This is a very informative wrongful dismissal case that sheds light on the issue of CERB payments vis-à-vis severance, as well as notice entitlements for employees terminated during the pandemic. Plaintiff (Mr. Iriotakis) was successfully represented by our law firm.  

Mr. Iriotakis was terminated without cause on March 25, 2020. He was 56 years old at the time of his termination. He began working for Peninsula Employment Services Ltd. (Peninsula) in November 2017 as a Business Development Manager. Peninsula provides human resources and health and safety support to businesses. 

The Plaintiff’s employment contract contained a termination clause which provided for payments below the minimums that are guaranteed by the Employment Standards Act. Simply, his contract permitted dismissal without notice of termination or termination and severance pay in circumstances where he was not “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer”.  Accordingly, the Judge held that the termination provisions of his contract were invalid, and he was owed the more generous common-law notice/pay in lieu of notice which the contract sought to limit.

For the purposes of determining Mr. Iriotakis’ severance entitlements, the Court noted that the Plaintiff was in a sales role that involved significant responsibilities for developing customer relationships. Although Mr. Iriotakis’ title included the word “manager”, he did not have any direct reports and so his job was not truly managerial in nature. After considering his age, length of service and position, the Judge awarded Mr. Iriotakis 3 months of severance. 

Affects of COVID-19 on Wrongful Dismissal Damages

Regarding Covid-19, the Judge noted that there was little doubt that the pandemic had some influence on Mr. Iriotakis’ job search efforts. However, the Court held that the impact of the pandemic on the economy in general and on the job market was highly speculative and uncertain both as to degree and to duration at the time Mr. Iriotakis was terminated. Accordingly, this was one of the very first decisions where the court addressed the affects of COVID-19 on a dismissed employee’s job search efforts and the resulting reasonable notice period. Since this decision was released, other Superior Court decisions have found that COVID-19 and the resulting economic recession should weigh in favour of increasing an employee’s common law notice period (please see Yee v. Hudson’s Bay, and Lamontagne v. J.L. Richards & Associates Limited). Depressed economic conditions in hard-hit sectors do not automatically entitle dismissed employees longer than normal notice periods; they serve to justify awards of notice in the lengthier end of the range that employees can reasonably expect. This is referred to as the “COVID-19 bump up”. 

CERB Payments Not Deductible from Severance

Another important consideration was the CERB payments received by Mr. Iriotakis during the reasonable notice period. The Court found that CERB cannot be considered the same as Employment Insurance benefits as it relates to calculating damages for wrongful dismissal (EI benefits are deducted from severance payments). The Judge reasoned that CERB is an ad hoc programme and neither the employer nor the employee could be said to have paid into the program or “earned” an entitlement over time. The Court also cited that the amounts received ($2,000.00/month) were considerably below the base salary earned by the Plaintiff. On these facts, the Judge found that it would not be fair to reduce Mr. Iriotakis’ entitlements to damages from his former employer by the amount of CERB he received during the reasonable notice period. 

Commissions During the Notice Period

Further, the employer had an unusual commission payment structure wherein commissions were earned and paid nine months in arrears based on the payment history of the client that generated the commissions. The Court noted that Peninsula’s commission policy which purported to exclude the payment of commission becoming payable during a common law notice period violated the Employment Standards Act and was of no force or effect. Accordingly, commissions arising on sales made prior to the Plaintiff’s termination that were payable during the notice period were awardable. Given the three-month notice period awarded, Mr. Iriotakis was entitled to commissions on sales made by him between six and nine months prior to the termination of his employment. It remains to be seen whether in future cases, courts would deem a similar nine-month commission policy an improvident and unconscionable bargain that serves to unjustly enrich an employer to an employee’s detriment.

Lecker & Associates has practiced employment law for over 35 years.  We exclusively represent employees of Ontario. Our team of employment lawyers has the knowledge, experience and ability to handle challenges that often surface in relationships between employees and their employers.