Canada: COVID Closure Did Not Frustrate Employment Contract, BCSC Rules

While COVID-19 certainly created difficult circumstances for bars and restaurants across Canada, it didn't result in a frustrated employment contract for a pub manager who lost his job at the onset of the pandemic.

On December 1, the Supreme Court of British Columbia (BCSC) released its decision Fanzone v. 516400 B.C. Ltd., 2022 BCSC 2089, a case in which a pub manager alleged wrongful dismissal after he lost his job without receiving reasonable notice or payment in lieu. The plaintiff received his outstanding pay, including vacation pay, on March 17, 2020, but was never called back to work or paid any severance.

Employer Claimed Pandemic Frustrated Employment Contract

The employer in this case claimed the pandemic had made it impossible for the pub to remain open and therefore frustrated the employment contracts it had with employees.

The frustration of contract defence would require that circumstances outside of the employer's or employee's control had arisen that made carrying out the employment contract impossible or "radically different" than what had been contracted. The Court, however, found that the employer chose to remain closed when it could have reopened.

While the Court acknowledged that the pandemic made business difficult for the defendant, it also noted that many other bars and restaurants reopened – albeit with social distancing measures in place – when B.C.'s health officer issued provincial orders allowing them to do so.

The Court found the defendant "chose to keep his Pub closed rather than re opening either on March 20, 2020 for permitted take-out or delivery service, or on May 15, 2020 when standing and seated service at the Pub was permissible, albeit subject to a variety of restrictions."

In the end, the Court ordered the employer to pay the terminated employees 20 months' worth of severance. (Notably, the Court did not deduct the employee's CERB payments from the damages award, citing the recent Yates v Langley Motor Sport Centre Ltd., 2022 BCCA 398 decision.)

Economic Challenges Don't Exempt Employers from Legal Responsibilities

While many businesses faced significant economic challenges as a result of the pandemic, this decision is a reminder that business struggles do not allow employers to escape their legal responsibilities to employees. An economic downturn may lead an employer to cut ties with staff, but those staff members are still entitled to reasonable notice or payment in lieu.

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.