When ending the employment relationship, employers often assume that paying out termination entitlements is the only option. But working notice – where the employee continues to work during the notice period – can be a strategic alternative that helps reduce costs, support operational continuity, and shifts negotiation dynamics.
As a brief overview, when an employer terminates employment, they must provide the employee with termination entitlements under both employment standards legislation and, where there is no enforceable contract limiting notice, under the common law. One option for employers to satisfy all or part of their termination obligations is through working notice – where the employee continues working during the notice period. For example, in the matter of Gazier v. Ciena Canada, the employee was awarded 24 months’ notice, which the employer was able to partially reduce based on the 12 weeks’ working notice previously provided.
For the working notice to reduce termination entitlements, there are three conditions that must be met. First, the terms and conditions of employment must remain unchanged during the notice period. For example, the employee must continue to receive the same pay and be assigned the same type of work. Second, the employee must be given reasonable flexibility to attend interviews and search for new work. Third, any statutory payments that cannot be provided as working notice must still be paid.
Working notice can also serve as a useful starting point for negotiating a separation package. For example, an employee may be dismissed with several months of working notice but presented with the alternative option of an earlier departure in exchange for a lump sum payment (contingent on a release). This approach can be helpful, especially where the company is unable to bear the financial implications of having to pay 12+ months’ compensation as a termination payment. By issuing working notice at the outset, the employer establishes that continued employment is available and that any lump sum package would be tied to a mutually agreeable resolution.
Employers should also be aware that working notice does not prevent them from later shifting course. If circumstances change, the employer may still choose to end employment immediately – either with a separation package or for just cause and willful misconduct. Misconduct that arises during the notice period can support a just cause termination. In the matter of Rae v. Ecolab, during the working notice period, the employee allegedly sent copies of confidential company material to his personal cloud-based drive. When the employer discovered this, the employer took the position it had cause and a claim against the employee for breach of confidentiality. Employers should be mindful that the threshold for establishing just cause and willful misconduct is high.
For strategic guidance on how to effectively use working notice in the context of a dismissal, please contact our firm.
