Firing employees just before the holidays could open the door to claims of bad faith, longer notice periods
As the end of another year approaches, employers often consider whether dismissals of employees should be undertaken before the end of the year.
The reasons for this can be legitimate and varied. Perhaps a reduction of employee headcount would improve the financial outlook of the organization heading into a new fiscal year. Or maybe a recently-hired employee’s probationary period is set to expire before a holiday break and it would be convenient to severe ties now on terms favourable to the employer.
However, from the affected employee’s point of view, such decisions can be viewed as a particularly cold and insensitive.
This is because given the impending holiday season, for many industries and businesses productivity and staff attendance is lower than average in December, as employees make use of their vacation entitlements to relax, recharge and spend time with those close to them during a well-deserved break.
Instead, dismissed employees will have a different, markedly less merry experience — one filled with the stresses and anxieties that all individuals face when they suddenly and unexpectedly become unemployed either immediately or after a brief period of working notice.
Does timing of a dismissal extend the notice owed?
Depending on the terms governing the employment relationship between the parties, particularly if an employee is owed common law reasonable notice of termination, the timing of a dismissal can result in a court finding that an employee is owed a longer period of working notice or pay in lieu.
This is underpinned by the general principle that a primary factor used to determine a relevant notice period is ascertaining the availability of comparable employment at the time of dismissal. Firing an employee at a time of year that negatively affects their job prospects justifies the award of a longer notice period.
It is common knowledge that with many employees taking time away at this time of year, hiring efforts are often paused until relevant decision makers return to work, making it exceedingly difficult for recently dismissed employees to make meaningful efforts into finding their next opportunity until well into the following year.
Additional exposure from holiday dismissals
Depending on the circumstances, the timing of a dismissal can not only serve to extend the notice owed to the affected employee but can also attract additional exposure to employers in the form of general damages awards. This happens when an employer is found to have dealt in bad faith or unfairly with the employee at the time of dismissal by being untruthful, misleading or unduly insensitive, and has been supported by cases coming from Ontario.
In the first, Horner v. 897469 Ontario Inc, 2018 ONSC 121, an employee complained of bullying and harassment from a co-worker to her employer days before the Christmas break. On Dec. 28, the employee discovered a termination letter affixed to the back door of her residence in which the employer alleged it possessed just cause for terminating her employment.
The employee successfully pursued a claim for wrongful dismissal, with the Ontario Superior Court awarding her $20,000 in aggravated damages arising from the employer’s bad-faith approach to the termination. While several factors were considered in reaching this decision, the court explicitly justified the award in part because the termination letter was sent “during the Christmas holidays.”
A second case, Zesta Engineering Ltd. v. Cloutier, 2010 ONSC 5810, the Ontario Superior Court awarded an employee $75,000 in moral damages because the employer’s conduct surrounding the termination “amply demonstrate[d] bad faith on its part.” Again, numerous reasons substantiated the misconduct of this employer were cited, but high among them concerned the timing — the employee was informed of his dismissal on his first day of vacation, five days before Christmas Day.
Risk of bad-faith conduct
This analysis serves as a reminder to employers that when it comes to the timing of a dismissal, absent an iron-clad termination clause in an employment contract, an employer may be on the hook for providing the dismissed employee with additional pay in lieu of working notice.
However, even for employees with termination clauses, evidence of bad-faith misconduct on the part of an employer introduces risk that general damages could be awarded against them, or that said misconduct will result in an otherwise enforceable termination clause being struck down by a court.
These consequences can be avoided if the decision to dismiss an employee is postponed until after the holiday season. Beyond being pragmatic, such a delaying is a humane approach that preserves the affected individual’s dignity and results in a more respectful end to the relationship. When it comes to subsequent allegations of wrongful dismissal, more amicable negotiations result, and overall litigation of such matters is reduced.
Sean Marzinzik is an associate lawyer at Ascent Employment Law and practices out of Kelowna, BC.
