Do difficult economic times such as the pandemic warrant an increase in reasonable notice entitlement?
The pandemic has significantly changed many aspects of life in general, and the workplace in particular has undergone a major transformation. From hybrid workplaces to remote workforces to extra health and safety measures, few elements of work have been untouched by COVID-19. And this includes an area of employment law that gave many employers headaches even before the world changed.
Trying to figure out reasonable notice of dismissal has been, for many employers, a challenge to say the least. Countless court decisions across the country have dealt with the issue and it may seem to some that just when a standard has been established, something else comes along and changes things. Part of this is because there are several factors that go into determining a reasonable notice period, with many of them case-specific.
Many employers have been caught providing only the minimum notice prescribed in employment standards legislation, only to discover that employees are also entitled to common law notice — as established by case law. Many have resorted to using termination provisions in employment contracts that limit the notice entitlement to only statutory minimums — this is perfectly legal, but the language must be precise in order to be enforceable. Many employers have thought they were protected from common law notice, only to have a court declare their termination provision to be unenforceable because of language that was too vague.
No rule of thumb
It seemed for a while that common law reasonable notice could be roughly calculated at about one month per year of service. However, a few years ago several courts cautioned against using that as a rule of thumb, as the various Bardal factors — age, character of employment, length of service, and the likelihood of finding similar employment, to name a few — play more of a role in determining notice entitlement.
With most dismissals over the past year and a half coming in the context of the pandemic, there may be yet another factor to consider. The shutdown of many businesses and public lockdowns created an economic downturn that negatively affected the job market, so it makes sense to think that this climate could affect one of the Bardal factors, the likelihood of finding similar employment. A tough economic climate as a factor in determining notice has divided courts in the past, with some agreeing that it affects the job search while others finding that it shouldn’t be a reason for extending the notice period due to social programs and unemployment benefits that are available.
On the other hand, what if an economic downturn seriously affects the employer’s finances? Should that be a reason to reduce the notice period for which the employer is responsible? The short answer seems to be no. An Ontario company that dismissed two long-term employees during the 2008 recession advised the court in a wrongful dismissal case that is was in the process of closing down completely, but the court still awarded 12 months’ notice to one of the workers who was 52 with 12 years of service, and 18 months’ notice to a 59-year-old with 19 years of service: see Munoz v. Canac Kitchens, 2008 CarswellOnt 7059 and Mahesuram v. Canac Kitchens, 2009 CarswellOnt 229.
Conditions at time of dismissal
An early case addressing the pandemic’s effect on the notice period came when a dismissed Ontario worker argued for a longer entitlement because the pandemic impacted the job market and made it harder for him to find work. The Ontario Superior Court of Justice disagreed because the worker was actually dismissed before the onset of the pandemic. Reasonable notice should be determined by the circumstances existing at the time of the dismissal, as the employer can’t know what the future holds, the court said: see Yee v. Hudson’s Bay Company, 2021 ONSC 387.
The same court didn’t want to give much consideration to the pandemic in the case of a worker dismissed in late March 2020, a couple of weeks into the pandemic. The impact that the pandemic would have on the economy at the time of the dismissal was “speculative and unconfirmed,” so it was impossible for the employer to consider, the court said: see Iriotakis v. Peninsula Employment Services Limited, 2021 ONSC 998.
The COVID-19 pandemic has lasted quite a while now, and it’s not over yet. During this time, many employers have had to dismiss employees, so It’s likely we’ll see many more cases addressing the effect of the pandemic on the common law reasonable notice entitlement.