In a few recent wrongful dismissal cases, courts across Ontario have increasingly found that an employee whose employment is terminated during the COVID-19 pandemic should be entitled to greater severance package. In other words, an employee who loses their job as a result of the COVID-19 pandemic should be provided with more severance pay from their employer. Why?
The answer is simple: the COVID-19 pandemic has made it that much harder for the employee to “mitigate” their financial losses resulting from the loss of the job. As such, the employer has a heightened obligation to compensate them for the timing of the employment termination.
What is a Severance Package?
In Ontario employment law, any non-unionized employee whose employment is terminated “without cause“ is generally entitled prior notice of termination before their last day of work, or payment in lieu notice of termination. The term “pay in lieu of notice” refers to an employer’s responsibility to provide compensation (termination pay, severance pay) if they choose not to provide notice of termination. Taken together, employment lawyers refer to this as an employer’s requirement to provide a “severance package,” which typically consists of a termination letter and full and final legal release.
At Bune Law, an experienced Toronto employment lawyers can help you determine if the severance package you have been offered by your employer is fair and appropriate. For most people, a termination of employment can be extremely stressful, which is made worse by the fact that understanding a severance package can often be intimidating. Most of the time, an employer’s severance package offer is below the amount that an employee is truly owed upon termination of employment.
In cases where the employee believes their severance package is inadequate, an employment lawyer can help review and negotiate a severance package to enhance severance pay the employer should be providing and, if all else fails, to commence a wrongful dismissal claim against the employer to get what you’re owed – nothing less!
During a legal consultation, an severance pay lawyer at Bune Law will take the time to gather information about your employment your circumstances, your job, the company you work for, your compensation and the circumstances surrounding your termination. After discussing your goals and objectives, an employment lawyer will then tell you what your severance package should contain, allowing you to compare this severance package assessment with what you have actually been offered by the company to decide on your next best steps.
The “COVID-19 Bump” in Ontario Severance Pay
As previously discussed on Bune Law’s employment law blog, it appears the courts have been willing to consider a “COVID-19 Bump” to termination notice periods (severance packages).
In a wrongful dismissal case, the courts determine how long an employee’s notice period should be (that is, how much compensation they are owed in their severance package). To do this, they consider the following factors set out in a 1960 court decision called Bardal v. The Globe & Mail Ltd.:
- Character of employment
- Age
- Years of service
- Availability of similar employment, having regard to the employee’s experience, training and qualifications.
In addition to the above, the courts also consider any other factor that can (objectively speaking) impact the employee’s job prospects, such as as whether the employee suffers from a disability or was induced to leave previous secure employment on promises of long-term job security. In making this analysis, the courts have been careful to emphasize that no one factor should be given disproportionate weight. Instead, the courts assess an employee’s severance package as “more of an art than a science”.
How does COVID-19 pandemic fit into the court’s severance package evaluation? Does it create a new “Bardal” factor?
The answer? No!
The courts have decided not to make the COVID-19 pandemic a whole new “Bardal” factor to consider (which makes sense, since the pandemic is not a permanent circumstance). Instead, the courts have viewed the COVID-19 pandemic as part of its analysis of the availability of similar employment. As always, the courts will determine an employee’s severance pay entitlements base on a case-by-case basis.
Cases Examples
In Yee v. Hudson’s Bay Company, 2021 ONSC 387, the Court held that an employee’s reasonable notice period must be considered at the time their employment is terminated.
“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.”
In other words, if an employee’s job was terminated after the start of the COVID-19 pandemic, it is more likely a court would increase an employee’s reasonable notice period. This conclusion was also reiterated in the recent case of Herreros v. Glencore Canada, 2021 ONSC 5010, where the Court held:
“However, in this case, the pandemic had not yet materialized at the time of dismissal. Given that an assessment of the Bardal factors, and the assessment of compensation, is to take place as at the time of termination, I find that the pandemic is not a relevant factor in my consideration of the fourth Bardal factor: see Yee v. Hudson’s Bay Company, 2021 ONSC 387, at para. 22.”
In Kraft v. Firepower Financial Corp., 2021 ONSC 4962, the Court awarded a 34-year old salesperson with 5.5 years of service 10 months’ pay in lieu of notice. Although the Court found that most employee’s in such circumstances would normally be awarded 9 months of compensation, it chose to award the employee 1 additional month as a result of the COVID-19 pandemic:
“There is evidence that the pandemic impacted on the Plaintiff’s ability to secure new employment. In light of that evidence, he deserves to receive at least somewhat above the average notice period. I would peg the figure at 10 months, or one month more than the average for his circumstances during non-pandemic times.”
In Lamontagne v. J.L. Richards & Associates Limited, 2021 ONSC 2133, the Court considered the COVID-19 pandemic as justifying an increase in an employee’s severance package entitlement. As such, it awarded a 36-year old employee with 6 years of service as a controller 10 months’ of severance pay compensation. The court commented as follows:
“By February 19, 2020, the possibility of a global pandemic was discussed. Cases had been reported in Asia, parts of Europe, and some had been reported in the United States. A global health emergency was brewing, and there existed at least the threat of a global pandemic, although most were not expecting what was about to happen. I take judicial notice that by February 19, 2020, there was the threat of a possible global pandemic. This threat created uncertainty about what might happen, including how our economy might fare, if a global pandemic ever became a reality. This degree of uncertainty, which existed on February 19, 2020, is one of the many factors that I consider in assessing the reasonable period of notice applicable to the circumstances of this case: Yee v. Hudson’s Bay Co, 2021 ONSC 387, at paras. 21 – 22.”
In Russell v. The Brick Warehouse, 2021 ONSC 4822, the Court again viewed the COVID-19 pandemic as a negative factor reducing an employee’s ability to obtain similar employment, and therefore as justifying a lengthier notice period.
Call Today for Help
If you are an employer or employee, please contact Bune Law at 647-822-5492 arrange a consultation with an employment lawyer in the Toronto area, so that we can discuss your specific employment matter in detail, explain employment law as it applies to your situation, and then determine whether you need our assistance and how we can help.
For employees, it is always best not to sign a severance package offer without seeking legal advice from an experienced employment lawyer! Employers will often try to convince a terminated employee that their first offer is fair – which it rarely ever is! Bune Law, employment lawyer in Toronto, will help get the severance pay you deserve!
If you have been fired from your job and feel you deserve fair compensation, call Bune Law for help. When you call, you will speak with an experienced employment lawyer assisting with severance package review and negotiation. Call today to learn about your legal rights.
As the above cases make clear, Ontario courts are willing to consider the effects of the COVID-19 pandemic as part of their reasonable notice assessment for employees whose employment terminated after it began. In other words, the COVID-19 pandemic could result in more severance pay.
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