Reasonable Notice of Termination - Recent Trends and Takeaways

Employees are prima facie entitled to receive notice when their employment is terminated without cause. Unless there is an enforceable termination provision in a valid employment agreement, an employee is entitled to notice (or pay in lieu) based on their common law entitlement to reasonable notice.

What amounts to "reasonable notice" under the common law is determined looking at the unique circumstances of the employment relationship. While there is no set mathematical formula, specific consideration is given to the following "Bardal" factors:

• Nature of employment
• Length of employment
• Age of employee
• Availability of similar employment

In assessing reasonable notice, the Courts often take a holistic approach that accounts for the real-life challenges the employee may face in finding alternative employment. For example, in recent cases we have seen judges consider the impact of COVID-19, lack of transferable skills, pregnancy, and disability, among many other factors when determining the appropriate reasonable notice period. In this blog post, we explore some of these recent decisions.

I. COVID-19 might impact reasonable notice

A pressing question from employers and employees alike is how the COVID-19 pandemic is impacting reasonable notice entitlements. In short, the answer it is depends.

There have now been several cases which confirm that being terminated amidst the COVID-19 pandemic may warrant a longer notice period. For example, in Kraft v Firepower Financial Corp, a salesperson who was terminated in the second week of March 2020, days before the government declared an emergency, received an extra month of notice. Likewise, in Pavlov v. The New Zealand Australian Lamb Company Limited, the judge held that the negative impact of the prevailing economic uncertainties in May 2020 on the former director of marketing and communication's ability to find similar alternative employment must be accounted for.

On the flipside, in Marazzato v. Dell Canada Inc., a senior manager with an IT company was not entitled to a longer notice period due to COVID-19 as he had not presented any evidence that the pandemic had made it more difficult for him to obtain a new position. The Court noted that the employee's skill set was in the computer business which may have actually benefited from the pandemic. Similarly, a senior labour relations specialist in Campbell-Givon v. Humber River Hospital, was not entitled to any increase in notice due to the pandemic as there were numerous job opportunities for individuals qualified in the labour relations area.

These cases highlight the fact specific approach to reasonable notice adopted by the Courts. While the COVID-19 pandemic may result in an increase in entitlement, it does not guarantee it. The whole of the circumstances will be considered, including the industry in which the employee works and the pandemic's impact on the availability of jobs in that area.

II. Tenure and older employees

Length of service is one of the well established Bardal factors considered by the Courts when determining reasonable notice. However, we have recently seen a number of cases that specifically consider how really long or really short tenure may impact an older employee's reasonable notice entitlements.

In the first category, there have been a couple of recent cases where the employees had spent their entire careers working for or with one company. The trend appears to be that these kinds of employees are entitled to reasonable notice on the longer end of the spectrum. This is especially the case where the employee's skills are not highly transferable or are "out of date". For example, in Currie v. Nylene Canada, the Ontario Court of Appeal upheld the exceptional award of a 26-month notice period for a 58-year-old employee who had worked for the same company since leaving high school at 18. Her skills were specialized to the company and despite her diligent efforts her computer skills were limited. A similar approach was adopted in the Ontario Superior Court case of Sandham v. Diamond Estates Wines & Spirits, where a 64-year-old employee was awarded 24 months. The Court expressly took account of the fact the employee had spent his whole working life selling just the products of this one company.

On the other hand, in the related cases of Flack v. Whiteoak Ford Lincoln Sales Limited and Ewach v. Whiteoak Ford Lincoln Sales Limited, the Court considered the reasonable notice entitlements of a pair of 61-year-old plaintiffs, who had been employed for 9 months and 19 months. In awarding reasonable notice of 2 months and 2.5 months, respectively, the Court emphasized that absent any other factors, short service tends to push the needle toward a lower period. Moreover, the fact the employees were older did not necessarily entitle them to a greater notice period - the Court noted that age may be desirable for some positions and an impediment for others.

These decisions highlight the underlying principle of reasonable notice - it is intended to provide an employee with a reasonable amount of time to find new employment. For employees who have worked in one job their whole life and know only that job, it will reasonably take them longer to find new work. On the flipside, an experienced, older employee with a relevant skillset may encounter fewer barriers to finding new work quickly.

III. Personal or health circumstances

In considering all of the circumstances, we are also seeing Courts account for personal or health circumstances which may impact an employee's ability to secure a new position.

In the decision of Nahum v. Honeycomb Hospitality Inc., the fact the employee was 5-months pregnant at the time of termination was an important factor in assessing her reasonable notice entitlements. While the Court noted that pregnancy does not automatically lengthen the notice period, in this employee's case it was found it did make it difficult for her to find work in the competitive job market.

The Courts have also considered how an individual's medical conditions may impact their ability to find alternative employment. In the case of Dizka v. Vantage Machine Shop Ltd., a 60-year-old employee was terminated while on a medical leave of absence following a stroke. In awarding a 24-month notice period, the Court noted that the employee's medical condition resulted in their being limited comparable employment available to him.

Takeaways:

These are only a few examples of recent decisions by the Ontario courts on the topic of reasonable notice. However, they underpin the circumstance-specific approach being adopted by the Courts. We are seeing decision makers do a careful review of all the facts, including both those that would make it easier and harder for the employee to find new employment, when determining reasonable notice entitlements.

Employers who may be on the hook for reasonable notice entitlements are encouraged to carefully consider the employee's unique situation prior to make any offers. Moving forward, employers are also encouraged to consider including or updating termination provisions in their employment contracts to best mitigate against reasonable notice related risks.

On the other hand, employees are encouraged to speak with legal counsel prior to accepting any offers on a termination. They may have greater entitlements than they realize.

Lee Workplace Law would be happy to answer any questions you may have arising from a termination of employment.