Howard Levitt: Some lawyers are promising greater awards for wrongfully dismissed employees in COVID-19 era. They’re wrong

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Twice a week for over a year, I have been writing here about employment law in the age of COVID-19.

But I have not discussed either of the two biggest questions COVID-19 poses for parties involved in wrongful dismissal cases. Since the pandemic has made re-employment notoriously more difficult, are courts increasing the number of months employees are awarded when they are wrongfully dismissed?

And is being relaxed about COVID-19 workplace protocols cause for discharge without severance?

I will answer the first today. The second, next week.

It has been Russian roulette for employers. If they retained their employees during the pandemic, many businesses would have dissolved financially. If they laid them off, they risked constructive dismissal cases. But when they fired them, they received the invariable letter from employee bucket shop contingency shops telling them that the severance pay formerly required has skyrocketed because of the pandemic’s impact. Every employer has received such a letter. But is there anything to them?

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My advice to my own clients has been nuanced. On the one hand, difficulty finding other work has always enhanced severance payments. On the other, as a matter of judicial policy, with employers often in as desperate straits as their employees, and appreciating that the downfall of an employer will cause unemployment for all of its employees, would the courts really put much of Canadian businesses out of business by increasing severance payments which they could already barely afford? Accordingly, I have advised my clients from the outset that, on balance, the pandemic would have little impact on severance awards.

And that has been proved correct in the cases to date.

As the court held in the Peter Iriotakis decision below: “There are few questions more vexing than that of determining reasonable notice under the common law of the employment contract as it has evolved over the years.”

Severance calculators (including my own firm’s), apps, formulas and charts provide an often useful, but too often misleading, starting point in calculating severance. Like predicting a court award for damages for a broken leg or for being rendered quadriplegic in a personal injury claim, there is no real formula and previous cases are not dispositive. It is as much an art as a science best predicted by reading thousands of previous cases.

Many severance formulas focus primarily on length of service. But in some instances employees who have worked two weeks and those with decades of service have both been awarded the same 12 months. Many factors are at play. The ease of reemployability has always been important and, since the dawn of the pandemic, employee lawyers have been beating that drum. But they have not convinced the courts.

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Dan Marazzato was the top executive of Dell Canada in direct sales. He was 59, worked for 14 years and earned about $465,000 per annum. His lawyer argued that he should receive higher notice because of the pandemic. Ontario Superior Court Justice Grant Dow, in a Dec. 9, 2020 decision, awarded 18 months, dismissing that argument as follows:

“I was asked to take into consideration the economic downturn caused by the COVID pandemic, that there would be extra difficulty in obtaining a new position. I note no evidence of same was presented to me. It would not be appropriate to speculate without evidence. For example, while there has been an economic downturn for many, Mr. Marazzato’s former employer and his skill set is in the computer business which may have actually benefited from the COVID pandemic and its resulting in greater use of computers for access to the internet and remote practices.”

Another case, decided by Justice Sean Dunphy of the same court on Jan. 29, 2021, involved Peter Iriotakis suing Peninsula Employment Services. The 56-year-old Iriotakis was employed in sales for two and half years earning $145,000. The court awarded him three months. It would have awarded him less but for his age. He was terminated on March 20, 2020 near the beginning of the pandemic. The court dealt with his request to provide heightened severance as follows:

“I was asked to make findings about the job market and the possible impact of COVID-19. I have little doubt that the pandemic has had some influence upon Mr. Iriotakis’ job search and would have been reasonably expected to do so at the time his employment was terminated in late March 2020. However, it must also be borne in mind that 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 at the time Mr. Iriotakis’ employment was terminated.”

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In considering the specific impact of COVID-19 on severance, the court concluded, just as I suggest above, that “a balanced approach is what is called for.”

This does not mean that the difficulty the pandemic has posed for employees in finding other work will always be irrelevant. But it does mean that courts will not simply take lawyers’ or clients’ word for it. Specific evidence will have to be called as to that impact, if any, in each particular case. And it could go either way as, especially in some areas, there has been a shortage of employees and reemployability is easier than ever. Particularly for lower paid positions where many normal applicants have been content to avoid work and collect the Canada Emergency Response Benefit, many of my clients have been frantically, but unsuccessfully, looking for workers. As in much of law, the actual evidence called at the trial will determine the result, not speculative principle.

Got a question about employment law during COVID-19? Write to Howard at [email protected].

Howard Levitt is senior partner of LSCS Law, employment and labour lawyers. He practices employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.