Oct 18, 2021  By John Hyde

How COVID-19 has Impacted Employment Law

The impact of COVID-19 cannot be understated, as the pandemic has truly changed the way in which our laws and society operate. Few know this better than employers, who have been forced to re-tool their workforce, make important decisions regarding employees and, ultimately move forward in an uncertain terrain.

As employers continue to navigate through the pandemic, it is integral that they understand COVID-19's impact on the law, as it applies to their business. In other words, employers must be cognizant of the legal considerations and issues that COVID-19 has forced them to wrestle with.  

The Interplay Between COVID-19 and Reasonable Notice Periods

Throughout the pandemic, a significant issue has been whether COVID-19's effect on employment prospects should be factored into reasonable notice awards. It is generally understood that employers have a duty to give their employees reasonable notice of their termination, failing which they must pay damages.  

The relationship between COVID-19 and reasonable notice has been dealt with in various court cases since March of 2020 and, employers should know how the pandemic will impact them.

In Yee v Hudson's Bay Company, the plaintiff was terminated by his employer in August of 2019, well before the pandemic. The Ontario Superior Court of Justice determined that he could not rely on the pandemic to boost up his notice period. Furthermore, the court stated that terminations predating COVID-19 and its subsequent impact on employment opportunities should not be given the same consideration as those terminations which happened after the onset of the pandemic. This case is notable for employers, as it suggests that COVID-19 will not justify longer notice periods, and thus potentially more money paid to wrongfully dismissed employees.

However, different results have been reached in cases where employers have terminated employees in close proximity to the COVID-19 pandemic. For example, in Lamontagne v JL Richards & Associates Limited, the plaintiff was terminated in mid-February of 2020. In this case, the court recognized the uncertainty created by the threat of a possible global pandemic as a factor in assessing the reasonable notice period. Furthermore, in Kraft v Firepower Financial Corp, the plaintiff was terminated in March of 2020, during the same week that the Ontario government declared a state of emergency. In awarding an additional month of notice, the court reasoned that COVID-19 had made both the economy and job market uncertain, while fewer employers were hiring.

In light of these cases, employers must understand that terminating a worker during a time when the economy and job market were impaired by COVID-19 may result in longer notice periods, and thus more money paid to former employees.

In spite of how glaring this message appears for employers, it is worth noting that in Iriotakis v Peninsula Employment Services Limited, the court nevertheless stated that COVID-19's impact on the economy and job market was speculative and uncertain, even for a plaintiff who was terminated in late March of 2020.  

While the law remains far from crystal clear, employers must nevertheless be cognizant of these relevant considerations.

The Impact of the Canada Emergency Response Benefit ("CERB") on Wrongful Dismissal Damage Awards

Another important legal development for employers has emerged by way of the Canada Emergency Response Benefit ("CERB"), a payment made to employees who were terminated or laid off due to COVID-19. For employers, the most significant issue arising from CERB is whether or not such payments should increase or decrease wrongful dismissal damage awards.  

As a general rule, contract damages are designed to put terminated employees in the same economic position they would have been had their employer not wrongfully dismissed them.

In the aforementioned Iriotakis decision, the Ontario Superior Court did not deduct CERB payments from the plaintiff's wrongful dismissal damages. The approximate $2,000 paid in CERB was much lower than the plaintiff's base salary, leading the court to determine that it would have been inequitable to reduce his wrongful dismissal damages by that amount.  

A different result was reached by the British Columbia Superior Court in Hogan v 1187938 BC Ltd, as CERB payments were indeed deducted from the plaintiff's wrongful dismissal damages. The court reasoned that "if CERB payments [were] not deducted, the plaintiff would [have been] in a better position than he would have been in if there had been no breach of the employment contract. But for his dismissal, the plaintiff would not have received the benefit."  

Employers should understand that the law regarding CERB and wrongful dismissal damages is unsettled, as it continues to develop. However, employers stand to benefit from considering how courts have analyzed this issue up to this point. We will continue monitoring this developing area of the law, and are always available to offer guidance.

Ontario's Infectious Disease Emergency Leave Regulation and Constructive Dismissal

Under Ontario's Infectious Disease Emergency Leave Regulation (the IDEL Regulation), a temporary reduction in an employee's wages or a temporary reduction or elimination of an employee's hours of work for reasons caused by the coronavirus will not constitute constructive dismissal. An employer constructively dismisses an employee when their conduct shows an intention to no longer be bound by the employment contract.  

Again, much like the topics discussed above, employers navigating the muddy waters of COVID-19 should understand that the law in this area is far from certain.

In Coutinho v Ocular Health Centre, the court found that the IDEL Regulation prevented the plaintiff from filing a constructive dismissal complaint with the Ministry of Labour pursuant to the Employment Standards Act, but this did not stop her from making such a claim "at common law" (through the courts).  

However, this conclusion was rejected in the case of Taylor v Hanley Hospitality Inc. In that case, the court determined that the IDEL Regulation was meant to shield employers from constructive dismissal claims of all kinds, which were caused by the legislature's mandate that employers stop operating or work at reduced capacity (thus laying off employees or reducing their hours).  

The Implementation of Workplace Vaccination Policies

For employers, no current issue may be as hot button as the introduction of workplace vaccination policies, particularly given the recent emergence of such government policies in the context of COVID-19.

On the one hand, both federal and provincial occupational health and safety legislation assign employers the duty to protect the health and safety of their workers. Employers have a legal duty to take every reasonable precaution as a means of protecting their workers. With the spread of COVID-19, vaccine mandates and policies are important tools in achieving this objective, and employers ought to implement them accordingly.

At the same time, employees who cannot be vaccinated for reasons protected by federal or provincial human rights legislation (such as disability-related issues) will need to be accommodated up to the point of undue hardship.

The Bottom Line

COVID-19 has changed the world in unprecedented ways, and the pandemic continues to impact employment law. If you are an employer, the topics written about in this article should demonstrate the importance of hiring a lawyer prior to making any decisions regarding your workforce.

If you have any questions or concerns about your workplace, please do not hesitate to contact us for expert legal advice and guidance.  

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