Q: What situations constitute a “constructive dismissal”? 

A: Broadly speaking there are two types of constructive dismissal:

  • A material negative change in terms of employment imposed without employee consent: this can be, amongst other things, a demotion, a pay decrease, a relocation or a combination of such things;
  • A series of employer actions or working conditions which it is not reasonable to expect the employee to tolerate: these cases are rarer but can involve an employee who is subject to excessive abusive behavior or sexual harassment or who is forced to perform illegal or unsafe work.

Other factors can be relevant so you should always get legal advice before alleging constructive dismissal.

Q: What are my rights if I have been “constructively dismissed”? 

A: If your situation meets the test for a constructive dismissal, you have the option of resigning and claiming severance equal to what you would receive if the employer terminated your employment without cause. If you have an employment agreement with a valid termination clause, then you would receive the contractual severance. If not, you are entitled to severance based on “reasonable notice” (see “Reasonable Notice” below).


Q: What is the duty to accommodate? 

A: Although the term is not found in human rights legislation such as the B.C. Human Rights Code (HRC), the duty of an employer to extend “reasonable accommodation” to the point of “undue hardship” applies in any situation where a protected characteristic under the HRC conflicts with a workplace rule or policy. There are no clear guidelines setting limits on the duty to accommodate, even for the most common form of accommodation: extending employment for an employee off on an extended disability leave. You should get expert legal advice if you think you are entitled to accommodation or, as an employer, feel you are being asked to do too much to accommodate a disability, religion or other HRC protected characteristic.


Q: I am claiming severance. Can I also apply for and receive EI? 

A: Yes, you can file a claim for EI immediately after termination. If you do not receive severance or all your severance immediately, you can begin receiving EI benefit while your severance claim is pending. See below for what happens if you later receive severance covering a period for which you received EI.

Q: How does receiving severance impact my EI benefits? 

A: Generally you cannot “double dip” and receive EI and severance for the same period. If you receive severance initially, your EI benefits will only start when the severance (and vacation pay) received runs out. If you receive the severance later, you will likely have to repay some or all EI benefits received for the same period according to EI rules.


Q: What is “just cause”? 

A: Just cause is a legal term to describe the situations in which an employer can terminate without providing any advance notice or severance. Note in Ontario, a slightly different standard applies under Employment Standards legislation.

The law of just cause is complex and the result of thousands of precedents decisions but broadly speaking there are two main sub-categories:

  • Serious misconduct: This can include gross insubordination, material theft of misuse of employer funds, assets or paid time, conflict of interest (e.g. having an undisclosed personal interest in a contract you award to a supplier) and a host of other things. Normally no advance warnings are needed in these cases;
  • Other less serious misconduct: This includes poor attendance, lateness, poor quality work or productivity, rudeness etc. and most other performance issues. In these situations, employers must clearly communicate reasonable performance or conduct expectations in written warnings. Normally, at least the last warning must explicitly threaten termination of employment.

Where an employer becomes aware of misconduct or poor performance but does not take disciplinary steps such as giving a warning within a reasonable time, the behavior may be deemed “condoned”, thus no longer grounds for termination.

Employers (and employees) need to get expert employment advice before concluding they have just cause for dismissal.


Q: Are such covenants enforceable? 

A: Canadian courts are generally hesitant to enforce restrictive covenants against employees that unreasonably restrict their ability to work. In Ontario, true “non-compete” covenants are banned for employees after October 2022, other than for “C-suite” executives. Everywhere else, they are difficult to enforce unless given in connection with the sale of a business. While a non-solicit covenant properly tailored to the competitive threat posed by a departing employee may be uphold by the courts, in many cases they are also struck down as overly broad in scope or too vague. You should get advice from an experienced employment lawyer on the drafting or enforceability of such covenants.


Q: Who is entitled to overtime? 

A: In BC and most other provinces, most employees are entitled to overtime. “Managers” who meet the Employment Standards definition are exempt from overtime, along with a list of professions and occupations found in the B.C. ESA Regulation such as lawyers, doctors, “high tech professionals” etc. Titles or how the employee is paid (salary vs. hourly) are not determinative and given little weight.


Q: What notice or severance is required when terminating an employee? 

