Average Severance Pay for Executives

There is no rule that 24 months’ is the absolute maximum amount of reasonable notice a long-standing, senior employee can receive in Ontario (see my earlier blog post on the topic here). To that effect, in Lowndes, the Ontario Court of Appeal observed that calculating reasonable notice is “case-specific” and, while there is “no absolute upper limit or ‘cap’ on what constitutes reasonable notice, “exceptional circumstances” may support a notice period in excess of 24 months.

In that regard, Ontario courts have awarded upwards of 30 months’ maximum reasonable notice in various cases where, generally, the employee was an older manager with around two or three decades of service, including:

 

 

Case Name

 

Employee’s

Position

 

Tenure

(Years)

 

 

Salary

 

 

Age

Notice

Awarded

(Months)

George v. Imagineering Ltd., 2002 CanLII 9995, 23 C.C.E.L. (3d) 31, 2002 CarswellOnt 4328, [2002] O.J. No. 4919 (Ont. C.A.).

 

President

 

23

 

$177,500

 

54

 

30

Baranowski v. Binks Manufacturing Co., 2000 CanLII 22614, 49 C.C.E.L. (2d) 170, 2000 CarswellOnt 40, [2000] O.J. No. 49 (Ont. Sup. Ct.).

 

President

 

29

 

 

54

 

30

Ben David v. Congregation B’nai Israel, 1999 CanLII 14854, [1999] O.J. No. 1238 (Ont. Ct. (Gen. Div.))

Congregational Rabbi

 

26

 

$65,000

 

59

 

30

Emery v. Royal Oak Mines Inc., 1995 CanLII 7074, 24 O.R. (3d) 302, 11 C.C.E.L. (2d) 149, 1995 CarswellOnt 456, [1995] O.J. No. 1708 (Ont. Ct. (G.D.).

 

President

 

29.5

 

$150,000

 

58

 

30

Markoulakis v. SNC-Lavalin Inc., 2015 ONSC 1081, 2015 CarswellOnt 5434, [2015] O.J. No. 1924 (Ont. Sup. Ct.).

Senior Civil Engineer

 

40.7

 

$129,300

 

65

 

27

Cowper v. Atomic Energy of Canada Ltd., 1999 CanLII 14853, 1999 CarswellOnt 1679, [1999] O.J. No. 2021, 43 C.C.E.L. (2d) 276 (Ont. Sup. Ct.); aff’d 2000 CanLII 2995, 132 O.A.C. 178, 1 C.C.E.L. (3d) 180, 2000 CarswellOnt 1745, [2000] O.J. No. 1730 (Ont. C.A.).

 

 

Director of Government Relations

 

 

 

35

 

 

 

$94,700

 

 

 

60

 

 

 

27

Jardine v. Gloucester (City) (1999), 45 C.C.E.L. (2d) 60, 1999 CarswellOnt 437, [1999] O.J. No. 424 (Ont. Ct. (Gen. Div.).

Commissioner of Human Resources

 

15.3

 

$82,000

 

52

 

27

Keenan v. Canac Kitchens Ltd., 2016 ONCA 79, 29 C.C.E.L. (4th) 33, 2016 CarswellOnt 965 (Ont. C.A.).

Foreman (dependent contractor)

 

32

 

 

63

 

26

Maasland v. Toronto (City), 2015 ONSC 7598, 29 C.C.E.L. (4th) 144, 2015 CarswellOnt 19525 (Ont. Sup. Ct.); aff’d 2016 ONCA 551, 34 C.C.E.L. (4th) 231, 2016 CarswellOnt 10850 (Ont. C.A.).

 

Divisional IT Manager

 

25

 

$142,500

 

58

 

26

Mikelsteins v. Morrison, 2018 ONSC 6952, 2018 CarswellOnt 19420 (Ont. Sup. Ct.).

Director, Business Development

 

31

 

$154,000

 

57

 

26

Dussault v. Imperial Oil Ltd., 2018 ONSC 1168, 245 C.C.E.L. (4th) 262, 2018 CarswellOnt 2504 (Ont. Sup. Ct.).

