As the COVID-19 pandemic continues to affect business operations throughout the country, some businesses have concluded they will not return to normal operations for some time. As a result, some employers are considering dismissals, but the challenges posed by the pandemic have left much uncertainty.
In particular, employers are uncertain how the challenges created by COVID-19 may affect their obligation to pay employees in lieu of notice of termination. The Ontario courts have not yet weighed in on the matter substantively, but previous cases highlight factors that courts consider when determining these types of cases.
Financial and Mitigation Difficulties Will Unlikely Have Big Affect Reasonable Notice
In 2016, the Ontario Court of Appeal considered a similar issue in Michela v St. Thomas of Villanova Catholic School, 2015 ONCA 801. The employer, a private school, was experiencing significant financial difficulties and dismissed some of its teachers. At trial, the court reduced the teachers’ entitlement of twelve months of pay in lieu of notice to six months, due to the severe financial difficulties.
On appeal, the previous decision of Bohemier v Storwal International Inc (1982), 40 OR (2d) 264, was clarified, particularly “when employment is unavailable due to general economic conditions, there has to be some limit on the period of notice to be given to discharged employees” (at 268). The Ontario Court of Appeal affirmed that poor economic circumstances do not justify a decreased notice period, nor does an employee’s difficulty in finding work justify unreasonable increases in the notice period.
A strict reading of the court’s decision would likely mean that no major changes in the common law are set to take place due to the impact of COVID-19. However, the inability to find new work is still considered a relevant factor for the assessment of pay in lieu of notice.
What Employers Should Keep in Mind When Contemplating Dismissals
Many industries will face structural changes during COVID-19 and its aftermath. Employees who are dismissed because of these changes may experience long-term difficulty in finding new work. These employees would likely be entitled to increased pay in lieu of notice because of the poor market which hinders them from finding any comparable work. However, such increases must still be reasonable and likely would not be significant overall.
Employers should note that not all industries will be permanently affected by COVID-19, and in cases where employees seeking new work are minimally impacted, it is unlikely any entitlement to reasonable notice will be increased.
Employers should continue to proceed with caution whenever contemplating a dismissal during any pandemic-related lulls in business.
Limiting Liability Starts with a Properly Drafted Employment Contract
At the contracting stage, employers should carefully ensure their employment agreements are carefully drafted to account for the risks posed by pandemics such as COVID-19. Well-drafted termination clauses will limit termination entitlements and will oust any entitlement to common law notice altogether.
Contact Us for Help
If you are an employer and need help with determining termination entitlements or with how to properly dismiss an employee, or an employee seeking to clarify your rights, our team of experienced employment and human rights lawyers can help. Contact us at 1 (800) 771-7882, or email email@example.com and we would be happy to assist.
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