Terminating Older Workers
In Canada, much like many other places in the world, we have an aging workforce, and have also been experiencing a period of economic downturn at the same time that mandatory retirement has come to an end. In addition, we have seen an increase in foreign ownership of our employers, whose management may not fully understand Canadian laws and workplace cultures. These factors have led to noticeable, and often disturbing, trends in how employers are dealing with terminations, especially those related to long service employees.
The overall impact is that older, often pension-eligible, workers are being unceremoniously shown the door after many years of good and faithful service. Instead of celebrating their long careers, employers are sending a tough message to these departing employees, seemingly confident that most will sign off on their severance agreements without a fight, rather than challenge the unfairness of their treatment.
So what are some of the trends that have been observed?
Recently, there appears to be an increase in the following:
- Terminations involving working notice;
- Offers requiring a release that involve only modest payments over and above statutory or contractual entitlements;
- Unwillingness to move to 24 months in cases where it seems appropriate;
- Reluctance to continue health benefits and/or pension growth during the notice period;
- Reluctance to recognize a key pension date and to offer to bridge to that date;
- Unwillingness to compensate for bonus loss during the notice period;
- Insistence on mitigation consequences regardless of the extent of mitigation;
- Modest or no outplacement assistance even in the case of senior executives; and
- Unwillingness to negotiate meaningfully until a lawyer’s letter is received or until sued.
There was a time when it was not uncommon to see termination letters with modest offers and no requirement for a release. This trend has been declining however, since the 2012 Court of Appeal for Ontario (ONCA) decision in Brito v. Canac Kitchens. In that case, a long term employee who developed cancer after starting a new job, successfully sued his former employer for damages for wrongful dismissal and associated benefits, including STD and LTD disability benefits, to which he would have been entitled if he had not been dismissed.
When confronted with age discrimination complaints as a result of these and other practices, employers often make efforts to justify terminations with complaints of poor performance, even in the case of senior employees with long and positive employment records.
This has led to an increase in claims and litigation involving plaintiffs who aren’t likely going to mitigate because of their age, and our Canadian courts and tribunals are responding.
Faced with operational realities, there are alternatives that can meet both the business needs of employers and the needs of older workers hoping to exit the workforce when the time is right with dignity, and in a way that recognizes their history with the organizations and the value of the contributions they have made over time. These alternative approaches will also help employers manage risk by avoiding human rights complaints and claims for bad faith damages, mental distress damages or punitive damages. Communication and respect are, as always, the key.
When planning for the departure of long service older employees, employers should consider involving the employee in the discussion. Often a dialogue with the employee and an effort to make their goals and objectives part of the solution can minimize problems later on. Ideally an employment contract spelling out entitlements upon termination would be in place; however this is often not the case. Employers should also be ready to be generous with severance offers to older, long service employees, and to accommodate any health issues in structuring those packages from the outset, so that the value of human rights or other damages fades in the minds of the employees, and of their lawyers.