec Court Of Appeal

Last Updated: April 2 2012
Article by Theodore Goloff

The American doctrine of "employment at will" exists nowhere in Canada! Perhaps because we are a kinder-gentler society, or perhaps because of a more liberal bent in the distinct society that is Québec, the Civil Code requires that, except for terminations "for cause", styled in this Province "serious reason", an employee receive "reasonable" working notice prior to termination, or pay in lieu thereof, which pay must include all remuneration that the employee would be entitled to receive during the period of such reasonable notice. Over the past number of years the appetite of Plaintiffs for ever larger settlements and/or awards has grown. While there have been some indications of limits in the past, definitive and binding pronouncements seemed to be absent.

In Canadian Jewish Congress vs. Polger and Smajovits, C.A.M. 500-09-019743-095, the Court of Appeal has defined conclusively the outside limits of such "reasonable notice" at twenty-four (24) months, absent proof of egregious proof of conduct by the employer in the termination or other such exceptional and compelling circumstances. All three judges of the panel (Hesler, J.A., Beauregard J.A. and Bich, J.A.) agreed the benchmark of twenty-four (24) months set in Aksich vs. Canadian Pacific Railway, [2006] RJDT 997, should be confirmed as the absolute outside limit, absent such egregious conduct.

Where they parted company however, was in respect of an alleged "usage" of the employer in "topping up" pension rights or advantages and the ability of the Plaintiffs on that basis to seek additional amounts to top up their defined contribution pension plan payouts.

Bich J.A. noted that while Art. 1434 C.C.Q. permits "usage" in some circumstances to become a source of contractual and legally binding obligations, it requires that the practice be general (i.e. widespread), consistent, uniform, steadfast and established over a very long period of time!

As she put it:

"[227] In my view, all that the evidence shows is that ex gratia payments in a variety of forms were made over the years to a certain number of employees, upon request only and following a decision by the board of directors or by management on a case-by-case basis."

More particularly, she wrote:

"[229] These rules – more particularly the requirements that usage be general consistent and steadfast in character – are applicable mutatis mutandis [18] to the practices developed within a single firm (which is what the respondents alleged here) or by parties within their own contractual relationship[19].

[230] In the present case, as my colleague Beauregard has shown, there was no general (that is, widespread), uniform and established practice of granting employees additional pension advantages. It is true that there were, over a period of 50 years, a number of occasions where, upon an employee's request, pension contributions or benefits were enhanced. But even then, there was no uniformity or generality in the nature, amount or duration of such enhancement, that would enable the Court to conclude that a binding practice existed that could be applied to the respondents. Certainly, the evidence does not establish that the appellant ever accepted, directly or indirectly, to transform the defined contribution pension plan offered to its Quebec employees [20] into a defined benefit pension plan [21] or to remedy, systematically, its perceived inadequacies. It does not establish that all (or even most) employees were entitled to the additional benefits received by some; it does not even establish, on a balance of probabilities, that all employees' requests were granted (even though all of those who received an additional benefit had made a request).

[231] If the respondents' claim cannot be justified on the basis of usage, could it be acknowledged on the basis of equity? In the circumstances, equity, as a source of implicit obligations under article 1434 C.C.Q., cannot, in and of itself, justify that respondents' claim for an additional pension be granted (as the trial judge decided), nor can we on that basis order the payment of a special contribution to their existing pension fund. Equity alone cannot allow the transformation of a defined contribution plan into a defined benefit pension plan, as the respondents would have it for all practical purposes. Nor can it justify imposing upon the appellant, as the employer, the burden of a substantial addition to its contribution to each respondent's pension fund, beyond what was required by the existing defined contribution pension plan." (Underlines, our own)

No doubt that those who, like the undersigned, practice Management side labour and employment law, will be greatly relieved that the judgment of the Superior Court substantially topping up pension payments for the life of the terminated employees has been set aside and this particularly so, since the employer is and was a non-profit organization supported by the community.

Of note is the fact that the Supreme Court denied leave to appeal from that judgment on February 9, 2012, making it the law of the land in Quebec, at least until the Court of Appeal decides otherwise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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