Previously, the Court of Appeal for Ontario (“ONCA”) held that reasonable notice at common law will be capped at 24 months, absent exceptional circumstances. However, a recent string of decisions by the ONCA suggests there may not be a 24-month cap, and in practice, awards exceeding the cap aren’t really that exceptional.
Reasonable Notice at Common Law
Under common law, an employee is entitled to reasonable notice of termination of employment, unless the employee’s contract stipulates a defined notice period. The purpose of reasonable notice is to provide the employee with a reasonable period of time to find similar alternative employment.
While there is no exact formula to calculate the length of reasonable notice, a court will commonly consider factors known as the Bardal factors:
Character of the employment.
Length of service of the employee.
Age of the employee.
Availability of similar employment, having regard to the employee’s experience, training, and qualifications.
Absent exceptional circumstances, the length of reasonable notice awarded to an employee will usually be capped at 24 months – that is, until recently.
Recent ONCA Decisions
The ONCA recently affirmed reasonable notice periods in excess of 24 months for two employees in two separate decisions.
In Lynch v Avaya Canada Corporation, the employee was awarded a 30-month reasonable notice period. The employee, Mr. Lynch, was a professional engineer with 39 years of service. His employment was terminated without any notice. The “exceptional circumstances” justifying the reasonable notice award were the following:
Mr. Lynch specialized in the design of software that was unique to Avaya Canada Corporation’s hardware.
Mr. Lynch’s skills were specifically tailored and unique to his workplace.
Mr. Lynch developed one or two patents each year.
Avaya Canada Corporation considered Mr. Lynch a “key performer”.
Similar and comparable employment would be scarce in Belleville, which was where Mr. Lynch lived for most of his life.
Similarly, in Milwid v IBM Canada Ltd, a managerial employee was awarded a 27-month reasonable notice period. The ONCA held that the exceptional circumstances identified by the motion judge justified the reasonable notice period awarded. Such circumstances included:
The exclusive nature of the employee’s skills with respect to the employer’s products.
The impact of the COVD-19 pandemic on the job market.
Implications of the ONCA Decisions
As stated earlier, the purpose of reasonable notice under common law is to provide an employee with a reasonable period of time to find similar alternative employment. However, some of the exceptional circumstances identified in Lynch and Milwid don’t really justify increasing the amount of time an employee needs to find comparable employment. For example, the fact that Mr. Lynch developed one or two patents each year or was considered a “key performer” does not really explain why a longer reasonable notice period is needed, nor do they necessarily constitute exceptional circumstances. Further, most of the “exceptional” circumstances identified in Lynch and Milwid already fall under existing Bardal factors – albeit at the higher end.
The recent ONCA decisions suggests there may not really be a 24-month cap. Without an enforceable termination clause which limits an employee’s reasonable notice entitlements under the common law, an employee may be awarded a lengthy notice period in excess of the usual 24-month cap. In other words, reasonable notice periods in excess of the 24-month cap may not really be that exceptional.
- LY
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