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.
Common reasons working notice is overlooked is because employers are scared about an “unproductive” and “unhappy employee” who remains at the workplace. However, a properly structured termination based on working notice can be significantly less costly and allow for an effective transition.
At common law, the employer has the option of providing
(a) working notice,
(b) pay in lieu of notice or
(c) a combination of the two.
Only statutory severance pay in Ontario and in the Federally regulated Jurisdiction cannot be worked off—this must be paid at the end of a proposed working notice period.
Typically, employees dislike working notice for obvious reasons—namely, they dislike having to attend a workplace they have been terminated from. So one of the biggest benefits of working notice is it encourages the employee to secure comparable and alternate employment. Employers just have to be flexible and allow the employee time to mitigate by attending to job search duties and interviews during working hours.
Working notice should be considered in the following types of scenarios:
- Plant closures—it’s easy for employers when they know they are closing to eliminate part of (if not all of) their severance obligation through working notice.
- When there is still a need for the employee’s contribution at the workplace.
- When costs, and especially potential severance costs, are an issue.
When an employee decides to terminate an employee by way of working notice, they should also take advantage of the timing to remind the employee that they must still contribute and that the company still retains the right to terminate them for just cause for appropriate misconduct. If the working notice is not working, the employer can then consider a “for cause” or a “without cause” termination at that point. At all times, employers must be careful to keep working notice arrangements confidential.
Therefore, next time you are involved in a termination, consider whether working notice is an option to consider.
Simon Heath, BA, MIR, LLB
Principal of Heath Law, Employment Lawyers
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