To remind our readers, as we have set out prior in other blogs, in the absence of a contractual term stating otherwise, a dismissed employee may be entitled to reasonable notice of termination at common law or pay in lieu thereof. To decide how long that notice should be, Ontario courts look at the employee’s age, length of service, character of employment, and the prospect of finding alternative employment. During the pandemic, Ontario courts have set out that it is possible to also consider the negative economic impact of the pandemic in order to lengthen the notice period of the dismissed employee. This is because it has been accepted by the courts that the pandemic may make the search for alternative secure employment harder for certain employees. However, this has been a thoroughly fact-specific exercise for the courts, where each case is looked at on its own to determine if there should be any increase in the notice period.
Ontario’s Court of Appeal has recently affirmed that the pandemic may be used to lengthen an employee’s notice period in Pavlov v. The New Zealand and Australian Lamb Company Limited, 2022 ONCA 655. This case was an appeal from a trial judgment awarding damages in lieu of notice for termination of employment. The Court of Appeal ultimately dismissed the appeal. The respondent employee had worked for the respondent employer for a period of just under 3 years. At the time of termination, he was 47 years old. His income also included a bonus that he would have been eligible to receive of up to a certain percent of his income based on the company and the employee’s individual performance.
The trial judge in Pavlov had set out that at the time of his termination in May 2020, the COVID-19 pandemic had serious negative effects on various industries and that it was therefore reasonable to infer that the timing of the respondent’s termination would have been an obstacle in his efforts at securing alternative employment. Further, these obstacles would have been known to the appellant employee. As such, the trial judge awarded the respondent 10 months’ notice which would include the value of the bonus on a pro-rata basis.
The appellant employer raised two main issues on appeal. The first was that trial judge’s decision to accept as a factor in the analysis of the length of notice the availability of similar employment in the economic circumstances relating to the pandemic was an error. The second was the trial judge’s decision to also include the pro-rata entitlement to the bonus during the notice period. Both grounds of appeal were rejected by the Court of Appeal. The Court of Appeal set out that there was no merit to the appellant’s arguments as those aspects of the trial judge’s decision were all findings of mixed fact and law and as such entitled to deference.
The Pavlov decision is not surprising. There have been other cases that suggest that certain bleak economic conditions caused by the pandemic would likely have a role in increasing the notice period of a dismissed employee. The courts have been known to be receptive to considering various factors in the assessment of what constitutes a reasonable notice period.
Thus, while the Canadian economy is on its way to recovery from the impact of the COVID-19 pandemic, it is likely that in certain cases the courts will incorporate the role of the pandemic as part of their analysis on what constitutes reasonable notice.