Terminating an Employee who has Submitted an Extended Notice to Quit

| October 10th, 2017 | No Comments »

Employees owe their employers a notice period when intending to quit, just as an employer owes an employee notice when seeking to terminate an employee. This ensures each party has time to adjust to changes without suffering too much hardship. When an employee submits a notice period that is considerably lengthy, however, employers may wish to end the notice period early. There are a few things for employers to consider when faced with this situation.

An employer cannot end the employment relation immediately after receiving a notice to quit from an employee. In particular, when receiving a lengthy notice, such as 3 months, for instance,  employers that dismiss an employee early may be faced with litigation for wrongful dismissal. Absent of a termination clause within the employee’s employment contract, employers must give ‘reasonable notice’ established through common law in order to end a lengthy notice period given by an employee. Common law considers the employee’s length of employment, skill level, whether or not they were in a managerial position, and so on. The intent of reasonable notice is to allow the employee enough notice time to gain comparable employment, which is why senior, highly skilled employees will be owed more notice than lesser skilled employees. Employers seeking to shorten a lengthy notice period given by an employee, therefore, absent of a termination clause, must offer common law notice of termination or pay in lieu to end the employee’s notice period early. It is important to ask an employment lawyer what an appropriate length of notice would be, as each scenario will vary in accordance to the facts.

Much of this uncertainty may be avoided if the employee is subject to a termination clause within their employment contract. It is advisable to have a legal expert draft such clauses, as it must comply with minimal standards legislation to be enforceable. If found unenforceable, common law notice will apply.

Are you entitled to bonus pay that would have been earned during your notice period in the case of wrongful dismissal?

| March 6th, 2017 | No Comments »

A notice period is required by an employer seeking to terminate an employee. Employers can either provide the employee with notice or pay that would have been earned had the employee worked throughout the notice period. When an employee is terminated without a notice or pay in lieu, this is a wrongful termination and a breach of the employment contract. The remedy is damages paid by the employer in the amount equal to the compensation that would have been earned by the employee during the reasonable notice period that is owed.

What about bonuses that would have been owed to the employee, but require the employee to be “actively employed” at the time the bonus is to be paid? A clause that requires ‘active employment’ during the time of payment does not apply in the case of wrongful dismissal. This was affirmed in the case of Paquette vs. TeraGo Networks Inc. (2016). Employees are generally entitled to bonuses that would have been paid during the notice period, regardless of whether or not the employee was actively working during the time. This is especially the case when bonus pay is essential to overall compensation (i.e. a significant proportion).

To gain a better understanding, it helps to review the Paquette (employee) vs. TeraGo Inc. case. Paquette was under an employment contract that required him to be “actively employed” at the time the bonus was to be paid. The bonus here was set to be paid every February for the previous year’s work. The judgement by the Superior Court of Justice awarded Paquette 17 months of damages for only base-salary and benefits. Paquette appealed this decision, arguing that he is also entitled to bonuses that would have been received had he actually worked for the duration of the notice time (17 months). The Court of Appeals (Ontario) awarded Paquette the bonus pay as well. Simply put, the notice pay is meant to place an employee in a similar position had there been no breach in the employment contract. Here, if Paquette was not wrongful dismissed, he would have collected his bonus at each payment date (February 2015 and 2016). In other words, Paquette had the right to work but was prevented from doing so as a result of the employer’s breach. For the year that Paquette did not work (2016), the bonus was calculated by taking the average of the previous years’ bonus payment.

If you are an employee that receives bonuses as an essential part of compensations (ie. a significant portion), then a clause requiring you to be employed at the time of bonus pay may leave you vulnerable if wrongfully dismissed. Employees in this situation are encouraged to seek legal advice to ensure you are fairly compensated for damages and are fully aware of your workplace rights.