Pregnancy Entitles Employee to More Severance Pay in Termination of Employment

When it comes to deciding an employee’s rights in a termination of employment (wrongful dismissal) case in Ontario, the courts generally take into account the following “Bardal” factors to determine how much severance pay the employer must provide as part of a financial severance package:

• age
• years of service
• position
• availability of similar employment, based on the employee’s skills, education and experience

But, as we have discussed before, the above list is not exhaustive. Under Ontario employment law, the courts will consider any circumstance that will (objectively speaking) impact the employee’s ability to replace their lost job. So, over the years, the courts have also added the following factors to consider in determining the “notice period” (a court’s estimate of the amount of time it should take a similar employee to find comparable employment):

• Pregnancy
• Medical condition/disability
• Inducement
• Specific Industry or specialized nature of the position
  
• Post-employment restrictions (e.g., non-compete/non-solicit agreement)
• Geographic location
• Transferability of skillsets to other industries
• Seasonal/cyclical employment

However, it is important to note that the above rule will generally not apply if an employee has signed an employment contract with a valid termination clause that limits their severance pay to the minimum legal requirements of the Employment Standards Act, 2000 .

Impact of Pregnancy on Termination of Employment

In a recent case called Nahum v. Honeycomb Hospitality Inc., the court was asked to consider the impact of pregnancy on the amount of severance pay the employee was entitled to upon termination of her employment. In other words, would the court increase the amount of reasonable notice of termination (or pay in lieu of notice) the employee should have received as a result of the employer’s termination of employment?

As expected, the answer is “Yes” – an employee’s pregnancy should be a factor in awarding an extended notice period (severance pay).

Facts

In this case, a 28-year old employee was dismissed without cause,  after working only 4.5 months in an HR role as a Director of People and Culture, where she received an annual salary of $80,000. At the time of her termination of employment, she was also approximately 5 months pregnant.

While the employee had signed an employment contract, both parties agreed that the termination clause in it was legally invalid, which meant the only issue the court was required to determine was the length of the reasonable notice period.

Court Decision

In determining the employee’s severance pay entitlement, the court noted that although she was young and employed for a very short period of time (factors which tend to reduce the notice period entitlement), she held a mid-management role and was pregnant at the time of termination (factors which tend to increase the notice period entitlement).

On the impact of pregnancy, the court specifically rejected the employer’s argument that there was no evidence to conclude that pregnancy reduces an employee’s prospects for finding new employment. Rather, the court held that it was commonsense that an employee’s pregnancy puts them at a disadvantage in their job search. In other words, the courts will generally conclude (and will not need proof) that pregnant employees face additional challenges when looking for work, specifically because of:

“the inherent barrier that pregnancy poses to most job searches – the impending absence of the prospective employee from a position for which they are not yet trained, in which they have not yet proven themselves, and in respect of which the employer is most likely seeking to fill an existing need.”

That said, the court was also quick to emphasize that pregnancy does not automatically entitle an employee to a long notice period. As in every other case of wrongful dismissal, pregnancy is only one factor among many that should be considered by an employer in providing a severance package.

Ultimately, the Court awarded the employee a reasonable notice period of 5 months, holding that her pregnancy at time of termination was an “important factor” that justified a greater notice period (less than the 8 months the employee requested, but more than the 2 months the employer argued was appropriate).

Discriminatory Termination of Employment

In addition to increasing an employee’s damages for wrongful dismissal, pregnancy can also give rise to a claim of discrimination under the the Ontario Human Rights Code. For instance, if the employer’s decision to fire the employee was influenced by the employee’s pregnancy at time of termination, it would likely constitute discrimination on the basis of sex or family status. As a result, the employer would be responsible for paying the employee  additional damages for injury to dignity, feelings and self-respect on the basis of discrimination.

Under both the Employment Standards Act  and Human Rights Code, employer’s have various obligations related to an employee’s pregnancy, including reinstating the employee back to to their old job once they return from a maternity leave or parental leave. If the old job is no longer available for legitimate business reasons unrelated to the leave (e.g., business downsizing or restructuring), the employee must transferred to a suitable and similar position. This is part of an employer’s “Duty to Accommodate” to the point of undue hardship.

When it is not possible to return the employee to their original job, it may be appropriate to transfer them to a comparable job in the same organization. However, as noted above, the employer must ensure that its decision is not based on the employee’s maternity or parental leave, and that it is not actually penalizing the employee for taking a job-protected leave of absence. Otherwise, an employee may have grounds for a human rights (discrimination) complaint against the employer.

Contact Bune Law for Help

If you are an employee who was terminated from your employment during pregnancy, it is important to speak with an experienced employment lawyer to determine whether your situation involves discrimination by your employer, and if so, fully discuss your options.

At Bune Law in Toronto, you will be provided with experienced legal advice on a wide variety of employment matters, including what steps to take if your employment was terminated while on maternity leave or disability leave. The experienced employment lawyer at Bune Law takes pride in a reputation for excellence in client service. Call 647-822-5492 for an employment lawyer consultation.

If you are an employer, you should speak with an employment lawyer to discuss your options before making the decision to terminate employment and obtain the proper termination documentation for your employee to avoid a discrimination claim.

No matter which side you are on, our employment lawyer is ready to assist with your case. Don’t hesitate to reach out to Bune Law at 647-822-5492.

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