Source: http://employmentlaw101.ca/02-determining-the-length-of-the-reasonable-notice-period/
Timestamp: 2019-04-24 04:20:04+00:00

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Determining a dismissed employee’s entitlement to reasonable notice of dismissal (a.k.a. a severance package) is more of an art than a science. There is no mathematical formula that can be used to calculate a severance or termination package for an employee who has been terminated without cause.
Employment lawyers develop the skill of being able to determine the notice period by reviewing countless wrongful dismissal decisions. Computer apps and other marketing gimmicks promising to predict a notice period are not consistently reliable.
Reasonable notice of dismissal should not be confused with a dismissed employee’s minimum statutory entitlement to notice and severance pursuant to the Ontario Employment Standards Act, 2000 (“ESA”). The ESA only sets out an employee’s minimum entitlements upon dismissal. An employee is presumed to be entitled to a significantly longer period of reasonable notice.
The goal is to conduct an individualized assessment of the factors that will impact the dismissed employee’s ability to find new work. Therefore other factors are may also be considered when calculating a notice period.
Judges have a great deal of discretion when determining the appropriate period of reasonable notice period. As a result, any review of reasonable notice decisions will inevitable point to a wide range of notice awards for relatively similar fact scenarios. Therefore, when attempting to determine the appropriate notice period a skilled employment lawyer will provide a range in which the majority of decisions fall.
Character of employment refers to the skill set and seniority of the dismissed employee.
Employees with highly specialized skill sets may be entitled to a longer notice period if it can be established that there are relatively few employment opportunities for the particular skill set.
Historically, courts have awarded highly skilled senior employees longer notice periods than lower level, lesser skilled employees. As an example, all else equal, a vice-president of a company would be expected to receive a longer notice period than the company’s receptionist. A lawyer or accountant would receive a longer notice period than an employee who lacks any formal accreditation.
The justification for this judicial bias towards employees at the higher end of the organizational structure is based on the presumption that it is more difficult for a senior employee with a more specialized skill set to find new employment than a lower skilled employee with a more generalized skill set. The lower skilled worker with a more generalized skill set should have more employment opportunities. For example, while a receptionist can work almost anywhere there may only be a handful of roles that will be a good fit for a vice-president.
This bias towards favouring senior employees with longer notice periods has been criticized as being unfair and not an accurate reflection of how difficult it can be for lower skilled employees to find employment. Indeed, a strong argument can be made that senior and highly skilled workers are actually more employable in our 21st-century economy than unskilled workers.
The character of the plaintiff’s employment is for the most part one of physical labour. He held a non- managerial position and was responsible along with 30 or 40 other material handlers in moving product in and out of and within the defendant’s warehouse. Of note, is the fact that his hourly wage was $28/hour which would appear to be considerably higher than the wage earned by other shippers in the industry. Even if the plaintiff could be considered a low level unskilled employee, it does not mean that he would necessarily have an easier time finding alternative employment than would a person in a managerial position. It has been held that the character of employment as being one of a rather low level is today a factor of declining relative importance: see DiTomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 (CanLII) at paras. 27 and 28.
Be aware that there is an older line of caselaw that held that the maximum notice period for clerical or unskilled workers is 12 months. However, this line of jurisprudence was rejected by the Ontario Court of Appeal in Crown Metal.
Longer service employees are entitled to longer notice periods. That said, short service employees often are awarded more than 1 month of notice for ever year of service.
In practice, long service employees (i.e. 20 plus years) tend to be awarded notice periods representing less than 1 months’ notice for every year of service. Short service employees (i.e. less than 3 years) tend to be awarded notice periods of more than 1 month per year of service. Of course, this is a generalization and any review of the caselaw will reveal a number of exceptions.
The irony is that, in practice, a dismissed employee’s length of service arguably has the least impact of any of the Bardal factors on a dismissed employee’s ability to find new employment in many cases. All else equal a dismissed employee with five years of service is not likely to find new employment any faster than a dismissed employee with ten years of service.
An employee’s length of service is an important factor in the determination of reasonable notice. For one thing, it has been said that “a long term employee has a moral claim which has matured into a legal entitlement to a longer notice period.” (See Ansari v. British Columbia Hydro and Power Authority, 1986 CanLII 1023 (BC SC),  BCJ No. 3005 (BCSC) at para. 26). Moreover, having served one employer for such a lengthy period of time, a potential new employer may view that individual as rather set in his ways and not as adaptable to change. Whatever the reason, courts have considered long term service as a factor towards increasing the notice period.
The tendency by some judges to place to over emphasize an employee’s length of service when determining the notice period was addressed in Acuity by the Ontario Court of Appeal. The Court found that the trial judge erred in awarding the plaintiff only 5 months notice of his dismissal. The plaintiff was a 50-year-old chartered accountant who held the position of senior vice president in the company of approximately 90 employees. He was dismissed from his employment without cause after 2.5 years of service.
