As is commonly known, an employee that is terminated without cause is entitled to notice of termination or pay in lieu of such notice. As summarized in the Ontario decision of McKay v. Camco, Inc., the purpose of notice “is to give the dismissed employee an opportunity to find other employment”. However, what happens to an employee’s entitlement to notice in the event that the employee plans to retire and therefore does not intend to obtain new employment? This question was considered in the recent Ontario Superior Court of Justice decision of Kimball v. Windsor Raceway Inc.
Background
In February of 2007, the employer inquired whether the employee had any plans with respect to retiring. The employee sent an email to the employer in response stating, “I am anticipating continuing to work for a year after I reach my 65th birthday in Dec. of 2007. I trust that this is what you need to work on your future projections.” Despite this response, the employee did not retire at this anticipated time and continued working with the employer.
On July 29, 2010, the employer again inquired whether the employee had any plans to retire, to which the employee responded by indicating that he would like to retire at the end of 2012. However, on July 9, 2012, being prior to the employee’s anticipated retirement date, the employer notified the employee that as a result of economic circumstances he was being placed on an indefinite layoff effective August 31, 2012. Thereafter, the employer provided the employee with a portion of his statutory notice entitlements demonstrating that the employee had been terminated. As a result, the employee initiated legal proceedings against the employer seeking 24 months notice and brought a Motion for Summary Judgment seeking an expedited determination of this issue.
Decision
Despite granting the employee partial summary judgment with respect to the balance of his statutory notice entitlements, the Court dismissed the rest of the employee’s Motion, being the issue of whether the employee is entitled to 24 months notice, on the grounds that a trial is required to decide this issue. One of the reasons why the Court reached this decision was the issue of the employee’s intention to retire. Specifically, the Court stated the following “If the dismissed employee has no intention to look for work, but has instead decided to retire, the very purpose for which reasonable notice is required to be given is absent. That is a factor that may well be relevant in assessing what constitutes reasonable notice in this case”.
Lesson for Employees
The above decision, as well as the trial decision to be decided in the future, will likely be of great importance for retirement-aged employees. Given an employer’s need to receive a reasonable amount of advance notice of an employee’s anticipated retirement date so that plans can be made to replace the retiring employee, the above decision suggests that such advance notice can expose the employee to a reduction in their notice entitlement in the event that their employer terminates their employment prior to the anticipated retirement date. As a result, depending on the decision at trial, employees may wish to think twice prior to providing their employer with too much notice of their anticipated retirement.
Lesson for Employers
Should the trial decision of the above matter find that the employee’s notice upon termination is to be reduced as a result of his intentions to retire, there may be a negative ripple effect for employers. Specifically, employees may become hesitant to provide their employers with as much advance notice of their intention to retire as they currently do fearing that such information will be used by the employer to limit the employee’s notice entitlements should they be terminated prior to their retirement date. As a result, employers may be caught off guard by employees providing only minimal amounts of notice of their intention to retire, thereby causing employers to be unable to fill the soon to be vacant position at the workplace and possible loss of business.
In summary, employers and employees require legal advice from an employment lawyer to properly plan the process of retirement or termination of a soon to be retired employee to ensure that nothing is jeopardized and that costly legal disputes are avoided. Given that aging workers do commonly postpone their retirement as a result of changes in economic situation and family needs it is likely that the issue of termination notice for workers that have plans to retire will be given special attention by the courts in the near future.
Minken Employment Lawyers is your source for expert advice and advocacy on today’s employment law issues. Whether you are an employer or an employee, we can help. Contact us to see how.
See also our article published in Canadian Employment Law Today, September 26, 2014, “Retirement plans may impact notice entitlements”.
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