A.
INTRODUCTION
Since the
Province of Quebec became the first province in Canada to
abolish mandatory retirement in 1982, all Canadian provinces
and territories now have enacted similar legislation. Several
provinces, including Ontario, Nova Scotia, Newfoundland
and Labrador, British Columbia, Saskatchewan and Alberta
passed laws during this decade eliminating mandatory retirement.
Consequently, employers, including charities and not-for-profits,
face potential challenges and liability risks in dealing
with older workers. These issues will become even more important
as Canada’s baby boom generation ages. The purpose of this
Bulletin is to highlight these risks and outline strategies
that employers can implement to deal with an aging workforce.
B. THE END OF MANDATORY RETIREMENT IN ONTARIO
On December
12, 2006, the end of mandatory retirement took effect in
Ontario. As a result of this change, an Ontario employee
can no longer be forced to retire at the age of 65.
This does not necessarily mean that an older employee cannot
be terminated; an employer is simply not allowed to arbitrarily
impose a contractual term or policy requiring an employee
to leave at the age of 65. However, an employer is still
entitled to terminate an older employer for ‘just cause’
or with notice or pay in lieu of notice. Employers can use
the same performance management criteria as for any other
worker, where there are legitimate concerns that are based
on objective evidence about the employee’s ability to perform
the duties of the job.
As a result
of this change in the law, employers now bear a greater
risk when terminating older employees. A long-serving older
employee may well be entitled to a lengthy notice period,
based on the common law and an employee’s entitlements under
the Employment Standards Act, 2000 (“ESA”). Also,
termination of an older employee may give rise to a wrongful
dismissal claim, and/or a human rights complaint based on
age discrimination. These issues will be examined in more
detail in the following sections.
C. TERMINATION
PAY FOR OLDER EMPLOYEES
The factors a court should take into account in determining
the reasonable period of notice, where an employee is dismissed
without cause, were set out by the Ontario Court of Appeal
in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R.
(2d) 140 (H.C.), at 145:
“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 servant, the age of the servant
and the availability of similar
employment, having regard to the experience, training and
qualifications of the servant.”
There
are numerous decisions that deal with the termination of
older employees. Age is a key factor in the common
law assessment of how much notice an employee receives,
which means that the decision to terminate
an older employee can be quite costly. An older employee
can argue that it will take them much longer
to find comparable employment, relative to a younger employee.
Therefore, an older employee may commence a civil action
for wrongful dismissal if he or she is not offered a proper
termination package.
As a result of amendments to the Ontario Human Rights
Code in 2008, an employee can also claim
damages for breach of a protected human right as part of
the wrongful dismissal action. A common thread
in the decisions examined below is that an older, long-term
employee will likely be awarded a substantial termination package.
In
the recent decision of Brien v. Niagara Motors Ltd., an employee brought a wrongful
dismissal claim after working for a car dealership for 23
years, and having her employment terminated at the age of
51. At the time of termination, the employer had offered
her eight weeks pay in lieu of notice and twenty three weeks
of severance pay, if she agreed to sign a release.
It was found that the dealership did not have cause to terminate Brien’s employment and she was awarded
damages equal to 24 months of notice. The judge came
to these conclusions based on a consideration of her age,
years of service, and position in the company. The 24 month notice period was upheld on
appeal.
In
the recent Alberta decision in Peacock v. Western Securities
Ltd, an employee made a claim for
wrongful dismissal after being
employed for the defendant for 13 years as a payroll and
benefits manager or administrator, and having
her employment terminated without just cause at the age
of 62. The employee made a claim for payment of one month
per year of service in accordance with the factors set out
in the Bardal v. Globe & Mail decision.
The relevance of an employee’s age was discussed, citing
Justice Iacobucci in the Supreme
Court of Canada decision in Law v. Canada (Minister of
Employment & Immigration) [1999 CarswellNat 359 (S.C.C.)]:
“It seems to me that the increasing difficulty with which one can find
and maintain employment as one grows older is a matter of
which a court may appropriately take judicial
notice.”
The
fact that the employee had not yet obtained full-time employment
as of the trial date led the court to take
judicial notice of the relevance of the employee’s age.
Based on the plaintiff’s age, experience, and the
specificity of her employment, the proper notice period
was found to be twelve months.
The
amount of notice that an older employee is entitled to was
also considered in the British Columbia decision in Monjushko
v. Century College. In this case, the plaintiff
was employed as a professor at a college for over 9 years
and brought an action for wrongful dismissal against
the college after his termination at the age of 65. The
plaintiff claimed he was entitled to 18 months of pay in
lieu of notice. The court determined that the plaintiff
was entitled to reasonable notice of 15 months, less any
sums earned by him during that period, based on his age,
length of employment, and the difficulty he had in finding alternate employment in his specialized
field.
In
another B.C. decision, the plaintiff was a 61-year-old engineer
and forester, who had worked for the defendant
for ten years when his services were terminated. On receiving
eight months’ salary in lieu of notice,
he sued for damages for wrongful dismissal. The plaintiff
claimed that he was entitled to 21 months’
notice instead of the eight for which he received compensation.
His
claim at trial was dismissed based on the finding that the
plaintiff had not proved any damages consequent on
the breach of his contract of employment. However, he succeeded
on appeal and was awarded damages equal to 20 months' salary, plus the net
loss he suffered with respect to being deprived of 20 months of benefits.
D. CONCLUSION
Given that employers across
Canada can no longer require employees to retire at age
65, minimizing the risk of wrongful dismissal or human rights
claims of older employees is important. Employers may limit
the common law entitlements of an employee by written employment
contract, which specifically defines the termination notice
period, so long as the termination provisions at least meet
the requirements of the ESA, or other applicable provincial
laws. The request to have an employee sign a contract can
be made when an employee receives their initial offer of
employment with the company, upon a promotion, or upon receiving
additional consideration such as a bonus.
Further, as with other
employees, it is important for employers to properly manage
the performance and expectations of older employees. For
example, employers may consider the following practices:
·
Establishing or expanding
the number of voluntary, flex or part-time positions for
employees who want to continue to work past age 65, but
who want to do so in a reduced role;
·
Managing the performance
of older employees, especially in situations where there
is evidence of decreased abilities;
·
Encouraging older employees
to share their knowledge and experience with younger employees,
to reduce the “knowledge gap” when older employees choose
to retire.
With their knowledge and
experience, older employees can be an asset to an organization.
However, organizations need to manage the risks of employing
older works to reduce potential liability exposure.
