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Is 24 Month’s Notice Really the Upper Limit of Employment Law Severance?

By Matt Lalande in Employment Law on March 04, 2020

Is 24 Month’s Notice Really the Upper Limit of Employment Law Severance?

Only in “Exceptional Circumstances” will a Court Award more than 24 Months Severance

Generally, notice periods or severance pay can exceed 24 months, but only in exceptional circumstances.  Our own Ontario Court of Appeal has refused to hold there is a “cap” to the amount of notice which can be awarded but has generally held that only exceptional circumstances will support a “base notice period” in excess of 24 months.

This comes from a leading Court decision called Lowndes v. Summit Ford Sales Ltd. .). The Court observed in Lowndes, at para. 11, that

“the determination of what constitutes reasonable 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”.
Justice Cronk found, at paras. 13-16, that Mr. Lowndes had not established that his circumstances were exceptional, warranting a notice period exceeding 24 months.

Our Superior Courts have followed the Lowndes approach over the years. The Lowndes approach was endorsed in Keenan v. Canac Kitchens Ltd., 2016 ONCA 79, 29 C.C.E.L. (4th) 33, at para. 30. In Keenan, the court declined to set aside an award of 26 months’ notice, finding that the plaintiffs, who were husband and wife, had established exceptional circumstances, based on their ages at the time of termination (63 and 61 years old), their lengthy service (32 and 25 years), and the character of the positions they held.

In another case called Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520, 349 O.A.C. 360, at para. 42, the court cited Lowndes and Keenan in affirming that

“reasonable notice is determined on a case-specific basis, and while there is no cap, generally only exceptional circumstances will support a base notice period in excess of 24 months.”
The court refused to increase a base notice period of 20 months.

The Court of Appeal once again looked at the 24 month notice cap in a recent case called Dawe vs. Equitable Life. The Superior Court awarded Mr. Dawe 30 months notice. Mr.Dawe had been employed with Equitable Life for 37 years. He was 62 years old when he was terminated from a very senior position. The original Judge that heard the case placed Mr. Dawe at the “high end” of each factor is set out in Bardal v. Globe and Mail Ltd. In finding that Mr. Dawe was entitled to 30 months’ notice, the motion judge ensured that Mr. Dawe would be fully compensated just beyond his 65th birthday – or to retirement. Equitable Life appealed the decision.

The Ontario Court of Appeal found that bridging notice until retirement at age 65 was not the right things to do. The Court of Appeal found that Mr. Dawe’s plans regarding retirement were not determinative in ascertaining Equitable Life’s obligations towards him.

The Court did agree with the motion judge that Mr. Dawe’s circumstances – including his senior position, career-long years of service at the same company, age at the time of termination, and his difficulty in finding new employment – warranted a substantial notice period. However, there was no basis to award Mr. Dawe more than 24 months’ notice.  His status as a long-term employee who had exhibited loyalty and dedication to the employer’s business over most of his working career and awarding him the upper limit of 24 months “recognizes” and “rewards” these factors, and constitutes the “high end of the appropriate range of reasonable notice for long-term employees in his position” In this case, exceptional circumstances had not been established to award in excess than 24 months.

The Takeaway

The determination of what constitutes reasonable 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. The circumstances will be rare.

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