Terminating a short service employee, especially a highly paid manager, is usually the result of the employer failing to exercise due diligence in the hiring process. Often, employers don’t worry about such a termination, because they believe if they terminate a short service employee, without cause or notice, the notice period and damages for dismissal will be minimal. This is a mistaken belief that can be costly.
As readers of this blog know, there are 4 key criteria the courts will use to consider what would reasonable notice be in the absence of a written enforceable agreement. Those factors, first identified in the Bardal decision, are:
- Length of service
- Position with the employer
- Availability of alternate similar employment
On occasion, Courts will also consider other factors (e.g., inducement).
The following three recent cases are a clear reminder of how short service employees can often end up with lengthy notice periods and large damage awards:
- Age – 43 years old
- Length of Service – 6 months
- Position – salesman
- Other factors – Inducement found to be a key factor
Decision – 6-months notice $100,000 damages
- Age – 58 years old
- Length of Service – 2 ½ years
- Position – maintenance supervisor (first level of management)
- Other factors – Age and lack of jobs key factors
Decision – 8 months notice $100,000 damages
- Age: 61 years old
- Length of Service – 26 months
- Position – manager of a lodge—considered senior position
- Other factors – Inducement NOT a factor nor was fact he had to move to Campbell River
Decision – 9 months notice $85,000 damages plus housing allowance (but no bonus nor consequential damages for loss on mortgage).
Other Relevant Points: After reviewing the cases raised by each party (see below), the Court noted that the cases relied upon by the Plaintiff (employee) involved employees with much higher salaries (this is not usually considered a factor) and that the cases relied upon by the Defendant (employer) focused on much shorter notice.
Arguments raised at Trial:
- Defendant (employer) argued 3-5 months: The defendant paid three weeks’ salary to the plaintiff as pay in lieu of notice when he was terminated and argued that pay in lieu of notice in the amount of three to five months was reasonable in the circumstances. The defendant relied on the following judgments:Hall v Quick Silver Resources; Saalfeld v Absolute Software; Cabott v Urban Systems Ltd; and Pakozdi v B & B Heavy Civil Construction
- Plaintiff (employee) argued 12 months: In contrast, the plaintiff claimed he was entitled to payment of 12 months’ pay in lieu of notice relying on: Sollows v. Albion Fisheries (see: footnote 2); Waterman v Mining Association of BC; Taner v Great Canadian Gaming; Dobbs v The Cambie Malone’s Corp; Porter v Fleischer; Mackie v West Coast Engineering; Mitchell v Paxton Forest Products; and Munoz v Sierra Systems.
WHAT’S AN EMPLOYER TO DO?
You can pay me (or another lawyer) a significant fee to fight these cases after the fact and also potentially end up paying the dismissed employee a large award of damages;
For those readers of my Blog old enough to remember when we used records, I am going to sound like a broken record when I say the best approach is to obtain an enforceable written contract, that not only creates certainty for both parties, but can also dramatically limit your liability when it comes to termination.
So…pay me now or pay me later.
The content in the Michael Weiler Employment + Labour newsletters and blog is for your general information and should not be taken as legal advice. If you have a specific problem, please contact Michael Weiler to discuss your situation.
 This decision is also noteworthy for its good review of various cases on notice for short term employees