The COVID-19 pandemic has been difficult for business owners and workers alike, with the former trying to sustain businesses in the face of forced closures or reduced demand and the latter possibly not being needed.
This has led to many employees being terminated without cause, which refers to the situation where employers do not assert that they have a legal justification for terminating the employment without notice or compensation in lieu of that notice. While employers are entitled to terminate employees, they must provide reasonable notice of termination or payment in lieu.
The pandemic has not changed this principle. This article looks at two recent decisions where employees were terminated because of the pandemic and received substantial payments in lieu of notice by the Ontario Superior Court of Justice.
Process server temporarily laid off in the first wave, then dismissed when the company ceased operations
In Lopez-Gonzalez v Reliance Legal Services Limited, the plaintiff began employment as a process server with the defendant’s employer in 2011. He was paid $55,000 per annum.
On March 27, 2020, the plaintiff was temporarily laid-off, and his salary was suspended. In July, he received an email advising that the company was closing indefinitely and that there was no guarantee that a position would be available in future. The plaintiff, a 59-year-old Venezuelan immigrant whose first language is not English, tried to find replacement employment. He unsuccessfully applied for 94 jobs.
In July 2021, the employer sent the plaintiff a letter formally terminating his employment because the company was ceasing operations. He received a cheque for eight weeks’ pay in lieu of notice.
Justice Perell referred to the Bardal factors, which are used to decide the length of the reasonable notice period and said:
The effect of the Covid-19 pandemic, which has affected the entire Canadian and world economy, may justify a longer notice period because of the attendant difficulty finding another employment position.
While expressing a “great deal of sympathy” for the employer, a small business owner who did his best to sustain his business and keep employment opportunities available for his employees, his Honour held that the plaintiff was entitled to compensation at common law for having been dismissed without cause and adequate notice.
His Honour settled on a 12-month notice period. Adding the annual vehicle allowance and subtracting the termination pay already received resulted in an award of almost $48,000.
In Ruel v Air Canada, Justice Ramsay observed:
As a result of the global pandemic declared in 2020, air travel declined significantly, impacted by travel restrictions in Canada and elsewhere. In a word, the sector was decimated. Airline carriers experienced massive losses and Air Canada was no exception, experiencing the worst financial crises in its eighty-year history.
The plaintiff employee, an executive with managerial responsibilities, fell victim to the employer’s workforce cutting in response to the pandemic. The employee of 24.5 years of service was terminated with two weeks’ notice in the summer of 2020, a month shy of his 52nd birthday.
The employee declined a severance package and commenced an action for damages, seeking twenty-four months’ reasonable notice, damages for lost bonuses, lost accrual of pension benefits and spousal survivor benefits, lost group health benefits during the notice period, and compensation for various post-retirement benefits, and retiree flight privileges which he claims he would have been entitled to have he received reasonable notice.
Looking at the issue of the length of the notice period, Justice Ramsay agreed with the plaintiff that a 24-month notice period was warranted, even without taking into account the pandemic.
Her Honour noted:
- The plaintiff’s long tenure at the company and age appeared to justify a longer notice period. He was at a competitive disadvantage as prospective employers may perceive that he is set in his ways given his lengthy employment with Air Canada.
- He was in a senior management position in a comparatively specialized industry.
Her Honour also observed that Air Canada’s witness admitted on cross-examination that the airline industry had been decimated by COVID-19, which had significantly limited the plaintiff’s prospects of re-employment in the airline industry.
The employer argued a 2.5-month gap where the plaintiff did not apply for any jobs because he moved his family to British Columbia, indicating a failure to mitigate his damages.
The onus is on the defendant to establish a failure to mitigate. The employer needs to prove that had the employee taken reasonable steps and he would have found a comparable position reasonably adapted to his abilities. The courts are tolerant in evaluating the employee’s efforts at mitigation, and the mitigation efforts need only be reasonable.
Her Honour found that Air Canada had not put forward any evidence to show there were comparable jobs that he failed to apply to during the 2.5 months. The plaintiff undertook six months of job counselling, did online searches almost daily, applied to 104 jobs in 12 months and did three interviews.
As a result, Justice Ramsay found the plaintiff entitled to 24-months’ notice or damages of approximately $234,000.
If you are an employer or an employee going through the termination process, contact Grosman Gale Fletcher Hopkins LLP. We have helped workplace parties with their most challenging employment-related matters. We assist employers in managing risk when seeking to terminate employees without cause. We also help employees secure all their entitlements in the event of termination.
We are one of Canada’s most recommended labour and employment law firms. If you need guidance with a workplace-related issue, contact us online or at 416.364.9599.
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