Age and length of service as exceptional circumstances?

Exclusive to Canadian HR Reporter from Rudner Law.

Dismissing an elderly, long-service employee? They might be entitled to more than 24 months of notice or pay in lieu of notice at common law.

A recent decision by the Ontario Superior Court of Justice in Panchbhaya v. Vulsay Industries Ltd., 2025 ONSC 5370, awarded a 65-year-old employee with 40 years of service a 26-month notice period.

Justice Koehnen’s ruling, which relied heavily on the core Bardal factors, signals a shift towards a more flexible interpretation of "exceptional circumstances" in wrongful dismissal cases, moving beyond the stricter view previously expressed by the Court of Appeal in Dawe v. The Equitable Life Insurance Company of Canada.

Facts of dismissal without cause

Panchbhaya joined Vulsay Industries in 1983, and was employed by the defendant company for 40 years. In late 2023, at age 65, he was dismissed without cause due to a facility closure.

At the time of termination, he held the position of laboratory manager and had a compensation package including annual salary of $84,000 and participation in the company group benefits and pension plans.

Vulsay provided only minimum statutory entitlements and no letter of reference or outplacement support. Panchbhaya sought 30 months’ pay in lieu of notice, while Vulsay argued for a 12- to 18-month notice period.

Analysis of Bardal factors

Justice Koehnen’s analysis focused on the classic Bardal factors: character of employment, length of service, age, and availability of comparable employment.

• Age as a barrier: The court found that Panchbhaya faced significant re-employment challenges at 65. The court cited Hussain v. Suzuki Canada Ltd., (2011) O.J. No. 6355, noting that employees in their mid-60s are "in the twilight if not at the end of [their] working years" and face "extremely stiff competition" from younger applicants. Justice Koehnen distinguished this from Cabott v. Urban Systems Ltd., 2016 YKCA 4, where a 53-year-old was not deemed to face significant age-related barriers, emphasizing the difference in how a 65-year-old in a specialized technical role is perceived compared to a 53-year-old professional.
• Length of service and employability: The court noted that Panchbhaya was “continuously employed by the defendant for 40 years”, that he was “hired within months of arriving in Canada from India” and that he has “no practical work experience outside of the defendant”. The court highlighted that 40 years with a single employer could make a worker appear "set in his ways" and less adaptable to change, in line with the decision in Milwid v. IBM Canada Ltd., which suggests that an employee’s employability can be limited by lengthy service with one employer.
• Nature of position: Panchbhaya’s position was found to involve specialized skills, limited to the liquid chemical industry, which negatively impacted its transferability to other sectors. The court found that in this case, “age and length of service are exacerbated by the plaintiff’s specialized experience.”

Importantly, the court adopted a more expansive approach to defining "exceptional circumstances" for awards exceeding the presumptive 24-month cap on reasonable notice. In that regard, Justice Koehnen stated at paragraph 12:

“The Court of Appeal has recognized that in exceptional circumstances, notice awards above 24 months are warranted. In Dussault v. Imperial Oil Limited, Favreau J. (as she then was) held that one or more of the Bardal factors, such as age and length of service can, in and of themselves, amount to exceptional circumstances. I find that the plaintiff’s age and length of service here constitute exceptional circumstances.” (emphasis added).

The court relied on Dussault v. Imperial Oil Limited, which held that advanced age and lengthy tenure alone can constitute exceptional circumstances in terms of assessing the duration of a notice period. While Dussault was largely affirmed on appeal, the specific issue of the appropriate notice period was not before the Court of Appeal.

Mitigation efforts analyzed

Despite the plaintiff's diligent search for over one hundred jobs, the defendant challenged his mitigation efforts. The judge dismissed these concerns, noting the following:

• The defendant failed to provide a letter of reference or outplacement counseling.
• The plaintiff only received the minimum entitlements mandated by the Employment Standards Act (ESA).
• While advance notice of the plant shutdown was given, the defendant simultaneously offered retention bonuses and hinted at alternative job opportunities for those who stayed.
• The defendant could not identify a single job opportunity that the plaintiff failed to pursue.

The court criticized the company for failing to provide a reference: “While I agree with the defendant that there is no legal obligation to provide a reference letter or outplacement services, it is somewhat ironic that the defendant attacks the plaintiff for an alleged lack of mitigation when the defendant itself did nothing to assist the plaintiff in his job search.”

Ultimately, the court awarded Panchbhaya 26 months’ notice, along with lost benefits and pension contributions. This award is consistent with comparable cases produced by the plaintiff involving long-serving employees, which had an average age of 58.6 years and tenure of 32.4 years, resulting in an average notice period of 26.6 months.

Key takeaways on notice periods

The Panchbhaya decision is significant, as it signals flexibility in assessing notice periods beyond the 24-month cap. By justifying an award above 24 months primarily on the traditional Bardal factors (the advanced age of 65 and long service of 40 years), Justice Koehnen has expanded the definition of "exceptional circumstances."

 Although this decision is consistent with previous cases where a plaintiff with lengthy service, advanced age and a specialized skillset was awarded more than 24 months of notice, the court here explicitly stated that the plaintiff’s age and length of service constituted exceptional circumstances.

While it remains to be seen if other courts will adopt this broader interpretation, Panchbhaya suggests that advanced age and long service can lead to extended notice periods even in the absence of other factors. Employers should therefore exercise caution when assessing severance obligations for older, long-tenured employees, as they might be entitled to more than the presumptive 24-month cap on reasonable notice.

In addition, employers should be careful in attacking an employee’s mitigation efforts and would be wise to consider offering a positive letter of reference, and outplacement counseling, where appropriate, as well as sharing potential comparable job opportunities.

Nadia Zaman is a senior associate lawyer at Rudner Law in Toronto. She can be reached at (416) 864-8500 or [email protected].