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Notice of termination: Keep working or go home?

Working notice often frowned upon, but may have its advantages for employers

By Jeffrey R. Smith

One important concept that threads through employment law is an employer, almost always, must provide an employee with reasonable notice of termination.

The only exception is if it can prove just cause for dismissal, which is often pretty difficult.

Unless an employee’s misconduct is very serious and damaging to the employer, just cause isn’t usually an option. On the other hand, despite what many employers may think, it isn’t difficult to fire an employee — as long as reasonable notice is provided. It’s not hard to fire someone, it’s just hard to fire someone without the often significant cost of reasonable notice.

While most employers simply pay the employee what she would have earned during the reasonable notice period — either in a lump sum payment or in instalments — this can be expensive, especially if the employee has a lengthy period of service. The so-called “rule of thumb” of one month per year of service has been largely discounted by courts and there are a lot of other factors that come into determining the notice period, but it may not be a bad place to start when figuring out how much notice an employee is entitled to.

But there may be one way to reduce this cost that is often shied away from by employers — working notice. Many might dismiss working notice as unworkable and rife with potential problems, but it may be worth a look in some circumstances. But when examining this option, employers have to be aware of legal obligations and weigh the risks against the benefits.

The main purpose of reasonable notice is to give employees enough time to find a new job and ensure they have income during the transitional period between jobs. So, if an employee continues to work through the notice period, that employee is free to look for a new job. Since the employer has already indicated an intention to terminate the employment contract, it has no grounds to keep the employee if the employee finds other work before the notice period elapses. As a result, if an employee is kept on during working notice, the employer should be prepared to lose that employee at any time, not just at the end of the notice period.

However, if an employee does leave for other employment while working out the string, it can financially benefit the employer. Just as if the employee was receiving pay in lieu of notice in instalments, paycheques are no longer necessary. The purpose of the reasonable notice has been fulfilled, the employee has found another job and the employer’s obligation to pay is over. So having a dismissed employee work out her notice can end up saving the employer some money and effectively reduce the notice period if another job comes along. The employer can also reap the benefits of the employee’s continued contributions until her termination date, rather than one who is sent home immediately upon providing notice of termination.

Granted, despite the potential financial and staffing benefits of having an employee work out her notice period, there can be other issues such as the potential for reduced productivity and negative vibes in the workplace. What do you think about working notice for dismissed employees? Is it worthwhile or is it better to just pay them in lieu of notice and be done with it?

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective. He can be reached at jeffrey.r.smith@thomsonreuters.com. For more information, visit www.employmentlawtoday.com.

Jeffrey R. Smith

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective.
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