Canada: The Only Rule is That There Are No Rules

In the absence of a contractual provision to the contrary, an employee can be terminated for just cause or in the absence of just cause upon being provided with reasonable notice or pay in lieu of reasonable notice at common law. Although determining the period of reasonable notice is said to be more art than science, from the earliest times our courts have tried to provide some guidance on the factors that should be taken into consideration in making this determination. The most often cited case in this area is Bardal v. Globe & Mail Ltd.1 where McCruer, C.J.H.C., stated as follows:

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.

New criteria have crept into the mix, while others have fallen out of favour. In fact, one author outlines 105 different factors that have been considered by the courts in determining the period of reasonable notice. In the end, all things being equal, the object of the damage assessment is compensatory, that is, to restore the employee to the financial position he or she would have been in had the employer provided the appropriate notice.

The Ontario Court of Appeal in the case of Minott v. O’Shanter Development Co.,2 in reviewing the trial judges determination regarding reasonable notice, held, among other things, that:

  • no two cases are identical;
  • ordinarily, there is no one "right" figure for reasonable notice. Instead, most cases yield a range of reasonableness; and
  • in each case, trial judges must "weigh and balance a catalogue of relevant factors".

This being the case, a Court of Appeal should only intervene where the trial Judge’s assessment falls outside of the "acceptable range or unless, in arriving at the figure, the trial Judge erred in principle or made an unreasonable finding of fact".

From time to time, litigants try to argue for "scientific" or a "rules based approach" to notice determination. Our courts have not been quick to embrace such an approach as demonstrated by a couple of recent decisions.

Is there a "Rule of Thumb"?

On occasion, employers and employees looking for some formulaic basis for determining the period of reasonable notice, raise the "month-per-year-ofservice" rule of thumb. They ask whether it’s true that an employee is entitled to one month of notice of termination per year of service. The issue has been considered by the Courts who have, with some exceptions, generally rejected the "rule of thumb" approach to notice determination.

But "certainty" and "predictability" are not easy to shake off and, the "rule of thumb" continues to be discussed from time to time. While there are cases where a month (or more) per year of service represents the appropriate period of reasonable notice of termination, the Courts have clearly said that this determination is to be made having regard to the particular circumstances of each case and that rules of general application are, by their very nature, contrary to the concept of reasonable notice.

The Ontario Court of Appeal, for example, in Minott squarely considered the following issue:

... should courts calculate the period of reasonable notice to which an employee is entitled if dismissed without cause by using the rule of thumb that one year's service equals one month's notice?

The Court held that the "rule of thumb" approach is deficient and inappropriate and is contrary to, for example, the more fluid and flexible approach first enunciated in Bardal. In fact, the Court held that the trial Judge erred by using the month per year of service "rule" as a starting point for determining the appropriate period of reasonable notice.

While some courts indicated and sometimes continue to suggest that there might be a "rule of thumb" for reasonable notice of one month per year of service, the vast majority of common law courts have rejected this view, preferring the "tried and true", though unscientific and uncertain, assessment based on the traditional Bardal criteria. This latter view was reinforced by empirical study, which revealed that in fact junior employees tended to receive in excess of one month per year of service, and senior employees tended to receive less than one month per year of service. That being the case, the practice of providing one month per year of service was in fact accurate only for mid-service employees.

As the Court states in Minott, the "rule of thumb" is defective in that it puts unwarranted emphasis on one of the Bardal factors ("length of service") at the expense of all of the others, while, at the same time, introducing a measure of rigidity into an exercise that should be fluid and flexible having regard to the particular circumstances. Although, it might be argued (with some merit) that this undermines the goals of predictability, certainty and consistency, it can also be argued that the very nature of the period of reasonable notice requires an approach that is neither predictable, certain or consistent.

Is there a Reasonable Notice Cap in Ontario?

On occasion, particularly when terminating the longer service employee, questions are raised about whether there is a reasonable notice "cap" or "upper limit". The Ontario Court of Appeal recently discussed this issue at some length in Lowndes v. Summit Ford Sales Limited.3 This case involved a termination of a 59-year-old general manager of a car dealership with some 28 years service. The trial judge determined that the appropriate period of reasonable notice of termination was 30 months. The employer appealed, arguing that the trial Judge’s determination of the period of reasonable notice was excessive and ought to be overturned.

The Court of Appeal agreed with the employer. Although the Court of Appeal found that the trial Judge had identified the correct legal principles for determining the period of reasonable notice (including that it was an "art not a science"), the court disagreed with the Judge’s application of those principles to the facts. Specifically, the Court of Appeal reduced the notice period noting that:

Although it is true that reasonable notice of employment termination must be determined on a case-specific basis and there is no absolute upper limit or ‘cap’ on what constitutes reasonable notice, generally only exceptional circumstances will support a base notice period in excess of 24 months.

The Judge did not consider whether such "exceptional circumstances" were present and this was a reversible error. The Court of Appeal reduced the notice period from 30 months to 24 months.

To draw a sports analogy, there doesn't seem to be a reasonable notice "hard cap" but, rather, a "soft cap". The Lowndes case emphasizes what Canadian courts have generally accepted as a governing principle, that the maximum notice period that should normally be awarded in wrongful dismissal cases is 24 months.

Conclusion

As can be seen, our courts have preferred a fluid, rather than formulaic or rigid approach to determining the period of reasonable notice. In reality, though sometimes frustrating due to a lack of certainty and precision, this is really the preferred approach and one that is consistent with the individualized nature of determining reasonable notice. It seems unlikely, given recent judicial pronouncements, that the courts will embrace a "reasonable notice by rote" approach any time soon.

Footnotes

1(1960), 24 D.L.R. (2d) 140 (Ont. H.C.J.).

2(1999), 42 O.R. (3d) 321 (C.A.).

3[2006] O.J. No. 1438 (C.A.).

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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