Skip to content

No 24-month cap on wrongful dismissal damages

Whether it comes to negotiating a severance package or determining the period over which damages are calculated in a wrongful dismissal lawsuit, 24 months has generally been regarded, save in the most exceptional circumstances, as the unofficial cap on reasonable notice.

However, Ontario courts have been sending a message over the past several years that there is no such cap, particularly as it concerns employees that have been employed by a single employer for their entire adult working lives and that are of a senior age. It may very well be that there is a growing judicial trend and willingness to dispel with previously held notions of caps on reasonable notice. This includes previously held notions that unskilled labourers should be capped at 12 months’ reasonable notice regardless of their years of service.

With the recent release of the decision in Dussault v Imperial Oil Limited, 2018 ONSC 1168, the trend of Ontario courts dispelling myths about caps continues, this time at the cost of Imperial Oil. Two former employees of Imperial Oil Limited recently had an Ontario court determine the appropriate period of notice to which they were entitled. In determining a unique set of circumstances existed, each employee was awarded 26 months’ damages.

Donald Dussault was employed by Imperial for more than 39 years. He was 63 years old when his employment was terminated in 2016. He held the position of manager, real estate development, Ontario at the time of his dismissal and his compensation totalled in excess of $190,000 a year.

The other employee, Maryann Pugliese, was employed by Imperial for 36 years. She was 57 years old when her employment was terminated and employed as a territory manager making about $156,000 a year.

Determining reasonable notice is an individual exercise unique to every employee in Canada. The principal factors that are to be considered when making a reasonable notice determination are often referred to as the Bardal factors, coming from Bardal v. Globe & Mail Ltd., 1960 CanLII 294 (ON SC). They include:

a.      The character of one’s employment;

b.      Their length of service;

c.      Their age; and

d.      The availability of similar employment in light of their experience, training and qualifications.

At paragraph 51 of the decision, Justice Favreau remarked: “Twenty six months' notice in this case represents a recognition that the plaintiffs' circumstances are somewhat unusual having regard to the Bardal factors.” Favreau made this determination when all factors were taken together.

While neither Pugliese nor Dussault supervised other employees, they were both in positions with significant levels of responsibility, they were of a more senior age in the context of employment, had been employed in excess of 30 years by the same employer and their skills and experience were geared to one particular employer, likely making it difficult to transfer those skills to a different employer.

A similar ruling was made in the 2016 Ontario Court of Appeal decision in Keenan v. Canac Kitchens Ltd., 2016 ONCA 79. Although the trial judge did not expressly find exceptional circumstances existed, 26 months was awarded.

In the 2015 decision in Markoulakis v SNC-lavalin Inc., 2015 ONSC 1081, a 65-year-old senior engineer employed by SNC Lavalin was awarded 27 months by an Ontario court. This individual was employed by the company for 40 years and was earning more than $129,000 a year.

The 2011 decision of Hussain v. Suzuki Canada Ltd. is another recent example of a case where the Ontario Superior Court of Justice awarded a former employee 26 months of reasonable notice as a result of exceptional circumstances. This involved a 35-year employee who was 65 years old at the time of his dismissal.

In Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520 (CanLII), 2016 ONCA 520 (C.A.), the Ontario Court of Appeal recently held:

“Although it is clear that reasonable notice of employment termination must be determined on a case-specific basis and there is no absolute upper limit on what constitutes reasonable notice, generally only exceptional circumstances will support a base notice period in excess of 24 months . . . “

This trend appears to indicate that unique circumstances will be deemed to exist when we are dealing with employees of a senior age that have been working for one employer well in excess of 24 years and generally for their entire adult work life.

While it appears that there is an increasing willingness by Ontario courts to award damages in excess of 24 months in the context of reasonable notice claims, this perceived increase as one’s length of service increases beyond 24 years is actually quite marginal. To the employees on the receiving end, it may even be lip service after 40 years of service. Nevertheless, marginal increases in multiples can be catastrophic for employers.

Without contractual safeguards in place, it will become increasingly difficult to mitigate the demands of an aging workforce. On the one hand, employees must be appreciated and incentivized, but on the other this must be balanced against the ultimate financial demands restructuring, benefits and pension management place on Canadian businesses.

There remains a significant portion of the workforce that is aging and has accumulated significant contractual and common law entitlements if and when they are dismissed. At times, it can be a waiting game between retirement and restructuring.

Now more than ever, a balance will need to be found. That being said, it would appear that courts recognize a unique set of circumstances exist when one has spent almost their entire adult life under the employ of one organization and they are of an age that, while not yet ripe for retirement, are senior enough that it represents an impediment to timely mitigation.

Michael Stitz is an employment and labour lawyer and owner of Stitz Litigation Professional Corporation, a Toronto-based law firm.