Overview 

In Milwid v. IBM Canada Ltd. the Ontario Court of Appeal upheld a decision in which an employee was awarded 27 months’ notice for wrongful dismissal. This is a notable decision, as the Court confirmed that exceptional circumstances justified an award greater than the usual cap of 24 months. 

How Courts Determine a Reasonable Notice Period 

In wrongful dismissal cases, the fundamental issue decided by Courts is what an appropriate notice period is given the circumstances. Notice periods are determined on a case-by-case basis considering the four main factors as described in Bardal v. Globe & Mail Ltd. (1960).  These factors are as follows: 

• (1) the age of the employee; 
• (2) the employee’s length of service;
• (3) the character of employment; and 
• (4) the availability of comparable employment. 

This is not an exhaustive list, however. Courts may take other factors into consideration when determining a notice period. Such other factors include inducement and employee pregnancy. 

The Decision 

In Milwid, the Court held that exceptional circumstances in addition to the Bardal factors warranted a longer notice period. In this case, the employee worked for the company for most of his working life. Further, the Court found that the employee’s skills were not transferable, as they related almost exclusively to IBM’s products. The Court considered this an exceptional circumstance which justified an extension of the notice period. 

The Court also considered the fact that the employee was terminated 2 months into the Covid pandemic in reaching its decision to award a 27 month notice period. In upholding the motion judge’s decision, the Court of Appeal stated that “the pandemic was a truly exceptional circumstance, and the respondent lost his position right at the time the global economy was shutting down”.  

Another notable outcome of this case was the Court’s decision pertaining to the employee’s restricted stock units. Restricted stock units formed a part of the employee’s remuneration in this case. He was set to receive 888 restricted stock units, half of which were set to vest on November 14, 2020. The other half were set to vest on November 14, 2022. The Court found that the employee was entitled to damages for the value of his restricted stock units that would have vested during the 27 month notice period. These damages were fixed at the amount of US $55,619.88. 

Takeaways for Employees 

Though Court’s often impose a cap of 24 months on notice periods, the decision in Milwid is a reminder that exceptional circumstances may warrant an even longer notice period. In this case, the COVID pandemic as well as the employee’s nontransferable skill set were cited as such exceptional circumstances. Employees should be alert to such circumstances in which their reasonable notice period could be extended. If you are an employee who has been terminated, speak to an employment lawyer to ensure that you are being adequately compensated.  

Takeaways for Employers 

This case serves as a reminder for employers to ensure that they have properly drafted employment contracts such that they can limit the amount of termination and severance pay provided to employees whom they terminate.