We have not seen caselaw yet (although it is probably coming) as to the effect of Covid-19 on severance. From an employee's perspective, severance should not be affected. Under the Bardal factors that help determine severance, one of the factors is the availability of similar employment. There is another case called Farmer v. Foxridge Homes, 1994Carswellalta in which the economic climate the employee is terminated into is seen as a relevant factor.
Covid-19 has led to an uncertain economic environment. It is possible that the courts will create some sort of equitable remedy to deal with the economic fallout from covid, but we have not seen those cases. It seems more likely that the courts will enforce obligations as they stand. Employers might have the argument that the economic situation has led to frustration of the contract (this is an argument that existing facts may make carrying out the contract impossible), but it seems unlikely as this would have the policy effect of denying employees severance.
Our view now is that severance will be owing for terminations occurring due to Covid-19.
If you have been terminated due to Covid-19, please feel free to contact us.
The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.
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