Employers are having to weather a storm of pandemic-related wrongful dismissal claims
In employment law, as in many other areas, the pandemic has been a source of upheaval and change. In particular, the challenges faced by businesses have led to fluid employment situations for many workers and a steady string of related wrongful dismissal lawsuits.
“There’s been a plethora of wrongful dismissal claims, either due to businesses shutting down permanently and also due to lockdowns, as well as temporary layoffs and constructive dismissal claims,” says Ronald Minken, founder and managing principal at Minken Employment Lawyers in the Greater Toronto Area.
Many employers may have been able to breathe a sigh of relief when governments in various Canadian jurisdictions amended their employment standards legislation to allow temporary layoffs that were related to the pandemic — normally temporary layoffs not allowed unless employment contracts or collective agreements specifically permit them. However, some court decisions — particularly in Ontario — have indicated that even though layoffs are now allowed by legislation, the same can’t be said for the common law, says Tanya Sambi, an associate lawyer at Minken Employment Lawyers.
“Employers began temporarily laying off their employers at a much higher number than we’ve seen before,” says Sambi. “And even though it was permitted under the Employment Standards Act, it was not permitted under the common law — so then they get hit with wrongful dismissal claims.”
Read more: Ontario courts debate over COVID layoffs and constructive dismissal.
Things worsened when more parents needed to work from home to care for children and some employers refused, says Minken. This has led to some human rights claims involving family status discrimination added to the pile.
As the pandemic has worn on, there has been an increase in wrongful dismissal claims related to other factors such as mask mandates and vaccination mandates. Some of the circumstances for these claims came about from employers not properly analyzing their health and safety obligations and drafting police that overreach, in addition to putting pressure on employees to vaccinate.
“Vaccination policies could be anywhere from completely voluntary to mandatory. And along with that, we’re seeing the one-size-fits-all policy being extraordinarily common. And, of course, what happens is that the employer overreaching on things that have nothing to do with workplace safety. And I guess when people are pressured, they want to do things of their own accord,” says Minken.
New EI rules
Another factor is that the federal government changed employment insurance (EI) rules to make if more difficult for employees who lose their jobs because of a refusal to get vaccinated to get EI. This has made people in those circumstances more likely to file wrongful dismissal claims, says Minken.
“Those employees are directing their attention at the employer, saying, ‘If the government isn’t going to pay me, then I want the employer to pay me.’ The EI rules, we believe, have really damaged employers because it is another factor that could trigger a wrongful dismissal claim.”
With vaccine mandates, it’s not just situations where employees are terminated for refusing to vaccinate — such policies could lead to constructive dismissal claims, says Sambi, who points out that, other than hospitals or other healthcare providers, most employment agreements don’t have a clause that requires vaccination.
“You don’t have a term in there that says you need to vaccinate in order to continue working,” she says. “So now, when employers are coming out with these vaccine mandates and saying, ‘In order to continue your employment, you need to be vaccinated,’ that is considered a fundamental and significant change to the terms of employment.”
Of course, a big reason for all of this employment upheaval is that the pandemic has hurt employers in some sectors, forcing them to close or reduce staff. Unfortunately for them, courts will probably not consider that when assessing wrongful dismissal claims, says Sambi.
“The employer’s circumstances is not one of the Bardal factors that a court would consider when awarding wrongful dismissal damages,” she says. “So based on that, it’s not likely that an employer’s economic circumstances would be taken into account to reduce an employee’s reasonable notice period.”
In fact, some recent decisions have indicated that courts might be willing to extend the notice period for dismissed employees for one to two months based on the negative impact of COVID-19 on the employee’s ability to find alternative employment, Sambi adds.
Limiting liability
Given the choppy employment waters of the past two years, what can employers do to limit their liability?
“Do not put an employee on a leave of absence with no pay and do not terminate for cause,” says Minken. “For-cause dismissal is completely contrary to law as we know it today.”
Sambi recommends drafting new employment agreements for new hires with clauses allowing temporary layoffs and any necessary vaccine mandates. This should be done for existing employees as well, but the employer would have to provide some kind of monetary or other consideration for signing new agreements, she says.
Read more: Acting in good faith will help employers manage liability for pandemic-related temporary layoffs, says another employment lawyer.
Ultimately, to reduce liability during a time in which everyone is stressed, employers should be careful not to make things worse on employees.
“We’re advising employers not to pressure their employees and to make sure they’re very reasonable with them, because the employees could be claiming that the employer caused them mental distress, which could result in increased damages.”
