A recent Ontario decision considered the impact of the COVID-19 pandemic on the common law assessment of reasonable notice periods. In Yee v Hudson’s Bay Company, the Ontario Superior Court of Justice (the “Court”) found that the pandemic’s economic effects will not increase the length of an employee’s reasonable notice period unless the employee was dismissed following the onset of the pandemic.
The employee, Melvin Yee, was dismissed without cause by the employer, the Hudson’s Bay Company (“HBC”), until he was dismissed without cause in August 2019. Importantly, Mr. Yee was dismissed before the onset of the COVID-19 pandemic.
Mr. Yee brought an action for wrongful dismissal. As Mr. Yee’s employment agreement did not contain a valid termination clause limiting his termination entitlements, he was entitled to common law reasonable notice of termination, which courts determine based on factors such as employee age, length of service, and position, as well as the availability of comparable employment within the job market. At the time of dismissal, Mr. Yee was 62 years old and had been employed at HBC for approximately 11- and-a-half years. He most recently worked as a Director of Product Design and Development, a managerial and executive role. His compensation included a base salary of approximately $162,000 and other benefits and incentives.
Mr. Yee argued that he was entitled to damages representing 18 months of notice, considering the factors set out above. In particular, he submitted that the increased difficulty of obtaining comparable employment during the pandemic provided a basis for awarding a notice period at the highest possible end of the appropriate range, and pointed to approximately 90 job applications he had submitted unsuccessfully as evidence of a downturn in the job market. HBC responded that the high volume of applications were indicative of many comparable positions available in Mr. Lee’s field in the post-COVID-19 economy.
The Court ultimately awarded Mr. Yee damages representing 16 months of notice. The Court, in assessing the reasonable notice period to which Mr. Yee was entitled, found that his older age, the managerial nature of his role, and his sizable income favoured a longer notice period.
The Court considered whether the COVID-19 pandemic’s impact on the job market, and particularly the availability of similar employment to Mr. Yee, warranted the award of a longer notice period. The Court found that while broader economic factors such as “a downturn in the economy or in a particular industry or sector” may justify a longer notice period, the length of the notice period should be determined by the circumstances existing at the time of termination, rather than the length of time it takes the employee to find employment. The Court stated that “terminations which occurred before the COVID pandemic and its effect on employment opportunities should not attract the same consideration as termination after the beginning of the COVID pandemic and its negative effect on finding comparable employment”. Accordingly, as Mr. Yee’s dismissal in August 2019 occurred well before the onset of the pandemic in Canada in or around March 2020, the Court did not take the pandemic into account in calculating his notice period.
Takeaways for Employers
Although the Court did not expressly set out how the COVID-19 pandemic will impact the assessment of reasonable notice periods in dismissals that occur after its onset, the Court confirmed that its negative effect on the availability of comparable employment may be taken into account. As such, the Yee decision has arguably opened the door for courts to award longer reasonable notice periods in dismissals that occur following the onset of the pandemic in Canada.
Employers who find themselves facing a claim for a pandemic-related “bump” to a former employee’s notice period must be prepared to show that the employee has maintained strong re-employment prospects. For example, given the rise of remote work and social distancing requirements during the pandemic, demand for jobs within certain sectors that have involved or easily pivoted to online operations may not have been as adversely impacted. Consequently, an employee who has been dismissed from such a job may not be able to rely on the pandemic to argue for an increase to their notice period.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.