There is a common misconception that courts use a 'rule of thumb' approach to determine how much notice (or severance) employees should receive upon dismissal. It is often said that employees are entitled to one month of notice for every year of service based on this rule of thumb.
Is there a rule of thumb for employee severance?
The rule of thumb approach is wrong. Courts have repeatedly confirmed that there is no such thing as a rule of thumb that can be used to assess the proper amount of notice (or pay in lieu of notice) that an employer must give to an employee. Nor is there any rule that says employees simply receive one month of notice for every year of service. The actual amount of notice that an employee is entitled to can be higher or lower, depending on the circumstances.
In Capital Pontiac Buick Cadillac GMC Ltd v Coppola, 2013 SKCA 80, the Saskatchewan Court of Appeal dispelled the notion of a rule of thumb, stating that "the rule of thumb approach is neither doctrinally sound nor supported by the majority of cases." Likewise, in Mackie v. West Coast Engineering Group Ltd., 2009 BCSC 177, Madam Justice Loo of the BC Supreme Court rejected the rule of thumb approach:
A rough rule of thumb for determining the period of notice is inconsistent with Bardal, which says that there is “no catalogue laid down” for determining reasonable notice in “particular classes of cases”, including in this case the notice period for a middle management employee or production manager.
In Kerfoot v. Weyerhaeuser Company Limited, 2013 BCCA 33, the BC Court of Appeal did not specifically address the rule of thumb approach. However, the Court disapproved of any approach which calculates a notice period by simply looking at the employee's length of service:
In my respectful view, the application of an arithmetic formula which by its definition only addresses length of service, as occurred here, falls short of that standard, and I consider demonstrates an error in principle. In particular, the judge took no account of the factors of responsibility of the employment function and the age of the employee, both of which serve to put the other factors considered in their full context.
Rather, in determining a reasonable notice period, the proper approach is - and for many years has been - to take into consideration factors including the character of the employment, the length of service, the age of the employee, and the availability of similar employment (commonly referred to as the "Bardal factors").
As explained in Kerfoot, a rule of thumb approach based on the employee's length of service is wrong because it only takes into account one of the Bardal factors. Length of service is relevant when determining a proper notice period, but it is only one of a number of factors that must be considered.
About the Author
Brendan Harvey advises and represents employees and small businesses at all stages before, during, and after the employment relationship. His primary areas of practice include wrongful dismissal, employment standards, and human rights litigation. If you would like to schedule a meeting with Brendan Harvey or any other of our lawyers, give us a call at 604-988-1000.
