Short Service Employee is Awarded a Long Notice Period

In Munoz v. Sierra Systems Group Inc., 2015 BCSC 269, a summary judgment motion, the plaintiff was awarded 10 months reasonable notice of dismissal despite the fact that the plaintiff, a 43-year-old senior systems administrator, had only 2 years and 7 months of service when he was dismissed from his employment.   

The defendant provides information technology (“IT”) management and consulting services to clients across Canada.  It contracts with clients to provide a variety of IT-related services by placing consultants with the clients, either onsite or remotely from its offices.  The plaintiff was hired by the defendant because one of its clients required a Spanish speaking system administrator.   During the interview process, the defendant’s representatives advised the plaintiff that they had a long-term and stable agreement with that client for the provision of IT consulting services.

However, after less than 3 years of service the defendant was informed by its client that it no longer required the services of the plaintiff.  As a result, the plaintiff was placed on the “bench” without pay while the defendant looked for new work for the plaintiff.  Ultimately, the defendant terminated his employment without cause.

Justification for the Longer Notice Period

The motions judge justified the award of 10 months’ notice of dismissal for several reasons.  Regarding the plaintiff’s 2 years and 7 months of service the judge wrote at para. 81 that this “must be regarded as a relatively short term of employment; however, the notice period is not generally restricted to a proportionate formula. Shorter term employees are generally awarded a disproportionately longer notice period.”

a)      The Non-Solicitation Clause

The plaintiff’s employment contract also contained a non-solicitation clause that restricted the plaintiff from soliciting the clients of the defendant for the 6 months after the termination of his employment.  As a result the judge increased the notice period “slightly” because clients of the defendant were “off-limits” in terms of a job search during that period (para. 92).

b)      Inducement

The plaintiff also claimed a longer notice period because the defendant, allegedly, had induced the plaintiff to leave secure employment by making fraudulent or negligent misrepresentations about the job security that the plaintiff would enjoy.

Although the motions judge did not find the defendant misrepresented the opportunity, the judge did find that the plaintiff would not have accepted the role if the representations of job security had not be made.  The judge took this into account when awarding a longer notice period.  At paragraph 82 the judge stated:

Job security was a key consideration for the plaintiff during the recruitment process. While the plaintiff was hired as an IT specialist, he was targeted for recruitment because of his Spanish language skills. The defendant was particularly in need of a consultant for Goldcorp, which required someone who could converse with its staff in Spanish. Much of the discussion between Mr. Miller and the plaintiff during the interview process centred upon the stability of the defendant’s contractual arrangement with Goldcorp. The plaintiff was assured that the contract with Goldcorp was secure until at least December 2014. The plaintiff’s evidence that he would not have left CDI without these assurances of job security is not contradicted.

Mitigation

The judge’s review of the plaintiff’s mitigation efforts is noteworthy for two reasons.

First, the judge considered the impact of the plaintiff’s attempt to focus on developing his own business immediately after he was dismissed from his employment instead of actively looking for new employment elsewhere.   In this case, the judge accepted that the plaintiff’s actions were reasonable writing at para. 105:

In my view, the plaintiff’s decision to increase the business opportunities of his pre-existing company was a reasonable step to take during the notice period up to December 5, 2013. Given the conditions imposed by the notice of termination, in terms of his obligation to remain available to the defendant for work assignments and the continued efforts of the defendant to find him other work, the plaintiff’s actions were not unreasonable. The fact that the company did not make substantial profits in this short period is not evidence that the choice was unreasonable. Further, the defendant has produced no evidence that there were suitable, comparable jobs available to the plaintiff during this period.

Second, the judge also reiterated the fact that an employer must get over a very high bar in order to prove that a dismissed employee failed to mitigate his or her damages.  At para. 107 the judge wrote:

Thus while the plaintiff took few steps to mitigate his loss in the early spring of 2014, I find there is little evidence that a suitable and comparable job existed had he looked for employment. The onus of proof rests with the employer to show that the dismissed employee has failed to mitigate his loss. Where there is no evidence that the plaintiff would otherwise have found appropriate work, there can be no reduction in the award of damages: per Burnyeat J. in [Smith v. Aker Kvaerner Canada Inc. and Kvaerner Power Inc., 2005 BCSC 117] at para. 36. The onus rests with the defendant to prove that the plaintiff failed to take steps to mitigate his loss and that those steps would likely have led to equivalent employment: Smith at paras. 32-33 and the authorities cited therein.

Conclusion

Munoz v. Sierra Systems Group Inc. is another example of an employee being awarded a relatively long notice period despite his or her short service.  Generally, short service employees will be awarded notice periods in excess of one month per year of service.  This is because an employee’s length of service is only one of the “Bardal” factors considered by the court when determining a notice period.  Age, character of employment and available of similar employment are also major factors that are taken into account.

The decision is also an example of how other non-Bardal factors can influence a notice period.  Inducement is a well-known factor that can increase an employee’s entitlement to reasonable notice of dismissal (see the Supreme Court of Canada’s decision in Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701 at paras. 83-85). 

A lesser known factor is that a non-solicitation clause or non-competition clause in an employment contract can result in the award of a longer notice period.  The notice period may be extended even if the restrictive covenant is not enforceable (see also Dimmer v MMV Financial Inc., 2012 ONSC 7257 at para. 99).

In this case, the defendant employer could have avoided this outcome by inserting a valid termination clause into the plaintiff’s employment contract, prior to acceptance, that specified either a fixed notice period or a notice period that was readily calculable.  It is well established that an employer can rebut the presumption of reasonable notice of dismissal by inserting a termination clause into the employee’s employment contract.  The Supreme Court of Canada confirmed in Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC) that a termination clause will be enforced by the court as long as it meets the minimum standards set out in the Employment Standards Act (and/or other relevant employment legislation).