Exceptional Notice Period Awards

Ontario Court Finds “Exceptional Notice Periods” (Twice)

Generally speaking, Ontario courts have held that the upper end of notice period awards should be 24 months, barring “exceptional circumstances” Two recent decisions of the Ontario Court of Appeal released in late October did just that.

IBM Case

In this case ¹ the plaintiff, 62 years old on termination, had been employed with IBM for 38 years, most recently in a position which was related almost exclusively to IBM products. The summary judgment application had allowed for a 26 “non-pandemic” award plus a further month to account for the dismissal having occurred at the onset of the pandemic.

The company’s submission on appeal was that there were no apparent exceptional factors to allow for the award to exceed 24 months. The Court of Appeal disagreed, finding that there were indeed two such exceptional factors:

1. The skills of the employee were not transferable;
2. The termination took place as the global economy was tanking due to the emergence of the Covid 19 pandemic, which was such a “truly exceptional circumstance”.

The appeal was dismissed.

Lynch v Avaya Canada

The facts of this case showed a professional engineer whose employment was terminated as he neared age 64, with 38 years of service. He was three years short of his intended retirement. His employment had always been in Belleville, Ontario.

The motion judge awarded 30 months as fair notice. ²

The Court of Appeal did note that it was incumbent on the motions judge to set out the details of the “exceptional factors” to allow for an award in excess of 24 months, the Court continued to state that it was nonetheless able to divine such factors from the decision. These were as follows:

1. The plaintiff specialized in the design of software to apply to the particular hardware made by the company. His job skills were unique and his talents were limited to this context;
2. The plaintiff developed one or two patents each year during his 38 years;
3. He had been identified as a “key performer” in one of his most recent reviews;
4. The absence of comparable employment in Belleville.

It does seem a stretch and then some to see the patent development and the performance review to allow for these to be relevant factors to reach this decision. The decision allows for considerable flexibility to the court of first instance in making such a finding.

Ontario courts have repeatedly confirmed there is no absolute cap on reasonable notice, but that awards beyond 24 months generally require exceptional circumstances. Other cases dealing with this issue include:

• Keenan v Canac Kitchens Ltd. (2016 ONCA 79) — 26 months for long-tenured dependent contractors treated as near-career employees with significant responsibility and a single-employer history.
• Currie v Nylene Canada Inc. (2022 ONCA 209) — 26 months upheld for a 58-year-old employee with 40 years’ service, limited education and non-transferable skills; termination akin to forced retirement.
• Dawe v The Equitable Life Insurance Company of Canada (2019 ONCA 512) — reduced 30 months to 24 months; confirms that more than 24 months is reserved for exceptional cases.

Alberta

The Alberta Court in Lischuk v K-Jay Electric Ltd  awarded 26 months’ reasonable notice to a 58-year-old General Manager with 34 years’ service. The Court described 24 months as a rough upper limit in Alberta but not a hard cap, and found that the combination of age, long single-employer tenure, limited transferability of skills and a termination effectively amounting to forced retirement amounted to exceptional circumstances warranting 26 months.

How Lischuk aligns with Ontario jurisprudence

Lischuk tracks Ontario’s analysis by focusing on the cumulative effect of the Bardal factors. The Court emphasized the worker’s near-career-long service with one employer, age at termination, narrow job market for comparable roles, and a termination rationale that effectively pushed him into retirement. Those factors mirror the Ontario decisions that uphold notice beyond 24 months.

Practical takeaways

• There is no absolute cap at 24 months; it is a reference point. Courts will exceed it where the totality of circumstances makes re-employment realistically unlikely within two years.
• Facts that commonly support going beyond 24 months include: single-employer careers, senior responsibility, specialized or non-transferable skills, older age at termination, small or saturated job markets, and circumstances akin to forced retirement.
• Employers should document objective, non-age-related business reasons for restructuring and consider transitional measures; employees with profiles similar to Keenan, Currie, Lynch and Lischuk are strong candidates for extended notice.

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1. OCA Milwid v IBM; summary judgment
2. summary judgment not presently reported and OCA