Can an employer provide an employee with working notice of termination but then change its mind midway through the notice period and pay off the rest?
Question: Can an employer provide an employee with working notice of termination but then change its mind midway through the notice period and pay off the rest?
Answer: An employer can provide an employee with working notice of termination of employment and then decide that it wishes for the remainder of the notice period to be provided as pay in lieu of notice.
Employers are permitted to provide working notice or pay in lieu of notice of termination of employment for an employee as is suitable for the situation. The amount of notice that an employee is entitled to arises from three primary areas: the governing employment legislation, their employment agreement, and the potential common law. An employer should be sure to canvass all areas before deciding on whether notice or pay in lieu of notice of termination is appropriate.
Working notice of termination may not always be appropriate in the circumstances. Important considerations for employers include whether there is a positive working relationship with the employee, if the employee is leaving employment on good terms, whether or not the employee is likely to still be productive during this time, and if there is an organizational need for the special skills or expertise that the employee possesses during the notice period.
While not essential, it is recommended that when providing an employee with a working notice of termination that the employer include a statement which indicates that the employer reserves the right to pay out the remaining notice period rather than requiring the employee to continue working. While an employer always has the right to do so, expressly reserving the right within the written notice of termination may make a change of plans more palatable for the employee.
There may be legitimate reasons for terminating the employment relationship earlier than planned. Poor work performance and lack of employee motivation may be sufficient reasons to terminate early. There may also be misconduct that could potentially give rise to termination with cause. It is important to assess the reasons, determining how and why it is necessary to end the relationship early.
Additional practical considerations will include how to pay out the remainder of the notice period (as a salary continuation or as a lump sum payment) and whether benefits continue through the notice period, among others. It is important that employers assess all of these issues and seek legal advice before informing employees that pay in lieu of notice will be provided.
When providing written notice of termination to employees, it is also important to expressly note that if an employee decides on their own volition to not work out the notice period, they will be resigning from their employment and will receive no further payment. Where this occurs, it is recommended that employers follow up with the employee to confirm the resignation.
Amy Gibson is an associate with MLT Aikins in Saskatoon, practising general labour and employment law. She can be reached at (306) 956-6994 or [email protected].
