"FORCED RETIREMENT" OF ADVANCED-AGE EMPLOYEES - GET READY TO PAY A PREMIUM, SAYS THE COURT

The emerging judicial trend in Ontario is to give more to long-service, advanced-age employees if they are wrongfully terminated.  The Courts are determining that “forced retirements” are unacceptable and punishing employers who are perceived to do so by granting more pay in lieu of notice (i.e., longer notice periods).

Severance settlements will be impacted by this trend in the Courts and, certainly, much more careful scrutiny should be given by employers forced to consider whether to litigate the notice period for advanced age employees (typically those over the age of sixty-five years), particularly if they have mid-to-long-term service records with the employer.

Case One: Dawe v. Equitable Life Insurance Company2018 ONSC 3130 (CanLII):

The employee had worked for thirty-seven years for the employer. He was a senior VP. He was sixty-two years of age when he was terminated, without cause. He earned a salary of about $250,000 annually, plus a bonus of nearly $400,000 in the year his employment was terminated.

He sued. He claimed he had planned to work for another three years.

The Court acknowledged the general rule that twenty-four months is the maximum notice period awarded. Despite this, the Court noted “a change in society’s attitude regarding retirement”, particularly with the abolition of mandatory retirement in 2006. The Court rules that “presumptive standards no longer apply”, mainly because many employees work past the age sixty-five.

After considering all of the usual factors in a case for wrongful termination, such as the employee’s age, length of service, character of employment and availability of alternate employment), the Court emphasized the employee’s advanced age, especially on the basis that it made the availability of comparable employment more difficult for the employee.

In fact, the Court held that termination without cause of this employee was “tantamount to a forced retirement”, stressing that the employee should have been given the opportunity to retire on his own and on his own terms.

In the end, Court would have awarded the employee a “minimum 36-month notice period”. However, only thirty months’ pay in lieu of notice was granted, given that the employee claimed no more in the case.

The case has been appealed; stay tuned.

Case Two: Saikaly v. Akman Construction Ltd., 2019 ONSC 799 (CanLII):

In this recent case, a sixty-year old office manager employee, who had worked for approximately twelve years only, was given twenty-four months’ pay in lieu of notice. Following its decision above, the Court’s decision took account that the employee did not hold as high a level of position or have a lengthy service record. However, despite this, the Court concluded a two-year notice period was appropriate, particularly given the employee’s  advanced age, dedication to his former employer and lack of formal training, making it more challenging for the employee to secure alternate employment.


Thank you for reading this - Jason Ward of WARDS LAWYERS PC.

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This WARDS LAWYERS PC blog is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

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