In the wake of Target closing its Canadian doors this month, we have had some of our employer clients asking about the pros and cons of working notice. The 17,600 employees of Target have received at least 16 weeks of notice each, but many will be expected to work all or part of those 16 weeks rather than receive a lump-sum payment. As reported in the news, many think they are not getting any “severance” at all.
To help clear up some of the misperceptions around working notice, here are three key points to consider:
- Notice: Throughout Canada, employers who wish to terminate an employee “without cause” must provide notice or pay in lieu of notice. We are not an “at-will” country. The various employment standards acts across the country each set out the minimum number of weeks of notice an employer must provide to an employee that the employee’s position will be terminated. This is not a requirement to give money. It is a requirement to notify the employee that in a certain number of days or weeks, the employee’s position will end, with the expectation that the employee must continue working in order to continue getting a paycheque.
- Severance Pay: The employment standards acts for Ontario requires larger employers to also provide a cash payment called “severance pay” to employees terminated without cause, in addition to the notice (or pay in lieu) requirement. In Ontario, it is a week of pay for every year of service up to 26 weeks, but only if the employer has an annual payroll of at least $2.5 million and the employee has at least 5 years of service with the company. Certain federally regulated employees will also be entitled to 2 weeks of severance pay. No other province requires a severance payment.
- Who Decides: The decision of whether to provide notice or pay in lieu of notice is up to the employer. Unless the employment contract indicates otherwise, an employee cannot force the employer to make a payment rather than working notice
The minimum standards set out in the various employment standards acts across Canada are just that: minimum standards. An employment contract and the courts can and often do expand those standards and require an employer to provide more notice or pay in lieu of notice upon termination.
While “working notice” may feel more like a punishment than any sort of generous settlement to some employees, other employees may be grateful that they can look for a new position while still appearing to be employed. Either way, unless there is a contractual agreement to do otherwise, working notice is a lawful way to provide notice in Canada. For more on the pros and cons of working notice, click here to read a past blog post I wrote on the topic.
As for the employees of the now insolvent Canadian Target, the fact that they are getting anything ahead of the secured creditors – working notice or not – is more than what most employees would get from an otherwise insolvent employer.