Two fundamental and common questions in employment law are:
1. What are the repercussions if an employee is fired without reasonable notice?
2. What are the responsibilities of an employee who has been fired?
Both of these questions are addressed by Quebec‘s highest court in Daunais c. Allstate du Canada. In this case, the respondent was 52 years old and had recently been promoted to the position of Agency Director. She had 32 years of service for the appellant employer before she was terminated without cause.
In circumstances like these, the employer must either provide reasonable notice to the employee or sufficient pay in lieu of reasonable notice, in order to comply with the law (in the absence of an enforceable termination clause which would limit the employee’s entitlement). Allstate Canada offered the equivalent of 18 months pay in lieu of notice, but the Superior Court found this to be inadequate. They held that a notice period of 24 months was more appropriate and also added on $20,000 in moral damages because of the manner in which the respondent was terminated.
This decision was overturned by the Court of Appeal. It found 24 months to be extreme and reduced the notice period to 18 months. They clarified that 24 months pay in lieu of notice should be limited to exceptional circumstances, and there were none in this case. Furthermore, since the respondent successfully found work during the additional 6 months granted, the Court of Appeal explained that the additional 6 months was contrary to the spirit of compensatory damages. This finding is consistent with the employee’s duty to mitigate damages. Upon commencing legal action after being terminated, one cannot remain passive until trial. The former employee must make reasonable efforts to limit the effect of that harm and take reasonable steps to find a new, similar job.
In addition to reducing the notice period, the Court of Appeal set aside the award of $20,000 in moral damages. This part of the decision affirmed the right of an employer to terminate an employee, as long as they comply with their duty to give notice or pay in lieu of notice. According to the Supreme Court of Canada in Honda Canada Inc. v Keays, there must be something more than the unfairness of losing one’s livelihood, such as bad faith, misrepresentation or a deprivation. The Court of Appeal found no evidence of abusive behaviour or anything in the employer’s conduct to warrant moral damages.
It is important to be cognizant of the fact that this decision is technically persuasive and not binding law in Ontario. Despite this, the approaches taken to this issue are generally the same in each province.
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