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Despite signs of a recovering economy, employers are still looking for ways to downsize operations and minimize human resources expenses. One cost effective manner is to give working notice when terminating an employee.

What is Working Notice?

Working notice is an alternative to paying out a lump sum upon dismissal. The employee is given advance notice of their final date of employment, and continues to work until the date of termination. Working notice allows employers to maximize productivity and value while significantly reducing the cost of termination. Provided that the employee is given reasonable working notice, such as that specified in his or her employment contract or a period reflective of common law notice (or as provided by the Quebec Labour Standards Act or Quebec Civil Code, as the case may be), the employer is not obligated to provide any further pay to the employee at the date of termination, except for statutory severance pay for Ontario and federally regulated employees.

Employers can also satisfy their notice obligations through a combination of working notice and termination pay in lieu of notice. In this scenario, the number of weeks of notice and the number of weeks of termination pay together must equal the length of notice (and severance pay, if applicable) an employee is entitled to receive.

Working Notice is the Employer’s Choice

Unless a contract provides otherwise, working notice is the employer’s choice. Generally, an employee does not have the option of refusing working notice and demanding termination pay. While many employees would prefer a cash payout, and may attempt to argue that it is more difficult for them to find a new job while continuing to work, the Ontario Court of Appeal has said that there is “no functional difference at law between working notice and payment in lieu of notice.” Thus, if working notice is given by the employer, the employee is obligated to continue working until the end of the notice period unless he or she chooses to resign before the end date. As a general principle, if the employee chooses to resign, he or she is not be entitled to any additional pay from the date of resignation, again except for statutory severance pay for Ontario and federally regulated employees in some circumstances.

Working Notice may not always be the best choice…

The use of working notice is not appropriate in all cases, and employers should consider the particular situation and temperament of the terminated employee.

  • In the case of very senior employees or those with access to confidential information, working notice may not be preferable, as these employees could damage the employer in the event that the employee works for a competing business.
  • In the case of employees with a grudge or problem with the company, employers run the risk of vindictive or retaliatory behaviours.
  • On a more general level, a terminated employee may have little motivation to continue to be productive.  

Employers should therefore consider the individual employee and the risk of any damage to the company before deciding to use working notice.

Some Incentives for Employees

In the event of a closing, downsizing or an amicable departure, such risks can be minimized and working notice may be appropriate. In these situations, incentives to make working notice more attractive can be useful. This can include:

  • providing employees with time off to attend interviews for other positions;
  • offering job placement services; and
  • providing bonuses for reaching certain performance targets or finding new employment during the notice period and leaving early.  

In some cases, employers may wish to provide a bonus for staying throughout the entire notice period.

To Sum Up

In sum, working notice can be a cost effective and useful method of dismissal. An employer must review the feasibility of working notice, particularly where the employer will be continuing business and needs to take precautions against damage to the business by disgruntled employees.