Appellate Court Upholds Reasonable Notice Damage Award of 30 Months

Written on behalf of Peter McSherry

When a person has been wrongfully or constructively terminated from their employment, damages for such termination must be assessed. Where there is a valid employment contract in place between the parties, the terms of that contract, with respect to any damages flowing from the termination, will be applied. However, in the event that there is no employment contract, or the contract itself is void for some reason (for example, if the terms of the contract are ambiguous or unclear, or there is a provision of the contract that violates a written law) then the court will have to assess damages on the basis of “reasonable notice”. In so doing, the court will evaluate a number of factors, including the age of the employee, the length of time they worked for their employer, the specialization and status of the position the employee held with the company, and whether or not the employee had been induced to leave prior, secure employment in order to work for their current employer. These factors are known as the “Bardal factors” and the court will consider each factor and will assess damages in accordance therewith.

Reasonable notice damages are generally assessed in months, so for example, the court might award someone who was wrongfully terminated after 10 years of employment, 10 months of reasonable notice damages, which would equate to 10 months of the employee’s income. Generally speaking, the longer a person works for a company, the higher their reasonable notice damages will be. For many years it was presumed that there is a “cap” or upper limit on the amount of reasonable notice damages a court may assess. Further, the assumption has been made that an Ontario court is not permitted to award reasonable notice damages beyond 24 months (or 2 years’ salary). As demonstrated by the case of Lynch v Avaya Canada Corporation, the courts are not bound by any such restriction.

Employee is Terminated and Sues for Wrongful Dismissal

In the Lynch v Avaya Canada decision, the employee (“Lynch”) was a professional engineer who had been terminated by his employer, Avaya Canada (“Avaya”) in March of 2021, due to company restructuring. At the time of his termination, Lynch had worked for Avaya for nearly 40 years, having been hired by Avaya’s predecessor in May of 1982. The parties were unable to come to mutually agreeable terms of settlement with respect to Lynch’s departure from the company, as a result of which Lynch sued Avaya for wrongful dismissal.

The matter proceeded to a summary judgment trial wherein Lynch was wholly successful and was awarded 30 months’ reasonable notice damages, the equivalent to 2.5 years’ salary.

Employer Appeals the Decision and the Award

Avaya appealed the decision of the motion judge, largely on the basis that the motion judge had erred in awarding Lynch damages of 30 months. Avaya argued that it was inappropriate to award anything beyond 24 months’ reasonable notice damages, and that damages in excess of 24 months were to be reserved for “exceptional circumstances”, a category in which Lynch did not belong. In particular, Avaya contended that reasonable notice damages beyond 24 months may only be ordered when the wrongfully dismissed employee in question held a position of significance within the company as a part of the management of the company. The court rejected all of Avaya’s arguments and upheld the decision of the motion judge.

In particular, the Court of Appeal noted that the purpose of assigning reasonable notice damages is “to afford an employee a reasonable period of time to search for and secure alternate employment”. The Court further stated that “there is no absolute upper limit or ‘cap’ on what constitutes reasonable notice”, although it also acknowledged that, generally speaking, “only exceptional circumstances will support a base notice period in excess of 24 months” and even then, only for long-term employees who held positions of significance.

Court of Appeal Upholds 30 Months Reasonable Notice Damages

In this case, the motion judge who had made the initial determination with respect to damages, had based her decision on the fact that Lynch’s position with Avaya had been unique and specialized and moreover, that Lynch’s skills were particularly “tailored to and limited by his very specific workplace experience at Avaya”. Further, Lynch had been described in a performance evaluation undertaken by Avaya as a “key performer”, in addition to which he had developed 2-3 patents each year throughout his lengthy 38.5 years of employment with them. Finally, Lynch, who was nearly 64 years of age at the time of trial, could be expected to have difficulty in finding similar employment, particularly in Belleville, which is where he had resided throughout the duration of his employment.

All of these factors, taken in concert, supported the motion judge’s decision to award exceptional reasonable notice damages of 30 months. Accordingly, the Court of Appeal upheld the motion judge’s award and dismissed the appeal.

Employment Lawyer Peter A. McSherry Helps Workers Navigate Employment Disputes and Terminations

If you believe you have been wrongfully or constructively terminated from your employment, it is important to consult with an experienced employment lawyer who can determine whether you have a claim and can help you navigate the claims process. The trusted employment lawyers at Peter A. McSherry in Guelph provides comprehensive services for all of your employment needs. From start to finish, we will guide you through the complicated legal process and negotiate on your behalf to ensure that you receive the compensation to which you are entitled and that your rights are preserved throughout. Contact us online or by telephone at 519-821-5465 to schedule a confidential consultation with a member of our team.