Employers often struggle with dismissing employees and calculating the amount owing to an employee for severance when there is a dismissal without cause and without notice.
Usually, the notice period for dismissal and severance is determined by the express terms of the employment contract, by the minimum standards set out in the Employment Standard Act, [RSBC 1996] c. 113, or by common law principles set by judges considering each case and reporting such decisions.
The minimum severance payable to a typical employee in BC who is dismissed without cause as set out in the Employment Standards Act is 1 weeks pay after 3 months of consecutive service, increasing to 2 weeks pay after 12 consecutive months of service, and increasing to 3 weeks pay after 3 years of consecutive service and 1 additional week thereafter per year up to a maximum of 8 weeks pay. This is a minimum standard and does not apply to all employees or groups (ie. teachers and union employees governed by a collective agreement).
Some employees with greater responsibility and professional duties may be entitled to greater notice beyond the minimum payable depending on their length of service, their age, the character of their employment, and the availability of similar employment having regard to their experience, training, and qualifications. Disability and accommodation factors would also be a consideration.
In calculating the above factors, lawyers have often referred to the rule of thumb being 1 months notice for every year of employment for managers and other, more senior employees who are dismissed without notice or cause. However, this rule of thumb is merely a rough estimate and not determinative as each factor must be considered against the specific employee and circumstances.
In Kerfoot v. Weyerhaeuser Co., 2013 BCCA 330, the British Columbia Court of Appeal overturned a trial decision granting 1 months pay for every year or service by two senior employees of a Weyerhaeuser pulp mill who worked 16 years and 18.5 years at the mill.
The Court of Appeal found 7 months of progress reports of a possible sale of the business was not clear communication of the end date for employment.
Further, the trial judge erred in applying a formula and failing to consider all of the factors in determining reasonableness of the notice period, and reduced it to 15 months for each employee.