Labour & Employment Law Blog

COVID-19 May Lengthen Notice While CERB Will Not Reduce Entitlement

Zeilikman Law

Zeilikman Law

Case Summary

The Ontario Superior Court in the case of Iriotakis v. Peninsula Employment Services Limited, 2021 ONSC 998, is another development with respect to what the impact of COVID-19 will be on establishing the amount of reasonable notice an employee can expect when terminated by their employer.

The plaintiff employee, Peter Iriotakis (“Mr. Iriotakis”) brought a motion for summary judgment to determine his notice entitlement in a wrongful dismissal case.   Mr. Iriotakis was terminated on a without cause basis in March 2020.  He was 56 years old and was employed by Peninsula Employment Services Limited (“Peninsula”) for about 28 months.  His title was that of a “Business Development Manager” and his position was that of a salesperson where he had a base salary and earned additional commission income.  While Mr. Iriotakis did not have a managerial position at Peninsula, he had significant responsibilities for developing customer relationships for the company.  Mr. Iriotakis was able to mitigate his damages by finding alternative employment in October 2020.

Mr. Iriotakis argued that he should receive at least 6 months of reasonable notice.  Peninsula argued that Mr. Iriotakis should receive no more than 2 or 3 months of reasonable notice.

The above details serve us to give context to the case.  However, they are rather banal.   The interest of this case really sits with how the court looked at two things.  The first is the impact of the COVID-19 pandemic on establishing Mr. Iriotakis’ entitlement to reasonable notice.  The second is impact of the receipt of certain government benefits that many Canadians took (and are still taking) in order to counteract some of the financial difficulties of the COVID-19 pandemic.

The court set out that there is “little doubt” that the COVID-19 pandemic has had “some influence” on the Canadian job market and therefore on Mr. Iriotakis’ job search to find alternative employment. However, the court went on to set out that this influence is imprecise, highly speculative and uncertain both to the degree and duration at the time of Mr. Iriotakis’ termination by Peninsula.  Regardless, the court ultimately in paragraph 22 of its decision agreed that the uncertainties in the job market at the time of Mr. Iriotakis’ termination “tilt” the period of reasonable notice away from what a rather short length of service might indicate.  The court called for a “balanced approach.” As such, in paragraph 23 of the decision, the court set out that Mr. Iriotakis should receive 3 months notice in order to balance the other factors (age, length of service, etc.) with the “consideration of his prospects” of finding alternative employment.

The court also determined that the Canadian Emergency Response Benefit (“CERB”) should not reduce Mr. Iriotakis’ entitlements to damages from Peninsula because it would not be equitable to do so.  However, the court acknowledged in paragraph 21 of the decision that CERB is not the same as the receipt of Employment Insurance as the employee has not “earned” the CERB benefit by paying into it as a taxpayer.

Our Thoughts

This case sheds a little light on how court in Ontario will look at the impact of the COVID-19 pandemic on the length of notice entitlements that employees can expect.  We know now that there may be some impact given the court’s wording of taking a “balanced approached.”  However, without flushing out how that “balanced approach” should be applied by courts in future cases that wording is rather vague.  For instance, while the court acknowledged a balanced approach causing the COVID-19 pandemic to “tilt” reasonable notice away from a “fairly short” notice period, the court still decided that Mr. Iriotakis should receive only 3 months of notice.   The amount of notice is well below the “at least” 6 months that Mr. Iriotakis was asking for and right in line with the “2 or 3” months that Peninsula argued that Mr. Iriotakis was owed.

This case may put the mind of employers at ease somewhat.  While the court here acknowledged some sort of impact due to COVID-19, that impact was arguably minimal.  Perhaps in may be the case that the impact of the pandemic may only push the amount of notice up a little to the higher range of what an employee would have received pre-pandemic.  However, it would not cause the notice period to increase beyond that.

Finally, we are not sure that we are in agreement with how the court looked at CERB.  The court set out that it would not be “equitable” do reduce the Mr. Iriotakis’ termination pay by CERB. Under normal circumstances, the principle is straightforward: an employer is not allowed to reduce the severance owing to the employee by the EI payments an employee has received during the notice period (the repayment obligation arises towards the government). Following this decision, it seems that an employer may be able to argue that CERB benefits may be used to reduce damages arising out of a wrongful dismissal payment when it would be “equitable” to do so. This means, of course, that it is unclear under what circumstances a reduction in wrongful termination damages vis-à-vis the employer would actually be appropriate.

The above article is for general information purposes only, does not constitute legal advice or create a solicitor-client relationship. Because each case is unique and factually driven, if you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere. We represent clients in the Greater Toronto Area including Toronto, North York, Markham, Vaughan, Thornhill, Newmarket, Aurora, Brampton, Mississauga, Barrie, Ajax, Whitby, Pickering and Oshawa.