The concept of reasonable notice remains a critical aspect of employment law disputes regarding wrongful termination cases, especially for individuals with extensive service time within a company. Like many other jurisdictions, Ontario upholds specific regulations governing the termination of employment and employee entitlement in such circumstances. Understanding the nuances of a reasonable notice period becomes paramount for employees who have dedicated a significant portion of their professional career to a single employer.

This blog explores the intricacies of reasonable notice periods in Ontario, focusing on the rights and entitlements of long-serving employees. It considers the legal framework for determining reasonable notice periods, how it applies to individuals with extensive service, and the factors that influence the determination of adequate notice in light of a recent decision from the Ontario Court of Appeal, which upheld a notice period of over 24 months.

Reasonable Notice Periods in Ontario

Employment termination, especially for employees with many years of service, can be a complex and emotionally taxing experience. Ontario’s legal guidelines aim to provide a safety net for employees in such scenarios. However, determining a reasonable notice period can vary based on multiple factors, including the individual’s role, length of service, age, prevailing employment standards, and common law precedents.

When an employer decides to end an individual’s employment, they must provide reasonable notice or pay in lieu of notice. This ensures the employee has ample time to secure alternative employment. Various factors influence the determination of what constitutes a reasonable notice period. While the statutory minimum notice periods are outlined in employment standards legislation, they often fall short of the common law reasonable notice, particularly for long-serving employees. Therefore, understanding the nuances in determining a reasonable notice period is essential for employers and employees to navigate termination situations fairly and justly.

Calculating a Reasonable Notice Period Based on the Bardal Factors

When calculating a reasonable notice period, the traditional factors to consider (also referred to as the “Bardal factors”) include:

  • The nature of the employee’s employment and the position they held;
  • The length of service the employee had with the employer;
  • The employee’s age at the time of termination; and
  • The availability of similar employment based on the employee’s qualifications and experience, considering the current job market.

While Ontario’s Court of Appeal has previously held that there is no upper limit or cap on reasonable notice periods, it also provided that “only exceptional circumstances will support a base notice period in excess of 24 months.”

Employee Terminated Due to Company Restructuring

In Lynch v. Avaya Canada Corporation, a 63-year-old employee was terminated in March 2021 due to company restructuring after 38 years of employment. The employee was a professional engineer, and after an unsuccessful attempt to reach a termination settlement, the employee commenced a claim for wrongful dismissal.

On summary judgment, the motion judge found that the employee mitigated his damages and determined that a 30-month notice period was appropriate in the circumstances. The employer appealed this decision, arguing that the motion judge erred by:

  • Awarding a notice period in excess of the relief sought by the employee in his Statement of Claim;
  • Misapplying the Bardal factors; and
  • Concluding that the employee took reasonable steps to mitigate his damages.

Awarding a Notice Period Greater Than What the Employee Claimed

In his Statement of Claim, the employee claimed damages for wrongful dismissal equivalent to 26 months’ notice. Therefore, the employer argued that the motion judge erred in awarding 30 months’ reasonable notice. However, the Court of Appeal saw “no merit in this argument.”

Determining a Reasonable Notice Period

The employer also contended the motion judge erred in fixing a notice period of 30 months. The motion judge had determined the circumstances of the case placed it within the “exceptional circumstances” category to justify a notice period in excess of 24 months. In support of this argument, the employer highlighted the fact the employee did not hold a management position within the company. However, the Court did not find in favour of the employer on this ground.

The Court emphasized that motion judges should explicitly identify the specific factors that support the presence of “exceptional circumstances” when awarding reasonable notice periods greater than 24 months. However, in this case, the Court found it possible to discern the “exceptional circumstances” factors the motion judge relied on. These factors included the fact that the employee:

  • Had developed one or two patents each year for the employer throughout his employment;
  • Was identified as a “key performer” in one of his recent performance reviews;
  • Had specialized skills regarding the design of software to control unique hardware manufactured by the employer; and
  • Did not have comparable employment prospects in the same city where he resided throughout his employment.

Court of Appeal Finds Employee’s Circumstances Justified Extended Notice Period

The Court indicated that because the question of reasonable notice is one of mixed fact and law, the Court did not consider the motion judge’s determination to be a palpable and overriding error. As such, the Court was not persuaded by this ground of the employer’s appeal.

Regarding the employer’s argument that the employee failed to mitigate his circumstances and should, therefore, only be entitled to a 16-month notice period, the Court noted that the employer had the ultimate onus of showing on a balance of probabilities he failed to do so. The motion judge accepted the employee’s evidence regarding his search efforts for alternative employment and his reasons for not expanding his search. As such, the Court acknowledged these factual findings are entitled to deference, and therefore, the Court declined to interfere with those findings.

Ultimately, the Court of Appeal dismissed the employer’s appeal, upheld the motion judge’s decision, and awarded the employee costs on a partial indemnity basis of $20,000.

Employers Should be Mindful of What Might be Considered “Exceptional Circumstances”

This decision highlights that the courts take a flexible approach when determining what exceptional circumstances call for extended notice periods. Moreover, this decision reminds employers to draft enforceable employment contracts with clear termination provisions to minimize their liability when dismissing employees.

Contact Grosman Gale Fletcher Hopkins LLP in Toronto for Advice on Wrongful Dismissal Claims & Reasonable Notice Periods

If you believe you have been wrongfully dismissed, or you are an employer who finds yourself defending a wrongful dismissal claim, it is essential to obtain sound legal advice as soon as possible to understand and protect your rights. The experienced labour and employment lawyers at Grosman Gale Fletcher Hopkins LLP in Toronto regularly advise employers and employees on various employment and labour law disputes, including wrongful dismissal, human rights issues, and workplace conflict and harassment. To schedule a confidential consultation with one of our lawyers and learn how we can help you, contact us at 416-364-9599 or complete our online form.