Determining a dismissed employee’s entitlement to reasonable notice of dismissal (a.k.a. a severance package) is more of an art than a science. There is no mathematical formula that can be used to calculate a severance or termination package for an employee who has been terminated without cause.
Employment lawyers develop the skill of being able to determine the notice period by reviewing countless wrongful dismissal decisions. Computer apps and other marketing gimmicks promising to predict a notice period are not consistently reliable.
Reasonable notice of dismissal should not be confused with a dismissed employee’s minimum statutory entitlement to notice and severance pursuant to the Ontario Employment Standards Act, 2000 (“ESA”). The ESA only sets out an employee’s minimum entitlements upon dismissal. An employee is presumed to be entitled to a significantly longer period of reasonable notice.
The primary factors considered when determining a reasonable notice period were set out in the 1960 decision Bardal v Globe & Mail Ltd.1 Justice McRuer wrote:
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.
The four factors (age, length of service, character of employment, availability of similar employment) are now commonly referred to as the “Bardal factors”. These factors have been recognized by the Supreme Court of Canada as the proper method to be used when calculating a dismissed employee’s reasonable notice period.2
The goal is to conduct an individualized assessment of the factors that will impact the dismissed employee’s ability to find new work. Therefore other factors are may also be considered when calculating a notice period.
Judges have a great deal of discretion when determining the appropriate period of reasonable notice period. As a result, any review of reasonable notice decisions will inevitable point to a wide range of notice awards for relatively similar fact scenarios. Therefore, when attempting to determine the appropriate notice period a skilled employment lawyer will provide a range in which the majority of decisions fall.
The approach a court will use to determine a reasonable notice period is flexible, and each case will turn on its own particular facts. The weight to be given each factor will vary according to the circumstances of each case, and the judge in a wrongful dismissal case is required to exercise judgment in determining what factors are of particular importance.3 No one Bardal factor should be given disproportionate weight.4
The Key Factors Impacting the Notice Period
1) Character of Employment
Character of employment refers to the skill set and seniority of the dismissed employee.
Employees with highly specialized skill sets may be entitled to a longer notice period if it can be established that there are relatively few employment opportunities for the particular skill set.
Historically, courts have awarded highly skilled senior employees longer notice periods than lower level, lesser skilled employees. As an example, all else equal, a vice-president of a company would be expected to receive a longer notice period than the company’s receptionist. A lawyer or accountant would receive a longer notice period than an employee who lacks any formal accreditation.
The justification for this judicial bias towards employees at the higher end of the organizational structure is based on the presumption that it is more difficult for a senior employee with a more specialized skill set to find new employment than a lower skilled employee with a more generalized skill set. The lower skilled worker with a more generalized skill set should have more employment opportunities. For example, while a receptionist can work almost anywhere there may only be a handful of roles that will be a good fit for a vice-president.
This bias towards favouring senior employees with longer notice periods has been criticized as being unfair and not an accurate reflection of how difficult it can be for lower skilled employees to find employment. Indeed, a strong argument can be made that senior and highly skilled workers are actually more employable in our 21st-century economy than unskilled workers.
In 2011 the Ontario Court of Appeal questioned the presumption that a junior employee should receive a shorter notice period than a senior employee. In Di Tomaso v. Crown Metal Packaging Canada LP.5 MacPherson J.A., writing for the Court, stated that character of employment is a factor that is declining in importance when determining a dismissed employee’s reasonable notice period. Writing at paragraphs 27 and 28 Justice MacPherson stated:
Crown Metal would emphasize the importance of the character of the appellant’s employment to minimize the reasonable notice to which he is entitled. I do not agree with that approach. Indeed, there is recent jurisprudence suggesting that, if anything, it is today a factor of declining relative importance: see Medis Health and Pharmaceutical Services Inc. v. Bramble (1999), 175 D.L.R. (4th) 385 (N.B.C.A.) (“Bramble”) and Vibert v. Paulin (2008), 291 D.L.R. (4th) 302 (N.B.C.A.).
