Features Legal
The unpredictability of wrongful dismissal: Former Avaya Canada worker awarded 30 months’ notice

In Lynch v Avaya Canada Corporation, 2023 ONCA 696, the Ontario Court of Appeal (ONCA) upheld a ruling that awarded an employee 30 months of termination pay in a wrongful dismissal lawsuit.

Background

Avaya Canada Corporation dismissed its employee, John Lynch, who worked for the Company (and its predecessor) for almost 39 years.

Lynch sued for wrongful dismissal, the parties agreed that the action would be determined by summary judgement, and the Judge hearing the summary judgment motion determined that the appropriate notice period was 30 months.

In this case, Avaya appealed the decision, arguing the judge erred by awarding a notice period greater than what was sought by Lynch in his Statement of Claim; by concluding that there was no failure to mitigate damages; and by erroneously awarding a notice period in excess of 24 months when there were no “exceptional circumstances” to justify that length of notice period.

The court’s decision

The ONCA upheld the 30-month notice period, rejecting all of Avaya’s arguments.

The ONCA found no merit to Avaya’s first argument, noting that, despite seeking 26 months of notice in his Statement of Claim, Lynch sought, and argued for, a 36 month notice period during the summary judgment motion hearing. The ONCA noted that Avaya had conceded at the hearing that it had not suffered any litigation prejudice from this, therefore the issue was moot.

With respect to Avaya’s mitigation argument, the court stated that the onus was on Avaya, as the employer, to provide sufficient evidence demonstrating that Lynch had failed to take reasonable steps to secure a new job (often referred to as “mitigation” in wrongful dismissal cases) and that he would have secured a new job if he had done so. The previous judge determined that Avaya had failed to meet that onus and the ONCA deferred to that assessment.

The ONCA was also not persuaded by Avaya’s argument regarding “exceptional circumstances.” The ONCA acknowledged that the previous judge did not specifically identify the “exceptional circumstances” which justified a notice period greater than 24 months. However, the ONCA stated that it was possible to discern the “exceptional circumstances” relied upon by the judge based on the factors she listed.

The ONCA took it upon itself to identify the relevant “exceptional circumstances”:

• Lynch’s skillset was tailored to Avaya – including specialization with hardware uniquely manufactured by Avaya;
• Lynch had developed patents for Avaya at least once per year;
• Lynch was a “key performer”; and
• comparable employment opportunities were located a significant distance away, potentially requiring relocation.

Purpose of reasonable notice and ‘exceptional circumstances’

When a terminated employee is awarded termination pay in lieu of reasonable notice under the common law, the purpose is to provide the employee with a reasonable period of time to secure a new job that is comparable to their previous job.

While there is no “cap” on the number of months a reasonable notice period should be, previous case law has used the approach from Lowndes v Summit Ford Sales Ltd., 2006 CanLII 14 (at paras 11-16), where, typically, only “exceptional circumstances” would support a base notice period in excess of 24 months.

With respect to the factors the ONCA listed as “exceptional circumstances” in this case, some of them can easily be understood as potentially increasing the amount of time an employee would need to secure comparable new employment. For example, if Lynch’s skillset and experience over the past 39 years was with tools and hardware unique to Avaya, that specialization will not necessarily be transferrable or employable by other companies who do not use those tools/hardware, making it more difficult for Mr. Lynch to secure comparable employment.

However, some of the listed factors are not clearly circumstances that would increase the amount of time the employee would need to secure a new comparable job. For example, the ONCA considered Lynch’s good performance to be one of the “exceptional circumstances” that justified a longer reasonable notice period. This logic seems counterintuitive to the purpose of reasonable notice as one would assume that it would be a poor performer, rather than a good performer, who would need more time to secure a new job.

Lessons for employers

This decision serves as a cautionary reminder to employers that there is no real “24-month” cap on reasonable notice as is often assumed, making it highly important to ensure that there are employment contracts with enforceable termination provisions in place to limit potential costs when dismissing an employee.

If there is no enforceable termination provision, this case serves as a warning that there is always some uncertainty and a level of unpredictability surrounding how a Court will assess the reasonable notice period, what factors they will consider relevant, and what a Court will consider to be “exceptional circumstances” that justify a reasonable notice period greater than 24 months.

John Hyde is the managing partner at Hyde HR Law in Toronto. He advises management on all aspects of employment and labour law, including representation before administrative tribunals, collective agreement negotiation, arbitrations, wrongful dismissal defence and human rights.