When assessing pay in lieu of reasonable notice in an employment termination case, Courts generally consider the employees position and responsibilities, length of service, age and the availability of other employment generally.

While employers have argued economic downturns as justification for termination, Courts have historically disregarded this argument and, in fact, in some cases given more reasonable notice when employers have taken this position.

There are, that I know of, only two cases in Canada in which the Court has considered this position by an employer and given some credit for it.

They are:

Gristey v. Emke Schaab Climatecare Inc. (Ontario) – The Court discounted the reasonable notice period by one-third to reflect the economic condition at the time and the employers precarious financial circumstances at the time; and

Lederhouse v. Vermilion Energy Inc. (Alberta) The Court gave some credit to the employer when the termination took place before the depression in the oil and gas industry in Alberta (but noted that, if the termination had taken place during the recession, no credit would have been given).

So, while there is some, limited authority in Canada for employers to try to reduce pay in lieu of notice due to economic conditions, it is not generally accepted and is risky to rely on, especially if a case must proceed to trial.

As usual, the best strategy for employers is to ensure there is a written employment in effect, at the outset of the employment, containing properly-constructed provisions limiting pay in lieu of notice on termination.

This WARDS PC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

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