Notice Period Capped at 24 Months in Most Cases

The Ontario Court of Appeal released a decision providing clarity to employers faced with having to determine appropriate notice periods, by ruling expressly that 24 months should be the ‘cap’, except in exceptional circumstances.

Dawe v. Equitable Life Insurance Company of Canada [2019 CanLII 512 (ON CA)] [hereinafter “Dawe”], was granted leave to appeal following a number of issues being heard and ruled on in the Superior Court of Justice. One of the issues being appealed was the Motion Judge’s finding, that Mr. Dawe’s notice period should not be that of 24 months, as was deemed by his former employer, but rather 30 months. In part, that determination was made based on what the Motion Judge felt was a change in society’s attitude about retirement and the belief that mandatory retirement, abolished in Ontario, since 2006, was done to protect against discrimination, which resulted in many people working past 65 years of age.

Mr. Dawe, at the time of termination was 62 years old, had 37 years of service, was holding a position of Senior Vice President and was a member of the Senior Management Team. His employer terminated his employment without cause. His notice period was deemed by the employer to be 24 months. The circumstances involved in his termination are not being explored here. While those details as to how his termination came to be were covered, their relevance as to the determination of the notice period itself were not considered.

The jurisprudence provides that generally, 24 months is to be the maximum notice period in these cases. The leading case, Lowndes v Summit Ford Sales Ltd. [2006 CanLII 14 (ON CA)] [ hereinafter “Lowndes”] establishes that reasonable notice must be decided on a case-specific basis. While true, as to what exactly constitutes reasonable notice, there is no specific or absolute upper limit or cap, generally, only circumstances that are exceptional would warrant support for a notice period in excess of 24 months.

The Motion Judge was aware of this jurisprudence and referenced it along with Bardal v. Global and Mail Ltd. [1960 CanLII 294 (ON SC)] a case that set out the principles applicable in determining reasonable notice which include, the employee’s age, the length of service, the nature of the employment and the availability of similar employment in view of qualifications, experience and training.

While aware of these cases and their principles, the Motion Judge ruled Mr. Dawe’s notice period should be 30 months rather than the 24 months offered by his employer. Leave to appeal was sought on that determination, amongst others.

On the specific issue of the appropriate notice period, the Court of Appeal reviewed the lower court’s decision and found it erred in finding 30 months was the appropriate notice period. They allowed this ground of the appeal and reduced his notice period to 24 months.

In making that determination, this court noted that in Lowndes, a case referenced in the Motion Judge’s decision, found Mr. Lowndes himself did not establish exceptional circumstances that would warrant a notice period exceeding 24 months.

Reference was made to the fact that the approach in Lowndes continues to be followed in the court system. More specifically, in following Lowndes, the case of Keenan v. Canac Kitchens Ltd. [2016 CanLII 79 (ON CA)] was noted where it was ultimately found the husband and wife plaintiffs there, did establish circumstances that were exceptional and their award of 26 months’ notice was not set aside. In the matter of Strudwick v. Applied Consumer & Clinical Evaluations Inc. [2016 CanLII 521 (ON CA)] Lowndes was again referenced for its principles of case-specific analysis and, in general, a cap on notice periods except in exceptional circumstances. Ultimately, in that matter the court did not increase the base notice period of 20 months.

The Court of Appeal was critical of the Motion’s Judge’s decision here to grant a notice period of 30 months where exceptional circumstances were not present, but rather, based on the judge’s own perception of social issues leading him to conclude the principles in Lowndes did not apply. Their view was Lowndes should have been applied rather than the judge’s personal perception and there was no basis for that thinking. While true, mandatory retirement in Ontario, ceased to exist beyond 2006, they noted the approach in Lowndes has not been altered and neither of the matters of Keenan and Strudwick the Court of Appeal had referenced suggested the end of mandatory retirement should alter the approach to determining reasonable notice.

The Court of Appeal agreed with the Motion Judge that Mr. Dawe’s senior position, his lengthy years of service, his age at the time of termination and the difficulty he would have in finding employment were all factors that warranted a notice period that was substantial. But, they determined, they were not exceptional circumstances and there was no basis upon which to award Mr. Dawe more than 24 months’ notice. They deemed Mr. Dawe’s circumstances similar to those in Lowndes. Mr. Lowndes was also a long-term employee, of similar age and held a management position. Cronk J.A. in the Lowndes matter stated “the base notice period of 24 months “recognizes” and “rewards” these factors and constitutes the “high end of the appropriate range of reasonable notice for long-term employees in [Mr. Lowndes’] position.” Ultimately, the appeal was allowed on that ground and the notice period was reduced to 24 months.

Thus for employers with employees seeking notice periods in excess of 24 months, this case is helpful. This is not to suggest that employees who seek notice periods in excess of this will always be unsuccessful, but rather, only those with exceptional circumstances will be considered and circumstances, such as a lengthy service or of a certain age, according to this recent case will not be sufficient to warrant exceptional circumstances and a notice period beyond 24 months. Please contact our office should you require further advice on matters of this nature.