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Ontario Court of Appeal puts the ‘reasonable’ back into ‘reasonable notice’

reasonable-noticeDetermining the actual notice period an employee is entitled to upon termination is often a frustrating exercise for employers. This is especially true of the more recent case-law which has tended to place more emphasis on certain factors (age and tenure) at the expense of other factors (nature of position and compensation). There have been widely divergent awards in recent years. This undermines the ability of employers to plan, with some certainty, for large scale restructurings and the required notice/severance to provide staff.

The recent Ontario Court of Appeal decision of Kotecha v. Affinia Canada Ltd, 2014 ONCA 411 (“Affinia”) is both a blessing and curse for employers. First, the good news. The Court of Appeal has put the brakes on escalating awards for lower skilled and older employees. The employee was a 70 year old machine operator who had worked for the employer for twenty years. He was originally awarded 24.5 months’ notice on a motion for summary judgment. On appeal, the Court of Appeal concluded 18 months was appropriate. In making this reduction, the Court of Appeal has supported the general notion that notice periods in excess of 24 months will only be awarded in exceptional circumstances – according to the Court of Appeal, this was not such a case.

Now, the bad news. Affinia had argued that the Court of Appeal should defer to a previous court case that Affinia was involved in where an employee was awarded 13 months’ notice. The Court of Appeal disagreed and affirmed that each case is decided on its own specific facts:

While other decisions of the Superior Court are persuasive, they are not binding as the appellant seems to suggest. Moreover, the determination of the appropriate notice period is a very fact-specific exercise and is calculated in accordance with numerous factors as set out in Bardal v. Globe and Mail Ltd., [1960] O.J. No. 149, being the character of employment, the length of service, the age of the employee and the availability of other similar employment.

Consistency in the application of the law is key for employers. Knowing that similarly situated employees have similar entitlements allows proper planning and budgeting. For Affinia, that meant that it could not even rely on a previous case involving the same employer and a similarly situated employee.

Determining notice periods at common-law remains an individualized assessment. There are no “rules of thumb” and formulaic approaches are not supportable in the case-law. Employers are well advised to seek legal advice in determining notice periods to reduce risk. In addition, employers should be hesitant to rely on precedents – whether that be internal policy or judicial decisions involving the company. Again, the Court of Appeal has confirmed that, while frustrating for employers to hear, each case is decided on its own facts.

By Daniel Pugen and Matthew Demeo

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Employer Advisor, McCarthy Tétrault LLP

Employment and labour lawyers at McCarthy Tétrault LLP
McCarthy Tétrault through their Employer Advisor blogs offers their perspectives on the latest legal developments applicable to the workplace. It provides their insights on legislative and regulatory developments, as well as new case law, while providing practical tips for employers and their human resources professionals when managing the workforce. McCarthy Tétrault is a Canadian law firm that delivers integrated business law, litigation services, tax law, real property law, labour and employment law nationally and globally. Several of their blog posts will be republished with permission on First Reference Talks. Read more
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