Canadian HR Reporter

26 www.hrreporter.com F E A T U R E S S P E C I A L R E P O R T LEGAL GUIDE KEEP COVID-19 IN MIND TO DETERMINE FAIR SEVERANCE ENTITLEMENTS FOR WORKERS A severance offer that may have been considered fair 18 months ago may no longer be considered reasonable in the post-COVID-19 era. SIMONE OSTROWSKI Lawyer Whitten Lublin in Toronto Canada approaches its 10th month of living with COVID-19, the courts are beginning to acknowledge the pandemic's dramatic effects on a dismissed employee's re-employment prospects. They are awarding greater severance entitlements to employees struggling to re-employ during the COVID-19 pandemic. This trend will likely continue as the effects of the pandemic wear on. Ever since the seminal 1960 case Bardal v. Globe & Mail Ltd., courts is confirmed in several cases that pre- date COVID-19, including the following Ontario cases: • In the 1984 McBride v. W. P. London & Associates Ltd. decision, the court accepted the plaintiff 's evidence that, because of the state of the economy from October 1982 to February 1984, it was nearly impossible for a senior draftsman to find employment. • In the 1996 Lim v. Delrina (Canada) Corp. decision, the court noted that the lack of available employment opportunities due to depressed economic conditions in a particular industry could operate to increase an employee's severance entitlement but not to decrease it. This principle was confirmed in the 2010 Sifton v. Wheaton Pontiac Buick GMC (Nanaimo) Ltd. decision. • In the 1996 Leduc v. Canadian Erectors Ltd. decision, the court found that slow economic conditions contributed to a greater period of unemployment and justified a greater severance entitlement for the plaintiff. • In the 2015 Zoldowski v. Strongco Corporation decision, the court specifically stated that, as part of its severance determination, it could consider the economic climate that the employee faced when terminated. If there is an economic downturn, the court recognized that this may make it more difficult for the employee to find a job and may justify a greater severance entitlement. In many of these cases, the courts found that a poor economy supports greater severance entitlements, but it does not permit an employer to reduce its severance obligations due to alleged financial hardship. Put another way, an employer cannot rely on a poor economy and reduced profits to justify paying out less severance — see, for example, the Ontario Court of Appeal's 2015 decision Michela v. St. Thomas of Villanova Catholic School. While all of these cases were decided before the COVID-19 pandemic, they readily translate to the present and confirm that any form of economic slump can be cited by an employee to support a greater severance entitlement in court. In one case decided during the pandemic, the 2020 Rothenberg v. Rogers Media Inc., the court stated the obvious — the Ontario economy took a drastic downturn in March 2020 due to COVID-19. This made jobs even more scarce as the number of unemployed persons campaigning for any available jobs increased, noted the court, and contributed to a greater severance entitlement for the plaintiff. We expect to see many more cases like this as COVID-19 continues to dramatically affect the economy. Employers must keep these cases in mind when determining fair severance entitlements for employees who are terminated in the foreseeable future. A severance offer that may have been fair 18 months ago may no longer be considered reasonable in the post- COVID-19 era. CHRR AS u s u a l l y d e t e r m i n e a d i s m i s s e d employee's severance entitlement with regard to four key factors: • the character of employment • the length of service • the age of the employee • the availability of similar employment having regard to the experience, training and qualifications of the employee. In a poor economy, the fourth factor will be greatly reduced and contribute to a greater severance entitlement, all other factors being equal. This principle

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