Act respecting labour standards Chapter IV - Larbour standards (Section 39.1 to 97)

Compensatory indemnity

An employer who does not give the notice prescribed by section 82, or who gives insufficient notice, must pay the employee a compensatory indemnity equal to his regular wage excluding overtime for a period equal to the period or remaining period of notice to which he was entitled.

Payment

The indemnity must be paid at the time the employment is terminated or at the time the employee is laid off for a period expected to last more than six months, or at the end of a period of six months after a layoff of indeterminate length, or a layoff expected to last less than six months but which exceeds that period.

Computation

The indemnity to be paid to an employee remunerated in whole or in part by commission is established from the average of his weekly wage, calculated from the complete periods of pay in the three months preceding the termination of his employment or his layoff.

1979, c. 45, s. 83; 1990, c. 73. s. 36; 2002, c. 80, s 48.

Interpretation

An employer who does not give the notice of termination of employment must pay the employee a compensatory indemnity equal to his regular wage for a period equal to the period of notice to which he was entitled. When the employer has given a notice of insufficient length, the indemnity must correspond to the employee’s usual wages (excluding overtime) for the period not covered by the notice.

One must not take into account in the calculation overtime that has been paid or replaced by a leave of absence. These overtime hours are determined with regard to the regular workweek of the employee or a regular workweek as provided for by the Act or the regulation, if the undertaking has none. For example, for an employee who has a regular workweek of 35 hours and is paid at the higher rate beginning from the 36th hour, the calculation of his indemnity will be on his regular 35-hour workweek, excluding the overtime worked.

Moreover, the basis for calculating the indemnity is different for an employee remunerated in whole or in part by commission, and this regardless of the amount of the commissions received. In that case, the average of his weekly wage must be established using the complete periods of pay in the three months prior to the termination of his employment or his layoff.

The expression "complete period of pay" means the period covered by the regular interval of pay up to a maximum of 16 days as provided for in section 43 ALS. The calculation of the indemnity is based on the wages earned during that period, regardless of the number of days or hours worked by the employee.

This indemnity must be paid:

1. at the time the employment is terminated;
2. at the time the employee is laid off for a period expected to last more than six months;
3. at the end of a six-month period after a layoff of indeterminate length or a layoff expected to last less than six months, but which exceeds that period.

Indemnity for termination of employment and severance pay

Moreover, it is important to distinguish the indemnity for termination of employment (stipulated in section 83 ALS) from severance pay. Indeed, it is frequent for a labour agreement, whether individual or collective, to provide for the payment of a special indemnity for the loss of a job. For example, this indemnity may be calculated according to the employee’s seniority. Such a contractual obligation cannot replace the legal obligation to give the notice stipulated in section 82 ALS, and failing that, the indemnity stipulated in section 83 ALS.

Notice of collective dismissal

The indemnities mentioned in section 84.0.13 ALS (collective dismissal) and in this section are not cumulative (s. 84.0.14 ALS). The employee will receive the greater of the two indemnities.