Long service employee awarded reasonable notice beyond 24 months
There is an implied term of the employment contract that when an employee is terminated without cause, they will be provided reasonable notice of termination. (Of course, an employer can avoid the reasonable notice requirement by including an express provision regarding termination in the employment contract.)
Reasonable notice is determined based on the well known factors from Bardal v. Globe & Mail Ltd. ((1960), 24 D.L.R. (2d) 140 the employee’s age, position, length of service and the likelihood of securing alternate work). While there is no fixed cap on the length of reasonable notice, Canadian courts have typically held that the maximum award will be 24 months. It is only in exceptional circumstances that a court will award a longer notice period. The Ontario Court of Appeal affirmed these principles in Lowndes v. Summit Ford Sales Limited (2006) 206 O.A.C. 55. It stated:
Although it is true that reasonable notice of employment termination must be determined on a case-specific basis and 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. (para 11)
Recently, the Ontario Superior Court of Justice provided guidance on what constitutes “exceptional circumstances” which will justify extending the notice period beyond 24 months. In Hussain v. Suzuki Canada Ltd. (2011), 209 A.C.W.S. (3d) 101, a 65 year old employee with 36 years of service was terminated when his position was eliminated due to restructuring. Suzuki offered him 34 weeks’ (approximately 8 months) notice as severance. The employee rejected the offer and brought an action seeking 30 months’ pay in lieu of notice.
In a brief decision, the Court held that the employee was entitled to 26 months’ notice. Justice Roberts based the decision the following factors:
- The employee was 65 years old
- He was Suzuki’s longest tenured employee in Canada and he had no inkling that he would be terminated
- He was an Assistant Warehouse Supervisor, which Suzuki admitted was a very important and valuable job
- His skills and experience were entirely in the automotive industry and were not particularly marketable
- While there was no evidence that he intended to retire in the near future, it was “a reasonable inference that the plaintiff is now closer to the end of his working years” (para 3)
- The plaintiff lost his job as a result of Suzuki’s restructuring due to its economic issues
Justice Roberts held that while each of these factors may not be exceptional, the combination amounted to the kind of exceptional circumstances that warranted an extension of the notice period.
Employers should take note of this decision when terminating a worker in similar circumstances. This case indicates that the costs of terminating an older worker without cause could be higher than previously anticipated. Two of the six factors in this case which led to a finding of “exceptional circumstances” related to the employee’s age and likelihood of retirement. This suggests that courts may be more likely to award damages beyond the previous limit of 24 months when an older worker with a long service record is terminated. Employers should consider all of the possible options when faced with a comparable situation, such as working notice or a severance arrangement subject to mitigation, to ensure they take the best approach to limit costs and the risk of litigation.
Lawyer, Cox & Palmer