While courts often award lengthy notice periods to long-service employees, a recent decision from the British Columbia Supreme Court ("BCSC") may help to reduce employers' liability at termination when their employee is nearing retirement.
In Gent v Askanda Business Services Ltd. [Gent], the BCSC found that the employee was wrongfully dismissed, but limited their common law entitlement to reasonable notice to the date on which they intended to retire. Although Gent was decided in British Columbia, adjudicators in Ontario may still be persuaded to similarly reduce notice periods in the context of retirement-age employees.
Background
In March 2020, the employee was placed on a temporary layoff because of the COVID-19 pandemic.
The employer never recalled the employee to return to work. In 2021, after exhausting his employment insurance benefits, the employee contacted the employer to inquire about termination pay. The employer refused, as he understood the had employee resigned in May 2020 when he said he "might as well retire".
The employee filed a wrongful dismissal claim.
Decision
Resignation vs. Dismissal
The BCSC rejected the employer's assertion that the employee resigned in May 2020. To rely on a resignation, an employer must show the employee clearly and unequivocally communicated their intent to end the employment relationship. The BCSC found that the employee's comment that he "might as well retire" did not meet this high threshold. The court further emphasized that the employer was required to clarify the ambiguous remark, including by asking when the employee intended to retire.
As the employee did not resign, the BCSC held that he was wrongfully dismissed when the employer did not recall him before the layoff period expired in August 2020.
Reasonable Notice
The employee was entitled to common law reasonable notice due to the wrongful dismissal. The BCSC noted that the employee would ordinarily be entitled to a lengthy notice period based on his 33 years of service, 64 years of age, and likely difficulty obtaining other employment because of the economic downturn caused by the COVID-19 pandemic.
However, the BCSC only awarded the employee six months' notice, running from the deemed termination date to the date the court found he intended to retire. The BCSC explained that by limiting the notice period to the employee's retirement date, he was placed in the same position he would have been in had he received proper notice and not been wrongfully dismissed.
In making the above-noted award, the court found that the employee had firm plans to retire when he turned 65. Although the employee had not communicated those plans specifically to the employer, he gave evidence at trial that he had intended to retire at that age—in part to counter the employer's claim that he had intended to retire earlier, in May 2020. The BCSC noted that had the employee's evidence about retirement been less firm, it would likely have awarded a more "significant notice period".
Punitive Damages
The BCSC declined to award punitive damages against the employer. The employer did not recall the employee back to work before the expiry of the layoff period, nor make termination payments to the employee, as required under British Columbia's Employment Standards Act. However, the BCSC accepted that the employer's failure to do so was based on the mistaken belief that the employee resigned.
Takeaways for Employers
The Gent decisionis useful for employers, as courts may reduce dismissal costs if the termination occurs near the employee's confirmed retirement date—but only where there is clear and credible evidence of the employee's intention to retire. Employers should also ensure they keep the following best practices in mind:
- Confirm and document an employee's retirement intentions: Employers can only rely on an employee's clear and unequivocal communication as evidence of a resignation. If an employee ambiguously communicates their intention to resign (e.g., "I might as well retire"), employers should ask clarifying questions without "pushing" the employee to resign. If, through these discussions, the employee confirms that they do in fact intend to retire, the employer should follow up with questions to determine the anticipated retirement date and then confirm those details in writing. Maintaining this written record can provide valuable evidence in the event of litigation, particularly if the employee's retirement plans later become relevant to the assessment of reasonable notice or damages.
- Review employment agreements: Ontario employers should confirm they have a contractual right to temporarily lay off employees. Without a properly drafted agreement, an employer may inadvertently dismiss an employee who they intended to bring back to work.
- Promptly make statutory termination payments: Ontario employers must provide termination pay no later than seven days after dismissal or on the employee's next regular pay date, whichever is later. While the employer in Gent was not penalized for failing to make prompt termination payments, Ontario employers have been ordered to pay $15,000 in moral damages for such failures. For more information on the risks of not making termination payments, see our blog on the Teljeur v Aurora Hotel Group decision.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
