When an employee is entitled to reasonable notice of termination at common law, the length of the notice period will typically be no longer than 24 months. Exceptional circumstances are needed to justify a lengthier notice period. A recent example of such exceptional circumstances is found in Currie v. Nylene Canada Inc., 2022 ONCA 209 aff’g 2021 ONSC 1922.
In this case, the employee began working for the employer in 1979. At that time, she was 18 years of age and had not finished high school.
The employee continued working with the employer until June 2017, when she satisfied the criteria to receive her accumulated Pension Plan. The employee could only receive her Pension Plan entitlements if she retired; however, the employer could enable the employee to access her entitlements by offering her new employment and processing the change as a “retirement” followed by a period of new employment. As a result, the employer approached the employee and provided her with a new offer of employment.
The offer stated that the employee’s job responsibilities and compensation would remain the same, and her previous service would be recognized for the purpose of determining eligibility under the employer’s benefit plan. The offer did not state that the employee would lose her status as an employee with 39 years of service.
The employee accepted the offer of employment, and she began to access her pension entitlements while continuing to work for the employer. But approximately one and a half years later, the employer terminated the employee’s employment on a without cause basis.
The employee claimed that she was entitled to 26 months’ notice of termination at common law. In contrast, the employer asserted that the employee was only entitled to 15 months’ notice, given that she had “retired” and accepted new employment in June 2017.
The Employee’s Length of Service
At trial, the judge declined to calculate the employee’s length of service from 2017 instead of 1979. The trial judge found that, when the employee had signed the offer in 2017, she was assured that her employment would remain the same. In other words, she was assured that she would not lose her status as a long-standing employee. The trial judge also emphasized that, if the new employment agreement was going to have an onerous effect on the employee’s employment (i.e. a loss a service), the employer needed to clearly notify the employee of the change.
The Length of the Reasonable Notice Period
Having found that the employee had 40 years of service, the trial judge awarded the employee 26 months’ notice of termination.
The trial judge considered the termination to be “equivalent to a forced retirement”, and the trial judge emphasized the following facts:
- The employee started with the employer right out of high school at the age of 18.
- The employee had worked for the employer for her entire career, which was near its end.
- The employee was 58 years of age at the time of termination, and the work landscape had evolved significantly since the employee had entered the workforce 40 years earlier.
- In addition, the employee had limited computer skills at the time of termination, and the skills that she actually had were very specialized and not easily transferable.
When the employer subsequently appealed the trial judge’s decision, the Court of Appeal upheld the decision and found that there was ample support for a 26-month notice period.
Takeaway for Employers
Even though 24 months is generally considered to be the upper limit of “reasonable notice” entitlements, an employee’s circumstances may justify a lengthier notice period. In addition, when employers are implementing onerous changes to employment entitlements with an employee’s consent, employers are encouraged to consider whether the employee has been clearly notified about the effect of the changes.