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Ontario Court of Appeal revitalizes Bardal factors – length of service not the only consideration in determining notice period

In determining the appropriate notice period in wrongful dismissal cases, the courts apply the seminal decision from Bardal v. The Globe and Mail Ltd. (1960) (“Bardal”).  Readers of Focus are no doubt familiar with the following passage from Bardal that has guided the determination of the appropriate notice period for the past 50 years:

There can be no catalogue laid down as to what is reasonable notice in particular classes of cases.  The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.

This passage from the Bardal judgment makes it clear that the appropriate notice period in wrongful dismissal cases is determined on a case-by-case basis, with all of the above factors to be considered.

However when one looks at the actual application of the so-called “Bardal factors” by trial judges over the years, it becomes clear that the judges give considerable weight to the employee’s length of service – but little or no effect to the other factors – in determining the appropriate notice period.

Now a recent Ontario Court of Appeal decision instructs courts to consider all of the Bardal factors, rather than just focus on an employee’s length of service.

In Love v. Acuity Investment Management Inc. (February 2011),  the Court of Appeal rejected a trial decision that set the notice period for a wrongful dismissal at five months due to the employee’s relatively short employment of two and a half years.  The Court of Appeal substituted a nine-month notice period.

Mr. Love, a chartered accountant, started working with Acuity in October 2002.  He was one of two senior vice-presidents in the 90-employee company. He was responsible for managing the company’s institutional investment clients.  In addition to his senior position, he also owned two percent of the company.  On May 3, 2005, after two and a half years’ service, he was dismissed without cause, and without notice.  He was age 50. His total annual compensation package, which included salary, commissions, profit distribution, and the value of his shares, was about $633,548.

Having been dismissed without cause and without notice, Mr. Love sued Acuity for wrongful dismissal. The trial judge noted that Mr. Love was a “short-service employee” when he was dismissed. The trial judge then cited the decision in Iliescu v. Voicegenie Technologies Inc. (2009) (“Iliescu”), in which the appropriate notice period for a “short-service employee” was set at four months.  The trial judge went on to note that Mr. Love did not supervise other employees, and had not been lured away from a previous job by Acuity.  Based on these factors, the judge set the notice period at five months.  Mr. Love appealed to the Ontario Court of Appeal.

THE COURT OF APPEAL

The Court of Appeal noted that it could only substitute its own decision for that of the trial judge if the trial judge made a mistake in principle and, even then, should exercise its power “sparingly if the trial judge’s award is in an acceptable range.” In the Court of Appeal’s view, the trial judge’s decision was not within an acceptable range.  The Court of Appeal decided that the trial judge made three mistakes.

First the trial judge put too much emphasis on the employee’s short service.  The Court of Appeal warned that comparing the length of service in one case to the length of service in another case must be done with care.  Although the factor of length of service is susceptible to being compared with “mathematical precision”, the other Bardal factors do not lend themselves to such precise comparisons. Consequently there is a risk that otherwise dissimilar cases will be deemed to have the same notice periods only because the employees’ lengths of service are similar.  The risk, the Court of Appeal emphasized, is that the length of service factor will take on “disproportionate weight”. The Court of Appeal said that the situation of the employee in the Iliescu case, which was relied on by the trial judge, was different from Mr. Love’s situation. The Court of Appeal noted that unlike Mr. Love, the employee in Iliescu was neither a senior executive nor a part-owner of the business.  Mr. Love’s compensation package was also much larger. The Court of Appeal stated that the award of four-months’ notice in Iliescu was “of little help in deciding what was appropriate for the appellant.”

The trial judge’s second error was underemphasizing the character of Mr. Love’s employment.  The trial judge stressed that although the appellant was a senior vice-president with a senior-level sales position, he did not supervise other employees.  The Court of Appeal viewed Mr. Love’s position differently.  He was one of only two vice-presidents in the company. He reported directly to the CEO.  He was responsible for the investments of institutional clients (an important aspect of the business).  He was one of only nine owners of the company.  The Court of Appeal found that Mr. Love was “clearly a high-level employee.” This suggested a longer notice period would be appropriate.

The third error the trial judge made was failing to consider the Bardal factor relating to the availability of similar employment. Mr. Love’s substantial annual compensation, and share of the company, were important aspects of his position yet it would be more difficult to find a job to replace this remuneration. Again this pointed to a longer notice period.

The Court of Appeal concluded:

In my view, the character of the appellant’s employment, viewed fully, and the challenge of finding similar employment both require a significantly longer period of notice.  Giving appropriate weight to these factors, and keeping in mind the appellant’s age and short service I would set aside the five months awarded at trial and substitute a period of nine months.

In Our View

The revitalizing of the other Bardal factors will benefit employees who are wrongfully dismissed, particularly those with shorter service.  Employers dismissing an employee without cause will now be faced with more uncertainty when calculating pay in lieu of reasonable notice.  Although it is clear how each of the Bardal factors operate to lengthen or shorten the notice period, it will now be more difficult for employers to determine the dollar value of that change.  As well, the Court’s renewed emphasis on factors in addition to an employee’s length of service may lead to more subjectivity in judges’ decisions. This may give rise to increased discrepancies in the case law and additional uncertainty.  It is therefore difficult to deny the attractiveness of using the length of service as the overriding factor in determining the appropriate notice period.  As the Court of Appeal stated, an employee’s length of service lends itself to easy comparisons and even a level of “mathematical precision”.

Acuity Investment is seeking leave to appeal to the Supreme Court of Canada. We will keep readers informed of any developments.

For further information, please contact Colleen Dunlop at (613) 940-2734.