Canadian HR Reporter

CANADIAN HR REPORTER NOVEMBER 2019 NEWS 7 Notice period of 30 months rejected by appeal court in Ontario But meaning of 'exceptional circumstances' still unclear for employers: experts BY SARAH DOBSON MANY employers were probably breathing a sigh of relief recently when the Court of Appeal for Ontario decided 24 months — not 30 months — was adequate when it came to the notice period for a long-service executive. Dawe v. e Equitable Life In- surance Company of Canada is good news for employers, says Susan Crawford, a partner at CCPartners in Brampton, Ont. "It's tough, these long-term employee situations… very diffi- cult. So, it's good to see that that cap has been re-established by the court of appeal." Frank Portman, an associate at Wilton Martin Litigation Law- yers in Toronto, agrees. "It does help to reduce this phenomenon of notice periods always creeping upward, which separated notice periods from their theoretical rationale, which is giving employees sufficient time to secure a new employ- ment. Once you get into these long, multi-year notice periods, the connection between those two things becomes much more thin. So, it's a nice readjustment, from that perspective." Background Michael Dawe was employed as a senior vice-president at Equitable Life Insurance company of Can- ada and was terminated without cause after 37 years — at 62 years old. He sued for wrongful dismissal and both parties moved for par- tial summary judgment on two is- sues relating to the damages: the proper notice period and Dawe's entitlement under the company's bonus plan. For the notice period, the mo- tion judge in his 2018 decision held that 30 months was the ap- propriate notice period. But the appeal court disagreed, saying 24 months was acceptable as there were no "exceptional circum- stances" that warranted a longer notice period. The motion judge, Donald Gordon, had referred to the 2006 decision Lowndes v. Summit Ford Sales Ltd., which said the determi- nation of what constitutes reason- able notice is "case-specific" and while there is "no absolute upper limit or 'cap' on what constitutes reasonable notice, generally only exceptional circumstances will support a base notice period in excess of 24 months." is was endorsed in Keenan v. Canac Kitchens Ltd. in 2016 when the court declined to set aside an award of 26 months' notice as the husband and wife had established exceptional circumstances based on their ages at the time of termi- nation, their lengthy service and their positions. However, Gordon didn't base his conclusion on exceptional cir- cumstances, said the appeal court judge, Gary Trotter, but on broad- er social factors that led Gordon to conclude that the "presump- tive standards" in Lowndes were inapplicable. "Society's attitude regarding retirement," was cited by Gor- don, along with the abolishment of mandatory retirement in 2006 in Ontario and many employees choosing to work past 65. "Pre- sumptive standards no longer ap- ply," he wrote. In finding that Dawe was en- titled to 30 months' notice, Gor- don ensured that Dawe would be fully compensated just beyond his 65 th birthday — but this approach to reasonable notice was in error, said Trotter. For one, mandatory retirement was known when the Lowndes decision was made in 2006. And "more recent authorities from this court have not altered the ap- proach," said Trotter. "Neither decision suggests that the end of mandatory retirement in Ontario ought to alter the tra- ditional approach to determin- ing reasonable notice. It was not open to the motion judge to chart his own course in light of these authorities." As stated in the 2016 Strudwick v. Applied Consumer & Clinical Evaluations Inc., "an employer does not guarantee employment to retirement." In addition, Dawe initiated the process of his departure as he re- quested an exit strategy because of conflicts at work, said Trotter. While his circumstances — in- cluding his senior position, long years of service, age and difficulty in finding new employment — warranted a substantial notice pe- riod, there was no basis to award more than 24 months, said Trotter. 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Use the HRG to increase hardiness in both leaders and team members, to build stronger, more resilient teams. Challenge Control Commitment To learn more about Hardiness and how it can help individuals and organizations visit mhs.com/hrg Equitable Life of Canada in Waterloo, Ont.

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