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Short service employees can be entitled to longer notice periods

Short service doesn’t always mean a shorter period of reasonable notice.

Common law reasonable notice is determined based on a number of factors but often three are key: age, nature of the employee’s position and length of service. Absent other factors like inducement that would put upward pressure on the notice period, short service has often been associated with shorter notice periods.

However, in Fraser v Canerector Inc. , the court took into account the timing of the termination to extend the notice period when 46-year-old Fraser was fired from a senior position at an auto parts manufacturer after 34 months on the job. The court noted that Fraser’s “employment was terminated in June and it was quite foreseeable that hiring decisions at his level might have needed to be delayed somewhat due to the summer months in order to account for vacation schedules of key decision-makers”. The court said that timing of the termination plays a bigger role where notice is short and increased a three month notice period to four and a half months based on when Fraser started a new job.

Other decisions have similarly suggested that an employee’s short service cannot be given disproportionate weight in a determination of the notice period. Regardless of short service, the character of the employee’s employment and their age, particularly in cases involving employees in professional and senior executive level positions or with high earning potential, justify a longer notice period.

In Love v. Acuity Investment, the Ontario Court of Appeal found that short length of service is less relevant when dealing with very high-ranking employees. The court awarded nine months’ notice to Love, a 50-year-old chartered accountant with 2.5 years’ service who held the position of senior vice-president. Love reported directly to the CEO, was responsible for a significant aspect of the business and earned a high level of remuneration. The court noted that it would be harder for Love to find similar employment given his level of compensation, which favoured a longer notice period.

Other courts have followed similar reasoning in awarding longer notice periods to shorter service employees, including:

  • an award of 14 months’ notice for a 55 year old assistant to the Canadian general manager was terminated after approximately one year of service
  • an award of 14 months’ notice to a 55 year old high level executive with three years’ service
  • a 36 year old marketing vice-president who worked for almost 11 months was awarded 10 months’ notice
  • an award of nine months’ notice to a 37 year old corporate controller with almost 11 years’ service
  • an eight month notice period for a 43 year old senior systems administrator with only two years and seven months’ service, although the notice period was increased slightly for inducement

The takeaways:

  1. Short service does not necessarily mean a shorter notice period, even absent inducement.
  2. A longer notice period may be appropriate for a short service employee based on a high-level position, significant earning potential or older age.
  3. Terminating an employee’s employment during peak vacation or holiday periods may extend the notice period given inactive and slow-moving recruitment by employers during these times.
  4. Ensure employment agreements contain valid termination of employment clauses to limit the amount of notice payable on termination.