Ontario Court Awards More Than the Presumed 24-Month ‘Cap’ on Reasonable Notice

March 1, 2019

"Although the Court found that a 36 month notice period was justified, 30 months were awarded based on what Mr. Dawe sought in his claim."

Dawe v. Equitable Life Insurance Company is a recent Ontario Superior Court decision that confirms that there is no fixed cap of 24 months’ reasonable notice in wrongful dismissal cases. In exceptional cases, like Dawes, courts may award more.

The plaintiff in Dawes, Michael Dawe, was terminated from his employment with Equitable Life Insurance Company of Canada (“Equitable Life”) on a without cause basis after 37 years of combined service with Equitable Life and its predecessor, Allstate Insurance. At the time of his termination, Mr. Dawe had been employed in the role of Senior Vice President and was earning upwards of $600,000.00 in salary and bonus payouts. He was 62 years of age at that time.

Mr. Dawe sought 30 months of pay in lieu of notice of his termination. Equitable Life pushed for the 24 months, arguing that this was the maximum possible award under the law.

The Court found that Mr. Dawe was entitled to more than 24 months because of his age, length of service, senior position and the lack of similar employment opportunities. The Court found that had he not been terminated Mr. Dawe would have remained employed with Equitable Life at least until he reached age 65. His seniority and length of loyal service were also important factors in the Court’s decision. The Court paid particular heed to Mr. Dawe’s attempts to secure alternate employment post-termination. In the Court’s view, Mr. Dawe’s documented job search efforts highlighted the lack of comparable employment opportunities. Importantly, the Court likened the termination of an older employee, who has no reasonable prospects of re-employment, to a forced retirement. Given the length of Mr. Dawe’s service to Equitable Life and its predecessor, the Court determined that he was entitled to retire on his own terms.

Although the Court found that a 36 month notice period was justified, 30 months were awarded based on what Mr. Dawe sought in his claim.

Lessons Learned:

This case confirms that employers terminating senior, long-service employees should be wary of potential awards of more than two (2) years of pay in lieu of notice, if litigation ensues. Entering employment agreements with existing employees, with the advice of legal counsel, may be an option for employers to avoid significant liability.  Long service employees should always seek legal advice to determine the appropriateness of any severance package offered to them.  Our lawyers have extensive experience in advising both employers and employees dealing with such issues.

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