Employees terminated after being employed for a short period of time commonly believe they are entitled to a small severance package. However, this is not always the case. Under common law, individuals who are terminated without cause must be given reasonable notice or paid in lieu of notice.
Determining how much severance pay one is owed depends on a number of different factors (referred to as the Bardal factors). Importantly, none of the factors are given more weight than the others. Therefore, an employee’s service time may be short, but other factors may result in that employee receiving a large severance package.
Various Factors a Court will Rely On:
An employee’s age at the time of termination is one of the factors. The basic principle is the older a person is, the more justification there is for a longer notice period. Older individuals may have a harder time finding similar employment compared to their younger counterparts.
As already mentioned, the service time is another relevant factor. Generally speaking, the longer someone worked continuously for an employer, the longer the notice period may be.
The employee’s character of employment is also considered. In other words, did they have a high-ranking position in a company that might be difficult to find again.
The level of compensation is relevant too. Again, the higher one’s salary is, the more difficulty they might have found a similar level of pay.
The employee’s ability to find comparable employment considering their education, job qualifications and the current economic climate is also a relevant factor. A recession may mean the employee will have an even more challenging time finding comparable employment. Thus, this may help justify a longer notice period.
Circumstances that May Aid Short Service Employees Obtain Large Severance Packages:
Since service length is not the only factor in determining notice periods, and all factors should be given equal weight, there can be a number of things which while help a short-service employee receive a longer notice period.
The following list is examples of circumstances that will drastically reduce an employee’s chance of finding similar employment:
- Older age
- Health issues
- Recruited by the employer who terminated you
- Lack of formal education or diverse job qualifications
- Spending an entire adult life working with the same company
Recent Decision of Humphrey v. Mene:
The Court recently held that a 32-year-old employee who was only employed for three years was entitled to 12 months of severance. The employee had asked for a salary review at the same time as her promotion. In response, the company questioned her loyalty to the company. One month later, she was terminated by the employer “with cause”.
The court decided that she was wrongfully dismissed and was entitled to 12 months’ notice for the following reasons:
- She was terminated for cause and would have to explain that to future prospective employers;
- It can be more difficult for women to obtain senior executive positions, especially considering her age of only 32; and
- She was a high-ranking employee with a managerial role (which helps justify a longer notice period). It is commonly accepted that executives have more difficulty than the average person finding comparable employment.
The case then went to the Court of Appeal, which agreed with the 12-month notice period (but reduced the package to 6 months because the employee did not adequately search for new employment). The Court of Appeal reiterated the fact that all relevant circumstances must be considered, not just the length of service. As the court stated, “because no single Bardal factor should be given disproportionate weight or be treated as determinative, a short notice period of service will not always lead to a short period of notice.”
It would be incorrect for the court to overemphasize the short service time and underemphasize the character of employment and the level of compensation.
Short-service employees may not be entitled to long notice periods. However, as discussed above, there are numerous factors that also must be equally considered. Due to this fact, short-service employees may be owed longer severance than they might originally believe. If you are unsure about your own situation, if you are a recently terminated, short-service employee, please contact our law firm.