Most of the time when employers look to terminate an employee they opt for pay in lieu of notice. Yet pay in lieu of notice can be costly, it can discourage mitigation and it may hurt productivity (if a suitable replacement has yet to be found). An often overlooked approach is providing working notice that satisfies both statutory and common law obligations.
The three most viewed articles on HRinfodesk this week deal with a company that was the author of its own misfortune when insisting on treating an employee as independent contractor; claims of working notice and constructive dismissal; and the reform of the temporary foreign worker program.
There is an implied term of the employment contract that when an employee is terminated without cause, they will be provided reasonable notice of termination. (Of course, an employer can avoid the reasonable notice requirement by including an express provision regarding termination in the employment contract.)
The recent firing of Toronto Transit Commission head Gary Webster makes it difficult for the city to claim it is trying to run like a business. Webster, a 37-year TTC employee, was a year away from the end of his contract, and his termination without cause will likely cost the city at least $500,000 in severance pay, not to mention the costs associated with replacing him.
Constructive dismissal, while still a source of concern for employers, is likely less of a threat than it is sometimes thought of. Employees placed in potential constructive dismissal suits must be very careful, or else they may find they have very limited recovery. However, an employer in British Columbia has attempted to push the weaknesses of constructive dismissal to the extreme. In fact it appears to have tried to push the concept farther than it can reasonably bear.
Here’s an interesting case from the British Columbia Court of Appeal. When an employer left a termination letter on a bus driver’s seat for him to find, The Court found there was inadequate notice of termination. The fact that the bus driver left work immediately instead of working the notice period did not negate his right to sue for damages in lieu of notice.
I always advise clients to consider their options when they must dismiss an individual (assuming it is without cause). Rather than automatically offering a package, and paying the employee not to work, I encourage our clients to consider whether a period of working notice could be viable. By doing so, at least they would get some value for their money. However, I often think back to a comment made by Mr. Justice Donnelly of the Ontario Superior Court of Justice, who, in the course of considering a wrongful dismissal claim, opined that “[w]orking notice is an institution almost invariably predestined to fail.”
Most employers understand a claim for damages for wrongful dismissal as arising from the termination of an employee’s employment without adequate cause or notice. It can be argued that this in fact reflects a misconception of the nature of the employment contract. Except in certain limited cases of federally regulated companies,…