Canada: Should Terminated Employees Receive Longer Reasonable Notice Periods During COVID-19?

In Yee v Hudson's Bay Company, 2021 ONSC 387, an Ontario Court issued a ruling in what may seem like a very standard case of reasonable notice at first blush, but looking a bit deeper this case could have an interesting impact on reasonable notice periods during the era of COVID-19.

Facts of the case

The plaintiff, Yee, worked for Hudson's Bay Company (HBC) for 11.65 years. He was 62 years old and worked as Director of Product Development when his employment was terminated without cause in August of 2019 (before COVID-19).

The plaintiff did not have a valid termination clause in his employment contract which meant the calculation of "reasonable notice" was left up to the common law assessment, using the Bardal Factors.

The plaintiff argued that 18 months was reasonable, considering his age, years of service, and managerial position. HBC argued that 11 months was more appropriate.

Decision from the Ontario Superior Court

The decision in this case was fairly standard, with the exception of the court's consideration of COVID-19 on reasonable notice. One of the Bardal Factors is "availability of similar employment, having regard to the experience, training, and qualifications" of the employee. With respect to this factor, courts have accepted that if an employee is dismissed at a time when there are few jobs available in the employee's field, then the employee may have a harder time gaining similar employment. This may lead to a higher period of reasonable notice.

In this case the court was asked to decide whether the undeniable impact of COVID-19 on the job market should lead to a higher reasonable notice period for the plaintiff. Interestingly, the court concluded that COVID-19's impact on the job market is relevant only for dismissals that occur after COVID-19 hit, but not for terminations occurring before COVID-19. The reasoning appears to be based on a finding that notice is determined by the circumstances that exist "at the time of termination and not by the amount of time it takes the employee to find employment" (citing from Holland v. Hostopia.com, 2015 ONCA 762 at para 61, citing Panimondo v. Shorewood Packaging Corp. (2009), 2009 CanLII 16744 (ON SC) at para 37).

Justice Dow ultimately ruled that 16 months was the appropriate notice period. The Court did not comment on whether COVID-19 impacted other aspects of its reasonable notice analysis, aside from clarifying that it was not assessed in looking at the availability of similar employment since the termination occurred before COVID-19.

Lesson for employers

While economic downturn may require some employers to cut ties with employees, it is important to know that without a valid termination clause employers will have to pay reasonable notice subject to the Bardal Factors analysis. Further, if an employee was terminated during the COVID-19 pandemic, this may have the effect of increasing their period of reasonable notice.

Employers should be aware of their potential liabilities before terminating anyone's employment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.