The Court of Appeal for Ontario recently overturned a lower court summary judgment decision awarding 30 months’ notice to a long-service employee whose employment was terminated without cause. The Court held that there were no “exceptional circumstances” to justify an award of greater than 24 months and reduced the reasonable notice period accordingly.
At the time of termination, the plaintiff was 62 years old and had been employed with Equitable Life for 37 years – his entire career. He held a Senior Vice-President role, and his compensation was significant. The plaintiff requested a termination package after a dispute over a fairly minor issue. When the matter was not resolved, the company terminated his employment without cause and offered a termination package of 24 months. The plaintiff gave affidavit evidence that he planned to work until he retired at age 65, which would have occurred about 30 months after the termination of his employment.
The Court of Appeal concluded that the decision of the motion judge to award 30 months’ notice was based on “irrelevant” considerations, such as the change in society’s attitude regarding retirement and the fact that the Province of Ontario had abolished mandatory retirement through legislative changes. The Court confirmed the approach taken in determining the reasonable notice period in the leading case of Lowndes v Summit Ford Sales Ltd. (2006), 206 O.A.C. 55 (C.A.). In Lowndes, the Court of Appeal for Ontario held that an assessment of the reasonable notice period must be case-specific and that, while the reasonable notice period is not capped at 24 months, it is only in “exceptional circumstances” that the reasonable notice period should exceed 24 months. In Lowndes, the Court specifically held that a notice period of 24 months already recognizes and rewards an employee’s long-term service and senior position and, therefore, constitutes the high end of reasonable notice for such employees. In other words, the employee’s long period of service and senior position do not constitute “exceptional circumstances”.
The Court of Appeal in Equitable Life found that the motion judge’s conclusion “did not rest on the presence of exceptional circumstances” but was instead based on his “perception of broader social factors”. The Court also stated that the plaintiff’s plans regarding his own retirement were not determinative in ascertaining the employer’s obligations to him, and confirmed an earlier Ontario case that held that an employer does not guarantee employment to retirement. There were, therefore, no exceptional circumstance in this case to justify a notice period greater than 24 months. The Court also found that the plaintiff had initiated his own departure by requesting an “exit strategy” and that this action was a factor that actually weighed against a finding of “exceptional circumstances”.
Equitable Life is an important decision for employers. It confirms that even where an employee has exceptionally long service and occupies a senior role, these factors do not constitute “exceptional circumstances” justifying a notice period of greater than 24 months. A notice period of 24 months already recognizes those factors; something more is required to justify a greater notice period. This case also confirms that employers do not owe employees work until their planned retirement. Societal norms and the absence of mandatory retirement are not relevant considerations to the determination of reasonable notice period.
While Equitable Life does not provide examples of factors that may constitute exceptional circumstances, it does suggest that an exceptional circumstance should not be based on traditional factors used to determine the reasonable notice period. These factors include age, length of service, nature of employment and availability of similar employment suitable to the employee’s skills, experience and qualifications. Employees seeking a notice period greater than 24 months must provide evidence of additional factors and persuade a court that they are “exceptional circumstances”.