In my opinion, the trial judge’s determination of the appropriate period of reasonable notice reflects error in principle in three respects.
First, it overemphasizes the appellant’s short length of service. While short service is undoubtedly a factor tending to reduce the appropriate length of notice, reference to case law in a search for length of service comparables must be done with great care. The risk is that while lengths of service can readily be compared with mathematical precision that is not so easily done with other relevant factors that go into the determination of notice in each case. Dissimilar cases may be treated as requiring similar notice periods just because the lengths of the service are similar. The risk is that length of service will take on a disproportionate weight.
The Supreme Court of Canada stated in McKinney v. University of Guelph11 that a longer notice period will be justified for older, long-term employees who may be at a competitive disadvantage in securing new employment because of their age.
Age arguably receives the second greatest weight in many decisions after the dismissed employees length of service.
The availability of similar employment is, arguably, the most important Bardal factor. The purpose of reasonable notice is to compensate a dismissed employee for a reasonable period of time while she attempts to mitigate her loss by finding new employment. The more difficult it is likely to be for the dismissed employee to find new employment, the longer the notice period. Individuals searching for new employment are most likely to find new employment opportunities in roles that closely match their previous work experience.
Despite its importance, the availability of similar employment is the Bardal factor most likely to be ignored by a judge. The reason is that it is rare that any sort of objective analysis of the availability of similar employment placed in front of the judge. A proper analysis would, in most cases, require a job market analysis of the plaintiff’s skill set and industry experience. However, the cost of this type of survey is prohibitive and, therefore, impractical for wrongful dismissal actions. As a result, the type of evidence considered by a court, if any, is likely to be speculative.
Third, the trial judge gives no consideration at all to one of the Bardal factors, the availability of similar employment. Both his substantial average annual compensation and the possibility of equity participation in his employer were important aspects of the appellant’s employment. Both are relevant in assessing similar employment opportunities: see Belzberg v. Pollock 2003 BCCA 71 (CanLII), (2003), 10 B.C.L.R. (4th) 255 (C.A.) for an example of the relevance of equity ownership in this assessment. Here both considerations suggest that obtaining similar employment would be harder rather than easier. This Bardal factor therefore clearly points to a longer period of reasonable notice.
With all due respect to the Court, the “substantial average annual compensation and the possibility of equity participation” enjoyed by the plaintiff in Acuity is simply not determinative that the plaintiff would have found it more difficult to find new employment. A highly skilled senior employee with both experience and connections in a high growth industry is likely to have a number of employment opportunities in relatively short order. In contrast, a senior, highly paid, employee whose career was spent working in an industry that is now in decline may find it difficult to ever find similar employment.
an employee with an extremely specialized skill set with limited re-employment options because the technology in his or her field has been replaced by a new technology.
Inducement occurs when an employer or its agent (such as a headhunter) contacts an individual who is already employed and convinces the employee to leave his or her secure employment and join the new employer. In circumstances where the employee is subsequently dismissed by his her new employer, a court may consider the dismissed employee’s past service with his or her previous employer when determining the appropriate notice period.
In my opinion, such inducements are properly included among the considerations which tend to lengthen the amount of notice required. I concur with the comments of Christie et al., supra, and recognize that there is a need to safeguard the employee’s reliance and expectation interests in inducement situations. I note, however, that not all inducements will carry equal weight when determining the appropriate period of notice. The significance of the inducement in question will vary with the circumstances of the particular case and its effect, if any, on the notice period is a matter best left to the discretion of the trial judge.
Inducement will be given a great deal of weight by a court in circumstances where a long service employee has been induced to join another company only to find his or her employment terminated shortly thereafter. However, the Wallace demonstrates that inducement may be considered as a factor by a court, even in circumstances where the employee has been employed for a long period of time.
An employment contract that contains a probationary clause is inconsistent with a claim for inducement. In Nagribianko v Select Wine Merchants Ltd.14 the court found that probationary employment, on its face and by its nature, is inconsistent with any inducement or promise of long-term employment.
A court may award a dismissed employee a longer notice period if an employer makes unsubstantiated allegations about the employee that will make it more difficult for the employee to find alternative work.
In Elgert v. Home Hardware Stores Limited15 the Alberta Court of Appeal upheld an award of 24 months notice to the plaintiff. He was a supervisor with nearly 17 years’ service and was 48 years old at the time of his dismissal. The Court held that the jury was entitled to consider the false accusations of sexual harassment, which may have impacted his ability to find new employment.
