How to Not Get Sued When You Terminate an Employee

You have an employee who has been with you for a number of years and it is time to let them go.

They haven’t done anything egregious, but they aren’t a great employee and your corporate cash flow tells you its time to reduce staffing costs.

What is the Minimum Notice I have to give under the Nova Scotia Labour Standards Code?

The Nova Scotia Labour Standards Code sets out the minimum amount of notice you have to give an employee if you are laying them off “without cause”. If you were firing the employee for unacceptable behaviour this requirement would not apply. The minimums are as follows:

 Number of Weeks Notice Number of Years Worked

Between 3 months – 2 years 1

2 years -5 years 2

5 years – 10 years 4

10 plus years 8

You don’t actually have to give the employee “working notice” if you don’t feel that will be to your company’s benefit. Many companies choose to give payment in lieu of notice. This is where you would compensate your employee equivalent to the number of weeks notice that they are entitled to. Businesses choose to do this in a circumstance where they are concerned that an employee that knows they are leaving the organization may cause harm to the organization through abuse of their emails or other actions during their notice period. However, it is important to understand that these are merely minimums. An employee, absent express words to the contrary in a written employment contract, is entitled to “reasonable notice”.

What is ‘Reasonable Notice’?

In Nova Scotia, “Reasonable notice” has been defined by the courts as the estimated, approximate amount of time that an employee with a similar fact situation would need to take to find comparable replacement employment. There is an old guideline floating around that suggests reasonable notice is approximately one month per year of service. However, that guideline was explicitly rejected by the Ontario Court of Appeal.

There are four key factors too instruct you on determining what reasonable notice would be in your employee circumstances. The four factors are:

Age: the realty is the closer to the natural retirement age an employee is the less likely they are to find employment in a short period of time.

Length of employment: the longer an employee has worked with one organization the longer they have been out of the market, the harder it will be for them to find suitable comparable employment.

Type of employment: the more specialized a job is the harder it is to find a replacement job. Likewise, the higher level the employee is at (eg. Clerical vs. upper management) the fewer jobs are typically available.

Job market: this factor relates to how any employee would fair while looking for a job in that job specific market. If it is a small town, that type of employment generally only hires in the spring and you are terminating your employee in the fall, you are going to need longer notice period. On the contrary, if you are laying off an employee in the spring and the job market in that industry heats up coming into the summer, the notice period would be shorter.

From a public policy point of view, the government does not want employers to be able to terminate employees and then leave them with so little income that they end up on financial assistance prior to being able to find a comparable job. Your obligation, is to objectively look at the employee you are terminating and do your best to calculate how long it should take someone in that person’s position to find a comparable job.

A lot of factors go into determining what an appropriate notice period is, if you offer too generous a severance package, you are doing your own business a disservice. However, if you offer an insufficient severance package that falls below the reasonable notice standard, you risk exposing your company to a wrongful termination lawsuit. The goal is to find the happy medium between these to extremes.

If you have any questions about terminating an employee in Nova Scotia or severance packages you can call us at (902) 826-3070 or email us at info@highlanderlaw.ca to set up a meeting with one of our lawyers at our Tantallon law firm. You can also schedule a no commitment Issue Review Consult for $250+HST where you have the opportunity to explain your situation to a lawyer and get basic advice before deciding whether or not you'd like to retain us.  

By: Dianna M. Rievaj, MBA, LLB - Founding Lawyer

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. Nothing contained on this blog is legal advice or constitutes a legal opinion. While it is our goal to provide information which is current, legislative changes and court decisions, among other matters, may result in some information no longer being current or accurate. You should consult a lawyer before relying on any information. The views expressed herein by individual contributing lawyers posting entries to the blog are solely those of the authors and should not necessarily be attributed to or considered representative of the firm of Highlander Law Group Lawyers