COVID just one factor to consider when assessing notice periods

Employment/Labour /
Brittany Taylor
Latest posts by Brittany Taylor (see all)

By Tony Poland, LegalMatters Staff • The economic fallout from the pandemic has left many uncertain about notice periods following terminations but two recent judgments provide some clarity, says Toronto-area employment lawyer Brittany Taylor.

Taylor, a partner at Rudner Law, says the two decisions – Iriotakis v. Peninsula Employment Services Limited and Yee v Hudson’s Bay Company  – illustrate that while COVID-19 has had an unquestioned impact on the job market, it is only one factor for courts to consider when assessing the appropriate notice period.

“Both judgments open up the floor to have this discussion about how much of an impact the COVID-19 pandemic is going to have on notice periods,” she tells LegalMattersCanada.ca. “But there are other factors to consider as well.”

Taylor says the judgments provide a timely reminder in a constantly changing employment landscape.

Employers need to be prepared 

“For employers, the key takeaway is that there could be some increase to notice periods as a result of COVID-19 and they need to be prepared for that,” she says. “They need to take the shifting employment realities into consideration when they are deciding the appropriate severance package for an employee, particularly in cases where an employee’s entitlements are not clearly limited by the terms of their employment agreement.

“From the employees’ perspective, it is important to remember that while the pandemic could have an impact on their entitlements, workers need to appreciate that it’s only one of many elements to be considered,” Taylor adds. “They cannot treat this as a windfall in the sense that their notice period is suddenly going to double or triple from what it was pre-pandemic. That’s an unrealistic expectation, given the direction we’ve seen from the courts.”

In Yee v Hudson’s Bay Company, a man who was dismissed in August 2019 prior to COVID’s economic disruption argued the reasonable notice period should be extended to reflect the impact of the pandemic on his prospects of finding similar employment.

In rejecting the man’s request for 18-months notice and awarding 16 months, the Court stated “it seems clear terminations which occurred before the COVID pandemic and its effect on employment opportunities should not attract the same consideration as termination after the beginning of the COVID pandemic and its negative effect on finding comparable employment.”

Effect of COVID on the job market

The effect of the coronavirus on the job market was also considered in Iriotakis v. Peninsula Employment Services Limited. The Court was told Peter Iriotakis was terminated without cause on March 25, 2020, at the beginning of the COVID-19 lockdown. The man, who was unable to secure new employment until October 2020, received four weeks salary in severance but argued he should be entitled to at least six months’ pay.

In considering the COVID question, Justice S.F. Dunphy writes he has “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.”

“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,” he states. “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.”

Dunphy was also asked to consider the impact of Canadian Emergency Response Benefit (CERB) payments on an employee’s damage entitlements.

“I agree with the defendant that CERB cannot be considered in precisely the same light as Employment Insurance benefits when it comes to calculating damages for wrongful dismissal,” he ruled. “CERB was an ad hoc programme and neither employer nor employee can be said to have paid into the program or ‘earned’ an entitlement over time beyond their general status as taxpayers of Canada.”

Judgment provides helpful guidance

Taylor says the Court’s decision provides helpful guidance on the impact of CERB payments on an employee’s entitlements.

“Taking CERB into consideration was not appropriate in this case. It would not produce an equitable result. The money the plaintiff received through CERB was so much less than the compensation that he would have been receiving if he was working,” she says. “This ruling gives us helpful direction in terms of what is going to be deductible, especially when you’re representing an employee in a wrongful dismissal situation. It clarifies what could be considered mitigation earnings.”

Taylor says the judges in both cases acknowledged COVID’s effect on employment prospects.

“It’s an interesting perspective and one that is very appropriate because the pandemic is certainly going to impact a person’s ability to find new employment in certain industries,” she says. “I believe it would have been a mistake for the Court to make a blanket statement that it is always going to increase the notice period. You have to look at the circumstances of each case and balance it with all the relevant factors, which is completely in line with how we calculate reasonable notice. 

“It’s helpful in the sense that we at least have confirmation that yes, there is going to be some impact. It doesn’t give us an answer of yes or no. It gives us a maybe, which is honestly what we usually have in employment law.”

Court decisions strike a balance

Taylor says the decisions strike a balance when it comes to fairness as well.

“You always have to consider it from both sides. Is it equitable to have employers paying much larger severance packages when they may also be suffering as a result of a pandemic?” she asks.

Taylor says determining the appropriate severance package basically comes down to an assessment using the Bardal factors – age, length of service, the character of employment and availability of similar employment. COVID’s consequence can be just one aspect to consider.

“Ultimately, it’s going to be the unique circumstances of each individual case and balancing all of the factors that are impacting the employee’s ability to find work that determine a reasonable notice period,” she says. “In these two cases, the pandemic just fit into that analysis as opposed to being an overarching, dominant factor.”

More from Rudner Law: