Statutory Severance in British Columbia
Under the BC Employment Standards Act (the “Act“) an employer must give an employee compensation for length of service in the event of a termination without cause.
Employers can also discharge this liability by giving employees written notice or a combination of pay and written notice.
Minimum termination pay under the Act
Section 63 of the Act requires the following compensation (or notice) to be given when an employee is terminated without cause:
• After 3 consecutive months of employment – an amount equal to one week’s wages, or one week’s written notice, or a combination of the two.
• After 12 consecutive months of employment – an amount equal to two weeks wages, or two weeks written notice, or a combination of the two.
• After 3 consecutive years of employment – an amount equal to three weeks wages plus one additional week’s wages for each additional year of employment to a maximum of 8 weeks wages. (The employer can discharge this obligation by giving written notice or a combination of written notice and pay).
Rules about notice
- After an employer gives notice of termination under the Act, an employer cannot change the employee’s conditions of employment without the employee’s consent.
- The notice period cannot coincide with an employee’s vacation.
- Notice cannot be given when an employee is on an approved leave of absence.
- Vacation pay is payable on compensation for length of service.
When compensation for length of service is not required
An employer is not required to give compensation for length of service or to give written notice of termination in the following circumstances:
• the employee resigns or retires
• the employee is dismissed for just cause
• the employee is working under an arrangement whereby the employer can request the employee to come to work at any time for a temporary period and the employee can accept/reject one or more of the temporary periods
• the employee is employed for a definite term
• the employee is employed for specific work which is to be completed within a period of up to 12 months
• it is not possible for the employment contract to be performed due to an unforeseeable event or circumstance (except for receivership or insolvency)
• the employee is employed at one or more construction sites and the employer’s principal business is construction
• the employee has been offered and has refused reasonable alternative employment
• the Act does not apply to the employee
Common law notice
Sometimes employers forget that common law reasonable notice obligations apply even if the Act does not require notice. For example:
• The Act does not require an employer to provide compensation for length of service if the employment is for a definite term. However, if an employer terminates an employee prior to the end of a fixed term contract, the common law requires an employer to pay out the balance of the term, unless the contract provides for some other period of reasonable notice.
• The Act does not require an employer to pay compensation for length of service to an employee who is excluded from the application of the Act. Nevertheless, these employees must be given notice in accordance with the common law requirement to provide reasonable notice.