Ontario Court of Appeal Upholds 26 Month Notice Period for Dependant Contractors

In Keenan v. Canac Kitchens Ltd., 2016 ONCA 79 the Court upheld a 26 month notice period for a husband and wife who both worked as dependant contractors for Canac as Delivery and Installation Leaders., which were determined to be supervisory/ foreman positions. The husband had 32 years with Canac and was 63. The wife had 25 years with Canac and was 61 .

There are a few aspects of this case that are interesting;

1) The Court did not lessen the notice period because they were dependant contractors as opposed to employees.

2) Even though there were no special circumstances other than the usual Bardal factors of age, service and position, the Court had no trouble upholding a 26 month notice period, thereby shattering the myth that 24 months is a cap.

3) Most important, at least to me, is that winning counsel was Matthew Fisher  ( my son ) and his partner Bram Lecker.

Termination Clause in Handbook not Binding:

In Asgari v 975866 Ontario Limited, ( 2015 ONSC 7508 ) Dow J. held that a an otherwise valid ESA termination clause was not binding on the Plaintiff because the same Employee Handbook which contained the termination clause had a provision on the page  which the plaintiff signed which said ” the Employee Handbook is not a contract of employment, that my employment with the company  is not for a specified term”.

The Judge said as follows:

[7] As a result, it is confusing if not contradictory about whether the plaintiff waived his right to seek common law damages beyond that available pursuant to the Employment Standards Act, S.O. 2000 c.41, which was paid to him, that is, one week or $1,711.54. I conclude those cases referred to me by counsel for the defendant requiring my enforcement of only Employment Standards Act notice provisions are distinguishable given the Employee Handbook as it states (at page 29) that it is not (part of) a contract of employment. I am reinforced in this conclusion by the lack of evidence that the plaintiff accepted this policy in respect of his employment.

These types of ” this is not a contract ” clause originate in the US where they are routinely inserted to offset the American implied term of “employment at will”. They make no sense in the Canadian context.

The much better practice is to insert the termination clause right in the hiring letter or the employment agreement, and not attempt to  have it incorporated by reference from a different document or website.


Ontario Court of Appeal Finds that Being Screwed out of a Bonus of $328,862 is Not a Constructive Dismissal:

In Chapman v GPM Investment Management ( 2015 ONSC 6591) the CEO was found by the Court to be entitled to a bonus payment of $328,862 as per his contract. When he was not paid this bonus he claimed constructive dismissal. The Court held that the non payment of this bonus was not a constructive dismissal as it was one off and the situation would not arise again. Moreover as his total compensation was $1,173,239 , it was only a reduction of 28%. The judge emphasized that nothing had changed regarding his role and in the future the Employer was committed to honouring the contract.

In what I find is a surprising decision  the Court of Appeal of Ontario ( Justices Miller, Hourigan and van Rensberg upheld the trial decision ( 2017 ONCA 227) .

Trial Decision :

So what is an employee to do when he is screwed by his employer out of a $328,862 payment? This is what Gunsolus J. had to say:

67 Mr. Chapman’s position that he was left in a position such that he would have had to sue his employer, and thus would be in the untenable position of having to leave his employment, does not persuade me that this was a constructive dismissal. In today’s modern commercial world, there were many other steps that Mr. Chapman could have considered. For example, mediation and/or arbitration could have been pursued. Mr. Chapman could have pursued the other investors in the EE Project as suggested by Mr. Johnson. Mr. Chapman was not put in an untenable position. He left his employment at a time when he had earned more than he ever had in his nine year history with the defendants. In addition to that, he received over $557,000.00 as a return on his personal investment in the EE Project. No reasonable person, in the shoes of Mr. Chapman, would consider themselves to have been constructively dismissed.

Court of Appeal Decision :

The Court of Appeal found that the trial judge made no overriding error in his reasoning. Of particular interest was what the Court said about the trial judges comments quoted above .

34]      Furthermore, the trial judge considered all of the relevant surrounding circumstances in concluding that there were no other factors that could lead a reasonable person in the appellant’s position to conclude that GPM’s breach indicated an intention not to be bound by the memorandum of understanding.

