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Welcome everyone this is Amer Mushtaq from YouCounsel. 

If you want to understand only one thing, in Canadian employment law, that would be the concept of reasonable notice of termination. It is the single most important concept that has a strong bearing on your employment relationship whether you are an employee or an employer.  We’ll talk about what this reasonable notice is and what does it mean to you and will explain it in simple terms so you can apply it in your own circumstances.  Before we begin, we will start with our usual disclaimer that this course is not legal advice so if you have any specific questions you must contact a lawyer or a paralegal.

Why is reasonable notice important?  Basically, reasonable notice is important because it may translate into significant amount of money.  If you are an employer, you may end up providing a significant amount of money to your departed employee.  If you are an employee, you may be entitled to a large amount of money.  The relevance of reasonable notice is directly related to the money that you may get on termination. Two things you must keep in mind with respect to reasonable notice—if you are terminated without cause and you are entitled to common law rights on termination—in that situation, once those 2 conditions are fulfilled, then you are entitled to common law reasonable notice of termination.  To give you a perspective this reasonable notice could be as high as 24 months of income.  If you make $100,000 income annually then sometimes, if you meet the criteria, you may be entitled to up to two years of your pay.  That’s a significant amount of money on terminations—when you’re actually losing your job.  What is this reasonable notice?  The main thing you want to understand is that the term reasonable notice is called reasonable notice commonly but the proper term is “common law reasonable notice of termination”.  What is this?  It is a Notice that an employer provides to an employee and basically tells the employee that his or her employment is going to end.  This common law notice or termination notice could be given in one of three ways. 

Option 1 is working notice: employee can come to you and say “Hey Mary / Hey John your employment is going to terminate as of December 31^st of this year (let’s say 12 months from now) and I am giving you this working notice.  You are required to come to work every single day as if you are an employee and perform your duties.  We will provide you your salary and when December 31^st comes that’s your last day”.  Then you go home and never come back.  Then you don’t get any more money—this is it.  This is a working notice.  You work the entire twelve months or whatever the duration of the reasonable notice is and then you go home and that’s the end of it.  There’s no money at the end of it.

Option 2: Or the employer may say “Hey John / Hey Mary your employment is ending today.  Please return your keys, return your access cards.  At the end of the day you go home, or you leave now and you do not come back.  Here is the money for twelve months of your pay or they may say we will continue to give you your salary for twelve months until you find another job or something like that”.  But the termination happens immediately, and you get the money for the notice period.  That’s option number 2 which is actually the most common option.  Most employers do not like to retain an employee on their premises who knows that his or her employment is going to end sometime in the future because it makes it difficult for that employee to continue working knowing that he/she are going to lose his/her job some time in the future and there’s a date that has been announced.  Also, it may jeopardize the relationship (it may poison the work environment).  Majority of employers do not like to give working notice.  Sometimes it works better, and employers do that, but mostly the employers do not give working notice.  They would rather give you money in lieu of working notice.

Option 3: is a combination of both.  The employer can give part of working notice and part money in lieu of notice.  It happens sometimes when the factory is closing (the plant is closing) down in three months time.  Your reasonable notice requirement is let’s say twelve months.  The employer may say, we expect you to work for the three months or three months of the work notice and the remaining nine months we will give you the money.  It could be working notice, it could be money in lieu of working notice or money in lieu of notice or it could be a combination of working notice or money.  That’s what a reasonable notice is.  It is a notice that is provided by the employer to the employee providing that employee a specific date which will be the final date of employment of that employee’s notice of termination.

We talked about common law rights.  You’re entitled to reasonable notice if you are entitled to common law rights.  We’re talking about common law reasonable notice.  We’re not talking about the statutory termination notice which is a completely different thing.  One important part you want to understand is that you get common law rights by default—common law rights are presumed.  What do I mean by that?  If you get hired with a company and let’s say you don’t have any written job offer / written employment contract whatsoever, somebody interviews you and says, welcome we’re going to pay you $X amount, this is your position and can you start on such and such a date.  You say “yes”.  And that is an employment contract even though it’s verbal but you have entered into it and when you have entered that employment contract then you, by default, have all the common law rights.  That means if you are terminated for certain specific circumstances, then you are by default entitled to common law reasonable notice of termination. But, the second thing you want to keep in mind is that that Common Law Rights for the reasonable notice of termination that presumption is rebuttable.  What that means is that, that presumption can be displaced by a contract.  If you have a written employment contract the employer can put in a clause which can change your common law right on terminations.  It can take that away—it can remove that reasonable notice by contract.  How is it done?  We’re going to talk about that in the next slide.

Displacing common law reasonable notice: one way to do that is your employment contract may say—first of all it will have a specific termination clause—if in the in the event we terminate your employment without cause, you will be entitled to your statutory termination rights and nothing more.  We are limiting your rights to statutory rights on termination.  We’ve spoken about that in a separate lecture and maybe we’ll talk about it a bit more.  Each province has a specific statute that deals with employment relationship, terminations, and all of those—and they have specific rights for the employees. For instance, in case of Ontario, we have the Employment Standards Act 2000, which has a specific clause that say’s that if you’re employed for X amount of years you get  X weeks of pay as termination pay.  Those natural rights are very, very minimal.  There’s no comparison between the statutory rights and Employment Standards Act and common law rights.  There’s a huge difference. 

