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Can long term employees get more than 24 months of notice period when terminated from their job?

Reasonable notice of termination is determined differently depending on the facts of each case, but there is no upper limit or 'cap' on reasonable notice. Generally, only exceptional circumstances will support a notice period in excess of 24 months. An increase in reasonable notice awarded by the courts was known as the "Wallace bump" from the case of Wallace v United Grain Growers Ltd. but the law has significantly evolved ever since the Supreme Court decision, Keays v Honda in 2008.

In Keays, the court was convinced Mr. Keays had been badly treated by his employer, Honda. The court awarded Wallace damages extending the notice period from 15 months to 24 months because of the manner of dismissal. In addition, the court awarded $500,000 as punitive damages, a costs premium, and costs. On appeal, the Ontario Court of

Appeal reduced the costs premium and the punitive damages award to $100,000.

When the case reached The Supreme Court of Canada, they quashed the Wallace notice extension, the punitive damages award and the costs premium. The Court also redefined some aspects of the law relating to damages in the context of employment. They found that extending the notice period (i.e. awarding Wallace damages) was not an suitable way to compensate an employee due to the manner of dismissal. There is a common law right to terminate an employment contract by giving reasonable notice, and normal distress and hurt feelings resulting from such termination should not be compensated. Additionally, the Supreme Court found that in order for an employee to recover damages, the damage must have been in the reasonable contemplation of both parties. This means that an employee is only entitled to damages resulting from the conduct of dismissal if the employer engaged in conduct during the dismissal process that is "...unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive." Regarding an extension of the notice period, The Supreme Court stated that damages relating to the manner of dismissal should be established by the court compensating for the 'actual damages' sustained, and not by an arbitrary extension of the notice period.

However, despite this Supreme Court decision, some employees have been suing successfully for an extension of the notice period as 'Wallace damages' even after the decision from Keays. This was seen in the Ontario Court of Appeal case of Slepenkova v Ivanov when the Court of Appeal did not overturn a trial decision to award Wallace damages despite the Keays decision.

Additionally, in the case of Peoples v Ontario (Ministry of Training, Colleges & Universities), an employee was terminated without cause after 28 years of employment with the Ontario Government. The termination was preceded by critical comments of the employee's management style and was followed by a reassignment of her role consistent with a demotion. The employee grieved the reassignment under the Public Service Act and the Ministry commissioned an investigation. However, without waiting for the report or the outcome of the grievance, her employer terminated her employment. The Ministry offered a notice period equivalent to 18 months of salary, and the employee brought an action to the Ontario Superior Court of Justice. The Court ordered the Ontario Government to provide 24 months of notice period and an additional 4 months' pay in damages. The reason for the Wallace damages awarded was because the Government terminated the employee's contract without reviewing her performance deficiencies with her, did not grant her the option to improve in her job, and did not follow a progressive discipline approach. As well, the Government did not provide an opportunity for the employee to respond to the investigation findings, did not wait for the outcome of the grievance prior to her termination, and did not offer to her other possible employment options within the provincial government.

Despite the Peoples case, it is important to note that any award of over 24 months of notice period is considered exceptional and any success at trial may be appealed. There have also been cases where no 'Wallace damages' were awarded post Keays in the form of an extension of notice period, therefore, there does not seem to be much consistency in this area of law.

To reach the author of this blog, Jean-Francois Lalonde, email jflalonde@viceandhunter.ca or call 613.232.5773 x 246.

Jean-Francois Lalonde is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Vice & Hunter LLP. He has extensive experience practicing in the areas of employment law and is a part-time professor at La Cité Collégiale teaching Employment Law for Paralegals.

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