A: Non-union employees who are terminated “without cause” (see above for a discussion of “just cause”) will have two entitlements:

  • To Employment Standards minimum notice or pay in lieu. Each province has its own scale based on service. In B.C. the minimum notice or pay in lieu is:

Length of Service ESA Minimum Notice of Severance in Lieu
3 months to 1 year 1 week
1 year to 3 years 2 weeks
More than 3 years One week per completed year to a maximum of 8 weeks

*Note: In BC, additional notice/severance must be provided on mass lay-offs of more than 50 employees at one location within a 60 day window.

In Ontario, employees with over 5 years of service with larger employers will also be entitled to “statutory severance pay”.

  • Contractual notice or severance: if you have a valid termination clause (see discussion of termination clauses below), then the clause will define what additional severance is owing. Note it is legally possible, if clearly drafted, to restrict contractual severance to the Employment Standards minimum.

If there is no termination clause or the clause is invalid, the courts will award severance based on common law (i.e. judge created law) “reasonable notice period” (RNP)

Q: What is the Reasonable Notice Period (RNP) for an employee? 

A: RNPs are set by individual judges on a case-by-case basis so awards do vary. In every case, the judge must consider, in rough order of importance:

  • Length of service;
  • The “nature of the position”: historically this has meant employees higher up in the employer organization will get more notice than those in lower level jobs with the same length of service;
  • Availability of comparable employment: here the courts ask whether the employee has transferable skills which are in demand (factors that will lower the RNP) or rather has limited re-employment opportunities in their local market;
  • Age: generally older employees in their late 50s and beyond will usually get a longer RNP than younger employees.

But other factors such as a disability, a language barrier etc. can be considered. This is only a very simple overview of “reasonable notice” and actual awards can vary greatly. The BC Court of Appeal has said 24 months is the upper limit of RNP awards.

Employers and employees need to consult an expert employment lawyer for an estimate of the RNP in each case.

Q: Can an employer give working notice of termination rather than paying severance? 

A: Some termination clauses may clearly require only payment of severance e.g. “If we terminate your employment without cause, we will pay you an amount equal to 3 months of your salary”. But more commonly, both statutory minimum termination entitlements and contractual termination entitlements can be satisfied using working notice on whole or in part. The common law entitlement to “reasonable notice” can be satisfied with working notice. The employer giving working notice must maintain regular terms of employment during the working notice.

Q: What should be included in contractual severance?

A: A valid termination clause may define what is included in severance. Otherwise, under common law “reasonable notice”, all elements of the employee’s compensation package that would have been earned if the employee worked out the RNP must be included in the contractual severance package, unless there is a clearly communicated policy or agreement to the contrary. This includes benefits, pension or RRSP contributions, car allowances (in some cases) etc. Thus sales people earning commission are entitled to severance that takes into account commission over their RNP. Where bonuses would have been earned over the RNP if it was worked out, the employee will normally be entitled to receive them, absent very clearly worded and well communicated terms excluding such entitlement.

Employers who do not want to be liable to include bonuses in severance need to get expert assistance in drafting bonus plan terms to this effect.

Q: If a termination is effective immediately, is the employee entitled to a lump sum equal to compensation over the RNP? 

A: Not necessarily. Severance for reasonable notice comes with two big catches:

  • Until the employee settles their severance, the employee must use reasonable efforts to seek employment comparable to their former position (including as to role and pay); and
  • Any re-employment or self-employment income earned during the RNP reduces the amount of contractual or common law severance owing. The exception would be an employee who was already earning side income from another source while employed and continues to earn the same level of other income after termination.


Q: How much advance notice do I have to give of my resignation? 

A: If you have an employment agreement with a resignation clause prescribing the notice required, then that is what is required. If not, some provinces Employment Standards legislation prescribes minimum notice (typically 2 weeks) but most, including B.C., do not. The courts say employees must provide “reasonable notice” of resignation if they do not have a resignation clause but:

  • The length of reasonable resignation notice is not as well established and is generally less than if the employer was terminating. The most important factor is how hard or time-consuming it will be to replace the employee and how important the employee is to the business’ operations;
  • Even if the employee fails to give the required resignation notice, “wrongful resignation” claims are rare because the employer has to take reasonable steps to work around the early departure and only has a valid claim if it can show the lack of more advance notice caused a specific provable loss of profit—often hard to do.

