Notice Of Termination: Can An Employer's Difficult Financial Situation Be Considered When The Employer-Employee Relationship Is Severed

Author:Mr Éric L'Italien
Profession:Norton Rose Canada LLP

In a recent decision, the Quebec Superior Court confirmed that in determining the severance pay that an employee is entitled to upon dismissal, all circumstances, both of the plaintiff and of the employer, including those related to economic conditions prevailing at the time of dismissal, should be taken into consideration.1


The plaintiff had worked at the employer for close to 34 years when, on September 14, 2006, he was given a letter of layoff effective November 10, 2006. At the time, the plaintiff held the position of assistant manager at one of the employer's plants. The employer stated in the letter that the plaintiff was being laid off on a temporary basis and for an indefinite time. Although the plaintiff was told that he would have to return all property and equipment belonging to the employer, he was allowed the continued use of a pickup truck belonging to the employer. Moreover, the related record of employment indicated that a date of recall was expected but unknown.

Convinced that he had been dismissed, the plaintiff promptly sent a letter to the attention of the president of the employer demanding the negotiation of a severance agreement. During a telephone conversation, the employer said that the plaintiff had been laid off, not dismissed. A few days later, the plaintiff returned to work for six hours per week. On October 10, 2008, the employer permanently terminated the employer-employee relationship. The record of employment issued at that time indicated, under "Expected Date of Recall," that no return to work was expected.

The decision of the Superior Court

After considering the employer's argument that the letter of layoff effective November 10, 2006, was a notice of termination of employment or, at the very least, a letter of termination of employment, the judge found that the employer's intention at that time was, in fact, to lay off the employee. With a crisis in the forestry industry, the employer was clearly struggling with both supply problems and disputes with competitors, but that information was not enough to persuade the plaintiff that his employment was being terminated. The judge noted that if the situation was unclear for the employer, then it was reasonable to conclude that it had to be even less clear for the plaintiff, as the letter of layoff effective November 10, 2006 indicated that the layoff was only a temporary measure. And, indeed, a few days after he was laid off, the plaintiff was called back...

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