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| Stuart Rudner |
The pandemic has resulted in decreased job opportunities and, as a result, the period of reasonable notice should be extended.
OR
The pandemic has decimated the company/industry, local, provincial, federal or global economy, and the company’s severance obligations should be reduced to reflect the dire financial straits they find themselves in.
So, what is the impact of a global pandemic on notice of dismissal or severance requirements? Does it result in increased notice, decreased payments, or neither?
The answer to most employment law questions is “it depends.” In this case, while there is no jurisprudence that is “on all fours” with the current situation, the case law would suggest that the pandemic will lead to a slight increase in notice periods, if anything. It would be a significant departure from the jurisprudence to see the notice periods reduced due to the situation that employers find themselves in, even though there may be compelling reasons to assist them in these unprecedented circumstances.
When it comes to assessing what is “reasonable” based on common law, we begin with the “Bardal factors,” which are length of service, age, character of employment and availability of similar employment. However, it is beyond debate that those four factors are not exhaustive and many others can be taken into account. That said, the case law indicates that an employer’s financial circumstances will not be a factor to consider.
In Michela v. St. Thomas of Villanova Catholic School 2015 ONCA 801, three employees were dismissed without just cause due to low enrolment. At trial, they each received six months of pay in lieu of notice, with the court explicitly considering the employer’s financial hardship. However, the Ontario Court of Appeal overturned the trial court decision and made it clear that financial difficulties do not justify a reduction in the notice period. This approach has been followed in Ontario and British Columbia, although the rest of the provinces have remained silent on the matter. Since British Columbia and Ontario case law is highly persuasive, it is likely that this doctrine will be followed, but there is greater uncertainty in the other provinces.
So, will the courts be more willing to consider an employer’s financial condition in the context of a pandemic that has impacted the global economy? That remains to be seen, but there is no case law to suggest they will.
Conversely, will the pandemic serve to increase notice periods and, if so, by how much? We have only had a taste of judicial consideration of this issue to date, as it takes a while for any issue to make its way through the court process.
First, the Ontario Superior Court of Justice in Yee v. Hudson’s Bay Company 2021 ONSC 387 suggested that the pandemic could serve to lengthen notice periods, but only if the dismissal took place during the pandemic. Since the dismissal in that case took place before the pandemic, it was irrelevant; the court confirmed that notice periods are to be assessed based upon the circumstances at the time of dismissal.
Subsequent to Yee, the Ontario Superior Court of Justice released its decision in Iriotakis v. Peninsula Employment Services Limited 2021 ONSC 998. In that case, the plaintiff was dismissed after the pandemic commenced and sought to rely on that as a factor to support a lengthier period of notice. The court held as follows:
[19] I was asked to make findings about the job market and the possible impact of Covid-19 on Mr. Iriotakis. I have little doubt that the pandemic has had some influence upon Mr. Iriotakis’ job search and would have been reasonably expected to do so at the time his employment was terminated in late March 2020. However, it must also be borne in mind that the impact of the pandemic on the economy in general and on the job market, in particular, was highly speculative and uncertain both as to degree and to duration at the time Mr. Iriotakis’ employment was terminated. The principle of reasonable notice is not a guaranteed bridge to alternative employment in all cases however long it may take even if an assessment of the time reasonably anticipated to be necessary to secure alternative employment is a significant factor in its determination. I must be alert to the dangers of applying hindsight to the measuring of reasonable notice at the time when the decision was made to part ways with the plaintiff.
While we will undoubtedly see more judicial consideration of this issue, this decision suggests that jurisprudence will be applied so as to result in a slight increase in notice periods. That is what people should expect at this point, and when I am asked to opine on such cases when mediating, that is my approach.
That said, any discussion of “reasonable notice” periods is irrelevant if there is a valid termination clause in the applicable employment agreement. The key, however, is that the clause must be valid; in light of many recent cases, a significant percentage of clauses in existence today are not.
Stuart Rudner is a leading Canadian employment lawyer and mediator at Rudner Law. He is the author of You’re Fired! Just Cause for Dismissal in Canada. He can be reached at 416-864-8500 or stuart@rudnerlaw.ca.
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