In 2016 the Ontario Court of Appeal in Lin v. Ontario Teachers’ Pension Plan16 held at paragraphs 52 to 55 that a relevant consideration when determining the appropriate reasonable notice period was the fact that the plaintiff’s dismissal “under an ethical cloud” would make it more difficult for the plaintiff to find comparable employment.
As noted above, MMV required Mr. Dimmer to agree to be bound by a non-competition agreement as a term of his employment and it insisted that he abide by the agreement for one year following his dismissal. Mr. Dimmer complied. In my view, this agreement effectively eliminated any opportunity to obtain similar employment during that year and it seriously impeded his ability to obtain employment at all, even in fields beyond the reach of the non-competition agreement. This too is a factor weighing in favour of a longer notice period.
Justice Moore reached this decision despite the fact that the employer had taken the position that the non-competition clause was not enforceable.
Thus for the first six months after the date of termination, it would have been reasonable for the plaintiff to have regarded clients of the defendant as off-limits in terms of a job search. As a consequence, I find that this agreement slightly increases the proper notice period because it restricted the job opportunities available to the plaintiff for six months.
The fact that the employer may not have been aware of the fact that the employee was pregnant or that its decision to terminate the employee’s employment had nothing to do with the fact that the employee was pregnant will not impact the assessment of her entitlement to reasonable notice.
However, if the employer’s decision to dismiss the employee was based, at least in part, on the fact that the employee was pregnant or about to become pregnant the dismissed employee’s dismissal is discriminatory and, therefore, in breach of the Ontario Human Rights Code (“Code”). If the dismissed employee were to claim damages for breach of the Code, she may be entitled to a much larger award of damages than that available to for her employer failure of the employer to provide her with reasonable notice of dismissal.
In Ontario, the dismissed employee can claim damages for breach of the Code either by filing an application with the Human Rights Tribunal of Ontario or as part of a civil action (ie a court action). In a civil action, the employee would likely claim damages for breach of the Code and, in the alternative, damages for wrongful dismissal.
If a short service employee is dismissed at a time of year when it will likely be more difficult to find new employment this may lengthen the notice period awarded. In Fraser v Canerector Inc21 Justice Dunphy extended the notice period by 1.5 months to take into account the fact that the plaintiff had been dismissed in June and that hiring decisions might be delayed because decision makers were on vacation.
Keays was one of the first employees hired at Honda’s plant. He spent his entire adult working life with Honda. He did not have any formal education and suffered from an illness which greatly incapacitated him. All these factors will substantially reduce his chances of re‑employment and justify an assessment of 15 months’ notice.
The loss of a job can have a devastating impact on the former employee. The resulting loss of income may, as an example, make it impossible for the individual to continue to pay his or her mortgage making it necessary to sell the home at a loss. However, the law is clear that an employee cannot claim this type of loss as damages in a wrongful dismissal claim. The Supreme Court of Canada reiterated in Honda Canada Inc. v. Keays,4 at para. 32 that damages are confined to the loss suffered as a result of the employer’s failure to give proper notice of dismissal, measured by the loss of wages and salary, and other benefits, that would have been earned during the reasonable notice period.
If two employees in identical circumstances are terminated at the same time, they are entitled to the same notice, regardless how long it takes each of them to find a new job. One may mitigate her damages by finding a comparable job shortly after being dismissed. The other may be unable to find work for years. They are entitled to the same notice, regardless of the outcome. The time it takes to find a new job goes to mitigation of damages, not to the length of notice.
An employer’s financial circumstances may well be the reason for terminating a contract of employment – the event that gives rise to the employee’s right to reasonable notice. But an employer’s financial circumstances are not relevant to the determination of reasonable notice in a particular case: they justify neither a reduction in the notice period in bad times nor an increase when times are good.
Notice of termination must be clear and unambiguous.27 If an employee knows that his or her employment is likely coming to an end but has not been given clear and unambiguous notice of dismissal, this knowledge will not result in a reduction of the notice period.
A recent example is the 2018 Ontario decision Dussault v. Imperial Oil Limited28. The employee had been aware for 18 months that the business was to be sold and, at a later date, that she would be offered employment with the purchaser. The employee ultimately rejected the offer of employment with the purchaser because the compensation offered was significantly lower. Only at that time did the employee receive formal notice that her employment would be terminated. The judge rejected the employer’s argument that the notice period should be reduced because the employee had known that her employment was coming to an end finding that the notice had not been clear and unambiguous.
Similarly, in 2018 the British Columbia Court of Appeal held in Cottrill v. Utopia Day Spas and Salons Ltd.29, that the fact that the employer had provided the employee with a letter her she had 3 months to improve or she would be fired was not notice of dismissal. The Court held that the letter did not clearly and unequivocally state that the employee would be terminated on a specific day, but rather stated that she might be fired if she did not improve her performance.

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