In negotiating a severance package for an employee in his or her late 50s or early 60s, the availability of alternate employment is a significant factor to consider.
It is common to hear from dismissed employees that it is difficult for them to find alternate employment given their age. Some recent cases involving individuals in their late 50s and early 60s provide some insight into how courts view their employment prospects, and the consequences for their notice periods.
In Dawe vs. Equitable Life Insurance Co., Michael Dawe had worked for the Equitable Life Insurance Co. for 37 years, most recently as senior vice-president. He was dismissed at age 62 and commenced a wrongful dismissal claim seeking 30 months’ notice. Equitable agreed that the dismissal was without cause, and the only issue for the court to determine was the appropriate damages. Equitable argued for a notice period of 24 months, which has generally been accepted as the upper limit of notice periods, barring exceptional circumstances.
The court started its analysis of the appropriate notice period by recognizing the general rule that 24 months has “been identified as the maximum notice period in most cases.” The court then went on to mention “a change in society’s attitude regarding retirement” and that age 65 was no longer an appropriate benchmark for retirement, given the abolition of mandatory retirement. Reviewing what are known as Bardal factors (age, character of employment, length of service, availability of similar employment), the court accepted that there were “no similar employment opportunities” for Dawe. The court stated that when “there is no comparable employment available, termination without cause is tantamount to a forced retirement.”
Ultimately, the court awarded Dawe the 30-month notice period he had sought, but the court also stated that given the lack of comparable employment opportunities, the case actually warranted a “minimum 36 month notice period.”
The next case of interest is Saikaly vs. Akman Construction Ltd. In that case, Anthony Saikaly worked for Akman Construction Ltd. for 12 years, until he was dismissed at age 60. Saikaly commenced a wrongful dismissal claim and Akman never defended against it, so the case proceeded by way of default judgment. When it came to considering Saikaly’s reasonable notice period, the court cited Dawe vs. Equitable Life Insurance Co. for the proposition that “it is not uncommon for individuals over the age of 62 and/or terminated from senior level positions to be entitled to 24 months’ notice.” Similarly, the court accepted that for “an individual at or over the age of 60, a notice period in excess of 30 months might be reasonable,” citing Abrahim vs. Sliwin, 2012 ONSC 6295.
The court concluded that Saikaly was entitled to a 24-month notice period, despite having only 12 years of service and being in a middle-management position. His age was a significant factor in this decision.
In Spalti vs. MDA Systems Ltd., the court considered the appropriate notice period for David Spalti, a 55-year-old employee who was dismissed after 13 years of service. Spalti sought a notice period of 16 months, and the court ended up agreeing with him. In reaching this conclusion, the court commented on the Bardal factors and, in particular, Spalti’s age, which he had argued presented an “insurmountable barrier” to finding alternate employment.
The court accepted that, all other things being equal, “the cases recognize that reasonable notice is longer in the case of an older employee than a younger employee.” Further, it recognized that there is an inference, recognized in the common law, whereby “persons in their late 50s and 60s may expect to have greater difficulty finding alternate employment.”
These cases demonstrate that notice periods for employees in their late 50s and early 60s can be considerably longer than for younger employees, and may even go beyond the generally accepted 24-month cap. Employers should do everything they can to support former employees in finding alternate work, for example, with reference letters and the provision of outplacement services. •
Danny Bernstein is a partner at Roper Greyell, where he practises in all areas of labour, employment and human rights law.
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern. The article is for general information purposes only and does not constitute legal advice.
