The Ontario Court of Appeal (“ONCA“) recently considered a termination claim in Pavlov v. The New Zealand and Australian Lamb Company Limited 2022 ONCA 655. Prior to the decision in this case, Ontario courts have, from time to time, considered the impact of the COVID-19 pandemic on reasonable notice at common law. In most cases this has resulted in increased notice periods for employees who were terminated during the pandemic. The ONCA has now approved this approach.
Background and Lower Court
The employee in this case was terminated by the employer after three years of employment. At the time of his termination, the employee was 47 years old and was the employer’s Director of Marketing Communications and Public Relations. His salary was around $130,000.00, plus a variable bonus.
Following his termination, the employee applied for over 100 positions, but was unsuccessful. By the date of the trial, he was still unemployed.
The Ontario Superior Court of Justice reviewed the circumstances of the termination and noted that at the time of the termination, the impact of the COVID-19 pandemic was such that shipping and distribution industries were disrupted. These industries were relevant to the employee’s employment. The overall disruptions to industry must have been additional obstacles to the employee finding reemployment, and was a factor likely known to the employer at the time of termination.
While the employer argued for a notice period of 3 to 5 months, the court disagreed and awarded 10 months’ notice. The court noted that it considered the prevailing economic uncertainties that had an impact on the employee’s ability to secure alternative employment.
The employer appealed the decision to the Court of Appeal.
Court of Appeal Decision
The Court of Appeal chose not to interfere with the trial judge’s decision. The ONCA found that the trial judge’s decision was entitled to deference. There was no error in the trial judge’s analysis and therefore the decision was upheld. The Court of Appeal ordered additional costs against the employer as a result of the appeal.
Takeaways for Employers
Many pandemic-related terminations are currently working their way through the Ontario court system. The ONCA has now provided clarity that the impact of the pandemic can be considered by lower courts and will usually result in an increased notice period to an employee.
The fact that the pandemic is an ongoing part of life means that employers need to take care when making termination decisions. If they are in an industry that is still subject to pandemic-related disruption (and indeed disruption from other external sources), this should be considered when making a severance decision. If an employee will likely have a harder time finding alternative work following termination due to such disruptions, employers in such circumstances may be on the hook for higher notice entitlements.
At Bridge Legal & HR Solutions, we provide expertise for employers of all sizes. Call us today at (647) 794-5442 for all your employment law and workplace investigation needs.