Description:
In episode 8, Jill and Dana tackle Jill’s favourite topic of ALL time: common law reasonable notice periods. We get to hear Dana’s attempt at an English accent early on. They dive into all that extra stuff one may be entitled to when they’re let go, after the minimum is covered. They explain the history common law, and how it helps employment lawyers negotiate more for their clients.
Full episode transcript below:
Host: This podcast is produced by Nelligan Law.
[Music]
Dana DuPerron: Welcome to All Worked Up, the podcast where two employment lawyers break down real-life workplace issues that affect real people. I’m Dana DuPerron –
Jill Lewis: I’m Jill Lewis, and we’re senior associates at Nelligan Law, and we’re super-excited to bring you this podcast aimed at making employment issues interesting, accessible for employees and employers.
[Music]
Jill Lewis: Hi, I’m Jill.
Dana DuPerron: And I’m Dana, and this is All Worked Up. Today we’re talking about your favourite topic –
Jill Lewis: Ohh –
Dana DuPerron: You’ve been waiting for this.
Jill Lewis: I’m all worked up.
Dana DuPerron: What’s got you all worked up?
Jill Lewis: Common Law – reasonable notice period. [Humming] [Laughter]
Dana DuPerron: OK, so back it up.
Jill Lewis: Yeah.
Dana DuPerron: Last time we talked about ESA –
Jill Lewis: Yeah.
Dana DuPerron: Severance entitlements, Canadian Labour Codes Severance Entitlements, minimum severance entitlements.
Jill Lewis: Yes.
Dana DuPerron: What’s the Common Law?
Jill Lewis: The Common Law? OK. Common Law, judge-made law, right. Common law is judge-made law and it is presumed under the Common Law that your employer, when you are terminated, is going to provide you with a reasonable notice period. And a reasonable notice period for everyone is different. And this is why I’m excited to talk about this because people come into our office all the time and say I’m entitled to 24 months, or I’m entitled to one month per year. I’m – you know I saw those calculators –
Dana DuPerron: Yeah.
Jill Lewis: Severance calculators online that says I’m entitled to everything, but it’s so much more than that. There are so many things to think about, and then I’ll also see people who signed contracts for very, very minimum amounts and they could have been entitled to more.
Dana DuPerron: Right, yeah.
Jill Lewis: So backing it up again, Common Law –
Dana DuPerron: Is judge-made law, comes from the English system [laughter], right. Master Servant Laws in England, right –
Jill Lewis: Master Servant Laws.
Dana DuPerron: – where if you’re going to terminate someone’s employment –
Jill Lewis: Yeah.
Dana DuPerron: – you want to give them enough notice to bridge them to a new job.
Jill Lewis: Exactly.
Dana DuPerron: That’s what we’re trying to do with Common Law Reasonable Notice.
Jill Lewis: Yes.
Dana DuPerron: Jolly good. [Laughter]
Jill Lewis: [Paul’s going to hate you 00:02:08].
Dana DuPerron: Well that’s OK, my husband’s from England too, and he’s an employment lawyer, and he loves my accent. [Laughter] Jolly good, well. Anyway it’s a great system and we are so lucky to have it in place here because you know a lot of places in the States –
Jill Lewis: In the States is work at will, right – at will rate – at will.
Dana DuPerron: At will. Your employment is terminated today and –
Jill Lewis: You’ll get nothing.
Dana DuPerron: – wham-bam thank you mam.
Jill Lewis: Unbelievable.
Dana DuPerron: Out the door. Unbelievable – don’t let it hit you on the way out.
Jill Lewis: And this is where we have a lot more fun too, as employment lawyers because this is when we get to really negotiate.
Dana DuPerron: Right.
Jill Lewis: And we get to use our skills. You think as lawyers, you know you’re going to be in a court arguing cases in front of a judge, and that’s just not really what we do. A lot of times –
Dana DuPerron: It’s not?
Jill Lewis: Not so much.
Dana DuPerron: I’ve been lied to.
Jill Lewis: Yeah, exactly. A lot of times we’re advocating for clients to get them the maximum amount of severance with opposing counsel over the phone –
Dana DuPerron: Right.
