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By MacLeod Law Firm, January 8, 2013 8:46 am

Wrongful Dismissal Update: What is Reasonable Notice of Termination?

In Ontario, an employer generally may terminate an employee at any time by providing the employee with reasonable notice of termination. Or the employer may opt to pay the compensation the employee would have earned during this notice period and remove the employee from the workplace immediately.

There are important exceptions to this general rule which are beyond the scope of this blog. One exception is if an employee has signed an employment contract that contains a termination clause.

When determining the appropriate reasonable notice period in a particular case the courts do not adopt a formula; however the courts do consider a number of factors in every case.

The Four Bardal factors

In determining what constitutes “reasonable notice” of termination, the courts have followed the principles laid out by the Ontario Court of Appeal in a 1960 case called Bardal; namely:

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 (i) character of the employment, (ii) the length of service of the servant, (iii) the age of the servant and the (iv) availability of similar employment, having regard to the experience, training and qualifications of the servant.

In the last 52 years, the courts have been asked to apply the Bardal factors in thousands of wrongful dismissal actions. As a result, there have been two significant developments in connection with two of these factors.

The Character of Employment factor

In 2011, the Court of Appeal stated that the “character of employment” factor is now largely irrelevant except for a small class of very senior employees.

The Length of Service factor

In 1999, the Ontario Court of Appeal concluded that an employee is NOT entitled to one-month notice of termination for each year of service.

In 2011, this court stated that an employee is NOT limited to 24 months notice of termination.

Lessons to be learned:

1. Although the factors a court will consider when determining reasonable notice have not changed for over 50 years, the courts have interpreted these factors differently over the years.

2. With the elimination of mandatory retirement in Ontario, employers will be forced to start terminating long-service employees as part of corporate down-sizing. Current wrongful dismissal law suggests that a reasonable notice period for these employees is increasing – particularly unskilled employees.

3. It is in an employer’s self-interest to help terminated employees find alternative employment as soon as possible because the courts will deduct income earned during the reasonable notice period from wrongful dismissal damages otherwise payable. This may involve providing former employees with positive references, retraining, and/or outplacement counseling.

If you have any questions about wrongful dismissal law in Ontario please call us at 1–888-640-1728 or email us at inquiry@macleodlawfirm.ca. You can follow us on twitter or subscribe to our employment law blog

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By MacLeod Law Firm, March 6, 2012 1:58 pm

Employee Benefits

Did you know that an employer is generally required to maintain an employee’s benefits until the end of the minimum notice period provided for under the Employment Standards Act (ESA) whether or not the employer provides the employee with actual notice of termination.

Is the employer also required to continue benefit plan contributions throughout the common law “reasonable notice period” which is almost always longer than the ESA notice period? Ontario’s Court of Appeal recently answered this question.

Brito v. Canac Kitchens : The Facts

Canac Kitchen terminated Mr. Brito’s employment after 24 years service. Within two weeks, Mr. Brito, 55 years old, found another job however his new employer did not provide short-term or long-term disability benefits. About 1 ½ years later, Mr. Brito was diagnosed with cancer which resulted in surgery, chemotherapy and a total disability.

The Decision

Mr. Brito claimed that Canac should have continued his long-term disability coverage throughout the common law reasonable notice period. The trial judge agreed. He found that Mr. Brito should have received 22 months notice of termination and because the total disability took place during the reasonable notice period he was entitled to receive, among other damages, an amount equal to the LTD benefits he would have received from the date he became totally disabled within the meaning of Canac’s LTD policy until he turned 65 years old.

Lessons To Be Learned

1. An employer’s obligation to continue benefits for a terminated employee is not limited to the minimum notice period under the Employment Standards Act.

2. Most LTD plans do not allow an employer to continue LTD coverage for a terminated employee beyond the ESA minimum notice period. The chance of a person becoming totally disabled may be small  however the employer’s potential legal exposure is usually HUGE.

3. Reaching an early settlement with a terminated employee where the person agrees to release the employer from this kind of damage claim as a term of settlement is one way to limit the legal exposure associated with this kind of claim.

If you have any questions about an employer’s obligations to a terminated employee, please call us at 1–888-640-1728 or email us at inquiry@macleodlawfirm.ca

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By MacLeod Law Firm, November 22, 2011 7:53 pm

The $ 64 000 Question

Can an employer terminate an employee who is on long-term disability?

In some cases, the answer is yes but if an employer improperly terminates a disabled employee then the legal exposure can be HUGE. There is no arbitrary time when it is acceptable for an employer to terminate a disabled employee. It depends on the facts of the case.

Most long-term disability policies have a narrow definition for “totally disabled’ for the first two years. After that period, the policy has a broader definition of totally disabled.

It is therefore not surprising that employment lawyers get a call two years after an employee has become disabled.

The employer wants to terminate the employment relationship because it believes there is no reasonably prospect the person will ever return to work. In legal terms, the employer claims the employment contract has been “frustrated”.

Why Do We Get the Question?

The reason we get the call is because the employer wants to stop paying premiums for employee benefits like extended health benefits. If the employer pays all of the premium costs for this benefit and the employee has family coverage then the premiums can be several hundred dollars a month.

A CASE STUDY: Costco

Costco terminated a Mr. Naccarato’s employment. He had been off work for five years and he was in receipt of LTD benefits at the time of his
termination. Costco argued that Mr. Naccarato’s employment contract had been frustrated.

The issue the court had to decide was whether it was unlikely that Mr. Naccarato would be able to return to work in the reasonably foreseeable future. If so, the employment contract was frustrated and it would automatically come to an end. And Costco would not be required to provide
the employee with any notice of termination at common law.

What was the outcome?

The trial judge ruled in the employee’s favour because Costco had not provided the court sufficient medical evidence. In particular, Costco did not prove it was unlikely that Mr. Naccarato would be unable to work in the reasonably foreseeable future. In this regard, the evidence was that the employee was being treated by his doctor and a new psychiatrist was being sought.

The Cost of a Wrong Answer

The court found that Mr. Naccarato’s employment contract had NOT been frustrated. Instead, the court found that Costco should have provided him with with 10 months compensation in lieu of reasonable notice, and ordered Costco to pay the him $12 500 in legal costs.

Don’t assume an employment contract is frustrated just because an employee has been disabled for more than two years.

If your organization is thinking about terminating a disabled employee and you want to discuss the case with a lawyer with experience in this area, please contact us at inquiry@macleodlawfirm.ca or 1-888-640-1728.