Canada: Employment Law: Notice: (Part 4 Of 6)

First presented at a Client Employment Seminar

The notice period for terminating an employee may be dictated by contract, statute, or common law.

(I) Employment Contract

If the parties have expressly agreed to notice terms in the employment contract, then the court will enforce those terms, provided they:

  1. Meet the minimum standards in the employment standards legislation (see below); and
  2. Are not otherwise contrary to contract law principles under doctrines such as duress, undue influence, and unconscionability.

If a contract specifies a notice period that is less than the minimum statutory notice, it is likely that the courts will find this provision to be null and void, and will impose the notice as dictated by the common law.1

(II) Statutory Notice - Employment Standards Act

Section 54 of the Employment Standards Act (the "ESA"), says that an employee who has been continuously employed for three months or more, is entitled to at least one week of pay per year of employment, to a total of eight weeks pay.

Rule of Thumb Common law reasonable notice for indefinite employees is 1 month of pay per year of employment. Courts infrequently adhere to this rule of thumb and tend to award damages that are more or less than the employee's theoretical entitlement under the rule of thumb.

(III) Common Law Notice and the Bardal Factors

The determination of common law reasonable notice involves the consideration of the Bardal Factors. In Bardal v. Globe and Mail Ltd., the Court referred to a number of factors which must be considered in determining the appropriate length of notice for a dismissed employee.2 Such factors include:

  • Character of employment (the prestigious nature of the position);
  • Length of service;
  • Age of the employee;
  • Availability of similar employment; and
  • Qualifications of the employee.

In theory, these factors are given equal weight, but depending on the circumstances, courts may give more weight to some factors over others.

Extending the Notice Period

In addition to the Bardal Factors, other circumstances may lengthen the duration of reasonable notice.

  • An employee who relocated at the behest of the employer is entitled to a larger award of damages than he/she would have been entitled to otherwise;3
  • If an employee was induced to enter the employment contract;4 or
  • If an employee is terminated during an economic recession, the court acknowledges the increased difficulty in finding a new job, and thus may require a longer notice period.5

Probationary and Fixed-Term Employment

Probationary Employees

Generally, reasonable notice of termination does not apply to probationary employment. To justify the dismissal of probationary employees, an employer must only show the following:

  • The employee was given a reasonable opportunity to demonstrate his/her suitability for the job;
  • The employee was found not suitable for the job; and
  • The employer's decision to dismiss was based on an honest, fair, and reasonable assessment.

Fixed-Term Employees

Generally, reasonable notice does not apply to fixed-term employment contracts. At the expiry of the fixed term, the employment relationship ceases, and neither party has a duty or obligation to renew the contract.

If the employer terminates a fixed-term contract prior to its term, the employer must pay compensation equivalent to the income the employee would have earned during the contract, unless the contract expressly stipulates the sum payable on termination or the employer has cause for termination.

Statutory Requirements during the Notice Period

According to Section 60(1) of the ESA, an employer...

  1. Shall not reduce the employee's wage rate or alter any other term or condition of employment;
  2. Shall in each week pay the employee the wages the employee is entitled to receive, which in no case shall be less than his or her regular wages for a regular work week; and
  3. Shall continue to make whatever benefit plan contributions would be required to be made in order to maintain the employee's benefits under the plan until the end of the notice period.

According to subsection (3), if the "employer fails to contribute to a benefit plan...an amount equal to the amount the employer should have contributed shall be deemed to be unpaid wages."

Go to Part 5 - Torts that Flow from a Wrongful Dismissal Claim

Footnotes

1. Machtinger v. H.O.J. Industries Ltd., [1992] 1 S.C.R. 986 (S.C.C.).

2. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.J.).

3. McNamara v. Price Wilson Ltd. (1979), 12 B.C.L.R. 300 (B.C. S.C.)

4. Wallace v United Grain Growers [1997] 3S.C.R. 701.

5. Johnston v. Queen's Park Hospital (1983), 44 B.C.L.R. 13 (B.C. S.C.)

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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