The Ontario Court of Appeal has dismissed an appeal by IBM Canada Inc., affirming a lower court’s decision in favour of an employee who filed a wrongful dismissal claim.
The court upheld a 27-month reasonable notice period for the dismissed employee and ruled that he was entitled to damages for the value of Restricted Stock Units (RSUs) that would have vested during this period.
Extended notice period justified
The lower court had awarded the employee 26 months’ reasonable notice, citing “exceptional circumstances.” These included the employee’s age, long-term employment with IBM, managerial role, specialized skill set, and the uncertain economic climate. IBM Canada contested this, arguing that such a period was too long and exceeded the standard 24 months generally considered reasonable.
The Appeal Court found no merit in IBM’s argument, confirming that the factors cited by the motion judge were indeed “exceptional circumstances” that justified the extended notice period.
“The evidence established that the respondent’s skills were not transferrable because they related, almost exclusively, to the appellant’s products,” the Court of Appeal ruled. “This is an exceptional circumstance not covered by the Bardal factors.”
It also endorsed an additional month of notice due to the impact of the COVID-19 pandemic, stating that the employee lost his position just as the global economy was shutting down.
RSUs awarded
IBM Canada also appealed the lower court’s decision to award the employee damages of US$55,619.88 for RSUs that would have vested during the notice period. The company argued that according to the terms of the Equity Award Agreement, the employee was ineligible for the RSUs as his employment had been terminated.
The Appeal Court rejected this argument, finding that the terms of the agreement were ambiguous regarding when an employee becomes ineligible to participate in the Equity Award. The court ruled that in case of ambiguity, the provision would not operate to extinguish the respondent’s right to participate in the Equity Award.
Costs and Legal Fees
In line with the parties’ agreement, the court ruled that IBM Canada must pay the dismissed employee $20,000 in costs for the appeal.
For more information, see Milwid v. IBM Canada Ltd., 2023 ONCA 702 (CanLII)
