Employment Contracts 101: Common Law Reasonable Notice

Some people are aware that an employer must provide an employee who is dismissed without cause up to 8-weeks’ notice under BC’s Employment Standards Act (“ESA”), depending on an employee’s length of service. This notice could take the form of working notice, where the employee continues to work for the notice period, or it could be pay in lieu of notice, which is also sometimes referred to as “severance.”

However, did you know that unless an employment contract expressly states that an employer will only be providing the amount of notice set out in the ESA, an employee may be entitled to much more than 8 weeks?

This extra entitlement is based off something called the “common law reasonable notice period.” Historically, Canadian courts have wanted to ensure that innocent employees have a certain degree of financial security for the reasonable period of time that it would take them to find new employment.

To calculate how many months of common law reasonable notice an employee is entitled to, a court will look at various factors, including:

  • the nature and character of the employment;
  • the length of service;
  • the age of the employee; and
  • the likelihood of securing similar employment, considering the employee’s experience, training, and qualifications.

While each of the factors can make the common law reasonable notice period longer or shorter, it is common for employees to be entitled to several months (and even as much as 24 months!) of notice, which can mean an employer could be liable for a significant amount of money for long-term employees.

However, the good news for employers (and the bad news for employees) is that by including a well-written termination clause in an employment contract an employer can contractually limit the amount of common law reasonable notice or pay in lieu to which an employee might be entitled upon termination and limit the notice period to the ones set out in the ESA.

If you’d like to learn more about common law reasonable notice and employment contracts, please reach out to Claire MacLeod at [email protected] or Leah Sorge at [email protected].

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