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Ontario Court of Appeal confirms 24 month cap on notice periods absent exceptional circumstances

cap on notice period

For as long as I have been practicing, we have referred to a “24 month cap” of notice when it comes to reasonable notice of dismissal pursuant to common law.

Some referred to it as a hard cap and some as an informal rule, but it was widely recognized as a reality that could impact some workers. In the past, there was also an informal cap of 12 months for “lower level” workers, but that was explicitly rejected by our courts a few years ago. And in recent years, we have seen several cases break through the 24 month cap, with many experts suggesting that the law had evolved and that there was no more cap in place.

One example of a case where the courts did not feel constrained by a limit of two years with respect to notice of dismissal is Dawe v. Equitable Life Insurance Company. Last year, a motions court Judge in Ontario went 25 percent higher than 24 months, awarding an older, long-term senior manager 30 months’ notice. And what’s more, the court made it clear that they only awarded 30 months because that’s what the Plaintiff sought in the Statement of Claim. Otherwise, the award would have been 36 months.

This was one of the more dramatic awards and caused many employers to conclude that inflation had come to notice periods, and that their severance costs would be increasing.

However, the matter was appealed, and Ontario’s Court of Appeal has weighed in on the state of common law notice periods, suggesting that any change is not as significant as the original decision might suggest. In so doing, they reaffirmed the principles established in Lowndes v. Summit Ford Sales Ltd. that

  1. any determination of a notice period is fact and case specific,
  2. there is no absolute cap on notice periods, but
  3. notice periods beyond 24 months must be supported by exceptional circumstances.

As a result, the Court of Appeal knocked the notice period down to 24 months. Among other things, they held that the motions Judge did not rely on exceptional circumstances to justify the 30 or 36 month award but focused primarily on factors such as the employee’s age and the end of mandatory retirement.

Given that the factors relied on were really the “basic” factors established in Bardal, being age, length of service, and character of employment, there were no exceptional circumstances to warrant exceeding the two year cap. A 24 month award would reflect the fact that the circumstances in this case warranted an award at the high end of the range.

So what can we take away from this decision? The Court of Appeal of Ontario seems to be suggesting that not as much has changed as some people thought when it comes to notice periods. The high water mark is still 24 months, and to get more, a Plaintiff must demonstrate that there were exceptional circumstances. They cannot simply rely on their age, length of service, or character of employment. That may get you to 24 months, but not beyond.

As a sub-point, counsel should be careful not to sell their case or their client short by not asking for enough. If the initial decision in this case had stood, then the Plaintiff would have lost out on half a year of income due to the fact that the prayer for relief in the Statement of Claim precluded the Court from awarding what they found to be reasonable.

Of course, Plaintiffs and their counsel should also be careful not to ask for too much, as Colistro v. Tbaytel demonstrates.

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Rudner Law, Employment / HR Law & Mediation

Employment Lawyers and Mediators at Rudner Law
Rudner Law specializes in Canadian employment law and Alternative Dispute Resolution. They provide clients with strategic advice regarding all aspects of the employment relationship, and represent them before courts, mediators and tribunals. Read more
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One thought on “Ontario Court of Appeal confirms 24 month cap on notice periods absent exceptional circumstances
  • jim anderson says:

    Great article. Thanks for sharing.

    Can you provide some examples of what would be ” exceptional circumstances” to warrant beyond 24 months. ??
    Am i correct to assume that the employee would need to be in that high end bracket where 20 – 24 months would apply as a “base” and then exceptional circumstances added on top ??

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