Can Notice Period Change?
Upon termination of employment, employers have duty to provide the employee with 'notice of pay' depending on the employee's unique circumstances. If an employer dismisses the employee in bad faith and does not provide pay in lieu of notice, the court has decided in Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC) that the manner of dismissal can be a factor to increase the notice period that the employee is entitled to as stated in paragraph 116:
Reasonable Notice Period Can Change Upon Bad Faith Dismissal
Summary of Facts
Wallace was 59 years old and he was the top salesman of the company and worked for the employer for 14 years. Prior to employment, Wallace received assurances regarding job security, fair treatment and remuneration from the company’s marketing manager, L. He expected to work at the company until he retired. Wallace was discharged from his position without any prior notice or explanation from the company in question. The company made false allegations against Wallace and deeming his terminations as for just cause. Wallace later issued a statement of claim alleging wrongful dismissal and sought damages in lieu of notice and for damages for mental distress. His attempts to find employment after the dismissal were largely unsuccessful, and he experienced emotional difficulties and was forced to seek psychiatric help.
Mainly bad faith dismissal conduct as well as the following five issues, as stated in :
a. Was there a fixed-term conflict?
b. Did the Court of Appeal err in overturning the trial judge’s award for aggravated damages resulting from mental distress?
c. Can the appellant sue in either contract or tort for “bad faith discharge”?
d. Is the appellant entitled to punitive damages?
e. Did the Court of Appeal err in reducing the appellant’s reasonable notice damages from 24 to 15 months?
Decision for Award
The Supreme Court of Canada awarded Wallace damages for wrongful dismissal based on a 24-month notice period and in addition, $15,000 in aggravated damages to recuperate the financial strain the psychiatric treatments had on his economic status but the Court of Appeal reversed the trial judge’s findings.
In order to obtain for damages for mental distress, the employer must have committed an “independently actionable wrong.” In Wallace’s case, the employer’s wrong was in the failure to provide Wallace with appropriate notice of termination. However, this case was focused more in “the manner in which the dismissal was conducted” rather than just the Bardal factors.
The court found that the employer was guilty of bad faith and made allegations that knew were to be false. This factor was used to increase the required notice period, and the court indicated that employers should conduct themselves in a candid, reasonable, honest and forthright manner and should not be untruthful, misleading or insensitive.
This case is an example of an employee’s intangible injuries that resulted from the employer’s poor conduct and so as a result was justified by extending the notice period.
The dealings by the employer, “manner of dismissal” is now a factor that the court will consider increasing the notice period. Factors such as a promise of job security could result in the increase of the notice period upon termination.
Employers that allege ‘just cause’ terminations should be careful. Facts to support the just cause allegations will be difficult or near impossible to prove at trial. When attempting to terminate an employee, seek professional help to reduce costly mistakes.
Wallace factor is now commonly used when calculating extended notice periods in bad faith dismissals.
If you find yourself going through a termination, please be aware that your employer is required to provide you with reasonable notice upon termination, or give proper compensation in substitution for such notice. Ultimately, right to termination must be exercised in good faith; bad faith conduct from the employer can be deemed unethical and must be compensated. This requirement is articulated with clarity in p. 858 of the case of Farber v. Royal Trust Co., 1997 CanLII 387 (SCC),  1 S.C.R. 846 that:
In the context of an indeterminate employment contract, one party can resiliate the contract unilaterally. The resiliation is considered a dismissal if it originates with the employer and a resignation if it originates with the employee. If an employer dismisses an employee without cause, the employer must give the employee reasonable notice that the contract is about to be terminated or compensation in lieu thereof.
Your compensation or notice period can vary by different factors such as age, position, and length of employment to name a few. Never sign anything without consulting professional advice, know our rights, and keep reading my scenarios.