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Terminating older employees – the debate continues: Do retirement plans diminish entitlement to notice?

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Over the past couple of years, we have seen a number of cases in which courts have grappled with the amount of reasonable notice to be given to employees who have long service and who are past the traditional age of retirement. We wrote about this for the first time in our blog How does “older” old age affect reasonable notice? Consider this trilogy of cases”  last November. We referred to Hussain v. Suzuki Canada Ltd., 2011 Carswell Ont 12251 (Ont. S.C.J.), a case in which a 65-year-old dismissed employee with 36 years of service was awarded 26 months of notice.

We also mentioned Filiatrault v. Tri-County Welding Supplies, 2013 ONSC 3091, where an Ontario court considered the notice entitlements of two employees who were in their eighties who had more than 42 years of service. While the employees had agreed to limit their claim to 18 months of notice (which they were awarded), the Court commented that the law seldom provides notice periods of more than 24 months, but that “higher notice periods have normally been awarded to persons of senior age” and that this will be an “increasing trend with the statutory end to retirement at age 65.”

We wrote about a third case, Kotecha v. Affinia 2013 ONSC 4817, in which an Ontario court  considered the reasonable notice entitlement of a 70-year-old employee, who had worked for the employer for 20 years as a labourer. The employee was awarded 20 months on a summary judgment motion, a somewhat surprising result, we argued, given the character of his employment.

A recent decision of the Superior Court of Justice of Ontario, Kimball v Windsor Raceway Inc, 2014 ONSC 3286, is yet another case which grapples with this issue. Here the Court considered the reasonable notice entitlement of a 71-year-old employee/plaintiff with 43 years of service. He had been employed in a supervisory role. The employee brought a summary judgment motion, and was partially successful. He was awarded his statutory entitlement under the Employment Standards Act. As for the larger amount of common law notice, Justice Heeney concluded that it was a matter for trial. That was because he had no evidence as to whether the plaintiff had earned any income since his dismissal, and more particularly, because there was some evidence on the record that the plaintiff intended to retire. Mr. Justice Heeney said as follows:

If the dismissed employee has no intention to look for work, but has instead decided to retire, the very purpose for which reasonable notice is required to be given is absent.That is a factor that may well be relevant in assessing what constitutes reasonable notice in this case.

What this case illustrates is that simply assuming that an older employee with lengthy service is entitled to notice in the high end of the range is incorrect. Kimball is a reminder of the purpose of common law pay in lieu of notice. It is to support a terminated employee while they are searching for another job. It is not a payment that simply rewards and recognizes long service.

Indeed, if the employee decides that they have been terminated from their last job and retires, there is the suggestion here that anything more than ESA minimums may be excessive. Of course, many employers will provide a financial payment to a long service employee as a thank you to recognize their contribution and as a “goodbye gift” so to speak. However, a gift is not a legal entitlement.

Janice Rubin