What impact has COVID had on reasonable notice periods and employment litigation?

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Photo credit: Pexels/Andrea Piacquadio

Short answer: Very little in law in Ontario. This is regardless of such considerations as: the timing of an employee’s termination prior to the pandemic, during, or due to the pandemic; and the actual time it takes an employee to find new employment. This is not to say that terminations during the pandemic, depending on the individual circumstances, may not have a negative public relations or brand impact, but that is another issue.

The issue: Over the course of the pandemic, many employees have argued, and even filed statements of claim, that they are entitled to longer reasonable notice periods based on the negative economic impact that the pandemic has had on the economy, the availability of employment, and therefore their job search efforts for new, comparable employment.

Why no impact: There are four factors – the so-called Bardal factors – that the Courts take into consideration in weighing what an employee’s reasonable notice is, that is the time assessed at the time of termination (i.e. not what happens after on either side of the table) it is expected that it will take the employee to find new, comparable employment or “mitigate” their reasonable notice damages.

The four Bardal factors are: age, length of service, nature of the position (i.e. executive, managerial, sales, administrative), and the availability of alternate employment (based on the employee’s experience, training, and qualifications). Generally speaking, the higher the first three and the lower the fourth equates to a longer reasonable notice period, subject to a general upper limit of 24 months of notice.

Prior to the pandemic the case law seemed to be expanding the fourth factor to include consideration of the economic realities of economic downturns on the ability of employees to mitigate their damages in a series of Canac Kitchen cases. While the Courts have recently acknowledged the negative “economic realities of COVID-19”, which is only on some industries, given others are booming (e.g. retail, restaurants, travel and tourism vs. construction, delivery, healthcare, and accounting), they have determined that the mere existence of the pandemic is insufficient in and of itself to establish a longer notice period.

Why is this? The Courts in Ontario historically have recognized that a downturn in the economy has a negative impact on both parties and therefore is a factor that should not be given undue weight. This historical assessment is fair in our pandemic circumstances and, based on a review of the recent case law in Ontario, still applies.

Added to this historical assessment of the considerations that go on the scale in weighing what weight to give the fourth Bardal factor, the Ontario Superior Court’s February 2021 decision in Iritakis v. Peninsula Employment Services Limited assessed that, while the pandemic undoubtedly “had some influence” on mitigation, the actual impact of the pandemic on the job market and the economy in general is unknown and “highly speculative and uncertain” both in degree and duration. Meaning, for employees to successfully claim a longer reasonable notice period in Ontario, they must prove the pandemic’s negative impact on their ability to mitigate. That proposition was specifically addressed in the Ontario Superior Court’s January 2021 decision in Marazzato v Dell Canada Inc. (“Marazzato”). In Marazzato the Court held, when it was asked to take into consideration the economic downturn caused by the COVID pandemic as part of its reasonable notice analysis, that there was “no evidence of same” before it and that “it would not be appropriate to speculate on that submission without evidence”.

Where could there be an impact seen? If and when it comes to be a case that the negative impact of the pandemic on the economy and the job market is quantifiable and an employee can prove its impact on the ability to mitigate, then perhaps the Courts in Ontario may recognize its impact on the fourth Bardal factor in calculating an employee’s reasonable notice entitlements.

Key takeaway: The recent Court decisions in Ontario should provide Ontario employers with comfort that their employees cannot merely assert that the economic downturn caused by the COVID pandemic warrants a longer notice period, without evidence to support the fact that such economic downturn actually impacted their search for comparable employment.

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