This is particularly so if an employer attempts to use character of employment to say that low level unskilled employees deserve less notice because they have an easier time finding alternative employment. The empirical validity of that proposition cannot simply be taken for granted, particularly in today’s world. In Bramble, Drapeau J.A. put it this way, at para. 64:
The proposition that junior employees have an easier time finding suitable alternate employment is no longer, if it ever was, a matter of common knowledge. Indeed, it is an empirically challenged proposition that cannot be confirmed by resort to sources of indisputable accuracy.
However, in the 2011 decision Love v. Acuity Investment Management Inc.6 (discussed in detail below) another panel of the Ontario Court of Appeal continued to rely upon the traditional jurisprudence when determining the dismissed employee’s notice period. When considering the notice period that should be awarded to a senior employee, the Court wrote at para. 22 “[the plaintiff] was clearly a high-level employee, something that this court has said favours a longer notice period.”
The 2011 Ontario Court of Appeal decisions in Crown Metal and Acuity are difficult to reconcile. However, in 2015 the Ontario Court of Appeal released Arnone v. Best Theratronics Ltd.7 in which the Court, relying on Crown Metal, reiterated at paragraph 11 “that that the character of employment is a factor of declining importance in the Bardal analysis.”
If anything, employees with a particular marketable skill are more valuable to employers and should have an easier time finding employment. The plaintiff herself is a case in point. Her skills were vulnerable to automation and she was replaced by a computer.
The judicial trend in 2015 to place less emphasis on lower skilled employees’ character or employment continued with Justice Lederer’s decision in Drysdale v Panasonic Canada Inc.9 In awarding the 58-year-old warehouse shipper with 23 years of service a notice period of 22 months, Lederer J. wrote at para. 15:
The character of the plaintiff’s employment is for the most part one of physical labour. He held a non- managerial position and was responsible along with 30 or 40 other material handlers in moving product in and out of and within the defendant’s warehouse. Of note, is the fact that his hourly wage was $28/hour which would appear to be considerably higher than the wage earned by other shippers in the industry. Even if the plaintiff could be considered a low level unskilled employee, it does not mean that he would necessarily have an easier time finding alternative employment than would a person in a managerial position. It has been held that the character of employment as being one of a rather low level is today a factor of declining relative importance: see DiTomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 (CanLII) at paras. 27 and 28.
Be aware that there is an older line of caselaw that held that the maximum notice period for clerical or unskilled workers is 12 months. However, this line of jurisprudence was rejected by the Ontario Court of Appeal in Crown Metal.
2) Length of Service
Longer service employees are entitled to longer notice periods. That said, short service employees often are awarded more than 1 month of notice for ever year of service.
A review of the caselaw demonstrates a tendency, in many decisions, to overemphasize the importance of length of service in relation to the other Bardal factors when determining the appropriate notice period. This tendency is so strong that many people believe that there is a rule of thumb that awards a dismissed employee, as an example, one month of notice for every year of service. This is an error of law.10
In practice, long service employees (i.e. 20 plus years) tend to be awarded notice periods representing less than 1 months’ notice for every year of service. Short service employees (i.e. less than 3 years) tend to be awarded notice periods of more than 1 month per year of service. Of course, this is a generalization and any review of the caselaw will reveal a number of exceptions.
The irony is that, in practice, a dismissed employee’s length of service arguably has the least impact of any of the Bardal factors on a dismissed employee’s ability to find new employment in many cases. All else equal a dismissed employee with five years of service is not likely to find new employment any faster than a dismissed employee with ten years of service.
