The COVID-19 pandemic has forced many businesses to lay off or terminate huge portions of their workforce to stay afloat, and there have been record levels of unemployment. This has made the job market competitive and employees may find it more difficult to find a new job after being let go.
Recent Court decisions suggest the widespread economic downturn and strains on the job market can have the effect of lengthening the reasonable notice entitlements of dismissed employees.
Common Law Reasonable Notice
If you are an employee who has been terminated without cause, you are entitled to notice of termination from your employer, either as working notice or payment in lieu of notice, based on the Employment Standards Act (ESA) of Ontario. Depending on the wording of your employment contract (if you have one) you may be limited to the minimum notice periods in the ESA or you may be entitled to what is called common law notice.
The courts consider a few things when considering reasonable notice for an employee terminated without cause. These include:
- Length of service;
- Availability of similar employment;
- Employee’s age; and
- Characteristics of the job.
The notice period is intended to provide employees with a reasonable amount of time to find new, comparable employment after being terminated. Something like a recession, or a global pandemic, would certainly impact the “availability of similar employment” criteria laid out above. There is no set formula for determining reasonable common law notice, and courts will undertake a holistic approach that looks at the unique facts of each employee’s circumstances.
Impact Of Economic Downturn On Reasonable Notice
In the past, courts have recognized that poor economic conditions should have the effect of lengthening employees’ reasonable notice periods. This has not been found to work conversely in favour of employers; just because economic times are hard does not mean employers should get out of their obligation to provide reasonable notice of termination.
In Michela v St. Thomas of Villanova Catholic School, the Ontario Court of Appeal held that financial difficulties being experienced by the employer should not result in a reduction of the notice period for the employee.
In Paquette v. TeraGo Networks, the Ontario Superior Court wrote at paragraph 27:
“Economic factors such as a downturn in the economy or in a particular industry or sector of the economy that indicate that an employee may have difficulty finding another position may justify a longer notice period”
However, other decisions have made clear that the impact of economic downturn is not absolute, and should only be considered if the economic conditions existed at the time of termination.
In Panimondo v. Shorewood Packaging Corp, 2009 the court wrote at paragraph 37:
“the availability of similar employment, having regard to the experience, training and qualifications of the servant is a question that must be asked prospectively, as opposed to retrospectively. The determination of reasonable notice must be made based on the circumstances prevailing at the time of dismissal, and not judged by the length of time it has taken the employee to find employment”
Echoing the decision in the above case, in Holland v. Hostopia.com, 2012, the court reasoned that notice is determined by circumstances that exist “at the time of termination and not by the amount of time it takes the employee to find employment”.
COVID-19 and Reasonable Notice
Recently, the Ontario Superior Court had the opportunity to assess how the COVID-19 pandemic should impact an employee’s reasonable notice period. In the case of Yee v Hudson’s Bay company, 2021, the court addressed whether COVID had an impact on the job market necessitating a higher reasonable period for the plaintiff. In that case, a 62-year-old Director with 11 years of service was dismissed 6 months before COVID-19 became a global pandemic. The Plaintiff argued that the pandemic had made it difficult for him to find employment and therefore, there was good basis for the court to award an extended period for reasonable notice. Reiterating previous jurisprudence on economic downturn, the court stated at paragraph 22:
“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”.
In other words, terminations that occurred after COVID had started would likely increase the reasonable notice period.
There have been other decisions that have dealt with the impact of COVID on notice periods. For instance, in Hunsley v. Canadian Energy, Judge G. H. Poelman J. stated that
“Adverse economic conditions tend to increase the notice period because they usually contribute directly to the estimated time required to find replacement employment”.
Similarly, in Mohammed v Dexterra Integrated Facilities Management, 2020, Justice P.W . Walker stated that:
“…economic circumstances at the time of termination may be a factor, although they are not to attract undue influence. Those arising post-termination, such as those from the COVID-19 pandemic, can be relevant to mitigation if they impact the availability of equivalent employment”
Therefore, employees terminated during COVID may be entitled to a longer reasonable notice period from their employers because economic circumstances at the time of termination impact the availability of comparable employment.
If you are an employee that has been terminated during the COVID pandemic, you may be awarded a longer period of notice or pay in lieu. If you are unsure of what your rights are, you should contact an employment lawyer at Monkhouse Law as soon as possible for advice about your situation.
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