Is common law reasonable notice equal to one month per year of service?

Is common law reasonable notice equal to one month per year of service?

We are frequently asked by employees about how much pay in lieu of notice they are entitled to. While employees’ statutory notice entitlements are clearly established by the Employment Standards Code, common law notice is a matter of judicial discretion meaning there is no right or wrong answer to that question. While some lawyers will tell you that an employee is generally entitled to one month of pay per year of service, court infrequently apply this rule. The recent case of Cordeau-Chatelain v. Total E&P Canada Ltd., 2021 ABQB 794 is instructive.

The plaintiff, a communications manager, sought damages for her termination without cause. She was hired in 2008 with salary, benefits and short term and long term incentives. There was no contractual notice period limitation in the plaintiff’s employment agreement, so common law reasonable notice applied. The Court used the Bardal factors and found that given the employee had worked for 8 years and 7 months, was 52 years old, was “Head of Governance and Metier [Profession] Support” and oversaw 3 people and a student, 18 months was a reasonable notice period. The plaintiff had 20 years of experience in communications and spoke both French and English with proficiency. Her position was specialized and unique. It was a well-compensated, senior-level position with a major oil and gas company and the Court concluded that this sort of position was rare in the job market. The defendant argued 8-12 months of notice was appropriate, the plaintiff argued 15-18 months and the Court found that the higher notice period of 18 months was to be awarded.

In what has been an increasing trend in the jurisprudence, the Court took judicial notice of the “…compounding negative effects that gender and age can have on a woman in the professional job market, especially at the management level…” The awarding of an 18 month notice period for an 8.7 year employee is a significant award based on current Alberta jurisprudence. Such higher awards are typically reserved for long term, senior employees. In this respect, this case offers a useful precedent going forward.

Some other interesting issues addressed by this case include quantifying the loss of benefits, entitlements to variable compensation during the notice period, and mitigation expenses.

In addition to her salary, the plaintiff was entitled to damages for the benefits she would have received during her notice period. The defendant argued that the plaintiff could have purchased a private benefit plan after termination and therefore the plaintiff suffered no damages. The Court stated that this is not an accurate statement of the law in Alberta. The plaintiff was awarded the cost to the employer of providing benefits. This amounted to taking the total cost to the employer for the provision of benefits of $12,124.00 multiplied by 1.5 to represent the cost through the 18-month period.

In terms of short term and long term incentives through the notice period, it was conceded by the defendant based on the recent Supreme Court case of Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26, that the plaintiff was entitled to what accrued for incentives during her notice period. The Court used a past performance based approach to calculate the short term incentive payment and utilized her three most recent short term incentive payments to find the proper damage amount under this head.
Finally, in terms of mitigation, the plaintiff claimed mitigation expenses of $20,157.12 for tuition from a graduate certificate in leadership and executive coaching she undertook after being dismissed. The defendant argued that employers are allowed to terminate employees and so such an expense is not compensable. The Court disagreed and found that the plaintiff had to incur retraining expenses because she was wrongfully terminated. In this case, the tuition costs were found to be reasonable and awarded to her. This is a significant award for retraining given it constituted an entirely new and expensive course. It is also interesting to note that while the plaintiff was offered the use of an outplacement career counselling service by the employer upon her termination, she did not use such services. Nonetheless, the Court found that her failure to use this service was not unreasonable. The plaintiff looked for re-employment for three years and was only able to find new employment after re-training. The Court concluded her mitigation efforts were reasonable.

In the final result, the plaintiff was awarded her base salary, benefits, short and long term incentive payments, tuition re-training expense, lost pension benefits, and 18 months compensation for lost health and wellness spending accounts.

This case represents a good canvassing of many employment law concepts applicable in Alberta and provides an overview of all that can be awarded to an employee upon being wrongfully dismissed.

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