Employees terminated without cause are entitled to a reasonable notice period or payment in lieu of this period. While the legislation sets out the minimum period of notice, employees may be entitled to a longer period of notice under the common law depending on the circumstances, so employers may provide a more generous termination package, or employees may claim common law notice in an action for wrongful dismissal.
The COVID-19 pandemic resulted in a severe downturn in many industries, with employees laid off or terminated. Some employees entitled to common law notice received significant damages awards in recognition of the economic uncertainty and difficulty in finding a new position.
This article looks at some of the principles relevant to the award of common law notice periods, along with a recent decision of the Ontario Superior Court of Justice in which an Air Canada employee terminated as a result of the COVID-19 pandemic received a 24-month notice period.
Statutory versus common law reasonable notice
Legislation, namely the Ontario Employment Standards Act (ESA) and Canada Labour Code (Code) that applies to employees in federally-regulated workplaces requires the payment of a minimum period of notice to employees that have completed three months’ service. The amount of notice required under provincial legislation depends on the employee’s length of service.
However, the common law may provide a more generous notice period to employees terminated without cause. If an employee succeeds in a wrongful dismissal claim, the court may award this notice. As a result, some employers offer termination packages that go beyond the legislated minimum to avoid such claims.
It is important to understand that employment contracts may seek to remove the entitlement to common law notice. Whether this is enforceable is another matter and may depend on issues, including the specific language used in the termination clause.
How are common law notice periods calculated?
As we have mentioned in a previous article, courts normally apply the Bardal factors in order to decide upon the period of common law notice. These factors are:
- the character of the employee’s employment;
- their length of service;
- their age; and
- the availability of similar employment, having regard to the employee’s experience, training and qualifications.
The Court of Appeal for Ontario has also stated that exceptional circumstances are generally required to justify a notice period that exceeds 24 months.
What impact has the COVID-19 pandemic had on common law notice periods?
Some courts have provided lengthy notice periods to employees terminated due to the COVID-19 pandemic. This aligns with the purpose of providing reasonable notice to give the employee time to find alternate employment. The economic conditions created by the pandemic, resulting from measures including shutdowns, made it difficult for some employees to do this.
The Court of Appeal for Ontario has also said that the employment factor’s character is potentially less important these days. As a result, relatively old employees who have spent their entire career with a company and have struggled to find work after being terminated may be entitled to a long notice period, even if their role is not a managerial position.
Airline employee terminated without cause in May 2020
In Williams v Air Canada, the plaintiff employee started working for Canadian Airlines International in 1996. The plaintiff started working for Air Canada after it acquired the airline in 2000. She worked her way up to the position of International Operations Training Manager prior to her termination without cause in May 2020 at age 52. Air Canada slashed its workforce by more than half in 2020 as a result of the COVID-19 pandemic.
The plaintiff earned an annual salary of about $70,000 plus various benefits. She designed and delivered training programs for staff, although did not directly manage other employees.
The plaintiff did not accept the severance package she was offered so the defendant paid the minimum statutory entitlements under the Code. She sued for wrongful dismissal and was unable to secure new employment until spring 2022.
H2: Defendant argued for 12-month notice period
Air Canada sought a 12-month notice period, arguing that the plaintiff’s position was not particularly senior as it was within the lower half of its position hierarchy, and she did not manage employees.
The plaintiff argued that the reasonable notice period was 24 months.
Court agreed with plaintiff; awarded 24-month notice period
Justice Ryan Bell observed that:
- older, long-term employees are normally entitled to a longer notice period as they may be at a competitive disadvantage in finding alternate employment; and
- serving one employer may reduce employability because potential new employers may see them as not adaptable.
Her Honour said:
“It seems to me that Air Canada unduly emphasizes the character of [the plaintiff’s] employment, and thereby diminishes the importance of her age and length of tenure, to minimize the reasonable notice to which she is entitled.”
Finally, her Honour noted the plaintiff was terminated due to the COVID-19 pandemic and decided she was entitled to notice at the higher end of the range because of its impact on the airline industry.
The court awarded a notice period of 24 months, or approximately $130,000.
Contact Haynes Law Firm in Toronto for Guidance on Employee Termination
The Haynes Law Firm helps employers and employees with all their employment law needs. Paulette Haynes can assist employers in avoiding the courtroom in the first place by correctly drafting employment contracts to limit employees’ entitlement to common law notice. We will help you to proactively manage your employment law issues to mitigate risk.We also work with employees to protect their legal rights and ensure they receive all of their entitlements in the event of termination. Let us get you what you need so that you can get back on your feet. Please contact the Haynes Law Firmonline or call us at 416.593.2731.