In uncertain economic times such as the current Covid19 crisis, employers will often look at their organizational charts and revise them to get rid of positions. Can they do this? Are they obligated to pay severance? What if they are doing this because economics forces them to?
Abolishing positions, whether for economic or corporate planning reasons does not relieve employers from their obligation to pay severance. Employers must pay severance, as set out in Bardal. (For more on how that is approached see here https://www.flodenward.com/post/how-is-severance-calculated-in-alberta .
The motivation for getting rid of the position so does not matter; the employer is still liable. For more on reorganizations, see our article on Constructive Dismissal: https://www.flodenward.com/post/fired-in-alberta-demotions-reorganizations-and-constructive-dismissal
Further, one of the key Bardal factors that courts will look at is the availability of alternate employment. The case of Farmer v. FoxRidge Homes 1994CarswellAlta63 says that employers are responsible if similar work is not available. The court said at paragraph 17:
Reasonable notice should reflect that period of time that a terminated employee can obtain employment at a similar level, salary, perks and working conditions. Too often courts have perpetuated their own precedents without reflecting on the real world. Much evidence is proffered to show an employee's failure to mitigate but in this case I see no unwillingness to become re-employed by [the Employee] and if there is no similar employment available, the responsibility for the time required by such an employee to find similar work must remain with the employer.
If your position has been eliminated and you require legal advice, please feel free to contact us.
The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.
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