The impact of COVID-19 on notice periods awarded by civil courts

Since the beginning of the health crisis in March 2020, workplaces have undergone many changes in response to the spread of the COVID-19 virus. Government restrictions and the pausing of Quebec society have forced many companies to reassess and adjust their needs in order to cope with this new reality.

In these circumstances, many companies have had to permanently dismiss their employees, notably as a result of the elimination of positions or a shortage of work. In this situation, section 2091 of the Civil Code of Quebec (“CCQ”) is clear: these employees are entitled to reasonable notice of termination.

Specifically, the CCQ stipulates that an employee whose contract is for an indeterminate term is entitled to a reasonable notice period when the employer terminates his or her employment without cause. The criteria used by the courts to determine the length of this notice period include: (i) the nature of the employment, (ii) the specific circumstances in which the employee performs his or her work, and (iii) the duration of the period of work.

The COVID-19 pandemic raises questions about the potential impact of the current situation on the length of the reasonable notice period to which an employee is entitled if their employment was terminated shortly before or since the beginning of the crisis. Can an employee validly claim to be entitled to a longer reasonable notice period because of the pandemic?

It appears that Quebec courts have yet to address the question of whether the socio-economic circumstances of the pandemic should entitle employees to a longer notice period than what would normally have been awarded prior to the COVID-19 crisis. That said, courts in other Canadian provinces have indicated in several cases that a longer notice period due to the pandemic will not be easily granted as we will explain hereinafter

First, it is important to keep in mind the basic principle that the length of the notice period must be analyzed in light of the circumstances existing at the time of the dismissal, as reiterated in the recent decision in Yee v. Hudson’s Bay Company.¹ In this case, the plaintiff claimed that he was entitled to more severance pay in lieu of notice than what was offered by his former employer, in part because of the difficulty of finding employment during the pandemic. The judge ruled that the notice period analysis should be conducted in light of the circumstances on the date of his dismissal, i.e. August 28, 2019, which was well before the start of the pandemic and thus did not consider the effect of the pandemic in his notice period analysis.

The Court nevertheless made a point of mentioning that a dismissal that took place before the onset of the pandemic should not give rise to the same considerations with respect to finding comparable employment as a dismissal that took place after the start of the pandemic. The judge therefore implied that, in order to be able to raise the detrimental effect of the pandemic in the notice period analysis, the termination of employment must have occurred during the pandemic.

That said, in order to potentially benefit from a longer notice period due to the health crisis, the employee must prove that the crisis had an adverse effect on the time required to find a new position. Indeed, in Marazzato v. Dell Canada Inc.,² the Ontario Superior Court judge did not consider the economic downturn caused by COVID-19, since Mr. Marazzato, who had been dismissed on March 4, 2020, from his position as Senior Sales Manager, had not presented any evidence of additional difficulty in finding new employment. On the contrary, the Court stated that Mr. Marazzato possessed a set of skills in information technology that would have been beneficial and advantageous to him during the COVID-19 pandemic.

Moreover, while the courts are willing to consider the impact of the pandemic in analyzing the granting of reasonable notice if there is evidence that the pandemic affected the employee’s ability to re-enter the workforce, the economic downturn created by the health crisis is only one of the factors that courts will consider in their analyses. In other words, it does not appear that courts are giving a priori more weight to the pandemic than to the other elements traditionally taken into account by the courts in determining a reasonable notice period.

In this regard, in Iriotakis v. Peninsula Employment Services Limited,³ the Ontario Superior Court recognized that the pandemic had an impact on the employee’s job search (he was dismissed on March 25, 2020, from his position as Business Development Manager) and that the parties should consider this impact. However, the Court called for a balanced approach, stating that hardship related to the pandemic does not apply to the exclusion of other criteria that must be considered in a notice period analysis. The Alberta Court of Queen’s Bench in Kosteckyj v. Paramount Resources Ltd.⁴ undertook a similar analysis to that in Iriotakis. While the judge considered the pandemic to be a factor in the engineer’s job search, he also took into consideration the economic downturn in Alberta’s oil and gas industry.

Finally, an interesting issue arose in the Iriotakis decision cited above as to whether the Canada Emergency Response Benefit (“CERB”) received by the claimant ($2,000 per month) should be subtracted from the notice award granted by the Court. The judge ruled that it would not be fair, in the circumstances, to deduct the amount of the CERB from the severance pay in lieu of notice to which Mr. Iriotakis was entitled. The Court relied on the following facts to support its position: (i) the $2,000 per month received by Mr. Iriotakis was a relatively small amount compared to the salary he received from his former employer; and (ii) the duration of Mr. Iriotakis’ employment was just 28 months, and therefore, he was only entitled to a short reasonable notice period. Notwithstanding the Court’s decision in this case, i.e., not to deduct the CERB payments from the employee’s severance pay in lieu of reasonable notice, it is possible, in our view, that in another context a judge might come to a different conclusion.

As a practical matter, these decisions suggest to us that awards of  a longer severance pay in lieu of a reasonable notice during a health crisis are far from guaranteed. Not only must the dismissal take place after the onset of the pandemic, but it is also necessary to demonstrate the impact of the pandemic on the job search. It should also be noted that external criteria, such as the CERB, could be taken into account.

It will be interesting to see whether Quebec courts will follow the lead of other Canadian provinces.

Written in collaboration with Catherine MacLean, articling student.

¹ Yee v. Hudson’s Bay Company, 2021 ONSC 387, para. 21.
² Marazzato v. Dell Canada Inc., 2021 ONSC 248.
³ Iriotakis v. Peninsula Employment Services Limited, 2021 ONSC 998.
⁴ Kosteckyj v. Paramount Resources Ltd, 2021 ABQB 225.