People dismissed during COVID deserve longer notice periods

A recent Superior Court of Justice decision confirms that longer notice periods should be given to people terminated without cause during a pandemic.

In Kraft v. Firepower Financial Corp., the plaintiff was a commissioned salesperson working in the investment banking field. In March 2020, he was dismissed just before the rise of COVID-19 led to a national lockdown.

As a termination settlement, the company proposed paying any commissions on deals that had been arranged by Kraft that closed in the next five months. 

“As it happened,” the judgment notes, a major deal that he had orchestrated would close “six months following the plaintiff’s termination.”

That deal, worth $1,374,277.75 to the firm, should have put the plaintiff in line for a $77,559 commission.

$77,559 commission originally denied

Being released on the cusp of the pandemic seriously impacted Kraft’s ability to find new employment, the court heard, so he requested a 10-month notice period and the $77,559 commission.

Referencing Yee v Hudson’s Bay Company, Firepower Financial urged Justice Edward Morgan to “take no account of the economic shutdown occasioned by the pandemic.” In that January 2021 decision in Yee, an Ontario Superior Court judge ruled against any extension due to COVID, writing, “Notice is to be determined by the circumstances existing at the time of termination and not by the amount of time that it takes the employee to find employment.”

Since Kraft was dismissed just days before the Ontario government enacted its first lockdown, the company urged Justice Morgan to follow the Yee precedent. He refused, calling that interpretation of Yee a “red herring.”

“At issue here is the job market and the impact of COVID on that market,” he wrote. “The reason that the pandemic was not taken into account in determining the reasonable notice period in Yee is that the employee in that case was terminated in August 2019 – i.e., more than a half year prior to the COVID pandemic – and there was no evidence that the pandemic impacted his job search. 

Terminated on the cusp on the pandemic

“Here, by contrast, the Plaintiff was terminated … the very same week and just days before the Ontario government declared an emergency. Whatever policy considerations drove the provincial government to implement its emergency orders on one particular day that week and not another are not relevant to the analysis; the point is that the economy was already shutting down and remained closed during the Plaintiff’s inevitably prolonged job search. A global pandemic does not just emerge on the day of the government’s emergency decree.”

Based on Kraft’s age, experience and time with the firm, the Court concluded that an average notice period would be “in the range of 9 months”: that is, Kraft should receive from his former employer monies he would have earned over a nine-month period.  Since there is clear evidence that the pandemic impacted Kraft’s ability to secure new employment, Justice Morgan ruled he “deserves to receive at least somewhat above the average notice period. I would peg the figure at 10 months, or one month more than the average for his circumstances during non-pandemic times.”

Such clarity from the court about the need to extend notice periods during COVID is certainly welcome. 

Similar ruling in Alberta

Justice Morgan is not the first judge to reach this conclusion. In April, the Court of Queen’s Bench in Alberta gave a woman a nine-month notice period after an energy company terminated her position, citing the pandemic and a downturn in resource prices.  In deciding that the woman was entitled to a notice period that was three months longer than what the company had offered, Justice Jane Sidnell wrote that “not only had there been an economic downturn in oil and gas before the pandemic took hold, looking for a new job in the midst of pandemic when so many businesses were assessing what resources they required, and were changing all of their communication practices, must have had a negative effect on every job seeker’s ability to seek a new opportunity.”

Returning to the more recent decision, the fact that Justice Morgan saw fit to award Kraft the $77,559 commission is also worthy of note. “That transaction closed during what should have been his notice period, and so the commission earned on the deal are included as part of his ‘wages,’” Justice Morgan wrote.

Court documents also state that the five-month timeline was “arbitrarily selected by the Defendant, and was unrelated to anything in the Defendant’s otherwise applicable sales compensation plan.”

This is a clearly articulated and welcome decision for workers and a good reminder to employers about the need to extend notice periods during a pandemic. And to keep their hands off commissions an employee has earned with their hard labour.