So much for the rule of thumb that an employee should receive
one month of notice for every year of service. The
Toronto Star has reported on a recent wrongful dismissal
decision that Ontario employers should consider, especially when
hiring senior managers or executives. Except for the 12 month
notice period that was awarded, the facts of the case seem
unremarkable. The company terminated, without cause, the employment
of a 52 year old executive, who had 19 months of service.
The interesting part of the decision is that the executive, who
had still not found work after 14 months, was then awarded a 12
month notice period. This is probably much higher than the company
expected when it was considering the termination. If it had
obtained a legal opinion prior to the firing, the advice was
probably that the executive would be awarded a notice period
somewhere around 6 months.
This decision underscores the sometimes painful reality that
there really is no rule of thumb when estimating a lawful notice
period. It also reinforces the fact that properly drafted
employment agreements can be a valuable tool to provide
organizations with certainty around employee terminations.
For example, it is perfectly lawful to have a severance clause
in an employment agreement that provides only the statutory minimum
entitlements to an employee on termination. This type of clause may
be appropriate for a lower level employee, but probably not for an
executive. For an executive, a common approach is to have a
severance clause which provides guaranteed entitlements that are
above the statutory minimums (but probably much lower than 6 months
per year of service), and in exchange requires the executive to
sign a release.
Had this type of clause been used in this case, it would have
avoided the need for litigation, which was probably costly to both
sides, and could have saved the company a significant amount of the
ultimate severance costs.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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