Q: What happens if the employer terminates me immediately when I give advance resignation notice? Do I still get paid over my resignation notice? 

A: Generally yes, unless the employer can invoke the right to terminate employment on less notice than the employee gave, in which case the employer will only have to provide severance in lieu of the required termination notice.


Q: What are employer obligations on statutory holidays in B.C.?

A: In B.C., with limited exceptions, employees who work 15 of the 30 days preceding a stat must receive:

  • If they do not work the stat, an “average day’s pay” aka “stat holiday pay”;
  • If they work the stat, time and half pay for hours worked plus stat holiday pay.

But there is no obligation to provide a day off in lieu of stats that fall on non-working days i.e. the weekend.

Q: What are the legal statutory holidays in B.C.?

A: As of 2023, they are: New Year’s Day, Family Day, Good Friday, Victoria Day, Canada Day, BC Day, Labour Day, National Day of Truth and Reconciliation (Sept 30), Thanksgiving, Remembrance Day and Christmas for a total of 11.

Boxing Day and Easter Monday are not legal statutory holidays.


Q: Are my employment-related legal fees tax deductible? 

A: Generally, yes if they relate to planned or actual termination of employment. In order to get the benefit of that deduction, we usually recommend arranging for the employer to pay your legal fees as part of a settlement. This way that amount is not considered taxable income. For most employees, the tax deductibility of our fees helps reduce their effective cost to you by anywhere from 20 to 53%, depending on your top marginal tax rate.

Q: Is my severance taxable and if so, at what rate? 

A: In most situations, after Employment Standards minimum severance has been paid, the balance of the severance will be considered a “retiring allowance”. If you have unused RRSP room, you can arrange to transfer up to that amount of your retiring allowance into RRSP with no tax deducted. Otherwise scaled flat rates are deducted from “retiring allowances”, depending on the total. No EI or CPP is deductible.

Note some types of awards in relation to termination are tax free, including “aggravated damages” (aka mental distress damages) or human rights “injury to dignity damages”.


Q: Is a termination clause in an employment agreement enforceable? 

A: A properly drafted and validly implemented termination clause in an Employment Agreement can define and limit an employee’s severance entitlements but employees and employers need to get expert advice in drafting or relying on them.

Q: When will the courts refuse to enforce a termination clause in an employment agreement? 

A: There are a variety of reasons why a court may refuse to enforce a termination clause, some relating to the circumstances of signing the agreement and some relating to the wording of the clause. Some common grounds to refuse to enforce the clause include:

  • The agreement was signed without the employee receiving any new benefit (aka “consideration”) for signing e.g. being asked to sign after already being hired and starting work;
  • Failure to allow the employee an opportunity to consider and get advice on the agreement;
  • The termination clause does not comply with some mandatory requirement of Employment Standards legislation;
  • The clause is unclear or vague e.g. while mentioning Employment Standards it does not say that is all the employee gets.


Q: Who decides when vacation is taken? 

A: Generally, the employer has the final say in approving vacation. If employees fail to take vacation, employers may even impose vacation times.

Q: Does vacation pay accrue on non-base earnings? 

A: Yes. Under Employment Standards legislation, vacation pay must accrue on all “wages” which includes overtime pay, statutory holiday premium pay, commissions and most bonuses. Many employers are not aware of this liability and fail to accrue and pay vacation pay on bonuses or commissions. Employers can avoid unexpected liability for this by defining and paying bonuses or commissions as composed of two components: a “base” bonus plus 6% vacation pay totaling the total amount the employer wants to pay.

Q: Can an employer impose a “use it or lose it” policy for vacation? 

A: Employers can never cancel unused statutory minimum vacation entitlements (2 weeks rising to 3 weeks after 5 years in B.C.) but can have rules that cancel unused additional vacation time provided those rules are communicated clearly well in advance of cancellation.


Q: What is a “wrongful dismissal”? 

A: There are two kinds of “wrongful” dismissals for non-union employees:

  • Where the employer asserts “just cause” or otherwise refuses to provide any advance notice or severance when terminating if just cause cannot be proven; and
  • Where the employer terminates without cause and pays or offers to pay severance which is inadequate, either because it does not cover a long enough period or because it omits parts of the employee’s compensation e.g. benefits or commissions.

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