The question we have been asking for months is how the COVID-19 pandemic will affect the reasonable notice period for dismissed employees. With the COVID-19 pandemic came a downturn in the economy, making it seemingly more difficult to find employment. However, until recently, there had been no indication from the Court as to how that would be factored in.

The recent case of Yee v. Hudson’s Bay Company, 2021 ONSC 387 [Yee] suggests that Courts will take the pandemic’s impact on finding comparable employment into consideration when determining the reasonable notice period for employees terminated during the pandemic; however, it will not be factored in for employees that were dismissed prior to the pandemic’s start.

In Yee, Mr. Yee was terminated from his employment with the Hudson’s Bay Company (“HBC”) on August 28, 2019. He had been employed with HBC for 11.65 years and held the position of Director, Product Design and Development at the time of his termination. He was 62 years old at the time of the trial. Mr. Yee’s compensation consisted of a base salary of $162,353, an annual bonus, group benefits (which the Court valued at 10% of his base salary), pension plan contributions (which was included in the 10% for benefits), and discounted pricing on HBC products.

In determining the reasonable notice period, Justice Dow considered the factors set out in Bardal v. Globe & Mail Ltd., [1960] O.W.N 253 (Ont. H.C.) and found as follows:

  • Yee’s age of 62 favoured a longer reasonable notice period;
  • Yee’s length of service of 11.65 years was a neutral factor; and
  • The character of his employment as a managerial employee with a high income favoured a longer reasonable notice period.

With respect to the availability of similar employment, Justice Dow discussed the impact of the COVID-19 pandemic. Justice Dow relied on Justice Perell’s statement in Paquette v. TeraGo Networks Inc., 2015 ONSC 4189 [Paquette], where he stated, “economic factors such as a downturn in the economy or in a particular industry or sector of the economy that indicate that an employee may have difficulty finding another position may justify a longer notice period”. However, Justice Dow stated that the Ontario Court of Appeal’s holding in Holland v. Hostopia.com Inc., 2015 ONCA 762 needs to be considered as well. Namely, that “[n]otice is to be determined by the circumstances existing at the time of the termination and not by the amount of time it takes the employee to find employment”.

Justice Dow went on to state:

It seems clear 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.

Therefore, it appears that for employees terminated during the COVID-19 pandemic, Courts are opened to considering the negative effects of the pandemic on finding comparable employment when determining the reasonable notice period. However, as Mr. Yee was terminated prior to the COVID-19 pandemic, it was not a consideration when determining the reasonable notice period. Mr. Yee was ultimately awarded 16 months for reasonable notice.

Take Away

It can be expected that Courts will consider the COVID-19 pandemic and its impact on a dismissed employee’s ability to find comparable employment when terminated during the pandemic as a factor in favour of a longer notice period.  However, if an employee was terminated prior to the pandemic, it may not be taken into consideration. Further, a Court’s consideration of the pandemic’s impact on a dismissed employee will be done on a case-by-case basis and one can expect that dismissed employees in industries unhindered by the pandemic may not necessarily obtain higher notice periods simply because they were terminated during the pandemic. Employers should regularly review their employment contracts and ensure their termination provisions are up to date, particularly to avoid paying for longer reasonable notice periods that are likely to be awarded due to the COVID-19 pandemic.