For many years the courts have held that the cap of 24 months on a notice period will only be exceeded in exceptional circumstances. A very recent case from Ontario has signaled a departure from the traditional approach.
In Dawe v. Equitable Life Insurance Company, Michael Dawe’s employment at The Equitable Life Insurance Company of Canada (“Equitable Life”) was terminated without cause. At the time of termination, Mr. Dawe was 62 years of age with a combined 37 years of service with Equitable Life and its predecessor. He was a senior vice president. Following his termination, Mr. Dawe brought an action against Equitable Life for wrongful dismissal seeking 30 months of reasonable notice. Equitable Life argued that the traditional cap of 24 months was applicable to Mr. Dawe’s notice period.
After concluding that Mr. Dawe’s circumstances supported a notice period in excess of the historical cap of 24 months, the Judge went on to consider the appropriate amount of notice. The Judge found that given the fact that there was no comparable employment available, terminating Mr. Dawe at age 62 was “tantamount to forced retirement”. The Judge further found that the retirement age of 65 did not apply in many cases and that Mr. Dawe would have worked at Equitable Life until age 65 or older. The Judge held that Mr. Dawe should have been allowed to retire on his own terms, stating:
Mr. Dawe had commenced the process of retirement planning, not uncommon at his age and logical given the nature and focus of the life insurance industry. Mr. Dawe had made no decision as to when retirement would occur. He says he was committed to working at Equitable Life until at least age 65. Retirement, if voluntary, may have occurred sooner or later. On the evidence, I conclude it is more likely Mr. Dawe would have worked at Equitable Life until age 65. I would add, it was more likely he would have worked there to a later age than an earlier one.
Accordingly, the Judge held that Mr. Dawe was entitled to a notice period of 36 months, however, awarded him 30 months’ notice based on what he had initially claimed.
This case highlights the importance of well drafted termination provisions within employment contracts as well as the importance of age in determining the appropriate notice period in the circumstances.