Until very recently, it was generally accepted that among the
factors considered by a court in assessing the period of reasonable
notice (i.e. — age of the employee, length of service,
character of employment [status, compensation package] and
availability of similar employment given the employee's
educational background, work experience and training) it was the
nature and relative status of the employee's position at
termination which was one of, if not the most significant factor.
The more specialized the position or the greater its status or the
degree of responsibility associated with it, the lengthier the
period of notice awarded. The rationale for this principle is the
presumption that executives and managers would have greater
difficulty finding other employment than would lower level
This "principle" or "presumption" was,
however, directly challenged in 1994 in Cronk v. Canadian General
Insurance Co., with unsettling results. Mrs. Cronk at age 56 was
terminated as part of a corporate downsizing program after 29 years
of service in various clerical positions with Canadian General. She
sued her employer for wrongful dismissal when she was offered 9
months severance claiming that she should receive at least 20
months. Disregarding the weight of established case law, the trial
Judge held that neither the nature or character of the employment
nor the individual employee's level of education, training or
specialization were of particular significance in determining the
appropriate notice period. Rather, the proper approach was to
consider the individual's prospects for re-employment. In the
trial Judge's opinion, there was no justification for
distinguishing between a clerical worker and the president of the
company in setting notice periods. Where both were of comparable
age with similar periods of service, it would be equally difficult
for both to find re-employment and so the court reasoned, the range
of notice period appropriate for each should be the same. Mrs.
Cronk was awarded 20 months severance at trial on this basis. It
was an award perhaps eight or nine months higher than what would
have been anticipated based on the established case law.
Although the trial judgment was overturned on appeal and the
award reduced to 12 months, the approach to determining appropriate
notice periods and the uncertainty created by the trial level
decision remains far from resolved. Indeed among the three Justices
who heard the appeal, there was no consensus as to how notice
periods should he assessed. One Justice emphasized that it was
important that employers, employees and the legal profession he
able to rely on existing case law and so he supported a return to
established principles. The second Justice suggested that this was
not the case in which to reconsider the degree to which
responsibility in employment favors a longer notice period and in
any event, even if character of employment was commensurate with
prospects for re-employment, it was equally arguable that a
downward adjustment of notice periods for executive level position
should result rather than an upward adjustment for clerical
employees. The third justice felt strongly that there was a need to
re-examine the factual assumptions underlying the principle as they
may no longer he supportable or true.
With these mixed signals from the Ontario Court of Appeal it
remains to be seen whether this case will ultimately mark a shift
in emphasis from the character of employment to the availability of
reemployment in assessing notice periods; or whether the courts
will continue, as they have done in Alberta and some other
jurisdictions, to recognize the need to balance the interests of
the terminated employee in receiving adequate notice against the
right of the employer to reduce its workforce and at a reasonable
cost. What is certain is that the only way employers and employees
can have any confidence as to what the notice period will be in the
event of termination is to have a written employment agreement
which either sets the notice period or provides a formula for its
calculation. An agreement of this sort, so long as properly drafted
and entered into willingly and knowingly by both parties, will
likely be upheld by the courts whether it is negotiated at the time
of hiring or subsequently. In the current economic climate where
downsizing, cutbacks and reorganization are commonplace, these
types of agreements and the certainty they provide will become more
and more important to both employers and employees. Our office can
assist in drafting such agreements so as to afford both employers
and employees the sort of protection they require against this
current and very disturbing uncertainty in the law.
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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