“WRONGFUL DISMISSAL” IN A NUTSHELL

There is a common misapprehension amongst employers that can lead to costly results.

The Employments Standards Act provides that an employer wishing to dismiss an employee, without cause, must give the following notice:

One week’s notice after three consecutive months of employment;
Two week’s notice after twelve consecutive months of employment; and
Three week’s notice after three consecutive years of employment, plus one additional week for each additional year of employment, to a maximum of eight week’s notice.

If an employer fails to give this required amount of notice, then he must pay wages to the employee in lieu of notice.

The common misconception is that this is the most that an employer can be liable for in the event he or she terminates an employee. This is wrong. The Employment Standards Act provides only the minimum amount of liability to an employee. Our unwritten Court-made law, called the “common-law”, may provide for significantly more notice, or pay in lieu of notice.

Under the common-law, an employer may terminate an employee without cause only upon giving “reasonable notice”.

Calculating reasonable notice is not an easy task. It depends upon a number of factors, with the four most common being:

1. the responsibility of the employment function;

2. age;

3. length of service; and

4. availability of equivalent alternative employment.

Lawyers practicing in this field have tried to come up with “rules of thumb” about appropriate notice. One such rule of thumb is that an employee in a junior or middle management position is entitled to one month’s notice for each year of service. Employees working below middle management are entitled to less notice. This rule is an extremely rough one, however, and the Courts will depart from it readily.

Another rule of thumb is that, absent exceptional cases, 18 to 24 months notice is the rough upper limit, and other cases should be scaled downward from there unless there are extenuating circumstances.

In 1997 our Supreme Court of Canada added a new wrinkle to the law of wrongful dismissal. The length of notice owed to an employee may be extended in the case of a “bad faith discharge”. Where, for example, an employer is found to be untruthful, misleading, or unduly insensitive, the ordinary amount that would be awarded can be increased. Further, if an employer entices an employee from other secure employment and later terminates the employment relationship, this can result in an increase in the damages award.

The obligation to give reasonable notice applies only if there is no “just cause” for termination. If an employer has just cause, however, then the employer is entitled to dismiss the employee without any notice whatsoever. It is not easy to fully explain the law about just cause in this brief article. But, acts of dishonesty by the employee constitute just cause, e.g. theft or fraud. Absent that, however, acts of poor performance or insubordination do not usually constitute just cause, unless there have been several notices given to the employee of these concerns and opportunities to remedy those that have gone unheeded. I think it is fair to say that the law tends to favour the employee over the employer in situations like this, and proof of just cause is usually a difficult hurdle to overcome.

What I have described above applies to the employer-employee relationship. As a general rule, it does not apply to an independent contractor relationship. So, for example, a customer can terminate his ongoing relationship with his repair garage, or a client can terminate his relationship with his lawyer, without there being an obligation to provide “reasonable notice”.

Occasionally, however, Courts have been prepared to introduce a reasonable notice requirement into some independent contractor relationships. For example, if a logging contractor has provided services to a licencee for a considerable number of years, or a log hauler has provided services to a contractor for a considerable number of years, those parties may be entitled to some form of notice of termination. Frankly, these types of claims are relatively rare, and we are in a bit of uncharted territory in terms of pursuing them. But, in the logging industry particularly, significant investments in equipment are often made on the strength of a long-standing relationship between the parties, with there being no written agreement between them. In my view, because of the dependence by one party upon the other, a Court would be prepared to make a damages award if that relationship is terminated on a short notice basis.

Blake Tancock is a Kamloops lawyer practicing in the areas of civil law.