An employee who is terminated without cause is entitled to notice (that is, to be informed his/her job is ending) OR pay in lieu of being notified.

Many employees who are terminated without cause figure the employer has to shell out because laying off a worker is a bad thing.

But that’s not the way the law looks at it. No worker has a right to their job, and anyone can be laid off, even if he/she has worked for an employer for a long period of time.

The employer has to advise the employee that his/her job will end as of a set date, and generally the rule of thumb used to calculate the appropriate notice period is one month per year of service.

That means that an employee who has been at a workplace for 10 years is entitled to be told today that the job will end 10 months from now. That’s it. The employee does not have to provide any financial settlement at all.

The law regards notice as that period of time employee needs to find not a job. Of course, it’s hard to look for a new job when you’re still doing your old job. On the other hand, it can be sometimes easier to get a job if you’re already employeed, some say.

Employers more often prefer to get the employee out the door right away and pay out money rather than keep the doomed employee around for weeks or months. It’s hard to an employee to put their heart into the job when he/she knows their days are numbered.

Sometimes the employer will provide a combination of actual notice and payment in lieu of notice.

The important thing for employees is to know what you deserve and what you’re getting, either in actual notice or payment in lieu of notice.

There’s an interesting case in the latest Ontario Reports, the publication for lawyers that includes some of the recent court decisions.

Walls v. Lewis is a wrongful dismissal case. The plaintiff kept looking for work but stopped when he turned 65. The court decided that he had sufficiently “mitigated” his losses.

The concept of “mitigation” is difficult to explain to clients who are suing for wrongful dismissal. Even though the court might eventually find that the client was indeed wrongfully dismissed, he or she is still required to look for another job.

And if he or she is successful, that new source of income will have the effect of reducing any damages that the former employer might otherwise be required to play.

Therefore, if the wrongfully dismissed employee finds a new job two weeks later, the former employer will end up being liable for next to nothing in damages.

“They’re getting away with it!” my client will often exclaim. I have to explain that the purpose of ordinary damages is not to punish the employer but to compensate for financial loss. No loss, no damage.

Of course, not everyone will be lucky enough to find a new job so quickly. The important thing is to look, and to keep a detailed and well-ordered file of employers contacted, resumes sent, interviews completed and so on. If you end up in court, that will be very important material.

What’s the difference between employment contracts and standard commercial contracts?

In some respects, they are the same. Two parties enter into a financial arrangement  in which one of them will provide services for the other in return for money.

However, the judicial view of employment contracts has changed considerably over the last few decades, in large part because the courts recognize the unequal bargaining power between employee and employer, particularly large employers.

In standard commercial contracts, it is expected that one party will make a business decision to breach and pay whatever penalties are owing.

Employment contracts are different. Employers are expected to treat their employees with “good faith,” especially at the time of termination. Employers are expected to be sensitive, above board, not to denigrate the employee to fellow employees and not to play “hard ball”. Above all, the employer should not manufacture a reason to fire an employee in order to avoid the cost of notice pay.

If, in the view of the court, the employer has acted inappropriately, it will be required to pay damages over and above what would have been assessed otherwise.

In short, all contracts are not alike, something that both employees and employers should keep in mind.