Self-storage operators are crossing the U.S. border to expand their businesses, and although they may find similarities with how facilities generally operate in Canada as compared to their home turf, they must be aware of certain particularities that may affect operations. One key difference is in employment law.
Most significantly, Canada is not an “at will” jurisdiction. In the United States, the concept of “employment at will” means an employee may quit his job at any time for any reason; plus, the employer has the equal right to terminate an employee at any time for any reason.
In Canada, the courts have consistently held that every contract of employment, whether in writing or not, includes an implied term that no employee will be dismissed without reasonable notice or compensation unless the employer can establish justifiable cause for termination. In the event of such dismissal without cause, the Canadian employer is liable for economic consequences suffered by the employee.
In addition, the courts are sometimes forced to decide what period of notice is reasonable and the amount of compensation the employee is entitled to in lieu of notice. Any award is reduced by any employment income the terminated employee may have earned during the period of reasonable notice. That is not to say that employees cannot contract out of their right to receive reasonable notice. However, such notice must be at least equal to the minimum statutory notice periods provided within the laws of the particular province.
Further, the Supreme Court of Canada has ruled that any employment contract that attempts to contract out of minimum statutory notice periods will be considered void and unenforceable. A properly drafted Canadian employment agreement should include a contractual dollar limit to claims of lack of reasonable notice for termination.
Case in Point
A recent case in British Columbia provides a good example of this difference in employment rights, Pires v. Vectis Technologies Inc., in which Pires, a senior engineer, left his company to join a startup enterprise in a similar business. Pires had signed an employment agreement that stated, upon termination without cause, “prior written notice of three months plus three weeks for each complete year of employment with the company to a maximum of one year.”
When the new company began to suffer financial problems, Pires was fired, allegedly for negotiating with the company’s investors for a larger share of ownership with the company. The court found that Pires was entitled to the compensation set forth in his employment agreement, specially holding that the pretense for the termination was not a sufficient cause for termination. Instead, the court believed Pires was dismissed simply because the company went broke.