Normally, when an employer terminates an employee, “reasonable notice” or pay in lieu thereof is required pursuant to Article 2091 of the Civil Code of Québec. This obligation is in addition to statutory notice under the Labour Standards Act.
The factors to be taken into account have been addressed in several judgments of the Quebec Court of Appeal, without such factors being hermetically sealed. In fact, there are numerous judgments to the effect that reasonable notice is to be decided by the Courts on a case-by-case basis. This presents important problems for employers who are asked to calculate reasonable notice at the time of termination, without knowing, with certainty, how the whole matter is going to play out.
Certainly, the factors that have been identified by the Courts in the past presuppose an active and working economy, unlike what it is now.
Reasonable notice is meant to provide employees a kind of safety net in which they are maintained whole while actively seeking other remunerative employment. Indeed, employees have an obligation to mitigate their damages and seek alternate employment from the day of their termination. The sooner the employee finds alternative work, all things being equal, the less the cost of such reasonable notice to the employer.
But if, upon termination, the parties try to come to an agreement on the length of the notice, how will these negotiations be influenced by the fact that, with the measures taken to fight COVID-19, all or almost all of the judicial and quasi-judicial machinery is in “neutral”, if not in “park”? They know that eventual judicial proceedings would be even longer than usual and that, if the employee remains without a source of income, the bill may be even higher for the employer.
There is also the issue of the employer’s capacity to pay when what was reasonable notice before COVID-19 is much much much more than an employer on “life support”, receiving subsidies that were recently rolled out, can bear. Judgments that consider either the economic conditions and circumstances at times of recession and the employer’s capacity to pay, for the most part, are few and far between.
All of this adds a healthy dollop of uncertainty.
One of the very few judgments raising this issue is Bernatchez c. Commonwealth Plywood ltée, 2012 QCCS 2119. The Court recognized that the lumber industry was going through a difficult period in the region where the employer and employee were located. Accordingly, the employee’s efforts to mitigate damages were not successful, which the Court accepted. But the context also caused the Court to be more lenient towards the employer:
| [79] In this case, there is no evidence of bad faith on the part of the defendant [the employer]; not only is there no appearance of bad faith but the difficulties caused to the defendant by the crisis in the forest industry are undeniable. [80] Were it not for this crisis, the plaintiff would possibly have been entitled to the maximum notice allowed by our Courts, which is 24 months. However, this Court believes that the circumstances in which the notice is determined must be analyzed not only from the plaintiff’s point of view, but also that of the defendant. [81] Accordingly, this Court sets the compensation allowable to the plaintiff to correspond to an 18-month notice. [Our translation]. |
Are we all therefore in uncharted waters? What was true yesterday may not be true tomorrow.
Full consideration of the above issues and indeed several others with a professional that you trust before terminating employees, or before you consider any offer of settlement, including the appropriate release documents, is not only recommended: it is well-nigh required.