There seems to be a commonly held notion among employees that employment can only be terminated by an employer where the employee does something wrong, and as long as the employee is working properly, the employer cannot dismiss. This notion is incorrect.
When can employers terminate a contract?
In general, employers can terminate employment contracts for any reason, good, bad or indifferent. Although an employer can dismiss for grossly bad behaviour, known as just cause, in practical terms the notion of wrongdoing is mostly irrelevant to the employer’s right to end an employment contract for any reason. The employer’s reason for dismissing does not have to be an especially good one. The law will not ask whether the reason for dismissal was a good one, and if it was not good enough, punish the employer. So employers are completely free to enter into, and exit from, employment contracts with various employees, assuming they honour the terms of the employment contract in question.
Employment is based on contract. Either there is a written hiring letter or employment agreement, or the employment contract is based on a verbal agreement. Both are enforceable forms of contract. All employment contracts contain terms. In a written contract, one can read what the terms are. In a verbal contract, one usually knows what the basic terms such as pay, benefits, holidays, are.
But in addition to what can be read or observed, the law implies terms into employment contracts that will not necessarily be apparent to the parties to the contract. For instance, the Employment Standards Act sets out numerous minimal provisions that each employment contract, whether verbal or written, is deemed to contain. For example, one of these implied minimums is notice upon dismissal. The Employment Standards Act writes into every employment contract regulated by that act that on dismissal for reasons other than just cause, the employer must provide the employee with a set schedule of notice or pay in lieu of notice.
Therefore, each employment contract within British Columbia and falling under the supervision of the act will provide this minimum notice formula whether the contract actually reads that way or not.
Employment contracts: basic terms
Employment contracts are generally regulated by the common law and also have certain basic terms implied into them. An example is the implied term that an employer may only dismiss an employee upon giving reasonable notice of such dismissal. The common law implies this term into each employment contract unless the actual form of contract between the employer and employee in question has provided some other formula.
Often the reason for an employer wishing to have a written form of employment contract with its employees is to limit dismissal notice to something less than reasonable notice. But for employment contracts that contain no such limiting provision, the common law applies, and implies the term into the contract that reasonable notice must be given upon dismissal. Therefore, a basic term in every employment contract unless otherwise stated is that of reasonable notice, and the employer is bound in the contract to provide such on dismissal. To provide any less without specific agreement is a breach of the employment contract.
Since verbal employment contracts are perfectly enforceable, one must wonder why written contracts are required by some employers. A basic reason for an employer to desire a written employment contract is that the employer wishes to set out a formula for dismissal notice that is less than the reasonable notice implied by the common law. Since employment is all about contract, and contracts are bargains entered into between two parties that agree, if the employer can get the employee to agree to a contract that sets out a dismissal notice formula that is less than reasonable notice, then that formula will apply between the parties, not reasonable notice.
What puts the "wrongful" into wrongful dismissal?
When an employer that is otherwise required to do so fails to give reasonable notice, the employer is in breach of contract and has dismissed wrongfully.
The result of a wrongful dismissal is that immediately upon dismissal the employee has a claim in damages for the breach of contract, called a wrongful dismissal. The claim is usually for reasonable notice.
Reasonable notice is not the notice set out in the Employment Standards Act. Neither is reasonable notice the formula given in most written employment contracts. Reasonable notice is a common law doctrine that sets a standard that varies from case to case depending on a number of factors.
Reasonable notice virtually always significantly exceeds the notice required by the Employment Standards Act and the termination formulae of written contracts.
At the point of dismissal, the most powerful bargaining weapon the dismissed employee can have is knowledge related to reasonable notice.
Get the help you need with wrongful dismissal by contacting Yeager Employment Law.
