Question: Due to a persistent slump in the market we must close one of our satellite offices. Can we reduce the amount of notice each employee is entitled to since the reason for termination is an economic downturn?
Answer: Generally speaking, a reduction in the workforce due to economic conditions will not result in a shorter reasonable notice period.
Most courts have determined the appropriate amount of notice in accordance with the philosophy that the notice period provides financial support to the employee during the time it takes to find replacement employment. From this perspective, an employer’s financial difficulties resulting from depressed market conditions may actually increase the notice period rather than reduce it, as such downward economic forces will make the process of obtaining new employment longer and more difficult for the employee.
On the other hand, some courts have held that the effects of tough economic times on employers should be taken into account when determining appropriate notice since it is unfair for employers to shoulder the full brunt of such hardship.
But this doctrine has been strictly applied with the employer bearing the burden of proof. Courts will make extensive and probing inquiries into the veracity of such claims by employers before finding that a reduction of the notice period is justified. Ultimately courts have stated that notice must be reasonable to both parties and, therefore, an economic downturn will rarely serve to reduce an appropriate notice period.
Peter Israel is counsel to Goodman and Carr LLP in Toronto and is head of the firm’s Human Resource Management Group. Peter can be reached at [email protected] or (416) 595-2323.
Answer: Generally speaking, a reduction in the workforce due to economic conditions will not result in a shorter reasonable notice period.
Most courts have determined the appropriate amount of notice in accordance with the philosophy that the notice period provides financial support to the employee during the time it takes to find replacement employment. From this perspective, an employer’s financial difficulties resulting from depressed market conditions may actually increase the notice period rather than reduce it, as such downward economic forces will make the process of obtaining new employment longer and more difficult for the employee.
On the other hand, some courts have held that the effects of tough economic times on employers should be taken into account when determining appropriate notice since it is unfair for employers to shoulder the full brunt of such hardship.
But this doctrine has been strictly applied with the employer bearing the burden of proof. Courts will make extensive and probing inquiries into the veracity of such claims by employers before finding that a reduction of the notice period is justified. Ultimately courts have stated that notice must be reasonable to both parties and, therefore, an economic downturn will rarely serve to reduce an appropriate notice period.
Peter Israel is counsel to Goodman and Carr LLP in Toronto and is head of the firm’s Human Resource Management Group. Peter can be reached at [email protected] or (416) 595-2323.
