The Impact of Gaps in Service on the Notice Period
Employment relationships are sometimes interrupted when an employee leaves an employer only to return months or years later. In our practice, a question that arises regularly, and perhaps more frequently than one might think, is:
What is the impact of a previous break in employment on an employee’s entitlements at termination of employment?
When discussing breaks in employment, we are not talking about things like leaves of absence or vacation. Rather, the focus is on the impact of breaks in employment where an employee leaves the Company – whether by resigning or being fired – and is later rehired at a later time.
General Entitlements Upon Termination
Typically, upon termination of employment, an employee is entitled to a separation package. Separation packages are generally based on what the employee probably would have earned during a period of time if the employer had given the employee reasonable notice of termination. In practice, separation packages may be discounted for the prospect that an employee may replace the job before the end of that reasonable notice period.
Judges decide what constitutes reasonable notice of termination based on a broad host of factors, including the following core factors, often referred to as the “Bardal factors” based on an Ontario court decision in 1960 called Bardal v The Globe & Mail Ltd:
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- Length of service – often the longer the employee worked for the employer, the longer the notice period will be;
- Age – older employees are generally entitled to longer notice periods;
- Position or title – more senior, specialised and rare positions attract longer notice periods;
- Compensation – employees with higher-paying jobs are typically awarded longer notice periods; and
- Job market and qualifications – a poor job market, having regard for the employee’s qualifications, will result in a longer notice period.
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In addition to the above factors, the Court may consider any other factor in the employee’s particular circumstances that would delay the employee’s ability to replace their position.
Length of Service
Although judges are not permitted to place too much emphasis on any single factor, length of service tends to be quite important when determining the length of the reasonable notice period. Historically, judges seemed to follow a rough guideline of awarding one month of notice per year of service. Although that practice is no longer ‘good law’, length of service continues to be a relatively strong consideration in the determination of reasonable notice periods.
Exceptions to this trend include (a) short-service employees with less than three years of service, who are often found to be entitled to notice periods significantly beyond one month per year of service and (b) extremely long-service employees with 30+ years of service, whose notice periods may be capped at the upper end of the range that the Court may award, resulting in a notice period which is less than one month per year of service.
Bridging a Gap in Service
When assessing an employee’s length of service to determine the reasonable notice period, judges may consider tenures of employment before a previous break and assess the entire compilation of service with the employer.
In many cases, judges will add two stretches of employment together, ignoring a gap in service. As a result, the employee will be given credit for a greater length of service in the determination of their entitlements upon termination.
Cheong v Grand Pacific Travel & Trade (Canada) Corp, 2016 BCSC 1321 (CanLII) illustrates the impact that bridging two periods of employment together can have on an employee’s entitlements.
In this case, Ms. Cheong worked for Grand Pacific for 10.5 years as its Director of Sales and Marketing and then resigned. After more than one year, Ms. Cheong was rehired by Grand Pacific and worked for 2.5 more years before her employment was ultimately terminated by the defendant. In the outcome, Ms. Cheong was awarded damages based on a 14 month notice period because the judge treated her as a 13-year employee. If not, Ms. Cheong would have been entitled to significantly less notice based on only 2.5 years of employment.
However, not all periods of employment will be factored into an employee’s length of service.
Lawful Written Agreements
As a starting point, judges will consider any enforceable written agreement between the parties regarding how the initial duration of employment was intended to be treated at termination of employment following the resumption of the employment relationship.
A clear and lawful agreement can limit the impact of a past period of employment on an employee’s entitlements upon termination.
Unenforceable Agreements
In many situations, there can be a written agreement between the parties that attempts to limit an employee’s entitlements at termination, but on a closer review by the Courts, it is unenforceable.
Judges will generally interpret any ambiguity in written agreements dealing with the subject in favour of employees. Employees are seen as having less bargaining power than employers and judges will attempt to address that imbalance when interpreting employment contracts. Judges scrutinise the language in employment contracts for any potential non-compliance with the technical elements of employment standards legislation.
A lesser-known provision of the Ontario Employment Standards Act, 2000 (the “ESA”) requires that all non-continuous time spent by the employee in the employer’s employ must be combined to determine (a) if the employee is eligible for statutory severance pay and (b) how much statutory severance pay the employee is owed, which is calculated based on roughly one week per year of service combined to a maximum of twenty-six weeks.
When drafting employment contracts where there is a history between the parties, employers tend to frequently overlook such nuances of the ESA. As a result, some employment agreements inadvertently breach the ESA thereby making them unenforceable.
Factors Considered by Judges
In the absence of an enforceable written agreement between the parties, Judges will consider the circumstances surrounding the break in service – both how the employment relationship came to halt and how it resumed. If the parties ‘intended’ that the employment relationship would resume, picking up where the employee left off – as opposed to starting a new employment relationship – then the periods of employment will be added together.
In a highly contextual assessment, the Courts have considered a series of factors to decide whether the periods of employment should be stitched together, despite a hiatus. The Court distilled factors that tend to support a finding that periods of employment should be combined in a case referred to as Hefkey v Blanchfield, 2020 ONSC 2438 (CanLII). Loosely summarized, those factors include the following:
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- The duration of the break in service was not lengthy;
- The employee was recruited by the employer to return;
- The previous terms of employment resumed upon returning to employment, rather than a new set of terms being negotiated;
- The employee’s vacation or other work benefits continued upon returning to employment as if there had been no interruption in the employment relationship; and
- The employee’s pension entitlements took into account the initial period, upon resuming employment.
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Lengthy Breaks in Service
In some circumstances, even a lengthy break in service will be disregarded in combining two periods of service, particularly where the employee remains connected to the employer in some way. For example, in Cronk v Canadian General Insurance Co, 1995 CanLII 814 (ON CA), a clerk-stenographer was hired for a period of time, then took a six-year break in employment to start a family. During four of the six years of hiatus, Ms. Cronk worked for the employer indirectly, through a temporary staffing agency, on a part-time basis. The plaintiff was then rehired to full-time employment with the defendant and later dismissed. The Court of Appeal for Ontario affirmed that Ms. Cronk’s period of employment for the purposes of determining the notice period, should take into account her total employment with the defendant.
Recent Case
More recently, the Court addressed this issue in the case of Lachapelle v St Laurent Automotive Group Inc, 2025 ONSC 1956 (CanLII). In September 2013, Mr. Lachapelle commenced employment with a car dealership, St. Laurent Automotive Group, as a technician apprentice. He was eventually promoted to the position of service technician. After 4.5 years, Mr. Lachapelle resigned from employment to work elsewhere as a mechanic. Mr. Lachapelle was recruited by St. Laurent Automotive Group to return to his employment after a nine-month break. He resumed employment with the dealership in February 2019.
About fourteen months later, the COVID-19 pandemic hit, and the plaintiff’s employment was placed on an unlawful temporary lay off and, in effect, ‘constructively’ dismissed from his employment. The judge took into account both periods of Mr. Lachapelle’s employment and awarded a notice period of seven months based on the Plaintiff’s combined years of service.
This case highlights that in the absence of a clear term of employment in an employment contract dealing with the break in service, it is up to the Court to decide how to treat the gap in service based on the circumstances of the case.
Takeaway for Employers
Employers should engage legal counsel to draft a clear and enforceable employment contract, which reflects the agreement between the parties, including how any previous periods of employment will be treated.
Takeaway for Employees
Employees should obtain legal advice from an employment lawyer before making changes in their career path and before signing any employment agreements.
If you have questions about how gaps in service may affect your employment contract, contact Zubas Flett Liberatore Law LLP for counsel at 416-593-5844 or questions@employment-lawyers.ca.