Termination without cause occurs when an employer does not assert that it has a legal justification for terminating the individual’s employment without notice or compensation in lieu of that notice. Employers are entitled to terminate an employee without cause, but they must ensure that they either give reasonable notice to the employee or payout this period as compensation. This is supposed to be a fair amount of time searching for and locating comparable, alternative employment.

This article looks at the length of the period of notice and how it is calculated.

Employees are entitled to reasonable notice when being terminated without cause

Firstly, the Employment Standards Act 2000 guarantees a minimum period of reasonable notice before termination, in writing, for all employees continuously employed for three months or more, unless they have been given pay in lieu of such notice.

This minimum notice period depends on how long the employee has been employed, with a longer notice period for employees with longer periods of service. The notice periods are set out in the table below.

However, reasonable notice may be a longer period than that provided for by the ESA. For example, the employment contract might set out what constitutes reasonable notice in the event of termination without cause.

Alternatively, notice periods under the common law may be longer, as explored in the next section.

Factors considered by the courts in determining the length of the reasonable notice period

The courts are often called upon to decide the period of reasonable notice in a wrongful dismissal claim, so employers looking to avoid claims often consider the common law when terminating an employee without cause.

There is no precise mathematical formula for determining the reasonable notice period, with each case considered based on its unique circumstances. While using database searches to identify possible ranges for notice periods may be possible, it is necessary to conduct an individualized assessment. Each case must be considered having regard to its particular facts.

To do this, the courts apply the “Bardal factors” to determine the length of the notice period. These factors were set out by the Ontario High Court in Bardal v The Globe & Mail Ltd. Applying the factors has been described “as much art as science” because each judge determines what factors are of particular importance in that case, and there isn’t a rule of thumb based on weeks of notice per year of service.

We take a look at the four Bardal factors below:

The age of the employee

 Generally speaking, a longer notice period will be justified for older long-term employees, who may be at a competitive disadvantage in securing new employment because of their age.

However, one judge recently said that there were strong policy reasons against having a principle that older employees are entitled to greater notice than younger employees, arguing that it could become a self-fulfilling prophecy. It is possible and may be demonstrated by the evidence that age plays no role in some job markets.

The length of the employee’s service

The longer the duration of employment, the longer the reasonable notice period. However, this is a generalization and could be a relatively insignificant factor in some circumstances, for example, if the employee was enticed away from prior secure employment by the employer.

The character of employment

The character of employment factor tends to justify a longer notice period for senior management employees or highly skilled and specialized employees and a shorter period for lower rank or unspecialized employees. That is because the former employees may need a longer period to conduct a careful search to find the right fit. However, the evidence might show that there are active markets for particular services, suggesting a shorter period.

The availability of similar employment regarding the experience, training and qualifications of the employee

Evidence relating to the availability of similar employment, having regard to the employee’s experience, training and qualifications, is relevant. Economic factors such as a downturn in the economy or in a particular industry or sector that indicate that an employee may have difficulty finding another position may justify a longer notice period.

“Exceptional circumstances” are required to justify a notice period exceeding 24 months

The Ontario Court of Appeal has held that, while there is no absolute upper limit or cap on what constitutes reasonable notice, generally, only exceptional circumstances will support a notice period exceeding 24 months.

The determination of whether an exceptional circumstance exists is fact-specific and discretionary. It is possible that termination of a senior employee after career-long years of service at the same company, combined with difficulty finding new employment, may not constitute exceptional circumstances.

Contact Grosman Gale Fletcher Hopkins LLP in Toronto for Guidance on Employee Termination

If you are an employer or an employee going through the termination process, contact Grosman Gale Fletcher Hopkins LLP. We have helped workplace parties with their most challenging employment-related matters. We assist employers in managing risk when seeking to terminate employees without cause. We also help employees secure all their entitlements in the event of termination.

We are one of Canada’s most recommended labour and employment law firms. If you need guidance with a workplace-related issue, contact us online or at 416.364.9599.