Monday, 17 March 2014

What is “reasonable notice”?

As described in an earlier post on the Ceaser Work Counsel Facebook page, the common law in Canada has adopted the legal rule that a contract of employment can only be terminated without cause if the employee is provided with “reasonable notice” of termination.  But what is “reasonable notice”?
Reasonable notice is the period of advance warning that an employer is supposed to provide an employee so that he or she has an opportunity to find alternative employment or business opportunities to mitigate the potential loss of income. In Canadian courts, the assessment of reasonable notice is usually based on the “Bardal factors” (i.e., the factors described in Bardal v. Global & Mail Ltd. (1960) 24 DLR (2d) 14(Ont. H.C.), at para. 21):
There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. 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.
Generally speaking, where the employee is in a more senior position, has longer service and is older, the reasonable notice will be greater.  In some instances, however, the courts will look to the job market and the availability of other positions, particularly in hard-hit sectors of the economy or regions.
The Bardal factors have been criticized for producing disproportionately long notice periods for employees in more responsible roles, benefiting the highest wage earners, while more junior employees receive significantly shorter notice periods (see in particular the New Brunswick Court of Appeal’s decision in Medis Health and Pharmaceutical Services Inc. v. Bramble).  However, more recent decisions of the courts in Ontario have shown a willingness to increase the notice periods of less senior employees to bring some parity to the calculation (see for example Di Tomaso v. Crown Metal Packaging Canada LP).
There are a number of caveats to the foregoing analysis.  First, it must be remembered that the parties to a contract have the ability to modify what is considered reasonable notice by incorporating specific provisions into the employment agreement, provided that the contractual entitlement is at least equal to what is provided by the Employment Standards Act (the “ESA”).  In cases where the parties expressly limit entitlement to what’s provided under the ESA, the courts have honoured these terms (see for example, Simpson v. Global Warranty Management Corporation), in which the plaintiff could only recover pay in lieu of notice pursuant to the ESA).
Second, although the common law speaks of reasonable notice, it is not unusual for employers to provide employees with “pay in lieu of notice” (whether statutory or common law).  Provided the employer also continues other employment entitlements (such as benefits coverage) for the period during which notice would run, offering pay in lieu of notice is accepted practice and is generally viewed as compliant.  Of course, every situation has to be reviewed on its facts, bearing in mind the components of the employment relationship and any contractual clauses that relate to entitlements upon termination.
Third, the so-called “rule” of one month’s pay per year of service has been repeatedly and resoundingly rejected by the courts.  The Bardal factors are still supposed to govern.  That being said, a review of typical notice periods suggests that what the courts actually award seems to correspond to the alleged rule pretty consistently – in many cases, and looking at overall averages, it would appear that one month’s pay per year is at least a “guide” in the courts’ reasoning.  That being said, in the cases of shorter service, senior and older workers, the “rule” has much less relevance, and every case must be assessed on its particular facts.
Whether you’re an employer or employee, it is important to understand “reasonable notice”.  If you have further questions, please do not hesitate to contact Lance Ceaser to review your situation.

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