Iriotakis v. Peninsula Employment Services Limited (2021 ONSC 998), offers some guidance on calculating reasonable notice periods for employment terminations during the pandemic.
The employee was a 56-year-old Business Development Manager, with just over 2 years of service, whose employment was terminated in March 2020, shortly after the first COVID-19 lockdown began. Despite the title of “Manager”, he had a sales position. He was awarded 3 months of common law reasonable notice.
Justice Dunphy applied the traditional Bardal factors of age, length of service, character of employment (position), and availability of alternative employment and still took a “balanced approach” considering all the circumstances.
Bardal Factors to be Assessed at Time of Termination, Not with Benefit of Hindsight
In assessing how COVID-19 impacted the availability of similar work, Justice Dunphy recognized 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 judge then goes on to remind us that “the principle of reasonable notice is not a guaranteed bridge to alternative employment in all cases”.
Ultimately, Justice Dunphy concluded that uncertainties resulting from COVID-19 regarding the availability of similar work should only be one factor that would help the employee in “tilt[ing] the period of reasonable notice away from the fairly short period of notice.” The decision also warns about “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.” Consistent with the overall approach in this decision, Justice Dunphy noted that “these factors do not apply to the exclusion of the others. A balanced approach is what is called for.”
The Court’s emphasis on the “dangers of applying hindsight” demonstrates that courts are not prepared to undiscerningly accept COVID-bump-up arguments.
CERB vs. EI: CERB Not Considered in Calculating Wrongful Dismissal Damages
The Court declined to reduce Mr. Iriotakis’ entitlement to damages by the amount of Canada Emergency Response Benefit (“CERB”) payments he received, noting that “CERB cannot be considered in precisely the same light as Employment Insurance benefits when it comes to calculating damages for wrongful dismissal. CERB was an ad hoc programme and neither employer nor employee can be said to have paid into the program or “earned” an entitlement over time beyond their general status as taxpayers of Canada.”
Justice Dunphy noted that CERB was much lower than the plaintiff’s base salary and lost commission income. As such, the judge concluded, “On balance and on these facts, I am of the view that it would not be equitable to reduce Mr. Iriotakis’ entitlements to damages from his former employer by the amount of CERB”.
The Court’s approach is consistent with the treatment of EI and CERB regarding repayment obligations in cases of negotiated settlements (when the employee receives government assistant post-employment termination): EI is subject to a legislated obligation to repay EI for the period corresponding to the settlement; while CERB is not.
Reasonable notice calculations require careful consideration of the unique facts of the case at issue. It is always best to not leave this up to judges, and instead, have well drafted employment contracts with valid termination provisions.
Iriotakis will be helpful in addressing arguments of a COVID-bump-up when dealing with wrongful dismissal claims.
If you have questions about what reasonable notice is appropriate in the circumstances, or you wish to avoid uncertainty and have your employees sign employment contracts, our Employment Law team at Pavey Law LLP would be happy to assist you.
Contact Melissa Roth