“Age is an impediment”: Fair severance for older employees in Ontario
Courts have previously recognized that older employees may struggle to find comparable re–employment. In a recent decision, Ozorio v. Canadian Hearing Society, the Ontario Superior Court of Justice awarded 24 months’ common law reasonable notice to a dismissed employee, Ms. Ozorio, who was 61 years old at the time of dismissal. Ms. Ozorio had been employed by the Canadian Hearing Society for approximately 30 years, the last ten of which she occupied the role of Regional Director.
This decision provides some helpful direction and guidance for employers that move to terminate the employment of older, long service employees from their organization.
Ms. Ozorio was dismissed in November 2015 as part of a restructuring process. Ms. Ozorio, whose total annual compensation had a value of $102,000, was offered a ‘voluntary separation package’ worth $93,000. Ms. Ozorio rejected this package. The employer then made an improved offer of $97,000—which Ms. Ozorio also refused.
Ms. Ozorio subsequently commenced a lawsuit. In considering the matter, and determining that the appropriate period of reasonable notice was 24 months, the Motion Judge made the following findings:
- Initially the employer offered less than 1–year of total compensation to Ms. Ozorio as reasonable notice. Later, the employer altered its position and asserted that reasonable notice for Ms. Ozorio was in the range of 18-20 months. The Motion Judge was unimpressed by this significant shift in position, noting that it represented a “tacit acknowledgment of the inadequacy of the original offers.” (paragraph 12)
- Age is an impediment to re–employment. The Motion Judge found that “the plaintiff is at a competitive disadvantage given her age in the broader job market, having virtually no work experience outside that of the defendant, a not for profit organization.” (paragraph 18)
The Motion judge further referred to earlier decisions, including Drysdale v. Panasonic Canada Limited, McKinney v. University of Guelph and Leeming v. IBM Canada Limited  O.J. No. 1020 with approval, confirming that:
- “Generally a longer notice period will be justified for older long term employees who may be in a competitive disadvantage securing new employment because of their age” (McKinney);
- “Having served one employer for such a lengthy period of time, a potential new employer may view that individual as rather set in his ways and not as adaptable to change” (Drysdale); and
- Older employees do not have particularly bright prospects for re–employment “competing with younger, more recently trained and less expensive talent.” (Leeming)
- The employer failed to offer Ms. Ozorio any support in seeking alternate employment. Specifically, the Motion Judge found that “no offer was made to provide the plaintiff with a letter of reference or any out-placement counselling services to assist her with alternative employment.” The employer solely provided 34 weeks of statutory notice and severance pay plus benefit continuation for an 8-week period.
Takeaways for employers
- The most significant take away from this decision is a further reminder that “age is an impediment” to re–employment. Older, long service employees will likely be entitled to receive greater severance than their younger counterparts in similar positions. Accordingly, consider carefully the manner in which older employees are dismissed, and how a fair severance package may be structured both to assist them and simultaneously avoid potential liability;
- In this case, it was found that the employer failed to make a reasonable severance offer when it dismissed Ms. Ozorio. As part of your organization’s operational decision–making consider carefully what amount of severance will be offered, and further how this payment (or working notice) will be structured. If your organization decides to offer a lower amount than that required at common law, consider the costs of litigation and how, if the organization later shifts its position, this may be perceived by a court;
- Offer dismissed employees career counselling and transition support, and provide references, as required. On a practical level, the cost to provide this support is minimal, yet it will likely improve your former employee’s chances of finding re–employment. Moreover, should a matter reach litigation, it will better allow the organization to reasonably challenge the mitigation efforts of the former employee;
- While not addressed in this decision, age is also a protected ground under the Ontario Human Rights Code, and as such employees cannot be discriminated against nor treated differentially as a result of their age. Accordingly, if your organization does move to dismiss an older employee, ensure that this decision is made for bona fide reasons (such as a re–structuring, or due to performance concerns). The fact of the person’s age cannot in any way be a deciding factor in the decision to terminate. In any termination situation, it is worthwhile speaking first with an employment lawyer.
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