How Does Age Impact Reasonable Notice Period Assessment?

September 2019

Article by: Gabrielle Scorer

With the demise of mandatory retirement many people are now working past age 65.  What impact does age have on the assessment of the reasonable notice period?  A recent decision of the Ontario Court of Appeal confirmed that “exceptional circumstances” must exist before more than 24 months is awarded, and that neither age nor a planned retirement date constitute exceptional circumstances.

In Dawe v. The Equitable Life Insurance Company of Canada, 2019 ONCA 512, the Ontario Court of Appeal overturned an award of 30 months notice to a 62 year old senior vice president with 37 years of service. The motion judge was of the opinion that the case warranted a minimum 36 month notice period based on the Bardal v Globe and Mail Ltd. factors, but awarded 30 months to ensure the plaintiff was fully compensated to just beyond his 65th birthday.  The plaintiff had said he intended to work for the employer until at least age 65.

The Court of Appeal did not accept the judge’s reasoning that the “change in society’s attitude regarding retirement” merited a longer notice period.  The Court confirmed that the reasonable notice period should only exceed 24 months where “exceptional circumstances” exist.

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.  In Saalfeld v. Absolute Software Corporation, 2009 BCCA 18, the court stated that reasons to extend a notice period might include inducement, evidence of a specialized or otherwise difficult employment market or bad faith conduct. Although it is sometimes argued that the older a person is the harder it will be for them to find new work, the impact of age in determining notice period must be considered on a case-by-case basis and “the individual circumstances and evidence regarding the impact of age in each case is more important than following any particular rule.” – Sciancmerli v. Comtech, 2014 BCSC 2140.

Recent cases in BC confirm these principles.  In Kerr v. Arpac Storage Systems Corp. [2018] B.C.J. No. 810, the plaintiff, who was 70 years old at the time of termination with 22 years service as the employer’s Occupational Health and Safety Manager, was awarded 20 months notice.  In O.W.L. (Orphaned Wildlife) Rehabilitation Society v. Day, 2018 BCSC 1724, the court concluded the appropriate notice period was 26 months.  The court stated that the plaintiff’s circumstances fell within the category of exceptional cases justifying a reasonable notice award beyond two years as she was the founder of O.W.L., had been with the organization for 30 years and had a narrow field of expertise.  These exceptional circumstances, as well as her age (63) resulted in the conclusion that 26 months notice was appropriate.[1]

Lessons for Employers

  • The combination of age, long service and a narrow field of expertise will likely create the basis for a finding of “exceptional circumstances” meriting extension to the reasonable notice period at common law.
  • To avoid uncertainty and costly litigation to have a court determine the appropriate notice period, ensure there is an enforceable severance provision in every employee’s employment contract which states what amount of notice or pay in lieu of notice the employee will receive if terminated without cause.
  • Contractual terms may require adjustment where an employee’s position changes significantly.
  • Contracts with severance provisions can be introduced to employees who have not previously had them as long as the employee accepts the new terms of employment in exchange for consideration from the employer.

[1] The court ultimately awarded 24 months’ notice based on the fact the plaintiff was planning to reduce her hours to look after her husband.