Termination of Employment Contract - Indeterminate Terms

Employment Law in Québec: Indeterminate Terms

The employee in question had been working for his employer since 1994. On Friday, February 15, 2008, he gave his employer a notice of resignation in which he announced that he would be terminating his contract of employment as of March 7, 2008, that is, three weeks later.

On Monday, February 18, after failing to convince the employee to stay with the company, the employer decided without any other formalities to terminate his contract of employment the very next day, February 19, 2008, rather than March 7 — the departure date announced by the employee.

The appellant, the Commission des normes du travail (“Commission”), claimed on the employee’s behalf an indemnity equivalent to a notice period of three weeks, which corresponded to the notice of termination given by the employee in his letter of resignation. It also claimed, in the same proportion, the monetary value of his annual leave. The Court of Québec found in the Commission’s favour, but the Court of Appeal ruled against it.

Held: The appeal should be allowed.

This appeal raises the issue of the interplay of the provisions of the Civil Code of Québec (“C.C.Q.”) and the Act respecting labour standards that relate to the effect of the notice of termination in the context of a contract of employment for an indeterminate term. The provisions in question must be interpreted harmoniously, since they are all concerned with the same subject, namely termination of the employment relationship.

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. 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.

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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.

Link to SCC decision: http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/14287/index.do