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EMPLOYMENT LAW
Apr 6, 2010

Reasonable notice or a salary for life?

    

By Jeffrey R. Smith (jeffrey.r.smith@thomsonreuters.com)

With mandatory retirement gone the way of the passenger pigeon, some employees are choosing to delay their retirement and working to ripe old ages. Employers can benefit from the experience and knowledge of these older employees, but what happens if things aren’t working out?

Obviously, employers have to be careful not to do anything that could be perceived as discrimination, as age is a protected ground under human rights legislation. Trying to force someone to retire would be entering dangerous territory. But what happens if an employer decides to terminate an older employee? What kind of reasonable notice should an employer be expected to give?

The purpose of the reasonable notice period, whether working notice or payment in lieu of, is to give the employee enough time to find comparable employment — a bridge between jobs. The length of notice is determined by factors such as the employee’s age, position, level of pay and the availability of similar jobs nearby. However, what about an employee who’s pushing 70? With more people working past 65, there are bound to be some who end up in circumstances where the employer wants to or needs to let them go. But what’s the likelihood of someone in their late 60s of being hired in a similar job they’ve already held for many years?

A Quebec employer was faced with this situation when its parent company fired its top executive in 2005 after 39 years with the company. The 69-year-old president of Cerescorp, an equipment management company operating in Montreal, was fired by parent company CTI after he pried into the company’s financial statements after a dispute over his bonus.

The Quebec Superior Court found CTI constructively dismissed him and he was entitled to damages for reasonable notice. The court acknowledged notice was “not intended to be a guarantee of employment for life,” but awarded the terminated employee 24 months’ notice because of his high position and slim chance of being hired somewhere else.

The court noted determining reasonable notice for someone of advanced age was “a balancing act.” He should be compensated for the fact it was unlikely he would find another comparable job, but part of that could be because it’s likely he would retire soon anyway. Would a 69-year-old still be working at all in two years, let alone looking for a new job? Reasonable notice usually goes up the older an employee is, but should there be an age threshold where it starts to go down again?

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a biweekly newsletter that looks at workplace law from a business perspective. For more information, visit www.employmentlawtoday.com.

    
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