Wrongful Dismissal Update

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Much has been written lately about whether the courts are applying a “COVID Bump” to termination notice periods and whether lay-offs during the pandemic are a constructive dismissal. We were curious whether there are any other trends related to wrongful dismissal that have arisen during the pandemic.  In this article, we analyze the wrongful dismissal decisions issued since March 2020.  Overall, there has not been a marked departure from the pre-pandemic approach. The courts continue to award generous notice periods and apply the law in an employee-friendly manner.

a)   Termination Notice Periods

Almost every wrongful dismissal case about notice periods references the 1960 decision, Bardal v. The Globe & Mail Ltd.  The “Bardal factors” refer to the four factors identified by the court as the basis of assessing reasonable notice:

  • The character of employment
  • Length of service
  • Age
  • Availability of similar employment, having regard to the experience, training, and qualifications of the employee.

The Supreme Court of Canada adopted the Bardal Factors as the basis for determining reasonable notice in Machtinger v. HOJ Industries Ltd., In 1997, the Court clarified in Wallace v. United Grain Growers that the Bardal factors are not an exhaustive list. Other factors can also be relevant such as whether the employee was induced to leave previous secure employment and promises of job security. More recently, in Honda v. Keays, the Supreme Court cautioned that no one Bardal Factor should be given disproportionate weight.

Our review of wrongful dismissal cases since March 2020 reveals that COVID-19 has not changed the existing framework of analysis. The iconic Bardal factors have not been shaken by the pandemic.  COVID-19 is not a new factor automatically increasing notice periods. Rather, it is a consideration when assessing the availability of similar employment.

·         COVID Bumps

Prior to the pandemic, Ontario Courts took into consideration poor economic conditions as one of the factors in determining reasonable notice. In a 2015 case, Michela v. St. Thomas of Villanova Catholic School, the Ontario Court of Appeal clarified prior case law and confirmed that a general economic downturn does not reduce an employee’s entitlement to notice. The Courts are now grappling with whether COVID-19 should increase notice periods.

In two recent cases, Marazzato v. Dell Canada Inc., and Yee v. Hudson’s Bay Company, Justice Dow of the Superior Court of Justice declined to increase the notice period due to the pandemic but did leave the door open for an increase in appropriate cases. Justice Dow referenced the impact the pandemic may have on the Bardal factors, specifically, the availability of alternative employment.

In the Marazzato case, Justice Dow declined to increase the notice period due to lack of evidence that the pandemic had made it more difficult for the plaintiff to find alternative work:

I was also asked to take into consideration the economic downturn caused by the COVID pandemic as part of this factor. This would be on the basis there would be extra difficulty in finding and obtaining a new position. In this regard, I would note no evidence of same was presented to me. Further, it would not be appropriate to speculate on that submission without evidence… Overall, I would conclude this factor does not favour a longer period of notice.

In the Yee case, Justice Dow noted that the reasonable notice period must be considered at the time of termination.[1] Although the pandemic became a reality during the reasonable notice period in the Yee case, at the time of termination, it was not an issue. In this context, his Honour wrote:

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.

The pandemic has had an uneven impact on our economy with some businesses thriving and others essentially shut down. An automatic COVID Bump does not make sense in this context. We anticipate the courts will continue to assess the impact of the pandemic on notice periods on a case-by-case basis.

·         Pregnancy

Pregnancy continues to be a factor to consider in assessing reasonable notice.  In Nahum v. Honeycomb Hospitality Inc., the Plaintiff was employed as their Director of People and Culture for only 4.5 months when her employment was terminated. At that time, she was 28 years old and 5 months pregnant.  Justice Akbarali found that judicial notice could be taken of the fact that pregnancy presents additional challenges for a job search.  At the same time, pregnancy does not automatically lengthen the notice period in every case.

After weighing the factors, Justice Akbarali concluded that with the plaintiff’s pregnancy, the character of her employment, and her brief length of service, a notice period of five months was appropriate.

·         Age

Pre and post the pandemic, the courts have continued to award higher notice periods to mid-service older employees.

In Wilkinson v. Valgold, the court awarded a 63-year-old President/CEO who had served for 12 years reasonable notice of 18 months. In the Yee case, referred to above, the plaintiff was 62 years old in a Director role with 11.65 years of service.  The court awarded 16 months’ notice. In Wilson v. Pomerleau Inc., the court awarded 18 months’ notice to a 65-year-old Estimator with 10 years of service.  In these cases, the courts awarded an average of 1.5 months per year of service.

On the other hand, longer service older employees are awarded proportionally less when the notice period is expressed as a ratio of months per year of service. In Rothenberg v. Rogers Media Inc., a 73-year-old reporter and on-air broadcaster with 55 years of service were awarded 21 months notice. The two long-service employees in Ristanovic v. Corma Inc. who worked in skilled manufacturing positions were both awarded 22 months.  One employee was 62 years old with 30 years of service. The other was 67 years old and had 28 years of service. In these cases, the courts awarded an average of 0.64 months per year of service.

