Canada: Decisions Involving Termination Of Long-Term Employees In Canada Should Concern Employers

Last Updated: January 31 2019
Article by George J.A. Vassos and Rhonda B. Levy

Employers considering terminating long-term employees in Canada should be aware of two relatively recent decisions. In one case, Dawe, 2018 ONSC 3130, the terminated employee, age 62, was a highly paid Senior Vice President employed for 37 years when terminated. In the second case, Bailey, 2018 BCSC 235, the 60-year-old employee had held a sales position for 17 years when terminated. These cases suggest that some courts believe that long-term employees of advanced age should not be terminated without being provided the financial equivalent of what they would have received had they been given reasonable notice. These courts appear to be willing to substantially extend the usual cap on reasonable notice periods or use damage awards to maneuver around enforceable termination clauses.

Notice of Termination Under Canadian Law

Canadian employees are entitled at common law to reasonable notice of termination where there is no just cause for termination. Canadian courts generally consider 24 months to be the upper limit on common law reasonable notice (absent special circumstances and absent an enforceable termination clause). The Dawe case indicates that the courts may consider the traditional 24-month upper limit inappropriate in cases where a long-term employee is of advanced age upon termination and comparable employment opportunities are unavailable.

In Dawe, the employee claimed he intended to work for at least another three years. The Court noted that in such circumstances, "Where there is no comparable employment available, termination without cause is tantamount to a forced retirement." In the Court's view, Dawe should have been allowed "to retire on his own terms." The Court opined, "With no comparable employment opportunities, in particular, I would have felt this case warranted a minimum 36 month notice period." (Emphasis added) However, it awarded Dawe only 30 months total compensation as that was what he sought in his claim. An appeal of the Dawe decision will be heard on February 4, 2019.

Termination Clauses and Ancillary Damages under Canadian Law

Traditionally, employers have been able to protect themselves from having to make significant payments to employees upon termination without cause by ensuring that their employment contracts contain enforceable termination clauses providing for minimum entitlements under employment standards legislation. The Bailey case suggests that may not always be the case.

In Bailey, the employee experienced a health issue that made him unable to work. He provided his employer with a note from his physician in support of this assertion. His claim for short-term disability was denied. While he was in the process of appealing that decision, the employer terminated him, alleging that he had abandoned his employment and was therefore owed nothing. The Court rejected this argument and determined that Bailey had been wrongfully dismissed. Although it acknowledged that the termination clause in Bailey's employment agreement was enforceable and restricted his entitlement to eight weeks' notice (the minimum under the applicable statute), the Court noted:

[The employer] is part of a large corporate group with over 22,000 employees in its operations in the United States and Canada. It has chosen to impose quite ungenerous terms of dismissal on its employees. Because of its contract terms, [the employer] is in a position of being able to make a calculated choice to treat employees abusively when firing them, as employees will seldom be willing to risk the cost of litigation.

Noting that, "Aggravated damages are compensatory based on foreseeable injury for breach of the duty of good faith and fairness," the Court stated, "[The employer's] manner of termination of Mr. Bailey breached the employer's duty of good faith and fair dealing in a whole host of ways..." and awarded him $25,000 in aggravated damages. In addition, the employee was awarded punitive damages of $110,000, which the Court characterized as "a meaningful award" that would "serve as a deterrent to [the employer] so that it does not choose to treat its employees so maliciously and callously as it did in this case." The Court noted that although the damage awards were significant, they were, "...still less than what [the employer] would have likely been required to pay in general damages if the common law regarding implied reasonable notice applied..." The Bailey decision was appealed, but a settlement was reached before hearing.

What are the Implications for Employers?

The Dawe case creates a problem for employers in that they may no longer be able to use the 24-month cap as part of a negotiating strategy when attempting to settle wrongful dismissal claims made by terminated employees, particularly long-term, senior management employees of advanced age without comparable opportunities.

The Bailey case mandates, as has a long line of cases, that employers treat employees fairly when terminating them. Upon evidence of callous, malicious or abusive employer behaviour at the time of termination, courts may use punitive or aggravated damage awards to provide significant funds to the employee, even when there is an enforceable termination clause limiting the employee's entitlement to the minimum under employment standards legislation. Moreover, as was the case in Bailey, the award may be almost as significant as a reasonable notice award at common law.

Bailey also indicates that, even in the absence of inappropriate employer behaviour, a court may look askance at a termination clause that limits entitlements to statutory minimums when the employee has worked at an organization for a long period of time. Accordingly, while an employer should attempt to limit an employee's entitlements upon termination by including an enforceable termination clause in the employment agreement, it should consider providing each employee something more "generous" than the minimum entitlement under employment standards legislation. Any excess beyond the minimum then forms a proper basis for a clause requiring the employee to sign a release of claims.

The Bottom Line

Treat employees fairly on termination, and for all employees, use employment agreements that contain enforceable termination clauses, which provide more than statutory minimums.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

George J.A. Vassos
Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions