What is the Maximum Amount of Reasonable Notice Under Ontario Law?

What is the maximum amount of reasonable notice, also referred to as severance, to which an employee dismissed in Ontario can be entitled under Ontario employment law? As at least one observer has asked, is the sky now the limit? See: Reasonable notice: The sky’s the limit?

The question was asked following the 2012 decision of the Ontario Superior Court in Abrahim et al v. Sliwin et al, 2012 ONSC 6295 (CanLII), in which the Honourable Justice Douglas Gray held, on an undefended default motion that, “I fail to see how a cap of 24 months, or indeed any maximum, is appropriate.”

It is Justice Gray’s decision that perhaps no maximum is appropriate that has led some to question that perhaps the sky is indeed now the limit.

Decision

What is interesting about this case is that the plaintiffs had proposed using the following formula for the calculation of their reasonable notice damages:

(a) one months’ pay for each year of service;

(b) subject, in any event, to a cap of 24 months.

Note that it was the plaintiffs who had suggested the cap of 24 months, not the defendant or the court.

In his reasons for decision Justice Gray disagreed that the formula so proposed was tenable at law. Nonetheless, His Honour was prepared to award damages based upon that formula.

In rejecting the one-month-per-year-of-service approach Justice Gray repeated what is set out in this blog’s description of how to calculate reasonable notice under the common law (see What is Wrongful Dismissal?) This blog has taken the position that:

With respect to length of employment, one would be prudent to observe that the ‘rule’ that one is entitled to one month’s notice for every year of employment has been expressly and repeatedly rejected as a rule by the Ontario courts. (See Minott v. O'Shanter Development Company Ltd., 1999 CanLII 3686 (ON CA.)) One cannot simply take his or her length of service to his or her employer and multiply by one month in order to calculate one’s entitlement on termination.

In his reasons, Justice Gray held that:

[19] The Court of Appeal, in Minott v. O’Shanter Development Co. 1999 CanLII 3686 (Ont. C.A.), has made it clear that a formula based on one month’s pay per year of service is not appropriate.

[20] At para. 69, Laskin J.A. held that the trial judge, Molloy J., erred by using as a starting point for determining the period of reasonable notice, a “rule of thumb” that an employee is entitled to one month’s notice for every year worked. At para. 73, he stated as follows:

The rule of thumb approach suffers from two deficiencies: it risks overemphasizing one of the Bardal factors “length of service” at the expense of the others; and it risks undermining the flexibility that is the virtue of the Bardal test. The rule of thumb approach seeks to achieve this flexibility by using the other factors to increase or decrease the period of reasonable notice from the starting point measured by length of service. But to be meaningful at all, this approach must still give unnecessary prominence to length of service. Thus, in my opinion, the rule of thumb approach is not warranted in principle, nor is it supported by authority.

In commenting upon the ‘cap’ of 24 months, Justice Gray held that:

[23] My other reservation is with respect to Mr. Wright’s proposal of a cap of 24 months. In my view, any such approach has now been rejected by the Court of Appeal in Di Tomaso v. Crown Metal Packaging Canada LP (2011), 337 D.L.R. (4th) 679 (Ont. C.A.).

[24] In Di Tomaso, the plaintiff was employed for over 33 years as a mechanic and press maintainer. The trial judge, Allen J., awarded the plaintiff damages equal to 22 months’ pay. It was argued, as had also been argued in Minott, that case law had established 12 months as the upper limit of appropriate notice for clerical and unskilled employees. MacPherson J.A., for the Court of Appeal, disagreed. At para. 27, he stated that the character of the plaintiff’s employment “is today a factor of declining relative importance.” In practical terms, character of employment is now largely irrelevant except for a small class of very senior employees: see Love v. Acuity Investment Management Inc. (2011), 89 C.C.E.L. (3d) 157 (Ont. C.A.)

[25] In my view, if a cap of 12 months is not appropriate, I fail to see how a cap of 24 months, or indeed any maximum, is appropriate. Two of the plaintiffs had worked for one or more of the defendants for at least 35 years, and were 63 years of age or older. I might have decided to award more than 24 months’ pay had such a request been made.

In the result, while Justice Gray disagreed with the approach of one-month-per-year, he found that the amount claimed on behalf of each plaintiff was reasonable in the circumstances.

Commentary

As this blog has previously noted, (see e.g. Greater Notice Required for Older Employees) the cap on reasonable notice at 24 months is not a cap at all.

In Hussain v. Suzuki (2011), 209 A.C.W.S. (3d) 101 (ON SC) the Honourable Justice Lois Roberts awarded an almost 65 year old employee with nearly 36 years of service 25.5 months of notice following his dismissal.

Commenting upon the ‘cap’ in that case Justice Roberts held that:

While there is no cap on the amount of reasonable notice of employment termination to which an employee may be entitled, and each case must be considered on its own particular circumstances, 24 months is usually the higher end of the range unless generally there are exceptional circumstances: Lowndes v. Summit Ford Sales Limited, 2011 ONCA 469, at para. 11.

So what does this mean for employees and employers? In my opinion it means exactly that which Justice Roberts said: each case must be considered on its own particular circumstances, and there simply is no formulaic approach or cap that one can use calculate damages. That assessment must be done on the whole of the Bardal factors.

Takeaways for those with Labour Pains

The takeaway from cases such as Abrahim and Hussain for both employers and employees should be that in calculating an employee’s entitlement to reasonable notice it likely pays to obtain professional legal advice.

the professional, experienced and cost-effective employment lawyers at Ottawa's Kelly Santini LLP would be happy to be of service to you.

Contact Us

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260. You may also use the contact box at the top of this page.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean Bawden, publisher of Labour Pains, can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.