The often cited “cap” of 24 months on reasonable notice damages has been exceeded by the Ontario Superior Court of Justice in a wrongful dismissal case involving a long-serving IBM manager.
The court awarded 26 months’ notice after he was let go without cause, and tacked on an additional month because of the timing of the dismissal during the COVID-19 pandemic — bringing the notice period to 27 months.
Gregory Milwid was employed with IBM for 38 years when he was let go, without cause, in May 2020 — near the start of the pandemic — with 11 weeks’ notice. At the time of the termination, he was in a management position.
He had a base salary of $169,695 and received an annual contribution to his pension equal to six per cent of his salary and a comprehensive group insurance plan. He held the position of Offering Manager in IBM’s Cloud and Cognitive Software Business Unit in the Internet of Things Offering Management Sub-Unit.
IBM offered him a severance package, which he rejected. It paid him his severance under Ontario’s Employment Standards Act as well as his accrued vacation. Milwid filed a lawsuit for wrongful dismissal.
On May 21, 2020, IBM gave him working notice of 11 weeks. He then received an additional week of pay in lieu of severance, totalling $41,516.02. Then, IBM paid him 26 weeks’ severance — or $87,806.70.
In November 2018, Milwid was granted restricted stock units (RSUs) under IBM’s long-term performance plan (LTIP). He received 888 RSUs, half of which were to vest on Nov. 14, 2020, and the other half on Nov. 14, 2022. IBM cancelled the RSUs on Aug. 14, 2020. The shares were valued at $125.27 USD per share.
Milwid sought 30 months’ reasonable notice. He said he tried to mitigate his damages, but was unsuccessful and was forced into retirement as a result.
He acknowledged the “so called cap of 24 months” under common law reasonable notice, but said there were exceptional circumstances in this case — including the shutdown of the economy due to the COVID-19 pandemic.
IBM countered that given his position, and non-executive status, a 20 to 22 month was appropriate, subject to a reduction for unreasonable mitigation efforts.
The Ontario Superior Court of Justice noted that numerous courts have already weighed in on the impact of the pandemic. In some cases, courts have grappled with whether it was a relevant factor on the terminated employee’s ability to find alternate work, it said.
It said there were factors in this case which supported a “lengthy” notice period. Midwid was 62 at the time of termination two months into the pandemic. It also noted that mitigation issues do not impact the length of notice period. (Rather, it impacts a deduction from that period.)
It said 30 months was too high, and cited the Ontario Court of Appeal in stating that difficulty in finding replacement employment should not “have the effect of increasing the notice period unreasonably.”
Milwid applied for 122 jobs and was not granted a single interview, the court said, which “tells its own story.” It also agreed that the termination was tantamount to “forced retirement.”
“There is simply no evidence before me to support that conclusion in the face of the social reality that there is no longer a mandatory retirement age, at age 65,” it said.
It settled on 26 months’ notice as the appropriate amount — and then tacked on an additional month on account of the pandemic and timing of his termination, for a total notice period of 27 months.
It also ruled there was no failure on Milwid’s part to mitigate his damages by finding another job.
In addition to 27 months’ notice, the court also awarded:
- $55,619.88 USD for the value of the RSUs which would have vested during the notice period
- damages for loss of pension contribution during the notice period
- prejudgment interest on damages.
It left costs to the parties to sort out, but invited them to contact the court if they were unable to come to an agreement.
For more information, see Milwid v. IBM Canada Ltd., 2023 ONSC 490 (CanLII)