Reasonable notice? Courts define it as ‘legal fiction’

What exactly is reasonable notice and why is it so important?

Because of its abstract nature, the courts have defined reasonable notice as a legal fiction. And when one thinks about how notice is given these days, the word “fiction” makes sense. Modern forms of notice, in the form of salary continuance or lump sum, are often given to dismissed employees who have been permanently sent home. Salary continuance or lump sum payments of money are supposed to equate to what the employee would earn for some period of notice. However, such payment in place of notice cannot purport to replicate actual employment, because the employee has been cut off from the workplace.

Giving the Employee Reasonable Notice

Rather than giving working notice where the employment actually continues being performed through the continuing work of the employee, the employer often finds it better to simply remove the dismissed employee from the workplace. Thus, the employer often simply calculates some sort of length of time, or some sort of payment of monies that it thinks approximates proper notice, and presents this to the employee in place of notice, so the employee can be removed from the workplace at once. The employer substitutes working notice for a payment and removes the employee from the workplace in one motion. There is definitely risk to doing business this way.

If the employer has offered a payment that is visibly lacking in some elements of pay or benefits or shortchanges the employee in terms of the length of time the payment is calculated for, and the employee senses this and refuses to bargain, lawyers will probably become involved. If the employee has been removed from the workplace in anticipation of eventual agreement as to the offered payment, but agreement does not come, the employer has a problem. The source of the problem is the removal of the employee from the workplace, in essence, a termination, without having given the employee reasonable notice of such termination. This is the core definition of a wrongful dismissal.

More Than a Severance Payment

When the gambit fails of removing the employee and bargaining for what payment will be made in place of notice, the employer has essentially walked a plank of its own making. It’s a lawsuit waiting to happen. Reasonable notice is a legal fiction. This is true; because what the courts say about reasonable notice is that it exists for remedial purposes. The remedial purpose of the court in assessing notice is to place the employee in the same position as if he or she were employed until the end of the reasonable notice period. The courts have said that the employment contract actually remains alive, regardless of whether the employee sits at home looking for other work, for the purpose of allowing the court to assess the compensation to be paid to the dismissed employee.

This is a powerful concept. The dismissed employee is entitled to be treated as if he or she were an employee throughout the reasonable notice period. And it’s the court, not the employer that determines and assesses what the reasonable notice period is.

Compensation for a Wrongful Termination

To extend this concept into practical outcomes, reasonable notice allows the employee to claim payment in the notice period of virtually all aspects of the remuneration and benefits that were being received before the termination. To show how elastic this concept can be, there is high court authority allowing the employee to claim vacation pay during the notice period regardless that the employee no longer actually works due to the wrongful dismissal. The courts consider that the context is a wrongful dismissal and thus the employer, being in the wrong, should not be allowed to benefit from its own wrongdoing.

In recent B.C. court decisions in cases where share options were involved, the principle of reasonable notice as discussed has been strongly affirmed.

In one case, the employee was granted 5,000 share options that vested over time. In the facts of this case, the employer terminated employment, sent the employee home, and paid her two weeks notice as their estimate of reasonable notice. The stock options had not vested at the point of termination.

The court estimated reasonable notice differently than the employer, finding reasonable notice to equate to five months. The court found that the unvested options would have vested three months after termination, and since reasonable notice was assessed at five months and the vesting period would fall into this reasonable notice timeframe, the employee was granted the monetary value of the shares.

In a second case, the dismissed employee was granted the right to participate in an initial public offering of stock that occurred after termination but during his period of reasonable notice, based on the principles discussed above. The point is that the employee can still claim benefits that occur after the employer has sent the employee away.

Obviously, fiction can be a serious problem for a wrongfully dismissing employer.

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