Giving the Finger to the ‘Rule of Thumb’

Giving the Finger to the ‘Rule of Thumb’

Author: Christopher Fleury

In Ontario, an employee does not have the right to employment. This means that an employer may dismiss an employee without legal cause, so long as the dismissal is not for a reason which violates provincial or federal human rights legislation.

Fortunately, when an employee is dismissed without cause, the employee is entitled to reasonable notice of the dismissal, or pay in lieu of such notice (commonly termed severance). The calculation of a reasonable notice period is a frequent source of debate among employment lawyers.

Employers often rely on what has become known as the “rule of thumb” to determine the length of notice period. The rule of thumb is said to be one month of notice per one year of employment (i.e. an employee who has worked for a company for three years is entitled to three months of reasonable notice).

This approach has been expressly and repeatedly rejected by Ontario Courts. Ontario Courts instead rely on a flexible approach which takes into account the character of the employment, the length of service, the age of the employee, and the availability of similar employment (commonly referred to as the “Bardal factors”). The determination of a reasonable notice period is often referred to as a principled art as opposed to a mathematical science. No two cases are alike. There is no correct or perfect number but rather a range of what is reasonable.

Courts have criticized the rule of thumb for overemphasizing one of the Bardal factors, length of service, at the expense of the others. It undermines the flexibility that is the virtue of the Bardal test. The actual amount of notice that an employee is entitled to can be higher or lower, depending on the circumstances.

Most recently, the Ontario Superior Court articulated the law as follows:

The weight to be given each factor will vary according to the circumstances of each case, and the judge in a wrongful dismissal case is required to exercise judgment in determining what factors are of particular importance. In determining the reasonable notice period, the court should not apply as a starting point any rule of thumb that would attribute so many weeks or months of notice per year of service, because such an approach privileges length of service above all relevant factors in determining notice, and each case must be considered having regard to its particular facts.

Lopez-Gonzalez v Reliance Legal Services, 2022 ONSC 2255.

The Court in this case expressed sympathy for the employer, a small business owner who did his best to keep his business open and keep employment opportunities available for his employees. His best efforts were unfortunately overwhelmed by the COVID19 public health emergency and the resulting economic impacts.

Still, the Court awarded 12 months reasonable notice where the employee had nine years of service; three months more notice than the rule of thumb would have determined.

It is also worth keeping in mind that there are both common law and statutory regimes governing the calculation of the length of the notice period. This article refers only to the common law. Generally speaking, the Employment Standards Act provides a minimum period of notice of one week per year of employment. However, in most cases an employee’s notice period will calculated to be significantly longer under the common law Bardal factors.

If you have been dismissed, it is important to retain an experienced employment lawyer to determine your entitlement to pay in lieu of a reasonable notice period and other entitlements.