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Employment law: compensation for termination of employment

Employees in British Columbia often have questions about their entitlements if their employment is terminated without cause. The BC Employment Standards Act (the “Act“), which governs the minimum standards for employment, generally requires employers to provide employees who have been terminated without cause with notice of termination or compensation in lieu of notice. The Act requires compensation in lieu of notice of termination as follows:

  • An employee who has worked for a company for at least three consecutive months must receive compensation equal to one week’s wages.
  • An employee who has worked for twelve or more consecutive months must receive compensation equal to two weeks’ wages.
  • An employee who has worked for three consecutive years or more must receive compensation equal to three weeks’ wages, with an additional week’s wages for each additional year up to a maximum of eight weeks’ wages.

The Act additionally confirms how a week’s wages should be calculated for the purpose of termination pay. The total wages that the worker earned for working regular hours during the previous eight weeks is divided by eight to determine the average weekly wages. 

Employers who do not provide pay in lieu of service upon termination must provide the equivalent amount of written notice to their employees. In these cases, the employee may work throughout the notice period and the employer is not required to pay compensation other than their regular wages. Some employers may choose to combine the two options upon termination, i.e., by providing written notice of termination for a shorter period, and paying out the balance of the required notice.

Note that while the Act provides for termination pay in the above manner, there are various unique circumstances that may bring other arrangements into play. Employees may also be entitled at common law to additional notice above the amounts stipulated in the Act. While parties usually cannot contract out of the minimum standards set by the Act with respect to termination, an employment contract or collective agreement may affect an employee’s entitlement to compensation or notice. Both employers and employees in British Columbia with specific questions about a termination of employment can turn to an experienced employment law lawyer in order to receive advice that is properly tailored to each case.

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