[35]      Against this, the appellant argues that the trial judge erred in not finding that he had been placed in the untenable position of having to either forego the $329,000 in bonus income and keep his job, or sue to recover the $329,000 and lose his job.

[36]      The trial judge, however, found on the evidence that the appellant had options other than suing GPM on the one hand and foregoing the bonus on the other, including proposing arbitration and/or following up on Johnson’s suggestion that GPM might reconsider paying something towards a bonus if the other investors in the Ellerslie lands agreed. 

[37]      In my view, it was open to the trial judge to find that there were, on the facts of this case, dispute resolution alternatives that the appellant, a commercially sophisticated party, could have been expected to explore, and that a reasonable person in the appellant’s position would not have considered himself to have been constructively dismissed when the bonus on the sale of the Ellerslie lands was refused.

There is no indication in the judgement that  there was an arbitration clause in the CEO’s employment agreement. As one cannot be forced into either mediation or arbitration absent a contractual provision, it is difficult to understand this logic. Furthermore suggesting that he pursue a remedy against other entities rather than the one with which he had a direct contractual relationship seems rather  odd.

Why should an aggrieved employee have to chose an ADR process to resolve this issue? Surely they have the right ( absent a mandatory arbitration clause ) to pursue their remedy in Court ?

Does this now mean that that the law in Ontario is that is perfectly  OK for an employee to sue their current employer over an allegation of unpaid wages  and remain at work ?

Another option that would have been open to the Plaintiff was to file a complaint with the Ministry of Labour under the ESA for non-payment of wages, as bonuses are wages under the ESA, and there is no longer any monetary cap on recovery. Any attempt by the employer to terminate or discipline the employee for filing a claim would bring about further liability to the employer under the Reprisal section ( s.74) of the ESA.

The message from this case must be that quitting to obtain back wages is highly risky. You are much better off remaining in your job and commencing some sort of adjudication or litigation. According to this judgement, you can pursue legal remedies against your current employer and not have to worry about the problem of a conflict of interest.

Speaking for myself, if you screwed me out of $328,262, you sure would not want me working for you any more.

If the test for a constructive dismissal is based on the ” reasonable employee”, then I am pretty sure that if you polled 100 working people and asked them how they would feel is they were illegally denied $328,262 of their wages, virtually everyone of them would think that the employee would be amply justified in feeling they had no option but to quit, even if their boss promised that he was only going to screw them this one time.

What if the shoe were on the other foot and the employee stole $328,262 from his employer but, after being caught, returned it and promised never to do it again ?

Would the Court of Appeal say that this was not just cause for dismissal ?

How is wrongfully not paying me what I am owed any any different from me wrongfully taking what is yours?


Employer Who Doesn’t Help Employee Find a Job Can’t Claim Failure to Mitigate:

In Drysdale v Panasonic Canada ( 2015 ONSC 6878) Mr Justice Lederman gave 22 months notice to a 58 year old shipper with 23 years service.

The Employer tried to attack the Plaintiffs’  mitigation  efforts by producing at trial, for the first time, 380 job ads. The Court commented that of the 380 jobs, 348 either did not state a wage rate or the rate stated was $17/hour or less. The Plaintiff was making $28/hour or $60,000 with overtime plus a pension.

The Judge then made this comment about the Employer’s trial tactic of showing up with job openings for the first time at trial.

22 The defendant offered the plaintiff no assistance in searching out these job postings and therefore it does not lie readily in the defendant’s mouth to criticize the plaintiff afterwards for not pursuing these specific job opportunities. As stated by Taylor J. in Maxwell v. United Rentals of Canada Inc., 2015 ONSC 2580 at para. 40 “… if an employer intends to argue the failure to mitigate on the part of the former employee, it would be well advised to present evidence of assistance that was offered to the terminated employee during his or her job search.” Here, the defendant raised the issue of available job postings after the fact and only in the course of this litigation. Prudence would have dictated that the employer make this information available to the employee in a timely way to assist him in his transition.

What can an employer do to help the former employee find alternative employment and save themselves lots of money on notice?

