Termination and Notice Periods
Terminating Employees: What Happens When You Don’t Have an Employment Contract?
When entering employment relationships, some employers choose not to have employment contacts.
From a legal standpoint, it is not necessary to have an employment contract when hiring in British Columbia. However, there are advantages to having an employment contract, specifically when it comes to an employer’s liability upon termination.
Severance under the Employment Standards Act
The Employment Standards Act in British Columbia (the “ESA”) provides for notice of termination or pay in lieu of notice (or a combination of both). When an employee is terminated, the written notice required under the ESA is determined by how long the employee was employed by their employer. The following chart specifies the periods of statutory notice required under the ESA:
|Length of Employment||Notice Required|
|Less than 3 months||None|
|3 months but less than 1 year||1 week|
|1 year but less than 3 years||2 weeks|
|3 years but less than 4 years||3 weeks|
|4 years but less than 5 years||4 weeks|
|5 years but less than 6 years||5 weeks|
|6 years but less than 7 years||6 weeks|
|7 years but less than 8 years||7 weeks|
|8 years or more||8 weeks|
Further entitlement upon termination arises under the common law in circumstances where there is no employment contract or the employment contract does not adopt the ESA. Absent a specific termination provision in an employment contract, which properly sets out an employee’s entitlements upon termination, an employee is entitled to reasonable notice of termination or pay in lieu under the common law. The ESA provides the minimum statutory notice that an employer must provide an employee upon termination.
Common Law Severance Entitlement
To determine reasonable notice under the common law, the courts take into consideration the following factors:
- Character of employment (junior, senior, managerial);
- Length of service of the employee;
- Age of the employee at the time of termination; and
- Availability of similar employment, having regard to the experience, training, and qualifications of the employee.
The only reliable guide to predict notice periods, in any case, are previous court decisions.
In many cases, notice entitlement under common law may amount to one month per year of service but is often much more for older and/or more senior executive employees.
There is no fixed maximum notice period under the common law as each case is determined on a case-by-case basis. However, British Columbia has yet to award an employee more than 24 months’ notice or pay in lieu of notice
If you are looking to terminate an employee or if you have been terminated, it is always a good idea to speak to a lawyer about your obligations as an employer or your entitlements as an employee. Or better yet, get ahead of the game by having us prepare and/or revise your employment contracts to restrict future liability. We are always happy to help. Contact our employment lawyer, Natasha Nair with your employment questions today.
© Linley Welwood LLP. The contents of this article do not constitute legal advice. Readers should seek legal advice in relation to their own specific circumstances.