Canadian Employment Law Today

July 19, 2017

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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with Meghan McCreary Ask an Expert MACPHERSON LESLIE & TYERMAN REGINA Have a question for our experts? Email Canadian HR Reporter, a Thomson Reuters business 2017 2 | July 19, 2017 Have a question for our experts? Email Terminated workers finding new jobs quickly Question: In a termination agreement, can the amount of pay in lieu of notice provided be less than common law notice or statutory minimums if the terminated employee finds new employment before the notice period ends? Can there by a clause stipulating pay in lieu of notice stops immediately in such circumstances? Have a question for our experts? Email Answer: Under employment standards leg- islation, an employee's entitlement to statu- tory notice of termination is not aff ected by his mitigation eff orts. As a result, even if an employee immediately secures new employ- ment, the employee is still entitled to the pre- scribed statutory notice of termination, or pay in lieu, if he has been dismissed without cause. Practically speaking, if working notice of termination is provided, an employee ob- tains new employment and cannot work out the notice period, the employer's obligation to provide working notice is extinguished. But if statutory notice is provided in the form of pay in lieu of working notice, it is payable even if the employee starts new employment during what would otherwise be the "work- ing notice" period. Parties to an employment contract are not permitted to contract out of the minimum protections of employment standards legisla- tion and contracts that attempt to do so are invalid. However, as long as the minimum statutory notice of termination is provided under a contract, the parties are free to ne- gotiate any other terms respecting severance at termination that surpass the minimum entitlement. For example, an employment agreement can stipulate that an employee is only entitled to the statutory minimum notice at termination. An agreement can also stipu- late that if notice of termination or pay in lieu above the statutory minimum is provided at termination, those payments will be reduced, or will cease entirely, if the employee fi nds new employment during the notice period. Again, from a practical perspective, it will only be possible to cease paying severance during the notice period if the severance payment is paid in instalments, or as sal- ary continuance, rather than as a lump sum. However, if a lump-sum severance is paid at termination, it is quite common for the par- ties to negotiate a discounted amount for the lump sum payment, to account for the fact that the employee's duty to mitigate will not be taken into account. Alternatively, the parties may negoti- ate that the employee can elect to accept a smaller lump-sum severance payment, or a larger salary continuance payment with a corresponding duty to mitigate. For exam- ple, an employee may be given the option of accepting a lump sum equal to six months' salary at termination, or of accepting salary continuance for 10 months on the condition that payments will cease, or be reduced, if the employee obtains new employment dur- ing the notice period. Start of reasonable notice period Question: Does the notice period start when an employee is verbally informed of termination or when the employer provides a termination letter? Answer: In every province in Canada, em- ployment standards legislation requires that notice of termination of employment must be given in writing. As such, statutory notice of termination does not begin to run until a written termination letter is provid- ed to the employee by the employer, making the termination offi cial. At common law, the onus of proving that a notice of termination is clear and un- equivocal "rests upon the employer who seeks to raise it as a defence to an action for damages for wrongful dismissal" — see Yeager v. R.J. Hastings Agencies Ltd. In other words, an employer has the onus of proving that proper notice of termination was given in order to establish that notice of termina- tion runs from a particular date. Notice of termination has been held to be invalid where an employer creates uncer- tainty with respect to the status of an em- ployee. As a result, while statutory notice of termination must be given in writing, the best practice is to provide all notices of termination in writing and to state clearly the date that notice is given and the date at which the termination becomes eff ective. e notice period will begin to run from the date that written notice is given. e principle that notice must be pro- vided in writing is also relevant to con- structive dismissal situations where the employer gives unilateral working notice of a fundamental change to terms and conditions of employment. An employer may aff ect a unilateral change to terms and conditions of employment by providing working notice of the change equal to the notice required to terminate the employ- ment contract, giving the employee an op- tion to accept the change or be terminated at the end of the working notice period. e employer can then off er the employee a new employment contract under the al- tered terms. However, if the employer fails to provide proper notice of termination of the contract, the employee will be entitled to insist on adherence to the original terms of the employment contract. As such, no- tice of the termination of the contract (if the change is not accepted) should be provided in writing. It must be made clear, in writ- ing, that if the employee does not accept the change at the end of the working notice period, his employment will be terminated — otherwise the notice of termination will not be eff ective: see Wronko v. Western In- ventory Service Ltd. For more information see: • Yeager v. R.J. Hastings Agencies Ltd., 1984 CarswellBC 768 (B.C. S.C.). • Wronko v. Western Inventory Service Ltd., 2008 CarswellOnt 2350 (Ont. C.A.). Meghan McCreary is a partner practicing la- bour and employment law with MacPherson Leslie & Tyerman LLP in Regina. She can be reached at (306) 347-8463 or mmcreary@ The best practice is to provide all notices of termination in writing and to state clearly the date notice is given and when the termination is effective. It's only possible to stop paying severance if it's paid in instalments rather than a lump sum

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