1) Give positive reference letters, backed by oral references. If you have a “policy ” saying you cannot do this, then change the policy.

2) Provide relocation counselling.

3) Send relevant job leads to the plaintiff on a regular basis. Call other employers in your industry and try to find a place for your former employee.

4) Don’t allege just cause as a litigation tactic.

Only # 2 costs money, the rest is just being a mensch.


Duty of Good Faith Applies to Resignations

In Evans v Avalon Ford Sales ( 1996) Limited, ( 2015 NLTD (G) 100 Mr Justice Butler applied the SCC case of Bhasin to a fact situation regarding an emotional resignation. The Judge made the following comments :

” [114] I conclude therefore on the facts of this case that even if the Plaintiff had resigned, the implied term of good faith and fair dealings which applied to both parties and to the employment contract required the employer to give Mr. Evans time to cool off and reconsider. The Defendant’s failure to do so represents a breach of the implied major term of good faith and fair dealings.

[115] Further, returning again to Bru, I accept that the Defendant’s actions and inactions following Mr. Evans’ resignation on the evening of June 10, 2010 would also be characterized as a form of careless disregard. In contractual terms, this represents a breach of the implied fundamental term of good faith and fair dealings applicable regardless of whether the Plaintiff involuntarily resigned (as I have found) or voluntarily resigned but in circumstances of confusion or uncertainty.

This is another example of how the Courts are utilizing the doctrine of honest contractual dealing in the employment context.

Discretionary Bonus = No Bonus Over the Notice Period

In Fraser v Canerector ( 2015 ONSC 2138) Dunphy J. denied a bonus payment in the year of termination and over the notice period to a three year employee who had received substantial bonuses in all of his past years ( $50,000 in year one, then $75,000 and in his last full year $175,000). He did this  because:

1) There was no formula in determining the bonus rather it was based on the owners determination of the employees’ contributions and the company performance.

2) In the past other eligible employees had received nil bonuses, although not the plaintiff. Furthermore the bonuses were confidential so the Plaintiff would have no information about what other executives did or did not get .

3) There was no evidence of any contribution of the Plaintiff in his final year that showed his  contribution. He was fired mid year.

4) They fired him because he was lousy at his job, although it did not amount to cause. Although he had performed well in his previous position, once he got a new position and a new boss ( the owners’ daughter) he apparently was a disaster.

5) Even if he had worked out his notice period ( which the judge determined was only 4.5 months for a 46 year old executive with 34 months service) he still would not have been employed at the end of the year, therefore no bonus would have been payable, even though such a rule had never been articulated by the employer.

6) As he had done well in all the other years, and thus benefitted by the disceretionary nature of the bonus, so should he not complain when the exercise of the discretion was not to his benefit.

7) Any attempt to assess the bonus would be arbitrary so the Court should not even try to do so.

This approach to bonus entitlement over the notice period is at serious odds with the case law, where mere difficulty in determining the bonus does not lead to no award of bonus. The bulk of the cases involve either a backward looking average ( usually the last 2 to 3 years ) or a determination of what the bonus would have been over the notice period. Dunphy J. seems to view a discretionary bonus as one  that is whatever the employer decides it to be, even when the existance of this bonus plan was part of the original compensation terms.

The root of the judges’ problem in this case seems to flow from his thought on how this would affect further cases:

[53] The plaintiff argues that bonus was an integral part of the remuneration package and submits that, even absent a formula, there must be an objective assessment of it. While participation in the plan itself was clearly an entitlement under Mr. Fraser’s employment contract, the plan itself was fundamentally and by its nature discretionary and thus subjective. The court is in no position to assess performance of an individual executive still less to compare his performance to others. The court has no basis to assess the merits of acquisitions originated by the plaintiff, the skill (or lack thereof) used by the plaintiff in managing them, the results obtained from divisions under his supervision and the degree to which he has managed them well or poorly.