That said, the courts often emphasize an employee’s length of service when deciding wrongful dismissal cases. Justice Lederer justified the tendency for judges to award long service employees a longer notice period in Drysdale at para. 14 as follows:
An employee’s length of service is an important factor in the determination of reasonable notice. For one thing, it has been said that “a long term employee has a moral claim which has matured into a legal entitlement to a longer notice period.” (See Ansari v. British Columbia Hydro and Power Authority, 1986 CanLII 1023 (BC SC),  BCJ No. 3005 (BCSC) at para. 26). Moreover, having served one employer for such a lengthy period of time, a potential new employer may view that individual as rather set in his ways and not as adaptable to change. Whatever the reason, courts have considered long term service as a factor towards increasing the notice period.
The tendency by some judges to place to over emphasize an employee’s length of service when determining the notice period was addressed in Acuity by the Ontario Court of Appeal. The Court found that the trial judge erred in awarding the plaintiff only 5 months notice of his dismissal. The plaintiff was a 50-year-old chartered accountant who held the position of senior vice president in the company of approximately 90 employees. He was dismissed from his employment without cause after 2.5 years of service.
On appeal, the Court found that the trial judge had overemphasized the importance of the plaintiff’s relative short service with the company in relation to the other Bardal factors. Goudge J.A., writing for the Court, stated at paragraphs 18 and 19:
In my opinion, the trial judge’s determination of the appropriate period of reasonable notice reflects error in principle in three respects.
First, it overemphasizes the appellant’s short length of service. While short service is undoubtedly a factor tending to reduce the appropriate length of notice, reference to case law in a search for length of service comparables must be done with great care. The risk is that while lengths of service can readily be compared with mathematical precision that is not so easily done with other relevant factors that go into the determination of notice in each case. Dissimilar cases may be treated as requiring similar notice periods just because the lengths of the service are similar. The risk is that length of service will take on a disproportionate weight.
The Supreme Court of Canada stated in McKinney v. University of Guelph11 that a longer notice period will be justified for older, long-term employees who may be at a competitive disadvantage in securing new employment because of their age.
Age arguably receives the second greatest weight in many decisions after the dismissed employees length of service.
4) Availability of Similar Employment
The availability of similar employment is, arguably, the most important Bardal factor. The purpose of reasonable notice is to compensate a dismissed employee for a reasonable period of time while she attempts to mitigate her loss by finding new employment. The more difficult it is likely to be for the dismissed employee to find new employment, the longer the notice period. Individuals searching for new employment are most likely to find new employment opportunities in roles that closely match their previous work experience.
The employee bears the burden of proving that the notice period should be longer because of the lack of availability of suitable work. Typically the burden is met by a plaintiff demonstrating his or her efforts to find work through job postings and applications made.12
Despite its importance, the availability of similar employment is the Bardal factor most likely to be ignored by a judge. The reason is that it is rare that any sort of objective analysis of the availability of similar employment placed in front of the judge. A proper analysis would, in most cases, require a job market analysis of the plaintiff’s skill set and industry experience. However, the cost of this type of survey is prohibitive and, therefore, impractical for wrongful dismissal actions. As a result, the type of evidence considered by a court, if any, is likely to be speculative.
The speculative nature of the evidence that may be considered by a court can be seen by the evidence considered by the Court of Appeal in Acuity. Considering the availability of similar employment, Goudge J.A. wrote at paragraph 22:
Third, the trial judge gives no consideration at all to one of the Bardal factors, the availability of similar employment. Both his substantial average annual compensation and the possibility of equity participation in his employer were important aspects of the appellant’s employment. Both are relevant in assessing similar employment opportunities: see Belzberg v. Pollock 2003 BCCA 71 (CanLII), (2003), 10 B.C.L.R. (4th) 255 (C.A.) for an example of the relevance of equity ownership in this assessment. Here both considerations suggest that obtaining similar employment would be harder rather than easier. This Bardal factor therefore clearly points to a longer period of reasonable notice.
With all due respect to the Court, the “substantial average annual compensation and the possibility of equity participation” enjoyed by the plaintiff in Acuity is simply not determinative that the plaintiff would have found it more difficult to find new employment. A highly skilled senior employee with both experience and connections in a high growth industry is likely to have a number of employment opportunities in relatively short order. In contrast, a senior, highly paid, employee whose career was spent working in an industry that is now in decline may find it difficult to ever find similar employment.
