Probably the most prevalent misconception in the area of employment law is the notion that all employees are entitled to “one month per year” as notice of termination without cause. This has, in the past, been referred to as the golden rule. In spite of repeated judicial pronouncements that the rule no longer applies, human resources professionals continue to apply it.
Obviously, the main attraction of this rule is its ease of application. HR need not conduct a complicated and time-consuming analysis of a dismissed employee’s prospects of re-employment, but need merely to requisition a cheque or institute a plan to continue the employee’s salary for the pre-determined number of months following dismissal. Unfortunately, this rule is no longer the law, if it ever was.
In determining how to assess an employer’s obligation for the payment of notice, there is no better reference than the statement by the Chief Justice of Ontario in the leading case of Bardal v. The Globe & Mail. In this 1960 decision, Justice McRurer stated the following:
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.
With the exception of the somewhat outmoded description of the employee as a servant, the statement remains good law today. However, as is often stated, the devil is in the details. How do we apply these criteria to come up with the quantum of notice?
In general, courts will look first at the age of the dismissed employee as an important factor. Normally, the older the employee, the greater the amount of notice to which he or she is entitled. However, it is open to the employer to lead evidence that, in the particular job held by the employee, age is, in fact, a positive rather than a negative. (And thus that the employee’s age will have little to no effect on his or her prospects of finding work.) Similarly, while the length of employment will normally increase the entitlement to notice, there have been cases where the courts have accepted the argument that the longer the employee had been working for the employer, the more desirable she or he will be to a subsequent employer, having demonstrated a commitment to the employment. These factors may therefore reduce the length of notice. However, as a general rule, the longer the employee’s service to the employer, the greater the entitlement to notice.
One of the most often litigated criteria is the “character” of employment. Effectively, this is a determination of the level of the position that the dismissed employee held; normally, the more senior the position, the greater the entitlement to notice. Therefore, the employee’s lawyer in most wrongful dismissal litigation will seek to portray the employee’s employment at the highest possible level. However, the courts have attempted to look at the empirical characteristics of the employee’s position. For example:
- Did the employee supervise other employees? If so, how many?
- Did the dismissed employee have responsibility for reviewing job performance for those employees he supervised, and was he responsible for hiring and firing of employees?
Courts have also looked at the question of whether the dismissed employee participated in decision making with respect to the strategic direction of the company, and to what extent the employee was involved in committee work with senior management. Courts have also considered whether or not the employee required specific or specialized training to perform the duties of his position. Generally, the more responsibility attached to the position, the greater the notice period.
Of critical importance is the question of the availability of similar employment. Much time is spent at wrongful dismissal trials calling evidence as to the availability of such similar employment, or the lack of it. It is a very effective defence strategy to call witnesses at trial, such as recruiters active in the field, who will give evidence as to the number of similar positions available at the time of the employee’s dismissal. However, this has become more difficult in the current economic climate. In addition, courts can take “judicial notice” of the strength or weakness of the job market at the time of the employee’s dismissal to extend the period of notice.
Unfortunately, this type of subjective assessment provides little guidance for human resources staff. What often takes place at a trial is that the employee’s counsel will refer to a number of cases in which the characteristics of the employee are similar to that in the case before the court, and significant periods of notice were granted. Conversely, counsel for the employer will submit case law where the characteristics of the employee were similar, and much shorter notice periods were granted. In a recent decision of the Ontario Superior Court, an employee with six years employment with the employer submitted previous decisions where the notice period ranged from five to six months. The employer produced case law which demonstrated a notice period of two to three months. The Court ordered five months’ notice for this six-year employee.
Another difficulty in determining notice is the constant shifting of the economy. It is difficult to predict on the date of termination what the job market will be like over the ensuing period of reasonable notice and how a court will assess that in terms of awarding the employee an amount to compensate for such reasonable notice. One of the ways employers can eliminate this game of Russian roulette is to avoid making lump-sum payments for notice. Rather, employees can simply be put on salary continuance for the appropriate length of time, or until a new job is secured. It is within the employer’s right to require that evidence be provided during the course of the salary continuance of the employee’s efforts to find a new job.
As the volume of wrongful dismissal litigation continues to grow, the resultant range of court decisions on notice will increase. This changing world requires detailed legal advice prior to the drafting of any termination package.
Garfinkle Biderman LLP
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