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 [email protected]. You can follow us on twitter or subscribe to our employment law blog
In the recent decision of Andros v Colliers Macaulay Nicolls Inc., the Ontario Court of Appeal (“OCA”) found yet another termination clause to be unenforceable. In this decision, the OCA reaffirmed and clarified various principles surrounding the enforceability of such clauses.
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