Imagine your residential lease did not specify your monthly rent and instead required you to pay your landlord a “reasonable” amount each month. Imagine that, if you couldn’t reach agreement, you and your landlord would each have to hire a lawyer to negotiate. If the lawyers failed to agree, one side would have to start legal proceedings to determine what rent was owing for that month.
If that sounds like the most preposterously inefficient system imaginable, it is. It’s also exactly how we decide how much severance a non-unionized employee is owed after he or she is let go in this province.
You see, many employment contracts do not address how much “pay in lieu of notice,” or severance, the employee must be paid upon termination. The law says that, if the contract does not address it, an employee is entitled to “reasonable” notice, or pay in lieu thereof, depending on factors like years of service, age, and seniority.
So how much severance would a 50-year-old managerial employee with 10 years of service be owed? Some lawyers might say eight months. Others might say 12 months. It depends. The law gives no black and white answer.
What does that mean in practice? It means that for even the most run of the mill dismissal — with no allegation of just cause or anything else unusual — the parties must negotiate the severance package....
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