After much speculation by employment lawyers, early wrongful dismissal decisions are starting to come out addressing the Court’s view on the impact of the COVID-19 pandemic for non-unionized employees notice periods. The most recent case on the topic is Kraft v. Firepower Financial Corp., 2021 ONSC 4962 (CanLII), in which the notice period seems to have been increased by one month above the average to address the impact of the pandemic.
What is Wrongful Dismissal?
In the legal sense, the phrase “wrongful dismissal” is an employer’s termination of the employment relationship with insufficient advance notice.
Who is entitled to Reasonable Notice?
Judges presume that employees are entitled to “reasonable notice” of termination, unless the employer and employee have an enforceable employment agreement with a technically-sound termination provision that provides otherwise.
Frequently, employment agreements contain termination provisions that are not enforceable because, for example:
- they are not implemented properly;
- they do not clearly oust the employee’s entitlement to ‘reasonable notice’; or
- they are not compliant with all of the potentially-applicable employment standards requirements.
If the termination provisions in an employment agreement are unenforceable or, if there is no written employment agreement, employees are generally entitled to reasonable notice of termination.
Awards for Wrongful Dismissal
In assessing damages for wrongful dismissal, the court analyses the circumstances of each particular case. The core factors that the court considers are as follows:
- the type of position the employee held;
- the employee’s age;
- the employee’s length of service; and
- the availability of similar positions having regard for the employee’s experience and qualifications.
The court will potentially consider other factors relevant to the employee’s circumstances, such as the dismissed employee’s health issues or relocation to accept the position, or the employer’s recruitment of the employee from a secure position or bad faith conduct in the dismissal.
Economic Circumstances
The focus of the Court’s analysis is the employee’s circumstances, not the employer’s circumstances. As a result, courts are not to consider the poor economic circumstances of the employer in determining reasonable notice period. For instance, the fact that an employer may not be able to afford the cost of providing an employee with reasonable notice of termination should not be taken into account to reduce the notice period.
Past recessions and economic downturns have generally resulted in increased notice period awards by the court, to address the depressed job market and longer job search needed in a poor economic climate. Such decisions were a precursor to the court’s decisions in wrongful dismissal matters in response to the COVID-19 pandemic.
Kraft v. Firepower Financial Corp
In the case of Kraft v Firepower, the Court assessed the notice period for an employee who:
- was a salesperson in a position that required some specialized knowledge of the investment banking industry;
- was employed for 5.5 years;
- was mid-career and well-qualified; and
- applied for 70 jobs over the course of a 13-month job search.
Justice Morgan found that the average notice period of previous cases with plaintiffs of similar age, experience and time on the job ranged from 4 to 12 months, with an average notice period of 9 months.
In light of evidence that the pandemic impacted the plaintiff’s ability to secure new employment, the court found that the plaintiff was entitled to above the average notice period.
In the outcome, Justice Morgan awarded damages based on a notice period of 10 months.
Takeaways from Kraft v Firepower Financial Corp
Often times, Judges do not specify how much weight they assign to a particular factor in determining the notice period. While each case turns on its own circumstances, Kraft v Firepower Financial Corp provides some guidance about how the Courts will assess the impact of the pandemic on notice periods, at least for dismissals that occurred early in the pandemic.
Employers should expect that employees will be entitled to greater notice periods because of the pandemic and adjust accordingly.
Employees should anticipate that the court will not necessarily make them ‘whole’. In other words, the length of the notice period will not necessarily be equivalent to the length of time needed to secure new employment.
For advice about the most recent developments in employment law or an assessment of your case, as either an employee or employer, speak with an employment lawyer, contact Zubas Flett Law at 416-593-5844 or questions@employment-lawyers.ca.