Human Resources Issues for Senior Management
Issue link: https://digital.hrreporter.com/i/343811
29 Still, many employers continue to won- der — what are the rules? How are no- tice periods calculated? Let's take stock of where we are. Longer notice periods for low-skilled employees Historically, a notice period in excess of 12 months was reserved for managerial and professional employees. is tiered ap- proach was based on the presumption there were fewer opportunities for senior and managerial positions, thus the length of time necessary to secure alternative employ- ment would be longer. As of the mid-1990s, the Ontario Court of Appeal expressly rec- ognized and endorsed the principle that a lower skilled, clerical type employee would be entitled to a shorter notice period than senior management, with an e ective cap of 12 months. While this cap for unskilled/clerical workers was never an absolute rule, the distinction between skilled/managerial and unskilled/clerical workers has now all but been abandoned in favour of a general assessment of the availability of alternate employment. As a result, in circumstances where the availability of alternative employ- ment is scarce, even unskilled workers may receive notice periods at the highest end of the scale. Traditional retirement age will not limit notice period In the era of mandatory retirement, a com- mon strategy for employers was to o er a senior employee, on the cusp of retirement, a shorter notice period, e ectively limiting any severance package to a "bridge" to re- tirement. is strategy was never endorsed by the courts, which generally recognized an older employee is likely to encounter greater di culty obtaining new employ- ment than a younger counterpart, justifying a longer notice period. Indeed, courts have been disinclined to accept any presumption of retirement at 65, even if set out in a written employment agreement. Since the abolition of mandatory retire- ment in Canada, employees are increasingly waiting longer to leave the workforce, and courts are struggling to establish consistent and fair notice periods for aging workers, some in their mid-80s, who have accumu- lated years of service well in excess of any cases previously decided. Based on recent trends, employers can expect to see reason- able notice periods for seniors at the historic high range and beyond. Relevance of poor economic climate A poor economic climate is o en referenced by employees to bolster longer notice peri- ods, on the premise that a downturn in the market translates into decreased availability of similar employment. However, the tables may be turning in favour of employers — in particular small employers struggling to survive in a di cult economy. In a recent Ontario appeal decision, Gristey v. Emke Schaab Climatecare Inc., the employee's reasonable notice period was re- duced by one-third because of the di cult economic factors facing the employer at the time of termination. e court found that, had the worker's employment not been ter- minated, he would have worked fewer hours during the reasonable notice period on ac- count of the employer's shrinking business. While the decision demonstrates an in- creased exibility on the part of judges to achieve results considered fair and equitable in the unique circumstances of a given case, it is unclear whether this reasoning will be- come prevalent in wrongful dismissal cases moving forward. Short service is no bar to a significant notice period e legal principle that an employee with short service is entitled to at least some notice is not new. However, recent cases, including those involving terminations within the probationary period, have yield- ed considerably longer notice periods. In CAO v. SBLR LLP, the court awarded an employee with just over one month of ser- vice a four-month notice period. Similarly, a senior executive with less than one year's service might expect a reasonable notice pe- riod in the range of six to eight months, or higher, depending on the compensation and prospect of nding comparable alternate employment. In short, there appears to be a general sense among plainti lawyers that three months is the starting point for any reasonable notice analysis. The reasonable notice ceiling may be climbing e Wallace era saw an aggressive up- ward shi in the reasonable notice periods awarded. In 2006, the Ontario Court of Ap- peal attempted to bring some stability to this upward trend when called upon to review a trial judge's decision granting a 34-month notice period (including a four month Wal- lace Bump). In that case, Lowndes v. Sum- mitt Ford Sales Limited, the Court of Appeal stressed that while there was no absolute maximum limit, absent exceptional circum- stances, a reasonable notice period should not exceed 24 months. Since this decision, the plainti 's bar has placed considerable e ort into Still, many employers continue to won-