Wrongful Dismissal, which is discussed elsewhere on this site, is the judge made law that is superimposed upon the Employment Standards Act. It deals with the situation of an employee who is dismissed without cause and what compensation they should receive as a result.The question becomes what reasonable notice should the employee have received at the end of their contract of employment in such an event. The contract is almost always unspoken and unwritten.
The practical starting point or rule of thumb widely discussed by both lawyers and courts is the equivalent of one month’s pay for each year of service.The formula indeed is not a formula as is set out in virtually every court decision on point including the Supreme Court of Canada in Honda Canada Inc. v. Keays.
The courts on one hand, steadfastly hold that there is no such rule of thumb but rather state that the question of what is reasonable notice is to be decided on a case by case point, examining all of the factors in determining appropriate pay in lieu of notice. Those factors include seniority of the employee, their responsibilities, the job market, efforts to find a new job and the age of the employee.However, time after time when one examines the fact situations being fed in to a careful analysis of all court decisions relating to wrongful dismissal, the rule of thumb seems to be transformed from plaster to steel.For a very long time, the upper reach of such pay in lieu of notice has been 24 months. There have been some adjustments when the court wishes to penalize a particularly bad employer who has engaged in such foul behavior as falsely accusing an employee of theft.
In the recent decision of the Ontario Superior Court in Abrahim v. Sliwin, Superior Court Justice Douglas Grey firstly denied the existence of the rule of thumb and then made a decision which was in essence the equivalent of applying the rule of thumb of one month’s pay for each year of service. Interestingly, Justice Grey made the non binding comment that he might have broken the 24 months ceiling had he been so asked.
This is an excellent example in exposing the difference between the severance and termination pay one is entitled to under the Employment Standards Act and the wrongful dismissal damages one is entitled to under the very same circumstances. The judge made law evolves with time and its only real boundaries are those imposed by the judges themselves with one eye towards any governing legislation. Conversely the Employment Standards Act is enacted, made by the provincial legislature, and is literally a predictable formula.
Dale Streiman Law LLP, has been providing assistance for many years to its clients both, employers and employees in determining what is an appropriate notice period and assisting in the appropriate method of terminating employees so as to minimize such payments.
