Junior employees, substantial notice

Low-level employees entitled to notice too

Background

It is not uncommon for employers who terminate low-level hourly employees to conclude such employees are not entitled to substantial periods of reasonable notice.

Many employers believe they can meet their legal obligations to these employees by providing the minimum amount of notice payable under the provisions of employment standards legislation.

The Ontario Superior Court of Justice decision in Russo v. Lawrence Park Medical Centre is another in a line of decisions that serves to remind employers that even unskilled employees may be entitled to a lengthy period of common-law notice. The decision also serves as a reminder of what courts will require of an employer that seeks to limit its exposure to an employee based on an employee's failure to accept an alternate position in mitigation of their damages.

The case: Russo v. Lawrence Park Medical Centre Ltd.

Anna Russo, 67, had been working as a parking lot attendant for 25 years. She was a widow, spoke little English and was undergoing physiotherapy for an injury. She was sent a letter by her employer, Lawrence Park Medical Centre, telling her they were turning over the operation of the parking lot to Pro Park, a parking company.

The letter indicated Russo's employment was terminated and she would be provided with 12-weeks’ severance pay along with nine-weeks’ working notice. The letter also stated, "it is my understanding that Pro Park is prepared to offer you employment with them as a parking attendant if you wish."

Shortly thereafter Russo received an unsigned offer letter from Pro Park. The offer letter purported to offer employment on a full-time basis but provided no other details of the terms and conditions of employment. When Russo attempted to seek particulars from the parking company’s agent, specifically regarding wages, he refused to provide her with any information and told her to accept and sign the offer. Russo also requested a signed version of the offer letter. This request was also denied. Russo did not continue to work for Pro Park.

On Dec. 14, 2000, Russo’s employment was terminated and she received 12-weeks’ severance pay. Although entitled to vacation pay, she did not receive it until a demand was made by her counsel, about six months after her termination. Russo received 21 weeks’ combined notice and severance after 25 years of employment.

Decision

One of the major issues at trial was whether Russo had failed to adequately attempt to mitigate her damages by accepting employment with the new employer. The court did not believe the employer’s evidence that there had been a true offer of employment made by Pro Park and that Russo had actually refused the position.

Implicit in this reasoning is that an employee must be provided with adequate information about the position being offered in order to decide whether or not to accept the offer.

The court found it important that Lawrence Park Medical Centre had not sold the parking lot, but rather was just farming out the work to a parking company. The court was particularly critical of the employer’s decision to terminate a 67-year-old employee who was undergoing physiotherapy, knowing her chances of re-employment would be extremely difficult given her age and physical infirmities. Thus the court found the employer did not meet its burden of proof and could not establish that Russo failed in her duty to mitigate her damages by accepting the new position.

The second issue addressed was that of the appropriateness of the 21-week notice period for an employee with 25 years of service. The employer claimed this was adequate for an unskilled employee such as Russo.

After canvassing the case law, the court held non-clerical and non-managerial employees were not bound by a 12-month ceiling on reasonable notice damages and it should take into account all relevant factors, including social and economic conditions, the employee’s age and health and the availability of similar employment in determining the appropriate period of notice. Ultimately, based on these factors, the court awarded Russo 13 months’ pay in lieu of notice.

The myth of the 12-month ceiling

An employer is obligated to give reasonable notice if it wishes to terminate an employee. Failure to do so will expose the employer to damages for loss of salary and benefits to which an employee would have been entitled had the appropriate notice period been given.

What constitutes “reasonable notice” is particular to the facts of the case. Factors to be considered in this determination were enumerated in Bardal v. Globe & Mail Ltd. as: character of employment, length of service, age and availability of similar employment.

These “Bardal factors” have been adopted and applied throughout Canada but do not constitute an exhaustive list. The circumstances of the termination, manner of dismissal and conduct of the employer are also important considerations.

The “character of employment” factor continues to play a significant role in the determination of notice periods. Employees with higher-ranking positions, such as management and executives, typically receive longer notice periods. The rationale given is that it typically takes longer for professionals and highly educated employees to find comparable employment and they may be subject to social stigma associated with termination.

This reasoning has been challenged by numerous courts. In Cronk v. Canadian General Insurance Co., Justice MacPherson found there was no reason to restrict the notice period based on the junior clerical position held by the employee.

MacPherson suggested those who were better educated and professionally trained would be more likely to find employment after dismissal than those with fewer skills. Edna Cronk, a 55-year-old employee with 29 years of service, was awarded 20-months’ salary in lieu of notice.

Justice Whalen reiterated this view in Trudeau-Linley v. Plummer Memorial Public Hospital. Whalen criticized the determination of reasonable notice based on the character of employment as a “caste system which would reserve the highest award for the most important person.” The Supreme Court of Canada, in Cunningham v. Wheeler, said courts should not be making socially regressive distinctions without foundation.

But courts have continued to apply the principle that junior employees are entitled to a shorter period of notice. In Cronk the employer successfully appealed the award of 20 months’ pay in lieu of notice and had the notice reduced to 12 months.

It had been argued by some that the appeal court decision in Cronk had created a 12-month upper limit of reasonable notice for unskilled employees. But the Ontario Court of Appeal made it clear in the case of Minott v. O’Shanter Development Co. that no 12-month ceiling existed and courts should consider all of the Bardal factors.

What Russo and other cases involving unskilled employees makes clear, however, is that even though such employees may not be entitled to the periods of notice required for senior management, these junior employees are still being awarded lengthy periods of notice that substantially exceed the minimum statutory entitlements.

For more information see:

Russo v. Lawrence Park Medical Centre Ltd. (2002), 20 C.C.E.L. (3d) 256 (Ont. S.C.J)

Bardal v. Globe & Mail Ltd. [1960], 24 D.L.R. (2d) 140 (Ont. H.C.).

Cronk v. Canadian General Insurance Co. (1994), 6 C.C.E.L. (2d) 15 (O.C.G.D.).

Trudeau-Linley v. Plummer Memorial Public Hospital (1993), 1 C.C.E.L. (2d) 114 (O.C.G.D.).

Cunningham v. Wheeler (1994), 113 D.L.R. (4th) 1 at p. 12, [1994] 1 S.C.R. 359.

Minott v. O’Shanter Development Co. (1998), 168 D.L.R. (4th) 270.

Practical tips for employers

In general it appears longer notice periods are being given out and courts have acknowledged there is no cap of 12 months for non-managerial or non-supervisory employees.

Employers should be extremely cautious about their conduct in a termination situation. An employee should be given a suitable notice period with regards to age, health, length of service, ability to find comparable work and other relevant social and economic factors.

The case law suggests the character of employment is not the most important factor for determining the length of notice.

Some courts have suggested the barriers to re-employment are the same for those who have a high level of education and skill as those who do not. It is simply not enough to provide the minimum statutory requirements of notice, as the courts will invariably allow employees a lengthier notice entitlement.

Employers should also be concerned about the manner in which the dismissal is conducted as well as the behaviour after termination — any hint of impropriety may be considered an aggravating factor and could lead to a longer reasonable notice period.


This in-depth look at reasonable notice was provided by Heena R. Mistry, a lawyer with Jesin, Watson & McCreary in Toronto. She can be reached at [email protected].

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