Increasing Common Law Notice Awards In Recent Years

In Canada, common law courts  have established for nearly a century that absent any contractual language to the contrary, an employer must provide “common law” reasonable notice (or pay in lieu of notice) in a termination without cause. The long-stated purpose of common law notice is  to provide employees with economic security while they seek alternate employment (i.e. to “bridge the gap” between employment). Reasonable notice is the quid pro quo for the employer’s right to terminate indefinite employment at any time for any reason (subject of course to rights and obligations conferred by specific statutes e.g. occupational health and safety or human rights legislation).  The oft cited and oft ignored notice period guidepost is one month of notice per year of service with a ceiling of 24 months. However, each case turns on its particular facts, and courts have used Ontario’s Bardal factors as a means to forecast on a case-by-case basis, how long each employee reasonably needs to secure new employment. The Bardal factors include an assessment of the employee’s age, length of service, characteristics of the employment, and availability of alternate employment.

No court has expressly overruled these factors. Yet, we have seen a significant increase in average common law notice awards in the last decade in Ontario (and other provinces). This has occurred during periods when employment rates have remained consistent, suggesting it has not become more difficult to find new employment in the job market. 

By our count, Ontario is leading the charge on notice period expansion. Between 1970 to 2010, notice period awards in Ontario averaged 10.4 months and the unemployment rate averaged 7.54%. In the last 10 years, despite a lower overall unemployment rate  of 6.68%, the average notice period award increased to 12.8 months (a 23% increase compared to 1970 to 2010). In the last three years, we see an even sharper increase to 15.7 months a (51% increase compared to 1970 to 2010).^[1]  

Given the relatively stable unemployment rates (which even during the COVID pandemic, never exceeded 10%), we would have expected courts to be similarly consistent with notice periods when applying the same Bardal factors. That has not been the case and employers are increasingly facing some truly extraordinary and inexplicable notice precedents. Here are some examples from Ontario courts between 2010 to 2024:

1. A 40-year-old Product Manager with 1.7 years of service who earned $100,000 received 9-months notice (5.3 months per year of service).^[2]
2. A 46-year-old sales Manager with 1.5 years of service who earned $50,000 received 6-months notice (4 months per year of service).^[3]
3. A 42-year-old Credit Analyst and Designer with 1.5 years of service who earned $55,000 received 4-months notice (2.6 months per year of service).^[4]
4. A 51 year old Golf Superintendent with 1 month of service who earned $70,000, received 5-months notice (60 months per year of service).^[5]
5. A 32-year-old Chief Operating Officer with 3 years of service who earned $90,000, received 12 months notice (4 months per year of service).^[6]

What is particularly striking from these examples is that: the employees are all relatively short service; none are near retirement age when courts traditionally award higher periods of notice, and; most of these positions are not unique and the salaries are available in the job market. Nonetheless, all employees in these cases were awarded outsized notice periods well beyond the one-month per year of service guidepost.

Ontario courts have been steadily increasing notice period awards to greater degree than the other common law provinces. At the same time, Ontario has also become the most difficult province to “contract out” of the common law and establish termination entitlements within employment contracts. The Ontario courts are increasingly striking down termination clauses that were once considered enforceable by the same courts, through a variety of means ranging from concerns about vulnerable employees to hypothetical statutory breaches.

The current notice trend has important implications for Ontario’s (and Canada’s) economy. If companies lack confidence that their termination provisions will stand up, and know their termination costs will be outsized and unpredictable, they will factor those potential costs into hiring, commercial transactions and investment decisions. Canada is a very high cost severance country, becoming costlier, all at a time of ailing GDP per capita, low labour productivity, low foreign investment, and economic turbulence in the world.

[1] See Westlaw Edge Canada, Wrongful Dismissal Quantum Service. See also Statistics Canada, Labour Force Characteristics, January 2025.

[2] Nemirovski v Socast Inc,  2017 ONSC 5616

[3] Cassidy v 277033 Ontario Ltd, 2013 CanLII 60849 (ON SCSM)

[4] Branch v CIBC, 2010 ONSC 1103 

[5] Smith v Lyndebrook Golf Inc., 2024 CanLII 103671

[6] Humphrey v. Mene Inc., 2022 ONCA 531