Court affirms that employers who use '1 months' notice per year of service' do so 'at their own peril'
By Stuart Rudner
I’ve said if before, and I will say it again: There is no “rule of thumb” for determining how much notice an employee is entitled to upon termination.
It is not one month of notice per year of service, or any other simple calculation you may have heard. The courts have made it clear every case is to be assessed based upon its own particular circumstances, and the data demonstrates courts do not simply rely upon an employee’s length of service.
I know it is tempting to try to identify an easy way to calculate notice periods, as employment standards legislation does. Unfortunately, at common law, what is clear is there are no hard and fast rules, and no limit upon the factors that are to be considered.
The core factors are the individual’s length of service, age and the character of the position (though that may be changing — see my comments on that). Another commonly considered factor is whether or not the individual was induced to leave previous secure employment.
An analysis of the awards made by the courts in wrongful dismissal cases from the last few decades demonstrates there is no clear pattern. The data shows short-term employees tend to receive disproportionately lengthy notice periods, contrary to what many suspect. In addition, the data shows an individual’s position, and age, can have a significant impact upon entitlement.
Of course, business people and many lawyers seek to perpetuate the myth of the rule of thumb. Most recently, the Court of Appeal for Saskatchewan was forced to address the issue in Capital Pontiac Buick Cadillac GMC Ltd. and Sergio Coppola. The court’s decision in this wrongful dismissal claim included the following comments:
Regardless, it seems clear from the jurisprudence that most appellate courts have been disinclined to adopt the rule of thumb approach. This may be because the very nature of the assessment of a reasonable notice period, as grounded by the Bardal factors, logically runs against a rule of thumb concept. Under Bardal, the court must consider subjective factors in reaching a determination as to what is reasonable in the circumstances. This analysis does not readily lend itself to the application of a mathematical formula, even if merely as the guideline of one month’s notice per year of service.
Adherence to the rule of thumb approach risks an overemphasis of one particular Bardal factor (i.e., the length of service factor) and creates a resistance to flexibility. This would be in error as no single Bardal factor may be given such disproportionate weight, as Bastarache J. affirmed in Keays.
Nevertheless, although the rule of thumb seems intuitively practical it is not, apparently, terribly reflective of the actual quanta of awards of pay in lieu of notice in wrongful dismissal cases. Practically-speaking then, while employers may wish to use the “one month’s notice per year of service” rule of thumb as a guideline in their day-to-day decision-making given its apparent facility, they do so at their own peril because the rule is not supported by the jurisprudence and is inconsistent with Bardal.
There is a very simple way to avoid the difficulty of determining what “reasonable notice” is in a particular situation — use a termination clause in an employment agreement in order to clearly establish how much notice will be required.
This allows both parties to avoid the unnecessary time and legal fees involved in assessing the notice period, negotiating, and potentially litigating the issue. My firm works with clients routinely to implement enforceable employment agreements, and I have written about this many times, including here.
Stuart Rudner is an HR lawyer and a founding partner of Rudner MacDonald LLP, a Toronto-based firm specializing in Canadian employment law. He provides clients with strategic advice regarding all aspects of the employment relationship, and represents them before courts, mediators and tribunals. He is author of You’re Fired: Just Cause for Dismissal in Canada, published by Carswell. He can be reached at [email protected]. You can also follow him on Twitter @CanadianHRLaw and join his Canadian HR Law Group on LinkedIn.