Jun 20, 2014 | For Employers

Wrongful Dismissal: The Cost of Terminating a Senior Citizen

In 2008, mandatory retirement was eliminated in Ontario. Since then the courts are starting to see more wrongful dismissal cases involving senior citizens.

Many employers are concerned that judges will start finding very lengthy reasonable notice periods for older workers. The unofficial maximum reasonable notice period is generally considered to be 24 months.

70 year old Employee Terminated After 20 Years Service

A recent case considered a 70 year old employee who was terminated without just cause after 20 years service.

Notice Period reduced from 24.5 months to 18 Months

The employer took the position that the reasonable notice period should be 13 months because that is what another court had awarded a 62 year old employee with 16 years service at the same organization.

The trial judge disagreed and concluded the employee should have received 24.5 months notice of termination; almost double the trial judge’s award.

The Ontario Court of Appeal (OCA) reduced the reasonable notice period to 18 months. In coming to this conclusion the court stated the employee had “no realistic possibility of obtaining similar employment” although the decision does not provide any reasons for reaching this conclusion.

The OCA also concluded: “In our view, the notice period in this case, totalling 24 and one-half months, is excessive and there are no exceptional circumstances that would justify this award.” The court did not however indicate why 24.5 months was considered excessive.

Unresolved Issues

Based on this employee’s age and length of service, I suspect most employment lawyers would tell their clients that reasonable notice would be in the 18 to 21 month range. Although 24.5 months is high I am surprised the OCA interfered with the lower court decision.

In the future, we hope the OCA will provide employment lawyers with more guidance in terms of the facts that the parties and a judge should consider when assessing reasonable notice in a case involving an older worker.

In particular, we hope for guidance in connection with an older employee’s duty to mitigate. Normally an employee has an obligation to make reasonable efforts to look for alternative employment. Given the OCA’s observation that the employee had no chance of finding alternative work, is there a lesser duty to mitigate imposed on senior citizens?

Lesson to be learned

This kind of court case can be avoided by requiring all employees to sign an employment contract with a termination clause. If the employer’s payroll was less than $ 2.5 M then the employer could have limited its liability to 8 weeks termination pay as opposed to 78 weeks. In addition, the employer would have saved considerable legal costs and management time.

An employment contract can limit the amount of termination pay an employer is required to pay a senior citizen. However, the contract cannot prevent an employee from commencing a human rights proceeding under the Ontario Human Rights Code. Accordingly, an employer should make sure the senior citizen’s age is not taken into consideration when the decision to terminate is made.

For the past 25 years, Doug MacLeod of the MacLeod Law Firm has been advising and representing employers in connection with employee terminations. If you have any questions, you can contact him at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.



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