Manager, Real Estate Development, Ontario

 

39

 

$190,200

 

63

 

26

Hussain v. Suzuki Canada Ltd. (2011), 100 C.C.E.L. (3d) 295, [2011] O.J. No. 6355 (Ont. Sup. Ct.). 

Warehouse Supervisor

 

36

 

 

65

 

26

Cardenas v. Kohler Canada Co., 2009 CanLII 17976 (Ont. Sup. Ct.).

Shift Supervisor

27.5

$62,600

43

26

Lee v. Bank of Nova Scotia, [2004] O.J. No. 3505 (Ont. Sup. Ct.)

Auditor

29

$41,100

57

26

Yet in 2018 in Dawe, the court shocked the employment law bar, wherein Justice Gordon stated (as obiter) [at para. 36]: “…I would have felt this case warranted a minimum 36 months’ notice.” In that case, the employee was a Senior Vice President (sales), age 62, with a tenure of 37 years. Soon after, plaintiff-side employment lawyers began writing demand letters or suing for the new supposed maximum – 36 months’ reasonable notice.

However, much to the relief of employers, in June 2019, the Ontario Court of Appeal overturned Dawe. Writing for the unanimous Court, Trotter J.A. held that 24 months was more appropriate:

I agree with the motion judge that Mr. Dawe’s circumstances – including his senior position, career-long years of service at the same company, age at the time of termination, and his difficulty in finding new employment – warranted a substantial notice period. However, there was no basis to award Mr. Dawe more than 24 months’ notice.
   Mr. Dawe’s circumstances are similar to those of the employee in Lowndes. Mr. Lowndeswas 59 years old at the time his employment was terminated. He had worked for the appellant employer for approximately 28 years, and held a management and director position at the time of termination. In concluding that exceptional circumstances had not been established, Cronk J.A. recognized Mr. Lowndes’ status as a long-term employee who had exhibited loyalty and dedication to the employer’s business over most of his working career. However, she noted that the base notice period of 24 months “recognizes” and “rewards” these factors, and constitutes the “high end of the appropriate range of reasonable notice for long-term employees in [Mr. Lowndes’] position”.
   I would allow this ground of appeal and reduce the notice period to 24 months

Thus, the question became, what are “exceptional circumstances” that would warrant a calculation of a notice period beyond 24 months following the Court of Appeal decision in Dawe? Regrettably, the Court of Appeal in Dawe provided no guidance on what are “exceptional circumstances”. Nevertheless, based on the cases listed above, and the facts in Dawe, I would argue that only senior employees who had actual supervisory responsibility and decision-making power (not just impressive titles like ‘Vice President’ but no actual indicia of management), age 65, with 30+ years of tenure have ‘exceptional circumstances’.  This argument echo’s the recent findings of the Court of Appeal in the most recent Court of Appeal case that was listed above, Keenan, 2016 ONCA 79, which awarded the Plaintiffs’ 26 months’ reasonable notice:

Lawrence Keenan and Marilyn Keenan worked for Canac for approximately 32 and 25 years respectively.  Together, their average length of service was 28.5 years.  They were 63 and 61 years of age at the time of termination.  They held supervisory, responsible positions in which they oversaw the installation of Canac’s products and met with Canac’s customers as its representatives.  For over a generation, they were Canac’s public face to the outside world.  Over a period of approximately thirty years – the entirety of their working lives – the Keenans’ income had come from Canac and they relied on that income to support themselves and their family.  Even during the approximately two years that they provided some services to Cartier, a “substantial majority” of the Keenans’ work continued to be done for Canac.  These circumstances justify an award in excess of 24 months and I see nothing wrong in the trial judge’s finding that 26 months’ notice was reasonable. 

Nevertheless, the employment law bar will wait and see what the courts flush out as “exceptional circumstances” following Dawe. In the meantime, in the wake of Dawe, employers can safely calculate reasonable notice with a 24-month cap unless the employee in question is a senior executive, age 65 or above, who worked longer than perhaps 32 years.

If you need assistance on calculating reasonable notice for senior employees and executives contact an employment lawyer at Dutton Employment Law.