In Ontario, when an employer is terminating an employee, it must provide reasonable notice of termination or pay in lieu of notice. The only exception to this is when the employer has "just cause" for dismissal, which will be covered in separate posts.
The central question for an employer and an employee is, what is the reasonable notice period?
The Employment Standards Act (the “ESA”) sets out the minimum standards for the amount of notice due to an employee who is being terminated without cause. However, the ESA periods are merely minimums. This means that greater obligations can be imposed by the terms of an employment agreement, or, in the absence of an employment agreement, by common law. By the same token, because ESA periods are the minimum periods, an employment contract cannot limit the reasonable notice period below the ESA minimums. Any clause in an employment contract that provides less notice than the ESA minimum is void.
The “common law” is law which has been developed and created by the courts. Under the common law, employees are usually entitled to more than just the minimum amounts due under the ESA. Therefore, if an employee is offered a termination package providing only the minimum notice period amounts, he/she is likely not receiving their full entitlement.
Litigation usually arises in situations where the notice pay does not adequately reflect the employee’s reasonable notice period under the common law. If litigation is commenced, a court will need to determine what the reasonable notice period is for that particular employee.
The seminal case for reasonable notice periods is the case of Bardal v. Globe & Mail Ltd. This case set out the main factors a court will consider in determining the reasonable notice period in a wrongful dismissal claim.
Reasonable notice will vary from case-to-case but the courts will always consider a number of factors in determining reasonable notice. These factors include:
· The age of the employee
· The position, responsibilities and specialization of the employee
· The length of service of the employee
· The experience/training and qualifications of the employee
· The availability of similar employment
See: Bardal at para. 21
For example, if an employer is of an older age, this will favour a longer notice period because it will be more difficult for an older employee to obtain reemployment or embark on a lengthy retraining program. If the position of the employee was specialized, this will also favour a longer notice period as it will presumably make it difficult for the employee to find a similar position in the foreseeable future. Furthermore, an employee with a longer length of service is more likely to receive a longer notice period than an employee with a shorter length of service as courts will attach greater significance to what is referred to as the ‘long and loyal service’ factor.
There is a general cap of 24 months as the reasonable notice period for most situations. This cap has been tacitly acknowledged by the courts and is rarely exceeded. This level of award is essentially reserved for employees of very long service who were employed at professional and specialized positions.
The jurisprudence has led some to suggest that under the common law, on average, one month of notice should be provided for every year of service. However, the courts have expressly rejected this. There is no rule of thumb for equating length of service and notice period: Minott v. O'Shanter Development Co. 1999 CarswellOnt 1, at paras. 71-73. Instead, the reasonable notice period should be approximated by looking at reported cases involving the same or similar fact patterns, and seeing what types of notice periods were awarded in those cases.