Wrongful dismissals constitute the bulk of employment law practice in Ontario. Wrongful dismissal or wrongful termination occurs when the employer terminates an employee in ways which are contradicting to legislation, but more often, they are contracting to the established common law practices. Employment Standards Act dictates the minimum requirements governing employment relations, but employers are often unaware that there are common law requirements as well.

Beyond the legislation

While the Employment Standards Act mandates one week of notice for termination per one year of service up to eight weeks of notice, or payment in lei of such notice, common law requirements differ greatly. The main idea behind common law requirements as compared to legislation mandates is that common law recognizes that employers are not obligated to hire indefinite term employees forever, but where dismissal occurs without cause, employees are entitled to a reasonable amount of time to secure other jobs, or payment in lieu of such time. This principal is clearly stated in Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986

In Canada, it has been established since at least 1936 that employment contracts for an indefinite period require the employer, absent express contractual language to the contrary, to give reasonable notice of an intention to terminate the contract if the dismissal is without cause…

The large contribution to wrongful termination was made by Bardal v. Globe and Mail Ltd. This 1960 case is still used today for what has commonly become known as the Bardal factors. Bardal factors can include the following;

  • the character of their employment
  • their length of service
  • their age
  • and the availability of similar employment, having regard to their experience, training, and qualifications

Subsequent case law has also interpreted these factors to look at compensation, particular customs in specific industrie, and any special circumstances surrounding the employee’s hiring.

The rationale is that more specialized employees, or those with an employer for a longer period of time, will likely have more difficulty finding comparable employment. This is calculated at approximately one month of notice per year of employment, up to 2 years maximum with most low-skill or non-professional vocations capped at 1 year.

Wallace v. United Grain Growers Ltd., [1997] 3 SCR 701 shows a calculation of the reasonable notice period which went as high as 36 months, the later Honda Canada Inc. v. Keays, [2008] 2 SCR 362 has curved down the notice period, still there are cases with exceptionally high notice period, for example in the 2014 case of Hussain v. Suzuki Canada Ltd., the court awarded a 26 month notice period. The exceptionally high award was due to the plaintiff’s older age of 65, his long history of service over 35 years, and the low likelihood of finding comparable employment due to the economic climate. Justice Roberts reasoned as follows,

4 While there is no cap on the amount of reasonable notice of employment termination to which an employee may be entitled, and each case must be considered on its own particular circumstances…

5 In my view, while each factor on its own may not be exceptional, the combination of all of the above factors amount to the kind of exceptional circumstances that warrant a 26-month notice period.

Economic factors further grounded elaboration of the reasonable notice period, as seen in Gristey v. Emke Schaab Climatecare Inc., 2014 ONSC 1798 where Justice Conlan found that if the employee’s job had not be terminated, he would have ended up working fewer hours during this notice period anyhow as the employer’s business was shrinking, with assessment of factors as follows;

[39] This is not a complicated case…

[56] So what would a reasonable notice period be in these circumstances? There is no science to that determination…

[57] In my assessment, economic factors aside, a reasonable notice period for Mr. Gristey would have been twelve (12) months.

[58] I think, however, that 12 months is too high when one factors in the economic considerations. This was a tough decision for the company. It was entitled to adjust its operations in light of the relatively poor market prevailing at the time. I attribute no bad motives or callous behaviour to the Defendant or to Douglas Schaab. In fact, he struck me as a caring and earnest gentleman who has successfully built a solid business with an unblemished reputation. I give him a great deal of credit for that.

[59] In light of the economic factors, I have decided to discount the notice period by one-third, from twelve to eight (8) months. Essentially, this is a recognition that (as I said above), had Mr. Gristey’s employment not been terminated, he would have likely worked less hours during the notice period. Thus, it would not be fair to the Defendant to apply the full twelve-month notice period.

 

The authority for reducing the notice period came from Bohemier v. Storwal International Inc., 1982 CanLII 1764 where Justice Saunders justified this principle by emphasizing that notice must be reasonable from the perspective of both parties to the employment contract:

An employee may be dismissed either on reasonable notice or by payment in lieu of notice. The latter alternative is almost invariably selected because, for obvious reasons, it is not helpful to a business to continue to employ a person who has received notice of dismissal. Payment in lieu of notice involves a cost to the employer for which there is no corresponding production or benefit. In my view, there is a need to preserve the ability of an employer to function in an unfavourable economic climate. He must, if he finds it necessary, be able to reduce his work force at a reasonable cost. If he cannot do so, the alternative may be bankruptcy or receivership. It seems to me that when employment is unavailable due to general economic conditions, there has to be some limit on the period of notice to be given to discharged employees even if they are unable to secure similar employment within the notice period.

It is clear that courts give deeper meaning to the statutory minimum required notice for termination. It is recognized that employees become less flexible to find other forms of employment when time spent working for one employer increases. Payment in lieu of notice is not the only option, it is commonly forgotten that time spent at work constitutes proper notice as well. The courts will look at the general financial health of the employer to establish a balance between an employee’s right to a reasonable notice and the employer’s ability to provide this notice either in terms of payment in lieu of notice or with an actual notice period.