Jill Lewis: – and taking into so many different considerations, right. So, OK, I feel like I’m backing this up again. Your Common Law notice period, reasonable notice period.
Dana DuPerron: Yeah.
Jill Lewis: What is reasonable?
Dana DuPerron: What is reasonable? That’s a good question, Jill – what is reasonable? What is reasonable? [Laughs]
Jill Lewis: So it depends –
Dana DuPerron: The dictionary [laughs] – Webster’s Dictionary defines reasonable. Ah, it’s going to depend, in every situation, on your specific factors.
Jill Lewis: Yeah.
Dana DuPerron: So we’re going to look at someone’s age, we’re going to look at their length of service. We’re going to look at the nature of their position –
Jill Lewis: Yeah.
Dana DuPerron: – so what is their job? Are they a highly specialised niche role, are they a CEO, are they admin staff – what’s their job?
Jill Lewis: Yeah.
Dana DuPerron: And the availability of comparable other positions. So like what’s the job market like –
Jill Lewis: Yeah.
Dana DuPerron: – how long is it probably going to take them to find another job. I always tell people this – I am asking you to look into a crystal ball at this very upsetting time in your life –
Jill Lewis: Yes.
Dana DuPerron: – and predict how long it’s going to take. Now sometimes people have been – like there is the kind of writing on the wall that maybe this is coming –
Jill Lewis: Yeah.
Dana DuPerron: – they’ve got feelers out there; they have a sense of what the market’s like. Other times, they don’t – that is not an exhaustive list of factors – those are like the big four that we kind of –
Jill Lewis: Yeah, those are the big ones, yeah, those are the ones –
Dana DuPerron: – focus on in every case.
Jill Lewis: – we go into an intake to meet somebody for the first time – it’s written down, right in front of us.
Dana DuPerron: Yeah.
Jill Lewis: Age, salary, title, yeah.
Dana DuPerron: Length of service.
Jill Lewis: Length of service. Length of service.
Dana DuPerron: Yeah.
Jill Lewis: Because we use the length of service – I don’t know about you, I sort of – my rule of thumb, I guess, is the one month per year, but there is no rule of thumb.
Dana DuPerron: All right, fine, OK.
Jill Lewis: Courts always say that. There’s no rule of thumb.
Dana DuPerron: There’s no rule of thumb. You kind of adjust around that –
Jill Lewis: Exactly.
Dana DuPerron: – it’s the Rubik’s cube and you’re like just twisting it to get the right combo.
Jill Lewis: Yes. So I like to start it there with the one month per year service and then obviously you take all the other factors and you sway it back and forth, right.
Dana DuPerron: Right.
Jill Lewis: So maybe you’ve been – maybe, OK, you’re 62 years old, you’ve been working somewhere three years.
Dana DuPerron: Yeah.
Jill Lewis: Maybe you’re CEO, making like $250,000 a year. OK, you get terminated – I’ll go with the rule of thumb that’s not a rule of thumb, one month per year, so what – three months’ severance. But that’s unlikely. Like you’re so bumping that up –
Dana DuPerron: Yeah, you’re bumping that up.
Jill Lewis: – you’re not finding – you’re not going to find comparable work –
Dana DuPerron: Exactly.
Jill Lewis: – at that age, probably – probably, probably –
Dana DuPerron: – within – yeah, you might, you might.
Jill Lewis: Employers though can look at that type of thing and think OK, I want somebody that’s going to be [spending 00:05:18] the next 10/15 years working here. And I know that this individual is close to retirement. Right away there is that stigma that somebody in their 60s is just looking for like a couple of years
Dana DuPerron: Yeah. Then you could show age discrimination if you could prove that.
Jill Lewis: Yeah, [harder turning turkey 00:05:32].
Dana DuPerron: Harder. That’s harder.
Jill Lewis: [Inaudible 00:05:33] Yeah. So obviously like as soon as you’ve really hit that – like the 60 plus, your notice period’s going to get bumped up.
Dana DuPerron: Yeah.
