It is a well-established principle of Ontario employment law that, barring exceptional circumstances, the maximum severance period an employee can expect to receive upon dismissal tops out at 24 months. Ontario’s Court of Appeal has reaffirmed this point time and again (including in 2006, 2016 and 2019).
Last month, the Court of Appeal revisited the question of what circumstances merit a longer than usual severance award in Currie v. Nylene Canada Inc., 2022 ONCA 209. This case involved a 58-year-old employee who had 40 years of service at the time of her dismissal. Having reviewed the matter, the Court of Appeal confirmed that a severance period of 26 months was warranted.
In particular, the Court of Appeal was struck by the employee’s “unique circumstances.” These included:
- Currie had left high school at age 18 to work for Nylene Canada and remained there for her entire career;
- Currie’s long tenure and age at the time of dismissal;
- Currie’s work experience was limited to a very narrow field (fiber production operation) and her skills were not easily transferrable;
- Currie had limited computer competency, leading the trial judge to conclude that her odds of finding new employment in the modern job market was slim; and
- the cumulative effect of Currie’s age, limited education, and specialized skills transformed her dismissal into what was effectively a “forced retirement.”
The Currie decision reaffirms that something extra is needed to justify severance in excess of 24 months. Long service (25 years or more) and old age (60 years or more) are not enough. Instead, it was the additional factors related to Currie’s service with a single employer, lack of transferrable skills, and computer limitations that allowed the Court of Appeal to confirm a 26-month severance award.
When assessing severance periods, both employers and employees must avoid the temptation to only look at the narrow criteria of age, position, and tenure. The factors that can impact the length of severance may be as varied as workers themselves. Consider the following cases where Ontario courts determined that exceptional circumstances existed to justify long severance awards:
|Decision||Age||Service||Job Title||Exceptional Circumstance(s)||Notice Period|
|Dussault v. Imperial Oil Limited, 2018 ONSC 1168||63 years old and 57 years old||39 years and 36 years||Real Estate Development Manager and Territory Manager||Experience limited to a single employer; difficult to transfer unique job skills||26 months|
|Mikelsteins v. Morrison, 2018 ONSC 6952||57 years old||31 years||Director of Business Development||Experience limited to a single employer; difficult to transfer unique job skills; marketability limited by non-solicitation obligation||26 months|
|Keenan v. Canac Kitchens Ltd., 2016 ONCA 79||63 years old and 61 years old||32 years and 25 years||Delivery and Installation Leaders||Experience limited to a single employer; acted as the “public face” of company for entire career||26 months|
|Baranowski v. Binks Manufacturing Co., 2000 CanLII 22614 (ON SC)||54 years old||29 years||Company President||Promised job security until retirement||30 months|
As can been seen from the above chart, there is ample case law to support the 26-month severance period confirmed in Currie. Indeed, long service with a single employer, rendering a worker’s skills difficult to transfer, is one of the most common “exceptional circumstances” recognized by Ontario courts.
Employers should take comfort that severance awards of more than 24 months are still quite rare. Few employees will have the necessary mix of old age, very long service, and something extra to qualify. The easiest way to reduce dismissal related liabilities, however, remains the use of written employment contracts. It is similarly vital to have such contracts regularly reviewed by legal counsel to ensure they remain up to date with current judicial guidance. To do otherwise risks that, one day, your business may face a claim premised on “exceptional circumstances.”
- Equity compensation and effective communication of adverse terms - January 13, 2023
- When is forty minutes too much? - December 16, 2022
- Process matters: understanding the procedural duty to accommodate - November 18, 2022