Ontario Court of Appeal affirms 'cap' of 24 months absent exceptional circumstances

Appeal court reduces 30-month notice award to dismissed employee with 37 years of service to 24 months

Ontario Court of Appeal affirms 'cap' of 24 months absent exceptional circumstances
Loyalty and dedication are not the type of exceptional circumstances that might warrant more than 24 months' notice of dismissal: Ontario Court of Appeal Shutterstock

On June 19, 2019, the Ontario Court of Appeal released a decision in Dawe v. Equitable Life Insurance Company of Canada. One of the issues in the case which will be of interest to employers concerned the employee's entitlement to notice, and whether an award of 30 months was appropriate in the circumstances.

Michael Dawe was employed as a Senior Vice President with Equitable Life Insurance Company of Canada and was terminated after 37 years of employment without cause. At the time of termination, he was 62 years old, having commenced his employment with Equitable Life at the age of 25. Over the years, he had received several promotions.

At the time of termination, Equitable Life offered Dawe 24 months’ notice, plus certain other benefits. He refused to sign a release and was paid his minimum entitlements under Ontario's Employment Standards Act. He then brought a motion for summary judgment alleging, among other things, that the 24-month notice was insufficient. The motion judge determined that the Dawe was entitled to 30 months’ notice. Despite a number of cases which had found that only exceptional circumstances would support a base notice period in excess of 24 months, the motion judge took a different approach and concluded that a notice period of 30 months was appropriate and did not rest on the presence of "exceptional circumstances," but rather, was based on the judge’s perception of broader social factors including a change in society’s attitude regarding retirement.

The Court of Appeal reversed the motion judge and reduced the notice period to 24 months. First, the Court of Appeal indicated that the motion judge should have applied the traditional line of authority restricting dismissed employees to 24 months instead of relying on his own perceptions of the change in society’s attitude regarding retirement. Second, the fact that mandatory retirement was abolished in Ontario in 2006 should not change the court’s views about the traditional approach to determining reasonable notice, and it was not open to the motion judge to "chart his own course" in the light of authorities which generally restricted employees to 24 months’ notice.

It is important to note that the court specifically acknowledged that Dawe's lengthy employment service and his loyalty and dedication to his employer’s business were not the type of "exceptional circumstances" that might drive the notice period beyond 24 months; rather, the base notice of 24 months recognized and rewarded these factors, and constituted the "high-end of the appropriate range of reasonable notice for long term employees."

This case is significant in that there has been a trend over the last few years with long service employees seeking notice periods of 30 and even 36 months, based on working for an employer their entire lives and being in their late 60s and even early 70s. Employers are often confronted with demands for well in excess of  24 months when they terminate employees in these situations. While it is still possible for an employee to successfully seek a notice period in excess of 24 months, the Equitable Life decision suggests that "exceptional circumstances" must be precisely that, and that lengthy service and age would not generally suffice to enlarge a "cap" of beyond 24 months.

For more information see:

  • Dawe v. Equitable Life Insurance Company of Canada, 2019 ONCA 512 (Ont. C.A.).

Thomas A. Stefanik is a partner and head of the Employment and Labour Group with Torkin Manes in Toronto. He can be reached at (416) 777-5430 or tstefanik@torkinmanes.com.

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