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Covid: Extended Termination Entitlements

August 3rd, 2021 in Employment & Severance

After seventeen months of a living in a global pandemic, it’s certainly beginning to feel like we’re reaching the light at the end of the tunnel. Friends and families can gather, restaurants have reopened, recreational sports are back in action and we can all get a long overdue haircut. From a legal perspective, the receding of the pandemic is also bringing positive change. More in person hearings are permitted and long-awaited decisions addressing the legal challenges caused by the pandemic are being released. In the realm of employment law, these decisions bring much needed clarity on a number of pandemic-related issues.

One such decision is Kraft v. Firepower Financial Corp., 2021 ONSC 4962 (“Kraft”). This decision, released in July 2021, confirmed that the COVID-19 pandemic is a relevant factor when determining an employee’s reasonable notice entitlement. While not the first decision to examine this issue, the reasoning in this case is clear and the Court expressly found that the employee, Mr. Kraft, was entitled to a one (1) month increase in his reasonable notice entitlement as a result of the pandemic.

What is Reasonable Notice?

 Before moving into the details of the Kraft decision, it may be helpful to provide a brief overview of the law on reasonable notice of termination. Every employee that is terminated without cause is entitled to notice of their termination. Unless an employee has signed an employment contract that sets out their notice entitlement, they will be entitled to reasonable notice in accordance with the common law. The common law considers four (4) factors to determine an employee’s notice entitlement, including:

  • the employee’s age;
  • the position they held;
  • their length of service; and
  • the availability of similar employment.

With respect to the final factor – the availability of similar employment – the Courts have held that economic conditions should be considered, however, prior to the COVID-19 pandemic, the Court had not considered whether a global pandemic was relevant to the assessment of this factor.

The COVID-19 Pandemic Extends the Notice Period

In the Kraft decision, the employee, Mr. Kraft, had worked for Firepower Financial Corporation for approximately five and a half years as a research analyst and subsequently as a commissioned sales person. He was terminated in March 2020, during the same week that the province declared a state of emergency due to the COVID-19 global pandemic. It took Mr. Kraft thirteen (13) months to find new employment in these circumstances.

When assessing Mr. Kraft’s reasonable notice entitlement, the Court specifically noted that his termination was right at the onset of the COVID-19 pandemic. The Court considered a previous decision that addressed this issue (Yee v. Hudson’s Bay Company, 2021 ONSC 387) and held that the circumstances were different as the employee in that case was terminated in August 2019 – i.e., more than a half year prior to the COVID pandemic – and there was no evidence that the pandemic affected his job search. The Court also considered the case of Lamontagne v. J.L. Richards & Associates Limited, 2021 ONSC 2133 (a case that was successfully argued by Mr. J.F. Lalonde of our firm) in which the Court took judicial notice of the uncertainty that existed as a result of the pandemic when assessing the employee’s termination entitlement.

 

For Mr. Kraft, his termination coincided with the closure of the economy in March 2020 and his job search was inevitably prolonged as a result. The Court noted that “especially during the first half-year of the shutdown in response to the pandemic, there was uncertainty in the economy and the job market and fewer employers were looking to fill positions.” The Court then noted that the average notice period for employees with similar experience, length of service and age as Mr. Kraft was nine months. Since there was evidence that Mr. Kraft’s job search was impacted by the pandemic, the Court held that “he deserved to receive somewhat above the average notice period” and awarded him one extra month of notice, for a total of ten months’ notice.

Takeaway for Employees and Employers

For employees, this is a welcome decision, as it clearly establishes that if there is evidence to show that their job search was prolonged by the pandemic, they will be entitled to a longer notice period. For employers, this decision is important to keep in mind when assessing an employee’s notice entitlement if the termination has or will take place during the pandemic.

For both employees and employers (and employment lawyers), the methodical approach used by the Court is helpful, as it provides a clear framework for assessing the impact of the pandemic on an employee’s notice entitlement. Specifically, the Court first determined the average period of notice arising from the case law for employees in similar circumstances, and then bumped that figure up in light of the pandemic-related job search evidence.

Vice & Hunter LLP is Equipped to Handle Your Case

Our firm has the knowledge and experience to help guide you through the legal process.  Whether you are an employee or an employer, our accomplished team has the tools to provide you with sound legal advice for every scenario. Lauren Benoit is a part of the employment law group at Vice & Hunter LLP and has experience providing practical and effective legal advice to both employees and employers. If you have an employment law issue, please contact the author of this blog, Lauren Benoit, at lbenoit@viceandhunter.ca.  We look forward to discussing how we may assist you in making important legal decisions for yourself or your business.

Disclaimer: As always, this post does not constitute legal advice and we would encourage you to seek professional legal advice from one of our knowledgeable lawyers before making any decisions with respect to your own case.