Termination and Reasonable Notice

Failure to provide reasonable notice or the appropriate pay in lieu thereof prior to terminating an individual’s employment often results in a wrongful dismissal suit being launched against the employer. Less frequently, employers are brought before the Ministry of Labour, usually an Employment Standards Officer as adjudicator of first instance, to justify their conduct vis-à-vis the terminated employee. Whether the terminated employee avails him/herself of the court or the government ministry, the employer will typically be put to considerable expense and time in defending the claim.Contrary to myth, there are no hard and fast rules used to define the “reasonable notice” period. Employers tend to believe that in all cases the courts follow the general rule of thumb that employees are entitled to one month for each year of service. The jurisprudence, however, suggests that, at least in some cases, one month for each year may be inconsequential, the result being that considerably more can be awarded, together with costs assessed against the employer.

What is known about what constitutes “reasonable notice” is that the courts consider a number of factors such as the employee’s: length of service; position within the company; age; and ability to obtain comparable substitute employment as well as the time associated with doing so. The determination of the appropriate notice period will therefore be made on a case by case basis taking into consideration the above factors as well as the decided case law.

The Case Law

The most noteworthy case as far as determining “reasonable notice” is the Supreme Court of Canada decision in Wallace v. United Grain Growers Ltd. In Wallace, the Supreme Court focused considerably on the imbalance of power existing at the time of termination between the employer and the terminated employee. In particular the Court decided that employees are most fragile upon termination and are therefore entitled to proper conduct by the terminating employer. The Court decided that employers owe a duty of good faith and fair dealing to the terminated employee in order to minimize the employee’s damages associated with the termination of employment.

Wallace is furthermore significant for broadening the scope of damages awardable on account of an employer’s bad conduct. Specifically, the Court found that an extension to the reasonable notice period is warranted in cases where an employee can prove bad conduct by the employer as well as a resulting impact on the employee’s ability to find replacement employment. Prior to Wallace, an extended award of damages on account of bad conduct was only possible in cases where an employee succeeded in proving a separate actionable wrong such as, intentional infliction of emotional harm.

Accordingly and since the decision in Wallace, employers have continuously faced wrongful dismissal actions with the added trepidation of Wallace damages. What is more, the courts seem to frequently award Wallace damages (including extensions to the reasonable notice period of six months) for an assortment of employer bad behaviour during termination.

Some reprieve was provided to employers by the Ontario Court of Appeal in Grismondi v. City of Toronto. In Grismondi, the Court of Appeal narrowed the range of cases in which Wallace damages can be awarded. Particularly, the Court of Appeal decided that such damages are justifiable only in cases where the employer’s misconduct is shown to have been carried out with malice or deliberate disregard for the employee. In other words, at least some form of bad faith conduct by an employer is necessary to give rise to Wallace damages.

Despite the decision in Grismondi, employees continue to seek out extended damages based on Wallace and, where the claim to such damages is supported by bad faith employer misconduct, such damages continue to be awarded. Consider the decision in Downham v. Lennox and Addington (County) wherein the Ontario Superior Court of Justice awarded damages in the amount of:

  • $50,000.00 on account of humiliation and loss of enjoyment of social activities;
  • $20,000.00 for intentional infliction of mental distress; and
  • $100,000.00 in punitive damages.

In light of the above, employers will continue to be exposed to Wallace damages where the termination of employment process is blundered. The focus of the trier of fact in such cases will continue to be twofold, namely, the nature of the employer’s misconduct and the resulting impact on the employee’s ability to obtain substitute employment. Employers should seek competent legal advice prior to and in conjunction with the termination of an employee’s employment.

Disclaimer: This article provides general information only and is not intended, nor is it to be relied upon as a substitute to obtaining legal advice.

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