The availability of similar employment does become a key Bardal factor when the dismissed employee will obviously face unique challenges when attempting to find new work. Examples include:
- small “one employer” towns where the one major employer dismisses a large number of employees. The dismissed employees will likely be required to move unlikely to find new employment and the former employees have; and
- an employee with an extremely specialized skill set with limited re-employment options because the technology in his or her field has been replaced by a new technology.
Other Factors That Might Influence the Length of the Notice Period
The four factors set out by the Court in Bardal are consistently considered when determining an appropriate notice period for a dismissed employee. However, there are a variety of other factors that may result in an increased notice period for a dismissed employee. Other factors include the following:
Inducement occurs when an employer or its agent (such as a headhunter) contacts an individual who is already employed and convinces the employee to leave his or her secure employment and join the new employer. In circumstances where the employee is subsequently dismissed by his her new employer, a court may consider the dismissed employee’s past service with his or her previous employer when determining the appropriate notice period.
The principle of inducement was recognized by the Supreme Court of Canada in Wallace v United Grain Growers13 as a factor that may increase a dismissed employee’s reasonable notice period. In Wallace the Court considered the dismissal of an employee who had worked for 25 years for a competitor when he was induced by United Grain Growers to resign and join it. Prior to accepting the offer of employment the plaintiff had sought assurances of job security and was told that if he performed as expected he could work for the company until he retired. After 12 years of employment with United Grain Growers the plaintiff was terminated from his employment. In addition to the Bardal factors, Iacobucci J., writing for the majority, considered the impact of inducement on the period of reasonable notice period at paragraph 85 writing:
In my opinion, such inducements are properly included among the considerations which tend to lengthen the amount of notice required. I concur with the comments of Christie et al., supra, and recognize that there is a need to safeguard the employee’s reliance and expectation interests in inducement situations. I note, however, that not all inducements will carry equal weight when determining the appropriate period of notice. The significance of the inducement in question will vary with the circumstances of the particular case and its effect, if any, on the notice period is a matter best left to the discretion of the trial judge.
Inducement will be given a great deal of weight by a court in circumstances where a long service employee has been induced to join another company only to find his or her employment terminated shortly thereafter. However, the Wallace demonstrates that inducement may be considered as a factor by a court, even in circumstances where the employee has been employed for a long period of time.
An employment contract that contains a probationary clause is inconsistent with a claim for inducement. In Nagribianko v Select Wine Merchants Ltd.14 the court found that probationary employment, on its face and by its nature, is inconsistent with any inducement or promise of long-term employment.
2) Unfounded Allegations That Hinder a Dismissed Employee’s Employment Prospects
A court may award a dismissed employee a longer notice period if an employer makes unsubstantiated allegations about the employee that will make it more difficult for the employee to find alternative work.
In Elgert v. Home Hardware Stores Limited15 the Alberta Court of Appeal upheld an award of 24 months notice to the plaintiff. He was a supervisor with nearly 17 years’ service and was 48 years old at the time of his dismissal. The Court held that the jury was entitled to consider the false accusations of sexual harassment, which may have impacted his ability to find new employment.
In 2016 the Ontario Court of Appeal in Lin v. Ontario Teachers’ Pension Plan16 held at paragraphs 52 to 55 that a relevant consideration when determining the appropriate reasonable notice period was the fact that the plaintiff’s dismissal “under an ethical cloud” would make it more difficult for the plaintiff to find comparable employment.
