A judge rejects the one-month-per-year rule of thumb for
calculating termination notice periods, but then applies it. The
employee's lawyer is prepared to concede that notice periods
should be capped at 24 months, but the court rejects that. What are
employers to expect anymore?
In Abrahim et al. v. Sliwin et al.,1 a group
of 34 employees brought a motion for judgment against their former
employer claiming damages for wrongful dismissal. At the time of
their dismissal, the employees were working in unskilled jobs. They
held no supervisory responsibilities and were paid a relatively low
wage. In light of these shared characteristics, the employees'
lawyer proposed that the Court adopt a uniform formula of one month
per year in assessing the employees' termination notice period
and therefore damages for wrongful dismissal, to a maximum of 24
months. In rejecting as a "rule" but then applying in the
case at hand the employees' proposed approach to calculating
reasonable notice, the Court made two important rulings.
First, the Court confirmed that the "rule of thumb"
that an employee is entitled to one month's termination notice
for every year worked has no place in assessing an employee's
common law reasonable notice period. Citing the Ontario Court of
Appeal's decision in Minott v. O'Shanter Development
Co.,2 the Court noted that the rule of thumb
approach falters because it places too much of an emphasis on an
employee's length of service, as opposed to other factors such
as the employee's position and age. Moreover, it removes any
flexibility that an employer has in fashioning an employee's
Surprisingly, however, the Court stated:
While I disagree with Mr. Wright that the [one-month-per-year]
formula he proposes is a tenable one at law, I am nevertheless
persuaded that the damages proposed for each plaintiff are
reasonable, and I am prepared to award them. This means that
despite its rejection of the rule of thumb approach, the Court
ultimately applied that formula in the case at hand, holding that
it was reasonable in the circumstances of the particular case.
Second, and perhaps most importantly, the Court ruled that a cap
of 24 months on reasonable notice awards is not appropriate.
Interestingly, in so doing, the Court questioned whether
any maximum is appropriate.
While the Court's stated rejection of the rule of thumb
approach for calculating reasonable notice is good news for
employers, the Court's decision to apply that formula is
troubling. Also, with the 24-month maximum rejected, employers need
to be concerned about how high the court may go in calculating the
reasonable notice period for those employees who are of an advanced
age with lengthy service records. For example, in another case a
65-year-old employee with 36 years of service was awarded 26
months' notice.3 Given this uncertainty, employers
should consider implementing employment contracts with effective
termination provisions at the beginning of the employment
relationship. By doing so, the employer and employee can mutually
agree on their own rules regarding the employment relationship,
including the length of any notice period.
1 2012 ONSC 6295.
2 1999 CarswellOnt 1 (C.A.).
3 Hussain v. Suzuki Canada Ltd., 2011
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On Thursday, September 22, 2016, Dentons hosted a panel discussion about the management of liabilities and risks associated with environmental crises, including potential liabilities for directors and officers and provided insight into risk and liability techniques associated with environmental crisis management.
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