Ontario, Canada Court Awards Employee Longer Reasonable Notice Period Due To Pandemic's Impact

• Published date: 19 August 2021
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Coronavirus (COVID-19), Employee Benefits & Compensation, Trials & Appeals & Compensation, Employment and Workforce Wellbeing
• Law Firm: Littler - Canada
• Author: Ms Rhonda B. Levy and Monty Verlint

In Kraft v. Firepower Financial Corp., 2021 ONSC 4962 (Firepower Financial), an employee brought a motion for summary judgment seeking 10 months' salary in lieu of notice, commissions and bonuses, and holiday and vacation pay in a wrongful dismissal action. Notably, in assessing the reasonable notice period, the court awarded the employee one month more than it would have otherwise because of the COVID-19 pandemic's impact on his ability to secure new employment and the degree of uncertainty it caused.

In addition, the court awarded the employee commission on a pending transaction that the employee had identified for the employer, which closed six months after the employee's dismissal from his job. In doing so, the court noted that all of the employee's work on this transaction was completed prior to his dismissal, the transaction closed during what should have been the employee's notice period, and commission earned on the transaction was included as part of the employee's "wages." The court declined, however, to award the employee commission on a second pending transaction, noting that it was unknown "if and when" it would close, the employee's notice period had ended, and the employee's entitlement to wages "does not go on forever."

Background

The employee began to work for the employer in 2014 and was dismissed without cause in March 2020, at the beginning of the COVID-19 pandemic. At the time of his dismissal, the employee was a specialized salesperson in investment banking focused on mergers and acquisitions, receiving a base annual salary of $70,000, commissions, incentive payments, and vacation and health benefits. The employee earned commissions for identifying and presenting opportunities to the employer that resulted in fees payable to the employer. He also received incentive income paid quarterly based on his percentage of the "Bonus Pool's" fee-generating activities.

Commissions on Pending Deals

Upon terminating the employee, the employer proposed paying commissions on the employee's pending deals provided they closed within five months of his employment termination.

One pending deal the employee identified (First Pending Deal) was the largest transaction he had ever been involved in, and all of the employee's work on the deal was completed prior to his job termination. This deal resulted in the employer being paid over $1.3 million in fees and would have resulted in the employee earning $77,559 in commission. Because the transaction...