Employer on the Hook for Longer Notice Period Despite Period of Absence and "New" Employment

A recent Ontario case illustrates how recognition of past service with former employers can impose increased liability for reasonable notice of termination.

Mr. Vist commenced employment in 1988 but left in 1992 to pursue alternate employment. He returned to his former employer in 1993 and remained employed with them until 2003, at which time his employer sold all of its assets to a third party. Mr. Vist was provided with written notice of termination by his employer and he accepted employment with the third party. Mr. Vist did not stay with the third party for long and did some contract work for his former employer between late 2004 and early 2006, and again for a few months at the end of 2006. He was then offered a term contract with his former employer beginning in January 2007. In mid-2007 he was offered full-time employment. His employment offer stated that for purposes of vacation and service milestones, his service date would be 1993. In early 2008 the unit in which Mr. Vist worked was acquired by another third party and he accepted its offer of employment which stated that his new employer would "recognize any accrued continuous service" with his previous employer.

Mr. Vist's employment was terminated without cause by his new employer in June 2009. Mr. Vist argued that despite the 3½ year break in his employment between 2003 and 2007, his entire length of service (since 1993) with his former employer should be used to determine the reasonable notice period while his new employer argued that he only had 2½ years' service. The Court held that Mr. Vist's employment since 1993 should be taken into account for the following reasons:

1. Mr. Vist was employed continuously by his former and new employers for over 16 of 21 years. In addition, he had worked under contract for his former employer in some of the years that he wasn't employed permanently.
2. When Mr. Vist was rehired by his former employer in 2007, his service date for the purposes of determining vacation and service milestones was acknowledged to be January 1, 1993. Further, his offer of employment from his new employer in 2008 stated that the company would "recognize any accrued continuous service" with his former employer.
3. Nothing in Mr. Vist's 2007 employment contract contemplated his length of service for the purposes of termination.

Implications for Employers

This case serves as a cautionary example for employers. The case illustrates how new employment which agrees to recognize previous service for certain purposes can affect reasonable notice periods. Although the court did not consider the cumulative length of employment as a single block, weight was given to the total amount served and not just the last uninterrupted block of service. Where the parties don't directly contemplate the effect of prior service for the purposes of termination, it may be deemed as continuous if the employer treats it as such. It is therefore important for employers faced with a similar situation to directly address the issue in an employment contract. A contract which explicitly cuts off prior employment and sets forth a new set of entitlements and responsibilities may pay dividends later if the issue of proper notice ever arises.