Saturday 30 January 2016

Is Twenty-Six the new Twenty-Four? Taking the 'Cap' off the Limit on Reasonable Notice

Notwithstanding the popularity of the Netflix series by the same name, it remains debatable whether orange really is the new black. Also subject to debate is whether twenty-four months remains the unofficial ‘cap’ on reasonable notice.

Ever since the Court of Appeal for Ontario’s pronouncement in Lowndes v. Summit Ford Sales Ltd., 2006 CanLII 14 (ON CA) that, “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”, employment lawyers have debated what those “exceptional circumstances” might be.

A more recent decision from the Court of Appeal, Keenan v. Canac Kitchens Ltd., 2016 ONCA 79 affirmed an award of 26 months to a “dependant contractor.” (For more on the issue of “dependant contractors” see The Not-So-Independent Contractor.)

Is 26 the new 24? I don’t know, what I do know is that whoever said orange was the new pink was seriously disturbed.

An award of more than 24 months is nothing new; even post-Lowndes. For example, in Hussain v. Suzuki Canada Ltd. (2011), 100 C.C.E.L. (3d) 295 (ON SC), the Honourable Justice Lois Roberts, now of the Court of Appeal, awarded a dismissed employee 26 months of reasonable notice. In Cardenas v. Canac Kitchens, 2009 CanLII, 17976 (ON SC) Justice Herman awarded one employee 26 months. In Maasland v City of Toronto, 2015 ONSC 7598 the award was 26 months to a constructively dismissed employee who was, some would say only, 57 years old at the time of her dismissal. In Markoulakis v. SNC-Lavalin, 2015 ONSC 1081 Justice Pollak awarded 27 months. I am sure there are other cases of which I am unaware.

For what it is worth, the ‘high-score’ remains (at least to my knowledge) 30 months of reasonable notice, which was awarded to a congregation rabbi in the case of Ben David v. Congregation B'nai Israel, [1999] O.J. No. 1238 (Ont. Gen. Div.)

So what about “exceptional circumstances?” The court in Keenan said the following:

[30] Canac asks this court to set aside the trial judge’s award of damages of 26 months of notice. Canac founds its position on this court’s decision in Lowndes v. Summit Ford Sales Ltd., 2006 CanLII 14 (ON CA), [2006] O.J. No 13 (C.A.). At para. 11 of Lowndes, this court stated that while the reasonable notice period is a case-specific determination and there is no absolute upper limit on what constitutes reasonable notice, generally only exceptional circumstances will support a notice period in excess of 24 months. Canac says that the trial judge erred in principle by failing to make a finding of exceptional circumstances before awarding damages for reasonable notice in excess of 24 months. Consequently, it submits, this court can set aside the award. It urges this court to make an award of between 16 to 18 months but, in any event, not greater than 24 months.

[31] I agree that the trial judge failed to expressly make a finding of exceptional circumstances. I note that as part of the agreed statement of facts, the parties presented an agreed damages calculation that included figures for up to 26 months of notice. This may explain why there is no explicit finding of exceptional circumstances as it clearly indicates that an award beyond 24 months was in the contemplation of all parties. In any event, however, given the Keenans’ ages and lengths of service, and the character of the positions that they held, I would not interfere with the award.

[32] Lawrence Keenan and Marilyn Keenan worked for Canac for approximately 32 and 25 years respectively. Together, their average length of service was 28.5 years. They were 63 and 61 years of age at the time of termination. They held supervisory, responsible positions in which they oversaw the installation of Canac’s products and met with Canac’s customers as its representatives. For over a generation, they were Canac’s public face to the outside world. Over a period of approximately thirty years – the entirety of their working lives – the Keenans’ income had come from Canac and they relied on that income to support themselves and their family. Even during the approximately two years that they provided some services to Cartier, a “substantial majority” of the Keenans’ work continued to be done for Canac. These circumstances justify an award in excess of 24 months and I see nothing wrong in the trial judge’s finding that 26 months’ notice was reasonable.

Canac Kitchens lost, again. For those unfamiliar with Canac Kitchens and their contribution to employment law, consider this: Canac his litigated over 30 different employment law issues. It is usually on the losing side, to the point that the late Justice Echlin awarded punitive damages against them because he was tired of seeing them: Brito v. Canac Kitchens, 2011 ONSC 1011. (Those damages were overturned on appeal.)

Takeaways for Employees with Labour Pains

So what does this mean for dismissed employees? Well, for one thing, don’t sell yourself short. For example, as I explained in my post What is the Maximum Amount of Reasonable Notice Under Ontario Law?, in the case of Abrahim et al v. Sliwin et al, 2012 ONSC 6295 (CanLII), the Honourable Justice Douglas Gray commented as follows, “I fail to see how a cap of 24 months, or indeed any maximum, is appropriate.”

Not all employees will be entitled to more than 24 months of reasonable notice. In fact, few will be the cases that even rise to that number. However, sometimes, in “exceptional cases” the number will be appropriate.

Takeaways for Employers with Labour Pains

This information is not likely to be well-received by employers. When I tweeted about 26 being the new 24 one fellow employment lawyer responded, “Don’t get any ideas.” First of all, I act for both employers and employees. Second, this was not my idea. Sometimes as an employment lawyer there is only so much one can do with the facts.

So how do employers avoid getting tagged with such large awards? Written employment contracts setting out some other, legal, amount of notice. Employers are not required to provide “reasonable notice.” They can provide some other, lesser amount, provided that certain legal criteria are satisfied.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

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