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Impact of COVID-19 On Dismissal Notice Periods

  • Image: “Door of a bankrupt business locked with chain and padlock. Global recession due to coronavirus lockdown” by Ivan Radic is licensed under CC BY 2.0

It’s an understatement to say the economy is currently bleak.  

Anyone with employment is hanging onto it for dear life.

Dismissed employees who are looking for new work face a formidable task.

People are told to “stay home”. Many businesses have effectively shut down, or are being told to operate well below capacity.

As a result, many businesses and many people are suffering financially.

Many employees have been “laid off” or dismissed, with inadequate financial pay-out.

Some businesses would like to take the position that their economic struggles arising from COVID-19 justify a shorter reasonable notice period.

However, this position is not legally sound.

An employee who is terminated without just cause is generally entitled to reasonable notice of his or her termination.

I’m speaking mainly about non-unionized employees. Different considerations apply to unionized employees.

As the Supreme Court of Canada stated in Machtinger v. HOJ Industries Ltd., “employment contracts for an indefinite period require the employer, absent express contractual language to the contrary, to give reasonable notice of an intention to terminate the contract if the dismissal is without cause.”

The idea is that receiving reasonable notice before being dismissed allows the employee to begin looking for comparable replacement work before the current job ends. 

When no just cause exists and reasonable notice is not provided before dismissal, wrongful dismissal damages must generally be paid to compensate the employee during the reasonable notice period. This is the amount of total compensation - wages and benefits – that the employee would have earned if she or he had been able to work through the notice period.

The amount of reasonable notice period in any particular case depends on the circumstances.  

The leading case setting out the factors relevant to the notice period is Bardal v. The Globe & Mail Ltd.   These factors focus on the employee’s circumstances: the character of the employment, his or her length of service, his or her age, and the availability of similar employment, having regard to the person’s experience, training, and qualifications.

An employer’s poor economic circumstances is not a relevant consideration.  Financial struggles by an employer do not justify a reduction in the notice period. 

As was stated by Mr. Justice Lambert of the B.C. Court of Appeal in Lesiuk v. B.C. Forest Prod. Ltd.:

Economic circumstances

Having made a contract of employment, both parties are obliged to stick to its terms, through thick and thin, or reach a new agreement. If the employee's economic circumstances change so that he needs more money, he is not excused from performance, or from the requirement to give notice if he wishes to quit. The situation is no different if the employer's economic circumstances change. A set-back in the employer's business does not give the employer the right to rewrite the contract of employment or to fire an employee without notice. Subject to a contrary term in the contract, of course. But economic circumstances may have other effects. In particular, they may alter the period of reasonable notice…and they may affect the steps that a reasonable person would take in mitigation of loss.

During the notice period, dismissed employees are to make reasonable efforts to mitigate their damages by seeking alternate comparable employment.

In Forshaw v. Aluminex Extrusions Ltd., the B.C. Court of Appeal stated:

A duty to 'act reasonably', in seeking and accepting alternate employment, cannot be a duty to take such steps as will reduce the claim against the defaulting former employer, but must be a duty to take such steps as a reasonable person in the dismissed employee's position would take in his own interest--to maintain his income and his position in his industry, trade or profession.  The question whether or not the employee has acted reasonably must be judged in relation to his own position, and not in relation to that of the employer who has wrongfully dismissed him.  [Emphasis added]

The long and short of it is that in many cases, the current economic state will entitle an employee to a longer, not shorter, notice period. This is because it is harder to find comparable employment.  

A recent court decision from another province considered the current economic slowdown’s effect on the notice period. Not surprisingly, the employee’s notice period was lengthened, not shortened. The notice period was extended, even though the employee was dismissed before the pandemic.

After all, being able to land comparable employment is the whole point to having a notice period in the first place.  

If you are losing your job, know your rights before signing any paperwork related to your dismissal!

This is a modified version of an article appearing in or around February 17, 2021 in online publications including the Kelowna Capital News. The content of this article is intended to provide very general thoughts and general information, not to provide legal advice. Advice from an experienced legal professional should be sought about your specific circumstances.  We may be reached through our website at inspirelaw.ca