COVID-19 has impacted the workplace in countless ways over the past year. Issues such as workplace safety, the responsibilities of the employer and employee, and layoff requirements have become important topics for many. However, the effects are still being felt and new issues continue to arise. One of those issues seems to be reasonable notice requirements in Ontario. There is a new case out of the Ontario Superior Court of Justice that outlines when COVID-19 could be a factor in calculating reasonable notice.

Employee Signed Transfer Offer Letter Three Years After Employment Agreement

The employee was in his 60’s and he had been employed with the same employer for nearly 12 years. Although he had held several positions during his time at the company, his last position was as Director of Product Design and Development. In 2015, he signed an employment contract that entitled the employee to specified payments in case of termination. However, he had also signed a “Transfer Offer Letter” at the time he was promoted to Director, in April of 2018. The employee’s termination letter of August 2019 referred to the 2015 contract and abided by the payments specified therein. He received 11 months of salary and benefits.

Once the 2018 Transfer Offer Letter was discovered, the pleadings were amended to seek aggravated and punitive damages for bad faith damages. The employee had made efforts to find new work but without success as of the date of trial. The employee sought 18 months’ reasonable notice.

Bardal Factors for Reasonable Notice

In this case, the court looked at the four Bardal factors outlined in Bardal v. Globe & Mail, a case decided in 1960 which set out several factors that still apply to reasonable notice. Those factors are:

  • Length of employment;
  • Age of employee;
  • Whether comparable employment was available;
  • Type of employment.

Employees Income at the Time of Termination

It was found that the employee’s income at the time of termination included:

  • A base salary of $162,353.00;
  • An Annual Incentive Plan (“AIP”) or bonus based on company sales and objectives which paid out 32% of the amount due in the Spring (after year end calculations were complete) and 68% in the Fall;
  • Group benefits including short- and long-term disability as well as life insurance which the company valued at 10% of base salary or $1,352.94 per month and employee accepted;
  • Pension plan contributions which the company submitted was included in the 10% for benefits and was valued at $676.47 per month; and
  • Discounted pricing on purchases of the company’s products.

The Court’s Decision

The court found that that the employee’s age was within the latter stages of the usual working life career for most individuals. This Bardal factor favoured a longer reasonable notice period. Even though the employee was not what could be considered a lifelong employee, the court still found that this factor was neutral to somewhat favour a longer period of reasonable notice. Also noted was the managerial nature of the employee’s position, and that his high-income level placed him among a very small percentage of income-earning Canadians. This, the court found, also favoured an award of a longer period of reasonable notice.

The court concluded, based on consideration of the entire factual matrix as detailed, that 16 months was the proper reasonable notice period in this specific case. Another issue for consideration was the employee’s entitlement to the AIP bonus based on the company’s sales and objectives. The company provided evidence regarding the AIP bonus. The employee would have been entitled to an additional AIP bonus of $6,635.02 in February 2020, if he would have continued working into 2020. It was found that he was entitled to have this amount as part of his damages, pursuant to a preceding case Matthews v. Ocean Nutrition Canada.

The employee was also entitled to both the $1,352.94 per month and the $676.47 per month.  The value of the company’s contribution was an agreed upon $8,117.65 per year.  For 16 months, it was calculated to be an award of $10,823.53.

The court found no bad faith claim in this matter.

How COVID-19 Factored into This Decision

The court did take the COVID-19 pandemic into consideration. Here, the court found that the pandemic did not really factor into reasonable notice considerations, because the employee’s termination occurred before the pandemic began. The court concluded, “It seems clear terminations which occurred before the COVID pandemic and its effect on employment opportunities should not attract the same consideration as termination after the beginning of the COVID pandemic and its negative effect on finding comparable employment.”

As can be seen, the current pandemic is having effects not just on the workplace itself, but likely also on reasonable notice, if an employee is let go during the pandemic, when it might be more difficult than usual to secure new employment. It is prudent to seek the advice of an employment lawyer to determine proper requirements for reasonable notice.

For advice on wrongful dismissal disputes, termination letters and other employment or labour law matters, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins LLP. We regularly advise workplace parties on a wide range of legal workplace issues. Contact us online or by phone at 416-364-9599 to schedule a consultation.