A recent Ontario Superior Court of Justice court decision
did. In Chen v. Purdue Pharma (2015 ONSC 1967), a summary judgment
decision, the court said yes, where the employee believed that
actual salary increases would occur, those increases should be
reflected in the notice period. We always encourage our readers to
read the full-text of a decision to have an understanding of the
context and circumstances. You can do so by clicking on the above
link. Our summary of the decision follows.
The plaintiff was employed for 22½ years. He was
terminated without cause in October 2013. Four issues were
considered at a summary judgment hearing of the matter. They
the period of reasonable notice;
whether the employee was entitled to increases to his base
salary during the notice period;
the calculation of bonus for the notice period; and
the approach to be taken to earnings, if any, during the
post-judgement balance of the notice period.
Here's what the Court said
(a) Reasonable notice
The plaintiff was 56 years old when he was terminated from the
position of "Director of Business Development". In
this job, there were only two people above him. Based upon
his age, length of service, importance of his role and the limited
availability of similar employment, reasonable notice was assessed
at 24 months.
(b) Increases to base salary during notice
The employee received salary increases of between 2.5% and 5%
between 2009 and 2013. He stated in his affidavit that he
believed that others holding comparable positions obtained 2014
salary increases between 2% and 3% and that he believed he would
have received a comparable increase had his employment not been
terminated. The court found he would have received an
increase of at least 2%.
(c) Calculation of bonus for the notice
The employee claimed a bonus for the notice period based on an
average of those he received in 2011 and 2012. The employer
argued that the notice period bonus should be based on the average
of bonuses paid to the employee for the years 2010, 2011 and 2012.
The employer did not disclose the bonuses paid to other
employee in 2013 or provide evidence as to how Chen's bonus
would have been calculated had his employment not been terminated.
For these reasons, the court favoured the employee's
claim based on his average in 2011 and 2012.
(d) Earnings, if any, during post-judgement balance of
The employer argued that damages awarded beyond the date of
judgment should be discounted to account for the possibility that
the employee would be re-employed during the balance of the notice
period. Alternatively, the employer argued that an amount
representing damages referable to the post-judgment period should
be held in trust by the employee's lawyers, and in the event
that he became re-employed before expiry of the notice period, that
an appropriate refund be made to the employer.
The Court concluded that any employment income received by the
plaintiff during the post-judgment notice period be held by the
plaintiff in trust and paid to the defendant when the notice period
What are the takeaways?
Not surprisingly, the factors to be considered in assessing
reasonable notice include, but are not limited to: age of the
employee; length of service; character of the employment; and the
availability of similar employment, having regard to the
experience, training and qualifications of the employee. In
this case, these factors added up to what is generally viewed as
the maximum award of reasonable notice – 24 months.
Where an employee shows that he or she believes there will be a
salary increase consistent with previous years, the court may award
a salary increase.
Where there is a "paucity" of evidence on some key
components of a bonus formula, the court may calculate a bonus for
the notice period based on its view as to the appropriate method
for calculation of bonus.
Employment income received by a plaintiff during the
post-judgment notice period can be held by the plaintiff in trust
and paid over to the defendant on the expiry of the notice
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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