Promises Of Job Security – Effect On Damages (2000)
Most people believe that the appropriate amount of notice or pay in lieu of notice they should receive upon being dismissed from employment without cause, is roughly one month of remuneration for every year of service. This so-called “rule of thumb” however, is no longer a “rule of thumb” that Courts utilize. An employee’s length of service is only one of many, many factors a Court will consider when determining the appropriate amount of notice or pay in lieu of notice upon dismissal without cause. Today we will look at one such factor that will effect the sufficiency of notice. It relates to the effect of an employer’s promise of job security.
To illustrate this point we turn to the 1997 British Columbia Court of Appeal decision in Robertson v. Weavexx Corp. In early 1993, Robertson was working at a competitor of Weavexx and as such was well known to the senior management at Weavexx. Weavexx knew Robertson was a very effective salesperson but was an individual who would not hesitate to leave an employer for a better offer. A Mr. Taylor, head of Weavexx, approached Robertson while he was working at the competitor and suggested that he consider filling a vacancy at Weavexx in the sales and marketing department. Robertson said in evidence at the trial, that he was open to hearing about the offer but had two conditions: satisfactory remuneration and recognition of prior service for pension purposes with two of Weavexx’s corporate predecessors.
There was evidence at trial of two discussions between Weavexx and Robertson in which Robertson expressed the hope that he would stay with Weavexx until he was retired some 11 years hence. The evidence at trial also indicated that Weavexx expressed its desire that Robertson not leave the company prior to his retirement. Robertson was then offered the position and commenced work at Weavexx in February 1993. There was no written contract or memorandum setting out the terms between the parties.
Five months after starting work at Weavexx, Robertson’s employment was terminated due to a corporate restructuring. Robertson was offered the equivalent of two months of his remuneration as damages for wrongful dismissal. Robertson found alternative employment two and one-half months later but at a lesser amount of remuneration. He sued arguing that his employment contract with Weavexx was for a fixed term of 11 years and thus was entitled to damages for the remainder of the term.
The Trial judge agreed with Robertson and of course, Weavexx appealed. On appeal, the Court found that the trial judge misconstrued the evidence regarding Robertson’s commitment to stay at Weavexx until his retirement. The Court found that Robertson’s expression of his desire to stay with the company until retirement did not amount to a term of the contract. Thus, the Court found that Robertson’s employment was not a fixed term contract and thus could be terminated without cause upon reasonable notice or pay in lieu. The Court found that even though Robertson’s commitment not to leave was not a term of the contract, it was sufficiently significant and in conjunction with the inducement factor, justified an increase in the reasonable amount of notice to 12 months.
The moral of this story is that there is no “rule of thumb” when determining reasonable amount of notice upon dismissal without cause. Before accepting a severance package, please call me. Most often, my clients are surprised to learn that their situation may warrant more severance pay than is being offered.
