It is a common misconception that an employee who has worked for a short period of time is entitled to only a modest amount of severance or notice on termination. In Ontario, that is not necessarily the case. Where there is no enforceable employment agreement limiting termination entitlements, an employee may be entitled to substantial common law reasonable notice or pay in lieu, even after a relatively brief period of service, as indicated by the recent decisions discussed below.
This issue matters to both employees and employers. Employees may assume that short service means limited rights, while employers may assume that a short tenure significantly reduces exposure on termination. In practice, employees may have a potential claim for wrongful dismissal notice awards that are much longer than many people expect.
Common law notice vs. statutory minimum notice
When an employee in provincially regulated workplaces in Ontario is dismissed without cause, the starting point is often whether the employer has a valid employment agreement that limits termination entitlements. If there is no such agreement, or if the agreement is unenforceable because it is imperfectly drafted, the employee may be entitled to common law reasonable notice or pay in lieu.
If there is an agreement and it is enforceable, termination entitlements may be limited to those set out in Ontario’s Employment Standards Act, 2000 (the “ESA”). Part XV of the ESA governs termination entitlements, and for an employee terminated after more than 3 months but less than 1 year of employment, for instance, the ESA requires one week’s notice or payment of one week’s wages, and vacation pay on that amount (as well as benefit continuation, where applicable).
Common law notice by contrast is assessed by the courts and is typically more generous than statutory minimum entitlements; this divide is especially pronounced in the case of employees with a short period of service. It is not calculated by a fixed formula. Instead, the court considers the circumstances of the employment relationship and the employee’s prospects of finding comparable work. Crucially, alternate income will be generally set off against a common law reasonable notice award, while this is not the case for termination entitlements required by the ESA.
The “one month per year” rule of thumb often does not apply
One of the most persistent misunderstandings in employment law is the idea that severance or notice is usually limited to about one month per year of service. While this rough rule of thumb can be a reasonable approximation in some cases, it fails to accurately capture the factors an adjudicator will canvas and is often not a reliable way to predict what a court may award.
What factors do Ontario courts consider?
Ontario courts consider several factors when determining reasonable notice. The key factors include:
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the length of service;
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the employee’s age;
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the employee’s position; and
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the availability of similar employment.
This is not a closed list, meaning that adjudicators are permitted to consider other factors.
Older employees in more senior or specialized roles are generally entitled to longer notice periods, as it is understood that it will often take them longer to find comparable employment.
As Professor Kenneth William Thornicroft has observed in his comprehensive review of appellate court decisions in Ontario, age and tenure in particular are significant predictors of notice awards. He noted a strong correlation between notice awards and tenure, indicating that period of service is an important factor. While he found that the one month per year rule of thumb is “far from being dead and buried”, cases involving short service employees are one instance where the rule of thumb fails to apply.
Recent Ontario decisions show that short service can lead to substantial awards
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In Eastwood-Fisher v. Equine Canada et. al., 2026 ONSC 2721, an employee serving as Director of Technical Development was awarded four months’ pay in lieu of common law notice after 15 months of employment.
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In Jones v. Strides Toronto, 2025 ONSC 2482, a 43-year-old employee serving as Senior Manager was awarded four months’ pay in lieu of common law notice after one year and four months of employment.
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In Grimaldi v. CF+D Custom Fireplace Design Inc., 2023 ONSC 6708, a 50-year-old Senior Project Manager was awarded 5.5 months’ pay in lieu of common law notice after only four months and 23 days of employment.
While the circumstances in each case vary somewhat, and it is notable that the employees in each of the above-noted cases was relatively senior, these recent decisions indicate the extent to which short serving employees may receive seemingly disproportionate notice periods. This is especially pronounced in the Grimaldi decision, where the notice period actually exceeded the employee’s tenure.
This is further pronounced when compared to ESA termination entitlements. In the Eastwood-Fisher case, for instance, under the ESA the employee would have only been entitled to two weeks’ notice or pay, had an enforceable employment agreement existed. Instead, the employee was entitled to 4 months or approximately 17 weeks.
Similarly in Grimaldi the employee would have been entitled to 1 weeks’ notice or pay under the ESA, but instead was awarded 5.5 months or approximately 24 weeks.
Employment agreements matter
For employers, the practical lesson is clear. If the goal is to limit termination liability to ESA entitlements, it is imperative that you have enforceable employment agreements in place. These employment agreements should be drafted to ensure that they do not contravene the ESA in any way, which would render them unenforceable, and should be regularly review to ensure that they remain compliant and effective.
Without an enforceable agreement, the employer may face exposure to common law reasonable notice that is far greater than amounts required by the ESA. That risk can be significant where the employee is older, holds a senior position, or has specialized experience.
Termination letters and severance packages
Employees should not assume that a short period of employment means they are entitled only to the amount offered in a termination letter or severance package. Even where service has been brief, the common law may provide greater entitlements than the employer has offered.
Before accepting a severance package, employees should review whether the offer accurately reflects their potential entitlements. This is especially important where there is no clear employment agreement limiting termination rights. A package that appears reasonable at first glance may still fall short of what the employee may be entitled to receive.
That review should be done promptly, because termination offers often come with deadlines. Once a release is signed, the employee may give up the right to pursue claims related to their employment.
Conclusion
Employees with short service may receive substantial wrongful dismissal notice awards, particularly where there is no enforceable employment agreement limiting termination entitlements.
For employers, the best way to manage this liability is to have enforceable employment agreements in place. For employees, the key is to review any termination letter or severance package carefully, even if the employment relationship was short.