Termination of Long-Term Senior Employees: 24 Month Upper Limit Confirmed

By Victoria Merritt, Associate & Mitchell Hayward, Summer Student

A recent case from the Ontario Court of Appeal confirms that where an employee is terminated without cause, and there are no exceptional circumstances, reasonable notice is generally capped at 24 months. This is the case even where it is a senior and long-term employee.

While this is not an Alberta decision, it will certainly be relied on by Alberta employers.

The Facts

A senior employee had spent his entire 37-year career with one employer when he was terminated without cause. He was 62 years old and a Senior Vice President.

The employer had made an offer of 24 months’ notice. However, the employee rejected the offer, in large part because his plan was to retire at the age of 65, which was 30 months after his termination. In the circumstances, he felt that the appropriate notice would be to his desired retirement date.

The employer disagreed, and the employee sued the company for wrongful dismissal. He sought damages equivalent to a notice period of 30 months.

The First Decision

An original decision by the Ontario Superior Court concluded that the employee was entitled to the 30 months’ notice he asked for. The court even went so far as to say that it would have awarded him 36 months if he had asked for it. Part of the Ontario Superior Court’s reasoning was that because the employee was very senior, and could not reasonably find comparable employment, his termination was “tantamount to a forced retirement”. Essentially, he should have been able to retire on his own terms.

The Appeal Decision

The employer successfully appealed the Superior Court’s finding of a 30-month notice period. The Court of Appeal found that the notice period should have been 24 months. The Court’s reasons included the following:

  • The employee’s plan to retire at age 65 should not have been a deciding factor in determining his employer’s obligations towards him. Unless an employer and employee have a contract for a fixed term, an employer does not guarantee employment until retirement.
  • What constitutes “reasonable notice” is case-specific. However, only exceptional circumstances will result in a base notice period longer than 24 months. There were no exceptional circumstances in this case that warranted a longer notice period.

What does this mean for employers and employees?

This decision confirms that 24 months’ notice is a maximum notice period, except for in exceptional circumstances. Being a very senior and long-term employee close to retirement does not constitute exceptional circumstances.

  • For employees, this is an important consideration if termination occurs close to retirement age. At the end of the day, your intention to retire at a certain age is not an important factor in determining what your employer owes to you.
  • For employers, this decision will hopefully provide some certainty when it comes to assessing risk and determining appropriate notice provisions.

If you have any questions or would like advice, reach out to our Labour & Employment team. ∎

This post is meant to provide information only and is not intended to provide legal advice. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this post to be outdated.