Employers Beware When Terminating Long Service Employees

June 13, 2022

By Brian Babcock

We have written several times before about how judges tend to favour employees in cases involving termination without notice, because they are viewed as vulnerable and lacking in bargaining power. Courts attempt to balance this by resolving doubt in their favour. This is especially true for older or longer service employees.

This does not mean they cannot be discharged, but if they are terminated without cause, employers can expect that they will receive generous compensation on departure.

This is illustrated in the case of Currie v. Nylene Canada Inc. where the Ontario Court of Appeal upheld a trial decision which:

  • Determined that the employee’s years of service were from 1979 until 2018, although the employee had retired in June 2017 and had been rehired, working until December 2018; and
  • Awarded damages equivalent to the notice period of 26 months.

The trial judge had determined that the retirement in 2017 had been for the sole purpose of the employee accessing her pension plan on the assurance that her employment would remain the same and that she had relied upon representations that the employment conditions would remain the same. This meant that her status as a long standing employee would not be affected by signing a new employment agreement.

As with all cases, the facts are important:

  • Her employment record did not reflect her retirement.
  • She did not provide written notice of resignation or retirement.
  • She was told that if she took her pension, nothing would change in her employment.
  • This included the terms and conditions of the employment.
  • The retirement was instigated by the employer approaching the employee, confirming that the employee was not ready to retire.

The Court of Appeal agreed with the trial judge that the retirement did not affect the calculation of years of service.

As we have written about before, years of service are one important component of assessing the reasonable notice.

Prior cases have indicated that there is normally a cap on unreasonable notice at 24 months, subject to case specific exceptions, including:

  • where the employee is very close to the traditional retirement age of 65, or older;
  • with extremely lengthy service, and no apparent plans to retire;
  • where the employee has only worked for one employer for their entire career; and
  • where the employee has held a management or supervisory position and therefore has more limited alternative employment positions available.

It is not necessary that all these factors be present in every case. So the fact that Ms. Currie was not a supervisor was offset by other factors:

  • she had worked at the company since she was 18;
  • she had limited education;
  • she was 58 years old;
  • she had very specialized skills which would make it difficult to find suitable alternate employment;
  • these skills were not easily transferable;
  • she had not had to search for a job for 40 years; and
  • she faced a forced retirement before she was ready for it.

This met the test for exceptional circumstances.

Although these facts are unusual, there are often cases where an employee will get credit for interrupted or separate periods with the same employer. Other cases involve rehiring after the sale of a business. Though each situation depends on its own facts, the trends favour employees.

The assessment of reasonable notice is an art not a science, and there is no simple formula or mathematical calculation. You cannot simply plug numbers into a computer program and generate the same answer that a judge would award. The closest approximation may be achieved when an estimate is prepared by an experienced lawyer with knowledge both of precedent cases and how judges think.

The best way to avoid a surprise in court is to not end up in court in the first place. For that reason, getting expert experienced legal advice prior to terminating a long service employee is particularly important. Often, if a reasonable offer is made, the employee will choose to accept it, or negotiate, rather than incur the expenses and delay of going to court. Many employers make the mistake of underestimating reasonable notice, particularly for long service employees in their offer, and this ends up costing them more in the long run.

Weilers Law has a proud tradition of pioneering employment law in Thunder Bay and northwestern Ontario. We combine this with our progressive approach which reflects recent trends and ongoing developments in the law. If you need legal assistance, whether advice, with negotiations, in court or before a tribunal, we may be the lawyers for you.