27 Months of Reasonable Notice After 40 Years of Service

In Markoulakis v SNC-Lavalin Inc., the Ontario Superior Court of Justice concluded after considering the Bardal factors that long-serving employee Eftihios (Ed) Markoulakis was entitled to 27 months of common law reasonable notice following his termination from a senior role at SNC-Lavalin. The court noted that notice beyond 24 months is within the court’s discretion in exceptional cases. Clearly, this was one of those cases.

Facts of the case

Markoulakis requested a summary judgment of his claim for wrongful dismissal.

He had been employed for 40.66 years by SNC-Lavalin at the time of his termination, which was the result of a shortage of work. At the time of termination, he was earning $129,272 annually as a Senior Civil Engineer and was 65 years old.

In lieu of reasonable notice, Markoulakis was paid an amount approximately equivalent to 34 weeks (eight months) compensation up to the time of the hearing of his motion.

Markoulakis argued that he should have been paid 30 months’ compensation, due to the challenges he faced finding another comparable senior-level professional position: his work experience was only with this one company; his age was 65 and employers would infer that he was going to retire shortly; the job market for senior engineers at his level in this industry was not plentiful; there were few available opportunities with a similar level of status, responsibility and compensation; and the company never offered any outplacement or career counselling.

On the other hand, SNC-Lavalin claimed that 34 weeks of compensation was within the “reasonable range” of payment in lieu of reasonable notice of termination of employment.

Although SNC-Lavalin agreed that a summary judgment motion was appropriate to resolve the determination of the period of reasonable notice, it submitted that the motion should not have been brought until the end of the notice period being claimed by Markoulakis (i.e., 30 months). The employer therefore argued that the motion should be adjourned until the end of the notice period to avoid an unfair resolution of the dispute.

This “unfairness” arises because Markoulakis has an obligation to make all reasonable attempts to mitigate his damages. Should he be successful, SNC-Lavalin’s liability for the award of pay in lieu of notice at common law would be reduced.

The court noted that even though 34 weeks had passed before the motion, it was still possible to award damages for significant notice and use the trust approach. This principle requires an employer to trust that the employee will mitigate damages during the notice period. Markoulakis would simply account for any mitigation earnings should he find any other employment during the notice period. It was important to note that SNC-Lavalin initially agreed with using this approach.

The court examined similar cases with extraordinary long-service employment records and examined the Bardal factors (the character of employment; the length of service; the age of the employee; the availability of similar employment having regard to the experience, training and qualifications of the employee; and any other relevant circumstances). The court commented that notice beyond 24 months was within the court’s discretion in exceptional cases.

Ultimately, based on the trust approach, and given Markoulakis’s circumstances, the court concluded that 27 months was the appropriate amount of notice.

What can we learn from this case?

As can be seen from this case, there are times when an extraordinary notice period must be awarded and that the Bardal factors are still relevant guidelines when determining reasonable notice periods.

It was interesting to see the various approaches courts take regarding common law notice periods and potential mitigation issues. The court examined the various options that could be used in this case:

  • Trust approach: a plaintiff must account for any mitigation earnings and a procedure is designed for potential for a return to court in the event of disputes
  • Partial summary judgment approach: the parties return at the end of the notice period to determine the adequacy and success of a plaintiff’s mitigation efforts
  • Contingency approach: a plaintiff’s damages are reduced by a contingency for re-employment (evidence must be put forth regarding the appropriate contingency rate)

The trust approach was the best one to use under the circumstances. This is typically what happens, especially in good faith situations where an employer can trust that a terminated employee would be truthful regarding mitigation.

Conclusion

A 40-year employee is an increasingly rare sight. In today’s economy, when such people find themselves out of work, they are often in a tough position: their skills may be too specialized, employers might see them as too old or too close to retirement, there may simply be too few jobs in the market that match their experience.

Employers must be sensitive to these factors when deciding whether to terminate older employees and when determining reasonable notice periods. One important lesson for employers is that offering job counselling or outplacement services may help a terminated employee find alternate work and therefore reduce the notice period.

Comments

  1. Interesting decision, especially re trust and mitigation. Omar Ha-Redeye discussed Bardal here recently as well. Clearly it’s still a live legal principle.

  2. Very good analysis. As always. But there is a lingering doubt as to the expression used of “extraordinary notice period”. I would question whether it is extraordinary given the time worked as opposed to the employer’s keeness in using age as a factor ? Seems the employee was not terminated for cause. And for the last 10 years or so the newspapers, blogs, and financial consultants are warning the current employees that the idea of retiring in their 60s is and will be wishful thinking. So I question the “extraordinary”. As well it is a bit of stretch for employers to line up their ducks to prove incapacity or incompetence when an employee works longer than the employer wants them on the premises. May not be fair or something we want to face but there could be a tsunami of wrongful dismissals — just like this one. Certainly to be welcomed as there is a new market niche for the swiftfooted counsellor. Just saying.

  3. It’s very live, but also very rare to see periods beyond 24 months, so this case certainly is notable. The pertinent facts here are listed at para 30 of the decision, and were included above in the summary:

    (a) the Plaintiff’s work experience is only with the Defendant;
    (b) as a result of his age, employers will infer that he will retire shortly;
    (c) the job market for senior engineers at the Plaintiff’s level in this industry are rare;
    (d) there are few available opportunities with a similar level of status, responsibility and compensation; and,
    (e) the Defendant did not offer outplacement or career counselling.

    The summary judgment application here is also notable here, i.e. prior to the expiration of the claimed period.

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