The Employment Standards Act sets out an employees’ minimum entitlement to notice and severance pay on termination of employment. Courts have long held that the Employment Standards Act, 2000 are minimum entitlements only. According to the Courts, an employer is obliged to pay damages to the dismissed employee during the time it will take to replace the lost employment.
While the Employment Standards Act recognizes the employer’s right to terminate employment without cause and sets out a formula for the notice the employer is required to give the statutory notice period does not take into account the particular circumstances of the dismissed employee: the President of a company, earning $150,000.00, is entitled under the Act to the same amount of notice the Receptionist earning $20,000.00. In contrast, the reasonable notice period at common law is in an attempt to estimate, in advance, approximately how long it might take a particular employee to find comparable employment.
The main factors relevant to the determination of a reasonable notice period are the employee’s age, length of service, salary, and the level of position. It will obviously take longer for a sixty (60) year old woman who has been at the same company for thirty (30) years to find a new position than it will for her twenty-five (25) year old colleague earning a lower salary.
Employers can limit an employees’ common law entitlement to reasonable notice so long as the Employment Agreement does not seek to avoid payment of the Employment Standards Act minimums. This was recently addressed in Stevens v. Sifton Properties Ltd., where the Plaintiff (a golf professional with Sifton Properties) was terminated without cause. The employer sought to limit the damages it was required to pay her relying on an employment agreement which indicated,
(a) The Corporation may terminate your employment for what it considers to be just cause without notice or payment in lieu of notice;
(b) The Corporation may terminate your employment without cause at any time by providing you with notice or payment in lieu of notice, and/or severance pay, in accordance with the Employment Standards Act of Ontario.
(c) You agree to accept the notice or payment in lieu of notice and/or severance pay referenced in paragraph 13(b) herein, in satisfaction of all claims and demands against the Corporation which may arise out of statute or common law with respect to the termination of your employment with the Corporation.
Ms. Stevens sued her employer alleging the employment agreement was not enforceable.
The Court agreed with Ms. Stevens, declaring that the termination provisions were unenforceable because it did not comply with the Employment Standards Act which required benefits be continued during the statutory notice period. These benefits, which included vacation, employee health care and pension plan, were significant to Ms. Stevens.
A carefully crafted employment agreement will minimize an organizations’ obligation to pay notice on termination of employment. The contract, however, must comply with the statutory framework. If the agreement undermines the statutory minimums the termination clause could be struck and the employee would then be entitled to an inflated payment of reasonable notice as prescribed by the common law.
