Notice periods are trending upwards. One reason for this is that people are not necessarily retiring at 65 anymore, leading employers to struggle with how to exit the older employee for either declining performance reasons (real or perceived) or to simply make room for new talent.
As an example of the high-risk employers face when trying to push out an older worker without a fair package, in Dawe v. Equitable Life Insurance Company, 2018 ONSC 3130, the employee was awarded a 30 month notice period. Mr. Dawe was terminated from his position as Senior Vice President of the Equitable Life Insurance Company at age 62. Mr. Dawe had worked from Equitable Life and its predecessor company for 37 years. In his last year of work, Mr. Dawe earned a base salary of $249,000 and a STIP and LTIP bonus totalling $379,585. (We will cover the award for this bonus in a future post.)
Notice Periods for Older Workers
24 months is generally seen as the maximum period of common law reasonable notice to which a terminated employee is entitled. However, courts have also always been careful to add that that there is no absolute cap on reasonable notice.
In the Dawe case, Justice Gordon commented that Mr. Dawe, while perhaps close to retirement age, should have been allowed to retire on his own terms. There were no comparable jobs available to him and he had dedicated the entirety of his working life to Equitable Life. Losing such a senior position at age 62 was tantamount to a forced retirement. While Mr. Dawe only requested a 30 month notice period, Justice Gordon commented that, had he been asked to, he would have awarded him 36 months.
Terminating Older Workers
In our experience, terminations of employees close to retirement are common. Often new management wants fresh blood to shake up how things have been done for years, or employers have stereotypical concerns about older workers keeping up with new technology and systems.
Since 2006, mandatory retirement is no longer legal. We live in an information workforce age where many jobs are not limited by age or a physical decline. Our lifespan and our work lives are longer than they have ever been. How workplaces adjust to this reality remains full of bumps in the road. The need for change management and new talent may be seen to outweigh the price of a notice period payment of an older worker.
The Dawe case shows, however, that the price tag could be hundreds of thousands of dollars. Wrapping up someone’s career requires careful planning and communication, and benefits from a shared goal of making it both fair and conducted with dignity.