top of page
Search

Severance Packages for Short-Service Employees Facing Wrongful Dismissal. Short Tenure Does Not Mean Small Severance.

Writer's picture: AdminAdmin

Updated: Jan 20


Severance Packages for Short-Service Employees Facing Wrongful Dismissal. Short Tenure Does Not Mean Small Severance.
Severance package consideration for short service employees. Short service can equal large payments.

In Ontario, the legal landscape surrounding severance packages for short-service employees is nuanced and involves a careful consideration of various factors. This is why hiring the very best employment lawyer like Stitz Litigation is essential. Severance packages, also known as termination packages, are designed to compensate employees for the loss of employment, especially in cases of termination without cause. Here's a comprehensive review of the law in Ontario regarding severance packages for short-service employees:


1. Entitlement to Severance:


Employees in Ontario are generally entitled to a severance package upon termination without cause, provided they meet certain criteria. It's important to note that the entitlement to severance is distinct from the minimum notice requirements under the Employment Standards Act, 2000 ("ESA").


2. ESA Minimum Standards:


The ESA sets out minimum standards for notice or pay in lieu of notice based on the employee's length of service. However, short-service employees may be entitled to a severance package that exceeds these minimum standards, depending on various factors.


3. Determining Severance Amount:


The calculation of severance for short-service employees involves a consideration of common-law principles, which may provide a more extensive severance entitlement than the statutory minimums. Courts typically consider factors such as the character of employment, length of service, age, and the availability of similar employment.


4. Bardal Factors:


The Bardal factors, established in the Bardal v Globe & Mail Ltd. decision, play a crucial role in determining reasonable notice and, consequently, the severance package. Short-service employees may still be entitled to a reasonable severance based on these factors, even if their length of service is relatively brief as considerations by the courts have expanded and developed over the past several decades as will be discussed below.


5. Individualized Assessment:

Courts in Ontario conduct an individualized assessment of each termination case, considering factors unique to the employee's situation. Short-service employees should not assume that their limited tenure automatically translates into a minimal severance package.


6. Mitigation of Damages:

Employees have a duty to mitigate their losses by actively seeking new employment. However, the time it takes a short-service employee to find new work does not necessarily reduce their entitlement to a fair severance package.


7. Contractual Agreements:

Employment contracts may include specific provisions regarding severance entitlements in the event of termination. It's crucial for both employers and employees to carefully review and understand the terms outlined in employment agreements.


8. Legal Advice:


Seeking legal advice is essential for both employers and employees when navigating severance packages. Employment lawyers can assess the unique circumstances of each case, provide guidance on entitlements, and negotiate fair settlements.


In conclusion, while short-service employees may not have the same length of service as their longer-tenured counterparts, they can still be entitled to reasonable severance packages in Ontario. The determination of severance is a complex process that considers various factors, emphasizing the importance of seeking an employment lawyer to ensure fair treatment and compliance with employment laws. Call employment lawyer Michael Stitz if you have any questions about wrongful dismissal, short service and severance package entitlements and negotiations.


NOTABLE SHORT SERVICE WRONGFUL DISMISSAL CASES


In the case of Smith v Lyndebrook Golf Inc., 2024 CanLII 103671 (ON SCSM), Deputy Judge David M. José determined that a 51-year-old Golf Superintendent, who had served for one month, was entitled to five months' notice. This decision was primarily influenced by the fact that the individual was a seasonal employee terminated mid-season, which posed greater challenges in securing new employment compared to non-seasonal employees.


In the case of Humphrey v. Mene Inc., 2022 ONCA 531 (CanLII) the Ontario Court of Appeal the Court found that the employer's bad faith invalidated the termination clause in the contract. The employee was awarded 11 months' compensation for 2.7 years of service. In that case the court provided a summary of some of the key cases and concepts concerning short service wrongful dismissal awards and concepts.


[46]      Because no single Bardal factor should be given disproportionate weight or be treated as determinative, a short period of service will not always lead to a short period of notice: Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] 2 S.C.R. 362, at para. 32; see also, for example, Sager v. TFI International Inc., 2020 ONSC 6608, 2021 C.L.L.C. 210-014 (two years and nine months of service, nine months’ notice); Sanghvi v. Norvic Shipping North America, 2020 ONSC 8068, 2021 C.L.L.C. 210-023 (three years and nine months of service, eight months’ notice); and Norgren v. Plasma Power LLC, 2018 ONSC 3186, 2018 C.L.L.C. 210-060 (23 months of service, 8 months’ notice).


[47]      It would have been an error for the motion judge to overemphasize the short duration of Ms. Humphrey’s employment as a factor. See, for example, Love v. Acuity Investment Management Inc., 2011 ONCA 130, 277 O.A.C. 15, leave to appeal refused, [2011] S.C.C.A. No. 170, where this court concluded that the trial judge erred by overemphasizing the employee’s short length of service (2.53 years) and underemphasizing the character of his employment, where (as here) he reported directly to the CEO. The court substituted a notice period of nine months for the five months awarded at trial.


