September 12, 2018
British Columbia’s Court of Appeal has upheld an award of five months’ notice for an employee with only 12 months of service who was terminated without cause.
“The case is an important reminder to employers that notice obligations on termination can be significant even for short-term employees,” says David McInnes, an employment and labour lawyer in McMillan LLP’s Vancouver office. “Employers would be better off by contracting for a specific notice period in the employment agreement.”
In the case, Pakozdi v. B&B Heavy Civil Construction Ltd., the Court of Appeal’s award was three months less than the original eight months awarded to David Pakozdi, an experienced construction bid estimator, by the trial judge. She added the three months on the basis that Pakozdi’s poor health, which was known to the company from the outset, would make it more difficult for him to find a new job.
“In my view, the initial assessment by the trial judge that the applicable notice period is five months is within the range of reasonableness having regard to [the existing] jurisprudence, though perhaps on the high side,” stated the Court of Appeal. “Adding three months for the respondent’s vulnerability takes the notice period outside the range of reasonableness unless there are very special circumstances that could support this assessment.”
As the Court of Appeal saw it, Pakozdi’s “worsened medical condition” when he was terminated didn’t provide a basis for an increase in an otherwise appropriate notice period. This was particularly so where, as here, the employee was able to continue his sideline consulting work after his termination.
McInnes isn’t surprised by the decision. “It just confirms a series of recent British Columbia Court of Appeal decisions awarding three or four months’ notice for short service to skilled employees who are in their forties or thereabouts,” he says. “Pakozdi was somewhat older.”
What did surprise Rob Sider, a partner in the labour, employment and human rights group in Lawson Lundell LLP’s Vancouver office, was the Court of Appeal’s characterization of the five-month award as “perhaps on the high side” of the reasonable range.
“These days, technical and managerial employees who have as little as two months’ service are getting four or five months,” he says. “So I don’t think five months’ is high at all for 12 months’ service.”
What is clear is that certain factors can bump up the notice considerably. “If there’s an inducement to join the company, or if you’re a more senior manager who’s been there for a while, we’re looking north of six months,” says McInnes.
Although employers wishing to limit their liability can do so contractually, McInnes says certain cautions are in order. “The notice and severance period must at a minimum meet or exceed that provided by employment standards legislation.”
Contractual provisions of this sort should also be negotiated before work starts.
“If a notice period is negotiated after that, the employer must provide some new consideration, like increased compensation or benefits, to ensure that the new terms are enforceable,” says McInnes.