Continued consideration of COVID-19’s impact on reasonable notice analysis

On February 9, 2021, the Ontario Superior Court of Justice released its decision in Iriotakis v. Peninsula Employment Services Limited, which added to the growing body of case law regarding the impact of the COVID-19 pandemic on the common law reasonable notice analysis¹.

What you need to know

• Furthering the analysis of COVID-19’s impact. In our prior bulletin regarding Yee v. Hudson’s Bay Company, we highlighted the court’s finding that the COVID-19 pandemic will not serve to increase an employee’s entitlement to reasonable notice if the employee’s termination occurred prior to the start of the pandemic in Canada.
  • In Iriotakis, the court found that, in the context of a termination which occurred on March 25, 2020 (i.e., shortly after the pandemic began), the impact of the pandemic on the employee’s re-employment prospects was highly speculative, and that it would be inappropriate to apply hindsight to the measure of reasonable notice. The court also considered the extent to which Canada Emergency Response Benefit (CERB) payments would serve to reduce an award of wrongful dismissal damages.
• Reasonable notice not to be assessed in hindsight. The assessment of an employee’s entitlement to reasonable notice is to be determined through the lens which existed at the time of termination, including as it relates to the impact of the pandemic on the plaintiff’s re-employment prospects. Hindsight should not be applied.
  • As of March 2020, the impact of the pandemic on the economy in general and on the job market, in particular, was highly speculative and uncertain, both as to degree and to duration. Accordingly, notice periods for employees terminated near the onset of the pandemic are unlikely to be increased significantly (if at all) to account for the impact of the pandemic on the job market at the time.
• CERB and wrongful damages. A plaintiff’s receipt of CERB payments may not serve to reduce a wrongful damages award, depending on the facts of the particular case.

The decision

The plaintiff, Peter Iriotakis, was terminated without cause by the defendant Peninsula Employment Services Limited (Peninsula) on March 25, 2020, and brought an action for wrongful dismissal. At the time of termination, the plaintiff was 56 and had worked as a Business Development Manager for just over two years.

The plaintiff’s employment agreement did not contain a valid termination provision. Accordingly, the plaintiff was entitled to reasonable notice of termination. In assessing the reasonable notice to which the plaintiff was entitled, the court found that the pandemic’s impact on the job market was “highly speculative and uncertain both as to degree and to duration” at the time of termination, cautioning that it was important to be “alert to the dangers of applying hindsight to the measuring of reasonable notice”². Accordingly, while the impact of the pandemic on the job market, combined with the plaintiff’s age at termination, “tilt[ed] the period of reasonable notice” away from the shorter end of the range, they were not determinative of the reasonable notice period (and certainly did not serve to significantly increase the period of reasonable notice). The court ultimately determined that the plaintiff was entitled to 3 months’ notice.

The court declined to reduce the plaintiff’s damages award to account for the CERB payments received by the plaintiff during the reasonable notice period. It distinguished between Employment Insurance (EI) and CERB benefits on the basis that employers and employees pay into the EI program, whereas the CERB program is not an “earned” entitlement over time. The court also noted that a reduction to account for the CERB payments would be inequitable in this case, considering that: i) the payments received by the plaintiff were considerably less than the plaintiff’s base salary; and ii) the plaintiff’s entitlements post-termination were significantly lower than his pre-termination earnings (the court refused to award the plaintiff certain commissions during the reasonable notice period). Importantly, the court was clear that this decision was limited to the facts of the case, thereby leaving open the possibility that CERB payments may be deducted from total entitlements on a different set of facts.

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¹ 2021 ONSC 998.

² Para. 19.