[48]      It is important to keep in mind the object of fixing a reasonable notice period, which is to determine, in the particular circumstances of the case, how long it would reasonably take the terminated employee to find comparable employment: Lin v. Ontario Teachers’ Pension Plan Board, 2016 ONCA 619, 352 O.A.C. 10, at para. 54. In the present case, the motion judge also properly considered the circumstances of Ms. Humphrey’s termination as a factor affecting how long it might reasonably take her to find a new position. The motion judge observed that, having regard to the fact that Ms. Humphrey was terminated allegedly for cause six months after her promotion to COO, “it would be more difficult for [her] to have obtained comparable employment because she would have to explain to prospective employers why she was terminated so soon after her recent appointment”: at para. 147. This is a relevant factor: see, for example, Lin, at para. 53.


[49]      In these circumstances, considering only certain factors (Ms. Humphrey’s age and length of service) might suggest that a notice period of 12 months was too high. The determination of reasonable notice, however, required an approach that considered all of the relevant circumstances as they would bear on Ms. Humphrey’s likely ability to find another comparable position. The determination of reasonable notice depends on the context and particular circumstances of the case. Mene has failed to demonstrate any legal error or error in principle in the motion judge’s approach, or any palpable and overriding error of fact that would justify interfering with her determination that 12 months was a suitable notice period. Nor am I persuaded that 12 months is entirely outside of an appropriate range in the circumstances of this case. As I will explain in the next section, however, I would reduce the damages to which Ms. Humphrey is entitled to the equivalent of six months’ compensation as a result of her failure to properly mitigate her damages.



Other Notable Legal Cases on Severance for Short-Service Employees:


1. Machtinger v. HOJ Industries Ltd. (1992):

  • This case established the principle that an employer's offer of employment, including termination provisions, must be clear and brought to the attention of the employee at the time of hiring. Vague or ambiguous terms may not be enforceable.

2. Bardal v. Globe & Mail Ltd. (1960):

  • Justice McRuer's decision in this case introduced the Bardal factors (character of employment, length of service, age, and availability of similar employment) as key considerations in determining reasonable notice for dismissed employees. These factors have become a standard in assessing severance.

3. Acuity v. Clement (2016):

  • This case reaffirmed the importance of the Bardal factors and emphasized that the determination of reasonable notice is an individualized assessment. It also highlighted that inducement, where an employee is enticed to leave secure employment, can impact the calculation of reasonable notice.

4. Wallace v United Grain Growers (1997):

  • Recognized the concept of inducement and its impact on the reasonable notice period. Inducement occurs when an employee is convinced to leave current employment for a new position. The court considered inducements as a factor that may increase the reasonable notice period.

5. Elgert v. Home Hardware Stores Limited (2008):

  • Acknowledged that false accusations made by an employer about an employee, such as allegations of sexual harassment, can impact the employee's ability to find new employment. This case resulted in a longer notice period awarded to the dismissed employee.

6. Lin v. Ontario Teachers’ Pension Plan (2016):

  • The court in this case considered the impact of a dismissal "under an ethical cloud" on the dismissed employee's ability to find comparable employment. It was recognized that such circumstances may justify a longer notice period.

7. Dimmer v. MMV Financial Inc. (2013):

  • Highlighted the influence of a non-competition clause in an employment contract on the notice period. The court considered the impact of such a clause on the employee's ability to secure similar employment.

8. Harris v. Yorkville Sound Ltd. (2008):

  • Recognized that pregnancy may be a relevant consideration when determining the reasonable notice period. A woman terminated while pregnant was awarded a longer notice period due to potential challenges in finding new employment.

9. Honda v Keays (2008):

  • This Supreme Court case emphasized that damages for wrongful dismissal are confined to the loss suffered as a result of the employer's failure to provide proper notice. It clarified that losses such as the impact on personal life or the time taken to find new employment do not form part of the damages.


Does a probationary clause present an issue when seeking to argue a short service employee was induced to leave secure employment and should be owed a premium?


Nagribianko v. Select Wine Merchants Ltd. (2018): This case clarified the inconsistency between probationary employment and claims for inducement. The court found that probationary employment, by its nature, is inconsistent with any inducement or promise of long-term employment, impacting the assessment of reasonable notice.



 


Contact Stitz Litigation, Employment Lawyers Toronto, today to schedule a consultation and learn how we can help you.

Comments


Commenting has been turned off.

Contact

100 King Street West

Suite 5700

Toronto, Ontario

M5X 1C7

647-243-4350

1-844-222-8154 (Toll Free)

  • Facebook
  • Twitter
  • LinkedIn
  • Instagram

CONTACT STITZ LITIGATION FOR A FREE CONSULTATION WITH AN EMPLOYMENT LAWYER

Thanks for submitting!

These materials do not constitute legal advice and do not create a solicitor-client relationship between you and Michael Stitz, Stitz Litigation PC and/or Stitz Law. The author makes no claims, promises or guarantees about the accuracy, completeness, or adequacy of any information linked or referred to or contained on Stitzlaw.ca and its related web pages. No person should act or refrain from acting in reliance on any information found on this website without first obtaining appropriate professional advice from a lawyer duly licensed to practice law in the relevant province, state, territory or country. The use of live chat or related correspondence does not create any relationship (solicitor/client or otherwise) unless you have signed and entered into a retainer agreement with Michael Stitz, Stitz Litigation PC, Stitz Law or any other related entity.

bottom of page