For those of us that specialize in employment law, advising the recently-dismissed employee can be among the most challenging of experiences. In many cases, the employee is quite emotional, and more often than not, they have been filled with ideas about what the law requires by their colleagues, family, and friends. Not only do we have to encourage them to approach the situation objectively, but we also have to dispel them of many of the notions that have filled their head.
In the vast majority of cases in which I have been retained to advise a dismissed employee, the message that I am given is that the employee wants to be sure that they are being treated fairly. However, as I often explain, the law does not necessarily require fairness in this context. As employment lawyers, it is our duty to ensure that clients understand their rights and obligations, and within that context, assess the appropriateness of the severance package that has been offered [if there is one].
By way of example, many individuals point to packages that their colleagues have received, either concurrently or in the past. If “Mary” only worked for the company for three years and received five months of severance, then surely the 15 year employee sitting across the table from you should receive at least six months, right? Well, not necessarily, as we often advise clients on both sides of the equation.
Our courts have made it clear that there are no hard and fast rules and no formulas to be followed. In particular, there is no “rule of thumb” requiring one month of notice for every year of service, despite common perception. Recently, the Saskatchewan Court of Appeal confirmed that there is no basis in law for such a rule in Capital Pontiac Buick Cadillac GMC Ltd. and Sergio Coppola. However, there are also occasionally judges that seem to “affirm” such an approach, thereby adding to the confusion. Not surprisingly, many employers persist in using formulas of one type or another when assessing severance entitlements.
It is important to ensure that clients understand that what the company may have done for someone else does not impact their legal rights to any significant degree, as that is not typically a factor to be included by the courts in their assessment. Even though the company may have been overly generous in the past, that does not establish a binding “precedent.”
In addition to the length of the notice period, many employees that are provided with working notice are extremely offended by the unfairness and the “nerve” of the employer to insist that they work through the notice period. However, it is incumbent upon employment lawyers to explain that unless there is some contractual term to the contrary, it is the employer’s option as to how they will provide notice or pay in lieu, and an employee will be expected to continue working during the notice period unless the circumstances are such that it would be unreasonable to require that they do so.
On that note, I wrote an article many years ago titled “Working notice: destined to fail?“. In that article, I discussed the court decision Elg v. Stirling Doors in which the judge was highly critical of an employer for imposing a period of working notice, suggesting that it was untenable and “an institution almost invariably predestined to fail.” As I wrote, the law currently allows for employers to provide either notice or pay in lieu, at their discretion.
The other matter that often causes employees to feel as though they are being treated unfairly is the notion of mitigation, and the fact that many severance packages include a “clawback” provision that will reduce their entitlement in the event they obtain new employment. Many are deeply offended by this, suggesting that the employer is trying to avoid its legal obligations. The common law concept of notice of dismissal is intended to estimate how long it will take the individual to find a new job, and to provide them with income during that period. The common law is clear: if an individual earns employment or self-employment income during the applicable notice period, those amounts are to be deducted from individual’s common law entitlement. By way of example, if a court were to find that an employee was entitled to one year of notice, and that his income during that year would have been $100,000, but the individual was successful in finding new work and earned $40,000 during that one year, then their former employer’s obligation would be reduced to $60,000.
There are many other factors that dismissed employees raise during my meetings with them as indications of how they should have been treated. They include their positive performance reviews, the packages given to others, their childcare obligations, mortgage, etc. In most cases, they are legally irrelevant. That being said, we all realize that in the majority of cases, there will be a period of negotiation before litigation is considered. While legally speaking, there are a limited number of factors to be considered, it is always open to the dismissed employee or their lawyer to raise such issues of fairness during their negotiations. Most employers do not want to develop a reputation as a company that treats its employees, or its former employees, poorly. For that reason, they are often willing to listen to reasoned proposals.
As lawyers know, the law is not necessarily about fairness, and trials are an imperfect search for the truth. It is our duty to explain this to our clients and ensure that they are not negotiating based upon false premises or hopes.
Rudner MacDonald LLP