The Ontario Court of Appeal recently provided some much-needed clarity into whether the Courts will impose a “cap” on the wrongful dismissal notice awards. As we wrote about in our April 2019 article, Exceptional Notice Awards Will Be Awarded In Cases With Exceptional Circumstances, in Dawe v The Equitable Life Insurance Company of Canada, the Ontario Superior Court of Justice awarded a long service, senior employee with a 30-month notice period, far exceeding the longstanding unofficial upper limit of 24 months.

In Dawe, the employee, Mr. Dawe had been employed by Equitable Life for 37 years, most recently as a Senior Vice-President and was 62 years old at the time of termination. In their analysis, the Superior Court determined that Mr. Dawe was at the “the extreme high end of each of the Bardal Factors“, justifying an extraordinary 30-month notice award.

However, the Defendant, Equitable Life was unsatisfied with this unorthodox decision, resulting in an appeal. In their recent decision, the Ontario Court of Appeal reaffirmed the principles established in the leading decision on wrongful dismissal damages, Lowndes v Summit Ford Sales Ltd. reiterating that:

  1. Any determination of a notice period is decided on a case-by-case basis;
  2. There is no hard cap on notice periods; BUT
  3. Notice periods beyond 24 months must be supported by EXCEPTIONAL CIRCUMSTANCES!

Applying these principles, the Honourable Justice speaking on behalf of the Court of Appeal, Mr. Gary Trotter, reduced the notice period to 24 months. In doing so, Justice Trotter expressed agreement with Equitable Life’s position, indicating that the motion judge had erred by relying solely on the traditional Bardal Factors to determine that a 30-month notice period was reasonable in the circumstances. Justice Trotter explained that there were no “exceptional circumstances” present in this matter, and as such, a 24-month notice period reflects an award at the highest-end of the acceptable range.

Key Takeaways for Employers

The court has reaffirmed the long-standing belief that, barring exceptional circumstances, a reasonable notice period will not exceed 24 months. However, the term “exceptional circumstance” is ambiguous, and may potentially refer to any number of unique circumstances. For instance, does this now mean that workplace harassment or a violation of an employee’s human rights may constitute an “exceptional circumstance”? Perhaps – but it is also entirely possible that a court will continue to deal with these matters separately from the calculation of a reasonable notice period at common law. Nevertheless, in our view, this ambiguity and subjectivity only further underlines the importance of being diligent and prudent when terminating senior-aged employees.

If your Company would like assistance in smoothly transitioning an older employee from your workplace, or if you are an older worker looking to make that transition, or if you feel you may be subject to age discrimination, we are here to help.   Contact us today for more information.

Disclaimer: this post is intended for educational and non-commercial purposes only and is not intended to be a source of legal advice to any person in respect of any particular legal issue; it does not create a solicitor-client relationship with any readers. If you have a legal issue or possible legal issue, please contact us.

Special thanks to Summer Law Student Joshua Davis for his assistance with the research and writing of this article.

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