Impact of COVID-19 on Reasonable Notice
In a decision on a motion for summary judgement rendered on February 9, 2021, the Ontario Superior Court of Justice in Iriotakis v. Peninsula Employment Services Limited, 2021 ONSC 998 considered the impact of the COVID-19 pandemic on reasonable notice periods for dismissed employees. The Court also considered the deductibility of the Canada Emergency Response Benefit (“CERB”) from wrongful dismissal damages.
In Iriotakis, the plaintiff, Mr. Iriotakis, was terminated from his employment as a Business Development Manager without cause on March 25, 2020, one week after Ontario declared a state of emergency due to the COVID-19 pandemic. At the time, he was 56 years old and had been employed for approximately 2.3 years.
A central issue before the Court was the period of reasonable notice to which Mr. Iriotakis was entitled. Given the timing of Mr. Iriotakis’ termination, the question of the impact of the pandemic on Mr. Iriotakis’ notice entitlement was squarely at issue. In that regard, the Court stated as follows:
I was asked to make findings about the job market and the possible impact of COVID-19 on Mr. Iriotakis. I have little doubt that the pandemic has had some influence upon Mr. Iriotakis’ job search and would have been reasonably expected to do so at the time his employment was terminated in late March 2020. However, it must also be borne in mind that the impact of the pandemic on the economy in general and on the job market, in particular, was highly speculative and uncertain both as to degree and to duration at the time Mr. Iriotakis’ employment was terminated. The principle of reasonable notice is not a guaranteed bridge to alternative employment in all cases however long it may take even if an assessment of the time reasonably anticipated to be necessary to secure alternative employment is a significant factor in its determination. I must be alert to the dangers of applying hindsight to the measuring of reasonable notice at the time when the decision was made to part ways with the plaintiff. [Emphasis added.]
While the Court recognized that the COVID-19 pandemic did have an impact on Mr. Iriotakis’ reasonable notice entitlement, it also cautioned against using the benefit of hindsight to make such an assessment and stressed the importance of assessing a dismissed employee’s reasonable notice entitlement at the time of termination. In this case, Mr. Iriotakis was dismissed in late March 2020, just a week after the province declared a state of emergency. The Court noted that, at this time, the pandemic’s impact on the job market was still highly speculative and uncertain.
The Court also noted that while the plaintiff’s age and the uncertainties in the job market at the time of termination served to tilt the period of reasonable notice away from the short end, these factors did not apply to the exclusion of others. The Court ultimately determined that a three (3) month reasonable notice period was appropriate.
CERB Payments Not Deductible from Wrongful Dismissal Damages
The Court also addressed the issue of whether the CERB payments Mr. Iriotakis received during the notice period should be deducted from his damage award. The Court began by distinguishing CERB payments from EI. While EI payments are not deductible from wrongful dismissal damages, employees are typically required to pay Service Canada back for any EI received during their notice period. The Court noted that, unlike EI, the CERB was an ad hoc program that neither employer nor employee paid into or “earned” an entitlement to. The Court then stated that it would not be equitable to reduce Mr. Iriotakis’ entitlement to damages from his former employer by the amount of CERB he received given his limited entitlements from the employer post-termination relative to his actual pre-termination earnings. The Court stressed that this was an equitable result “on balance and on these facts” (emphasis in original), thereby implying that it may not be equitable in other cases with different facts.
Takeaways
This decision suggests that the COVID-19 pandemic will not automatically translate into a longer notice period for a dismissed employee. It will be important to assess each case individually, looking specifically at when the employee was terminated and what was known about the pandemic’s impact on the job market at that time. By implication, this may mean that employees who were terminated a little further into the pandemic, once it became clear that its impact on the economy would be severe and long-lasting, might have a better argument for a longer notice period than those terminated in the early stages of the pandemic, or perhaps towards its conclusion, whenever that may be. This case also suggests that a blanket approach to the deductibility of CERB payments from wrongful dismissal damages may not be appropriate, as the Court stressed the fact specific nature of its analysis on this issue.
Disclaimer: As always, this post does not constitute legal advice and we would encourage you to seek professional legal advice from one of our knowledgeable lawyers before making any decisions with respect to your own case.