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New Case Offers Guidance on Reasonable Notice During COVID-19 Lockdowns

By February 22, 2021Employment Law
Reasonable Notice During COVID-19 Lockdowns

In Iriotakis v. Peninsula Employment Services Limited (2021 ONSC 998), the Court provided guidance on calculating reasonable notice periods for employment terminations during the pandemic. 

The employee was a 56-year-old Business Development Manager, with just over 2 years of service, whose employment was terminated in March 2020, shortly after the first COVID-19 lockdown began. Despite the title of “Manager”, he had a sales position. He was awarded 3 months of common law reasonable notice.

The Purpose of Reasonable Notice

Pay in lieu of reasonable notice is meant to put the employee in the situation they would have been in if they had been provided with reasonable working notice of the termination of their employment. In other words, reasonable notice is intended to provide financial stability to an employee during the time between their employment termination and securing alternative employment. 

If an employee’s employment is terminated without cause and there is no valid employment contract setting out termination entitlements (see our prior article on Waksdale), the employee is entitled to reasonable notice based on common law. When common law reasonable notice is calculated, the Bardal factors (age, length of service, character of employment, and availability of similar employment) are used to predict how much reasonable notice the employee needs to bridge their employment gap.

Age Not a Significant Factor

Employees will often argue that advanced age should lengthen the reasonable notice period. A key assumption underpinning this argument is that an employer will likely prefer job candidates who are anticipated to remain with the company for a longer time and thereby offer a greater return on the employer’s investment in training.

In Iriotakis, Justice Dunphy took a “balanced approach” considering all the circumstances and did not find the employee’s age (56) to be a significant factor:

[16]      […] In my view, it would be an error to make age the dominant consideration in arriving at a determination of reasonable notice in a case such as the present one. Such a reliance would create needless obstacles in the way of employees securing fresh employment at Mr. Iriotakis’ age and would be quite counterproductive in the long run. 

Bardal Factors to be Assessed at Time of Termination, Not with Benefit of Hindsight

In assessing how COVID-19 impacted the availability of similar work, Justice Dunphy reasoned as follows:

[19]      […] I have little doubt that the pandemic has had some influence upon Mr. Iriotakis’ job search and would have been reasonably expected to do so at the time his employment was terminated in late March 2020. However, it must also be borne in mind that the impact of the pandemic on the economy in general and on the job market, in particular, was highly speculative and uncertain both as to degree and to duration at the time Mr. Iriotakis’ employment was terminated. The principle of reasonable notice is not a guaranteed bridge to alternative employment in all cases however long it may take even if an assessment of the time reasonably anticipated to be necessary to secure alternative employment is a significant factor in its determination. I must be alert to the dangers of applying hindsight to the measuring of reasonable notice at the time when the decision was made to part ways with the plaintiff. 

Ultimately, Justice Dunphy concluded that uncertainties resulting from COVID-19 regarding the availability of similar work should only be one factor that would help the employee in “tilt[ing] the period of reasonable notice away from the fairly short period of notice.” However, consistent with the overall approach in this decision, “these factors do not apply to the exclusion of the others.  A balanced approach is what is called for.”

The Court’s emphasis on the “dangers of applying hindsight” demonstrates that courts are not prepared to undiscerningly accept COVID-bump-up arguments. Nevertheless, Iriotakis may give rise to the opportunity to distinguish facts in future cases. More specifically, if employment is terminated at a point when the long-lasting impact of COVID-19 is understood with more certainty, this may reduce the “dangers of applying hindsight” and leave more room to argue that the known reality of COVID-19 at the time of termination should act to lengthen reasonable notice. 

CERB vs. EI: CERB Not Considered in Calculating Wrongful Dismissal Damages

The Court declined to reduce Mr. Iriotakis’ entitlement to damages by the amount of Canada Emergency Response Benefit (“CERB”) payments he received:

[21]      I agree with the defendant that CERB cannot be considered in precisely the same light as Employment Insurance benefits when it comes to calculating damages for wrongful dismissal. CERB was an ad hoc programme and neither employer nor employee can be said to have paid into the program or “earned” an entitlement over time beyond their general status as taxpayers of Canada. The level of benefit paid (approximately $2,000 per month) was considerably below the base salary previously earned by the plaintiff to say nothing of his lost commission income. On balance and on these facts, I am of the view that it would not be equitable to reduce Mr. Iriotakis’ entitlements to damages from his former employer by the amount of CERB given his limited entitlements from the employer post-termination relative to his actual pre-termination earnings.  I decline to do so. 

The Court’s approach seems consistent with the treatment of EI and CERB regarding repayment obligations in cases of negotiated settlements (when the employee received government assistant post-employment termination): EI is subject to a legislated obligation to repay EI for the period corresponding to the settlement; CERB does not have to be repaid. 

Key Takeaways 

Reasonable notice calculations require careful consideration of the unique facts of the case at issue. Age has been a factor that has received mixed treatment under common law and sometimes heavily relied on by employees to seek a much longer notice period. However, as demonstrated in Iriotakis, an employee’s age is not determinative, and it is only one factor that must be considered alongside other factors. 

Although Iriotakis provides helpful guidance regarding the effect of the COVID-19 pandemic on the reasonable notice period, the reasoning of this case leaves room for the facts of future wrongful dismissal cases to produce different outcomes. This case will be helpful in addressing arguments of a COVID-bump-up when dealing with reasonable notice calculations.

If you are an employer or employee with questions about what reasonable notice is appropriate in the circumstances of your case, our Employment Law team at Pavey Law LLP would be happy to assist you. 

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