By Geoff Mason.
Last month, we continued my 5-part blog series on summer employment with a piece reviewing the rules that apply to statutory holiday pay and vacation entitlements. In today’s post (Part 5), as we head into the last few weeks of summer, we look at the rights and obligations of employers and employees when it comes to ending seasonal employment.
No matter what time of year it is, these rights and obligations depend in part on the nature of the parties’ relationship. Here, we consider workers employed (1) for a fixed / definite term, (2) to work on a specific project, or (3) indefinitely.
A fixed (or “definite”) term employment contract is one that sets out how long the employment relationship will last and when exactly it will end. Under the Employment Standards Act (ESA), an employee working pursuant to a fixed-term contract is not entitled to any notice or severance when the term expires.
Remember, however, that fixed-term contracts must be clear and unequivocal. If there is ambiguity as to whether the contract is for a fixed or indefinite term, the ambiguity will most often be resolved in favour of the employee – meaning the employer could be liable to provide notice or severance.
One further note: If an employee under a fixed-term contract continues to work for a period of three or more months past the end of the term, the employee is deemed under the ESA to have been working pursuant to an indefinite contract, such that the ESA notice provisions (discussed below) apply.
As in the case of fixed or definite term contracts, if an employee is hired to perform specific work that is to be completed within 12 months, no notice or severance is required under the ESA once the project has been completed. However, these contracts must also be clear and unequivocal, and if the employment relationship continues for three or more months past the end of the specific work, the ESA notice rules will apply.
The termination entitlements of an employee employed under a contract of indefinite term differ depending on whether the contract contains a valid “severance-limiting” termination clause, i.e. one that sets out exactly how much notice or payment in lieu the employee will receive on termination.
Where an employment contract contains a valid severance limiting clause, an employee will be limited to the notice or severance set out in that clause. One option for employers is to limit the severance payable to the minimums set out in the Employment Standards Act (ESA):
- For employees with less than 3 months employment, no notice is due under the ESA.
- An employee with between 3 and 12 months employment is entitled to one-weeks’ notice under the ESA.
- For groups of 50 to 100 employees being dismissed within a two-month period, 8 weeks of notice must be given. For groups of 101 to 200 employees, 12 weeks of notice must be given. For groups of 301 or more employees, 16 weeks of notice must be given. These notice requirements are in addition to the individual notice requirements outlined above.
To satisfy its obligations under the ESA, an employer can provide working notice (e.g. one-week’s notice in advance of termination), payment in lieu of notice (e.g. one-week’s pay and immediate dismissal), or a combination of both.
Note: An employer can NOT avoid its notice obligations under the ESA, and any attempt to do so through the wording of an employment contract will be invalid.
No severance-limiting clause
Where there is no valid severance limiting clause, an employer must provide “reasonable notice” under the common law. In some cases, what constitutes reasonable notice can be significantly higher than the notice required under the ESA.
Common law reasonable notice is determined by considering the “Bardal factors” (named after the Bardal case) – the employee’s age, length of service, nature of their position and the availability of similar employment – with an eye to assessing how much time the employee will need to obtain comparable employment. Reasonable notice calculations are highly fact-specific and depending on the particular circumstances of each employment relationship. For this reason, if your seasonal workers are subject to an indefinite term contract that does not contain a valid severance limiting clause, we suggest you consult an employment lawyer to discuss your notice / severance obligations to your employees.
Have questions about hiring seasonal employees? Contact us!
NOT LEGAL ADVICE. Information made available on the Kent Employment Law website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action, based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. One of our lawyers would be pleased to discuss any specific legal concerns you may have.