Monday, June 27, 2016

What's the Minimum Reasonable Notice Period?

Throughout English-speaking Canada, if you don't have a valid express contractual clause setting out your entitlements on termination in non-union environments, the usual result is that you're entitled to "reasonable notice".

Much of the job of an employment lawyer is figuring out what's "reasonable" in a given scenario, based on factors like length of service, age, character of employment, and availability of replacement employment.

In Ontario, at least, it's pretty well-established that there's a soft ceiling of 24 months.  There are exceptional cases, but you rarely see more than 24 months.

But what's the minimum?

There's no question that assessing the notice periods for short service employees can be a relatively difficult task, so the entitlements of 'new employees' are hotly debated.  There's long been an attitude among employers that 'reasonable notice' should never really be much more than about a month per year of service.  In the 1990s, respected employment lawyer and mediator Barry Fisher used a comprehensive database he developed to prove that this "rule of thumb" didn't really track the outcome of cases, especially for particularly short-service and particularly long-service employees.  In 1999, in the case of Minott v. O'Shanter, the Ontario Court of Appeal expressly rejected the "rule of thumb", finding that it placed an undue emphasis on length of service, to the detriment of the other factors.

Accordingly, while it's always surprising to people outside of employment law, it's not at all uncommon to see employees with less than a year of service getting notice periods of 3 months or more, or to see employees with just three years of service getting upwards of 6 months.  For managers in particular, it's not at all unusual to see someone with 3 or 4 years of service obtaining a reasonable notice period approaching one year.

A few years back, I watched a presentation by Justice Sproat, a well-respected employment law judge, where he asserted that any 'real job' can be expected to take no less than 3 months to replace.  I've had similar conversations with experienced employment law mediators, including one recent mediation for a very short-service employee where the mediator suggested that anything outside the 3-6 month range was very improbable.  This is in line with much of the case law.  It's fairly rare to see notice periods assessed at much less than 3 months, and this tends to be the understanding in the employment law bar in general.

Yet there's very little case law actually talking about general propositions for short-service employees.  Is there a floor, or even a soft floor, for reasonable notice periods?  A number that you won't get below, barring exceptional circumstances?  It would actually be very helpful to have such a figure.  As employee counsel arguing my client's position, or employer counsel advising my client, to have a judicial decision setting a rough minimum for notice periods.  (It's not unusual to see an employer offering 6-8 weeks of notice, or sometimes even less, which is usually a pretty aggressive posture.)

However, in recent years, there have been some cases out of the west coast talking a bit about low-end notice periods - a couple of decisions from the British Columbia Court of Appeal Hall and Saalfeld, culminating in a recent decision from the Yukon Court of Appeal, in the case of Cabott v. Urban Systems, where the Court referred to a range of "two to three months" as being "a useful starting place" for a short-term employee.  The Court concluded that, because of Cabott's level of responsibility, the range should be bumped up to four months (but not to six months, as found by the trial judge).

On the facts, the Court's treatment of Ms. Cabott is, perhaps, rather questionable:  The Court refers to the the Hall and Saalfeld decisions as being essentially a baseline, and places Cabott's circumstances slightly above them.
On the other hand, there is some force to the submission that Ms. Cabott’s position in Whitehorse, described by the judge as senior and supervisory management, involved somewhat greater responsibility than the positions discussed in Saalfeld and Hall. Accepting the description of the range of notice for specialized employees in short term positions as two to three months as observed in Saalfeld and Hall, the character of this employment would justify an award modestly beyond that range.
While it's certainly true that Cabott, at age 53, was older than Hall (42) and Saalfeld (35), and likewise true that the trial judge considered her role to be "senior and supervisory", unlike Hall and Saalfeld, there remains one minor hitch with the Court's reasoning here:  The British Columbia Court of Appeal had upheld a five month notice period for Saalfeld.  They had felt it was at the high end, but not so outrageous as to warrant appellate intervention.  The trial judge awarded Cabott, with a more senior role, a significantly higher age, and even a longer period of service, a modest one month improvement over what the BCCA had upheld for Saalfeld.

