Non-Continuous Service and Reasonable Notice: Cautionary Tale for Employers

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In Vist v. Best Theratronics Ltd., the Ontario Superior Court considered the impact of non-continuous service on the calculation of reasonable notice of termination in a non-unionized workplace. The Court held that when determining the appropriate amount of reasonable notice of termination, years of service earned prior to periods of service interruptions will be taken into account.

Margus Vist, a 54-year-old bio-physician brought an action for wrongful dismissal against his former employer, Best Theratronics Ltd. seeking damages for reasonable notice of termination.

The issue before the court was the amount of reasonable notice of termination to which Mr. Vist was entitled. The employment relationship was governed by the Canada Labour Code, Part III, R.S.C., 1985, c. L-.2.

The case revolves around Mr. Vist’s complex employment history:

  • beginning in 1988, Mr. Vist was employed by MDS Nordion and its predecessors on an on-and-off basis;
  • he started at AECL’s Isotope Division, later named Theratronics International Ltd., in 1988. Theratronics International was then succeeded by MDS Nordion;
  • from 1993-1994 he worked for an unrelated company;
  • in 1994, returned to MDS Nordion and worked there until the period of 2003-2007, during which he was a self-employed consultant to MDS Nordion;
  • in 2007, he was once again an employee of MDS Nordion;
  • in 2008, MDS Nordion was succeeded by Best Theratronics, where he worked until his termination.

In total, he had worked for these related companies for sixteen of the past twenty-one years.

In May 2008, Mr. Vist’s employment came to be governed by a written employment contract. The contract ensured his service with the former employer would be recognized and terms and conditions of his former employment would continue. The contract did not include a termination clause.

On May 19, 2009, Mr. Vist notified Best that he wished to leave his position as General Manager and return to his prior engineering role. He received no response to his request until June 17, 2009 when Mr. Vist was handed a notice of termination. Cause for termination was not alleged; accordingly, he was provided with two weeks’ pay in lieu of notice and three weeks of severance pay, which is the minimum pursuant to the Code.

In his wrongful dismissal suit, Mr. Vist claimed nine months of reasonable notice of termination. Best asserted that Mr. Vist’s accrued continuous service with MDS Nordion and Theratronics International was only 2.5 years, thus a lengthier notice period was unmerited. Furthermore, Best argued that Mr. Vist did not attempt to mitigate his damages in a role comparable to the General Manager.

The Court held that as the contract did not include a termination clause, there was an implied term in the contract which provided that in the absence of just cause for termination, he would be provided with reasonable notice of termination or compensation in lieu of notice.

The Court addressed the issue of Mr. Vist’s length of service. The Court found Mr. Vist’s service at Best was interrupted for a “brief” three and a half years. The Court also found that his employment contract with MDS Nordion, which expressly recognized his service date to be January 1, 1993, and his subsequent employment contract with Best, which expressly stated: “Best Theratronics Ltd. will recognize any accrued continuous service with MDS Nordion and its predecessors” were “ambiguous”.

The Court concluded that because his years of service were interrupted and the employment contract was ambiguous on the issue, the total years of service at these related employers could not be “cumulative”. Rather, “some weight” would be afforded to the previous employment period and Mr. Vist would be given “some credit for his past services”, and “treated as a long term employee having given sixteen years of service to the defendant and its predecessors.”

In light of the foregoing, the Court determined that six months is the appropriate reasonable notice for his dismissal.

This decision informs employers governed by the Canada Labour Code that an employee’s prior service can factor into the calculation of reasonable notice, potentially turning a short-term employee into a long-term employee. For the calculation of severance pay, however, twelve months of continuous service is required and multiple periods of employment with the same employer does not have to be considered.

Under the Ontario Employment Standards Act, 2000, when calculating severance pay, multiple periods of employment with the same employer must be considered regardless of the duration of interruption in service and the reasons for the interruption. For the calculation of notice of termination, however, the Courts have considered the length of service relative to the length of the interruption, representations made by the employer and any agreements on the issue.