In this case, should the employer decide not to recall the employee for the season because of COVID-19 related event cancellations, the relationship will likely be considered terminated giving rise to severance pay. In calculating severance, the courts will take into consideration: the employee’s age, length of service, total compensation package, and nature/seniority of their position.
Historically, the courts have also considered other relevant factors, such as the economic climate of a specific industry, in determining severance. In Hatch-Stewart v St. Catherines Museum  O.J. No. 4478, the courts found that because of the economic downturn of the tourist industry caused by the SARS outbreak the plaintiff was entitled to an increased notice period (whether the courts will adopt the same approach in the wake of COVID-19 has yet to be seen).
That aside, severance pay is not always guaranteed. The cancellation of seasonal events as a consequence of COVID-19 due to a government mandate would likely not trigger such entitlement as the contract would likely be rendered impossible to fulfill. This is known as a frustration of contract which occurs when unanticipated circumstances, through no fault of either party, make it impossible for an employment contract to be fulfilled. Such an event has the effect of rendering the contract null and void with neither party having any further obligation to the other. In other words, no severance pay owing.
On the other hand, the economic downturn as a result of COVID-19 related event cancellations may not justify a claim of frustration, especially where the business is able to continue to operate, regardless of capacity. This is especially so if the employer has chosen not to take advantage of the Provincial and Federal benefit programs recently made available (Canada Emergency Student Benefit; Canada Emergency Wage Subsidy).
With years of experience in this ever-changing area of law, we at Whitten & Lublin are happy to provide insight and advice into your specific work situation. If you’re looking for employment lawyers and would like more information about what Whitten & Lublin can do for you, please contact us online or by phone at (416) 640-2667 today.
Author: Athan Makrinos