The relationship between an employer and employee is contractual. As such, there is no general principle that an employer has to employ any particular person. Employment contracts, whether written or unwritten, can therefore be terminated provided certain requirements are met. To terminate an employee, an employer must give an employee notice that they are being let go or pay the employee compensation in lieu of giving notice.

Section 63 of the Employment Standards Act provides a severance formula for employees whose employment has been terminated. However, employees are frequently entitled to more than the amount stipulated in the Act.

In Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986 (S.C.C.) at paragraph 19, the Supreme Court of Canada stated “employment contracts for an indefinite period of time require the employer, absent express contractual language to the contrary, to give reasonable notice of an intention to terminate the contract if the dismissal is without cause.”

The Court then wrote at paragraph 22 that “what constitutes reasonable notice will vary in the circumstances of any particular case.” While calculating the exact amount of compensation varies from case to case, employees are frequently entitled to one month’s notice of termination or pay in lieu for each year they were employed with a company. In other words, if an employee worked at a company for 10 years and is dismissed without cause, the employee may be entitled to 10 months of notice or compensation in lieu of notice.

In van’t Slot v. Oncogenex Technologies Inc., 2010 BCPC 249 at paragraph 14, the court wrote that the Employment Standards Act sets out the “minimum notice” to which an employee is entitled upon being let go from a job. In van’t Slot, the court found that an employment contract can be drafted to expressly provide that an employee’s severance will correspond with the amounts in the Employment Standards Act.

The result of Machtinger and van’t Slot is that employers and employees can contract a specific time period for notice of termination or compensation in lieu. However, any provision setting out the notice or compensation period must line up with the termination sections of the Employment Standards Act, at a minimum. Employers and employees may wish to create certainty in the terms of employment by drafting a clause in the employment contract which provides that if an employee is dismissed without cause, the employee’s severance will mirror the termination sections of the Employment Standards Act. Without such a clause, an employee may be eligible for significantly more compensation than what is provided by the Act.

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In the recent British Columbia case of Brennan v. Burrow, 2016 BCPC 78, the purchasers of an original painting from an artist sued to recover the $9,000.00 purchase price.

The purchasers commissioned a painting for their West Kelowna home after viewing the artist’s work at the Calgary Stampede.  The purchasers noticed a problem immediately upon delivery of the painting – that there was a distorting glare due to the finish of the painting. They said that this glare makes it difficult to focus on the painting.  The artist denied the glare problem and stated that the painting had the same finish as the other paintings viewed by the purchasers.

In Court, the purchasers alleged there was an implied term in the contract – on the basis of s. 18 of the B.C. Sale of Goods Act – that the painting would be reasonably fit to hang in their living room.

The Court had to decide whether the contract for the painting is for the work and labour of the artist (separate from the actual painting) or whether it is for the original painting itself? The Court held that in British Columbia contracts for original paintings are for the work and labour of the painter. In other words the contract is not for the actual painting, it is for the time the artist spends on the production of the painting. Since s. 18 of the B.C. Sale of Goods Act only applies to goods, the Court held that there is no implied term in the contract regarding the painting being reasonably fit for the living room and dismissed the purchaser’s claim.

If you need legal advice on this subject or any other law related inquiry please contact us.