Written on behalf of Peter McSherry
As we have previously written about here, most Ontario employees are entitled to reasonable notice of the termination of their employment under Ontario common law. An employer’s failure to provide reasonable notice makes the termination a wrongful dismissal.
At the time of writing, we are emerging from the Omicron wave of the coronavirus pandemic. Courts are currently being asked to consider how the coronavirus and related restrictions impact a wrongfully dismissed employee’s entitlement to severance. This post will review one of those cases in greater detail: Skowron v. ABC Technologies Inc.
How is reasonable notice calculated in a wrongful dismissal case?
Before we turn to the specifics of this case, we will turn to what is often referred to as the Bardal factors. The reasonable notice or severance owed to an employee is based on a weighing of the relevant factors to determine how long it will likely take an employee to become re-employed. While courts may consider any relevant fact raised by the parties, the primary factors considered by the court actually come from a case from the 1960s. The case is called Bardal v Globe & Mail Ltd. and the factors are:
- Character of employment;
- Years of Service; and,
- Availability of similar employment.
As much as things have changed since 1960, these factors continue to resonate and remain the primary consideration for courts in determining what fair severance or reasonable notice should be.
Yes and no. The pandemic has changed so much in our day-to-day lives
In the Skowron v ABC Technologies Inc. case, the employee immigrated to Canada in 1989 and is a professional engineer by training with a Master’s degree in engineering. He was employed by ABC Technologies, which is a Canadian company that manufactures automotive parts. Although originally hired as a plant engineer, he was promoted to a Technical Manager role. He was 61 years old at the time of termination. He had been with the company since 1994 as an employee except for a brief period in the middle when he was a dependent contractor and a consultant.
In addition to reviewing his age, the nature of his role and his tenure, the judge reviewed how these facts would interact with the job market or the availability of similar employment. Naturally, any look at the availability of similar employment is going to consider the pandemic. For good or for bad, the pandemic is upending the job market across all industries.
Note that this applies to terminations that took place during the course of the pandemic. Courts will consider the facts as they were at the time of termination. If the pandemic had occurred after the employee was dismissed, the judge would not have considered it. This was the situation in an earlier case we wrote about here. In that case, the employee had been terminated shortly before the pandemic started, but his job search efforts were of course impacted by the pandemic. In that case, the judge explained why COVID would not be taken into consideration:
It seems clear terminations which occurred before the COVID pandemic and its effect on employment opportunities should not attract the same consideration as termination after the beginning of the COVID pandemic and its negative effect on finding comparable employment.
Turning back to the Skowron v ABC Technologies Inc. case, the judge was able to consider the pandemic as the employee had been dismissed during the pandemic, so it was a relevant fact at the time of the termination. In providing the reasons related to the pandemic, the judge wrote the following:
[I]t is relevant that we are in difficult economic times at present. I have no indication that the job market for sixty-plus year old project engineers is particularly buoyant in Toronto during the third wave of the pandemic. (emphasis added)
It is clear in looking at the availability of similar employment that Ontario courts will consider the economic circumstances at the time of termination. In this example, it was the pandemic, but in other examples, we have seen the court consider economic recessions and downturns in specific industries (for example Paquette v TeraGo Networks Inc.).
In addition to overall economic circumstances, a court may look at the economic situation of the employee’s geographic region or industry. A judge may also review facts related to the availability of similar employment for that employee.
In this case, the judge considered the lack of a reference letter and the likelihood of a negative verbal reference and how that may impact the employee in the job market. On this point, the judge indicated:
The defendant also has not provided a reference letter for Mr. Skowron. Moreover, under cross-examination, Mr. Skowron’s supervisor indicated that, if asked for a reference by a prospective employer, he would level some serious criticisms.
While each individual’s circumstances will vary, it is noteworthy that a court may consider an employee’s poor performance (as perceived by the employer) and a negative reference in relation to that poor performance a factor that justifies lengthening the notice period. Reference letters are not required as part of a severance package, but often go a long way to helping the employee become re-employed elsewhere, which should be a goal of both the employee and the employer.
In the end, after reviewing the circumstances of the case, the judge determined this employee was entitled to 24 months of notice (less two weeks of pay as a contingency and any severance paid to date).
Contact Peter A. McSherry Employment Lawyer for Advice on Reasonable Notice and Severance Packages
The amount of reasonable notice owed on termination can be affected by many common law factors, over and above the requirements of employment legislation. Many employers make mistakes of providing employees with the wrong severance amounts exposing themselves to legal and reputational risk. Employees are often underpaid.
Employment Lawyer Peter A. McSherry assists employees and employers on these issues. If you are an employee seeking advice on your entitlement to an extended reasonable notice period, we can review and provide advice on proposed severance packages. For employers, we can ensure employee dismissals and lay-offs meet all legal requirements, reducing the risk of employment litigation. Contact us online or by phone at 519-821-5465 to schedule a consultation.