Should your severance or reasonable notice be reduced because you got another job?

wrongful dismissal photoThis is a question that I often get asked in severance package review meetings. The answer is that your statutory severance (under the employment standards act) will never be reduced if you are terminated without cause but your common law reasonable notice maybe can be. Numerous contracts of termination include a so-called “balloon clause” which includes a separation payment that will be paid to you in the event that you find another job.  Normally what is included (or what I include when I draft termination precedents) is that you will be paid 50% of the remainder of your severance if you find another job. For example, if you are paid 12 months notice and six months into your notice you end up finding another job then you will be paid the remainder three months notice normally in lump sum. This is incentive for you to find another job and double up on your income as well as incentive for your former employer to pay less severance to you and get you off the books.

If there is no balloon clause in your termination contract then term of reasonable notice (common law part of your severance) should not be reduced simply because you obtain new employment after dismissal. Damages do not stop because you have found alternate employment within the reasonable notice. This is been set out in numerous cases such as Schumacher v. TD Bank and Meyer v. Jim Pattinson industries Limited.  Reasonableness of notice is determined at the date of your termination – the point at which your entitlement to notice arises. The efforts of the employee to obtain alternate employment are more properly related to the question of mitigation, and should be addressed in calculating the actual damages versus damages thereafter. In short, the severance paid to you is calculated when you’re terminated and once that severance is agreed to by both parties is to be paid no matter if you find another job.

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    What are SOME grounds for just cause dismissal?

    Some basics on just cause termination – you may have been terminated inappropriately.

    Disputing just cause termination issues are some of my favorite cases to advance for terminated employees. Out of the absolute infinite possibilities I often counsel clients on just cause termination issues such as:

    • insubordination;
    • conflict of interest;
    • incompetence;
    • absenteeism and lateness;
    • dishonesty;
    • misconduct;
    • intoxication and addiction;
    • sexual harassment;
    • off-duty conduct; and
    • illness or disability.

    It’s important to note that in appropriate circumstances, any of these forms of misconduct may be sufficient to support just cause termination. Your contract of employment (written or implied) has an implied term which states that your employer can terminate your job for just cause, without being obligated to give reasonable notice or similar statutory termination payments.

    The issue in just cause is whether you have been guilty of misconduct, sufficient to support your termination and this is always a factual determination.  It is case by case and determined individually and factually.

    Who bears the onus of proving your termination for just cause?

    Your employer bears the onus of proving just cause termination. Not you. If there is no just cause for an employee’s termination, you will usually be entitled to reasonable notice or pay in lieu of notice from the date of termination. Whether

    just cause for summary dismissal exists normally depends upon the employer’s conduct. In some cases, employers may be under a duty to provide you with a warning that particular behavior is not acceptable before resorting to firing you.

    The failure to provide a warning may be fatal to a finding of just cause for termination.

    You're Fired SignThe doctrine of condonation is also a potential barrier to a finding of just cause on your behalf. If your employer has previously condoned, overlooked, or forgiven certain misconduct that might otherwise support your termination, your employer may be unable to justify your  just cause termination without notice. In such cases, the onus is usually on you to prove that your behaviour had been condoned in the past.

    An employer who provides a warning to an employee has been held to have condoned the employee’s misconduct, precluding the employer from relying upon the same incident to support summary dismissal. Of course, if the employee were to repeat the misconduct, or to exhibit other unacceptable behaviour after the warning, just cause for dismissal might be appropriate, notwithstanding the employer’s earlier condonation.

    Typically, an employer can only justify a termination for cause based upon conduct that occurred during the employment relationship. However, where the employer discovers, after terminating an employee, that the employee engaged in conduct sufficient to amount to just cause, the employer may use that conduct to justify a refusal to offer pay in lieu of notice.

    On the other hand, where the misconduct occurs post-termination, the employer cannot, normally, use that evidence to justify the employee’s summary dismissal. Your post-termination conduct may, however, be properly considered as a factor explaining or highlighting other pre-termination behaviour. While false allegations of cause may result in a finding of bad faith against an employer, a failed just cause defence will not be punished if the allegations of cause were made by the employer in good faith

    Absences from employment may or may not amount to just cause – it is all dependent on the facts. In the New Brunswick case of Walsten vs. Kinonjeoshtegon First Nation the Manitoba’s Queen’s Bench determined that two workers unexplained absences did not amount to just cause – since their job expectations (described at “lax”) did not involve fix days hours or even work.

    What about misconduct or drinking at work? In the case of Ritchie vs. Richelieu Hardware Canada ltd. an Ontario Judge held that a warehouse manager’s termination for drinking at work was wrongful, seeing how the employer supplied the booze and made it readily available during work hours.

    You may have been terminated without cause inappropriately. For more information please fill in a contact form and a lawyer will get back to you within 5 hours.

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      Does your length of service affect your severance?

      Severance and your length of service. Does it matter?

      Do lawyers and human resource professionals take into account your length of service when calculating your severance? The short answer is yes.

      terminated stampWhen calculating what an appropriate “severance” amount will be we  take a look at certain relevant factors. Once these relevant factors have been properly considered by a Court, the matter of the length of notice ultimately becomes an issue of Judgment.   One of the relevant factors to be considered is the length of service of an employee. It is a very important factor in the determination of reasonable notice. By giving weight to the employee’s length of services in the calculation of reasonable, courts have implicitly recognized a limited proprietary right to one’s employment which grows the longer one has been employed.

      One of the leading wrongful dismissal case that deals with this is the case of Ansari v. British Columbia Power Authority where the court said ” For reasons which are largely subjective and which I would not presume to disturb, the law requires a longer notice period for a long-term employee even though discharged employees of the same age, skill and responsibility suffering under the same economic factors must be assumed to require an equal period to obtain equivalent employment. The reasons for this anomaly may be that a long-term employee has a moral claim which has matured into a legal entitlement to a longer notice period. “

      In summary – the length of service as a variable does however have a functional aspect to it – the longer you work for your employer the more difficult it is to find alternate employment.

      Always remember – we try not to calculate reasonable notice (employee payout at termination) by using a rule of thumb. We always try and consider all relevant factors – and weight those factors in determining how much severance should be paid.

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