Employees Get Noticed

par Catherine McKenzie
Irving Mitchell Kalichman LLP

The Supreme Court of Canada has rendered an important decision in Quebec employment law. In its decision released Friday, Quebec (Commission des normes du travail) v. Asphalte Desjardins Inc. (2014 SCC 51), the Supreme Court held that an employer has to pay an employee during the notice period the employee gives when they resign, so long as that period is reasonable in the circumstances.

 

The facts are relatively simple. The employee worked for the Respondent since 1994 and had a contract of indeterminate term. In February, 2008, the employee gave three weeks notice of his resignation. After the Respondent tried unsuccessfully to convince him to stay, it decided to terminate his employment immediately and refused to pay the notice period. The Commission des norms du travail claimed an indemnity equivalent to three weeks under s. 82 of the Labour Standards Act (the “Act”) (although under that section he would have been entitled to four weeks of statutory notice).

 

Justice Wagner framed the question at issue as follows:

“(…) whether an employer who receives a notice of termination from an employee can terminate the contract of employment before the notice period expires without in turn having to give notice of termination or pay an indemnity in lieu of such notice.” (para. 1)

The Commission won its case at the Court of Quebec, but that decision was overturned, with a dissent, by the Court of Appeal. Justice Wagner noted that in overturning that decision, the Court of Appeal had gone against a fairly consistent line of reasoning “according to which an employer cannot renounce a notice of termination without engaging ss. 82 and 83 of the” Act (para 25). Justice Wagner noted:

[26] A decision by a court of appeal that overrules a dominant line of authority at the trial level is not, of course, open to challenge for that reason alone. On the contrary, such a decision is within the jurisdiction of an appellate court. After all, someone always has to take the first step if the law is to change. Nevertheless, it is impossible to disregard the impact of such a radical reversal in a field of law whose general principles, while based on civil law rules, are also subject to specific legislative provisions relating exclusively to labour relations, which is what makes this appeal so important.

Justice Wagner then canvassed the nature of an employment contract and how it fits into the general scheme of contracts under the Civil Code of Quebec (“CCQ”):

[29] More broadly, art. 1439 C.C.Q. establishes the principle that a contract is irrevocable: a party cannot resiliate it unilaterally except on grounds recognized by law or by agreement of the parties. The parties to the contract must therefore, inter alia, respect its term. This principle also applies to a contract for an indeterminate term, such as the one at issue in the case at bar. Thus, D. Lluelles and B. Moore state that [translation] “the contract for an indeterminate term is, in principle, just as irrevocable as the contract for a fixed term. . . . A contracting party cannot be allowed to revoke the contract suddenly, brusquely and immediately”. 

[30] The power of unilateral resiliation provided for in legislation [translation] “is an exceptional privilege whose intended scope is narrow”. Where the contract of employment is concerned, the Civil Code provides for two circumstances in which a party may terminate the contractual relationship unilaterally. First, a party may unilaterally resiliate a contract of employment for a serious reason without giving notice (art. 2094 C.C.Q.), regardless of whether the contract is for a fixed term or for an indeterminate term. Second, as in the instant case, a party may unilaterally terminate a contract of employment for an indeterminate term without giving reasons, but on condition that he or she give notice of termination to the other party in reasonable time in accordance with art. 2091 C.C.Q. (…) 

[31] It should also be mentioned, given that this is crucial to the outcome of this appeal, that the obligation under art. 2091 C.C.Q. to give notice of termination applies to both the employee and the employer, for the entire term of the contract. (citations removed)

Justice Wagner then noted that s. 82 of the Act adds additional protection for employees by providing for fixed notice periods when their contracts of employment are terminated by the employer, depending on the number of years of service. This section of the Act fits with the CCQ in the following manner:

[35] The parties can agree to lengthen the minimum notice period provided for in the Act respecting labour standards. Moreover, even if there is no such provision in the contract, it is possible for an employee to be entitled under art. 2091 C.C.Q. to a notice period longer than the one provided for in s. 82 of the Act respecting labour standards. The cardinal rule with respect to the unilateral resiliation of a contract of employment is the giving, in reasonable time, of a notice of termination that takes into account, in particular, the nature of the employment, the specific circumstances in which it is carried on and the duration of the period of work. The courts have, although without suggesting that these were maximums, accepted notice periods of 9, 12, 15 and 18 months, and even 24 months in certain circumstances. (citations removed)

These sections must be interpreted in a harmonious way. This means, for instance, that the contract of employment is not terminated at the moment that notice is given. Rather, its end date is the end of the notice period:

[38] It is well established that a contract is not automatically resiliated upon receipt of a notice of termination and that, on the contrary, the contractual relationship continues to exist until the date specified in the notice given by the employee or the employer. This means that even after one of the parties to a contract of employment for an indeterminate term gives the other party notice of termination, both parties must continue to perform their obligations under the contract until the notice period expires. This includes the obligation to give notice of termination set out in art. 2091 C.C.Q., which the other party must meet if he or she wishes in turn to terminate the contract before the notice given by the first expires. The argument that the parties’ legal situation “crystallizes” when notice of termination is given in that the notice merely delays the termination of the employment by postponing the employee’s date of departure must therefore fail. The notice of termination does not immediately terminate the contract of employment, preserving only the conditions of employment during the notice period. Rather, the contract itself continues to exist in its entirety until that period expires.

