TERMINATION OF EMPLOYMENT – HOW MUCH SEVERANCE ARE YOU ENTITLED TO?

by Kathleen Coutts

In Manitoba, a non-unionized employee can be terminated by their employer at any time for essentially any reason. There are a few exceptions to this rule, such as terminating an employee for a protected ground under The Human Rights Code or not complying with certain provisions, such as leave provisions, under The Employment Standards Code. Generally however, an employee’s only recourse when terminated is to ensure they have received the appropriate amount of working notice of the termination, or pay in lieu of notice (sometimes commonly called ‘severance’).

There are two legal branches that must be considered when determining the appropriate amount of notice or severance a terminated employee is entitled to in Manitoba. The first is under The Employment Standards Code and the second is under the common law (which is the law developed by the Courts regarding how much “reasonable notice” is to be provided to the dismissed employee). An employee also must be aware of their duty to mitigate any losses they may suffer resulting from the termination.

The Employment Standards Code of Manitoba

The Employment Standards Code is a legislative Act, created and passed by the Manitoba government, which contains provisions specifically setting out the minimum amount of notice a dismissed employee is entitled to based only on their years of service.

Notice under The Employment Standards Code is as follows:

Period of employment Notice period
less than one year 1 week
at least one year and less than three years 2 weeks
at least three years and less than five years 4 weeks
at least five years and less than 10 years 6 weeks
at least 10 years 8 weeks

There are a number of exceptions to the above, including when an employee is on probation of 30 days or less, when an employee is on a fixed term contract that terminates at the end of the term, or when the employee is employed in construction (seasonal). The main exception is when an employee is terminated for “just cause” which means that the termination was warranted in the circumstances due to conduct and/or failures of the employee. When an employee is terminated for just cause, they are not entitled to any notice or severance. They are also usually not entitled to receive Employment Insurance benefits.

If you have been terminated and your employer failed to provide you with the length of notice indicated above or you believe your employer terminated you for just cause unfairly, you can contact Employment Standards and file a complaint.

A complaints officer will be assigned to investigate the complaint and, if they find in your favour, an order will be issued wherein the employer is required to the appropriate period of pay in lieu of notice as set out under The Employment Standards Code.

The Common Law – Reasonable Notice

Generally, the amounts set out under The Employment Standards Code are considered to be the minimum requirement an employer must meet. The Courts have found that notice or severance in addition to what is required by the Code is often required and is generally known as reasonable notice. Reasonable notice is usually required to be provided or paid to an employee when they are dismissed or terminated by the employer without just cause. The main purpose of reasonable notice is to permit the dismissed employee to have an opportunity to find other comparable work. The length of such reasonable notice or severance is then based on a Court’s consideration of a number of factors:

a)   Length of Service: Employees who have worked with an employer for a long period of time are entitled to more notice than employees who have worked for a shorter period of time. There is a very loose rule of thumb where some employers may base an assessment of notice as being between 2 weeks and 4 weeks of notice for every year of service. However, Courts have never considered themselves bound by such a rule of thumb and at the high end of length of service have generally not gone higher than 24 months of notice.

b)   Position and Rate of Pay: A more senior position and higher rate of pay can create a greater obligation on the employer regarding notice. That is because it will likely be more difficult for the employee to find comparable employment when they have a more senior position and earn a higher salary.

c)   Age: Employees who are older will generally have a more difficult time finding other comparable employment. Accordingly, an older employee is often entitled to more notice due to the additional difficulty they will face in finding other work.

d)   Specialized Training/Experience: When an employee has specialized training or very specific experience in a limited field, more notice is required because it will often take longer to find comparable employment.

e)   Relocation: Where an employee will likely be required to relocate to find comparable employment, more notice is generally required in light of the obvious additional hardship this imposes on an employee.

The above factors are not an exhaustive list and are only some of the considerations a Court will make when assessing the amount of reasonable notice an employee is entitled to under the common law. The Courts determine notice on a case by case basis.

Duty to Mitigate

A terminated employee also has a duty to mitigate his or her losses by actively seeking new employment. Put another way, an employee, once terminated, cannot sit at home for 6 months and expect a Court to award them severance for this entire period, given that its purpose is to permit the employee an opportunity to find other comparable work. The employee has a duty to go out and look for a job. This does not mean that he or she must accept any job that becomes available, but an employee should be actively seeking re-employment in their field and should act reasonably in their choice of other work. If an employee is re-employed during the reasonable notice period, the employee is generally not entitled to “double-dip” and the Court may require that there be a set off between what the employee made at their old job and what they are now making at their new job. If their new job pays more, they usually aren’t entitled to any severance up to the point the commence the new job and beyond.

This does not however apply to the notice periods under The Employment Standards Code discussed above. These periods are to be paid out regardless of whether an employee finds new employment or not. However, if the employer terminates an employee but provides ‘working notice’, meaning the employee is expected to continue working throughout the notice period while looking for a new job, should that employee leave before the expiration of the working notice period, he or she is essentially forgoing the remaining notice and is not entitled to claim severance for the remaining period.

If you think you have been wrongfully dismissed or not provided sufficient notice or severance, please contact a lawyer in our Employment practice area .