1. A contract can actually take away your “common law reasonable notice” and say what you will get is only statutory rights and that’s legal, it’s allowed, an employer can do that. That’s one way of doing that. 
2. The other way is that the the contract may say we retain your common law rights and if the contract retains your common law rights then that’s what you’re entitled to or the contract may not have any clause about terminations whatsoever and if there is no termination clause then the presumption is still there and so you are still entitled to common law reasonable notice.
3. The third way that the employer can do is give you something in between—more than statutory rights but not common law rights. They may say we’ll give you your statutory rights plus two weeks or plus a month or something like that, which may be much less than common law rights but it is at least more than your statutory right.  That could be a clause in your employment contract.  Or in some cases, which is really very rare, your contract may provide you terminations rights which are actually more than common law rights. I have seen this and you may have noticed this, this usually happens mostly in appointments which are political appointments. You would see in newspapers that a large Crown Corporation or semi Crown Corporation have been working—and it’s in the news the C.E.O. did not perform well and they terminated the C.E.O.’s employment.  Then you realize that the C.E.O. got hundreds of thousands of dollars and sometimes millions of dollars in termination—as a severance package and everybody’s up in arms.  But the legal answer that you will get is, unfortunately that was part of his or her contract and so there’s no way that we can take that away.  There are circumstances where termination rights are negotiated much more than common law rights but it’s very, very rare.  You won’t see it.  In my experience it is in these political appointments where this kind of thing happens.  These are some of the ways that contract can displace the presumption of reasonable notice.

Factors for Reasonable Notice: now I said you could get up to 24 months of pay and not everybody can get that—that is an extreme example.  What are the factors that you can keep in mind? what kind of factors would the courts consider in deciding what is an appropriate common law reasonable notice for a specific case.  There is no formula; there is no one reason—there are a variety of factors that the court considers and then decides what would be an appropriate common law reasonable notice for this employee who has been terminated without cause.  These factors are basically listed in a case but they talk about more factors to be considered and they’re called Bardal factors.  This is a term that is used in case law and employment lawyers use this often—every time they refer to Bardal factors, those are some of the factors that the court will consider in deciding reasonable notice.  When you look at the cases, the jurisprudence, the courts have considered as many as about 170 different factors in arriving at what is an appropriate reasonable notice.  There are four common—most common factors that you want to keep in mind.  Those are the essential ones that would apply to every single case: 1. Age: what is the age of an employee who has been terminated? The formula here or the top process here, in courts mind, is that the older the employee is, the more reasonable notice of termination should be.  Courts believe that it will take older employees longer time to find another job as opposed to younger employees.  Their reasonable notice of terminations on the basis of their age will play a role in an increased reasonable notice.  2. Second factor to keep in mind is length of service.  The longer the employee’s service with the employer is, the longer the notice period would be.  If you are a long service employee, then you will get a higher notice.  I have had clients who have worked for an employer for twenty years plus and they may be entitled to twenty four months of pay depending upon other factors.  3. Third factor that is considered is the position and the way this works is what is your position?  Are you a senior management employee, a management employee, middle management, lower management, clerical, technical, engineering person? What is the kind of position you’re occupying?  Then the principle the court applies generally is that the higher the position of the employee, the higher the notice period so if you are a C.E.O. of a company you will probably get higher notice than if you were a much junior employee.  4. The fourth factor is what are the chances of finding another job for that specific employee? There’s no empirical evidence available.  But there are different factors considered.  I’ll give an example: some time ago there were significant reductions in the automotive industry jobs and whatever jobs were being eliminated there were no alternative positions.  Many engineers who had automotive industry experience for many, many years had to retrain to go into another job. That was a factor that for them chances of finding another job in Canada in the automotive industry was slim and so the court would award higher notice.  Those are some of the factors that court will consider in deciding what would be an appropriate reasonable notice and as I said it could be as high as 24 months or sometimes even a bit more. 

What is it that you want to carry from this course (from this lecture)? It is that when you are negotiating your employment contract (you are not hired yet) you are a candidate who is at a stage where the employer is making you an offer and has provided you with an employment contract and if you have any room to negotiate sometimes (you don’t sometimes) you just accept, you’re just happy that you got a job and you sign at the dotted line and you take the job.  In many, many cases you have room to negotiate.  If you do, you want to make sure that your common law termination rights are are not displaced and they remain intact.  I have advised many of my clients when they have been faced with a job offer and they have successfully negotiated that position because if the employer really wants you for that position, if the employer believes that you are an important addition to their team then they will value your negotiation.  They will value that you are going to look after some of your own interests in that employment contract.  The second part is that even if you already have an existing employment contract or you’re not able to negotiate something different you want to make sure that you properly review your existing employment contract because even if it has a termination clause, in many, many cases that termination clause maybe challenge, may be shown or may be proven that it’s unlawful or it’s improperly drafted.  Then that will not rebut the presumption for a common law notice and you may be still entitled to it.  It’s a complex area in employment law—which termination clauses are valid and which are not and if you talk to any employment lawyer, they will give you the advice that over 90-95% percent of the time smart employment law counsel will be able to challenge the appropriateness of a specific termination clause, get it thrown out and then have their client get some reasonable notice.  If you are unclear, if you’re not sure, you want to talk to an employment lawyer so that you understand your rights because what is at stake is a significant amount of money.  Those are two things that you want to keep in mind.  Hopefully, this gives you some understanding of what is common law reasonable notice.  We will have many more lectures. If something is unclear or you want something elaborated upon, by all means reach out to us or write to us with your comments and we will be happy to cover that in future lectures.  Thank-you for watching.