A recent decision of the BC Supreme Court further highlights the potential value of using written employment contracts to determine an employee’s notice entitlements upon termination of employment.
Many of our readers will be familiar with the concept of “reasonable notice”. In British Columbia, an employee who is terminated without cause is entitled to what’s called “reasonable notice” of termination. Reasonable notice is unfortunately not a mathematical calculation. It is contextual. Reasonable notice is assessed in each case based on the weighing of several key factors: the employee’s age, length of service, position and prospects for re-employment in a comparable role.
Reasonable people can disagree about reasonable notice. In Chapple v. Big Bay Landing Ltd., 2018 BCSC 1666, for example, the Court recently awarded 9 months notice to a 61 year-old Resort Manager with only 26 months’ service. The employer argued that 3 – 5 months was reasonable in the circumstances, while the employee took the position that 12 months was appropriate. Quite a disparity, and each had case law to support their position. In its judgment, the Court cited a 2009 decision of the BC Court of Appeal which noted that short-service employees (less than 3 years service) receive proportionately longer notice periods, as compared to other employees. In Chapple, the Court expressly adopted that approach in granting 9 months’ notice to an employee with just over 2 years’ service.
Depending on your perspective, you may be of the view that the result in Chapple was unduly generous. On the other hand, you might say that this made sense because short service employees also need a reasonable amount of time to get their affairs in order after losing their job. Regardless of your views on the outcome, we can all agree that sorting this out required a lot of time and resources for both parties, including a full-day in court. The good news is that we can address this issue more proactively through the use of a written employment contract. A written contract could have helped to avoid this legal dispute from arising in the first place.
Employment contracts are one of the best ways for employers to create certainty around entitlements upon termination and reduce the risk of a legal dispute. Through a written employment contract, employers and employees can agree in advance upon the notice or payment in lieu that will be provided in the event of dismissal without cause.
If you have any questions about this article, please contact Nicole Toye.