No “Rule of Thumb” For Establishing Notice Periods For Fired Employees

Many non-lawyers (and many non-employment lawyers) will make reference to a “rule of thumb” that provides that a terminated employee is entitled to one month per year of service.

However, in two recent decisions, the British Columbia Courts have re-affirmed that there is no “formula” or rule of thumb that can be applied in determining how much notice an employee may be entitled to on the termination of their employment.

In Kerfoot v. Weyerhaeuser (2013 BCSC 640), two employees of Weyerhaeuser complained that they had not been provided adequate notice when their employment with Weyerhaeuser was terminated on the sale of Weyerhaeuser’s pulp mill in Kamloops. The employees were long time non-union Weyerhaeuser employees who had been employed by the company for 15.75 months and 18.4 months respectively. At trial, the trial judge set the period of reasonable notice by applying a formula of one month for each year’s service. On that basis, the two plaintiffs were entitled to 15.75 months and 18.4 months notice.

Weyerhaeuser appealed this decision and was successful (Kerfoot and Harshenin v. Weyerhaeuser (2013 BCCA 330). The British Columbia Court of Appeal held that Weyerhaeuser was correct to complain of the formulaic approach adopted by the judge. The Court of Appeal re-affirmed that the correct approach is to consider what is objectively reasonable in the variable circumstances of each case, but that the most important factors are the responsibility of the employment function, age, length of service and the availability of equivalent alternative employment, but not necessarily in that order.

In the case of the two Weyerhaeuser employees, one of them was an Operations Superintendent and the other was an Electrical Project Engineer. The Operations Superintendent earned 20% more than the Engineer. They were employed for 15 years 9 months, and 18 years 5 months respectively. They were close in age, 43 years old and 45 years old respectively. The Court found that the Operations Superintendent held the more responsible position. Both men had degrees in applied sciences.

The Court of Appeal, considering all of these factors, set the notice period at 15 months for both men, noting that the difference in responsibilities of the Operations Superintendent was roughly balanced by the years of service of the Engineer. 

This process of considering various relevant factors in setting a notice period is also clearly demonstrated in the British Columbia Supreme Court decision of Ellerbeck vs. KVI Reconnect Ventures Inc et al. (2013 BCSC 1253).

Ms. Ellerbeck was a certified management accountant who was employed as the defendants’ corporate controller for about three and one-half years. She was 56 when she was hired, and was one day short of 60 when her employment was terminated. She was the senior financial officer for the defendants and supervised three employees in the finance department. At the time her employment was terminated, Ms. Ellerbeck’s salary was nearly $110,000 per annum, and she was entitled to various benefits and an annual bonus.

The employer argued that Ms. Ellerbeck should be entitled to only 10 weeks of severance, and alternatively relied on the general “rule of thumb” of one month notice per year of employment, in which case the  notice period would be 3 and one-half months.

The Court considered Ms. Ellerbecks’s age, her senior level management position, and the fact that Ms. Ellerbeck remained unemployed (despite her reasonable efforts to find work) at the time of the trial, which was some 16 months after her employment was terminated. Rejecting the “rule of thumb” approach, and notwithstanding Ms. Ellerbeck’s relatively short length of service, the Court took into account all of the relevant factors, and found the period of reasonable notice of payment or payment in lieu of such notice was ten months.

Both of these cases highlight the fact that however simple or attractive it may appear to apply a formula in assessing notice periods for terminated employees, the law is, not surprisingly, more complicated than that.

Joni’s practice encompasses a range of civil litigation areas. She has extensive experience in wills, estate and trust litigation, labour and employment issues, and disputes related to real property. Joni can be contacted at 250-869-1200 or [email protected]

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