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A recent Ontario case shows that, in the case of employees who are terminated near the age of retirement, a court will take into account an employee’s age and employment prospects when deciding the appropriate notice period.

The Facts

The employee began his employment with the employer, a life insurance company, in 1978. He originally began as a vice president in sales and marketing. A number of promotions followed and by 2015, he became senior vice president in group insurance.

The event leading up to the employee’s termination was a minor disagreement concerning the purchase of tickets to sporting events for business promotion, which occurred in September 2015. After the event, the president of the company ordered an audit of entertainment or promotion expenses; he delivered a verbal reprimand to the employee, but not others.

Afterwards, matters escalated and the employee consulted a lawyer. The employee presented complaints of harassment by the president that were summarily dismissed by management.

Then, in October 2015, the Board of Directors decided to terminate his employment. At that time, he had 37 years of service and was 62 years old. The company admitted the termination was without cause.

Issues and Position of Parties

The amount of bonuses the employee was entitled to was raised, but the other issue centred on the amount of notice he was entitled to.

The employee claimed entitlement to 30 months’ notice, while the employer said the notice period should be 24 months.

The Decision

At the outset, the court reprimanded the employer for its behaviour and stated:

“There can be no dispute, an employer owes a duty to the employee to act fairly and reasonably. […] In this regard, it is difficult to understand how management allowed such a minor dispute to escalate and result in termination. […] The triggering event did not warrant a verbal reprimand. Management could have done better.”

Turning to the issue of notice, the court stated that, as a general principle, 24 months has been identified as the maximum notice period in most cases. However, the court took note of the employee’s circumstances, his age in particular, by explaining:

“Whether it is exceptional circumstances or recognizing a change in society’s attitude regarding retirement, the particular circumstances of the former employee must be considered. For many years, the usual retirement age was considered to be 65. Pension plans improved as a result of the labour movement, introducing, for example, an 80 factor for most employees in the public sector and many in large companies in the private sector. That lead to some individuals retiring between the age of 50 and 60. But many were not ready to fully retire. They sought out additional employment or simply continued to work in their existing position. Further, mandatory retirement was abolished in 2006 in Ontario to protect against age discrimination. Many employees have continued past 65. In result, it is important to recognize that each case is unique. Presumptive standards no longer apply.”

The court then set out the principles applicable to reasonable notice, which include:

  1. the age of the employee;
  2. the character or nature of the employment;
  3. the length of service to the employer; and
  4. the availability of similar employment, having regard to the experience, training and qualifications of the employee.

The court noted that the employee was 62 at the time his employment was terminated and that he had devoted his entire working career to the employer, 37 years in total. It found that the employee’s age was a significant factor and that his mitigation efforts demonstrated a lack of other employment opportunities.

The court stated that reasonable notice is normally referred to as the period of time it should reasonably take the terminated employee to find comparable employment. It then stated:

“When there is no comparable employment available, termination without cause is tantamount to a forced retirement.”

The court acknowledged that the employee had commenced the process of retirement planning, but he had made no decision as to when retirement would occur. In fact, the employee stated that he had committed to continue working for the employer until at least the age of 65.

As a result, the court concluded:

“[The employee] should have been allowed to retire on his own terms. With no comparable employment opportunities, in particular, I would have felt this case warranted a minimum 36 month notice period.”

However, the court decided that the employee’s submission of a 30 month notice period was more reasonable and so ordered.

Get Advice

If you have questions about unfair practices in the workplace, wrongful dismissal, or any other employment matter, contact the Mississauga employment lawyers at Campbell Bader LLP. We regularly advise both employers and employees on a wide range of issues that arise at work. Contact us online or by phone at 905 828 2247 to schedule a consultation.