COVID-19: No Excuse to Lay/Off Employees

COVID-19: No Excuse to Lay/Off Employees | Lecker & Associates

As the proverbial dust from the chaotic storm of events caused by the COVID-19 pandemic begins to settle, more and more cases addressing its impact on employee rights are being decided. In Ristanovic v. Corma Inc., and Eliyahu Asafov v Corma Inc., 2021, ONSC 4108, the employee Plaintiffs (who were successfully represented by Jordan Reiner – partner at Lecker & Associates) were awarded 22 months of reasonable notice. Beyond the high damages awarded, the case affirmed important legal precedents (i.e., examples that are binding) for future courts to follow in regards to the law on lay-offs, employers’ severance obligations during depressed economic conditions, and payments that may be deducted from a damages award on account of employees’ obligation to mitigate. 

Mr. Ristanovic and Mr. Asafov were both long-service employees of Corma (the “Company”), with tenures of 28 and 30 years, respectively. The Company manufactures corrugated tubing and is based in Concord. It relies upon overseas markets for 95% of its business. Accordingly, it faced significant disruptions to its supply chain in late 2019 and early 2020 when the outbreak of the pandemic began to take root internationally, culminating in a decline of the Company’s revenues by about 40%. The Company laid off both Plaintiffs in February of 2020, at which point they were advised that their lay-offs would not exceed 35 weeks. The Plaintiffs had not consented to the layoffs. Further, neither of the Plaintiffs, in this case, had ever been laid off by the Company in the past.

The main issue, in this case, was whether the Plaintiffs had a right to treat their lay-offs as unilateral changes in the conditions of their employment amounting to constructive dismissal (i.e., a fundamental breach of their employment contracts). The Company’s position was that since it was hit hard by the pandemic, the court should read into the contracts of employment a force majeure clause permitting it to lay the Plaintiffs off. The court rejected these arguments, refusing to read in an implied term allowing for lay-offs. Accordingly, there was no “global pandemic” defence to a layoff under the law. As Justice Dunphy succinctly phrased it: Insolvency, recessions or the evolution of the competitive marketplace have never justified unilateral lay-offs under our law. 

Further, as the Plaintiffs argued, even if there was such a defence, it does not override the statutory requirement under the Employment Standards Act, 2000, that a layoff does not exceed 35 weeks. In other words, after 35 weeks of being on a layoff, termination of the Plaintiffs’ employment was mandatory according to the legislation. Most germane here is that the layoffs occurred before COVID-19 had been declared a global pandemic. Accordingly, the now notorious IDEL regulation enacted by the Ford government was not relevant to the Court’s reasoning as it does not cover the relevant time period. 

Corma argued that the economic recession caused by the pandemic should curtail the amount of severance paid to the Plaintiffs. The Court, however, was not willing to engage in an “ability to pay” analysis. In so holding, the Court implicitly held that, though some companies have been hit hard by the pandemic, that will not be a factor in determining notice.

Another salient fact, in this case, was that, well into the litigation, the Company issued the Plaintiffs recall notices. The Plaintiffs returned to work as they had a duty to mitigate their damages. However, the Court held that since the layoffs were constructive dismissals, the return to work period was considered working notice, deductible from the remaining 22 months of notice awarded to the Plaintiffs. Moreover, one of the Plaintiffs received CERB payments which were found to be exempt from being classed as mitigation income because the payments coincided with the statutory notice and severance periods which are not subject to mitigation. In addition, one of the Plaintiffs drew on his pension at a reduced rate and it was held that these payments were also not deductible as mitigation income because pension income is quite simply not mitigation income.  

The Plaintiffs’ were awarded not only 22 months in damages, they also returned to their positions at Corma and were awarded $52,000.00 in costs and disbursements. 

If you have been laid off from your employment as a result of COVID-19, you should immediately consult Lecker & Associates and speak with one of our experienced employment lawyers to determine if your employment has been constructively dismissed and if you’re entitled to compensation as a result of your employer’s conduct.