In Ontario, the termination of executives and senior-level employees presents distinct legal considerations. These individuals often occupy highly specialized roles, and their career trajectories may involve induced departures from otherwise secure employment. Consequently, they frequently encounter a scarcity of comparable opportunities and face unique hurdles in securing new positions. Jurisprudence has acknowledged the particular vulnerability of senior employees with short tenures, recognizing the potential challenges they face in justifying brief periods of employment to prospective employers, a factor courts must consider when assessing reasonable notice.
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What is the Appropriate Reasonable Notice for Short Service Executives and Key Employees?
Determining how much severance pay an employee should get depends on numerous considerations.
In a wrongful dismissal lawsuit, the Bardal factors as listed below are often used to determine what constitutes a reasonable notice period:
the type and nature of the employment;
the length of the employment;
the age of the employee and the availability of similar job; and
the employee’s experience, training, and qualifications.
Courts have issued notable decisions awarding substantial severance packages to employees who would otherwise be entitled to little severance pay compensation as a result of their short service, based on special circumstances. The court will consider factors such as old age, health issues (disability, injuries), inducement, pregnancy, and lack of formal education.
Executives and senior-status employees typically hold specialized roles, sometimes switch positions due to some form of inducement away from great and stable jobs, have fewer comparable opportunities, and often face unique challenges in finding replacement positions. Notably, the courts have identified that short-service employees, especially those of senior status, will likely have difficulty explaining such a short position in a subsequent job search.
a. Humphrey v. Mene, 2021 ONSC 2539; 2022 ONCA 531
In Humphrey, the court decided that a 32-year old employee who had worked for the same employee for only 3 years was entitled to 12 months of severance package compensation.
In determining the employee was entitled to a larger severance package, the court considered the Bardal factors and concluded:
having regard to the fact that the employee was terminated allegedly for cause 6 months after her promotion, it will be more difficult for the employee to get a new job because she will have to explain to prospective employers why she was terminated (terminated “under an ethical cloud”)
it is much more difficult for women to obtain senior executive positions, particularly given her young age of 32
the employee’s high-ranking, managerial role with the company justifies a longer notice period (severance package) because it is commonly accepted that executives have more difficulty finding other comparable employment.
When this decision was appealed, the higher Ontario Court of Appeal in Humphrey v. Mene Inc., 2022 ONCA 531, agreed with the 12-month notice period award (although it reduced her severance package to 6 months of compensation because of the fact that the Plaintiff unreasonably delayed starting her search for new employment by several months and then turned down a comparable offer job offer).
Please keep in mind that if a worker is actively seeking comparable employment and has sent many job applications after termination, a court may rule otherwise and grant an employee a reasonable notice period of 12 months without reduction.
b. Grimaldi v. CF+D Custom Fireplace Design Inc., 2023 ONSC 6708
In Grimaldi, the Ontario Superior Court addressed the issue of reasonable notice for a short-service employee in a specialized role. Mr. Grimaldi – who did not have a fancy title but was expected to act like the owner of the company and was the highest-paid employee – was terminated without cause after less than 5 months of service.
After reviewing his employment contract, the court awarded Mr. Grimaldi almost 5.5 months of notice. In reaching this decision, the court emphasized that while Mr. Grimaldi’s tenure was short, his senior position, specialized skill set, and limited availability of comparable roles justified an extended notice period. Mr. Grimaldi was someone who did not have the title of an executive, but was nonetheless, an equivalent in substance – a “hidden executive.” The court noted that his dismissal left him particularly vulnerable in a competitive job market. Importantly, the court awarded this extended notice period despite finding that Mr. Grimaldi was not induced into the short-term role.
The court reaffirmed that the length of service is only one factor in assessing reasonable notice, and short service does not automatically lead to minimal notice if other factors support a longer period.
c. Shelp v. GoSecure Inc., 2025 ONSC 49
In Shelp, the Ontario Superior Court awarded a notice period of 6 months to a Vice President of Sales who only worked for 10 months before being terminated without cause. GoSecure conceded in this case that Mr. Shelp’s contract was unenforceable due to a vague termination provision; thus, entitling him to common law reasonable notice.
The court emphasized that Mr. Shelp’s relatively short tenure did not justify a shorter notice period, given the nature of his role and the challenges in securing similar employment. Again, as in Grimaldi, the court found that Mr. Shelp was not induced into the short service role, and awarded an extended notice period despite this fact.
