Q: I work for an agricultural company that was purchased by another company. It’s not clear if I have a job once the new owner takes over. I’ve been here 15 years. Am I owed severance pay if they don’t offer me a job?
A: You are asking about a branch of employment law referred to as wrongful dismissal. With more takeover bids in agribusiness, these situations are more common.
An employer can fire someone for cause, which means for a justified legal reason. If cause exists, the employer has no obligation to provide notice or severance pay. An example is where an employee is caught stealing. The employer is entitled to take such a breach of trust seriously and is justified in immediately dismissing the employee.
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An employer can also fire anyone it wants, even for no reason and in the absence of cause. The only issue is whether the fired employee is entitled to notice or pay in lieu of notice. Here, the purchase and reorganization would operate as an effective or constructive dismissal. You would likely be entitled to notice.
Actual working notice is sometimes given. For example, if a company is downsizing it might give a number of months of notice to an employee. That person stays on the job for that period of time, doing his work and collecting his pay. At the end of that period the job ends and the employee leaves. As long as the notice period is sufficient, the company has done everything it
has to.
Sometimes the situation is unpleasant. Employers can make things so miserable that an employee quits before going crazy.
This can amount to constructive dismissal. While the employee left, he did so because he was driven out and not because he genuinely wished to leave.
If your job is terminated without cause and you are given no notice or insufficient notice, then the employer has to pay you your salary and benefits for the time that would have amounted to proper working notice. This is called pay in lieu of notice.
There is no precise formula to determine your entitlement to notice, or how long it should be or how much pay in lieu you should receive. Provincial legislation may apply to give a few weeks’ pay, but this is a minimum and you may be entitled to more.
You will often hear it described as two to four weeks per year of service, but that’s not anything the courts use. It’s just a rough and informal guide.
Courts look at a large set of factors in each case.
Depending on the position you held, seniority, responsibility, years of service, age, training, education level and availability of alternate employment, the amount of notice or pay will vary. Remember that pay in lieu of notice includes benefits, not just salary.
If you are dismissed, you have a legal duty to mitigate your loss. This means you have to take reasonable steps to find another comparable job or otherwise reduce your claim.
So if you are terminated and two weeks later you come across a position that is at least as good as yours with no move or change of residence required, then you have to apply for it (and if offered, take it) or you risk having no claim for notice or severance pay. The law just compensates you for actual losses. If you don’t have any loss because you got a great job right away, then you have no claim.
Your duty to mitigate and look for other employment starts the moment you are terminated from your current job.
However, you do not have to accept a demotion, cut in pay or responsibilities, or change location to comply with your duty to mitigate. The law expects you to seek employment that is reasonably close to the job you left, and in the same general locale.
The employer will likely want you to sign a release if you receive pay in lieu of notice. That’s fair, but so is getting legal advice about the sufficiency of the notice and the terms set out in the release.
Rick Danyliuk is a practising lawyer in Saskatoon with McDougall Gauley LLP. He also has experience in teaching and writing about legal issues. His columns are intended as general advice only. Individuals are encouraged to seek other opinions and/or personal counsel when dealing with legal matters.