Jill Lewis: Salary, you know anything – you know those high salaries that are difficult to replace. Harder – much harder to find those senior positions.
Dana DuPerron: Yeah.
Jill Lewis: Much harder to find. So that person’s going to have a significant bump-up.
Dana DuPerron: Mm-hmm.
Jill Lewis: Same sort of thing is going to happen the opposite way if somebody’s like you’re 32, you’re a tech designer, you’ve worked somewhere like 10 years, you know maybe you’re [sales 00:06:03] –
Dana DuPerron: They say salespeople can find jobs quickly.
Jill Lewis: Sales and tech, for sure, are – like they get pretty – snatched up pretty easily.
Dana DuPerron: Yeah, unless you’re very, very niche tech.
Jill Lewis: Yeah, so maybe you’re in –
Dana DuPerron: And there are exceptions to everything, but like sometimes people are like I can only work on this one product that this company does.
Jill Lewis: One company does. No other company in Ottawa, no other company in Canada does this, so I’m going to have to completely retrain.
Dana DuPerron: Yeah. Those are important factors.
Jill Lewis: Yeah.
Dana DuPerron: So all of those – so that 32-year-old, yeah, they may get a shorter notice period, right.
Jill Lewis: Yeah.
Dana DuPerron: But the idea is we are kind of looking into a crystal ball and we’re sort of – like our starting point is just thinking what does a judge – what would a judge give you based on all these factors, and we use precedents –
Jill Lewis: Yeah.
Dana DuPerron: – to also make those arguments. So we have a database of case law, you know 32-year-old tech, like making this amount of money, what did a judge give them –
Jill Lewis: Yeah. And we can pull some loops –
Dana DuPerron: – and you know all the way through cases and get like a sense. No two cases are ever –
Jill Lewis: No.
Dana DuPerron: – identical. So a lot of it does comes down to experience and gut, yeah.
Jill Lewis: Yeah.
Dana DuPerron: Like a lot of it is – this is what it is. And often the Employer Counsel and the Employee Counsel kind of know what that notice period should be.
Jill Lewis: Oh yeah. Of course. Like there’s a range, you know the employer’s going to be on the lower side, employee counsel’s going to be on the higher side of that.
Dana DuPerron: Yeah, there is typically a range.
Jill Lewis: There’s a range. Where you’re getting a lump sum payout right away, typically employers expect to bump down the number of months because you have a duty to mitigate the Common Law –
Dana DuPerron: Yeah –
Jill Lewis: – and there are forgiving you that duty. So that’s often what they’ll do.
Dana DuPerron: Yeah.
Jill Lewis: If they’re paying you a lump sum right off the bat and not doing a salary continuance with any kind of claw-back or anything, they often bump-down a little bit from what that top end of the range could be.
Dana DuPerron: Yeah. So what is the duty to mitigate?
Jill Lewis: Oh, OK, this is what always gets me worked up, is explaining this to [laughs] – explaining this to employees, explaining this to employers, right. One reason why we don’t use sort of those severance calculators that you see online, which is fine to use them – I love calculators.
Dana DuPerron: Oh, they’re great to give you an idea –
Jill Lewis: I love a good calculator.
Dana DuPerron: – and you know what, I’m happy that they exist to help people see that you could [inaudible] –
Jill Lewis: You could be entitled to more.
Dana DuPerron: – we always say, you could be entitled to more.
Jill Lewis: You could be entitled to more and so you can kind of like use those, look at them –
Dana DuPerron: Yeah, yeah.
Jill Lewis: – you can see the severance that you can put in, like my job title, my yield, my years of service, my age, and it will give you like a range.
Dana DuPerron: Yeah, they’re a great tool. But it doesn’t stop there, right.
Jill Lewis: Yeah.
Dana DuPerron: You’re not just entitled to that money upfront, right, which is sometimes, yeah people come in, like I’m entitled 24 months.
Jill Lewis: Yeah.
Dana DuPerron: OK, but maybe you are, but you also have a duty to mitigate,
Jill Lewis: Right, and the employer is entitled to first off pay that amount to you through working notice – they could do that, boom-boom-boom, that works.
