Hospital CEO with six years’ service awarded 30 months’ notice

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Many employers are aware that one of the factors affecting the length of the notice period owed to an employee terminated without cause is the length of the employee’s service. However, a recent Ontario decision illustrates that an employee can be awarded a long notice period even in the absence of a lengthy record of service. This was the result in Kilpatrick v. Peterborough Civic Hospital (April 17, 1998), where the employee won the longest notice ever awarded by an Ontario judge.

Before being persuaded to serve as the CEO of the Peterborough Civic Hospital, William Kilpatrick had been an employee of the Moncton Hospital for 29 years. He was hospital President for the last 21 years of that period. Kilpatrick did not apply for the position with the Civic. He was contacted after a national recruitment effort had failed to turn up any suitable candidates. When first offered the position, Kilpatrick balked at the terms. Negotiations ensued, and Kilpatrick accepted an enhanced offer. He commenced employment in July 1991 and was terminated some six years later.

AN IMPLICIT INDUCEMENT

In court, the Hospital did not argue that Kilpatrick had been dismissed for cause. The only issue was the length of his notice. In resisting the requested 30 months’ notice, the Civic argued that there was no evidence of Kilpatrick having been offered any specific inducement to change jobs.

The court accepted that no specific inducement had been offered but held that, under the circumstances of Kilpatrick’s recruitment, it was likely that he was implicitly induced into accepting the job offer. In this regard, the court held that it had been reasonable for Kilpatrick to believe both that he was being actively “wooed” by the Civic and that his concerns regarding his future economic security were being addressed:

“[I]mplicit in the wooing would be the unstated inducement that this man who was 53 years of age, who was being invited to uproot himself and his family from his life-long relationship with the community of Moncton and surrender his seniority as a 29-year employee with 21 years as Chief Executive Officer in order to move to … a new province and undertake a new job with a new employer, would reasonably be able to expect that the job would be available to him and provide economic security for him and his family until his natural retirement at age 65.”

INDUCEMENT AS A FACTOR IN DETERMINING THE NOTICE PERIOD

The court observed that some decisions had held that the factor of inducement for the determination of reasonable notice was applicable only in cases where the employee was terminated shortly after being hired. The court disagreed with this view, and noted that the Supreme Court of Canada in Wallace v. United Grain Growers Ltd. (in the January 1998 issue of FOCUS – see “”Fairly, reasonably and decently”: Employers obliged to deal in good faith with dismissed employees, Supreme Court rules” on our Publications page) had treated inducement to leave secure employment as a factor that can be used to lengthen the notice period in a variety of circumstances. The court took this to mean that “the length of time in which an employee has served after the inducement would be one of the factors the court should consider in determining the degree of weight to be applied to that factor, as opposed to the elimination of that factor entirely.” To give no weight to the inducement could, in the court’s view, serve as an invitation to employers to use the inducement of secure employment with the hidden agenda of retaining persons so induced only for the medium term.

AN “AURA OF COMMITMENT”

The court pointed to evidence that the Civic had been concerned, during the negotiation period, that Kilpatrick might decide to take early retirement shortly after being hired. In response to this concern, the court found, the Civic had encouraged an understanding that any offer of employment was conditional on a long-term commitment from Kilpatrick. Under these circumstances, the relatively short length of his service should not be used to pare down the notice period:

“If providing a prospective employer with a sense of long-term commitment is an important feature in the hiring process, it would … be unreasonable to suggest that the employer could escape bearing the consequences of having created such an atmosphere by discharging the employee within a time frame significantly less than long term.”

The court therefore held that Kilpatrick ought to be in no worse position than if he had been discharged from the Moncton Hospital after 29 years, and awarded 30 months’ notice. (But see Kilpatrick award reversed on procedural grounds” on our Publications page.)

In Our View

This case serves as a reminder both of the fact that the length of the notice period is highly dependent on the specific factual circumstances of the case, and of the increasing willingness of courts to award lengthy notice periods to employees whom they feel have received rough treatment (see, for example, “Long-serving employee on serial short-term contracts wins record notice and punitive damages” on our Publications page). In this case, the court expressed the view that, while the employer had not exacerbated the termination with harsh words or crude conduct, the very fact of the dismissal itself, under the circumstances of his recent recruitment, had led to “devastating consequences” for the employee which were predictable to the employer.

For further information, please contact Jacques A Emond at (613) 563-7660, Extension 224.