Original article by Howard Levitt published in the Financial Post, Aprill 22, 2019
A decision handed down just last week has answered the ringing question as to what the courts will do with dismissed employees of retirement age in the absence of mandatory retirement.
Rishi Drepaul was a 65-year-old mid-level employee, a coordinator who had worked for 3 1/2 years for Mikla Foods Canada when he was dismissed without legal cause. By the absence of cause, I mean the absence of gross misconduct entitling an employer to dismiss an employee without compensation.
Justice William Chalmers of the Ontario Superior Court noted that, at the time of trial, three years after dismissal, Drepaul had been unable to find new work despite attempting to do so. Of course, wrongful dismissal is not an insurance policy entitling an employee to indefinite compensation until they secure other employment. Courts look at a variety of factors, most significantly being re-employability, position, age and length of service in determining appropriate compensation.
Many employees and even human resource departments share the misconception that severance is a function of length of service
Many employees and even human resource departments share the misconception that severance is a function of length of service. That has never been the law and this case clarifies otherwise.
Based almost entirely on his age of 65, Drepaul, represented by Sunira Chaudhri of my office, was awarded 11 months severance. The court found that, at that age, it was reasonably foreseeable that he would have great difficulty finding other work.
With the absence of mandatory retirement, employers are increasingly dismissing older workers rather than leaving them to retire at age 65. They do so either as part of a downsizing or because the older worker might not have the skills they once did.
As this case makes clear, they do so at their peril. There is also the issue, which did not exist in this case, that if the employee’s age is one of the reasons for the dismissal, the court will award additional human rights damages on top of, in this case, the 11 months.
If the employee’s age is one of the reasons for the dismissal, the court will award additional human rights damages
Another issue which arose, in this case, is that the employee was treated as a contractor for his first year of employment and invoiced for his wages. The court said that, effectively, despite the invoicing and the characterization as a contractor, he was effectively an employee so his entire 3 1/2 years were considered. In my experience, the vast majority of workers who are called independent contractors are employees at law and employers mischaracterize at their peril.
What are employers to do when faced with terminating workers to which they have extensive severance obligations?
One answer would be to provide sufficient advance working notice, which can be set off against their wrongful dismissal entitlement. This must be done correctly to be enforceable.
The law of unintended consequences could, of course, stem from this case in the form of employers being even more reluctant to hire older workers. They do so at their peril as evidence of that will result in substantial human rights damages including an order to employ that job applicant.
Employers must keep rigorous records respecting their treatment of all applications and their criteria for hiring to ensure that employees cannot later claim to have not been hired based on a human rights ground.