Are Longer Notice Periods for Terminated Employees Becoming More Common?

Employees in Canada who have their employment terminated are entitled to be provided with either notice of the termination of their employment or compensation in place of notice which will likely be enough to find another job.

The exact amount of notice which an employee should be provided on termination too often leads to conflict between employers and employees.

While the amount of notice an employee should receive on termination of employment is determined by courts on a case-by-case basis other than in exceptional circumstances, courts have been hesitant to offer more than 24 months of notice.

A recent decision of the Ontario Superior Court of Justice appears to have expanded the circumstances which may justify a notice period longer than 24 months.

Court Awards Longer Notice Period

The case, Dawe v Equitable Life Insurance Company, involved an employee who worked as a Senior Vice President with Equitable Life Insurance Company. At the time of termination of his employment, he had been with the company for 37 years and was 62 years of age.

Following the termination of his employment, the employee brought a claim against his former employer stating that he should be entitled to a package equivalent to 30 months’ notice.

In deciding on the appropriate notice period, and while recognizing that a notice period above 24 months generally speaking should be provided only in exceptional circumstances, the court stated that judgments regarding how much an individual should receive should reflect changing societal attitudes respecting retirement. The judge specifically recognized that individuals in general are working longer and deferring retirement. To this end, the court pointed to the abolishment of mandatory retirement and the Plaintiff’s own determination to continue to work at least to and potentially beyond the age of 65.

Given these factors, the court held that it would have granted 36 months, however since the Plaintiff only sought 30 months, it limited its award to 30 months.

The case may be impacted by an appeal which is currently underway by the Court of Appeal for Ontario.  Nevertheless, the case provides an important indication of the evolving law, particularly as it relates to employees near what would normally have been considered retirement age. Specifically, courts appear willing to provide significant notice periods to provide sufficient time for employees to find alternative employment regardless of how close they may be to what would normally have been considered traditional retirement age.

Takeaway

Courts continue to indicate that they are willing to hold employers liable for significant damages relating to the termination of the employment of their employees. It is important that employers avoid such risk, and that employees are aware of their rights to pursue them when appropriate. If you require more information or have questions relating to any of the above, please contact the Toronto employment lawyers at Sultan Lawyers by telephone at 416-214-5111, by here, or by filling out the form below.