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February 3, 2021

Can the COVID-19 Pandemic Impact Notice Periods?

Authors Hendrik Nieuwland and Mackenzie Anderson

On January 18, 2021, the Superior Court of Justice, in Yee v Hudson’s Bay Company, 2021 ONSC 387, appears to have addressed the question of whether the COVID-19 pandemic can impact reasonable notice period awards. The Court’s comments suggest that where an employee is terminated after the COVID-19 pandemic began, the employer could be liable for providing longer reasonable notice periods, or payments in lieu of notice, to account for the impact of the pandemic.

Background

Melvin Yee was terminated without cause by the Hudson’s Bay Company (“Hudson’s Bay”) on August 28, 2019. He was 62 years old, had 11.65 years of service, and held the position of Director of Product Design and Development at the time of his termination. Mr. Yee’s contract did not contain an enforceable termination clause. Consequently, the court was left to determine an appropriate reasonable notice period.   

Mr. Yee argued that a longer notice period was justified because the COVID-19 pandemic had caused an economic downturn and negatively impacted the job market. In support of this assertion, Mr. Yee pointed to his approximately 90 unsuccessful job applications during this period.   

Decision

In determining the appropriate length of notice to award Mr. Yee, the court considered the four factors identified in the seminal case of Bardal v. Globe & Mail1960 CanLII 294 (ON SC):

  • Age
  • Length of Service
  • Character of Employment
  • Availability of Similar Employment

 

The court found that Mr. Yee’s age, years of service, and the managerial nature of his role favoured awarding a longer period of reasonable notice. When considering availability of similar employment, and the negative impact of the COVID 19 pandemic, the court reiterated that a longer period of reasonable notice could be justified by economic factors, such as a downturn in the economy and subsequent difficulty finding alternate employment. However, the court clarified that reasonable notice should be "determined by the circumstances existing at the time of termination and not by the amount of time that it takes the employee to find employment”. Following these remarks, the Court stated that terminations that occurred before the COVID-19 pandemic and its economic hardships should not attract the same considerations as those occurring after it began. Ultimately, and based on the four Bardal factors, the court awarded Mr. Yee a 16-month reasonable notice period.

Implications for employers

When determining reasonable notice entitlements, courts will consider the circumstances which existed at the time of termination. Therefore, the negative economic fallout from the COVID-19 pandemic will not influence the notice awards for employees terminated prior to the commencement of the pandemic. Conversely, employers should expect that employees terminated after the COVID-19 pandemic began will likely be entitled to greater notice periods that account for the negative economic impact of the pandemic.   

The foregoing is for informational purposes only and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyers by email or telephone.

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