Friday, March 15, 2019

Wise Law Roundtable: Forced Retirement, Age Discrimination and Wrongful Dismissal

Commentaries from Wise Law's lawyers on current cases of interest 

Garry J. Wise:  Employees over the age of 60 are a perennially vulnerable sector of the Canadian workforce. 

Forcing an older employee to essentially retire through an unwarranted dismissal is now discriminatory and illegal in most circumstances.  This new legal reality, however, still hasn't fully filtered down into the cultures of many workplaces, where age discrimination remains alive and well.

The sorry truth is that for many employees aged 60 and over, the end of career is possibly nearer than they wish.

In a May 2018 ruling in Dawe v. Equitable Life Insurance Company, Mr. Justice D.J. Gordon of the Ontario Superior Court considered the enitlements of Michael Dawe, a 62 year old Senior Vice President with 37 years of service with the insurer who had been terminated without cause.  Mr. Dawe claimed it had been his intention to work until at least age 65.

He asked the Court to award him 30 months' pay in lieu of notice.  The Court not only granted this claim, but in fact, Mr. Justice Gordon indicated he would have been prepared to award Mr. Dawe 36 months, had a claim for that higher amount been asserted.

Simran Bakshi:  From the sounds of it, perhaps the pendulum may be shifting back toward employees, especially older employees, on questions of the length of notice.

What is most interesting about this decision is that the court awarded a notice period of 30 months without hesitation, going considerably beyond the usual upper ceiling in the range of 24 months of notice.

This decision in large part was based on the fact that the employee had devoted his career to working at the company, and was only a few years away from retiring at the time of his wrongful dismissal. In view of his age, retirement plans, long service, and the senior nature of his position, the Court was convinced that it would be extremely difficult for him to find comparable employment:
[33]           Mr. Dawe was 62 at the time his employment was terminated.  He had devoted his entire working career to Equitable Life and its predecessor, 37 years in total.  Mr. Dawe was a senior vice-president.  He was a member of the senior management team.  There are no similar employment opportunities.  No doubt, Mr. Dawe’s age is a significant factor.  His mitigation efforts demonstrate the lack of other opportunities.
[35]           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.
[36]           Counsel referred to a number of cases as examples of a reasonable notice period.  Such were helpful in my review.  Mr. Dawe is at the extreme high end of each of the Bardol factors.  He should have been allowed to retire on his own terms.  With no comparable employment opportunities, in particular, I would have felt this case warranted a minimum 36 month notice period.
[37]           Mr. Dawe’s position of a 30 month notice period is more than reasonable.  I conclude he was entitled to that in this case.
This decision, if upheld by the Court of Appeal, is likely to have a significant impact on employment law cases going forward. In fact, it has already been relied upon in at least one case –Saikaily v. Akman Construction Ltd., to support an award of 24 months’ of notice, for a far more junior and short serviced employee nearing the age of retirement.

Paul Adam:  Well, this is a bold decision with some very bold language.

As Simran mentioned, the conventional wisdom has generally been that there is a “soft cap” of 24 months on notice, if the employee was at the highest levels of seniority, when four key "Bardal factors" are considered:

(a)           age of the employee;

(b)         the character or nature of the employment;

(c)           the length of service to the employer; and

(d)         the availability of similar employment, having regard to the experience, training and qualifications of the employee.

Mr. Justice Gordon in this case made it explicit that these factors were traditionally applicable to employment environments in which the longest possible tenure of an employee was assumed to be maxed out at age 65.

Then he goes on to say that assumption no longer necessarily applies:
[31]           Whether it is exceptional circumstances or recognizing a change in society’s attitude regarding retirement, the particular circumstances of the former employee must be considered.  For many years, the usual retirement age was considered to be 65.  Pension plans improved as a result of the labour movement, introducing, for example, an 80 factor for most employees in the public sector and many in large companies in the private sector.  That lead to some individuals retiring between the age of 50 and 60.  But many were not ready to fully retire.  They sought out additional employment or simply continued to work in their existing position.  Further, mandatory retirement was abolished in 2006 in Ontario to protect against age discrimination.  Many employees have continued past 65.  In result, it is important to recognize that each case is unique.  Presumptive standards no longer apply. [emphasis added]
The Court lays out two paths of legal reasoning to arrive at this conclusion- one is that this case is an exceptional departure from the “24 months” rule, the other is that the “24 months” no longer applies to senior employees because it was based on assumptions about how long we work that now belong to a bygone era.

It’s not very often that a judge will say that an established legal presumption “no longer applies.”

That being said, I think the ruling is correct. There’s lots of empirical data and anecdotal evidence that age discrimination against older employees, despite the fact that they are working even longer, has remained stubbornly pervasive or gotten worse.

Simran Bakshi: To date, Dawe has only been cited in one case, being the Saikaly decision.

What is interesting about this case is what sets it apart from the Dawe decision.

Mr. Saikaly had been the office manager of the Defendant company, a far less senior role than that of Mr. Dawe, who held the position of Senior Vice President. While Mr. Saikaly was a long term employee, having been employed for a period of twelve years, his tenure was no where close to that of Mr. Dawe’s thirty-seven years of service.

What they had in common, however, was that Mr. Saikaly and Mr.Dawe were both employees over the age of 60 at the time of their respective terminations.

In each case, the court takes note of the difficulties older employees are likely to encounter in finding a comparable position of employment following a dismissal, particularly as they approach the age of retirement.

As Justice D.J. Gordon in Dawe described it, a dismissal in such cases is tantamount to a “forced retirement”.

The Saikaly decision appears to zero in on this aspect of the Dawe decision. As Corthorn J. summarized:
28  For an individual at or over the age of 60, a notice period in excess of 30 months might be reasonable (Abrahim v. Sliwin2012 ONSC 62952013 C.L.L.C. 210-004, at para. 25). 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. (See: Dawe v. Equitable Life Insurance Company, 2018 ONSC 3130; and Bovin et al v. Over the Rainbow Packaging Services Inc.2017 ONSC 1143.)
Garry Wise:  In summary, with respect to the lengthy notice awarded in Dawe, note that the proximity to retirement, the the employee's lack of desire to retire early, and the likely unavailability of comparable employment led the Court to suggest even a virtually unheard-of notice period of 36 months would have been reasonable in the circumstances.

While time will tell, this ruling could represent a judicial warning shot to employers that new rules now apply to the improper termination of older employees.  The consequences of all forms of age discrimination could become increasingly severe and expensive for employers.

Dawe is also noteworthy because the issue of entitlement to bonuses upon termination is also addressed.

The court noted that the entitlement to bonus upon severance is ultimately a contractual question, to be determined based on the agreement between the parties.

Dawe is apparently winding its way toward appeal right now.

- Wise Law Office, Toronto
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