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Bulletin | The HR Space

Court says Short Notice Period Appropriate for Short Service Executive

Fasken
Reading Time 3 minute read
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Labour, Employment and Human Rights Bulletin | The HR Space

In one of the first termination cases decided since the COVID-19 pandemic slowed the economy and court system, the Ontario Superior Court of Justice awarded an older employee with very short service just two months' notice after he was terminated without cause.[1] It is an early but promising sign that employers may not automatically be saddled with excessively long notice periods for short service employees, or because terminated employees struggle to find jobs in a stagnant job market. Though it is still too early to say what the true effect of the pandemic will be on notice periods.

The Facts

The employee was hired in November 2018 on an indefinite basis and was given the title of "Vice President, Equity Trading." There was no termination provision in his contract. The employee was dismissed without cause roughly five months later and given three weeks' pay in lieu of notice. The employee was 58 years old at the time of termination and was earning a salary of approximately $100,000.

The employee sued and asked the court to give him damages in lieu of twelve months' notice. He argued there was a presumption that senior managers or executives terminated without cause receive at least twelve months' notice regardless of their length of service.

At the time the case was decided, more than a year later in July 2020, the employee had still not obtained a new job despite reasonable mitigation efforts.

The Decision

The court said that the employee's title alone was not sufficient to make him senior management or an executive. In fact, the court said he was neither based on his responsibilities.  In particular, the court highlighted that:

  • the employee did not have any role in supervising co-workers in his department;
  • the employee was not responsible for the oversight or strategic direction in his department;
  • many employees held the same title; and
  • the employee was three levels removed from the employer's executive team.

Because the court decided the employee was not a senior manager or executive, it was not necessary to decide whether there was a presumption of at least twelve months' notice for senior management or executives.

The court awarded damages in lieu of two months' notice. The court commented that the employee's age was a relevant factor in that determination because there are fewer job opportunities for older workers. The fact that the employee had been unable to find a job for over fifteen months and that Ontario was still coping with the "economic realities of COVID-19" did not appear to factor into the court's decision in deciding the reasonable notice period.

Takeaways

At common law, an employee who is dismissed without just cause is entitled to reasonable notice or pay in lieu of notice where there is no enforceable limit on an employee's entitlements. What is "reasonable" is decided on a case-by-case basis considering a variety of factors (like age, length of service, and nature of employment among others). This decision is a good reminder that the true essence of an employee's position should be considered as a factor rather than an employee's job title. It is also helpful in combatting a trend towards excessively long notice periods for short service employees.

 



[1] George v. Laurentian Bank Securities Inc., 2020 ONSC 5415

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