The myth of the one-month rule

Reasonable notice can be much more than one month per year of service
By Stuart Rudner
|Canadian Employment Law Today

Background

Many employers, employees and even some lawyers don’t fully understand the concept of reasonable notice and that the minimum notice periods provided for in legislation are just that — a minimum.

Two propositions that may surprise many employees, employers, and lawyers:

•there is no rule of thumb that employees are entitled to one month of notice for every year of service;

•short-term employees can be entitled to significantly more than one month per year and sometimes their notice period can actually exceed their tenure.

Below is a look at reasonable notice when it comes at dismissing an employee, what employees are entitled to and how courts come up with the magic number in wrongful dismissal suits.

Employers, employees have many misconceptions about reasonable notice

When I advise employers for the first time, I find that the majority of them tend to approach the notice period in one of three ways:

•provide the amount set out in the

Employment Standards Act

;

•provide double the notice period set out in the

Employment Standards Act;

or

•provide one month of notice per year of employment.

There is actually a fourth group: the American approach of “notice – why should I have to provide notice!”

The people that fall within the first group tend to be unaware of the common-law requirement of reasonable notice which is, of course, over and above the statutory requirement.

It’s hard to blame them. Often they have taken the time to check the applicable statute in order to determine their obligations and have no reason to suspect it is only half the story.

I don’t know where the second group of people get their information. It seems to be a somewhat haphazard view that acknowledges the fact the statutory requirements are insufficient but believes that doubling them will be “more than generous.”

The third group can hardly be blamed for thinking there is such a rule of thumb. It is a fairly common view. When I was an articling student, I defended a wrongful dismissal claim in small claims court. The plaintiff was unrepresented although she had obviously consulted with a lawyer. Either her lawyer gave her bad advice, or she misunderstood the advice she received. In her claim, and again at trial, she explained her lawyer had told her she was entitled to one month of notice for each of her seven years of service.

That was apparently the reason why she had steadfastly refused the reasonable offers from the employer. Unfortunately for her the trial judge made it clear that “my lawyer told me so” was not a sufficient argument. At the end of a day-long trial the plaintiff received far less than she was expecting.

The seminal decision regarding the determination of what constitutes reasonable notice is the 1960 case of

Bardal v. Globe and Mail Ltd.

, which suggested the factors to be considered include, but are not limited to:

•the character of employment;

•length of service;

•age of the employee, and

•availability of similar employment in light of the employee’s experience, training and qualifications.

As recently as the mid-1990s the “rule of thumb” was fairly widely used and was even confirmed by the judiciary. In

Bullen v. Proctor & Redfern Ltd.

, Justice Molloy referred to an “informal rule of thumb” of one month for every year of employment, which would then be adjusted upward or downward depending on other factors. But the Ontario Court of Appeal expressly rejected this concept in

Minott v. O’Shanter Development Co

. In that case Justice Laskin held that using the rule of thumb risked overemphasizing the length of service factor and undermining the flexibility of the Bardal test. He therefore rejected such an approach.

In his reasons Justice Laskin referred to a study by Barry Fisher, who compiles a database of wrongful dismissal cases and the length of notice in each. Fisher reviewed the cases in his database and concluded the rule of thumb had very little value for predicting the amount of notice for short-term or long-term employees. It only accurately reflected those in the mid-seniority range.

Therefore there are two reasons not to put much credence in the so-called rule of thumb: it has not been borne out statistically and it has been explicitly rejected by the Ontario Court of Appeal.

People are often very surprised to learn that, in some cases, the length of notice can be much more than one month per year of service. That is particularly true for employees that are only employed for a short period of time. For example a senior sales manager in his early 40s recently consulted me. After 10 months of employment it was clear to all involved the relationship was not working out.

They discussed the possibility of a severance package and he asked for the company to continue his salary for one month. They agreed. He thought he had done quite well for himself. He only contacted me after his brother suggested he do so. My brief review of Barry Fisher’s database suggested he would be entitled to notice of more than three months.

I should note the notice periods for short-term employees are sometimes extended due to the fact they were induced to leave secure employment and then let go soon thereafter. But even without such an inducement factor, employees that are dismissed after a very short period of employment are often entitled to far more notice than they expect.

This is just one more example of how the law of employment in Canada is not as intuitive as one might expect. It is also one more reason why people should consult a lawyer before agreeing to anything that will affect their rights and obligations. They may well be short-changing themselves or putting their company at risk.

For more information see:

Bardal v. Globe and Mail

, 1960 CarswellOnt 144 (Ont. H.C.)

Bullen v. Proctor & Redfern Ltd.

, 1996 CarswellOnt 291, 20 C.C.E.L. (2d) 36 (Ont. Gen. Div.)

Minott v. O’Shanter Development Co.

, 1999 CarswellOnt 1, 40 C.C.E.L. (2d) 1 (Ont. C.A.)

This in-depth look at notice periods was provided by Stuart Rudner. He practices civil litigation and employment law with Miller Thomson LLP’s Toronto office.
He can be reached at (416) 595-8672 or via email at srudner@millerthomson.ca.

What they might get…

Here’s a random sampling from Barry Fisher’s database of wrongful dismissal awards. Wrongful Dismissal Database is available from Carswell on CD-ROM. Visit www.carswell.com for more information.

The information below was taken using random searches by job title, age of employee, years of service and jurisdiction. It compares the criteria to similar judgments, but the cases used to arrive at the figures below should be read in their entirety before a legal opinion is given.

Upper management employee in Alberta

A 52-year-old upper management employee with 25 years of service at an Alberta firm would be entitled to about 15 months’ notice.

Clerical worker in Ontario

A 29-year-old clerical worker in Ontario with six years of service would be entitled to about five-and-one-half months’ notice.

Salesperson in Nova Scotia

A 58-year-old salesperson in Nova Scotia with 30 years of service would be entitled to about 12 months’ notice.

Sales manager in British Columbia

A 30-year-old sales manager in British Columbia with two years of service would be entitled to four months’ notice.

Professional in Quebec

A 44-year-old professional in Quebec with 20 years of service would be entitled to five-and-a-half months’ notice.

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