·         Short Service

The courts have remained consistent in awarding proportionally longer reasonable notice to employees with a short period of service. One example is the Nahum case referred to above where the employee was awarded 5 months notice for 4.5 months of service.  Other examples include:

The average months’ notice per months of service for these shorter service employees is 0.72. This is equivalent to 8.66 months’ per year of service.

·         24 Month Cap

In Currie v. Nylene Canada Inc., the Ontario Superior Court held that “exceptional circumstances” existed to justify an award of 26 months exceeding the 24-month “high end” amount of reasonable notice for long-term employees recently confirmed in Dawe v. The Equitable Life Insurance Company of Canada.  The “exceptional circumstances” included:

  • The plaintiff worked for the employer for her entire working life (39 years).
  • The plaintiff was 58 years old.
  • The plaintiff has specialized skills that were not easily transferrable to other employers.
  • The workforce has changed significantly since 1979 and the plaintiff’s experience was limited to only one employer.
  • The plaintiff is not well equipped to effectively compete in the labour market.

A number of commentators have questioned whether the circumstances identified above meet the threshold of “exceptional” expressed by the Court of Appeal in Dawe[2] Time will tell whether the Currie case will undermine the relative certainty regarding the 24-month cap that we have experienced since the Dawe decision was published.

·         1 Month Per Year of Service

Rounding out our review of recent wrongful dismissal notice periods, we note that the guidepost of roughly 1 month per year of service continues to be alive and well, with deviations from this norm trending slightly above that ratio.  The chart at the link below summarizes this category of cases.

Wrongful Dismissal Chart

b)   Constructive Dismissal

In our recent article, we discussed the case of Coutinho v. Ocular Health Centre Ltd., where the plaintiff filed a constructive dismissal claim and argued that the IDEL Regulation under the Employment Standards Act, 2000 (“ESA”) did not prevent her from bringing a claim for constructive dismissal under the common law.  The plaintiff was laid off from her employment and did not have a clause in her employment contract that permitted her employer to temporarily lay her off.  She relied on section 8(1) of the ESA which states that “no civil remedy of an employee against his or her employer is affected by this Act”.

The Court held that her lay off was a constructive dismissal and the IDEL Regulation does not affect the plaintiff’s right to pursue a civil claim for constructive dismissal against the defendant at common law. The Court accepted the plaintiff’s argument that section 8(1) of the ESA meant that the plaintiff was not precluded from bringing a claim for constructive dismissal at common law.

In another interesting case that is referenced above, Ristanovic v. Corma Inc.,  the defendants advanced a defence that there is an implied term of employment that would allow an employer to temporarily lay off employees during a COVID-19 pandemic. The layoff in question occurred outside of the time period that the IDEL Regulation was in effect. Instead, the employer asserted that “the pandemic is a once in a lifetime occurrence” and that had “the parties turned their mind to it when the contract was first entered into, they would reasonably have agreed to permit a temporary lay-off to safeguard the ability of the employer to re-hire them when the situation improved.”

The court did not rule on the question of whether a global pandemic could imply a right to temporarily layoff. Instead, Justice Dunphy decided the case based on the narrow facts before him.  His Honour dismissed the defendant’s argument for two other reasons: the layoff occurred before the global pandemic began; and the layoff extended beyond 35 weeks and under the ESA was deemed to be a severance. Therefore, the court held that the plaintiff had been constructively dismissed and was entitled to reasonable notice or pay in lieu of notice.

c)   Takeaways

  • The Courts have remained consistent in determining reasonable notice based on the Bardal factors.  Terminated employees are not entitled to an automatic increase of reasonable notice due only to the COVID-19 pandemic. Instead, the pandemic adds context to the plaintiff’s job-hunting efforts and the availability of alternative employment.
  • One court has found that the IDEL regulation does not preclude a terminated employee from bringing a constructive dismissal claim at common law.
  • Although an Ontario court has found “exceptional circumstances” justifying a notice award greater than the 24-month cap, it remains to be seen whether other courts will follow suit.
  • The question of whether there is an implied term in employment contracts permitting employers to lay employees off due to a pandemic has not been decided.

 

[1] See also Nahum v. Honeycomb Hospitality Inc., 2021 ONSC 1455 (CanLII).

[2] See for example http://barryfisher.ca/employmentlawblog/26-month-notice-period-explains-special-circumstances/, and https://www.hrreporter.com/opinion/canadian-hr-law/ontario-court-awards-26-month-reasonable-notice-period/355839 

The article in this update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hunter Liberatore Law LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hunter Liberatore Law LLP. ©

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