There's a bit of revisionism here:  The BCCA was clearly of the view that 2-3 months would have been more appropriate for Saalfeld, but 5 wasn't totally outrageous.  Yet, in the Cabott decision, one would think that going much beyond the three months for a short service employee requires executive-level and/or retirement age employee.

What's more, I might resist the idea that Cabott's age and character of employment should move the notice period so very little.  It seems to put far too high a degree of importance on 'length of service'.

Indeed, the very language of a 'starting position' for short-service employees, to be bumped up depending on other factors, looks a little too similar to the "rule of thumb" language the Ontario Court of Appeal rightly rejected in Minott.

If we read the "starting place" language as creating a floor, assuming all Bardal factors to be toward the low end, then that would make sense.

Yet the Yukon Court of Appeal's reasoning appears instead not to do this, ultimately asserting 2-3 months not so much as a floor, but rather as a soft ceiling based on one of the Bardal factors.  This reasoning is reminiscent of the Ontario Court of Appeal's reasoning in Cronk in 1995 - a decision which was dismantled piece by piece, starting with Minott in 1999.

Notwithstanding a questionable application, however, I expect that, across the country, Cabott will be routinely cited for this simple proposition:  "For a short term employee the useful starting place in discussing range is the two to three months spoken of in Saalfeld and Hall."

And I suspect that this will make many wrongful dismissal cases far easier to settle.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

Friday, June 17, 2016

Superior Court Declines to Follow Trites v. Renin Corp

Three years ago, the Superior Court of Justice released its decision in the case of Trites v. Renin Corp, where an employee claimed to have been dismissed or constructively dismissed by the imposition of a temporary layoff.

In a statement which made the entire employment law bar do a collective double-take, Justice Moore held that:
there is no room remaining at law for a common law finding of constructive dismissal in circumstances where a temporary layoff has been rolled out in accordance with the terms of the ESA.
I have come to refer to this proposition as the "Trites proposition".  I argued at the time that the Trites proposition is wrong, and will not largely be followed, because it's obiter (in that Justice Moore concluded in any event that the temporary layoff had not been rolled out in accordance with the ESA), inconsistent with established and binding jurisprudence, and fundamentally rooted in a misinterpretation of the Employment Standards Act.  The widely-accepted status quo, before Trites, was that a temporary layoff would constitute a constructive dismissal unless the employer could demonstrate an express or implied term in the employment contract authorizing such a layoff.

I've had to argue about Trites in court since then:  I argued a motion for summary judgment on such a case last year.  I think the judge, who generally sits in the family court, was happy to be able to conclude that there was a constructive dismissal without needing to resolve the Trites question, in an unreported decision this past January.

But I'm not the only one who's been arguing about it.  In 2014, Deputy Judge Hagan declined to follow it in the case of Wiens v. Davert Tools (my commentary here).  As a Small Claims Court decision, it has little precedent value, but nonetheless it was striking that the Small Claims Court declined to follow an ostensibly binding precedent:  To do so, Deputy Judge Hagan concluded (as I had previously argued) that the Trites proposition is obiter, and therefore not binding, and inconsistent with the rulings of higher courts.

Until recently, however, Trites hadn't been expressly considered by any other Superior Court judges.  Which brings us to the recent case of Michalski v. CIMA Canada, in which Justice James expressly rejected the Trites proposition.

Justice James reviewed the Stolze and Chen cases (see my first linked entry above), as well as McLean v. The Raywal Limited Partnership, as well as the text "Employment Law in Canada", and concluded that these were out of step with Trites.
To the extent that the decision of Moore J. in Trites stands for the proposition that the common law conditions precedent to a lawful layoff have been completely displaced by the ESA, I respectfully disagree.
Commentary

While this can't be said to finally resolve the question for once and for all, I would suggest that the results in Michalski and Wiens bring into focus my earlier caution that employers should not place reliance upon the Trites decision.

