Impact of COVID-19 on Reasonable Notice Periods
It has been over one year since Ontario declared a state of emergency in response to the COVID-19 pandemic. Since then, COVID has had profound impacts on employees in Ontario and across Canada. They have been faced with temporary layoffs, reductions in the scope of their duties, and in some cases, termination. Where an employee has been terminated, they will be entitled to reasonable notice at common law, subject to the terms of their employment contract.
The purpose of reasonable notice (or pay in lieu of notice) is to provide the employee with an opportunity to seek alternative employment. Calculating the reasonable notice period is a highly fact-specific exercise and Courts will typically consider the following factors: 1) the employee’s age; 2) the length of service; 3) the character of the employment; and 4) the availability of similar employment. With that in mind, Courts in Ontario have now been asked to consider whether the impact of COVID on the job market should extend reasonable notice periods for terminated employees. Although Courts have suggested that COVID may extend reasonable notice periods, they have thus far declined award lengthier notice periods in response to COVID.
Recent Case Law
The case of Yee v. Hudson’s Bay Company, 2021 ONSC 387, a recent decision of the Ontario Superior Court of Justice, involved a 62-year-old plaintiff who was terminated by the defendant employer after more than 11 years of service. The plaintiff’s employment was terminated in August of 2019 – just over six months before the beginning of the COVID pandemic. The plaintiff argued that, in determining the appropriate reasonable notice period, the Court should consider the COVID pandemic and the associated challenges in obtaining comparable employment. There was evidence that the plaintiff had submitted approximately 90 employment applications without success.
The Court distinguished between terminations occurring before and after the beginning of the COVID pandemic. Specifically, the Court held that pre-pandemic terminations should not attract the same consideration as post-pandemic terminations in terms of the pandemic’s negative effect on finding comparable employment. The Court’s holding appeared to suggest that terminations occurring after the beginning of the pandemic could result in longer periods of reasonable notice.
However, in Iriotakis v. Peninsula Employment Services Limited, 2021 ONSC 998, the Ontario Superior Court of Justice refused to extend the reasonable notice period for a termination that occurred after the pandemic was declared. In that case, the plaintiff was employed as a business development manager with the defendant employer for just under two and a half years. The plaintiff’s employment was terminated one week after Ontario declared a state of emergency due to the pandemic.
Although the Court acknowledged that the pandemic had some influence on the plaintiff’s job search, the Court stated that the impact of the pandemic on the job market was “highly speculative and uncertain both as to degree and to duration” at the time the plaintiff’s employment was terminated. The Court also warned about the dangers of applying hindsight when calculating the appropriate period of reasonable notice. The plaintiff was ultimately awarded three months’ notice.
The case law dealing with post-pandemic terminations is currently limited. Courts have not yet considered a case where an employee was terminated at the height of the pandemic. Although there are existing criteria which Courts apply to determine reasonable notice periods, it remains to be seen whether Courts will place additional weight on the COVID pandemic when considering the availability of similar employment for post-pandemic terminations. For now, Courts appear to be taking a conservative approach, but we will continue to monitor this issue for further developments.
Questions? Contact David Cherepacha or Ava Kanner