Statutory requirements are not "offers", nor are they optional

When terminating an employee's employment without cause, Canadian employers must provide the terminated employee with at least their minimum statutory entitlements. This is a hard requirement, non-negotiable.

What are minimum statutory entitlements? These are the amounts required to be paid on termination in accordance with applicable employment standards legislation or the Canada Labour Code. Usually, this includes all outstanding wages/vacation pay earned up to the date of termination, as well as statutory termination pay and/or severance. The exact amounts vary jurisdiction by jurisdiction and case by case.

In contrast, common law reasonable notice is determined by caselaw. The amount of notice hinges on four (4) main factors – age, length of service, position, and availability of similar employment. Adjudicators have made it clear that each case is different and must be determined on a case-by-case basis. There is no one-size-fits-all formula. While every Canadian employee is presumably entitled to common law reasonable notice on termination without cause, employers may restrict this entitlement by a valid termination provision in one's employment contract. You can read about how that works here.

Importantly, common law reasonable notice includes statutory minimums, and these statutory minimums must be provided unconditionally.

That means, employers cannot make payment of same conditional on the employee signing a termination letter or release. In fact, doing so could attract hefty damages, such as punitive damages. This was recently discussed in the decision of Taylor v. British Columbia, 2026 BCSC 1047. Let's breakdown the case together.

Facts:

In this case, the plaintiff was terminated after 30 years of employment. As she was a public sector employee, she was entitled to the maximum amount under British Columbia's Employment Termination Standards, BC Reg 379/97, which in this case, was 18 months of combined salary and benefits.

One of the key issues in the case was that the defendant employer did not directly provide the plaintiff with her statutory termination entitlements following termination, as required. Instead, the defendant asked her to sign a Release to receive it. When the plaintiff refused to do so, the defendant withheld her statutory termination entitlements for 15 months.

This resulted in a series of negative consequences for the plaintiff. The abrupt stop in income for the plaintiff forced her to have to look for alternative sources of income, including exercising her pension early.

The plaintiff claimed that, in addition to her severance entitlements, she was also entitled to extra damages due to the defendant's poor conduct in withholding her statutory entitlements.

Outcome:

The Court found that by demanding the Release be signed in exchange for statutory termination entitlements, the defendant breached its legal duty owed to the plaintiff. Remember, statutory termination pay is required by law.

Further, based on Honda Canada Inc. v. Keays, 2008 SCC 39, a breach of legal duty by an employer can qualify as an independent wrong that gives rise to punitive damages. This is a head of damage that is intended to "punish" conduct that is harsh, vindictive, reprehensible, or malicious.

As a result, the Court awarded the plaintiff, Ms. Taylor, punitive damages in the amount of $200,00.00. Though not the sole reason for the award, the Court found that the defendant's conduct of withholding the plaintiff's statutory termination entitlements as ransom for a "promise" that she would not sue was worthy of rebuke. This was especially the case given the vulnerability of the plaintiff and the power imbalance between the two parties.

The Court also awarded aggravated damages in the amount of $50,000 for other issues, such as the manner of termination.

This case provides an excellent example showing that employers must exercise care when terminating employees, whether it is the manner of termination or when asking the employee for a release.

Takeaways:

Remember, statutory entitlements are not optional, nor are they offers. They are required by law and need to be paid out promptly in accordance with legal obligations. If handled incorrectly, this could potentially lead to a hefty punitive damages award.

Note, this does not mean you can never ask an employee to sign a Release on termination. Employers can and often should. However, if you are going to do so, you'll need to ensure you offer something additional, "on top" of these statutory entitlements in exchange for the employee signing. The statutory entitlement amount cannot be used in exchange for a Release. If you are not sure, contact us. We will be happy to assist.

As for employees, if your employer is withholding your statutory termination pay indicating that you need to sign a Release, we recommend that you speak with an employment lawyer ASAP. We can help. Contact us today!