By Samantha Stepney.
Many employees who seek our advice following termination are surprised to learn that so long as their employer has not violated any human rights laws, the employee can be fired for any reason. If the reason amounts to “just cause” – which includes things like theft and insubordination – the employee is not entitled to any notice of termination or any severance. (For more on “cause”, visit our blog.)
Because cause can be very difficult to prove, the vast majority of firings are “without cause dismissals” – in these cases, the employer must give the employee notice of the dismissal, pay in lieu of such notice, or a combination of the two. How much notice the employee is entitled to depends on various factors, including whether her employment contract limits her notice or severance rights.
In British Columbia, there are three different regimes that govern an employee’s right to notice or severance on dismissal: statutory, contractual, and the common law (court made law). The following blog post reviews each of these regimes in turn.
Statutory Rights: Compensation for Length of Service
The BC Employment Standards Act (ESA) creates a statutory floor that requires employers to provide employees with a minimum amount of notice, pay in lieu, or a combination of both (referred to as “compensation for length of service”) if they are dismissed without cause. The length of this notice is determined by the employee’s length of service:
- Employees who have worked for less than three consecutive months are not entitled to any compensation for length of service;
- After three consecutive months of employment, an employer becomes liable to pay an employee an amount equal to one week’s wages;
- After 12 consecutive months of employment, an employer becomes liable to pay an employee an amount equal to 2 weeks’ wages; and
- After 3 consecutive years of employment, an employer becomes liable to pay an employee an amount equal to 3 weeks’ wages, plus one additional week’s wages for each additional year of employment, to a maximum of 8 weeks’.
Under the ESA, a week of pay is calculated by totaling the wages, commissions, etc. earned by the employee in the last eight weeks that he worked normal hours at the regular wage, and dividing that figure by eight.
Contractual Rights: The Termination Clause
Not all employees have a written employment contract. However, those that do may be subject to a “termination clause”, i.e. a contractual clause specifying the amount of notice the employee is entitled to if he is terminated without cause.
Such clauses may limit the employee’s notice or severance on termination to the ESA minimums described above. In other cases, the employer may have promised to provide the employee with more generous compensation. So long as the termination clause is valid, it will dictate the employee’s entitlements on termination.
However, there are some circumstances in which a termination or severance provision may not be enforceable. For example:
- If it restricts the employee to less notice or severance than that set out under the ESA.
- If it is vague such that it does not clearly limit severance.
- If it was added to the employment contract after the employee had already started working for the employer under the employment contract, and the employee was not provided with any additional consideration for entering into the amended contract.
- If the employment contract was entered into after the employee had already started working for the employer, and the employer did not provide the employee with any additional consideration for entering into the contract.
To learn more about employment contracts generally and the perils of poorly drafted severance clauses, visit our blog.
Common Law “Reasonable Notice” – The Bardal Factors
If an employment contract does not contain a termination / severance limiting clause, or the clause is invalid and unenforceable, the employee’s reasonable notice entitlements are determined under the common law (court made law). An employee’s “reasonable notice” may (and likely will unless he or she is a very short term employee) exceed the amount she is entitled to under the ESA. In other words, even if an employer satisfies its obligations under the ESA and pays an employee her statutory “compensation for length of service”, she may still be entitled to additional notice or severance under the common law.
The calculation of common law “reasonable notice” is flexible, and more of an art than a science. Generally speaking, an employee’s notice period is intended to represent the amount of time it will take him to find replacement employment.
To determine an employee’s reasonable notice, a court considers a variety of factors known as the “Bardal factors” (based on the name of the case in which they were developed). These factors include:
- Employee’s age: Older employees are typically entitled to more notice.
- Employee’s length of service: Employees who have worked for a longer period of time are typically entitled to more notice.
- Availability of similar employment, having regard to the employee’s experience, training, and qualifications: If the type of employment is particular, and not many comparable jobs are available, a dismissed employee will typically be entitled to more notice as it will be more difficult for her to find replacement employment.
- Character of the employment: Managerial employees tend to receive longer notice than those in non-management roles.
Other factors may also be relevant in certain circumstances. For example, if an employee was induced to quit his previous stable employment to work for a new employer, he may be entitled to more notice if fired by the “new” employer.
Generally speaking, the maximum common law period of reasonable notice period is 24 months – such an award would only occur where an employee is her 60s, have been employed many years, and/or works in a unique position, or the evidence otherwise showed that it would be extremely difficult for her to find comparable alternative employment. However, there have been extraordinary cases where courts have awarded notice above this 24 month high water mark.
Have questions about the appropriate period of notice or need help drafting an employment contract? Contact us!