Dos, Don’ts and Dollars
Section 159 of the former Municipal Act in Manitoba (R.S.M. 1988, c. M225) provided that municipal officers could only be dismissed where cause for dismissal could be shown. The Act provided for a Civic Services Board with the jurisdiction to review the employer’s decision. However, the law has changed since the old Municipal Act was repealed and the new Act no longer provides that an officer must only be dismissed for cause. Gone is also the Civic Services Board to review the decision. Therefore, the contract law and common law principles apply with respect to the dismissal of municipal employees, except to the extent the employees are unionized.
As the title suggests, this paper addresses some of the key considerations and cost implications an employer must consider in dismissing an employee. It should be noted that this paper will only apply to the dismissal of employees who are not unionized. In the unionized context, the collective agreement will have to be carefully analyzed in order to determine the employer and employees’ rights. Labour law will have to be considered – and that is a topic for another day. Finally, it should also be noted that the nature of the considerations in this paper are written with specific attention to the position of the Chief Administrative Officer (the “CAO”). As the CAO holds a management position, the provisions of The Employment Standards Code (Manitoba, C.C.S.M., c. E110) (the “ESC”) do not apply with respect to standard hours of work and overtime. However, for lower level, non-unionized municipal employees, the ESC will have a greater impact on the dismissal.
The Law of Wrongful Dismissal
At common law, an action for wrongful dismissal – where an employee has been terminated without cause by his or her employer – is based on an implied obligation in the employment contract that an employee must be given “reasonable notice” of his or her termination. In other words, if an employment contract is otherwise silent on the length of notice to be given on termination, the courts will conclude that both the employer and employee meant that “reasonable notice” of termination would be given. However, where the parties do expressly agree to a notice period in the employment contract, such notice period will generally be binding whether or not the courts would find it reasonable, subject to the minimum standards prescribed by the ESC which cannot be contracted out of (as discussed further on in this paper).
“Notice” is merely information that the employment will end on a certain date. It does not necessarily equate to money and, in the meantime during the notice period, the employment continues. This type of notice is sometimes referred to as “working notice.” Of course, an employer may instead compensate an employee in an amount that is equivalent to what the employee would have earned if he or she had worked out the notice period. This is what is commonly known as “pay in lieu of notice.”
So what constitutes “reasonable notice”? Such is the question of much litigation and the sticking point in many severance negotiations. Accordingly, the courts over the years have adopted some guidelines for determining what notice is “reasonable,” which will be further discussed later on in this paper.
The concept of “reasonable notice” applies to all employees in Manitoba and in Canada. As an employer, municipalities must be aware that their CAOs are no exception. The employment of CAOs in this province is governed expressly by Part 4 of The Municipal Act (the “Act”) of Manitoba. Under the Act, every municipal council must pass a by-law establishing the position of a CAO – effectively the administrative head of the municipality – and must appoint a person to that position. Not only must the appointment be approved by a majority of the council’s members,. so must his or her revocation.
In addition to these statutory obligations, municipalities as employers must be aware that common law principles with respect to wrongful dismissal apply to the dismissal of CAOs and have in fact been written right into the Act itself:
C.A.O. entitlement in certain circumstances
126 A chief administrative officer whose appointment is revoked without cause is, subject to any written agreement between the council and the officer, entitled to reasonable notice or to compensation instead of reasonable notice.
Section 126 of the Act is completely consistent with the basic common law principles of “reasonable notice” as explained above. CAOs under the Act have the same legal rights to institute an action for wrongful dismissal against their employer as do private sector employees.
Employers must be proactive in their approaches to dismissing employees. This means that considerations should start early on, right from the time the municipality contemplates hiring a CAO. As such, the remainder of this paper will identify the key considerations for municipalities in addressing the hiring, performance, and ultimately the termination of their CAOs.
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