The obligations of an employer to an employee upon termination of an employee’s employment are generally governed by two bodies of law:
1) Statutory Entitlements – Each province has enacted legislation setting out minimum mandatory notice and severance entitlements based on the individual employee’s length of service. There are additional entitlements based on the size of the employer’s payroll and the number of employees terminated at the same time. These entitlements are available to employees that have not committed acts of “willful misconduct” (which the employer must prove) and are not subject to any off set for income gained through alternate employment. An employer is obligated to pay all accrued vacation pay and report all relevant information to Service Canada for Employment Insurance benefits and income tax purposes. The employer is alos required to effectively process all disability / benefits insurance claims that have been submitted during the statutory notice period.
2) Common Law or Contractual Entitlements – In all Canadian Provinces, in the absence of cause, a dismissed employee is entitled to a reasonable notice of termination or compensation for loss or remuneration and / or benefits as a result of a contract of an indefinite employment which can be written or more typically unwritten in nature. The period of notice is assessed by a Court based on age, length of service and the character of employment. There are many other factors which affect this determination including the manner of the dismissal, the employee’s health and the availability of alternative employment. Monetary entitlements may be setoff by statutory amounts already received and / or income from alternative employment.
Employee Resignation
Generally, a voluntary resignation is considered to be a bar to an action in wrongful dismissal. However in Canada, the preponderance of leading Court decisions dealing with the issue have stated that in order for the resignation to be effective it must be “clear and unequivocal.” Additionall, it must not be obtained as a result of a false representation, deceit or duress. Many Courts in Canada have also said that an employee delivering such a resignation given in the “heat” of an exchange with the employer must be given the opportunity of a “cooling off” period to reconsider and withdraw the resignation, even if it has been accepted. Of course, a resignation cannot be initiated by the employer nor deemed to operate as a result of some implied conduct on the part of the employee.
Constructive Dismissal
What exactly is constructive dismissal?
In the leading case of Farber v. Royal Trust , the Supreme Court of Canada gave a very expansive and definitive characterization to constructive dismissal that is binding on all Canadian jurisdictions. Simply put it is any act committed unilaterally by the employer that materially alters the nature of the employment agreement .
Constructive dismissals take on three major forms:
1) a substantial change in the employees remuneration and / or benefits (generally considered to be in excess of a 10% variance) with immediate effect
2) a change in an employees duties and responsibilities that an employee would find humiliating and / or cause an undermining of their ability to fulfill their duties
3) the creation of a “toxic” or insecure workplace in which the employee is harassed , humiliated and threatened on a consistent basis such that his / her employment has been rendered devoid of security
There are literally hundreds of recorded examples of such conduct in the case law although it is always the employee’s onus to prove that he / she has been constructively dismissed. In recent years the Courts have increased the “tolerance” level of the kind of conduct the employee must endure before he / she can consider the employment relationship as being repudiated, allowing a voluntary leaving that preserves the right to sue for constructive dismissal. An employee can be found to have condoned the change by a sustained period of silence on the issue. A prudent employee must immediately, and in writing where possible, protest any significant changes in their employment which prejudices their interests. The Courts are intolerant of any significant change that is imposed without precedent, notice or justified business reasons as not passing the “smell test” of a bone fide human resources decision.
Wrongful Dismissal
Job Loss? What exactly is wrongful dismissal?
An employee who is wrongfully dismissed without cause can expect significant protection from Canadian Courts who recognize that the employer must provide income/benefits maintenance during a reasonable period of notice that in theory would provide an opportunity to seek out comparable alternative employment. Similarly, Courts will provide compensation only during the period of income loss.
Duty to Mitigate
What does duty to mitigate mean?
Employee’s having found themselves dismissed from their employment have a duty to mitigate, or simply put: to exercise diligent efforts to search for employment. In Canada an employer can attempt to argue that an employee has lost his / her right to income protection by proving that the employee has failed in this duty. However, there is a heavy burden on the employer to show the employee has not been unreasonable in all respects relating to the job search.
This is a difficult strategy especially if the employee can show that he / she has considered all reasonable opportunities and job resources and is willing to relocate. The argument is especially doomed to failure if the employee can show that he has not received the assistance of a positive reference letter or outplacement counseling from the employer who is generally seen to be trying to benefit from its own wrong.