By: Stephanie McDonald and Baljinder (Bal) Singh Tiwana
Employees in Ontario are sometimes surprised to learn that even after a short period of employment, they may still be entitled to substantial severance—particularly if they held a high-paying and/or specialized role.
At common law, employees terminated without cause are entitled to “reasonable notice” or pay in lieu of notice. Courts do not apply a strict formula when calculating this notice period. Instead, they assess each case individually considering what are known as the Bardal factors. The objective is to provide employees with sufficient time and compensation to secure comparable employment.
Common Law vs. ESA Minimums
It is important to distinguish between common law entitlements and the minimum standards set out in the Employment Standards Act, 2000 (ESA).
The ESA establishes minimum entitlements only—it does not cap what an employee may recover. In many cases, common law reasonable notice significantly exceeds ESA minimum entitlements.
Termination Clause
While a properly drafted termination clause can limit an employee’s entitlement to ESA minimums, such clauses frequently fail to withstand judicial scrutiny. Ontario courts apply a stringent standard. Employers often draft termination clauses with insufficient legal precision and some often fail to comply with the ESA, rendering the termination clause invalid and unenforceable. 95% of the termination clauses we review at Workplace Sage Legal are unenforceable.
The Bardal Factors
Ontario courts determine reasonable notice by considering the following core factors:
- Age of the employee at dismissal
- Length of service
- Character of employment (including seniority and specialization)
- Availability of similar employment
These factors are not an exhaustive list. Courts use these factors to assist in calculating the appropriate period of reasonable notice. Courts consider additional circumstances depending on the case.
The Role of Income
While income is not a standalone Bardal factor, it plays an important role. Higher compensation often reflects greater seniority, responsibility, and/or specialization. These characteristics can make it more difficult to find comparable employment, which in turn may justify a longer notice period.
As a result, even employees with short service may receive a significant severance, if they held a high-level or niche position, along with a high salary.
Short Service and “Stigma”
Courts also recognize that employees dismissed (without cause) after a short stint may face added challenges in the job market. A brief period of employment can raise concerns for prospective employers, potentially creating a form of “stigma.”
This can further limit re-employment prospects and may justify a longer reasonable notice period in appropriate cases.
Conclusion
If you have been dismissed without cause—especially after a short period of employment—it is essential to understand your rights before accepting any severance offer. You may be entitled to significantly more compensation under common law, than what is initially offered.
Before signing anything, consider seeking legal advice to fully assess your entitlements and negotiate an appropriate severance package. Workplace Sage Legal can help guide you.
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Learn more about employment law through the articles below:
- Who is entitled to Reasonable Notice, and how is it calculated?
- How to Read a Severance Package Like a Lawyer
- Understanding Termination ClausesUnderstanding Termination Clauses
- Ontario Severance Packages: Why You Should Almost Never Accept the First Offer
DISCLAIMER: This article/blog is provided for educational/informational purposes only. This blog does not constitute legal advice. Do not rely on any advice before speaking with a lawyer. This blog does not form a solicitor-client relationship.
