While employers are entitled to terminate employees at any time, they must treat employees fairly when doing so. When terminating employees without cause, employers must provide reasonable notice or pay in lieu of notice. This notice period provides employees with financial stability and time to secure alternate employment.
This article looks at what constitutes a reasonable period of notice. While reasonable notice under the Employment Standards Act 2000 (ESA) is based on the duration of employment, notice periods under the common law may be more generous. The recent case of Flack v Whiteoak Ford Lincoln Sales Limited in the Ontario Superior Court of Justice considered the impact of the COVID-19 pandemic on notice periods.
Employees are entitled to a minimum notice period under the ESA
Under section 54 of the ESA, an employer is not permitted to terminate an employee who has been continuously employed for three months or more unless they have given written notice or pay in lieu of such notice.
The required minimum notice period is set out in section 57 and depends on the employee’s period of employment. The required notice period is longer for employees with longer lengths of service. It ranges from one week (after three months of employment) to eight weeks (after eight years or more of employment). You can find the full range of minimum entitlements here.
The common law may impose additional notice to an employee terminated without cause
However, employers also need to consider the common law because case law has established additional notice requirements commonly applied in a termination. These requirements are often added to an employee’s damages award if they bring a successful case for wrongful dismissal. Employers sometimes include pay instead of notice beyond the statutory minimums in the termination package to avoid a wrongful dismissal claim.
For sixty years, the courts have determined reasonable notice by applying the analytical framework laid down by the Ontario High Court in Bardal v The Globe & Mail Ltd (Bardal). The judge in the case said that each case needed to be considered based on its unique circumstances, with regard to four factors:
There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.
Employee argued for a longer notice period due to difficulty finding new employment because of the pandemic
In Flack v Whiteoak Ford Lincoln Sales Limited, a 61-year-old employee with nine months of service was terminated without cause. His employer sought to give two months’ notice, whereas the plaintiff asked for eight months.
The employee was a finance manager at a car dealership. He was in a fairly senior position, responsible for selling financial products to customers rather than the cars themselves. He was paid on a pure performance basis and earned about $156,000 per annum annualized. He argued that a shorter period of service should attract a lengthier notice period because of the impact on finding new employment. He also argued for a longer notice period due to the souring of market conditions after termination caused by COVID-19. The plaintiff was on the verge of securing a new job just before COVID-19 hit. He resumed his search immediately after the job marketplace began to re-open.
Consideration of the Bardal factors didn’t warrant a lengthy notice period
Justice Dunphy looked at the four factors before deciding on a reasonable notice period. His Honour explained that the use of database searches can only be a tool to identify appropriate ranges for notice periods, but does not dispense with the requirement to conduct an individualized assessment.
Character of employment
Justice Dunphy, while noting that the importance of this factor had diminished, said that the more “custom” the fit of employee to employer, the more likely that a longer time frame will be needed to find the right combination of job openings and demand.
His Honour found that, in the particular industry, there was a relatively active market for the services of employees with the right combination of experience and a proven track record, both of which describe the plaintiff’s role.
Length of service
His Honour didn’t think that the plaintiff’s relatively brief service was a major factor in his employability. His three prior positions were comparatively short in duration and there were no lengthy intervening periods of unemployment. This was consistent with the employer’s claim that the market was characterized by relatively frequent turnover.
Furthermore, there were no factors that would tend to tilt the needle away from the range of reasonable notice that a short period of service would normally suggest, such as being enticed away from prior secure employment or being a high-level executive such that a careful search to find another “fit” was necessary.
Age of the employee
Justice Dunphy said that there were strong policy reasons against having a principle that older employees are entitled to greater notice than younger employees. Such a principle would quickly become a self-fulfilling prophecy and age has advantages. His Honour found little support for the idea that age played a significant role in the plaintiff’s recent experiences in the job market.
Availability of similar employment
His Honour decided that the pandemic was not entitled to weight in the form of lengthier notice. Because the period of reasonable notice was something that needed to be determined at the point in time when notice was required to be given, the souring of market conditions post-termination was irrelevant.
Justice Dunphy decided that a two-month notice period was reasonable in the circumstances.
Contact Haynes Law Firm in Toronto for Guidance on Employee Termination
Haynes Law Firm helps employers and employees throughout Ontario achieve effective solutions to legal issues and conflict management in employment law and civil litigation. We ensure our employee clients leave nothing on the table when negotiating the terms of their dismissal, so they have the resources they need while they seek new employment. We also help employers manage employee terminations to limit their exposure to legal claims. Please contact us online or call us at 416.593.2731.