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Break In Service and Impact on Notice Period

We often receive questions from clients with respect to termination of employment and in particular, the structure of a termination package. However, how should an employer treat the termination of an employee with a break in service? This issue was considered in Skowron v. ABC Technologies Inc.

On a motion for summary judgement, the Court considered the Plaintiff’s entitlement to pay in lieu of notice following the termination of his employment. The Plaintiff was employed by the Employer for a total of 26 years, with an 11 month gap. Specifically, he was hired in 1994 as a Plant Engineer, but later resigned in 2000 to pursue a career as a consultant. After 11 months, the Employer invited the Plaintiff to return to work on a specific project, under contract.

In 2002, the parties agreed that the Plaintiff would enter into another contract for a specific project. In 2003, the Employer agreed to re-hire the Plaintiff as an employee on a fixed-term basis, with a three-month probationary clause. The Plaintiff subsequently remained employed until 2020 with no new employment agreement.

The Employer argued that the proper period of employment in which to consider is only the past 17 years. Specifically, the Employer characterized the Plaintiff’s work history as “a six year job, then a three year consultancy, and then he became an employee of the Employer for the past 17 years.”

The Court ultimately awarded the Plaintiff a 24-month notice period on the basis of a total of 26 years of service. In determining this, the Court first noted that aside from the 11-month gap in 2000, the time spent as a consultant for the Employer would also be considered in the calculation of the notice period. The Court found that the Plaintiff would have been a dependent contractor while he operated as a consultant (and thus entitled to notice/pay in lieu of notice upon termination).

The Court considered the Employer’s argument and more at paragraphs 24-28:

[24] While the Employer is both technically and legally correct, the strict legalities of the situation do not address the issue. I am called to weigh factors. It is not a reductionistic inquiry as suggested by the Employer. Rather, the court takes a holistic approach to review all the relevant circumstances to try to arrive at an appropriate assessment of the amount of time reasonably required for the plaintiff to obtain new employment.

[25] In my view, in the real world, a reasonable prospective employer looking at Mr. Skowron’s employment experience would see that for his whole career, since 1994, the plaintiff has been working for the Employer with the exception of a year in which he tried to go out on his own. In his 27 year career, he spent 26 with the Employer; 24 as an employee and two as a contactor. He did the same things for the same employer from 1994 to 2000 as he did upon his return after a short break. Mr. Skowron did not have three careers with three different sets of job duties or three different employers. His entire working experience is with the Employer with a break when he tried to be a consultant.

[26] The court has discretion to overlook a break in the period of a plaintiff’s employment for the purposes of assessing the reasonable notice period. See: Hefkey v. Blanchfield, 2020 ONSC 2438 (CanLII) at para. 82. I essentially go through the factors mentioned by Bawden J. in that case at paras. 19 to 25 above.

[27] But I do not see myself as overlooking a clear break in the Employer’s employment. On these facts, I do not see the decision about the plaintiff’s length of employment as being quite as binary as the parties argued. The point is not to punish the plaintiff for leaving or to reward the Employer for papering its file properly. The goal it to characterize the length of the plaintiff’s employment with the Employer for the purposes of applying the Bardal factors to decide on the proper notice period.

[28] I accept that there was a legal break in Mr. Skowron’s employment with the Employer. I do not think that finding that the plaintiff has been an employee of the Employer for just 17 years fairly encapsulates the length of employment from the perspective of a sixty year old man who is now unemployed and is looking for a new job however. I do not think it matters if I find the length of service to be specifically 22, 24, or 26 years. The Bardal process is not mathematically precise. Nor is it intended to be so.

In this case, the Employer could have avoided this result with careful drafting of an employment agreement, specifically excluding credit for previous service for any purpose, except as required by the minimum standards of the Employment Standards Act, 2000.

Absent such language, often the determination as to whether an employee should be accredited previous service comes down an analysis of facts. Consider the following factors:

  • Whether the employee has been induced to return to work;
  • The length of the break in service;
  • Negotiated terms upon return (e.g. vacation entitlement);
  • The purpose of the break in service;
  • How the relationship originally ended.

These factors, and more, will help in determining an employee’s entitlement. Should you have any questions regarding the impact of this decision on your business, or wish to have your employment agreements reviewed, please do not hesitate to contact McCarthy Tétrault’s labour and employment group.

Employment Law


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