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Or sign-in if you have an account.To determine what is reasonable, courts consider a number of factors, including the employee’s age, length of service, nature of their employment and the availability of similar work. Photo by Getty ImagesBy Howard Levitt and Jenny YuSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorOne of the most persistent myths in employment law is that an employee is entitled to one month’s severance for every year worked. It is repeated by HR professionals, employees, business owners and, unfortunately, by countless online severance formulas and calculators.The trouble is that it is wrong.Not just occasionally wrong; almost invariably wrong. In fact, courts have departed from that supposed rule of thumb so often that it has become the exception, not the rule.Common law notice has never been determined by a mathematical formula. The purpose of a notice period is to provide a dismissed employee with a reasonable opportunity to find comparable employment.FP Work touches on HR strategy, labour economics, office culture, technology and more.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Work will soon be in your inbox.We encountered an issue signing you up. Please try againTo determine what is reasonable, courts consider a number of factors, including the employee’s age, length of service, nature of their employment and the availability of similar work. They also examine any other circumstances that could affect the employee’s ability to secure a comparable position.The results can surprise even experienced employers.Consider the pregnant employee who was awarded five months’ notice despite having worked for her employer for less than five months. Or the employee who worked only seven months after being recruited away from a long-term position and was awarded 14 months’ notice because of the employer’s inducement.These are not judicial anomalies. They reflect the courts’ focus on an employee’s real prospects of re-employment rather than an arbitrary formula.Despite this, many people continue to believe that length of service is the dominant factor.Employees often make the opposite mistake. Many are unaware that a properly drafted and enforceable termination clause can eliminate their entitlement to common law notice altogether, restricting them instead to the dramatically lower minimum standards required by employment legislation.Employers, meanwhile, frequently underestimate their potential liability. In many cases, courts award substantially more than one month per year of service.The myth is especially dangerous when dealing with short-service employees.Employment lawyers have long recognized that employees with fewer than five years of service frequently receive notice awards that bear little resemblance to the so-called formula.A recent British Columbia decision illustrates the point. In Ho v. Monk Office Supply Ltd., the employee served as corporate controller for only two and a half months before being dismissed without cause. Despite being only 41 years old, he received four months’ reasonable notice.The Court observed that employees with very short service generally start with a notice period of two to three months. It then increased the award because Mr. Ho required five months to secure replacement employment, and only at a reduced salary.The Court accepted that he had made reasonable efforts to find work and concluded that the market for comparable employment was sufficiently challenging to justify a longer notice period.The reasoning is hardly novel.Courts have repeatedly noted that very short periods of employment can actually make it harder for an individual to obtain another position. A prospective employer may question why someone remained in a job for only a few months, while recruitment processes themselves often take several months to complete.When short service is combined with other factors — such as an employee approaching retirement, specialized qualifications or a weak labour market — the resulting notice period can be several times greater than the simplistic “one month per year” calculation.Nor is the trend moving in employers’ favour. Courts have generally become increasingly generous in assessing reasonable notice over the past several years.That reality carries significant implications today.Many employers are reassessing staffing levels after the aggressive hiring that followed the pandemic. Employees with only a few years of service may appear to be inexpensive candidates for workforce reductions.That assumption can prove extraordinarily costly.An employer attempting to reduce expenses may instead find itself paying many months of compensation to an employee who no longer performs any work, while also incurring substantial legal fees defending an avoidable dispute.The lesson is straightforward. Employers should stop relying on rules of thumb, online severance calculators and casual advice when estimating the cost of terminating an employee. Those shortcuts routinely produce misleading results and can leave employers facing unpleasant surprises once a lawyer’s demand letter arrives.There is no substitute for legal advice tailored to the facts of the individual case.When planning a termination, employers would be wise to put away the severance calculator and instead use that same thumb to pick up the phone and call their employment lawyer.Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practises employment law in all provinces and is the author of six books, including the Law of Dismissal in Canada. Jenny Yu is an associate at Levitt LLP. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.