Mandatory Retirement – A Thing of the Past
October 1, 2013
81 YEARS OF AGE – BUT NO PRESUMPTION OF AN INTENTION TO RETIRE
Mandatory retirement has gone the way of the Dodo. So what do you owe to employees when they are terminated at age 81? The answer: reasonable notice just like anyone else.
The case before the Ontario Superior Court of Justice in Filiatrault v. Tri-County Welding Supplies Ltd., unfortunately did not provide any guidance regarding the length of reasonable notice because the Plaintiffs had agreed to cap their claims at 18 months, notwithstanding having almost 42 years of service with the company at the time of their wrongful dismissal.
The Plaintiffs here were husband and wife and had initially founded the company. They entered into an agreement by which they obtained an option to sell their shares in their company to the purchaser, being the company whose product they were in the business of distributing. The couple exercised this option and the sale of their shares ultimately took place 13 years later thereby completing the sale of the business. That agreement was silent regarding their continued employment at any point in time. While they remained employed for the 13 years preceding the sale, the purchaser terminated their employment after closing, taking the position that it was an implied term of the agreement that their employment would terminate at that time.
The Court refused to accept the purchaser’s argument that the plaintiffs’ agreement to resign should be implied from, amongst other things, the fact that they were in their 60s when they negotiated the agreement. The Court commented in closing: “I do not think there is a place in this social reality for an automatic presumption that persons should or would naturally retire on reaching senior age”. The Plaintiffs only pursued 18 months’ notice at their regular compensation rates. It ended up costing the purchaser $1.12 million. The Plaintiffs did not pursue human rights, punitive, benefits or “Wallace” damages. Perhaps the Defendants got off easy.
As mandatory retirement at the age of 65 has been abolished, the Court held that in the absence of an express agreement, employers should be disinclined to ask a court to imply such a term in an employment contract. This goes to show that corporate counsel need to be very careful when drafting agreements not to ignore employment issues but to address them head-on and get the parties to expressly document an agreement on such matters.