Should My Employer Consider the Pandemic In my Severance Package?

As the COVID-19 pandemic continues many employees are having their employment terminated without cause. It is important to consider the impact of the pandemic on employee’s entitlements upon the termination of their employment as it can help in determining whether you have been subjected to unjust or wrongful dismissal.

Notice of Termination of Employment

When an employee’s employment is terminated without cause, they are entitled to notice of the termination of their employment or pay in lieu of such notice (i.e., a termination package).

The amount of notice or pay in lieu of notice that an employee is entitled to is determined by three key sources:

1. The Employment Standards Act in Ontario, which sets out the minimum amount of notice of the termination of employment/pay in lieu that an employee is entitled to;
2. The common law, or a collection of court decisions which set out the amount of notice or pay in lieu of notice of the termination of employment that an employee is entitled to. depending on a variety of factors including age and years of services; and
3. The employee’s employment agreement, which can in some cases be used to define an employee’s entitlement to notice of the termination of their employment, provided that it does not do so in a way that provides an employee with less notice/pay in lieu than what they are entitled to pursuant to the Employment Standards Act.

Common-Law Notice and Availability of Similar Employment

When judges make decisions regarding how much notice of termination (or pay in lieu of notice) an employee is entitled to, they take a number of factors into account, including the year of service and the age of the employee, as mentioned above.

One important factor a decision-maker will consider is the availability of comparable employment.

Courts have taken a variety of approaches when considering whether the notice period should be affected by the state of the economy generally or the parties’ own financial situation specifically. Some lower courts have stated that economic circumstances may justify a longer notice period if they have made it more difficult to find alternate employment. Conversely, Ontario’s Court of Appeal has said that difficulty in securing alternate employment due to general economic conditions should not have the effect of increasing notice periods unreasonably.

How is the Pandemic Impacting Employee Entitlements?

Four recent court decisions shed light on how judges/decision-makers are grappling with how to consider the pandemic when making decisions about employee entitlements post-termination:

• Yee v. Hudson’s Bay Company: The judge deciding this case agreed that the pandemic and economic downturn are relevant considerations for someone whose employment was terminated during the pandemic. In this case, the Plaintiff’s employment had been terminated prior to the pandemic and so pandemic factors could not be properly considered in the assessment of notice damages.
• Iriotakis v Pennisula Employment Services Ltd: The judge deciding this case found that reasonable notice damages must be determined at the time of the employee’s termination. The Plaintiff’s employment, in this case, was terminated only days into the pandemic and so the Justice found that COVID-19 did not have a significant impact on his notice period, given that the situation was relatively unknown at the time of his termination.
• George v. Laurentian Bank Securities Inc: In this case, the court noted the “economic realities” of the pandemic but did not expressly factor into its assessment of what the Plaintiff’s reasonable notice should be. Based on what was ultimately awarded, the pandemic did not have a significant lengthening effect on the notice period.
• Rothenberg v. Rogers Media Inc: In this case, the court took the pandemic into account when determining the reasonable notice period and in assessing the Plaintiff’s mitigation efforts. The result was a reasonable notice award “towards the higher end of the scale”, and while we cannot know for certain given the comments in the case it seems that the pandemic played at least some role in leading the court to this decision.

Making the Case for a Longer Notice Period

At Sultan Lawyers, we are committed to advocating for our employee clients in a manner that maximizes the potential takeaway. Given the current caselaw, there remains room to argue for a longer notice period, in the context of negotiation and litigation, by pointing to the current economic circumstances.

If your employment has been terminated, whether by unjust dismissal, wrongful dismissal or otherwise, we strongly urge you to have your termination package reviewed to determine if there may be an opportunity to request or argue for a more favourable exit package. Please contact Toronto employment and immigration lawyers, Sultan Lawyers, at (416) 214-5111 or here.