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Reasonable notice and financial hardship of employer

November 27, 2002
by Israel Foulon LLP

Question: Due to a persistent slump in the market we must close one of our satellite offices. Can we reduce the amount of notice each employee is entitled to since the reason for termination is an economic downturn?

Answer: Generally speaking, a reduction in the workforce due to economic conditions will not result in a shorter reasonable notice period.

Most courts have determined the appropriate amount of notice in accordance with the philosophy that the notice period provides financial support to the employee during the time it takes to find replacement employment. From this perspective, an employer’s financial difficulties resulting from depressed market conditions may actually increase the notice period rather than reduce it, as such downward economic forces will make the process of obtaining new employment longer and more difficult for the employee.

On the other hand, some courts have held that the effects of tough economic times on employers should be taken into account when determining appropriate notice since it is unfair for employers to shoulder the full brunt of such hardship.

But this doctrine has been strictly applied with the employer bearing the burden of proof. Courts will make extensive and probing inquiries into the veracity of such claims by employers before finding that a reduction of the notice period is justified. Ultimately courts have stated that notice must be reasonable to both parties and, therefore, an economic downturn will rarely serve to reduce an appropriate notice period.

Peter Israel is the senior partner in the Toronto law firm of Israel Foulon LLP – Employment and Labour Lawyers. He can be reached at 416-640-1550 or pi@qtw38575.mywhc.ca. A version of this article originally appeared in the Carswell publication, Canadian Employment Law Today


Legal Disclaimer

This article is for informational purposes only and is not intended to provide legal advice, which in all circumstances must be tailored to the specific facts of any problem. You should obtain a proper legal consultation in order to determine how this article applies to your specific situation. Please feel free to contact Israel Foulon LLP to learn more at 416-640-1550.