[54] If the bonus plan were to be treated as objective for purposes of assessing damages in wrongful dismissal cases, then it must logically be considered objective for ALL purposes and not merely end-of-employment questions. Merely stating the proposition is sufficient to reject it – the court is in no position to sit as a court of appeal weighing allegedly unfair bonus calculations for active employees or to hear constructive dismissal suits based on allegations that a particular decision regarding bonus in a year was alleged to be unfair.( emphasis added)

In fact, given the new obligation of honest dealing in contractual relations as set out by the Supreme Court of Canada, I would argue that there is a contractual obligation for an Employer to assess a bonus entitlement in good faith and thus it is entirely proper for a Court to review an Employer’s decision to not award a bonus or to award an unfair bonus, even if the employee is actively employed at the time.

Bonuses are no longer viewed as gifts from a grateful master to a loyal servant at Christmas time. Rather they are a vital part of many employees’ compensation plan and should be entitled to the same contractual protection normally given to other contractual entitelements.

In this case there were objective criteria in determining the size of the bonus, namely the individual performance of the employee and the overall performance of the Employer. There was no indication in the judgement that the Employer had any financial problems in the year in question. The only comments about the Plaintiffs’ performance was that they fired him because they thought that he was not a good enough performer in his brand new role . There is no evidence of any goals set for him, any performance review procedure or any criteria at all in deciding how to evaluate his individual performance. There must have been criteria, because in the past he received substantial bonuses. Was this whole process just based on a whim?

Surely when one signs up for a new job with a bonus plan, one can reasonably expect that it will be administered in a responsible and consistent basis, not based on the current whim of the owner and his daughter.

Therefore if a employer chooses to have a bonus plan that is entirely discretionary without any criteria whatsoever, it should have to inform the employee as follows:

“In addition to your wage, we may or may not pay you a bonus. We are not telling you what you need to do in order to get a bonus. If we decide to pay you a bonus, the amount will be entirely up to us and you will have no input into that decision or have any clue how we arrived at the number.  If we decide to terminate your employment, you will not get any bonus whatsoever, no matter how hard you worked or how much you achieved. ”

The Plaintiff  filed an appeal of this decision. On October 4, 2016 the Divisional Court dismissed the appeal . ( 2016 ONSC 6071).




Actual Period of Unemployment Irrelevant to Determining Reasonable Notice Period


The Ontario Court of Appeal in Holland v. Hostopia.Com Inc. (2015 ONCA 762) had this to say about the whether it was relevant in determining the reasonable notice period the fact that the employee got a new position quite soon after the dismissal :

’61.There is, however, merit to the appellant’s submission that the trial judge should not have considered the speed with which he found new employment in determining the period of reasonable notice. Notice is to be determined by the circumstances existing at the time of termination and not by the amount of time that it takes the employee to find employment: see Panimondo v. Shorewood Packaging Corp. (2009), 73 C.C.E.L. (3d) 99 (Ont. S.C.J.), citing Harper v. Bank of Montreal (1989), 27 C.C.E.L. 54 (Ont. Div. Ct.). If two employees in identical circumstances are terminated at the same time, they are entitled to the same notice, regardless how long it takes each of them to find a new job. One may mitigate her damages by finding a comparable job shortly after being dismissed. The other may be unable to find work for years. They are entitled to the same notice, regardless of the outcome. The time it takes to find a new job goes to mitigation of damages, not to the length of notice.

62 I am unable to find, however, that the trial judge’s consideration of this factor had a significant impact on his conclusion concerning the proper notice period. Having regard to the authorities cited by counsel for the appellant, the appropriate range in this case was between eight and twelve months. While the eight months awarded by the trial judge was at the very low end of the range, I would not interfere with the exercise of his discretion, notwithstanding the error in referring to the time it took the appellant to find new work: See McNevan v. AmeriCredit Corp., at paras. 34-35.

This case is one in a series of cases which is finally clarifying what the rules of reasonable notice are, beyond the Bardal analysis. One can only hope that this trend towards simplification in determining notice periods continues at the appellate level, so that the trial judges, counsel, mediators  and the parties can more easily determine what the proper notice should be.

