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The complexities of Common law

In our last column we discussed the minimum notice and severance pay a non-union employee dismissed without just cause could expect to receive.

Most employees, however, are entitled to more than the minimum requirements of the Employment Standards Act (ESA) and Canada Labour Code (CLC). To discover the actual requirements we need to travel to the world of wrongful dismissal law.

Wrongful dismissal

Wrongful dismissal law is a small part of a body of law called the Common Law. The Common Law is a vast body of law created by judges over hundreds of years. Unlike the ESA and CLC there is no statute in which we can look up the requirements. Rather we look at previous cases, which we call precedents, in order to determine the legal requirements. And this is why most people will need a lawyer or legal advice to establish their rights.

Courts look at numerous factors to determine theproper amount of notice an employee is entitled to receive. The main factors are length of employment, age, education, prospects of obtaining alternate employment and the employee’s duties and responsibilities. These and other factors are considered and, after an analysis of comparable cases, a judge comes up with the legal notice requirement, called reasonable notice.

Of course, in most cases a judge isn’t necessary to decide the issue because either the employer provides more than the minimum ESA/CLC requirements, and the employee doesn’t challenge the separation package, or there is a negotiated settlement.

In a small percentage of cases, lawsuits are commenced and eventually they get settled or a judge is asked to make a ruling.

Many people wrongly believe that there is a formula of one month per year of employment. That is, an employee with 10 years of service would get a 10 month package. There is no such formula. Some employees end up with more and some end up with less than one month per year. There is a generally accepted upper limit of 24 months, although in rare cases higher awards have been granted.

So far this sounds pretty good for employees. Other than having to get some legal advice you have a pretty good shot at getting a package that exceeds the minimum statutory requirements. But there is a wrinkle and it’s called the “duty to mitigate.”

If you want to get more than the minimum statutory requirements you must act reasonably in trying to obtain alternative employment. If you don’t, a court can reduce the package it would otherwise have awarded.

The bad news is that if you do get alternative employment the court will deduct your earnings from your package. For example, suppose a court rules that you should have received 12 months of notice and calculates the package as being worth $75,000. Now suppose you’ve found alternate employment and earned $25,000 during the 12 months. The court will deduct the $25,000 from the $75,000 and you’ll end up with an award of $75,000. Fortunately, this deduction cannot take the award below the minimum statutory requirements.

A terminated employee must decide whether to file a complaint with the provincial or federal Minister of Labour to receive the minimum statutory notice and severance pay or seek to obtain a wrongful dismissal settlement. You may not do both, so in many cases getting some legal advice before you make a decision would be wise. At the point you have just been fired you likely won’t know how well you will fare in getting alternate employment so this can be a very difficult decision.

Complex Area

In this complex area of the law, I will leave the last word to prominent Toronto employment lawyer Barry Kuretzky who offers this bit of advice: “Formulating a reasonable package for an employee is more of an art than a science. Each case will depend on its own facts and unique circumstances. No prior court decision will determine the final result. In the end, there is no law, but just a good argument!”