An Update on Notice Periods: Noteworthy Cases in 2022-2023

October 13, 2023

There were a lot of developments in the jurisprudence on notice periods over the past year, suggesting a trend towards awarding longer notice periods in certain circumstances. Some of these cases exemplify the court’s increasing lack of tolerance for employers who take untenable positions or otherwise engage in bad faith conduct during a termination. This blog will summarize some of the most significant Ontario court decisions focused on notice periods that were released in 2022-2023.

Currie v Nylene Canada Inc, 2022 ONCA 209

On March 14, 2022, the Ontario Court of Appeal upheld the trial judge’s decision to award a 26-month notice period to an employee who had been terminated by her employer without cause. In doing so, the Court of Appeal relied on the following facts put before the trial judge in support of the finding that “exceptional circumstances” existed that justified a 26-month notice period:

The employee had dropped out of high school and had worked for the same employer ever since;
The employee was 58 years old and in “the twilight stages of her career” at the time of her termination without cause;
The employee had a very specialized skillset, which made it difficult for her to find suitable alternative employment;
The work landscape had evolved significantly since the employee had entered the workforce and since virtually all of her work experience was with the employer and its predecessors in a manufacturing environment her skills were not easily transferable; and
The termination “was equivalent to a forced retirement” in light of the employee’s advanced age, limited education, and lack of transferrable skills.[1]

Key Takeaways: The courts are now considering a broad range of “exceptional circumstances” in order to depart from the general principle that a common law notice period will not exceed 24 months.

Milwid v IBM Canada Ltd, 2023 ONSC 490

More recently, the Ontario Superior Court of Justice elaborated on the types of “exceptional circumstances” that entitle an employee to a notice period in excess of 24 months and specifically commented on the impact of the COVID-19 pandemic in respect of an employee’s entitlement to common law notice.

Justice Ramsay reiterated the principles articulated in Dawe v The Equitable Life Insurance Company of Canada,[2] confirming that “exceptional circumstances” must exist in order to support a notice period in excess of 24 months. He held that such circumstances were found in this particular case and specifically relied on the following factors in support of his conclusion that the employee was entitled to damages equal to 26 months of notice:

The employee had worked for IBM for 38 years, which represented most of his working life;
The employee was 62 years old at the time of his termination;
The employee held a “technical position” which was specialized in nature; and
The character of the employee’s position, which was described as being one of substantial responsibility entitling him to significant compensation.

Notably, Justice Ramsay acknowledged the “unprecedented effect of the COVID-19 pandemic on the economy and the available job market” when determining that the employee was entitled to a lengthier notice period, noting that the impact of the COVID-19 pandemic has already been commented upon by a number of other recent court decisions[3].

Key Takeaways: In this decision, Justice Ramsay broadly interpreted the “exceptional circumstances” that warrant a notice period in excess of 24 months. Going forward, it is likely that other senior employees with lengthy tenures will attempt to advance similar arguments that such exceptional circumstances exist, even where those circumstances are limited to the usual Bardal factors.

Teljeur v Aurora Hotel Group Inc, 2023 ONSC 1324

An employee with only three years of service was recently awarded a seven month notice period, consistent with the growing trend of awarding lengthier notice periods to short service employees.

At the time of his termination, the employee was 56 years old and held the role of General Manager, earning a salary of $72,000 plus benefits. The employee had also incurred $16,800 in business expenses at the time of his termination, and the employer had failed to reimburse him for those expenses even at the time of trial. The employee sued for wrongful dismissal, reimbursement of the business expenses, as well as moral damages for the employer’s bad faith conduct.

In awarding the employee seven months’ of pay in lieu of reasonable notice, Justice McKelvey of the Ontario Superior Court of Justice held that the employee’s age, level of seniority, and market conditions (i.e., he was dismissed during the COVID-19 pandemic) were all factors that necessitated a longer notice period despite the fact his tenure was “relatively short.[4]” He also specifically noted that, while the mitigation evidence produced by the employee was “skeletal” (he had only contacted three prospective employers over the course of 10 months), there was insufficient evidence to conclude that the employee could have found other work during the notice period.[5]

Moreover, Justice McKelvey concluded that the employee was entitled to $15,000 in moral damages after the employer: (a) failed to reimburse his business expenses; (b) failed to advise him of his termination in writing; (c) paid him only his statutory minimums despite having promised him eight weeks of severance at the time of termination; and (d) delayed in issuing his ESA payments.

