The tasks of running a business and maintaining employees are not as simple as they used to be. Today, business owners need to be cognizant of the rights and obligations when it comes to termination, specifically, notice or severance requirements, constructive dismissal issues, and the right to temporary layoff. With a solid employment contract in place, all these issues can be addressed at the outset of an employment relationship.
Here are some basic items related to termination that ought to be addressed in an employment agreement:
When it comes to termination, the termination clause should clearly state the minimum notice or pay in lieu that is consistent with the Employment Standards Act. If the intention is to grant the minimum notice or pay in lieu, the language must be explicit, or you run the risk of a judge finding no restriction to the notice period of pay in lieu: McLennan v. Apollo Forest Products Ltd. (1993), 49 C.C.E.L. 172 (BCSC).
In the case of an employee resigning due to a claim of constructive dismissal, this can be addressed through a clause that minimizes the notice or pay in lieu entitlement in such circumstances. Without this protection, you could be on the hook for wages outstanding from the time an employee declares constructive dismissal onwards, and not just the minimum notice allowable in the contract: Van't Slot v. OncoGenex Technologies Inc., 2010 BCPC 249.
Following the COVID-19 pandemic, many businesses resorted to temporary layoffs of employees. However, employers do not have an automatic right to temporarily lay off their employees, and they run the risk of facing constructive dismissal claims if the employment agreement does not explicitly grant the employer this right: Besse v. Machner, 2009 BCSC 1316.