Non-unionized employees are entitled to "reasonable
notice" of termination under the common law, or pay in lieu of
such notice. The only exceptions are if an employee is employed on
a fixed term, has a defined contractual entitlement on termination
or just cause exists for termination.
Employee entitlements to reasonable notice at common law are not
based on a formula, but by a case-by-case assessment of various
factors, such as length of service, age, nature of the position and
re-employment prospects, which are known as the Bardal factors. For
employers with long service employees, common law notice
entitlements can be significant. Although there is no formal cap on
these damages, typically courts will award up to 24 months.
Counsel for terminated employees frequently plead as part of
their claim that employees with long service should receive a
notice period that bridges them to retirement. However, the issue
is seldom actually considered by the courts.
Arnone v. Best Theratronics
In Arnone v. Best Theratronics Ltd., the Ontario
Court of Appeal rejected the argument that an employee's notice
period should automatically extend to retirement. The employee was
terminated without cause after 31 years of service. The employee
was 53 years of age at the time of termination. The reason for the
termination was a restructuring. The employer had provided him with
the statutory minimum pay in lieu of notice, and the employee
launched a law suit.
The case was heard on a summary judgement motion. When
determining the period of reasonable notice, the motion judge
diverged from the Bardal factors described above, and instead
calculated the period of reasonable notice by reference to the date
of termination and the date the employee would have been entitled
to an unreduced pension. In addition, the motion judge applied this
bridging until retirement approach to his determination of the
employee's mitigation efforts and did not deduct the
employee's earnings during the notice period from the
The Court of Appeal rejected the bridging to retirement approach
for calculating the period of reasonable notice at common law. The
Court affirmed that the Bardal analysis remains the approach that
must be applied by the courts, which does not include
considerations of eligibility for pension benefits. In coming to
this conclusion, the Court determined that the reasonable notice
period should be extended to 22 months (the motion judge had
awarded 16.8 months based on the employee's pension
With respect to mitigation, the Court again rejected this
bridging until retirement approach. It held that the income earned
by the employee from new employment during the period of reasonable
notice must be deducted from the award of notice period
Another issue under appeal was the employee's entitlement to
a retiring allowance. The motion judge found that it was customary
for the employer to provide employees with retirement allowances of
one week per year of service to a maximum of 30 weeks. The Court of
Appeal found that there was an implied term in the contract of
employment that entitled the employee to a retiring allowance. The
motion judge had linked the entitlement to the retiring allowance
with the pension. Although the Court found this was in error, it
awarded the retiring allowance based on its determination that the
employee was contractually entitled.
Depending on the situation, the bridging approach could cut both
ways. For an employee who is very close to retirement, it could
result in an amount that is less than the employee's common law
entitlements, which would benefit the employer. However, in other
cases, the employee might receive a larger amount than they would
be otherwise entitled. On balance, the Court's decision
is favourable to employers because it limits liability and provides
more certainty regarding terminated employees'
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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