When an employee is terminated without cause in Ontario, their employer must advise them that their employment will end at a future date and give notice of termination. This notice can take the form of working notice or pay in lieu of notice, otherwise known in Ontario as termination pay.
Most employees would rather receive termination pay, as it allows them to continue receiving wages without having to work and makes it easier for them to find a new job. Most employers also prefer this because it allows them to terminate unwanted employees swiftly.
But, on rare occasions, an employee will be given working notice. What does this mean?
Working Notice Means You Continue Working
When an employee receives working notice in Ontario, they are effectively told that their employment will be ending on some future date. This serves as their notice. The employee is then expected to continue working until that date, at which point they will no longer be employed. The purpose of giving notice is to give the employee time to search for new employment. Employees who have been given working notice must still have a good opportunity to search for alternative work during the notice period actively.
While the goal of both working notice and pay in lieu of notice is to give the dismissed employee an opportunity to find new work, it has been held that there is no difference between the two despite the fact it is harder to search for new employment during a period of working notice:
“While the purpose of the notice period is to provide time for employees to find alternate employment, a task made more difficult while the employee undertakes to fulfill the terms of working notice, we are of the view that there is no functional difference at law between working notice and payment in lieu of notice.” (Taylor v. Brown,  OJ No 4650 (QL))
Working notice can be advantageous for employers. Instead of giving dismissed employees a big severance payout without receiving anything in return, working notice allows employers to continue receiving the employee’s labour. Furthermore, working notice is a good litigation strategy. A dismissed employee has a duty to mitigate by searching for and accepting comparable employment. An employee who turns down working notice and then sues the employer for wrongful dismissal may be found to have failed in their duty to mitigate.
The Downside of Working Notice
While working notice can seem attractive to an employer at first, it can have severe consequences. Despite its advantages, an employer may nevertheless wish to consider payment in lieu of notice.
It is not hard to imagine the damage that working notice can have on worker morale. An employee who has just been told they will be fired in three months will have little motivation in those remaining months to do their job well. They may even be vindictive, uncooperative, and disruptive. An employee on working notice may be more prone to misconduct or poor attendance. In the words of one Ontario Superior Court judge:
“Working notice is an institution almost invariably predestined to fail” (see Elg v. Stirling Doors (2002), 2002 CarswellOnt 2574, 115 A.C.W.S. (3d) 632).
With that in mind, an employer may wish to opt for termination pay instead of notice even if they lose out on the employee’s additional labour in exchange for that payment. For employees, payment in place of notice is obviously preferred over working notice. The employee receives the same amount of compensation without having to put in the same amount of work. They also have more free time to search for new work, meaning that it is easier for them to mitigate. An employee on working notice who does not want to continue working should be very careful: if they refuse to continue working, they might be deemed to have resigned and lose all their severance.
An Employee May be Owed More Notice
An employee who has been placed on a working notice should question whether the amount of notice they’ve been given is adequate. There is a good chance it is not and that such an employee would be owed more even after their working notice period has ended. This is because an employee might be entitled to common law notice, which requires that an employee be given “reasonable” notice.
What is reasonable will vary case-by-case and depends on factors such as an employee’s age, length of service, nature of employment, and the availability of similar employment in the marketplace. It is highly recommended that employees contact a wrongful dismissal lawyer to determine how much notice they are truthfully entitled to. An employee may be owed as much as twenty-four months of notice.
This was written by Shane Burton-Stoner, an Employment Lawyer at Monkhouse Law. Monkhouse Law is an employment law firm located in Toronto with a focus on workers’ issues. Give us a call at 416-907-9249 or fill out this quick form. We offer a free 30-minute phone consultation.