Short service, long notice

An emerging trend in common law reasonable notice periods

Short service, long notice

Recently, Canadian courts have been increasingly willing to buck the “one month per year of service” rule of thumb for short-service employees claiming wrongful dismissal in favour of more generous awards. It is particularly common in cases involving older employees in managerial positions who may struggle to compete against younger talent in securing comparable employment.

The pandemic also seems to be pushing notice period awards up. Many judges reference the challenges and unpredictability COVID introduced to the job market, leaving one to wonder if notice period awards for short-service employees will begin to decline as the pandemic recedes.

An overview of recent case law involving short-service employees receiving increasingly high notice periods helps to document this trend and uncovers practical takeaways for HR professionals.

Pandemic a factor in some cases

In Teljeur v. Aurora Hotel Group Inc, 2023 ONSC 1324, the Ontario Superior Court of Justice awarded a seven-month notice period to a general manager employed with the hospitality company for three years. The employee was terminated in December 2021, during the Omicron variant surge and the accompanying lockdowns.

Despite characterizing the employee’s duration of employment as “relatively short,” the court flagged the his age (57) and the “challenging circumstances” he would face in finding new employment due to the pandemic when fixing the notice period at seven months.

In Ramcharan v. Wesdome Gold Mines Ltd., 2023 ONSC 4643, the court awarded a six-month notice period to an employee who had worked as director of sustainability for a period of one-and-a-half years.

In setting the notice period at six months, the court emphasized the employee’s relatively senior position and high salary (his total annual remuneration was almost $300,000) as factors supporting a higher notice period. The court also noted that the employee was terminated four months prior to the declaration of the pandemic, and that an “economic downturn can justify a longer notice period.”

In Pavlov v. The New Zealand and Australian Lamb Company Limited, 2021 ONSC 7362, the court awarded a 10-month notice period to an employee who had worked as director of marketing and communication for the defendant company for three years.

Unlike Teljeur, the employee in Pavlov had been recruited from his previous employer by a recruiter engaged by the employer. The court accepted the employee’s position that the offer of greater responsibility and opportunity had been critical in luring the employee away from secure employment. Curiously, the employee had only been with his prior employer for a period of one-and-a-half years, a fact that appears unconsidered in the court’s decision.

The court acknowledged that the employee “had been employed for a comparatively short time in his position,” but emphasized the employee’s June 2020 termination – at the height of pandemic – and drew the inference that “the effects and uncertainties of the pandemic were obstacles” to his efforts to obtain secure employment.

Younger age not a factor in BC case

In Yates v. Langley Motor Sport Centre Ltd., 2021 BCSC 2175, the British Columbia Supreme Court awarded a five-month notice period to an employee who worked as a marketing manager for a period of eight months.

The court restated the employee’s submission that reasonable notice of short-service employees was “trending upwards” but found the employee’s initial ask (a 10-month notice period) to be unsupported by the case law.

Notably, the employee was only 30 years old at termination, a factor that would normally drag the notice period downward, as younger employees are thought to have an easier time securing new employment. The court distinguished her case from others involving older employees but did not seem to discount her notice period award because of her age.

In fixing the notice period at five months, the court emphasized that the employee was terminated in July 2020 and did not obtain alternate employment until seven months later – due, at least in part, to the “depressed job market arising from the COVID-19 pandemic.”

Trend began before pandemic

For each of the preceding decisions, a recurring theme is the depressed job market created by the pandemic. Yet even in pre-pandemic cases, the trend towards more generous notice periods for short service employees is present.

Consider Chambers v. Global Traffic Technologies Canada Inc., 2018 ONSC 2000, a case in which the court awarded a nine-month notice period to an employee who had held a senior managerial role with the defendant company for two-and-a-half years.

In Chambers, the court highlighted the employee’s responsibilities (he oversaw offices with revenues of roughly $6 million) and his age (57), which made him the most senior employee in the company. While observing that his duration of employment was “not a lengthy period,” this factor seems to have been given comparatively less weight given the nine-month notice that was ultimately awarded.

The court made no mention of economic headwinds or a challenging job market in its decision – a sensible move, given the employee was terminated in August 2017 when the economy was healthy.

Takeaways for HR professionals

The purpose of reasonable notice is to provide a post-termination cushion for employees as they seek new employment. Shorter-service employees may face an uphill battle in securing new work, as they struggle to explain their relatively brief tenure with their previous employer, and risk being labelled as “job-hoppers” by prospective employers.

Human resources professionals should be aware that short-service employees may be entitled to more sizable termination packages than many employers realize. Treating termination as a last resort is wise for all employees, including those with relatively brief tenures.

HR professionals contemplating termination of employment and preparing settlement offers should seek legal advice in light of recent case law, as legally compliant offers at the outset may end up saving money in the long run by avoiding costly litigation.

Tim Heneghan is an employment lawyer at Zubas Flett Law in Toronto.

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