School Principal Wins $200,000 for Aggravated Damages:

  • In Karmel v Calgary Jewish Academy ( 2015 ABQB 731 ) MacLeod J of the Court of Queens Bench awarded a school principal the sum of $200,000 in aggravated or bad faith damages for the manner in which the plaintiff was terminated. Essentially the Principal and the Chairman of the Board of Directors had a fundamentally different approach to the Principal’s role. The Chairman felt that he was the CEO and the Principal was his employee. The Principal saw himself as the professional educator reporting to the entire Board which consisted of volunteers who were members of the Calgary Jewish community. The Chairman grew to despise the Principal and led a campaign to get him fired. The Court found that the allegation of just cause had no merit. The process of building a case against the  Principal and convincing the Board to fire the Principal was found to be done in bad faith.

As the plaintiff was terminated part way through a 5 year fixed term contract, he also received the sum of  $669,998 representing the balance owing until the end of the term.

After deciding that the conduct of the Defendant were ” particularly insidious” and ” sufficiently egregious as to warrant punitive damages” the Judge then went on to decline to award punitive damages because ” I do not believe that he ( being the Plaintiff) would wish to punish the Calgary Jewish Academy with further punitive damages”

This last note is rather odd. The plaintiff requested punitive damages. The Judge thought that they were warranted. However then  the Judge assumed that the Plaintiff really did not want the damages. Surely the better analysis would be to award the damages and if the Plaintiff choose not to collect them, that is his choice, not that of the judge. At the very least the Plaintiff should get a charitable tax receipt for the sum of the punitive damages that he should have got. In fact, had he been awarded say $100,000 for punitive damages that would have been received on a tax free basis. He then could have made a charitable donation to the school of say, $100,000, resulting in a significant tax credit which he could have used to offset the taxes owing on his wrongful dismissal damages of  $669,998.

Waiver and Severability Clause Cures All Defects in Employment Contract

In Oudin v Le Centre Francophone de Toronto, 2015 ONSC 6494 ( Can LII) , Justice Sean Dunphy of the Ontario Supreme Court was faced with a contract that limited the the employees’ rights on termination to the minimum requirements of the Employment Standards Act        ( ESA) . The plaintiff attacked the clause on various grounds claiming that parts of the clause were void as they contradicted the ESA and that other parts were ambiguous.

The termination provision contained the following clause ( as translated from French in the judgement ):

12. Waiver and Severability
12.2 If any of the provisions of the present agreement is invalid or unable to be performed by virtue of any law, regulation, order or any other requirement or other principle of law, this modality shall in such case be considered to be modified or nullified, but only to the extent necessary to comply with the statute, regulation, order, legal requirement or principle and the other dispositions of the present agreement shall remain in force.

Dunphy J. used this clause to in essence fix up the void provisions of the termination clause and rewrite them so as to be in compliance with the minimum provisions of the ESA. Here is his reasoning:

39] The plaintiff relies upon the decision of the Supreme Court of Canada in Machtinger (supra). In Machtinger (supra), whether through deliberate action or accidental slip, it was common ground that provisions of the contract had the effect of providing a lower standard than that prescribed by the ESA. The issue in Machtinger (supra) was whether the court could have regard to the admittedly invalid termination provisions of the employment contract in determining what level of reasonable notice should be implied in construing the contract. Iacobucci J. delivered the judgment of the majority and held that if the clause is void for one purpose, it cannot be looked at for another where there was no evidence as to what the intention of the parties would be in the event the clause was found to be void.

[40] That is simply not the case here. The parties have explicitly spelled out what they intend to do in the event any part of the contract is found to be unenforceable. In s. 12(2) the parties have provided that “[i]f any of the provisions of the present agreement is invalid or unable to be performed by virtue of any law, regulation…this modality shall in such case be considered to be modified or nullified, but only to the extent necessary to comply with the statute, regulation, order, legal requirement or principle and the other dispositions of the present agreement shall remain in force” [translation].

[41] Section 4 contains a precise list of reasons (“motifs”) for which immediate termination of the employment relationship without notice is authorized. Among the reasons listed was “continuing incapacity considered permanent”. That particular reason for immediate termination is invalid. The excision of the offending reason from the list does no violence to the integrity of the remainder of s. 4 which contains a list of other unrelated grounds for termination. It is significant that s 12(2) does not direct the court to do anything as clumsy as deleting the entire section or clause of the employment agreement. Rather, it directs that the “modality” be modified or nullified to the extent necessary.

