When terminating an employee in BC and Canada, it is important to remember that the concept of “at-will” employment does not exist. The law surrounding the termination of employees involves far greater consideration and obligation on the part of the employer than in jurisdictions that subscribe to “at-will” employment. Each situation will turn on its own set of facts.

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The Requirement to Provide Notice

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Unless a non-unionized employee acts in a manner that would constitute “just cause” for termination (which is a narrow category of behaviour), or the employment relationship expires at the end of a fixed term, the employer is obligated to provide the employee with either:

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• Advance notice of termination.
• Compensation in lieu of that notice.

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The employer's obligation to provide the employee with reasonable notice of termination does not apply where:

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• The employee resigns their employment
• The employment relationship is frustrated
• There is just cause for termination of employment
• The employment contract contains a valid term providing for the amount of notice to be given in the event of termination
• The employment contract is for a fixed term

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As it is often practically undesirable to have an employee continue to work after receiving notice of termination, paying out the notice period is the more frequent choice.

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The notice of termination provided to the employee must be specific and unequivocal. Moreover, it must be clearly communicated to the employee.

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In BC, there are three types of potential notice that the employer must give the employee at the time of termination of employment:

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• Statutory minimum termination notice or pay in lieu of notice.
• Common law reasonable notice.

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Alternatively, the parties may contract for a set period of notice, provided that period is not less than the statutory minimum requirements. Employers cannot contract out of the statutory minimum requirements.

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Both unionized and non-unionized employees are potentially entitled to the minimum statutory notice and severance pay. Common law reasonable notice is potentially available to non-unionized employees, but not to unionized employees who have their employment governed by a collective agreement.

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Statutory termination notice – BC Employment Standards Act

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There is a statutory minimum period of termination notice that must be given according to length of employment, outlined in the BC Employment Standards Act. Where groups of employees are terminated with a short period of time, mass or group termination notice periods may apply. The minimum standards legislation applicable to the employee must be consulted before structuring a termination package.

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Common law reasonable notice

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The notice periods that have been held to be reasonable at common law have traditionally been much longer than the minimum standards termination notice period, sometimes greater than 24 months of notice. Unless the employment contract limits the notice period to the statutory minimum, or to another amount that is greater than the statutory minimum, the employer must provide compensation for the common law notice period.

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In determining “reasonable notice” under the common law, the Courts will consider such factors as:

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• The length of service.
• The age of employee.
• The character of the position, including the degree of responsibility and the employee’s level of training and education.
• The availability of similar employment, having regard to the experience, training and qualifications of the employee.

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The employer has the choice of asking the employee to work through the notice period, or to pay compensation in lieu of such notice. If pay in lieu of notice is given, the employer is to pay the compensation to which the employee would be entitled as though the employee had worked through the notice period. The employer may also be required to continue medical and dental benefits to the employee for the duration of the notice period and pay for unused vacation time.

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Contractual notice

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An employer can control some of the uncertainties that might arise at the time of termination of an employee by clearly setting parameters in the original employment contract. While the employer cannot contract out of statutory minimums (such as minimum notice periods that must be provided on termination), contracts can be used to limit or exclude the common law concepts that would otherwise apply. For example:

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• A contract can specify that certain acts will constitute just cause or willful misconduct, effectively broadening the common law definitions of these concepts.
• A contract may also set out what period of notice will be given, how payment on termination will be structured and how various types of incentive compensation will be dealt with on termination.

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Unless the employee’s duty to mitigate is outlined in the termination provisions of the employment contract, mitigation will not apply to the termination provision amounts.

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Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter please contact one of our Employment & Labour group members.

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