Reasonable Notice, Bonus Entitlement and Mitigation
Update by Erin Brandt, Cofounder
There is a general rule of thumb that absent serious employee misconduct, discrimination, or an enforceable termination clause in a contract, a dismissed employee is entitled to roughly one month of severance per year of service. However, this guideline can shift based on factors such as the employee’s age, nature of employment and availability of other work.
In the case of Gale v. Fairmont Hot Springs Resort Ltd., 2025 BCSC 2690 the court significantly departed from this one-month-per-year rule of thumb, awarding an employee with approximately 3 years of service 9 months of severance. The Court also provided useful commentary on an employee’s duty to mitigate and post-dismissal bonus entitlement.
Background
Mr. Gale worked as Director of Sales and Marketing for Fairmont Hot Springs Resort from October 2020 until his dismissal in February 2024. Mr. Gale’s employment contract included an explicit term that on termination without cause his employer would fulfill “its obligations pursuant to the common law”.
At age 63, Mr. Gale was dismissed without cause and provided three weeks’ working notice. He was offered an additional 3.3 months’ severance on certain conditions, including that he sign a release.
Mr. Gale brought a wrongful dismissal claim seeking increased notice, bonus compensation, benefits and punitive damages.
The Decision
Reasonable Notice
The Court assessed reasonable notice at 9 months, emphasizing Mr. Gale’s significant level of responsibility, including oversight of all revenue streams and responsibility for marketing strategy. The Court rejected the employer’s characterization of the role as merely “mid-level managerial sales and marketing”.
Although his service was relatively short (just over three years), the Court found that:
His senior managerial role warranted a longer notice period;
His age (63) reduced his re‑employment prospects; and
There was limited evidence of comparable employment opportunities as reflected in his lack of success finding new work.
Taken together, these factors supported a 9 month notice period.
Mitigation
The Court found that Mr. Gale did not make sufficient efforts to look for new work. His job search was limited and not “assiduous” consisting primarily of informal inquiries rather than many formal applications.
However, the employer failed to establish that comparable employment was actually available. As a result, the employer did not demonstrate that Mr. Gale failed to mitigate and his damages were not reduced.
Bonus
Mr. Gale claimed entitlement to a bonus for the second half of the 2022/2023 fiscal year which would ordinarily have been paid in February 2024 – the same month he was dismissed.
The Court found that Mr. Gale was entitled to be treated as if he remained employed throughout the notice period (i.e. until November 2024). Although the bonus was discretionary under Mr. Gale’s employment agreement, the Court held that a bonus is no longer discretionary following a without-cause termination if the bonus was an integral part of the employee’s compensation.
Applying Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26, the Court held that:
The bonus was an integral part of Mr. Gale’s compensation; and
The employment contract did not clearly remove his entitlement during the notice period.
Since Mr. Gale would have been paid the discretionary bonus for the second half of the 2022/2023 fiscal year had he not been dismissed, the Court ordered payment of that bonus as part Mr. Gale’s damages.
Benefits and Punitive Damages
The Court declined to award damages for lost benefits because the employment agreement clearly displaced this common law entitlement.
The claim for punitive damages was also dismissed as the employer’s conduct did not rise to the level of harsh, vindictive or malicious conduct.
Key Takeaways for Employees
This case is one of a few recent cases where short service did not necessarily mean short notice - age and seniority can significantly increase severance entitlements above the one-month-per-year rule of thumb.
Further, if an employer refuses to pay a bonus following termination, it is critical to look closely at both the bonus policy and the employer’s past practices.
Finally, employees pursuing severance claims should keep detailed records of their job-search efforts to defend against an employer’s arguments that they failed make reasonable efforts to mitigate.
Key Takeaways for Employers
Bonus policies and employment contracts should be carefully drafted to clearly define what compensation is payable following dismissal. Absent clear language, an employee may have claims for bonus or other benefits enjoyed during employment.
Post-dismissal, if there’s a risk of a wrongful dismissal claim, employers should start tracking and sharing job opportunities early, as mitigation arguments require evidence of actual available comparable roles, not just criticism of the employee’s efforts.
