The Ontario Court of Appeal recently released a decision in the case of Arnone v. Best Theratronics Ltd., 2015 ONCA 63 (CanLII) which overturned the Motion Judge’s finding that the employee’s earnings during the notice period need not be deducted from the award of damages in lieu of notice.
This case is a good reminder that terminated employees have an obligation to seek and obtain new employment and when they do, those earnings are deducted from the notice period, though in the Arnone case, the new employment didn’t stop the notice period from running completely.
The employer in the Arnone matter ended up paying 22 months in lieu of notice. That is a lot of notice and for many small businesses would be a crippling Judgment.
How then, can small businesses protect themselves from the result in Arnone? The answer is by having a lawyer prepare an employment contract that limits the amount of notice to the statutory minimum (approximately 1 week per year to a maximum of 8 weeks).
The drafting of the employment contract needs to be precise in order to gain the benefit of capping the notice period, therefore, you don’t want to do this on your own. The money you pay a lawyer to draft the contract will be less than a tenth of the cost of defending a lawsuit by a former employee.