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In Fraser v. Canerector Inc., 2015 ONSC 2138, the plaintiff was a 46-year-old senior executive who was dismissed from his employment in June 2014 after 34 months (2.8 years) of service. He argued that he had been induced to leave a secure, long-term position at another firm, where he had worked for approximately seven years, to accept employment with the defendant and, as such, the period of reasonable notice ought to reflect his combined length of service to both employers. He claimed that 12 months’ notice would be reasonable in the circumstances.

The plaintiff also claimed an entitlement to the prorated bonus accrued to the date of his dismissal, as well as any bonus amounts that might have accrued during the reasonable notice period. Although his employment agreement did not have any formal bonus policy, his offer of employment permitted him to participate in the defendant’s executive bonus program, for which there was no ceiling or any formula which the court could use to calculate bonus entitlement. Bonus awards were entirely at the discretion of the company’s owners and kept confidential. In 2013, the plaintiff had received a bonus of $175,000.00.

The defendant, Canerector Inc., disputed the characterization of the hiring process as involving inducement of any kind and took the position that the bonus program was entirely discretionary and payable only to active senior employees at the time of assessment and award of bonus each year (which took place in February).

Decision

The court held that the plaintiff was not induced to leave his prior employment in such a way as to impact the assessment of an appropriate notice period. It considered the plaintiff’s years of service with the defendant and did not inflate this period to account for his prior years of service with his former employer or his accrued entitlements there.

On the issue of the plaintiff’s entitlement to a bonus, the court held that the employer’s bonus plan implicitly required participants to be employees at the time the assessment process is undertaken (i.e., in February). The plan itself was fundamentally discretionary and subjective, and provided no formula for a prorated bonus award. As such, there was no amount of bonus to which the plaintiff was entitled as of the termination date.

However, the court proceeded to discuss the issue of whether the time of year of dismissal could affect what constituted reasonable notice. It noted that reasonable notice of termination is intended to provide the employee with enough time to secure alternative comparable employment, and dismissal at the outset of the summer makes it much more difficult, in most industries, to find alternative employment in the weeks following termination. 

The court stated:

[35]      I find that for a man of Mr. Fraser’s age and level of responsibility but relatively short years of service, I must also account for the time of year when his employment was terminated in assessing reasonable notice.  Mr. 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.  While his term of service might normally suggest a relatively shorter period of notice, timing plays a bigger role where notice is short.  While timing in fact was no impediment in this case (Mr. Fraser having found new employment by August), that is a conclusion enabled by hindsight.

In its result, the court held that, taking into consideration of the time of year during which termination occurred, three months’ notice would have been sufficient based on the Bardal factors. However, because the plaintiff had been terminated in June, 4.5 months was a reasonable period of notice in the circumstances.

Commentary

This case serves as an important lesson for employment lawyers that numerous considerations beyond the Bardal factors are relevant to assessing reasonable notice. It also signals to employers that they ought to carefully consider the timing of any dismissals before terminating employees, particularly those in high-level positions. Although character of employment, length of service, age and availability of alternative employment are all important factors to consider in assessing reasonable notice, any factor that has an impact on an individual’s ability to secure new employment should be taken into account.

Blumberg Segal LLP acts for both employees and employers in employment law disputes.   If you have an employment related issue, we encourage you to contact us.

Maria Constantine is an associate at Blumberg Segal LLP, practicing in civil and commercial litigation, as well as employment law. Maria can be reached at maria@blumbergs.ca or 416-361-1982 ext. 246.