Plans to retire may limit award for wrongful dismissal

 

Time to retire clock faceA series of recent court cases have confirmed that with the elimination of mandatory retirement, even people aged 65 or older may be entitled to significant damages for wrongful dismissal if they are fired.

However, the decision of the Ontario Superior Court of Justice in Kimball v. Windsor Raceway illustrates that where an employee has indicated his intention to retire by a certain date and does not, this could impact the magnitude of the damages awarded if he is subsequently fired.

John Kimball was employed by the Windsor Raceway from 1970 until his termination in 2012 except for short periods when he was on seasonal layoff or on medical leave. One of those brief layoffs occurred on November 15, 2006, when his position of Purchasing/Security Director was eliminated, and he was placed on temporary layoff.

However, recognizing the difficulty that Kimball would have finding alternate employment at age 64, the defendant created a new position for him. It involved a reduction in pay from $61,400 to $55,260 per year. On December 4, 2006, this position was offered to the plaintiff and he accepted it. He continued to work at that position until his termination.

In February 2007 he was asked about his plans to retire. He wrote an email to the company saying that he intended to retire at age 66 in December 2007. On January 2008 he began receiving his monthly pension of $921. However he continued working at his regular job.

He was also asked In December 2008 whether he was going to honour his commitment to retire. According to affidavit evidence from the president of the Windsor Raceway, Kimball told several coworkers he was not going to retire, because if he waited long enough his employer would have to offer him some sort of buyout or severance package.

During a July 2010 Human Resources Planning Meeting he was asked again when he would retire. The report from that meeting notes Kimball said he would like to retire at the end of 2012.

Written notice was, however, given to him on July 9, 2012. The notice said that due to the government ending slot operations at the raceway, it was necessary to reduce the workforce. He was advised that he “would be placed on indefinite layoff effective August 31, 2012. The company owed him four weeks of vacation, so he was paid through September 29, 2012.

He was also paid the sum of $6,110.47, less statutory deductions, representing 5.75 weeks of salary, pursuant to the Employment Standards Act (ESA). He has not been paid any further salary by the Windsor Raceway or returned to work.

Kimball sued his former employer for wrongful dismissal in the Ontario Superior Court requesting two years’ salary because at 71 after 43 years of service he was unjustly terminated. In the alternative he sought 26 weeks’ salary in the amount of $27,629.94, the severance pay he was entitled to under the ESA. His lawyer brought an application for summary judgment.

Judge Heeney said he was clearly entitled to 26 weeks of severance pay and there was no compelling reason to make him wait for a trial of the action to receive this amount.

However, he wrote in his decision, “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.” Therefore, the balance of his case was adjourned for trial.

It seems logical that if Kimball stated he was going to retire but stayed at work simply because he was waiting for his employer to offer him a severance package, it may not be appropriate for a court to award him damages of 24 months’ pay for wrongful dismissal.

However, the “elephant in the room” is whether or not HR was even permitted to question when he intended to retire and hold him to a date. This seems to be clearly in violation of the Ontario Human Rights Act. Nevertheless, is interesting to note that he did not elect to defer his pension, but started receiving it at age 65.

Ultimately Kimball was fired as part of a general downsizing for economic reasons because slot machines were removed from the raceway. On the facts, I think the key issues before the court will be if he mitigated his damages and was actually looking for work.

Situations such as these present a real dilemma for employers seeking workplace renewal and the ability to move younger workers up through the ranks. Because more and more older workers are choosing to work longer, the only way employers may be able to fire them without significant financial liability is if they can clearly document a performance issue which means an employee is unable to do his/her job, even with accommodation.

We will keep you posted regarding future developments in this interesting case.

Also see:

Alberta senior, 72, gets job back in age discrimination case

Octogenarians get $1.16 million for wrongful dismissal

 

 

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