Common Law Notice 

Upon termination of employment, if an employee’s contractual entitlements are not nailed down in an up-to-date and enforceable employment contract, the employee is likely entitled to common law reasonable notice (or pay in lieu of notice) of termination. Even if an employee’s entitlements are set out in an employment contract, it is common these days for employees, on the advice of employment law counsel, to claim that some of the contract’s termination-related provisions are not Waksdale-proof, and are therefore unenforceable. (We discuss how employers can make their contracts Waksdale-proof in this blog, and best practices for rolling out updated contracts in this blog). Under both scenarios, any path to resolution will start with an assessment of the common law notice period.  

Courts consider several factors in determining an employee’s common law notice period (i.e. the number of weeks or months of pay to bridge the employee until their next role). The primary factors are known as the Bardal factors: 

1. the employee’s age; 
2. their length of service; 
3. the character of their employment (i.e. the seniority/level of responsibility of their role); and 
4. the likelihood of finding comparable employment (i.e. an assessment of the job market). 

A simple way to understand the common law notice period is to conduct a thoughtful and informed analysis of how long it will take the employee to re-employ in a comparable role. 

The Duty to Mitigate

When an employee is terminated without cause, they may be entitled to damages or severance pay. Unless a contract states otherwise, the law requires these employees to mitigate or reduce their potential damages by seeking alternate comparable employment. This means no sitting back and relying on severance or damages to support themselves.

The principle behind the duty to mitigate is to ensure that individuals are actively attempting to reduce their economic losses. This also protects employers from excessively compensating employees who might otherwise have been able to find a similar job quickly.

Employers Can Soften an Employee’s Landing

The faster an employee re-employs, the faster both parties can move on. Below are important ways that employers can boost an employee’s mitigation efforts, with little effort or added cost:

Provide a reference letter In many cases, an accurate reference letter can go a long way for an ex-employee. Employers can and should write candidly about an employee and their skills. If they lacked critical skills or attributes needed for a particular role, this would be revealed to any skilled recruiter or interviewer seeking follow-up verbal references. Even if the employee was not a strong performer, there is usually something an employer can say to assist the person in their job search. This may involve highlighting their best attributes, even if the employee wasn’t cutting it in their particular role.  

Where the employee’s employment was terminated, in whole or in part, for reasons unrelated to the employee, then employers should say so. For example, include in the reference letter that the termination was part of a group termination or reduction in force. If the employer’s downsizing is not publicized and they prefer to be discrete, simply convey that ‘business reasons’ drove the termination decision(s). 

Providing an accurate reference letter will never hurt, and it can certainly help the employee land a new role. It can also protect an employer from allegations of bad faith where the employer unreasonably refuses a request for a reference letter. Depending on the circumstances, employers might even choose to save their busy managers time by inviting the ex-employee to prepare a brief, draft reference letter for the employer’s review. 

Even if the ex-employee was just, well, a plain nuisance, in all cases a neutral ‘letter of employment’ can be provided, in which employers confirm the employee’s name, title, and dates of employment. 

Outplacement services: Employers can offer basic services such as resume writing, job market training, career transition services, or career counseling, along with the flexibility to tailor to the employee’s actual needs. Requiring that these services be accessed within a certain timeframe (e.g. 3 months)  can be helpful for employees with post-termination inertia.

Understand the job market: Often the employer’s team is well positioned to estimate how long their ex-employee will take to re-employ. They will understand the person’s skills and experience, and their network and ability to maximize that network in their job search. A thoughtful analysis of the timing and potential to re-employ in a comparable role is a worthwhile exercise when preparing a severance package. It will also assist in any future severance package negotiations.

Make introductions and rely on recruiters: Some employers employ or retain third-party recruiters who have valuable job market intel. Employers can boost an ex-employee’s job search by making introductions to recruiters and prospective employers, and by sharing market intel about suitable roles.

Include an If-You-Get-Another-Job-Clause in severance packages: In this blog, I discussed how this type of clause (also known as a ‘clawback clause’), can motivate employees to re-employ more quickly and benefit from a period of double compensation from two employers. 

Sometimes I am pleasantly surprised when a matter that is tracking toward litigation resolves after a collaborative and detailed assessment of the job market and the ex-employee’s best chances of re-employment. Even if the employer’s part is done out of pure self-interest to reduce termination costs and/or avoid litigation, it remains a win-win scenario. 

If you or your team needs help preparing or negotiating a severance package, get in touch.