In part 1, which can be found here, we reviewed the circumstances in which an employer may terminate the employment of one or more employees during the COVID-19 era.
Employers may find that they are unable to recall some or all of their employees from a COVID-19 related layoff. Provided that the employee is not on a job-protected leave of absence, the employer may initiate termination of a laid-off employee. The employer will be required to pay the employee the proper amount of termination pay in order to avoid a wrongful dismissal claim (see below for details).
Employment Standards Act Notice & Severance
The Employment Standards Act, 2000 (“ESA”) is known as “minimum standards legislation” and, as the name implies, it establishes the minimum amount of working notice (or pay in lieu of notice) that an employer must provide when dismissing an employee without cause. Employee entitlements under the ESA are roughly equal to one (1) week of notice (or pay in lieu) per full year of service up to a maximum of eight (8) weeks. The Ontario Government operates a website with a detailed explanation of ESA termination pay that is linked here.
If an employee is only entitled to ESA notice (and severance, if applicable), these calculations will not be adjusted due to COVID-19, unless the employer is initiating a “mass termination”.
A mass termination occurs when an employer terminates 50 or more employees at the employer’s establishment within the same four-week period. Under the ESA, “establishment” includes multiple locations in the same municipality where the employer conducts business. In Ontario, the mass termination provisions are not triggered if two criteria are met: The number of employees whose employment is terminated at the establishment is not more than 10 percent of the number of employees who have been employed there for at least 3 months, and if the terminations were not caused by the permanent discontinuance of part of the employer’s business at the establishment.
Employers need to be aware that there are various administrative and notice requirements that are triggered by a mass termination. Employees may be entitled to increased notice periods as part of the mass termination notice obligations set out in the ESA. More information about mass termination rules is available on the Ontario Government’s website here.
Common-Law Reasonable Notice
Employees who are entitled to common law reasonable notice may be entitled to increased notice of termination during the COVID-19 pandemic. Reasonable notice is not based on a specific mathematical formula like the ESA notice but is instead a notional estimate of the time that it will take the terminated employee to find comparable, alternative employment with reasonable effort. The determination of reasonable notice is specific to each employee and will consider relevant factors such as length of service, age, seniority of role, skillset, disabilities, and the job market. As such, an employee who is dismissed during the COVID-19 pandemic may be able to argue that the time required for them to find new employment will be longer than usual. Courts have previously recognized that a depressed economy and/or poor job market is a relevant factor that can be considered and can reasonably lengthen an employee’s notice period.
We expect to see similar comments from the judiciary and longer notice period awards once the wrongful dismissal cases from the COVID-19 era make their way through the courts.
Dismissing employees who are entitled to common law reasonable notice can be costly for employers. For more information about how employers can limit their termination pay obligations, please review our blog article linked here.
The employer and employee may have agreed upon a notice framework or formula in the written employment contract. So long as the formula does not violate the minimum standards set out in the ESA, the contractual notice amount will apply and will not generally be adjusted due to COVID-19. All of the contractual terms will need to be reviewed in detail to be sure that there is nothing in the agreement that would trigger a larger notice period than what is described in the termination clause of the contract. For example, if the contract is for a fixed term, the employer may need to allow the employee to work or pay out the employee for the remainder of the term. As such, the employment contract as a whole will need to be scrutinized to determine the amount of notice that is payable to the employee.
Terminations can be complicated during the best of times and the team at SV Law is here to help you navigate your obligations and rights when it comes to termination of employment.
Reach out to the SV Law Employment Law team and we will be happy to assist you.
The content of this article is intended to provide a general guide to the subject matter and is not legal advice. Specialist advice should be sought regarding your specific circumstance.