Court affirms notice period exceptions can be granted in rare cases

Even though the Ontario Court of Appeal recently reduced a senior employee’s termination notice entitlements to 24 months from 30 — despite what seemed like exceptional circumstances — that does not mean courts are unwilling to exceed the usual two-year soft cap in other cases, says Toronto civil litigator Stephen Moreau.

“In my world of employment law, many people are saying that we won’t be seeing notice periods that are more than two years anymore,” says Moreau, a partner with Cavalluzzo LLP. “I think they are jumping to the wrong conclusion.”

The decision involved a senior vice-president dismissed at the age of 62 after 37 years of employment and offered pay in lieu equivalent to 24 months’ notice. The man sued for wrongful dismissal, and the motion judge held that 30 months was an appropriate notice period. The company said that was excessive and the appeal court agreed, knocking it back down to two years.

Exceptional circumstance required

“While there is no hard cap, the appeal court has indicated that notice periods should not exceed 24 months unless there are exceptional circumstances,” says Moreau.

He explains those circumstances could include a combination of exceptionally long service, advanced age, a senior position, or if the job is being replaced by some form of technology.

“It’s quite possible that anyone who has worked for decades for the same employer, in any job, could be found to be in exceptional circumstances by a judge, and therefore entitled to more than 24 months’ notice,” Moreau says.

According to court documents, the motion judge noted the man was planning to retire at age 65, so he granted 30 months of notice.

“By giving that amount, this judge effectively was handing him the retirement he was planning at age 65,” Moreau says.

The appeal court found the motion judge’s reasoning to be unjustified, noting, “plans regarding retirement are not determinative in ascertaining [the firm’s] obligations … an employer cannot reasonably be seen as having accepted the risk that in dismissing an employee, it would be obligated to pay that employee until their retirement.”

Moreau says if the motion judge did not reference the pending retirement and instead focused on his service, the 30-month award might have been upheld on appeal, or at least 26 or 27 months, since 30 months is unusual.

‘Correctly unpacks poor reasoning’

“This judgment correctly unpacks the poor reasoning of the lower court judge, but I don’t think it will change anything in the employment world,” he says. “Notice periods of more than 24 months will continue to be granted because there are going to be lots of cases going forward where there will be exceptional circumstances.”

As an example of these circumstances, the judgment cites a 2016 Court of Appeal decision involving a husband and wife, ages 63 and 61 respectively, with 32 and 25 years of experience, who worked almost exclusively as contractors for a firm. When they were released without notice, or pay in lieu, they sued and were each given the equivalent of 26 months of notice.

“I think it’s a little too rash to say that the recent case is going to mean fewer notices above 24 months because there are many people in Canada who have worked as long as the couple referenced in the judgment,” Moreau says

He recalls another case in Ontario where a 43-year-old man who started working in his teens received 26 months of pay in lieu when he was terminated.

“The appeal court has already said that exceptions can be granted in exceptional circumstances and the most recent case has not changed that,” says Moreau. “If anything, it affirms it.”