Canada: Court Considers COVID-19 Impact On The Common Law Reasonable Notice Analysis

In its recent decision in Yee v. Hudson's Bay Company, the Ontario Superior Court of Justice considered the effect of the COVID-19 pandemic on the reasonable notice analysis, finding that the COVID-19 pandemic will not serve to increase an employee's entitlement to reasonable notice if the employee's termination occurred prior to the start of the pandemic¹.

What you need to know

• The assessment of an employee's entitlement to reasonable notice is to be determined by the circumstances which existed at the time of termination. Accordingly, for employees terminated prior to the onset of the COVID-19 pandemic, the impact of COVID-19 on the job market will not serve to increase the employee's reasonable notice entitlement.

The decision

The plaintiff Melvin Yee was terminated without cause by the defendant Hudson's Bay Company (HBC) on August 28, 2019 and brought an action for wrongful dismissal. The 62-year old plaintiff had worked for HBC for over 11 years at the time of termination, most recently as Director of Product Design and Development.

The plaintiff's employment agreement did not contain a valid termination provision. Accordingly, the plaintiff was entitled to reasonable notice of termination. In assessing the reasonable notice to which the plaintiff was entitled, the judge considered the plaintiff's age, years of service, and the managerial nature of his role, all of which favoured a longer period of reasonable notice.

The judge then turned to consideration of "the availability of similar employment having regard to the experience, training and qualifications of the employee." The plaintiff argued that the court, in considering this issue, should take into account the negative impact of COVID-19 on the job market and the plaintiff's resulting difficulty in securing comparable employment (as evidenced by the plaintiff's many unsuccessful job applications).

The judge acknowledged the observation in Paquette v. TeraGo Networks Inc. that "[e]conomic factors such as a downturn in the economy or in a particular industry or sector of the economy that indicate that an employee may have difficulty finding another position may justify a longer notice period"² but importantly, also noted that an employee's reasonable notice entitlement "is to be determined by the circumstances existing at the time of termination and not by the amount of time that it takes the employee to find employment"³. In weighing these authorities, the judge concluded that COVID-19's impact on the job market will not be relevant to assessing an employee's reasonable notice entitlement if the employee's termination occurred prior to the onset of the pandemic.

The judge ultimately determined that the plaintiff was entitled to 16 months' notice.

Footnotes

1. 2021 ONSC 387.

2. 2015 ONSC 4189, para. 27.

3. Holland v. Hostopia.com Inc., 2015 ONCA 762, para. 61 [emphasis added].

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