Dana DuPerron: You [cannot give 00:08:51] statutory severance – rewind, listen to our last episode – you can’t give that through working notice.
Jill Lewis: Yeah.
Dana DuPerron: But any period of reasonable notice can be given as working notice.
Jill Lewis: Yeah. Yeah, people don’t like
Dana DuPerron: Yeah, people don’t like that.
Jill Lewis: Usually employers don’t like it, because you’ve got someone there who’s employment has been terminated or worse.
[Laughter]
[Inaudible 00:09:08]
Dana DuPerron: Yeah, could you imagine. Like you are [inaudible 00:09:11] not happy. Nobody’s happy, you’re being fired every month – pack your bags, don’t’ get comfortable.
Jill Lewis: Yeah.
Dana DuPerron: Keep doing your best.
Jill Lewis: So the employer, yeah, so the employer, going back to duty to mitigate. OK, so you have a duty to mitigate; you have a duty – a duty to make reasonable efforts to find similar employment, so in your field in a similar price range –
Dana DuPerron: Yeah, at like 80 percent.
Jill Lewis: – 80 percent at least of the compensation. Yeah, yeah. So you don’t have a duty to go like find a job working somewhere –
Dana DuPerron: At half the salary –
Jill Lewis: Exactly, exactly. Take on like a brand-new job. But you do have a duty to just like what’s reasonable efforts? Put out your resume, right, like update your LinkedIn account, go to interviews.
Dana DuPerron: Talk to your contacts, keep records of everywhere you’re checking and all jobs you apply for.
Jill Lewis: Exactly, yeah.
Dana DuPerron: And if there’s a job that looks like you could apply for it, but you don’t because you don’t have some skill, mark that down, like keep records of that yeah. If you don’t make any efforts, like if your efforts to mitigate aren’t reasonable, which the employer has to prove, a court can knock down your notice period. So I always tell people keep good records of those things. It is the employer’s burden to prove. Otherwise if you do mitigate, you find another job, you were that person who was putting out feelers before and you’re walking into another job as soon as your employment ends, and they’re offering you three months, but your notice period at Common Law is probably like six months, you’re still probably going to want to take that deal. As long as – like it’s more than your statutory minimums, we’re looking like all that’s covered off, if you’re walking into a new job it might not matter that your notice period could be longer.
Jill Lewis: Yeah. Yeah, well because you found new work, right. So OK, so, yeah, let’s say a judge would give you 12 months, for all the reasons that we’ve just gone over. But then the judge is going to say OK, Dana did you find new work? Like show me, right, like show me that you mitigated. I want to see that [it actually 00:11:11] –
Dana DuPerron: Yeah, what did you do, and did you find new work – how much money did you make.
Jill Lewis: Yeah. Like given precedence, yeah, I think your range is 12 months, but show me it actually took you 12 months, and if took you six months, then that’s all the employer owes you, unless you’re making a little bit less.
Dana DuPerron: Yeah, then they pay the difference for the remainder of the period.
Jill Lewis: Exactly.
Dana DuPerron: So the example that I always give to people, because it’s easy, is if your employment – if your notice period is 12 months, OK, you’re making $100,000 in your job that you’re terminated from.
Jill Lewis: Yeah.
Dana DuPerron: You find another job earning $80,000 after six months; you get full pay for those six months, so $50,000, half of 100,000, and then the difference between 80,000 and 100,000 for the second six months.
Jill Lewis: Right.
Dana DuPerron: So 40,000.
Jill Lewis: Yeah, or 10,000.
Dana DuPerron: [Laughs] 10,000. 10,000 – the difference.
Jill Lewis: We like maths.
Dana DuPerron: Yeah, there you go, so it’s 60,000 total, right. So that’s how it works – it’s important that you document those efforts and it’s important that you’re aware of that, because that – the chances of you actually finding new work, and if you have another offer, impact how you assess the offer that’s made to you, and whether it’s good or not.
Jill Lewis: Yeah. And how we may negotiate your case, right. When they come up – we might be in the middle of negotiation – maybe you get a job offer – maybe you have interview or you have a good feeler –
Dana DuPerron: Talk to your lawyer about the implications of that.