3) Non-Competition and Non-Solicitation Clauses
Employers considering inserting non-competition or non-solicitation clauses into employment contracts should be aware that these type of clauses may result in a dismissed employee being entitled to a longer notice period. This is because the non-competition or non-solicitation clause may make it more difficult for the dismissed employee to find new employment.17
In Dimmer v. MMV Financial Inc.18 Justice Moore’s decision to award the plaintiff a 12 month notice period was influenced by the fact that the plaintiff’s employment contract included a 12-month non-competition clause. The plaintiff was 50 years old and had been employed be the defendant for 4 years in the position of senior vice president at the time of his dismissal. Considering the impact of a 12-month non-competition clause Justice Moore wrote at paragraph 99:
As noted above, MMV required Mr. Dimmer to agree to be bound by a non-competition agreement as a term of his employment and it insisted that he abide by the agreement for one year following his dismissal. Mr. Dimmer complied. In my view, this agreement effectively eliminated any opportunity to obtain similar employment during that year and it seriously impeded his ability to obtain employment at all, even in fields beyond the reach of the non-competition agreement. This too is a factor weighing in favour of a longer notice period.
Justice Moore reached this decision despite the fact that the employer had taken the position that the non-competition clause was not enforceable.
In Munoz v. Sierra Systems Group Inc.19 the trial judge increased the notice period because the defendant had placed 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. At para. 92 the judge wrote:
Thus for the first six months after the date of termination, it would have been reasonable for the plaintiff to have regarded clients of the defendant as off-limits in terms of a job search. As a consequence, I find that this agreement slightly increases the proper notice period because it restricted the job opportunities available to the plaintiff for six months.
A woman who is terminated from her employment while pregnant may be entitled to a longer notice period. In Harris v. Yorkville Sound Ltd.20Dambrot J. increased the dismissed employee’s 10 month notice period by an additional 2 months to take into account the fact that she was pregnant writing at para 63.: “It seems to me that if part of the concern in the exercise of setting reasonable notice is the availability of other work, and the possibility of the dismissed employee being hired for it, then pregnancy has to be a consideration.”
The fact that the employer may not have been aware of the fact that the employee was pregnant or that its decision to terminate the employee’s employment had nothing to do with the fact that the employee was pregnant will not impact the assessment of her entitlement to reasonable notice.
However, if the employer’s decision to dismiss the employee was based, at least in part, on the fact that the employee was pregnant or about to become pregnant the dismissed employee’s dismissal is discriminatory and, therefore, in breach of the Ontario Human Rights Code (“Code”). If the dismissed employee were to claim damages for breach of the Code, she may be entitled to a much larger award of damages than that available to for her employer failure of the employer to provide her with reasonable notice of dismissal.
In Ontario, the dismissed employee can claim damages for breach of the Code either by filing an application with the Human Rights Tribunal of Ontario or as part of a civil action (ie a court action). In a civil action, the employee would likely claim damages for breach of the Code and, in the alternative, damages for wrongful dismissal.
5) The Time of Year When The Employee Was Dismissed
If a short service employee is dismissed at a time of year when it will likely be more difficult to find new employment this may lengthen the notice period awarded. In Fraser v Canerector Inc21 Justice Dunphy extended the notice period by 1.5 months to take into account the fact that the plaintiff had been dismissed in June and that hiring decisions might be delayed because decision makers were on vacation.
6) Disability and/or Lack of Formal Education
An employee who has a medical condition that will make it more difficult to find new work may be entitled to a longer notice period. Similarly, the lack of formal education may justify a longer notice period. These factors were recognized by Supreme Court of Canada in Honda Canada Inc. v. Keays.4 Bastarache J. wrote at para. 32:
Keays was one of the first employees hired at Honda’s plant. He spent his entire adult working life with Honda. He did not have any formal education and suffered from an illness which greatly incapacitated him. All these factors will substantially reduce his chances of re‑employment and justify an assessment of 15 months’ notice.
Factors that Will Not Influence the Calculation of the Reasonable Notice Period
1) Bridging An Employee To Retirement
Bridging occurs when an employee is dismissed prior to a date that triggers the employee’s entitlement to a pension or other retirement benefit. In Arnone v. Best Theratronics Ltd.23 the Ontario Court of Appeal held at para. 16 that “calculating the period of reasonable notice by reference to the amount of time required to ‘bridge’ the dismissed employee to his date of eligibility for a full pension [does] not accord with the Bardal analysis.”
