Reasonable notice: beyond the job label

The Ontario Superior Court of Justice has affirmed, in a recent wrongful dismissal decision, that courts will look beyond a dismissed employee’s title when assessing the character of their employment to determine their common law reasonable notice entitlements. George v. Laurentian Bank Securities Inc. also affirms that courts will not always provide inflated common law reasonable notice entitlements to short-service employees and older employees.

Termination entitlements

When an employee’s employment is terminated, they generally have two different types of termination entitlements — statutory entitlements under employment standards legislation and common law entitlements.

Under employment standards legislation, employees are entitled to varying minimum amounts of notice of termination — or pay in lieu of notice — and, in some cases, severance pay, depending on their length of service and the jurisdiction. Additionally, employees are entitled to common law reasonable notice — or pay in lieu of reasonable notice — unless there is an enforceable termination clause in their employment agreement removing that right.

Notably, common law reasonable notice entitlements tend to be far greater than statutory termination entitlements, and employees can be entitled to up to 24 months of reasonable notice absent exceptional circumstances.

How reasonable notice is assessed

Common law reasonable notice is intended to estimate the amount of time that it should reasonably take an employee to find a new job, and it can only be determined by a court. To make this determination, courts consider a number of factors, with the primary factors being:

• the employee’s length of service
• the employee’s age
• the character of the employee’s employment
• the availability of comparable employment

Although the courts have been clear that common law reasonable notice must always be assessed on an individualized basis, trends in the case law have led many to believe that there are certain unwritten “rules” about how much reasonable notice to which certain types of employees will be entitled. For example, many believe that older employees will invariably be entitled to substantially more common law reasonable notice than younger employees, all else being equal. Similarly, many believe that short-service employees are entitled to a minimum of approximately three months’ reasonable notice, regardless of any other factors.

However, Laurentian Bank illustrates that older age and short periods of service will not necessarily lead courts to award lengthy common law reasonable notice periods, even when these factors are considered together.

George v. Laurentian Bank Securities

The employee brought a motion for summary judgment seeking damages for wrongful dismissal. The employee had held the title of vice president, equity trading and was 58 years old when he was dismissed without cause on March 26, 2019, after less than five months of service. Notably, this was one of the first wrongful dismissal cases decided in Ontario during the COVID-19 pandemic, and the court noted that Ontario was “still coping with the economic realities of COVID-19” at the time of the hearing.

Counsel for the employee argued that he was a senior manager or executive and that there is a presumption at common law that senior managers and executives are entitled to at least 12 months’ reasonable notice. However, the court declined to determine whether there was any such presumption as it found that the employee was not a senior manager or executive because:

• He did not supervise other employees.
• He did not engage in oversight of or strategic decision-making in his department.
• He was three levels removed from the employer’s executive team.
• All employees in the department held the title “vice president, equity trading” to give them clout when dealing with clients.

Accordingly, the court held that the plaintiff’s title was not sufficient in and of itself to characterize him as a senior manager or executive.

Ultimately, the court awarded the plaintiff two months’ reasonable notice, despite finding that his age would make it more difficult for him to find comparable employment and that he had, as of the date of the hearing, been unable to do so in the 15 months since his dismissal.

Takeaways for employers

Laurentian Bank demonstrates that employees are not entitled to a minimum amount of reasonable notice where they have a short length of service. As the Ontario Superior Court of Justice reiterated, “there is no static formula to be applied relative to the length of time the terminated employee was employed” to determine an employee’s reasonable notice entitlement.

Similarly, this decision makes clear that courts will not always award lengthy reasonable notice periods to older employees, even where they recognize that an employee’s advanced age decreases their chances of finding comparable employment in a timely manner.

The decision in Laurentian Bank also affirms that an employee’s title is not necessarily indicative of the character of their employment. In particular, courts will look beyond an impressive title and examine an employee’s actual duties and responsibilities to determine the character of their employment. It is also worth noting that Ontario courts are beginning to treat character of employment as a less important factor in assessing reasonable notice entitlements than it has been in the past. For example, in Larry Patterson v IBM Canada Limited, the court stated that “‘character of employment’ is a criterion that is often of limited value in the modern context” and that it is “fast becoming a vestige of a by-gone era.” Nonetheless, employers should bear in mind that character of employment is still considered by the courts in assessing reasonable notice entitlements, and more senior and/or specialized employees may be awarded longer notice periods on that basis.

Finally, Laurentian Bank also demonstrates that the impact of the COVID-19 pandemic on the Canadian job market will not increase a wrongfully dismissed employee’s common law reasonable notice entitlement where the employee was dismissed prior to the onset of the pandemic. Although the court did not discuss whether the pandemic impacted the employee’s reasonable notice entitlement in Laurentian Bank, it appears clear from the two-month notice period that it did not. Other decisions have clearly established the principle that the length of a dismissed employee’s reasonable notice period should be determined based on the circumstances existing at the time of dismissal, rather than how those circumstances, including the job market, may have changed after dismissal. Accordingly, it is likely that the COVID-19 pandemic did not impact the notice period in Laurentian Bank because the employee was dismissed well before the pandemic began.

Overall, Laurentian Bank is good news for employers, as it suggests that they may not be required to pay out unduly large amounts of pay in lieu of reasonable notice to dismissed employees, even where the employees are older, have a short length of service and/or have an impressive title. However, this decision is not necessarily indicative of a trend, and employers should continue to monitor how the courts assess age, length of service and character of employment while determining common law reasonable notice entitlements in future decisions.

For more information, see:

• George v. Laurentian Bank Securities Inc., 2020 ONSC 5415 (Ont. S.C.J.).
• Larry Patterson v. IBM Canada Limited, 2017 ONSC 1264 (Ont. S.C.J.).

Joel Smith and Mark Wolfe are lawyers with Williams HR Law in Markham, Ont., where they practise management-side labour, employment and human rights law. They can be reached at (905) 205-0496 [email protected] and mwolfe@williamshrlaw.