Two recent cases have confirmed a long-standing principle: in order to be effective, notice of dismissal must be clear, specific, and unequivocal. Among other things, a definite terminate date must be specified. Otherwise, in most cases, the “notice” will not be effective, and the employer will be on the hook for additional notice or pay in lieu thereof.
This issue often arises in the context of a sale of all or part of a business. The owner may have made the decision to sell, and even entered into preliminary discussions with a potential buyer. They tell their staff that when the business is sold, their employment will end, with a possibility that they will commence a new employment relationship with the owner. Months go by while negotiations take place, and ultimately an agreement to purchase the business is signed. Often, the owner then advises the staff that the sale will be effective imminently (or already is), and relies upon the previous notification as legal notice of termination. Can they do so?
In Kerfoot v. Weyerhaeuser Company Limited, the company had sent a notice to all employees on April 23, 2006 announcing its intention to sell its pulp mill to a new owner. According to the employees, they
were consistently told that the transaction was conditional; it was subject to several significant pre-conditions that might or might not be fulfilled, and that they did not know for sure that the transaction would complete until March 7, 2007. They say that they only learned that the transaction had completed and that as a result they were now employees of Domtar during the course of their working day on March 7, 2007.
The Court confirmed that the purpose of notice of dismissal is to allow an employee time to mitigate their losses by seeking new employment; until they know when their employment will end, this duty will not arise in the absence of extenuating circumstances. The Court went on to find that
Far from being specific, clear and unequivocal, the advice to the employees was inherently equivocal. The advice they got was, in essence, “Your employment with Weyerhaeuser will terminate if and when the transaction closes. Otherwise, you will remain employed by Weyerhaeuser.”
The Court concluded that
For its own practical business reasons, Weyerhaeuser chose not to provide actual notice of dismissal prior to the transaction completing. It cannot now be heard to say that it did so… no prior notice of termination was given, at all. The plaintiffs were simply told on March 7, 2007 that their employment with Weyerhaeuser had terminated and that they were employed by the new company, Domtar, after the fact.
In Di Tomaso v. Crown Metal Packaging Canada LP, a specific date of termination was provided, but then repeatedly changed. As the Ontario Court of Appeal found:
On September 9, 2009, Crown Metal informed Mr. Di Tomaso that it no longer required his services. Days before his expected termination date, Crown Metal informed Mr. Di Tomaso that his employment would be extended by several weeks. Over a period of five months, Crown Metal repeatedly extended Mr. Di Tomaso’s employment just before each previously stated termination date. In total, Mr. Di Tomaso received five separate written notices of termination, containing a total of four different termination dates…
After the September 9, 2009 notice, each subsequent letter reviewed the extensions in employment and characterized Mr. Di Tomaso’s employment as being “extended” for a “temporary period”.
The Trial Judge found, and the Court of Appeal agreed, that the repeated extensions created uncertainty with respect to when the plaintiff’s employment would end, and rendered the earlier notice ineffective at law.
The lesson for employers is fairly straightforward. They should not expect that vague comments about a potential sale of the business will constitute effective notice of dismissal, nor should they provide a fixed date and then repeatedly defer dismissal at the last minute. When I work with our clients in this context, I usually advise that they wait until they are at a point where they are relatively certain of their plans, including the timing, and then provide notice with an effective date they are comfortable with. If plans have to be changed, employees should be given as much notice as possible of the new date.
Miller Thomson LLP