Filiatrault v. Tri-County Welding Supplies Ltd., is a recent Ontario decision dealing with two plaintiffs (in their 80s) who filed wrongful dismissal claims after more than 40 years’ employment (they had a family business that was eventually purchased by the defendants who subsequently terminated the plaintiffs’ employment). The court suggests in this decision that “reasonable notice” as we know it should change given the elimination of mandatory retirement.
…There are few, if any, cases where the courts have awarded notice periods of more than 24 months. The higher notice periods have normally been awarded to persons of senior age, usually persons in their 60s and less often in their 70s, not normally to persons in their 80s. The durations of employment that have attracted higher notice periods have rarely if at all been as great as 40 years. This will likely be an increasing trend with the statutory end to retirement at age 65, a point I will return to later. There is no suggestion here with the current reality of employees working to more senior ages that the upper limit on notice periods should be infinite. However, the fact of the matter is courts will have to increasingly grapple with adjusting what a reasonable notice period is in this new reality.
Justice Allen, paragraph 54
This statement by Justice Allen is a good reminder for employers. Even the mere possibility of longer reasonable notice periods is good reason to deal with the issue up front by contract.
Why give reasonable notice?
In Canada, if there is no just cause or a contract saying otherwise, an employer can terminate an employee by providing the employee with reasonable notice of termination. The employer may opt to pay out the reasonable notice and have the employee leave the workplace immediately or the employer may require the employee to work through the notice period. The purpose of reasonable notice is to provide an employee with a reasonable amount of time to find a new job.
How do you determine reasonable notice?
The calculation of reasonable notice It is not an exact science, but it is predictable to a limited extent. Common law decisions are often used to predict reasonable notice. If an employer does not have just cause to dismiss an employee it cannot provide less than the minimum established by employment standards.
Know the applicable minimum employment standards
Not all employment standards legislation is uniform. For more information on the minimum requirements under employment standards legislation in Atlantic Canada visit our Spring 2013 Atlantic Employers’ Counsel.
What do the courts look at?
Courts rely on the factors set out in a 28-year old case from British Columbia (Bardal v. Globe and Mail and Ansari v. British Columbia and Power Authority):
The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.
How can you deal with it?
The best time is before the employee starts working for you. Another issue in the Filiatrault v. Tri-County Welding Supplies Ltd. decision was whether the parties, when the defendant purchased the business from the plaintiffs and continued their employment after the purchase, had an implied understanding that the plaintiffs would retire or resign once their shares in the business were purchased by the defendant some years later. If you guessed that the court said no, you’re right. Judges are not inclined to create an agreement for the parties if one does not exist. Here are the basic rules:
- Limit reasonable notice liability by contract by providing at least what is required under the relevant provincial employment standards act in clear and unambiguous terms.
- Provide the employee with a copy of the employment contract and get the employee’s agreement to these terms BEFORE the employee begins work.
There is at least one caveat, however – if the employee is promoted, the original agreement on termination may not survive scrutiny.
As we were posting this blog, the Supreme Court of British Columbia released Ellerbeck v. KVI Reconnect Ventures Inc. A review of the decision reveals that a 60-year old CMA with 3.5 years’ service was awarded 10 months notice. Just a few days later the Ontario Superior Court of Justice released Kotecha v. Affinia where 70-year old machine operator with 20 years’ service was awarded 22 months as reasonable notice. Need more reason to limit reasonable notice liability BEFORE the employee beings work? Probably not.