Jill Lewis: Tell your employer – yeah tell your employer.
Dana DuPerron: Yeah, tell your lawyer.
Jill Lewis: Sorry, it’s lawyer. Tell your lawyer– don’t tell the employer.
Dana DuPerron: Oh my God [inaudible 00:12:33]. Yeah, yeah, hello – no, talk to your lawyer about what that actually means for your case.
Jill Lewis: Yes.
Dana DuPerron: Because that is going to impact the case.
Jill Lewis: Yeah.
Dana DuPerron: So that’s what – the employee lawyer, the employer side lawyer, they’ve got that information, we all have that information like on how long we think it might take to find new work, what we think are reasonable notice periods going to look like which is why it is going way back to your comment on the lump sums, right.
Jill Lewis: Yeah.
Dana DuPerron: That’s why lump sums are so attractive.
Jill Lewis: Yeah.
Dana DuPerron: You get the money right away.
Jill Lewis: Yeah.
Dana DuPerron: You don’t – you know you don’t owe the employer any –
Jill Lewis: Not checking in.
Dana DuPerron: – for like updates –
Jill Lewis: Yeah, [inaudible 00:13:07] my job, yeah.
Dana DuPerron: Yeah. And then the employer’s taking a risk that, say they paid you a six-month lump sum, they’re taking a risk. So you get a windfall –
Jill Lewis: Yeah.
Dana DuPerron: – you walk into a job after a month and then you’ve got five months of double comp.
Jill Lewis: Exactly, you are taking a risk that it takes you longer than six months to find new work, so that’s sort of like – yeah, I mean it’s a benefit risk analysis that everybody’s going to do on either side and they try and meet somewhere reasonable and in the middle.
Dana DuPerron: Yeah, for some people salary continuance is more appealing – they want benefit continuation which might be easier –
Jill Lewis: Yeah, might be easier –
Dana DuPerron: – with salary continuance. So there’s all those factors – it’s going to depend in each case – you’re going to talk about all those options and what makes the most sense for you.
Jill Lewis: Yeah.
Dana DuPerron: And one thing I also wanted to know – I know you want to say something, I can tell – but I know I’m going to forget this [inaudible 00:13:50] –
Jill Lewis: Oh it doesn’t matter because I am so worked up –
Dana DuPerron: –- in the reasonable – in terms of like mitigation and accepting a reasonable – looking for comparable employment, comparable employment that we’re talking about – if you accept work that’s not comparable, you don’t have to, but the employer’s going to try to get credit for that.
Jill Lewis: For sure.
Dana DuPerron: So you might have to because of you need the money, and as employee – when we’re doing employee’s side work, there’s sort of relatively new case law that suggests that you might not get to deduct that because you didn’t have to do it to mitigate. But there are considerations there, so talk to your lawyer about that too.
Jill Lewis: Yeah, exactly. And you’re going to take a little contract or something – do something on the side, yeah.
Dana DuPerron: Yeah. Now I know you wanted to say something.
Jill Lewis: Oh what was I going to – oh I know what I was going to talk about, yes, OK. Common law notice period, well the whole idea around that notice period is to make the employee whole and you are not just made whole through your salary – it’s everything, right. It’s everything that we – the benefits, the bonuses, the car allowance, cell phones sometimes right. It’s like everything you were entitled to as an employee, it’s sort of like – you know in last week’s episode we talked about the ESA eight-week notice period, that sort of magic period where everything just continues.
It is presumed under the Common Law that that is going – you are going to be entitled to that. If I’m going to put the employee in the place they would have been in, had I given them reasonable notice, then I have to put them in that position and it’s not just going to be a lump sum of their salary, it’s going to have to include benefits and anything – any other kind of compensation. Now, you can contract on this all, right – all of this can be contracted out of – so you do have to have a lawyer look at the severance package because often those little pieces are missing. You may look at your package and think that’s a fairly reasonable lump sum, like they’re going to pay me 12 months, that’s OK. But maybe it’s not including benefits –
Dana DuPerron: Your pension doesn’t accrue, and if that’s – that could be a big one.
