The plot surrounding the attempted elimination of the longstanding unofficial 24-month cap on reasonable notice continues to thicken.
In recent years, we have seen notice awards slowly creeping up, with the courts providing notice awards of 26 and 27 months before hitting a high-water mark in 2018, when the Ontario Superior Court of Justice awarded a staggering 30-month notice period in Dawe v. Equitable Life Insurance Company ("Dawe").
However, this momentum quickly stalled when Dawe was heard by the Ontario Court of Appeal. Justice Gary Trotter speaking for the court in this decision, reduced the notice period to 24 months, expressing that notice periods beyond 24 months must be supported by "exceptional circumstances". However, Justice Trotter failed to offer a specific set of circumstances that may qualify as "exceptional", thus allowing for significant ambiguity in future decisions.
One such decision was recently heard by Justice Marc Smith of the Ontario Superior Court, where he revisited the concept of "exceptional circumstances" in offering a judgement that will surely be quite controversial.
This matter involved a 58-year old plaintiff employee who had been employed by the defendant employer as a Chief Operator for a staggering 39 years. The plaintiff was terminated on a without cause basis, along with 16 colleagues, when the company notified the employees that the Company would discontinuing the specific operation which they performed in the plant.
As we have noted on several occasions, in the absence of an enforceable employment agreement, the reasonable notice period is determined on a case-by-case basis, using a well-recognized set of factors stemming from the seminal decision in Bardal v Globe and Mail Ltd. (known as the "Bardal Factors"). The Bardal Factors include the employee's: (1) age at the time of termination, (2) length of employment, (3) character or nature of employment, and (4) the availability of similar employment.
Looking through the lens of Justice Smith and applying the Bardal Factors to the plaintiff's case, provides considerable insight into how the court ultimately reached their decision.
- Age: The plaintiff was 58 years old at the time of termination and Justice Smith characterized this as, "in her twilight working years, closing in on the end of her career";
- Length of Service: As indicated above, the plaintiff had amassed 39 years of service at the time of her termination. Justice Smith explained that the plaintiff had commenced employment with the defendant at the young age of 19 and had dedicated her entire working life to the company.
- Character or Nature of Employment: As a Chief Operator in a plant, Justice Smith noted that the plaintiff, "has worked and developed skills in a very specialized field (fiber production operation) [... ] which makes it very difficult to transfer her skills to a new employer."
- The Availability of Similar Employment: Justice Smith deemed there were likely no similar employment opportunities available to the plaintiff, as "she is not well equipped to effectively compete in today's market or secure comparable employment."
Justice Smith indicated that these factors taken as a whole collectively demonstrate the existence of "exceptional circumstances", thus entitling her to 26 months' reasonable notice.
In justifying his decision, Justice Smith paid considerable attention to the final Bardal Factor. He indicated that the plaintiff's unsuccessful attempts to mitigate her damages (i.e. secure comparable employment post-termination) despite consistent and reasonable efforts – clearly demonstrated the lack of opportunities available to the plaintiff in the job market. As such and further, taking into consideration the plaintiff's advanced age, limited education and skillset, Justice Smith explained that the termination was equivalent to a forced retirement.
While this is obviously an important decision with significant impact, it is our view that this case likely represents the exception – not the rule, when it comes to determining reasonable notice. As seen in the earlier Dawe decision, the plaintiff's Bardal Factors, including her age and lengthy years of service, form a very unique and exceptional case. This serves to reiterate that terminating older employees can be a very challenging and costly process for employers. As such, employers must exercise great caution when terminating these employees, in particular.
Furthermore, this decision represents the next chapter in an ongoing game of tug-of-war between the Ontario Superior Court and Court of Appeal, regarding the longstanding unofficial 24-month cap on reasonable notice. As mentioned above, in the recent highly analogous case in Dawe, the Court of Appeal stepped in to thwart the Superior Court's attempt to supersede this cap. As such, we hope to report back to employers with positive news when this decision is inevitably heard (and hopefully overturned) by the Court of Appeal.
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