[42] I conclude that section 12(2) directs that section 4 must be modified to remove the reference to permanent disability from the list of reasons (“motifs”) in s. 4. Removing that reason alone is the minimum extent necessary to give effect to s. 5(1) of the ESA and can be simply and logically done while introducing neither ambiguity nor uncertainty in the remainder of the clause as so modified. That is precisely what s. 12(2) directs be done in plain and simple language. There is no reason to disregard the express direction of the parties as contained in s. 12(2).

As read this judgement, as long as an employment contract contained this savings clause, the remaining parts of the contract could violate as many statutory provisions as they want because the Court would simply rewrite the contract so as to bring it into compliance with the offended statute.

Imagine  a contract that had the above mentioned savings clause but also contained the following provisions :

1. This is a “at will ” contract and therefore the Employer can terminate this contract without any notice or pay in lieu of notice.

2. Overtime will be paid only after 75 hours per week.

3. No parental leave is allowed.

4. The Employer has the right at any time to require you to undergo a lie detector test .

5. If you become disabled for more than 5 days, you agree to immediately resign your employment.

Applying the reasoning of this case, the employment contract would be completely rewritten by the Court as follows:

1. Your only entitlement upon termination is as set out in the ESA. You are not entitled to reasonable notice.

2. Overtime will be paid after 44 hours.

3. Parental leave under the ESA is permitted.

4. The Employer cannot ask you to take a lie detector test.

5. If you are disabled for 5 days, we will not demand that you resign.

Needless to say that would be absurd, but apparently quite lawful, according to the logic of this case.

This decision fails to take into account the realities of the workplace. It assumes that employees are so highly educated in employment law  that they would know exactly which provisions of the contract breach the Employment Standards Act, 2000 ( and its many regs) the Labour Relations Act, the Occupational Health and Safety Act, the Workplace Safety and Insurance Act, the Human Rights Code, the Pay Equity Act, the Accessibility for Ontarians  with Disabilities Act, 2005. Moreover the employee would have to have a good understanding of Canadian constitutional law as well because he or she would first have to determine if their potential employer was covered by provincial or federal employment law . If covered by federal law, the above list of provincial statutes would be largely substituted by their federal counterparts.

Dunphy J addressed the point of the sophistication of the plaintiff in the following paragraph:

[47] Once again, the plaintiff cites Machtinger (supra) in support of this argument. The plaintiff contends that only the clearest of waivers of the reasonable notice standard will suffice since absent such a bright line, employers may be tempted to attempt to cheat employees of their minimum ESA entitlements. Indeed, In Machtinger (supra), Iacobucci J. noted that many employees might not be aware that there is such a thing as minimum required notice and employment contracts may often involve a disparity in bargaining power. Such considerations are not in fact present here. The plaintiff is a well-educated individual. Far from reflecting a disparity of bargaining power, the employment agreement in this case represented a significant opportunity for the plaintiff to earn additional income based on a higher guaranteed base salary and a higher commission rate.

This was a motion for summary judgement. There is no mention at all in the judgement as to what education the plaintiff had . All we know is that he was a 68 year old Project Manager for a company that produced a ” glossy magazine ” ( para 8 of the judgement) .

Let us  assume that he finished high school , maybe even had a college degree in something. How does that make him so well educated that he is deemed to have knowledge of the entire ambit of Canadian employment law so that he would be able to ascertain which parts of his contract are valid, which are void and for those void provisions, what exactly are the new substituted provisions?

Employers write contracts because they don’t like the implied term of reasonable notice. I get it. Why however, should Courts allow employers to use convoluted language like in this case to spell out what they will pay upon termination? Why not simply require employers who want to limit their termination obligations to spell it out in clear terms without reference to complicated statutes that many lawyers do not fully understand ?

