When an employee is terminated without cause, they are offered a severance package. While many people believe that common law notice is generally one month per every year of service, this is not entirely accurate.
In determining what the common law notice period is, a court will use, but is not necessarily limited to, the following factors:
- Character of the employment
- Length of service
- Age
- Availability of similar employment, having regard to the experience, training and qualifications of the employee
- Economic factors (downturn in the economy or in a particular industry or sector of the economy)
None of the factors are to be more heavily weighted than the others. They should all be considered equally when determining what reasonable notice is in the circumstances. This method of determining reasonable notice has been used since the Bardal v. Globe & Mail Ltd. decision in 1960.
Notwithstanding the existence of a legal termination provision in the employment agreement which limits severance to the minimums set out in the Employment Standards Act (ESA), common law notice is generally limited to 24 months. However, there are exceptions in which notice awards given to employees are greater than 24 months. In early 2023, the Milwid v. IBM Canada decision was released. Here, the Plaintiff received an award for reasonable notice above the soft cap of 24 months. He received 27 months based on a number of factors.
Milwid v. IBM Canada Ltd., 2023 ONSC 490:
In awarding a notice period greater than 24 months, the court needed to provide reasons which show why the circumstances in this case were exceptional.
Firstly, the COVID-19 Pandemic was a relevant factor. While it is not sufficient on its own to bring an award past the 24 month threshold, it is significant enough to be considered in the determination.
Secondly, the court considered the typical Bardal factors:
Character of Employment
The Character of Employment Bardal factor is an exception to the rule. Over time, it is considered to be of declining relative importance. This is particularly true if an employer attempts to use the character of employment to say an unskilled employee deserves less notice because they may have an easier time finding new employment. Here, the Employer argued that the non-executive status of the Plaintiff was a reason for finding a lesser notice period award. The court disagreed based on the reasoning above.
Compensation
The Plaintiff was well compensated in his position with the Employer. This includes a substantial average annual compensation as well as possible equity participation in the Defendant’s company. These factors are relevant in determining notice. Having a compensation package such as this will likely be difficult to find in future employment. Thus, the court weighed this factor in favour of a longer notice period.
Age
The Plaintiff was nearly 63 years of age when he was dismissed from his position. The older an employee is, the more difficulty that person will have in finding comparable employment. The court found the Plaintiff’s age to be a relevant factor which weighed in favour of a longer notice award.
Length of Service
An employee’s length of service is a relevant factor as well. In this case, the Plaintiff spent most of his adult life working with the Defendant. Overall, he had 38 years of service. This again weighed in favour of a longer notice period.
Main Takeaway: No Upper Limit in Reasonable Notice Awards
As established in the case law, there is no absolute upper limit on reasonable notice awards. Therefore, based on all the relevant factors including service length, job, salary, age, and the additional factor of the Pandemic, the “soft cap” limit of 24 months was surpassed and the court felt that his 38 years of service, advanced age, substantial compensation package and the lockdowns during the Pandemic all provided enough reason to award 27 months’ notice.
This case shows both employees and employers that when the factors predominantly weigh towards a lengthier notice period, an award over 24 months is certainly possible.
Notice Summary:
| Notice Awarded | Service Length | Job | Salary | Age | Additional Factors |
| 27 Months | 38 years | Band 10 Offering Manager | $169,695.00 per annum | 62 | Plaintiff was terminated immediately before the COVID-19 Pandemic |