Most businesses fall under provincial jurisdiction, however, some employers/employees in businesses such as shipping, banking, television, radio and airways are governed by federal laws. An employee’s rights upon termination will depend on whether he or she was terminated for cause and consideration will be impacted by the provisions of any written employment agreement (if any), minimum entitlements provided by the Canada Labour Code, and reasonable notice entitlements that have been established at common law (previous cases decided in courts).
Termination for Cause
An employee is generally entitled to advance notice of termination, or payment in lieu of notice, unless there is “cause” for termination. There are numerous things that can constitute cause for termination ranging from serious individual incidents of misconduct to minor repeated misconduct or poor performance. A single occurrence will generally only constitute cause for the most serious types of misconduct. A determination of whether cause exists is not straightforward therefore any employer or employee should speak to an employment lawyer about their situation before assuming that there is (or isn’t) cause for termination.
In addition to commencing an action for wrongful dismissal, an employee (non-managerial) who has completed twelve months of continuous employment can file a complaint under the Canada Labour Code for recourse in relation to an “unjust dismissal” (a dismissal without cause). An adjudicator will determine whether the dismissal was unjust and will also consider whether the dismissal is exempt from unjust dismissal provisions for other reasons (exemptions include a layoff due to a discontinuance of a function or lack of work). If an employee is successful he or she may be entitled to compensation which can even include the right to reinstatement.
Termination Without Cause
Canada Labour Code – Minimum Entitlements
The Canada Labour Code sets out minimum entitlements for employees upon termination without cause. Employees who have completed three consecutive months of employment are entitled to two weeks of notice (which can be provided by way of “working notice” or payment in lieu of notice … with extended benefits being maintained through the notice period). Employers also have additional requirements to comply with in the event of mass terminations involving over 50 employees.
Severance pay is also payable to employees who have been employed continuously for at least twelve consecutive months (except for some situations where the employee is entitled to a pension at the time of termination). The amount of severance pay will be a minimum of five days’ regular wages and will otherwise equal two days’ regular wages for each completed year of employment. It is important to note that severance pay cannot be satisfied with working notice.
Common Law
“Common law“ refers to caselaw that has been developed over time in the courts. In the absence of a written employment contract an employee will be entitled to “reasonable notice” which is often greater than the minimum entitlements available under the Canada Labour Code. What constitutes “reasonable notice” is determined with a case-by-case assessment based on factors which include: the term/length of employment, the employee’s age, the position and duties of the employee, rate of pay, and the availability of suitable employment. An employee’s damages will include all forms of compensation that he or she would have otherwise received if employment had continued through the notice period, but is subject to reduction in the amount of any earnings which have been received by the employee through subsequent employment. It is notable that the minimum amounts payable under the Canada Labour Code are not subject to reduction as a result of subsequent earnings during the notice period.
Written Employment Contract
In some cases an employer and employee will enter into a written employment contract which governs the employee’s entitlements upon termination of employment. Properly drafted employment agreements can vary the length of an employee’s notice period and other entitlements upon termination, however, provisions which contravene the minimum standards set out in the Canada Labour Code are not enforceable. There are several things which can render an employment contract unenforceable therefore it is important for employers and employees to speak to an employment lawyer to be aware of any important issues that may apply to their circumstances.
Jamie Pereira advises employers and employees on all aspects of employment law in Southern Ontario and the GTA. If you have any questions you can contact Jamie directly at pereira@mhnlawyers.com or 519-426-6763.