Accordingly, if an employer refuses to accept the notice period given by an employee, then they are the one terminating the contract, and notice becomes due:

[40] An employer who advances the date of termination of the contract after an employee has given notice of termination effects not a “renunciation”, but a unilateral resiliation of the contract of employment, which is authorized only as provided by law (arts. 1439 and 2091 C.C.Q.). By “renouncing” a notice received from an employee, the employer prevents the employee from performing his or her work and ceases to pay the employee, thereby defaulting on the contractual obligations it is required to fulfil until the expiration of the notice period. In the case at bar, as Pelletier J.A. rightly stated at para. 36 of his reasons, [translation] “[u]ntil that date, only an agreement, and not a unilateral act, [can] release the parties from their obligations.” 

[41] In sum, an employer who receives from an employee the notice of termination provided for in art. 2091 C.C.Q. cannot terminate the contract of employment for an indeterminate term unilaterally without in turn giving notice of termination or paying an indemnity in lieu of such notice. The notice given by the employee does not have the effect of immediately releasing the parties from their respective obligations under the contract. If the employer prevents the employee from working and refuses to pay him or her during the notice period, it is “terminating the contract” within the meaning of s. 82 of the Act respecting labour standards.

That notice period is not necessarily the one adopted by the employee; rather, the appropriate notice in the circumstances is applicable:

[44] Of course, the notice period chosen unilaterally by the employee cannot be “imposed” on the employer. An employer can deny an employee access to the workplace during the notice period, but must nonetheless pay his or her wages for that period, provided that the employee’s notice of termination was given in reasonable time. The employer can also choose to terminate the contract by giving notice of termination in reasonable time or by paying the corresponding indemnity in accordance with art. 2091 C.C.Q. and under ss. 82 and 83 of the Act respecting labour standards (…).

This reasoning also finds support in art. 2092 CCQ, which provides that an employee cannot renounce in advance to receiving reasonable notice. This provision, which is of public order, applies to a situation where the employee is the one terminating his employment:

[52] Article 2092 C.C.Q. makes it impossible for an employee to renounce redress for an injury flowing from, inter alia, insufficient notice of termination. Put differently, art. 2092 C.C.Q. precludes the employer from limiting its liability. It nullifies any clause in a contract of employment by which the employee has renounced the indemnity to which he or she would be entitled should the employer terminate the contract unilaterally without sufficient notice. 

[53] This is a protective provision of public order, and the employee — the party for whose benefit the provision was enacted — cannot renounce the right in question until it has been acquired. 

[54] Article 2092 C.C.Q. does not establish an exception to the rule that a party who wishes to terminate a contract unilaterally without giving a reason must in every case, as required by art. 2091 C.C.Q., give notice of termination to the other party. Indeed, art. 2092 C.C.Q. concerns not the notice of termination itself, but the employee’s right to claim an indemnity if the notice is insufficient. The commentary of the Minister of Justice on art. 2092 C.C.Q. is revealing: [translation] “The purpose of this article is to confer a right on the employee. Like wages, the indemnity is a vital element, and it is accordingly viewed as replacing an essential element of the contract. It seemed reasonable to prohibit any renunciation of the indemnity; this article is therefore of public order”. (…)  

[59] Given that art. 2092 C.C.Q. deals with renunciation of the indemnity to which the employee is entitled in cases in which the notice of termination is insufficient (or in which the manner of resiliation is abusive), it is wrong to conclude that the absence of an equivalent provision in the employer’s favour means that the employer may “renounce” a notice of termination received from the employee. The prohibition established in art. 2092 C.C.Q. does not imply — as the majority of the Court of Appeal suggest — that otherwise the possibility of renouncing the notice of termination of art. 2091 C.C.Q. is the “default” rule.  

[60] With respect, I am of the opinion that the majority of the Court of Appeal erred in their analysis of art. 2092 C.C.Q. by confusing renunciation of the indemnity with renunciation of the notice of termination. This article cannot in fact preclude an employee from renouncing the notice of termination: specific performance cannot be required in the case of an intuitu personae contract. It is the monetary equivalent — the indemnity — that is at issue in art. 2092 C.C.Q. (emphasis in the original, citations removed)

That being said, the parties can agree to except themselves from this regime if that agreement is mutual. For instance, if an employee resigns immediately, and only offers notice, the employer is free to accept the immediate resignation and not notice would be due. While the Court of Appeal called this a “semantic” distinction, Justice Wagner disagreed:

[62] An employee who tells the employer that he or she intends to resign effective immediately but who nonetheless offers to remain for a certain time must be aware and accept that the employer could renounce its right to notice of termination: if the employer does indeed want the employee to leave immediately, there is a meeting of minds and notice of termination is unnecessary, since a contract for an indeterminate term can be terminated by agreement of the parties (art. 1439 C.C.Q.). In such a case, art. 2092 C.C.Q., which precludes the employee from renouncing his or her right to obtain an indemnity, does not apply, since the termination of the employment does not then flow from a unilateral act by the employer. Nor would the indemnity provided for in ss. 82 and 83 of the Act respecting labour standards apply, since the termination of the contract would flow from an agreement between the parties: the employer could not be found to have terminated the contract.

Since, in the present case, the employee gave a clear notice of termination in his resignation letter, the employer was not free to simply refuse it, and notice was due to the employee when it chose to have him not work a notice period.

 

Reference : [2014] ABD 298