Reasonable Notice Period is inclusive of ESA entitlements

Reasonable Notice Period is inclusive of ESA entitlements

ESA Termination Entitlements

Workers who have been terminated are provided minimum statutory entitlements in Ontario’s Employment Standards Act. The act outlines minimum entitlements for notice periods based on how long a worker has been employed. Minimum notice period entitlement under the ESA ranges from 1 week for workers who have been employed for less than 1 year, to 8 weeks if workers have been employed for 8 years or more. The Ontario Court of Appeal in Stevens v. The Globe and Mail has stated that the purpose of minimum notice periods is to soften the economic dislocation of the employee resulting from dismissal. In addition to minimum notice periods, the ESA also entitles certain workers to statutory severance pay. While severance is often used colloquially to refer to any payments made in the wake of termination, statutory severance pay is distinct from statutory reasonable notice. Workers are owed severance pay only under certain restrictive conditions. Firstly, workers must have worked with the employer for 5 years or more. Secondly, one of two things must be the case. Either the workers’ jobs must be permanently discontinued, and the worker is one of 50 or more workers affected by this elimination; or the employer has a payroll of $2.5 million or more. Under these circumstances, a worker is entitled to statutory severance pay, which amounts to 1 week per year of service on a pro-rata basis. In other words, every year of service results in 1 week of severance pay, and partial years of service entitle workers to partial weeks of severance pay.

Common Law Reasonable Notice

In addition to ESA termination entitlements, many workers are entitled to common law reasonable notice. Reasonable notice under common law tends to be more expansive than reasonable notice entitlements under the ESA and can provide workers with a greater degree of security after being terminated. Determining common law reasonable notice is significantly more complicated than the values available under the ESA. Common law reasonable notice is determined by a number of factors known as the Bardal factors, named after Bardal v. Globe & Mail Ltd. These factors include, but are not limited to, the workers:

  • Character of employment;
  • Length of service;
  • Age; and
  • Availability of similar employment regarding experience, training, and qualifications of the worker.

These factors, among others, are generally used to determine a workers’ common law reasonable notice period. As the Ontario Court of Appeal in Minott v. O’Shanter Development Company Ltd., has stated, calculating a worker’s reasonable notice period “is an art not a science”. In other words, reasonable notice periods can vary from case to case, based on the circumstances of the worker and their termination. Nevertheless, reasonable notice periods tend to exceed ESA entitlements, and can help workers recover from an unexpected termination of employment.

Reasonable Notice and ESA Entitlements

While reasonable notice typically provides greater relief for workers above and beyond statutory entitlements under the ESA, there are certain aspects of reasonable notice that interact with the minimum standards legislation. Most crucially, workers should be aware that ESA entitlements are included under reasonable notice, as outlined by the Ontario Court of Appeal in Stevens v. The Globe and Mail. In that case, the Ontario Superior Court ruled Stevens was entitled to 21 months’ compensation for reasonable notice; the Court of Appeal confirmed that both ESA notice periods in addition to severance pay were to be deducted from the 21 months’ compensation. The Court of Appeal held that ESA entitlements are specifically minimum entitlements, not separate from common law reasonable notice which can extend above and beyond those minimum entitlements yet nevertheless include those minimum entitlements. The Court of Appeal held that both severance pay and common law reasonable notice serve the same purpose of providing workers with an economic cushion from termination. More recently, in Chalmers v. Airways Transit Service Ltd. and Badder Capital Group Ltd., the Ontario Court of Appeal reconfirmed that severance pay is to be included in calculating common law reasonable notice for workers. Workers can claim both ESA entitlements in addition to common law reasonable notice upon termination, but the Court of Appeal prohibited “double recovery”. In other words, statutory entitlements are to be included in any calculation of common law reasonable notice.

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