When I was arguing Trites in court last year, it was a tricky argument.  A contention that a recent decision of the Superior Court was wrongly decided on the law is not a submission to make lightly.  I needed to make the argument, with significant and detailed appeal to the authorities with which Trites was inconsistent, and an indepth examination of the intellectual framework of the Employment Standards Act.  Even then, I was happy to be able to add to my factum the corroborating viewpoint of Deputy Judge Hagan, as an example of an independent judicial officer come to the same conclusions about Trites that I was making on behalf of my client.

Now, that will be even easier.  With a Superior Court decision that expressly rejects Trites, providing authorities for the position, I expect that it will be much easier to deliver future arguments that Trites was bad law, to the point that I expect most employer counsel will advise their clients that the Trites argument is a long shot - making many such files much easier to settle.

So the lesson to employers is simple:  If you want the right to temporarily lay off your employees, put it in the written contract.

Other Issues Surrounding Temporary Layoffs

There's another tidbit of useful commentary in the Michalski decision, as well.  Quite often, employers facing a temporary layoff constructive dismissal allegation are taken by surprise, as some employers (including large national employers) have been routinely using layoffs to control costs for a lengthy period of time:  "I've been doing this for decades, and this employee knew it!"

Quite often, in these cases, I see employers attempting to rely on the long-standing practice as supporting a contention that the ability to lay off becomes an implied term of the employment contract.  (There are contexts in which this is the case.  The onsite construction industry comes to mind.)  In dealing with such an argument, Justice James noted:  "Standing alone, it is difficult to see how the layoff of one worker can result in a unilateral amendment of the employment contracts of other workers."  Only in cases where the right to layoff is "notorious, even obvious, from the facts of a particular situation" will it be found to be an implied term.

Of course, this doesn't head on address the other variation of that argument we sometimes see, of acquiescence to temporary layoffs: there are scenarios where an employer may have temporarily laid off an employee in the past, and the employee did not raise an objection at that time, and then takes a constructive dismissal position in response to a subsequent temporary layoff.  (Personally, I regard this as a difficult argument, most of the time, requiring a fairly particular factual matrix, for a number of reasons.)

There's also another variation in cases where an employee takes a constructive dismissal position after a lengthy layoff, or even after being recalled.  Andrew Monkhouse recently litigated such a case, Kurt v. Idera, at the Divisional Court, and it was sent back down to the motions court.  The employee in that case responded to a recall notice, over six months after the layoff, with a letter indicating that he took the position he had been constructively dismissed.

I find this variation to be challenging, as well:  On the more fundamental principles of constructive dismissal law, the employee has the option (or sometimes the obligation) of 'trying out' the changed terms and conditions of employment for a reasonable period of time.  If your employer changes your employment conditions, and you try it out for just long enough to conclude, "You know, this really doesn't work for me", then you're not blocked from taking a constructive dismissal position.  On the other hand, if you continue with the changed employment conditions for a much longer period of time, you'll be said to have accepted the change.  This is the root of the acquiescence argument here.

Yet it's difficult to apply this concept to temporary layoffs at all, and moreso to a single continuous temporary layoff:  The image of acquiescence is that the employee is going into work and doing his job under the modified conditions.  Even with multiple temporary layoffs, that's a tough pitch, because when the employee does report back to work, it's presumably under the same terms and conditions as before.  But with a single lengthy temporary layoff, and particularly for one of an indeterminate length, it seems inherently difficult to suggest that the employee has to make that assessment before knowing just how long the temporary layoff will be.  Maybe I'm prepared to acquiesce to a one week layoff, but not to a 12-week layoff.  Seems reasonable that I might hit a point where I say, "Hey, this isn't right" and want to seek recourse for an ongoing breach of contract.  Yet the longer the temporary layoff has gone on, the less likely it is to be a constructive dismissal?  Seems a little off.

*****

This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.