A senior executive who was induced to leave long-term employment for a new role has been awarded 14 months’ notice — totaling more than $200,000 — after being wrongfully dismissed, with the Ontario Superior Court finding the employment contract’s termination provisions unenforceable under the Employment Standards Act (ESA).
The plaintiff, M.M., was recruited from a competitor to join AlayaCare Inc. as Vice President, Client Services. She was employed with the company for seven months before being terminated without cause as part of a workforce reduction.
At the time of termination, she was provided with four months’ pay in lieu of notice per her employment agreement. The court found that M.M. was entitled to a significantly longer reasonable notice period due to factors including inducement, her senior role, and her age.
Background
M.M. had been employed for nearly 12 years at WellSky, a competitor of AlayaCare, where she held a senior leadership position. AlayaCare executives actively recruited her, initiating contact through LinkedIn and offering financial incentives to secure her employment.
She was promised an increased salary, bonuses, and equity in the form of Restricted Share Units (RSUs) that would vest over a three-year period. After extended negotiations, M.M. accepted AlayaCare’s offer and resigned from WellSky in December 2021, beginning her employment with AlayaCare in January 2022.
Seven months later, in August 2022, AlayaCare terminated M.M.’s employment without cause, citing restructuring. She was offered four months’ salary in lieu of notice per her employment agreement, along with a severance package contingent on signing a release. M.M. declined the offer, arguing that the termination provisions in her contract violated the ESA and that she was entitled to common law reasonable notice.
The court’s findings
The court ruled that the termination provisions in M.M.’s employment agreement were unenforceable as they contravened the ESA. Specifically, the agreement allowed for termination “for cause” without notice, failing to align with ESA provisions that require termination notice unless an employee engages in wilful misconduct.
Citing previous case law, including Waksdale v. Swegon North America Inc., the court held that an invalid “for cause” termination clause renders all termination provisions in the contract unenforceable.
The court also rejected AlayaCare’s argument that the offer letter, which stated a “minimum of four months’ salary” upon termination without cause, governed M.M.’s notice entitlement. It found that the wording lacked the necessary clarity to rebut the common law presumption of reasonable notice.
Reasonable notice assessment
Applying the Bardal factors, the court determined that M.M. was entitled to 14 months’ reasonable notice. The decision was based on the following considerations:
Length of service: While M.M. worked at AlayaCare for only seven months, the court recognized her 12 years of experience in the industry as a relevant factor given that AlayaCare recruited her for that expertise.
Nature of employment: M.M. held an executive position with significant responsibility, favouring a longer notice period.
Age: At 62 years old, M.M. faced greater challenges in securing comparable employment.
Inducement: AlayaCare actively pursued M.M., offering financial incentives and assurances to persuade her to leave secure employment. The court found this amounted to inducement, which generally supports an extended notice period.
The court did not extend the notice period based on a non-competition clause in M.M.’s contract, as there was no evidence that it impacted her ability to secure new employment.
Damages awarded
The court awarded M.M. damages equivalent to 14 months’ notice, calculated as follows:
- Base salary: $79,166.70
- Lost benefits: $1,330.28
- Lost bonuses: $33,750
- Value of RSUs: $90,157.20
The total award amounted to $204,404.18, plus pre-judgment interest. The RSUs, which had increased in value since M.M.’s hiring, were deemed an integral part of her compensation package. The court determined that she was entitled to their full value, rejecting AlayaCare’s argument that they held no liquid value until a public offering or sale of the business.
Fore more information, see Miller v. Alaya Care Inc., 2025 ONSC 1028 (CanLII).
