Calculating Reasonable Notice (Severance Packages)

Assessing a dismissed employee's entitlement to reasonable notice of dismissal, commonly known as a severance package, is more of an art than a science. There exists no mathematical formula to precisely calculate severance or termination packages for employees terminated without cause.

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Legal professionals specializing in employment law acquire the expertise to gauge the appropriate notice period by examining numerous wrongful dismissal cases. Despite the presence of computer apps and other marketing tools claiming to predict notice periods, their reliability is inconsistent. Furthermore, these tools do not account your legal counsels experience negotiating with the same group of lawyers who represent employers.

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It is crucial to differentiate reasonable notice of dismissal from an employee's minimum statutory entitlement under the Ontario Employment Standards Act, 2000 ("ESA"). The ESA outlines only the minimum entitlements, and employees are generally presumed to be entitled to a more extended period of reasonable notice.

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The primary factors considered in determining a reasonable notice period, established in the 1960 Bardal v Globe & Mail Ltd. decision, include the character of employment, length of service, age, and availability of similar employment, collectively referred to as the "Bardal factors." These factors, endorsed by the Supreme Court of Canada, guide the calculation of a dismissed employee's reasonable notice period. The law however has expanded over the decades to become more nuanced and consider a greater number of variables.

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The goal is to conduct a personalized assessment considering factors that impact the dismissed employee's job search. Hence, additional elements may also be considered in determining the notice period.

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Judges exercise considerable discretion in determining reasonable notice periods, leading to a wide range of awards for similar cases. Skilled employment lawyers often provide a range representing the majority of decisions when determining an appropriate notice period.

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The court's approach to determining reasonable notice is flexible, with each case depending on its unique circumstances. The weight given to each factor varies, and no single Bardal factor should be given disproportionate importance.

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Typically, the upper limit for a notice period is around 24 months, as reaffirmed by the Ontario Court of Appeal in the 2019 Dawe v. The Equitable Life Insurance Company of Canada case. However, "exceptional circumstances" that might warrant a longer notice period remain undefined. In Ontario we have seen employees awarded approximately 30 months on occasion.

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Key Factors Impacting the Notice Period:

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1. Character of Employment:

   • Relates to the skills and seniority of the dismissed employee.

   • Courts historically favor longer notice periods for highly skilled senior employees.

   • Criticisms exist for bias towards senior employees, as the assumption of difficulty in finding new employment is challenged in modern times.

2. Length of Service:

   • Longer service employees are generally entitled to longer notice periods.

   • Misconceptions exist regarding a rule of thumb for notice periods based on years of service.

   • Long service employees may receive notice periods less than one month for each year of service, while short service employees may receive more.

3. Age:

   • Older, long-term employees may justify a longer notice period, recognizing potential challenges in securing new employment.

4. Availability of Similar Employment:

   • Arguably the most crucial Bardal factor, considering the dismissed employee's ability to find new work.

   • The burden is on the employee to prove a longer notice period based on limited opportunities for similar employment.

   • Often overlooked by judges due to the speculative nature of evidence.

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Other Factors Influencing Notice Period Length:

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1. Inducement:

   • When an employer convinces an already employed individual to leave for a new position, past service may be considered in determining the notice period.

2. Unfounded Allegations:

   • False accusations by employers may lead to a longer notice period if they hinder the employee's employment prospects.

3. Non-Competition and Non-Solicitation Clauses:

   • Inclusion of such clauses in employment contracts may result in a longer notice period, considering their impact on finding new employment.

4. Pregnancy:

   • A terminated pregnant employee might be entitled to a longer notice period.

5. Time of Year:

   • Dismissals at challenging times of the year may lengthen the notice period.

6. Disability and Lack of Formal Education:

   • Medical conditions or lack of formal education may justify a longer notice period.

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Factors Not Impacting Notice Period Calculation:

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1. Bridging an Employee to Retirement:

   • Bridging an employee to retirement does not factor into the Bardal analysis.  However, we may be able to negotiate this as part of a settlement.

2. Losses Suffered by the Employee:

   • Only losses directly related to the employer's failure to give proper notice are considered for this aspect of a case.

3. Time Taken to Find New Employment:

   • The notice period is determined at dismissal, irrespective of the time taken to find new employment.

4. Financial Difficulties of the Employer:

   • The employer's financial circumstances are not considered when determining the reasonable notice period.