CalculatingReasonableNoticeInThe EventOfEmployerBankruptcy
The Employment Standards Act (“ESA”) is the legislation that sets out minimum employment rules in Ontario and is particularly important for workers in the province. The terms of every employment agreement in Ontario aresubjecttotheobligationsoftheESA.
Whenanemployerbecomesbankrupt,employeesareentitledtoreceivereasonablenoticeofterminationorpay in lieu of notice. The amount of reasonable notice is based on the length of employment and other factors such asage,position,andtheavailabilityofsimilaremploymentopportunities.
Section 9 (1) of the Employment Standards Act (the “Act”) is relevant to consider when calculating the period of statutoryreasonablenotice.It providesthatif an employersellsabusiness(orapart thereof)andthepurchaser employsanexistingemployee,theemployee’semploymentisdeemednottohavebeenterminatedforpurposes oftheAct.
Inaddition,otherfactorsconsideredwhendeterminingreasonablenoticeincludethefollowing:
• Themanneroftheemployee’sdismissal;
• Improperallegationsofcausemadebytheemployerabouttheemployee;
• Conductoftheemployerandemployeebothbeforeandafterthetermination;
• Existingprovisionsintheemploymentcontractregardingtermination
ResaleinthecontextofbankruptcycontinuestheperiodofserviceforthepurposeoftheAct’sstatutorynotice
Section 9(1) of the Employment Standards Act states that if an employer sells a business (or a part thereof) and thepurchaseremploysanexistingemployee,
theemployee’semploymentisdeemednottohave been terminatedforpurposesof theAct. Thismeans thatthe employee’speriodofservicecontinuesforthepurposeofcalculatingstatutorynotice.
For example, if an employee has worked for a company for five years and then the company sells its business to another company that employs the employee, the employee’s period of service will be deemed to be five years withthenewcompany.
Forcommonlawnotice,anewemployerbreakstheperiodofemployment
Constructive dismissal occurs when an employee resigns as a result of the employer creating a hostile work environment. This can happen when an employer fails to live up to the essential obligations of the employment relationship. It can also occur when an employer wrongfully makes working conditions so intolerable that the employeeisforcedtoresign.
In other words, constructive dismissal arises from the failure of the employer to live up to the essential obligations of the employment relationship, regardless of whether the employee signed a written employment contract.HavingalabourlawyerinCanadaonretainerisadvisedtohelpyouunderstandthelegalprocess.
Servingapredecessoremployermaybearelevantfactorwhencalculatingtheperiodofcommonlawnotice
The period of common law reasonable notice is determined by courts based on several factors. The four main factors(alsoknownastheBardalfactors)are:
1. Age
2. Lengthofservice
3. Natureofthepositionheld
4. Theavailabilityofsimilaremployment
Otherfactorsthatmaybeconsideredincludethetypeorcharacterofemploymentandseniority.
HerearesomeexamplesofhowtheBardalfactorshavebeenappliedinpreviouscases:
• In one case, a 62-year-old employee with 20 years of service as a seniormanager was awarded 24months of reasonablenotice.
• In another case, a 50-year-old employee with ten years of service as a sales representative was awarded 12 monthsofreasonablenotice.
• In another case, a 47-year-old employee with 14 years of service as a sales representative was awarded 18 monthsofreasonablenotice.
Employeeworkedforanewemployerafterbankruptcy,thenwasterminated
In Chin v. Beauty Express Canada Inc., the Ontario Superior Court considered an employee’s service with her previous employer in calculating her total years of service. The plaintiff was a part-time aesthetician at Beauty Express,asalonlocatedintheBay.
She began working for Beauty Express in 2013 and continued working there until she was terminated without causein2020.
TheplaintiffhadalsoworkedforanothersalonbeforeworkingatBeautyExpress.
The court found that the plaintiff’s prior experience was relevant when calculating her total years of service. As a result,thecourtawardedheranextendednoticeperiod.
Employmentcontractunenforceable,pavingthewayforcommonlawnotice
An employment contract with a valid and enforceable termination clause that limits the employee’s entitlement to only statutory notice is not entitled to common-law notice. If a written employment contract is unenforceable, the employee’s entitlement is governed by the common law, which provides employees with ”reasonable notice,” whichtendstobemuchmoregenerousthanmostwrittenemploymentcontractsandcertainlymoregenerousthan thelegislatedminimums.
Employeearguedforlengthycommonlawnoticeconsideringhercombined20yearsofservice
Length of service is one of many factors courts consider in determining the period of common law reasonable notice. The court will consider factors such as age, salary, position, length of service, experience, access to similar employment,andothercircumstancesimpactingtheabilitytofindcomparableemployment.
Someaccountofpriorservicewasfactoredintotheemployee’snoticeperiod
In determining the length of the reasonable notice period in any particular case, courts will look at the Bardal factors,whichinclude:
•
Thecharacterofemployment,
• Lengthofservice,theplaintiff’sage,
• Availabilityofalternativeemployment.
Generally, “length of service” is given significant weight. Therefore, prior service can be factored into an employee’sreasonablenoticeperiodcalculation.
Prior service can be factored into an employee’s reasonable notice period calculation. However, calculating reasonable notice can be a complex process that requires a thorough understanding of the law and the specific circumstancesofeachcase.Therefore,it’simportanttoconsultwithalabourlawyerwhocanhelpyounavigatethis processandensurethatyourrightsareprotected.
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