We wrote about the Dawe v. Equitable Life Insurance Company, 2018 ONSC 3130 back in January. Check out that post here. The Dawe case was notable because the judge in that case awarded Mr. Dawe a notice period of 30 months. The judge also made the comment that he would have awarded Mr. Dawe 36 months of notice, but stopped at 30 because that was what Mr. Dawe had asked for in his Statement of Claim.
30 Months of Notice!!!!
This case caused a stir with employment lawyers because historically 24 months of notice has been the high-water mark. It has been very rare to see a former employee awarded more than 24 months of notice and this would only be the case in “exceptional circumstances.”
Here is that classic nugget verbatim for anyone who is truly curious:
“Although it is true that reasonable notice of employment termination must be determined on a case-specific basis and 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” Lowndes v. Summit Ford Sales Ltd., 2006 CanLII 14 (ON CA), [2006]
Dawe Overturned
The employer in Dawe, who had been ordered to pay Mr. Dawe an addition 30 months of his salary, appealed the decision. This gave the Ontario Court of Appeal a chance to weigh in. In June the Court of Appeal overturned the first judge’s award of 30 months, reducing it to 24.
Justice Trotter, writing for the court, noted that: “There were no exceptional circumstances that warranted a longer notice period.” Bam!
Why Wasn’t Mr. Dawe’s Case Exceptional?
Mr. Dawe was the Senior Vice President of The Equitable Life Insurance Company of Canada. He worked for Equitable Life for 37 years. He was 62 years old when he was terminated. He had planned to work until age 65 – another 30 months. Equitable Life made Mr. Dawe an offer of 24 months notice, which he rejected.
So why wasn’t Mr. Dawe exceptional?
The first judge made comments about Mr. Dawe’s intention to retire at age 65, and about society’s changing perceptions about retirement. He awarded Mr. Dawe 30 months because of Mr. Dawe’s stated intention to retire at 65. 30 months of reasonable notice put him in the same financial position as if he had worked until just past age 65.
Justice Trotter, for the Court of Appeal, disagreed with the first judge’s emphasis on Mr. Dawe’s retirement plans, stating that Mr. Dawe’s retirement plans did not determine Equitable Life’s obligations to him. Further Justice Trotter found that it was Mr. Dawe who initially requested an “exit” from Equitable Life and therefore his departure could not properly be seen as a forced retirement or a situation of “exceptional circumstances.”
Takeaways
The Court of Appeal’s decision in Dawe affirms the cap of 24 months of notice for long-serving, high-earning employees who are nearing retirement. Equitable Life was right to offer Mr. Dawe 24 months of notice right off the bat. This decision also confirms that an employer does not have an obligation to employ anyone on a contract of indefinite duration until they choose to retire. An employer’s obligation, absent contractual terms dictating otherwise, is to provide reasonable notice of termination to employees which, in all but very rare cases, will be at most 24 months.
If you are a long-serving employee who has been terminated or if you’re an employer looking at the potential liability of exiting a long-serving worker who is nearing 65, get in touch!
