The 24-Month Reasonable Notice “Cap” in Canada
By Marty Rabinovitch, Devry Smith Frank LLP
Dawe vs The Equitable Life Insurance Company of Canada (2019, Court of Appeal for Ontario). If a Canadian employee is terminated from their employment without a valid legal reason, or without cause, unless there is an enforceable termination clause in their employment contract which states otherwise, the employee is entitled to reasonable notice at common law. Canadian courts have consistently held that, although there is no offcial cap, the reasonable notice period should not exceed 24 months, unless there are exceptional circumstances.
In Dawe vs Equitable Life, Dawe’s employment was terminated after 37 years of service because of a minor dispute with his employer. Dawe sued for wrongful dismissal and the court found that Mr Dawe was entitled to a common-law notice period of 30 months. In fact, the court further determined that it would have awarded Dawe a 36-month notice period, had this been requested by his lawyers. The court determined that an award in excess of the “cap” was warranted because Dawe held the position of senior vice president at the time of termination, was 62 years old, and the termination amounted to a “forced retirement” because there were no comparable positions available.
However, the Court of Appeal for Ontario overturned this decision and reduced the notice period to 24 months. The Court of Appeal concluded that there were no exceptional circumstances to justify a longer notice period, that Dawe requested a severance package after the dispute (and that there was no forced retirement) and that the lower court’s perceptions of the change in society’s attitude about retirement did not constitute special circumstances.
What constitutes “exceptional circumstances” in the context of wrongful dismissal litigation? The answer to this question remains unclear. All that is clear is that it will be diffcult for a wrongfully dismissed employee to obtain a notice period of more than 24 months.
Marty RabinovitchGGI member firm
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Devry Smith Frank LLP (DSF) is a full-service law firm based in Toronto, Canada. DSF provides professional and affordable client-tailored servic
Marty Rabinovitch is a Partner and Head of the Employment Law Group at Devry Smith Frank LLP. His practice focuses on representing employers with respect to issues which arise in the workplace. Marty has extensive employment litigation experience and provides legal services to both English- and French-speaking employers.
Published: Labour Law Newsletter, No. 07, Autumn 2019 l Photo: Aitor - stock.adobe.com