It is a common misconception that when an employer terminates an employment relationship without cause, they are only obligated to provide the notice period prescribed by The Saskatchewan Employment Act, SS 2013, c S-15.1 (the “Act”). In reality, most employees are entitled to a much longer notice period.
Under the Act, in the case of a termination without cause, the employer must either provide notice of termination (sometimes referred to as “working notice”) or pay in lieu of such notice (sometimes called “severance”). In most cases, the latter is preferred and the amount paid includes all compensation the employee would have received during the notice period had the employment relationship not been terminated. Under the Act, the length of the notice period is determined entirely by the employee’s length of service. It ranges from a minimum of one week for employees with more than 13 consecutive weeks but less than one year of service to a maximum of eight weeks for employees with over ten years of service.
What many people do not realize is that these notice periods represent only the minimum requirements. Failure to provide at least this minimum notice period can lead to the employer being reported to the Ministry of Labour Relations and Workplace Safety for non-compliance and enforcement of these standards. However, under the common law, which is a body of law developed through judicial and tribunal opinions, an employee is entitled to a notice period equivalent to the time they reasonably need to secure replacement employment. The determination of a reasonable notice period involves considering what are known as the Bardal factors, which include the character of the employment, length of service, employee’s age, and availability of similar employment having regard to the experience, training, and qualifications of the employee.
You may have heard that a reasonable notice period can be estimated by a rule of thumb: one month to one year of service. While this may be a practical starting point, this is not the legal test. Several significant factors can impact the length of the required notice period. For example, an employee who was recruited and relocated for a position requiring specialized skills in a narrow job market may be entitled to a notice period of several months, even if their tenure with the employer was relatively short. On the other hand, an employee with over five years of service, who is relatively young with marketable skills and qualifications in a thriving job market, may only be entitled to a notice period of a few months. Someone in their late 60s who spent their entire career with a single employer is often entitled to the maximum notice period, as finding similar employment at their age is unlikely. The critical question is how long it will take a particular individual to secure a comparable employment opportunity, which varies depending on the circumstances.
It is worth noting that while the applicable notice period can be substantial, it does not go on forever. Even if an employee has dedicated 50 years to a company, courts typically will not award notice periods exceeding two years. This is generally regarded as the maximum limit.
Additionally, whether you are an employee or an employer, it is important to pay attention to the method of severance pay calculation. Typically this is done by considering all amounts an employee would receive during the notice period, including base salary, annual bonuses, commissions, employer-paid pension contributions, employer-paid portions of group benefit premiums, and other taxable benefits. It does not usually include amounts related to expense reimbursements, such as an allowance for car, phone, fuel, tool, or boot expenses. Where an employee’s wages fluctuate seasonally or because they are paid on a commissions-basis, it is typical to average the last three years of wages to determine the rate applicable to the notice period. Exceptions to this general practice do exist, such as a significant downturn in the market or an unexpected but temporary interruption of employment.
The bottom line is this: if you are an employer considering terminating an employee, it is advisable to consult with a lawyer to determine what constitutes a reasonable offer of pay in lieu of notice. Failing to provide a reasonable amount could lead to a dispute and land you in court. Similarly, if you have been terminated after working for an employer for more than a couple years and receive only two weeks’ notice, you are likely entitled to more and should seek legal counsel.
Faith Baron
STEVENSON HOOD THORNTON BEAUBIER LLP
500-123 2nd Avenue S, Saskatoon, SK S7K 7E6
Telephone: 306-244-0132
Email: fbaron@shtb-law.com
The information in this article is not legal advice. We encourage you to consult with your legal advisor for advice specific to you.
This article was originally published in The Western Producer on November 3, 2023.