2) Losses Suffered By the Employee as a Result of Loss of Employment Income
The loss of a job can have a devastating impact on the former employee. The resulting loss of income may, as an example, make it impossible for the individual to continue to pay his or her mortgage making it necessary to sell the home at a loss. However, the law is clear that an employee cannot claim this type of loss as damages in a wrongful dismissal claim. The Supreme Court of Canada reiterated in Honda Canada Inc. v. Keays,4 at para. 32 that damages are confined to the loss suffered as a result of the employer’s failure to give proper notice of dismissal, measured by the loss of wages and salary, and other benefits, that would have been earned during the reasonable notice period.
3) The Length of Time It Takes the Former Employee to Find New Employment
A dismissed employee’s reasonable notice period is determined at time of dismissal and not by the amount of time that it takes the employee to find employment. The Ontario Court of Appeal in Holland v. Hostopia. Com. Inc.25 at para. 61 explained the reasoning as follows:
If two employees in identical circumstances are terminated at the same time, they are entitled to the same notice, regardless how long it takes each of them to find a new job. One may mitigate her damages by finding a comparable job shortly after being dismissed. The other may be unable to find work for years. They are entitled to the same notice, regardless of the outcome. The time it takes to find a new job goes to mitigation of damages, not to the length of notice.
4) The Financial Difficulties of the Employer
An employer’s financial circumstances is not a relevant consideration when determining the period of reasonable notice to which a wrongfully dismissed employee is entitled. This was recently confirmed by the Ontario Court of Appeal in Michela v. St. Thomas of Villanova Catholic School26 at para. 17:An employer’s financial circumstances may well be the reason for terminating a contract of employment – the event that gives rise to the employee’s right to reasonable notice. But an employer’s financial circumstances are not relevant to the determination of reasonable notice in a particular case: they justify neither a reduction in the notice period in bad times nor an increase when times are good.
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- Bardal v Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.);
- Keays v Honda Canada Inc., 2008 SCC 39 at para. 28;
- Paquette v TeraGo Networks Inc., 2015 ONSC 4189 (CanLII) at para. 28;
- Honda Canada Inc. v. Keays, 2008 SCC 39
- Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469;
- Love v. Acuity Investment Management Inc., 2011 ONCA 130
- Arnone v. Best Theratronics Ltd., 2015 ONCA 63l
- Zoldowski v Strongco Corporation, 2015 ONSC 5485;
- Drysdale v Panasonic Canada Inc., 2015 ONSC 6878;
- Minott v O’Shanter Development Co., 1999 CanLII 3686 (ONCA);
- Mckinney v. University of Guelph, 1990 CanLII 60 (SCC);
- Munoz v. Sierra Systems Group Inc., 2016 BCCA 140;
- Wallace v United Grain Growers, 1997 CanLII 332 (SCC);
- Nagribianko v Select Wine Merchants Ltd., 2016 ONSC 490 ;
- Elgert v. Home Hardware Stores Limited, 2011 ABCA 112;
- Lin v. Ontario Teachers’ Pension Plan, 2016 ONCA 619;
- Holland v. Hostopia. Com. Inc., 2015 ONCA 762 at paras. 58 – 60;
- Dimmer v MMV Financial Inc., 2012 ONSC 7257;
- Munoz v. Sierra Systems Group Inc., 2015 BCSC 269;
- Harris v. Yorkville Sound Ltd., 2005 CanLII 46394;
- Fraser v Canerector Inc., 2015 ONSC 2138;
- Honda Canada Inc. v. Keays, 2008 SCC 39
- Arnone v. Best Theratronics Ltd., 2015 ONCA 63;
- Honda Canada Inc. v. Keays, 2008 SCC 39
- Holland v. Hostopia. Com. Inc., 2015 ONCA 762
- Michela v. St. Thomas of Villanova Catholic School, 2015 ONCA 801;