Tuesday, June 10, 2014

SCJ: An Intention to Retire Might Affect the Reasonable Notice Period

There are increasing numbers of cases dealing with elderly employees, and the effect of age on the reasonable notice period.  The Superior Court recently dealt with a summary judgment motion in Kimball v. Windsor Raceway Inc., involving a 71-year-old employee dismissed after 43 years of service.

In 2007, the employer made enquiries about Kimball's retirement plans.  His response was "I am anticipating continuing to work for a year after I reach my 65th birthday in Dec. of 2007."  There's some ambiguity in that sentence, as to whether he plans to retire in December 2007, or a year after December 2007.  However, from other facts in the case, it appears that the 65th birthday occurred in December 2007, with the result that he was clearly saying that he'd retire in December 2008.  However, Justice Heeney appears to have taken this as a commitment to retired in December 2007, and notes "He did not, however, retire at that time."

In December 2008, Kimball was asked again if he was going to "honour his commitment to retire", and he did not retire then either.  In December 2010, he was asked again when he was planning to retire, and he answered "at the end of 2012".

He was dismissed in July 2012.

The employer paid out the statutory notice owing, but not statutory severance, and there doesn't seem to be any basis on the record for that failure.  Kimball was granted partial summary judgment for statutory severance (notwithstanding the employer's rather strange argument that there was no evidence that Kimball had not sought severance pay through the Ministry of Labour, which would have engaged a statutory bar), but was denied the remainder of the summary judgment claim.

Part of the reason the summary judgment claim was denied was because there was no evidence of damages - i.e. that the plaintiff had not led affidavit evidence to establish that he was not working.  Justice Heeney cited a Divisional Court case from last year, Garcia v. 1162540 Ontario Inc. (c.o.b. as Venice Fitness), where Justice Wilton-Siegel reversed a Small Claims Court award of wrongful dismissal damages where the plaintiff hadn't led evidence of unemployment after the termination.  Likewise, in this case, no evidence had been led as to mitigation efforts or income (or lack thereof).

Mitigation hadn't been pleaded, but was raised as an issue requiring a trial (also requiring an amendment of the defence), which Justice Heeney also accepted, given that there was no evidence on the point one way or another.

The other reason the summary judgment claim was denied was because of questions surrounding the intention to retire.  The employer made some hearsay allegations that Kimball had said he planned to hang on until the employer fired him, in order to secure a payout.

Justice Heeney found that "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."


On the question as to whether damages have been proven, I have serious doubts about Garcia's correctness, but I will comment on that issue in another entry.


Mitigation is, in some ways, a more interesting issue.  It's always a tough one - the onus is on the employer, but it turns on information known to the employee.  Yet the threshold for proving failure to mitigate is very high and relatively seldom successful.  This motion is early in the proceedings, with no affidavits of documents having been exchanged, meaning that the discovery process that might allow a defendant to examine the mitigation efforts of the plaintiff are not yet underway.  So it's not surprising that the defendant would raise mitigation as an issue, nor that it would lack the particulars to substantiate its position.  Yet the complete failure to raise any evidence supporting a point for which the employer bears the burden of proof would not necessarily cause the court to think that the issue 'requires a trial'.

It's a tough question at the best of times, and when the employer has failed to plead the mitigation issue, it's not the best of times.  Still, there's another reason to think that mitigation might be a live issue - namely, the allegations that Kimball intended to retire.  I'll touch on that momentarily.

Intending to Retire

The notion that the intention to retire might affect the reasonable notice period is, in my mind, a bit troubling, for a few reasons.  First, I should say that I consider it poor practice to pressure an employee to retire, possibly opening up an employer to human rights-related liabilities.  Asking the question, in the interest of succession planning, might be appropriate, but trying to shoo older employees out the door is very risky.

If the parties have a fixed expectation of retirement on a certain date - say, pursuant to a mandatory retirement contractual clause (if otherwise lawful), or because the employee has formally indicated an intention to resign, then damages might well be 'capped' at the expected retirement date.

However, despite the nature of compensatory damages, it is not a matter of looking into a crystal ball to predict whether the employee would have worked through the full notice period, and for the court to conclude that a given employee would have retired on a certain date...would be highly questionable, at least without some fairly firm indicators.  (Even a fixed intention to retire can change with circumstances.  But it would be highly inappropriate to start regarding elderly employees as bearing an additional burden of establishing that they were not going to retire.)

So if Kimball can be said to have given a notice, on which the employer was entitled to rely, that he was going to retire at the end of 2012, then that might be something that could limit his rights.  But especially when he had said that once before - meh, I'll retire in a couple years - and kept working for years longer, the employer would not likely be able to make much of it.

As well, I consider the employer's argument that Kimball was just hanging on to let them get rid of him, looking for a package, to be very weak.  In fact, worse than weak, counterproductive, in terms of assessing the reasonable notice period.  There's absolutely nothing wrong with saying "I don't plan to ever retire voluntarily."  An employer has absolutely no right to expect employees to retire at a given time, or at all.  If he kept going and continued to perform his job satisfactorily, it would be entirely inappropriate for the employer to hope or expect him to retire voluntarily.

And if he had made a decision to not retire voluntarily, then that would completely undermine any notion of "he wouldn't have continued to work for another two years anyways"...because he presumably would have.

Not to say that an elderly employee is entitled to regard pay in lieu of notice as some kind of pension.  They aren't.  It's compensatory damages, and tied to the obligation to mitigate.  Thus, an employee who gets dismissed and concludes "I'm done working", and never seriously looks for another job, will likely have their damages seriously reduced on the basis of a failure to mitigate.  But it doesn't change the initial damage assessment.

In other words, I think the employer might have a triable issue of failure to mitigate on the basis of their evidence regarding Kimball's intentions to retire, but not an issue relating to the prima facie damage calculation.  Aside from the failure to plead mitigation, therefore, it's probably appropriate that the summary judgment motion was largely unsuccessful.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

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