Is the 24-month cap over?

“There is no cap; the cap is gone, as far as I'm concerned.”

So says Barry Fisher, in talking about the traditional limit when it comes to the length of a notice period for termination of employment.

For years, 24 months was seen as the upper limit, but more and more cases seem to be upping the number, citing “exceptional circumstances.”

“I don't think it serves anybody,” says Fisher, a mediator and arbitrator of employment and labour relations matters in Toronto. “It doesn't serve claimants and it doesn't serve defendants. The only people it serves, frankly, are lawyers, mediators.”

But a big takeaway from this recent case is for employers to settle these things before they get to this point, says Kate Kahn, associate at Viner, Kennedy in Kingston, Ont., who represented the individual awarded 30 months.

“We had an offer out before we even went to litigation that was less than what was ultimately awarded. If the employer had been at all reasonable at any point and just recognized, even the 24 months, at one point, it would have settled a long time ago [but] this employer just wanted to play hardball. And they paid the price for that.”

So, what were the particulars of the case that led to the 30 months?

Restructuring leads to termination after 40 years

During a company restructuring, professional engineer John Lynch was terminated in March 2021. He had worked for telecom service provider Avaya Canada since 1982.

When the two parties unsuccessfully attempted to reach a termination settlement, he sued for wrongful dismissal. Both parties agreed to a summary judgment.

The motion judge found that a 30-month period was appropriate, so Avaya appealed the ruling, saying the motion judge erred because she wrongly held that the circumstances of this case placed it within the “exceptional circumstances” category of cases that have justified a notice period in excess of 24 months, such as Lowndes v. Summit Ford Sales Ltd.

But the Court of Appeal disagreed, citing the Bardal factors in determining a reasonable notice period, which include the character of the employment, length of service of the employee, age of the employee, and availability of similar employment “having regard to the experience, training and qualifications” of the employee.

As for Lowndes, this court recognized that there is no absolute upper limit or “cap” on what constitutes reasonable notice, but it went on to state that “generally only exceptional circumstances will support a base notice period in excess of 24 months”

Outlining exceptional circumstances

In this case, the motion judge concluded that “the plaintiff’s circumstances were exceptional” and identified, as a group, all of the factors that led her to fix the notice period at 30 months. The appeal court said her “holistic description” of the relevant factors was understandable given the approach set out in Bardal, but Avaya said her failure to identify separately the Bardal factors amounting to “exceptional circumstances” tainted her analysis and should mean a reduction of the period of notice awarded.

The appeal court agreed that judges should “specifically identify” those factors that they think demonstrate exceptional circumstances” for the purpose of calculating the period of reasonable notice: “Appellate courts should not be left to guess which factors, taken alone or in combination, move a case into one that displays ‘exceptional circumstances.’”

But the appeal court said it could “discern” the exceptional circumstances factors relied on by the motion judge in comparing her listed factors with those this court in Currie v Nylene Canada which justified an award in excess of 24 months. Those factors were:

• Lynch specialised in the design of software to control unique hardware manufactured at the Belleville facility
• Lynch’s job was unique and specialized, and his skills were tailored to and limited by his very specific workplace experience at Avaya
• during his lengthy employment of 38.5 years, Lynch developed one or two patents each year for his employer
• Avaya identified Lynch as a “key performer” in one of his last performance reviews
• although similar and comparable employment would be available in cities such as Ottawa or Toronto, such jobs would be scarce in Belleville where Lynch had lived throughout his employment.

The Bardal factors and 24 months

Lynch was 63 when he was given notice, working in a highly technical job in Belleville, says Kahn.

“Pretty much every single kind of extraordinary circumstance that's been found to be extraordinary was here.”

And while the court of appeal said the motion judge “could have expanded a little bit” on her assessment, “it was clear from what she did do... what she had considered and that she'd done the proper analysis,” says Kahn, so “there's no reason to believe there was a palpable error.”

There’s never one determinative factor, she says, citing Currie which involved a 65-year-old individual who was a key performer in a very narrow area of work.

“The court’s job is to look at all the factors and weigh them appropriately. And in [Lynch’s] case, the fact that he wasn't a supervisor, it doesn't weigh against him the way that Avaya certainly wanted it.”

At least now, the higher court is sending a message to the lower courts that judges should be specific about the reasons for giving notice awards, says Fisher.

“There was a time when we thought there was going to be more or less a cap at 24 [months] and being stuck with that,” says Fisher, citing the well-known cases of Dawe v Equitable Life. But then other decisions came along, he says, such as Currie, which broke through the cap.

Repeating Bardal factors to determine notice?

The problem with all of these cases is they’re really just repeating the Bardal factors, which can lead to 24 months, unless there are exceptional circumstances, says Fisher.

“Repeating what is otherwise a Bardal factor is not an exceptional circumstance.”

In the Avaya case, for example, there are two factors that aren’t necessarily different from the Bardal factors, says Fisher.

For example, points one and two in paragraph 13 both talk about Lynch’s work being unique and specialized.

“It sounds like you're saying the same thing twice. I'm not sure that's two factors,” he says.

The mention of his “lengthy” employment is also a Bardal factor, and it’s unclear why the patents are relevant, says Fisher.

“These are the things that upset me… they're focusing on how good he was as an employee. That has never been a factor, you're either fired for just cause or you're not, whether you're great [or not].”

Plus, “if the idea here is to determine how long a reasonable person in his situation would take to get a job... who's more likely to get a job, a top performer or a schlepper?” says Fisher. “It bothers me because it has nothing to do with traditional analysis.”

What this means is we're going to be flooded with “completely irrelevant evidence” about whether someone was a good performer or a bad one, he says.

Mitigation efforts in spotlight

Avaya also felt the motion judge erred in failing to find that Lynch had not taken reasonable steps to mitigate his damages by seeking alternative employment — but the appeal court disagreed: “We see no error in the motion judge’s treatment of the mitigation issue.”

Lynch’s work involved a mix of software and hardware, often inside an anechoic chamber, which basically removes all exterior sound, says Kahn, “so he was really dependent to do his work on that chamber that they had in the Belleville facility.”

He also obtained his education roughly 40 years ago, and lacked the base knowledge of software that kids coming out of college or university have today, she says.

“He literally would have had to retrain entirely to get even those base skills. And at 64, that wasn't really a viable option for him.”

In looking at mitigation, employers have to show that if the former employee had done more, they likely would have got a job, says Kahn.

“So the fact that someone could go out and do a million things, if it's not going to get them anything comparable, then the employer hasn't met the onus. That was a big issue in this case.”

Failure to mitigate is always the last argument of the employer, says Fisher.

“More importantly, it's a two-part test, and almost impossible for the employer to beat: you have to first of all show that the guy did less than a judge thinks he should have; and second of all… had he done more, he would have got a job. How do you ever prove that?”

Typically, employers will say a person had, for example, 50 jobs that they didn't apply for that could have provided employment, he says, but “the number of job vacancies is half the equation,” as there could be hundreds of applicants for those 50 jobs.

Plus, an employer may say they have lots of employees who are over 65, says Fisher, referencing Lynch’s seniority, but if you ask them about the last time they hired somebody over 65, they may have trouble answering.