Exceptional circumstances in employment law not easily defined

Employment/Labour /
Ellen Low
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By Tony Poland, LegalMatters Staff • Determining how to tie exceptional circumstances to a fair severance package can be difficult to predict as illustrated by a recent court decision involving a 73-year-old who spent decades as a radio broadcaster, says Toronto employment lawyer Ellen Low.

Low, principal of Ellen Low Employment Law, says the case deals with a man who had been employed as a news reporter and on-air broadcaster for 55 years. At the time of his dismissal in 2018, he had been working for about 20 years at two Tillsonburg, Ont., radio stations that had been purchased by a large media company in 2017. 

The man was terminated without cause when the company restructured and was offered 12.4 months of pay in lieu of notice, according to the judgment. When he rejected the settlement and initiated a wrongful dismissal claim, the company countered with an offer of 18-month’s pay.

The case ended up before the Ontario Superior Court of Justice where the man argued that given his age, years of experience and the lack of available employment in his field, he was entitled to a 30-month severance package. 

Court not swayed

The Court disagreed, saying he “has not established on the evidence that there are exceptional circumstances that entitle him to damages over the 24-month limit imposed by the Ontario Court of Appeal in Dawe v. The Equitable Life Insurance Company of Canada. Instead, the court awarded 21 months’ compensation.

“I would have thought with someone who is 73-years-old, that in of itself would be an exceptional circumstance,” Low tells LegalMattersCanada.ca. “He spent his entire life in radio. He worked for 20 years in the same company. If none of that is exceptional then what is? Shouldn’t someone in that situation be entitled to 24 months severance in lieu of notice?”

She says employment law has changed significantly in the past two years, influenced to some degree by the Dawe case.

In the 2018 decision, Michael Dawe was awarded 30-month’s severance, exceeding the implied 24-month threshold. In reaching its decision, the Court found the man was: “62 at the time his employment was terminated. He had devoted his entire working career to Equitable Life and its predecessor, 37 years in total. Mr. Dawe was a senior vice-president. He was a member of the senior management team. There are no similar employment opportunities.”

“With no comparable employment opportunities, in particular, I would have felt this case warranted a minimum 36-month notice period,” Justice Donald J. Gordon wrote. “Mr. Dawe’s position of a 30-month notice period is more than reasonable. I conclude he was entitled to that in this case.”

Low says “that decision set off a chain of cases involving significantly higher notice periods.”

“We started to see these increased notice periods that were over what otherwise would have been considered the traditional maximum in Ontario of 24 months,” she says. “But then Dawe was overturned by the Court of Appeal in 2019.”

‘Case-specific’

Low says the appeal court “went through its analysis and discussed that what constitutes reasonable notice is case-specific.”

“The decisions that follow confirm that there’s no upper limit and there’s no cap on what constitutes reasonable notice,” she explains. “In Dawe, the Court of Appeal stated that only in exceptional circumstances can notice can exceed 24 months. However, the court doesn’t expand on that.

“So, we’ve now got this analysis that states exceptional circumstances must be demonstrated to exceed the 24-month limit, but without a lot of discussion as to what the exceptional circumstances are which might allow you to do that,” Low adds.

She says it seems to be generally accepted post-Dawe that no plaintiff is going to see an award surpassing the 24-month threshold.

“I disagree with that. In the right case of course,” Low says. “If you’re going to go to trial you may as well take a run at trying to establish an exceptional circumstance. You do that by referencing the language in the court of appeal decision in Dawe, using the fact that there is no cap and it’s supposed to be an individual assessment.”

The question of what constitutes an exceptional circumstance will continue to be debated, she predicts.

“We are likely to see more cases dealing with Dawe in terms of this matter,” Low says. “One of the questions that arise in my mind, for example, is does COVID constitute an exceptional circumstance? What about the current downturn in the economy? We don’t know yet.”

Impact of the pandemic

She references Yee v Hudson’s Bay Company, which involved a plaintiff who was dismissed in August 2019, before COVID’s economic fallout. He argued the reasonable notice period should be extended to reflect the impact of the pandemic on his chances of finding similar employment.

The Court ruled that “it seems clear terminations which occurred before the COVID pandemic and its effect on employment opportunities should not attract the same consideration as termination after the beginning of the COVID pandemic and its negative effect on finding comparable employment.”

“The issue of how to treat the plaintiff at the time of termination raises questions in the employment law bar with each different situation,” says Low.

As in every employment case, she says it is important to seek advice to ensure the best outcome.

“If you are an employee who has been terminated don’t assume you are going to be limited to a 24-month notice period. However, don’t be surprised if that period seems to be the practical cap,” Low says. “From an employer’s perspective, don’t get too comfortable thinking that 24 months is the maximum possible amount that can be awarded. People are going to continue to chip away at these exceptional circumstances.”