Jill Lewis: That could be a big one. If you have like kids that all need like braces and stuff and your benefits are gone, that could be huge.
Dana DuPerron: Yeah.
Jill Lewis: So that is something that lawyers will also use to negotiate with. Stocks.
Dana DuPerron: [Laughs]
Jill Lewis: Stocks – they go up – they go down [humming] – where are they?
Dana DuPerron: That’s the trickiest part, right, usually of any like RSU stocks – stock options, you’re going to have to look at the plan, but those can also be factored into that. They may be [inaudible 00:16:23] notice period. Yeah. If you have a big vesting date that’s something to consider.
Jill Lewis: Yeah. Yeah, and a run during the notice period, bonuses that would have been paid out, commissions that would during the notice period.
Dana DuPerron: Yeah, have to look at those plans –
Jill Lewis: Like there’s a lot – like once you kind of break them all down on how much they’re worth, there could be a lot of money that you’re leaving on the table when you don’t – when you just accept based on salary only.
Dana DuPerron: Yeah.
Jill Lewis: You could have the employer continue your benefits, maybe. You could have the employer maybe payout a lump sum representing what you think your benefits are worth.
Dana DuPerron: Yeah, or the cost to you of getting – of securing your own benefits.
Jill Lewis: Getting benefits. There are a lot of –
Dana DuPerron: What’s it cost – there’s all kinds of ways to do it.
Jill Lewis: Yeah, so I just want people to know that it is – you know your [Common Law period 00:17:06], it’s a presumption that you are entitled to it, unless you’ve contracted out. So see a lawyer about it because there could be – and you’re entitled to it, whether you were a yearly salary employee or an hourly employee, a parttime employee, like you don’t – I think people hear severance packages and they think people who have been sort of those long-service employees in big companies, right.
Dana DuPerron: Yeah.
Jill Lewis: Like that’s what I’ve heard is that some people have said oh like I’m an hourly employee, or I only work four days a week so I don’t think I get severance package. Like of course – yeah, no, no of course you do unless you’ve contracted out or something like that – there’s other reasons. But I just want people to know that that exists.
Dana DuPerron: Yeah, bring your contract. Bring your termination letter. Speak to someone. And see what more there could be. And that’s what we’ve been talking about, is what that more could be.
Jill Lewis: Yeah, exactly. Yeah, and then employers you also need to know about Common Law.
Dana DuPerron: Yeah.
Jill Lewis: Because you need to know that this is a liability. If you want to terminate people, this is the maximum. So you know there maybe – the contracts should probably be looked at –
Dana DuPerron: Especially with the way the laws on contracts change, right?
Jill Lewis: Yeah.
Dana DuPerron: It’s good one day, it’s not good the other, or you have a court who actually says, actually I think this contract – like this is fine.
Jill Lewis: Yeah.
Dana DuPerron: So have them looked at every now and then.
Jill Lewis: And usually if you are going to terminate someone, I think it’s really important to talk to – like don’t do it on your own, like talk to a lawyer, have them maybe draft the letter, because there might be things in there that you’re missing. And then – like I often would recommend offering a little bit of Common Law notice right off the bat. I mean you can just do – offer –
Dana DuPerron: You need to offer something extra to make that release enforceable and usually want to release.
Jill Lewis: Exactly. Yeah.
Dana DuPerron: Just so you know it’s not floating out there that you get something signed and it’s done.
Jill Lewis: Yeah.
Dana DuPerron: Yeah, so, yeah, for both parties you have to have those severance packages looked at –
Jill Lewis: Yeah. To make sure that they’re taking into consideration all of our settlement entitlements which includes our legislative entitlements – from last week’s episode.
Dana DuPerron: Those minimums.
Jill Lewis: Those minimums, and your Common Law entitlements.
Dana DuPerron: Yeah, if you’ve got those. So, that concludes our two-part series on Severance Entitlements [laughter]. And we’ll be back next week with another very exciting topic that’s got us All Worked Up.
[Music]