Inducement and Detrimental Reliance
Think of inducement as a siren song. Inducement is a representation or promise made by one party, explicitly or implicitly, that persuades another to act. However, the song alone isn't enough. The key ingredient that transforms inducement into a potential legal claim is detrimental reliance. This means the induced party must have reasonably acted upon the representation to their detriment. They must have changed their position, incurring a loss or foregoing an opportunity, because of the promise.
Ontario courts have been cautious in applying this doctrine, and usually require a clear and unequivocal representation, reasonable reliance, and a demonstrable detriment. The reliance must be causally connected to the induced action.
In an employment context, an inducement is typically in the form of a promise made during the recruiting process that the new job will be long-term, with a better career path and better pay.
If an employee forewent his or her stable position in reliance on the inducement, resulting in damage, a court is likely to give a lengthier reasonable notice period as compensation.
The list of detriments may include, but is not limited to, harm to professional reputation—particularly given the industry's perception, the difficulty in securing a comparable executive role during a period of economic turmoil, and emotional distress due to the abrupt changes in life.
Duty of Good Faith and Fair Dealing
The duty of good faith and fair dealing is an implied contractual obligation that requires parties to act honestly and reasonably in the performance of their contractual obligations. Think of it as a constraint on exercising contractual rights in a way that is fundamentally unfair to the other party.
The Supreme affirmed the duty of good faith in the manner of dismissal in Honda Canada Inc. v. Keays, [2008] 2 SCR 362. The Supreme Court stared that an employer must act in good faith, and refrain from conduct that is unfair or in bad faith by being untruthful, misleading or unduly insensitive, and that bad faith would be addressed with an award of damages to compensate provable mental distress.
The Supreme Court of Canada has stated in Bhasin v Hrynew, 2014 SCC 71, that the organizing principle of good faith necessitates honesty in contractual performance. Although altruism is not required, the obligation of good faith and fair dealing ensures that parties don't deliberately mislead or deceive each other in relation to the contract. Furthermore, it's not simply about abstaining from bad faith. It also includes a positive obligation to act reasonably in the performance of the contract.
The Supreme Court, in Matthews v. Ocean Nutrition, 2020 SCC 26, clarified that the duty of honest contractual performance was a contractual doctrine that applied to all contracts, including employment contracts. The duty means that parties must not lie to or otherwise knowingly mislead their counterparty about matters directly linked to the performance of the contract.
Unless the employment contract specifies otherwise, probationary status enables an employee to be terminated without notice during the probationary period ONLY if the employer makes a good faith determination that the employee is unsuitable for permanent employment, and provided that the employee was given a fair and reasonable opportunity to demonstrate their suitability. See Bhasin v Hrynew, 2014 SCC 71.
The Supreme Court in C.M. Callow Inc. v. Zollinger, 2020 SCC 45, held that “the duty to act honestly in the performance of the contract precludes active deception.” Even if the Respondent honoured the 10-day notice period required by the contract, they misled the Appellant into believing that the contract would not be terminated. In an email from July 2013, the President of Baycrest wrote to a board member “I was talking to him last week as well and he is under the impression we’re keeping him for winter again. I didn’t say a word to him cuz I don’t wanna get involved…”
The Supreme Court held that: “Baycrest may not have had a free-standing obligation to disclose its intention to terminate the contract before the mandated 10 days’ notice, but it nonetheless had an obligation to refrain from misleading Callow in the exercise of that clause.”
The Court upheld the trial judge's award of over $60,000 (the value of the lost profit under the winter maintenance agreement, less expenses). The rationale was that had Callow not relied on Baycrest’s falsehoods, it would have been able to secure an alternate contract for the winter.
In Callow, the Plaintiff was misled into thinking that the contract would be extended, and as such the client worked extra hard, and forwent opportunities in securing an alternate contract for the winter.
Similar to Callow, any employee who has been deceived into leaving his or her previous position by a false promise of continuous employment only to be terminated quickly in the new job should be given special consideration and be awarded an extended reasonable notice accordingly.
Conclusion
Terminating an executive is a legally fraught endeavor. Employers must, and executives should, seek expert legal counsel to navigate the complexities of reasonable notice, inducement, and the duty of good faith. There's a need to consider inducement, detrimental reliance, and the heightened vulnerability of short-service, senior employees when determining the proper reasonable notice. The implied duty of good faith looms large. A proactive and informed approach is essential to mitigating risk and ensuring a fair outcome for all parties involved.
You may want to consult with an experienced employment law firm such as HTW Law, to learn of your employment law rights and the do and don't before deciding what to do.
With the right legal support, employees can ensure their employment law rights are protected; employers can avoid legal pitfalls.
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