Absent exceptional circumstances, common law reasonable notice for terminated employees is generally capped at 24 months, with a handful of cases awarding employees greater amounts. In the recent decision Currie v. Nylene Canada Inc., 2022 ONCA 209, the Ontario Court of Appeal shed further light on the kinds of exceptional circumstances which merit an award in excess of the soft cap of 24 months, upholding the trial judge’s decision to award Ms. Currie 26 months of notice after she was terminated without cause from her long term employer.
Ms. Currie was terminated in December 2018 after 40 years of service with Nylene and its predecessor employer, interrupted only by a brief retirement period in 2017, taken only to access her pension. In its severance package, Nylene offered Ms. Currie only her entitlement under the Employment Standards 2000, (“ESA”), consisting 8 weeks of termination pay (the maximum amount under the ESA) and 26 weeks of severance pay (again, the maximum amount). Ms. Currie subsequently argued that she was entitled to common law reasonable notice, rather than just her ESA entitlements, and sought a notice period of 26 months.
At trial, there was no dispute that Ms. Currie was entitled to common law reasonable notice, with the key issue being the appropriate amount of notice. As many readers may be familiar, in assessing how much notice a terminated employee is owed, courts will analyze the applicable Bardal factors, which include: the character of employment, the length of service, the age of the employee, and the availability of similar employment, taking into account the experience, training and qualifications of the employee.
On this issue of service, Nylene argued that her brief retirement in June 2017 taken in order to access her pension, amounted to a break in her employment and so her prior service should not count towards calculating her notice entitlements. The trial judge and Court of Appeal disagreed, finding that her retirement was taken only to access her pension, and that Nylene had assured her that the terms of her employment would remain the same when she was immediately re-hired. Consequently, her entire length of service with Nylene was recognized.
Nylene then also argued that Ms. Currie’s Bardal factors supported a notice period of 15 months, while Mr. Currie argued that the appropriate amount of notice was 26 months. Both the trial Judge and the Court of Appeal again sided with Ms. Currie, finding that 26 months was appropriate given the following:
- Currie had been employed by Nylene or its predecessor Company for 40 years, since she was 18 years old
- After working with Nylene for the entirety of her career, she was terminated at age 58, near the end of her career
- Currie’s work experience with Nylene was niche, in one manufacturing environment, and as such her skills would not be easily transferrable to other industries or other lines of work. Notably, Ms. Currie had limited computer skills, which were recognized as an impediment to her being competitive for many positions.
- Currie had limited formal education, having left school in Grade 11 to work for Nylene in 1979, and that the termination in light of the previous points “was equivalent to a forced retirement” given her age.
The trial judge held that the factors listed above, when taken together, did amount to exceptional circumstances meriting an award beyond the soft cap of 24 months. This was supported by Ms. Currie’s work history post-termination, which demonstrated that she was still unemployed in 2021 when her case was first heard by the courts, over two years after she was terminated, and despite her submitting nearly 150 applications.
Had Ms. Currie had an enforceable employment agreement which contained a valid termination provision, her entitlement to severance would have been limited to the ESA amounts first offered to her at the time of her termination. This case serves as a reminder to employers to regularly review and update their employment agreements to minimize any ambiguity around employee termination entitlements.
Should you have any questions regarding employment agreements for your organization, please do not hesitate to reach out to the team at Rodney Employment Law at [email protected] or complete our contact form here.