No clear answers as to when longer notice periods are required

A recent Ontario Superior Court decision provides a clear reminder that there remains real uncertainty as to what constitutes “exceptional circumstances” that would require an employer to give a termination of employment notice greater than 24 months in length.

When an employer terminates someone’s employment, they typically owe them prior “reasonable notice” of termination.  The length of that notice is generally capped at 24 months unless there are “exceptional circumstances”. However, a string of decisions shows there is little consistency in deciding what those factors entail.

Let’s go back to 2019, and the Ontario Court of Appeal’s ruling in Dawe v. The Equitable Life Insurance Company of Canada. Michael Dawe was a senior vice president who was dismissed at the age of 62 with 37 years of employment. He was offered pay in lieu equivalent to 24 months’ notice. He sued for wrongful dismissal and the motion judge held that 30 months was an appropriate notice period. The company argued that was excessive and the appeal court agreed, reducing the notice to two years.

“There were no exceptional circumstances that warranted a longer notice period,” the judgment states.

Same circumstances, different rulings

Fast forward to March 2022, when the Ontario Court of Appeal upheld a lower court decision granting Diane Currie a 26-month notice period. In Currie v. Nylene Canada Inc., the appeal court ruled “the trial judge firmly anchored his reasonable notice analysis in a series of cases where the court had found that ‘exceptional circumstances should exist to support a notice period that exceeds 24 months.’”  The judgment went on to note those exceptional circumstances included the fact that the employee had been with the company for 40 years when her role was terminated at the age of 58, meaning that the termination “was equivalent to a forced retirement.”  It was hard to discern from Currie how long service and an older working age equated to “exceptional circumstances” there when similar long service and age in Dawe did not get Mr. Dawe over the “exceptional circumstances” line.

The presence of “exceptional circumstances” was again a factor in the Superior Court of Ontario decision in Milwid v IBM decided in January 2023.  Mr. Milwid worked for two divisions of IBM since 1982, giving him a total of 38 years of service. IBM terminated him in 2020 when he was 62 years old.  

Ultimately, the court held that “there are exceptional circumstances in this case which warrants a notice period in excess of 24 months,” including Mr. Milwid’s age, lengthy service, the exclusivity of his employment with IBM, the character of his employment and the specialized nature of his work. He was awarded a 26-month notice period, plus one extra month “on account of COVID’s impact on the job market.”

The similarities in these three cases are striking

The similarities in these three cases are striking. All three plaintiffs had long service records, worked exclusively for one company from early adulthood, and were approaching retirement age. On their own, these three factors seem easy to identify as “exceptional circumstances.”

This begs the question: why did the Court not reach that conclusion in Dawe? The appeal court has made it clear – in principle, at least – that the 24-month cap can only be surpassed if there are exceptional circumstances. The Milwid, Currie and Dawe decisions remind us there doesn’t seem to be agreement as to what comprises those factors.

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I’ve addressed “exceptional circumstances” in relation to notice periods before. In April 2022, I mentioned four other cases where the longevity of someone’s employment may or may not lead to a longer notice period. They were:

• In the 2000 Ontario Supreme Court case of Baranowski v. Binks Manufacturing Co., a man who was laid off at 52 with close to 29 years of experience was given 30 months of salary in lieu of notice. “Since the plaintiff held the reasonable expectation his employment was secure until his retirement, this is an ‘exceptional’ case, one which warrants a notice period in excess of 24 months,” the judge wrote.
• In the 2006 case of Lowndes v. Summit Ford Sales Ltd, the Ontario Court of Appeal noted that the determination of what constitutes reasonable notice is “case-specific.” While there is “no absolute upper limit or ‘cap’ on what constitutes reasonable notice, generally only exceptional circumstances will support a base notice period in excess of 24 months.” The 59-year-old plaintiff had worked for the same firm for approximately 28 years. The trial judge gave him a 30-month notice period, which the appeal court reduced to 24 months.
• In 2009 in Cardenas v Kohler Canada Co. an Ontario Superior Court found that a reasonable notice period of 26 months was appropriate for a 43-year-old shift supervisor with 27.5 years of service. 
• In 2016, the Ontario Court of Appeal ruled in Keenan v. Canac Kitchens Ltd. that a husband and wife – aged 63 and 61 with 32 and 25 years of experience respectively, who worked almost exclusively as contractors for a firm – were entitled to 26 months of notice.

As I wrote in 2019, “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.”

What we need from the courts is a definitive answer about what constitutes those circumstances. A clear guideline would benefit everyone involved.

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