The Supreme Court of  Canada has now brought to the common law of  contracts, including employment contracts, the doctrine of honest dealing. Surely an important component of that duty is to draft termination provisions that are easy to read and comprehend for the average employee.

Employment contracts are not like agreements between large entities, each with a battery of lawyers to draft and review their agreements . They are much more like consumer contracts where fairness and clarity rule the day.

I am advised that this case is under appeal. I am hopeful that the Ontario Court of Appeal uses this case to give some enlightenment to this contentious and  difficult area of employment law.


Economic Conditions of Employer is Irrelevant When Determining Reasonable Notice

In Michela v St Thomas Villanova Catholic School       ( 2015 ONCA 801) the Ontario Court of Appeal held that “An employer’s financial circumstances may well be the reason for terminating a contract of employment – the event that gives rise to the employee’s right to reasonable notice. But an employer’s financial circumstances are not relevant to the determination of reasonable notice in a particular case: they justify neither a reduction in the notice period in bad times nor an increase when times are good.”

This case decisively ends the debate over the last 20 years as to the proper meaning to be drawn from a previous  case entitled Bohemier v Storwal International ( 1982 ) 40 O.R. (2d) 264 ( H.C.) . Here is what the Court said about that issue.

“[18] The confusion in this area stems from Bohemier v. Storwal International Inc. (1982), 40 O.R. (2d) 264 (H.C.), cited by the motion judge, at para. 91, to support the proposition that “[u]ncertainty, especially where an employee knows that there are financial concerns, can be a factor in reducing the length of notice that might otherwise be reasonable…” The motion judge quoted the following passage found at p. 268 of Bohemier:

An employee may be dismissed either on reasonable notice or by payment in lieu of notice. The latter alternative is almost invariably selected because, for obvious reasons, it is not helpful to a business to continue to employ a person who has received notice of dismissal. Payment in lieu of notice involves a cost to the employer for which there is no corresponding production or benefit. In my view, there is a need to preserve the ability of an employer to function in an unfavourable economic climate. He must, if he finds it necessary, be able to reduce his work force at a reasonable cost.

[19] However, the key sentence in Bohemier – not quoted by the motion judge – follows on from the passage quoted above, at p. 268:

It seems to me that when employment is unavailable due to general economic conditions, there has to be some limit on the period of notice to be given to discharged employees even if they are unable to secure similar employment within the notice period. [Emphasis added.]

[20] Bohemier does not hold, and this court has never held, that an employer’s financial difficulties justify a reduction in the notice period. It does no more than to hold that difficulty in securing replacement employment should not have the effect of increasing the notice period unreasonably. That is what this court should be taken to have meant when, in its brief endorsement in Bohemier, it said that the lower court judge was right to “tak[e] into account economic factors when considering the case for each of the parties”: (1983), 44 O.R. (2d) 361, at p. 362, leave to appeal to SCC refused, [1984] S.C.C.A. No. 343.

[21] Nevertheless, it is clear that Bohemier has caused some confusion in wrongful dismissal litigation. Most recently, it was relied on in Gristey v. Emke Schaab Climatecare Inc., 2014 ONSC 1798, 2014 C.L.L.C. 210-028, in reducing an employee’s notice period by one-third as a result of the relatively poor state of the market and the financial health of the employer.

[22] It is important to emphasize, then, that an employer’s poor economic circumstances do not justify a reduction of the notice period to which an employee is otherwise entitled having regard to the Bardal factors. See Anderson v. Haakon Industries (Canada) Ltd. (1987), 48 D.L.R. (4th) 235 (B.C.C.A.), at pp. 238-41 (Lambert J.A.), pp. 243-44 (Wallace J.A.); Farquhar v. Butler Bros. Supplies Ltd. (1988), 23 B.C.L.R. (2d) 89 (C.A.), at pp. 92-93; and Sifton v. Wheaton Pontiac Buick GMC (Nanaimo) Ltd., 2010 BCCA 541, 12 B.C.L.R. (5th) 90, at paras. 34-35, 47-50.”

Practitioners of employment law will be pleased that an otherwise uncertain area of the law( determining reasonable notice )  is now a little more certain.