The Ontario Court of Appeal in Kotecha v. Affinia Canada ULC, 2014 ONCA 411 (CanLII) considered an appeal of a reasonable notice award of 24.5 months given to a 70 year old machine operator earning an annual salary of $37,918.40 having 20 years service with an auto parts manufacturer.
Mr. Kotecha brought a motion for summary judgment in an action for wrongful dismissal under the simplified procedure. He was terminated without cause and, as such, the only real issue was the period of reasonable notice.
Mr. Kotecha was terminated and provided with 11 weeks working notice and severance pay of $14,656.
The Motion for Summary Judgment
The motions judge considered the Bardal v. Globe and Mail Ltd. factors:
There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the [employee], the age of the [employee] and the availability of similar employment, having regard to the experience, training and qualifications of the [employee].
In discussing “character of employment”, the Court considered the case of Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 (CanLII) where the Court of Appeal considered the character of employment factor and concluded that it is “today a factor of declining relative importance” in determining the notional period of reasonable notice. Numerous other cases, including from other Courts of Appeal, have made similar observations in AMEC Americas Limited v. MacWilliams, 2012 NBCA 46 (CanLII) and in Bramble et al. v. Medis Health and Pharmaceutical Services Inc. 1999 CanLII 13124 (NB CA)).
In discussing “age”, the motions judge referenced the following quote from the Supreme Court of Canada case of McKinley v. BC Tel 2001 SCC 38 (CanLII):
Barring specific skills, it is generally known that persons over 45 have more difficulty finding work than others. They do not have the flexibility of the young, a disadvantage often accentuated by the fact that the latter are frequently more recently trained in the more modern skills. Their difficulty is also influenced by the fact that many in that age range are paid more and will generally serve a shorter period of employment than the young, a factor that is affected not only by the desire of many older people to retire but by retirement policies both in the private and public sectors.
It is important to note that this statement was made in the context of a discussion about the Human Rights Code protection regarding age and certain changes in the age range protected under the Code.
The motions judge also relied upon the following statement from Movileanu v. Valcom Manufacturing Group Inc., 2007 CanLII 48989 (ON SC):
It is apparent that people in that [45 to 65 years] age bracket will have more difficulty in finding similar employment with another company at the same wage rate.
I would be interested in seeing any studies that support the views expressed in McKinley and Movileanu that it is “generally known” and “apparent” that persons between 45 years and 65 years will “have more difficulty finding work than others”. I’m sure there must be some objectively verifiable evidence out there that supports these broad statements of fact, I am just not aware of it.
The Court found that the notice period was 22 months “as Kotecha claims” to which, it seems, was added the 11 weeks working notice for a total of 24.5 months.
Court of Appeal
The employer appealed and the Court of Appeal granted the appeal. The Court reduced the period of reasonable notice from 24.5 months to 18 months (less the 11 weeks working notice already provided).
The Court affirmed that the operative principles for determining the period of reasonable notice at common law were those set out in Bardal which involves an individualized and fact specific weighing of the relevant factors. Although the employer argued that the judge was bound by precedent and the concept of stare decisis (which requires that courts render decisions that are consistent with the previous decisions of higher courts), that idea was rejected where the entire exercise is so fact-specific.
That being said, the Court of Appeal observed:
Notwithstanding the foregoing, the court should strive to ensure that notice periods, which are inherently individual, are consistent with the case law. That was not done in this case.
This is consistent with the notion that the determining the period of reasonable notice is “more art than science” and yields a range of reasonableness.
The Court also observed that:
In our view, the notice period in this case, totalling 24 and one-half months, is excessive and there are no exceptional circumstances that would justify this award.
This is consistent with the earlier Court of Appeal case of Lowndes v. Summit Ford Sales Ltd., 2006 CanLII 14 (ON CA) where the Court stated:
Although it is true that reasonable notice of employment termination must be determined on a case-specific basis and there is no absolute upper limit or ‘cap’ on what constitutes reasonable notice, generally only exceptional circumstances will support a base notice period in excess of 24 months.
The upper limit of 24 months will only be exceeded in exceptional circumstances.
The Moral of This Story
This case is important in that it reaffirms the relevant factors to be taken into account when determining the common law period of reasonable notice. The case is significant as the fear, when the motions judgment was handed down, was that “age” would be given greater weight than the other Bardal factors. The Court of Appeal found that this was not the case. In Ontario there seems to be a “soft-cap” of 24 months on reasonable notice which can be exceeded in “exceptional circumstances”.
The case highlights the unpredictability in determining what a court will consider as relevant when determining the period of reasonable notice at common law. As such, it is in the employers interest to take the guesswork out of the equation by crafting a termination provision in the written contract of employment that spells out clearly and unambiguously the employees’ entitlement on termination. The case is also relevant as it appears to implicitly acknowledge as a “given” that employees over 45 years will have a harder time finding replacement employment than those younger than 45 years.