In our view, employees who have been terminated during the COVID-19 pandemic may be entitled to longer notice periods as a result of the depressed economy. In contrast, many employers have attempted to argue that courts should "cut them a break" in light of their difficult financial circumstances. However, the courts have repeatedly rejected similar arguments made pre-pandemic, and we see no reason they would change their analysis now.
What are my entitlements on termination?
When an employee is terminated from their employment without cause, their employer may often be required to give them notice of the impending termination, or in the alternative, provide them with pay in lieu of that notice. This is often called a "severance package". To read our previous blog post on notice periods and how they are calculated, click HERE.
Since the beginning of the COVID-19 pandemic, many employees have wondered whether they should be entitled to a greater notice period given the increased difficulty in finding a new position. The unemployment rate in Canada has nearly doubled since last March, and the reality is that new positions are harder to find. At the same time, this means that finding alternative work has been increasingly difficult for recently terminated workers.
In our view, employees should be entitled to greater notice periods that reflect the increased difficulty in finding a comparable position in the midst of a global pandemic. Courts have repeatedly held that notice periods are calculated based on the circumstances of the individual employee. The purpose of the notice period is to estimate how long it will take that particular employee to find their next comparable position. The fact that an employer may be experiencing increased financial difficulty is simply not a relevant consideration.
For example, in 2016, the Ontario Court of Appeal in Michela v. St. Thomas of Villanova Catholic School determined that an employer’s financial circumstances are not relevant when determining the length of an employee’s reasonable notice period. In that case, three teachers were terminated and their employer, the school, argued they should be entitled to reduce the employees' notice periods, as they were experiencing financial difficulty.
The Court of Appeal soundly rejected this argument, reasoning that the notice period is based on the employee's, and not the employer's, circumstances at the time of termination. In other words, while the employer’s financial situation may be a reason for the employee’s termination, it cannot be a reason to decrease a former employee’s notice period.
This finding is also supported by numerous other court awards. For example, in Lim v Delrina (Canada) Corp., the Court found that it should consider the lack of available employment opportunities due to the depressed economy. However, this can only be used to increase the notice period. Similarly, the Court in Leduc v Canadian Erectors Ltd. found that the “economic climate to be weathered by the plaintiff when his employment was terminated” was an important consideration in determining whether the period of notice should be enlarged. And finally, in Zoldowski v Strongco Corporation, the Court confirmed that a longer notice period is justified when there is an economic downturn.
This reasoning can easily be applied to employee circumstances during the ongoing COVID-19 pandemic. Workers who have been terminated continue to struggle to find comparable employment, if not employment in general.
As a result, we expect Courts will award longer notice periods to employees whose employment has been terminated during the pandemic. This theory has yet to be tested at common law but is supported in numerous decisions.
*Special thanks to articling student Sydney Lang for her assistance in drafting this post.