Canadian Employment Law Today

Canadian HR Reporter, 2021 4 Courts have started to evaluate whether the pandemic should be factored into dismissed employees' notice entitlement A COVID boost to reasonable notice? IN 2021, we have begun to see court rulings dealing with circumstances where employ- ees were dismissed proximate to the onset of the COVID-19 pandemic. To the surprise of many, the pandemic has not (yet) resulted in substantially increased common law no- tice awards for dismissed employees. While this is a positive trend for employers, given that positive COVID-19 cases continue to remain steady in Canada, employers should not discount the impact that COVID-19 can have upon an employee's termination en- titlements going forward. Common law reasonable notice Common law reasonable notice is a legal concept and employee entitlement in Canada that generally applies to all non-unionized employees who are not subject to a fixed-term contract. Canadian employers have a legal ob- ligation to provide employees with reasonable notice of termination of their employment. This notice may be provided through work- ing notice — advance notice of an impending date that the employee's employment will ter- minate — or by providing the employee with payment in lieu of notice. Common law reasonable notice is de- termined by judges on a case-by-case ba- sis based on established factors including length of service, age of the employee, char- acter of employment and the employee's prospects of re-employment. The purpose of common law notice is to provide an employee with a reasonable period to seek similar re-employment. Courts have recog- nized that an economic downturn and poor job market can make it more difficult for an employee to find work. This can result in a longer common law notice period when the employee can demonstrate to the court that the circumstances have impacted their pros- pects for re-employment. Employers and employees can contract out of the requirement to provide common law reasonable notice by providing for a specific contractual termination entitlement — often referred to as a termination clause — so long as the termination clause com- plies with the minimum standards provided under the applicable employment standards legislation. However, if an employee is not subject to an enforceable termination clause in their employment agreement, the em- ployee is entitled to common law reason- able notice upon termination. The impact of COVID-19 In 2021, several decisions have weighed in on COVID-19's impact on reasonable notice pe- riods. Courts first weighed in on terminations that occurred prior to the onset of COVID-19 in March 2020 but where the pandemic has arguably impacted the employee's job search efforts. In Yee v. Hudson's Bay Company, the first Ontario decision to address COVID-19 and reasonable notice, an employee who was dismissed prior to the onset of COVID-19 argued that the pandemic had impacted the job market and made it significantly more difficult to find a job. As a result, the em- ployee argued he should be entitled to a correspondingly longer notice period. The court disagreed, holding that reasonable no- tice is to be determined by the circumstanc- es existing at the time that the employee's employment was terminated. Accordingly, because the employee had been dismissed prior to the onset of the pandemic, the em- ployee's reasonable notice entitlement was not extended despite the reality that the pandemic may have made it more difficult for the employee to find re-employment. Subsequently, courts have considered what impact COVID-19 has had on com- mon law notice periods where employees were dismissed following the onset of the pandemic in March 2020. Surprisingly to many, courts have not been willing to apply a "rubber-stamp" extension of reasonable notice awards on the basis that an employee was dismissed during the pandemic. Courts have considered the circumstances that ex- isted at the time of dismissal, and specifical- ly whether the pandemic has truly impacted the employment prospects of the employee at issue. The case law also suggests that the impact of COVID-19 on reasonable notice awards will depend on the specific circumstances that existed at the time of termination. A 2021 Ontario decision, Iriotakis v. Peninsula Employment Services Ltd., did not give much weight to the pandemic in awarding a rea- sonable notice period to an employee who was dismissed in late March 2020. The court reasoned that during the early onset of the pandemic there was uncertainty as to the impact of COVID-19 on the economy and job market. Given that the impact that CO- VID-19 would have on the economy at the time was speculative and unconfirmed, the court did not find that COVID-19 was a fac- tor that served to extend the notice period. Another 2021 decision from Ontario, Marazzato v. Dell Canada Inc., involving an employee in the computer industry who was dismissed in March 2020, declined to con- sider COVID-19 as a factor lengthening an employee's reasonable notice entitlement. In that case, the court relied on the employ- ee's failure to present any specific evidence of the pandemic's impact on his ability to find a new position. The court also sug- gested that, although many employees may have experienced challenges finding new employment because of the pandemic, the job prospects of the employee in that case may have actually benefited from the pan- demic because of the increased reliance on computers to work remotely. What to expect going forward While COVID-19 in some cases may lengthen some employees' reasonable notice periods, the case law indicates that employees will be required to demonstrate objectively that the economic circumstances surrounding the pandemic at the specific time of dismissal had an impact on their own ability to re-employ in order to receive an extended reasonable notice period. Accordingly, COVID-19 may not significantly impact reasonable notice periods where it can be demonstrated by the employer that, at the time of termination, the job market had seen an improvement or CO- VID-19-related restrictions had been eased, CASE IN POINT: REASONABLE NOTICE COVID-19 has kept employers (and employment lawyers) very busy over the past year. One of the questions that is being considered by Canadian courts is the impact that COVID-19 should have on employee termination entitlements. Because of the pandemic, many employers have been forced to implement layoffs and terminations, which has resulted in a flood of constructive dismissal and wrongful dismissal claims from dismissed employees. BACKGROUND BY JOEL SMITH AND SETH HOLLAND Courts have not been willing to apply a 'rubber-stamp' extension of reasonable notice awards on the basis that an employee was dismissed during the pandemic.

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