Key Takeaways: This decision demonstrates a continuing tendency by the courts to award increased notice periods to short service employees, even in circumstances where there is evidence that the employee made minimal efforts to mitigate his damages. It also suggests that the courts are becoming increasingly less tolerant of employers who engage in bad faith conduct and will not hesitate to make an award for moral damages in those circumstances.

Griffon Integrated Security Technologies et al. v. Valley Associates Inc. et al., 2023 ONSC 2200

A Vice President and General Manager with 12 years of service was awarded a 20-month notice period, as well as $75,000 of punitive damages after he was terminated while battling colon cancer. Despite continuing to discharge his responsibilities to the extent he was able to do so, his employment was terminated while he was undergoing chemotherapy treatment. After he was initially terminated without cause and had commenced a wrongful dismissal action, the employer accused the employee of financial irregularities and argued that it had after acquired cause. The employer also brought a counterclaim for breach of contract, fraud, and defamation even though the discovery process made it clear there was never any substance to the counterclaim or the defence generally. The employer’s litigation tactics were rebuked by the court, who described it as a “scorched earth strategy.”[6]

At some point during the litigation, the employer’s counsel moved to get off the record and the employer advised that it did not intend to participate in the litigation going forward. It consented to the employee’s motion to strike the Statement of Defence and dismissal of the defendant’s Counterclaim. The court was then tasked with determining whether the employee’s requested relief could be justified[7].

The court found that there was no cause for dismissal, and the employee was entitled to reasonable notice. He was 65 years old at the time of termination and was held the second most senior executive position in the corporation. The court held that it was also relevant that he was undergoing cancer treatments and was (to the employers’ knowledge) in a difficult financial situation because it failed to pay him is accrued bonuses and commissions. The court noted that the employer’s behaviour at the time of termination was a relevant factor in determining the applicable notice period, finding that “…the brutality of the dismissal…can be considered in determining the notice period because the completely unfounded allegations of dishonesty would have rendered it far more difficult for the plaintiff to find alternative employment”. The court fixed the notice period at 20 months, and awarded punitive damages against the employer in the amount of $75,000 in light of the employer’s egregious conduct[8].

Notably, the court held that the damages should be awarded against the employer (a corporation) as well as the owner/CEO of the employer in his personal capacity jointly and severally. Not only was the owner/CEO a named defendant in the action, but the court deemed that there were circumstances which warranted piercing the corporate veil to be pierced for the following reasons:

The Statement of Defence had been struck;
At all material times, the owner/CEO was the sole shareholder, director and most senior officer of the company. He wrote the termination letter and directed the conduct of the litigation;
The corporate defendant and owner/CEO defended the action collectively, were represented by the same legal counsel, and did not differentiate as between themselves when they advanced the counterclaim;
On the motion to strike, the owner/CEO attended the proceedings and advised the court that he consented to the order striking the Defence and the Counterclaim. He was fully aware that the employee was pursuing damages as against him in his personal capacity;
There was confusion concerning the identity of the corporate defendants, as it was noted in the affidavit evidence that the defendants changed their letterhead and the name of the corporation throughout the course of the litigation; and
The allegations in the Statement of Claim and the affidavit evidence led the court to conclude that there was conduct constituting an independent actionable wrongdoing sufficient to pierce the corporate veil.[9]

Key Takeaways: This decision stands for the proposition that an employer’s conduct around the time of termination can be considered in determining the notice period in circumstances where the unfounded allegations of dishonesty would have rendered it far more difficult for an employee to find alternative employment. It also emphasizes the fact that the courts are becoming increasingly less tolerant of employers (and their directing minds) who engage in bad faith conduct at termination and during the course of litigation.

[1] Currie v Nylene Canada Inc, 2022 ONCA 209 at para 11.

[2] Dawe v The Equitable Life Insurance Company of Canada, 2019 ONCA 512.

[3] Milwid v IBM Canada Ltd, 2023 ONSC 490 at para 40.

[4] Teljeur v Aurora Hotel Group Inc, 2023 ONSC 1324 at paras 19-21.

[5] Teljeur, supra at paras 24 and 41.

[6] Griffon Integrated Security Technologies et al. v. Valley Associates Inc. et al., 2023 ONSC 2200 at paras 3-6/

[7] Griffon, supra at para 9.

[8] Griffon, supra at paras 12-18.

[9] Griffon, supra at para 24.