Having a comprehensive understanding of your rights and entitlements is paramount to ensuring fair treatment in the workplace. For Ontario employees who find themselves in short-term employment positions, questions surrounding termination and reasonable notice entitlements often arise. For instance, how much notice are short-service employees entitled to, and what factors influence what is considered reasonable?

This blog will provide a high-level overview of the rights of short service employees and their entitlements to reasonable notice in accordance with the law. It will also explore a recent decision from the Ontario Superior Court of Justice in which an employee was terminated after less than five months service, but entitled to a reasonable notice period of over five months.

Who is a Short-Service Employee?

Short-service employees are individuals who have worked for their employer for a relatively brief period of time. Unlike their long-tenured counterparts, short-service employees may not have built up significant time at the company to warrant lengthy notice periods. However, their entitlement to fair treatment under the law still remains.

Calculating Severance Pay for Short-Service Workers

Several nuanced and fact-specific considerations will shape the determination of a reasonable notice period, including the nature of the employment, the employee’s age and experience, and the availability of alternative employment opportunities. These non-exhaustive factors are referred to as the Bardal factors. The minimum standards for notice periods are set out in Ontario’s Employment Standards Act. When calculating appropriate severance pay for short-service employees, courts must consider how long it would reasonably take a terminated worker to find a new job, their length of service with the employer, and their compensation structure at the time of the termination.

It is a common misconception that an employee is entitled to one month of severance pay per year of service, although common law has developed such that notice entitlements are informally capped at 24 months. However, as the law recognizes that it may take a terminated employee several weeks to secure new employment, short-service employees should receive sufficient severance pay to help them get by in the interim. Employers and employees alike should be aware that just because an employee’s length of service was short, this does not automatically mean that they will only be entitled to a short notice period. It is, however, uncommon for a reasonable notice period to exceed an employee’s length of service, which was the case in the matter of Grimaldi v. CF+D Custom Fireplace Design Inc..

Employee terminated after 4 months and 23 days

In the matter of Grimaldi v. CF+D Custom Fireplace Design Inc., the plaintiff employee and personal defendant (“VV”) met six times prior to signing the employment contract, the first time was on an airplane when they were seated in the same row and engaged in casual conversation.

When the employment contract was signed, it provided that the employee would be employed as a senior project manager and would receive an annual salary of $90,000, in addition to a late model vehicle and allowance, holiday pay at 6%, and benefits paid in full by the employer after three months, and equity in the company. The employee accepted the terms and did not attempt further negotiation.

Employee brings wrongful dismissal claim against employer

The 50 year old employee was terminated without cause after four months and 23 days and was provided with two weeks’ salary in lieu of notice. The employee subsequently brought a wrongful dismissal action against the company, seeking 12 months’ pay in lieu of notice.

When the matter came before the Court, it was noted that the employee was offered permanent employment without a terminated date stipulated in the employment contract. Both parties anticipated that the employee would remain with the company long-term. The Court also acknowledged that the employee’s short service length “likely affected how long it took him to find a new job.” Further, given his age and previous experience in project management, his re-employment prospects may be hindered as he would be required to explain the reason for his dismissal. Accordingly, these factors weighed in favour of a lengthened notice period.

Court awards notice period of 5.5 months

Ultimately, given his senior position, advanced age, and the fact that he was the highest paid employee and expected to behave like a company owner, the Court concluded that the employee was entitled to 5.5 months’ notice.

This decision reminds employers of the risks associated with termination as Ontario courts tend to rule in favour of employees and award longer notice periods in certain circumstances. Further, it underscores the importance of ensuring employment contracts are well-drafted and contain a valid termination provision. While every case will be determined on its facts, employers can take proactive steps to minimize risk and liability in wrongful termination cases, by reviewing and updating the language within their employment agreements as necessary, ensuring they have proper recruitment and onboarding processes, and consulting with experienced employment counsel before terminating an employee.

For employees, this decision legitimizes the potential challenges a terminated short-service employee might face when seeking to secure alternative employment. Although short-service employment is becoming more common, this case provides an optimistic outcome for individuals in similar circumstances.

Toronto’s Labour and Employment Lawyers at Grosman Gale Fletcher Hopkins LLP Provide Proactive Advice on Employee Terminations

When an employment agreement is terminated after a short duration, an employee may be unsure as to their entitlement to severance pay. When navigating this difficult terrain, it is important to work with a knowledgeable employment lawyer who can advise you on your rights and entitlements under the law and ensure that you obtain adequate severance. At Grosman Gale Fletcher Hopkins LLP, our talented team of labour and employment lawyers work with employers and employees to help them minimize risk and assert their rights regarding termination disputes. Contact us at 416.364.9599 or online to discuss your employment law matter with one of our team members.