Recently, Zubas Flett Lawyer, Ted Flett, was recently quoted in a case comment by Jeffrey Smith of Canadian HR Reporter. The article analyzed a recent Ontario Court of Appeal decision in which a long-service non-manager worker was awarded 30 months notice of termination, is below and can be found here.
Ontario Court of Appeal upholds 30-month Notice for long-term, non manager
Non-managerial employees may not be ‘slam dunk’ to stay under 24 months notice: lawyer
The Ontario Court of Appeal has upheld a 30-month notice period to a non-managerial worker with nearly four decades of service with his former employer.
The decision confirms that there isn’t a hard cap on common law reasonable notice, but there needs to be exceptional circumstances to support a notice period in excess of the traditional limit of 24 months, according to Ted Flett, an employment lawyer at Zubas Flett Law in Toronto.
The 66-year-old worker was a professional engineer who was employed with Avaya Canada Corporation and its previous owner in Belleville, Ont., since 1982. His job involved designing software to control unique hardware that Avaya manufactured at the Belleville facility. He generally developed one or two patents each year for Avaya.
In one of the worker’s last performance reviews, he was called a “key performer.” However, on March 31, 2021, Avaya terminated his employment in what the company called a restructuring.
The worker and Avaya tried to negotiate a termination settlement given the worker’s nearly 39 years of services, but they were unable to come to an agreement. The worker then sued for wrongful dismissal, claiming damages representing 26 months’ reasonable notice.
None of the facts of the matter were in dispute, so the worker moved for summary judgment of his claim. In doing so, he changed his claim to 36 months’ notice.
30 months’ reasonable notice
The motion judge agreed that the worker was wrongfully dismissed and determined that 30 months’ reasonable notice was appropriate. Although there is traditionally a cap on notice periods of 24 months, the motion judge found that the worker’s situation involved “exceptional circumstances.” It had been established in the jurisprudence that exceptional circumstances justified notice periods in excess of 24 months.
Avaya contended that the worker didn’t take reasonable steps to find employment and the notice period should be reduced to 16 months, but the motion judge disagreed.
Avaya appealed the decision, alleging that the motion judge erred by awarding a notice period in excess of the worker’s initial claim, misapplying the Bardal factors in calculating reasonable notice, and finding that the worker reasonably mitigated his damages.
The company also argued that the worker didn’t hold a management position in the company and the motion judge didn’t specify the exceptional circumstances that justified going beyond 24 months’ notice.
The Court of Appeal found that there was no error in awarding the worker a greater notice period than he initially requested. Although the worker claimed damages for 26 months’ notice in his initial statement of claim, he changed that to 36 months in his summary judgment motion and Avaya didn’t challenge it, said the appeal court, adding that Avaya suffered no litigation prejudice because of the change.
“It’s important because it sends the message that that the parties are perhaps not as tethered to their pleadings as we might otherwise think,” says Flett. “Or perhaps these sorts of considerations of summary judgment motions are reflective of – I’m hypothesizing here – how hard it is to get a motion hearing date these days, certainly in the trial court, and you can combine or not have to go to the same lengths to amend pleadings as you might have had to prior to the backlog.”
Reasonable notice factors
As for the length of the notice period, the Court of Appeal noted that the principle behind common law reasonable notice is to provide an employee a reasonable period of time to search for and find alternate employment. The traditional Bardal factors are assessed on a case-by-case basis to determine an appropriate notice period.
The appeal court also noted that the cap of 24 months wasn’t absolute and could exceed that in exceptional circumstances, particularly for long-term employees. The court added that where there are special circumstances, judges should identify the factors that demonstrate them.
The Court of Appeal agreed with Avaya to a certain extent that the motion judge didn’t specifically point out the factors creating exceptional circumstances. However, the court found that it was possible to discern exceptional circumstances by going through the factors that the motion judge listed in her decision – the worker’s job was specialized and his skills were tailored to his role at the Avaya facility in Belleville, his developed one or two patents per year for the company, he was identified as a key performer in a performance review, and similar employment would be scarce in the Belleville area. These factors supported the motion judge’s determination that there were exceptional circumstances justifying a reasonable notice period beyond 24 months, said the Court of Appeal.
The Court of Appeal clarified that judges should specifically identify exceptional circumstances if the reasonable notice award is going to be longer than 24 months even though the motion judge didn’t appear to do that, says Flett.
“Fortunately for the worker, there was enough that they could extract from the decision of exceptional circumstances, but the message sent from this decision to lower courts is to make certain that they are distinguishing what are the exceptional circumstances that get them past that soft cap of 24 months,” he says.
Employer failed to prove lack of mitigation
As for the mitigation issue, the appeal court found no reason to interfere with the motion judge’s findings that Avaya didn’t provide evidence that the worker didn’t mitigate his losses. The company’s real issue was with the motion judge’s fact-finding on mitigation based on the evidence, to which the judge’s determination should be deferred without any palpable error, said the appeal court.
The company’s appeal was dismissed and the 30-month notice award was upheld.
It’s interesting that a non-managerial employee received such a lengthy notice period award, says Flett.
“He was a non-manager and yet was still able to satisfy enough other exceptional circumstances to exceed 24 months, which I think is compelling and important as a takeaway for employers and HR practitioners as they are calculating reasonable notice,” he says. “Not managing other individuals may not be a slam dunk that we might have thought it was insofar as keeping notice periods at 24 months or below.”
Employers could potentially mitigate the risk of such a large notice period award by using working notice of termination or salary continuance, according to Flett.
“If [Avaya] kept the worker on the payroll such that with each paycheque, the worker’s damages were decreased, that can sometimes have the impact of dissuading litigation or affecting the litigation process, because damages would be reduced accordingly.”
See Lynch v Avaya Canada Corporation, 2023 ONCA 696
*******
If you have any questions or inquiries regarding notice periods, contact Zubas Flett Law at 416-593-5844 or questions@employment-lawyers.ca.