Monday, November 23, 2015

An employer's finances do not affect the quantum of notice for dismissal

Michela v. St. Thomas of Villanova Catholic School, 2015 ONCA 801:

[12] The nature and purpose of notice are well established. Although employees may be dismissed without cause,"employment contracts for an indefinite period require the employer, absent express contractual language to the contrary, to give reasonable notice of an intention to terminate the contract if the dismissal is without cause": Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986.Reasonable notice allows employees a reasonable period of time to find replacement work. Damages for dismissal without reasonable notice are designed to compensate employees for the losses incurred during the period of reasonable notice – the amount of wages and benefits that they would have earned had they been permitted to serve out the notice period: see Arnone v. Best Theratronics Ltd., 2015 ONCA 63, 329 O.A.C. 284, at para. 16, leave to appeal refused, [2015] S.C.C.A. No. 140; Taggart v. Canada Life Assurance Co. (2006), 50 C.C.P.B. 163 (Ont. C.A.), at para. 13; and Sylvester v. British Columbia, [1997] 2 S.C.R. 315, at para. 1.

[13] The calculation of the notice period is a fact-specific exercise. The relevant factors are set out in Bardal v. The Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.), at p. 145, and focus on the circumstances of the employee: the character of their employment, their length of service, their age, and the availability of similar employment, having regard to their experience, training, and qualifications.

[14] The motion judge emphasized the "character of the employment" in determining that the twelve-month notice period sought by the appellants should be reduced to six. He reasoned as follows, at paras. 89 and 90:

It should be self-evident that, by its nature, the School could not provide the security of employment offered by larger, more established and better-funded institutions. The teachers must be taken to have understood the circumstances of their employer. Every year, they had to wait until June before the School could be sure of its requirements for the upcoming year…

The three teachers cannot be taken to have been unaware of the circumstances of the School. Whatever their rights to notice, it must be understood that they worked there understanding its circumstances. This cannot be ignored in assessing what is reasonable notice. It is an aspect of the "character of the employment" as referred to in Bardal v. Globe & Mail Ltd... These are facts that are particular to this case.

[15] In my view, the motion judge erred in considering an employer's financial circumstances as part of the "character of the employment".

[16] The character of the employment refers to the nature of the position that had been held by the employee – the level of responsibility, expertise, and so on. Historically, courts have drawn a distinction between management and non-management employees in determining notice, and have assumed that the former may require more time to find similar employment than the latter. This court has questioned the validity of this assumption and suggested that the character of the employment is "a factor of declining relative importance": Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469, 337 D.L.R. (4th) 679, at paras. 27-28.

[17] It is not necessary to address this issue for the purposes of this case. It suffices to say that the character of the employment, like the other Bardal factors, is concerned with the circumstances of the wrongfully dismissed employee. It is not concerned with the circumstances of the employer. An employer's financial circumstances may well be the reason for terminating a contract of employment – the event that gives rise to the employee's right to reasonable notice. But an employer's financial circumstances are not relevant to the determination of reasonable notice in a particular case: they justify neither a reduction in the notice period in bad times nor an increase when times are good.

Of the Law Societies of Upper Canada and Nunavut

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