The Administrative Labour Tribunal (ALT) recently heard a complaint filed pursuant to Section 124 of the Act Respecting Labour Standards by an employee whose employment was terminated due to his Employer incurring losses caused by the pandemic.
The facts
The Complainant was hired by the Employer in 2012 as an international sales development representative. The company specialized in the construction of wide-span buildings, offering services worldwide. In March 2020, the company experienced a serious decline in business, caused in large part by travel restrictions adopted at the outbreak of the pandemic and the health crisis precipitated by Covid-19.
After a brief lay-off, the Complainant returned to work during early May 2020. On May 14, the Complainant even received a salary increase. At the time, the Employer reassured the Complainant that his job was safe.
However, on May 29, 2020, the Employer terminated the Complainant’s employment due to the uncertainty associated with the Covid-19 pandemic. The Employer alleged that the health crisis was preventing him from adequately forecasting its future manpower requirements, which meant an important cutback in operations was inevitable.
In reaction to this U-turn of the Employer, the Complainant challenged his employment termination by filing a complaint for dismissal without good and sufficient cause, based upon Section 124 of the ALS.
The decision
In its decision, the Tribunal distinguished between the notions of “dismissal” and “termination”, the former being linked to grounds related to the employee and the latter to grounds related to the company. Where an employer alleges that employment termination is severance upon economic grounds, as opposed to dismissal, the Tribunal will assess whether the ground raised in support of employment termination does not in fact amount to a wrongful dismissal.
Where the Tribunal finds that termination is in fact a pretext, it may rule that a complainant is the victim of a dismissal without good and sufficient cause. The Employer has the burden of proving that termination (based here upon unavoidable economic difficulties) is real, and corresponds to a viable employment termination.
In this case, the Tribunal ruled that the Employer had succeeded in demonstrating that the uncertain climate generated by the health crisis triggered an important decline in its sales.
The Tribunal furthermore added that even though not all the data was known at the time of termination of the Complainant’s employment, it was nevertheless clear that 2020 was financially difficult for the Employer and that sales figures were in decline. This holds true, notwithstanding the fact that it was impossible to forecast the duration of the crisis, or the extent of its economic impact.
Consequently, aside from the financial situation of the company, the unanticipated decline in sales justified the reorganization of its activities and the economic termination of the Complainant.
On the issue of the Employer arbitrarily targeting the employee for termination, the Tribunal ruled that the company properly weighed the objective criteria of seniority and capability in coming to its decision.
The short notice of termination and the conditions attached (i.e. the strict minimum legal requirements) might leave an observer perplexed. However, having said that, the Tribunal concluded that the circumstances exposed to the court were insufficient to justify qualifying the acts of the Employer as anything other than an economic termination. This was a proper employment termination.
Case comments
The health crisis has forced numerous businesses to cut back on personnel, provoking layoffs throughout the economy. This decision of the Administrative Labour Tribunal shows that the uncertainty associated with the Covid-19 pandemic, a phenomenon that has impacted businesses everywhere, can justify resorting to employment termination where unavoidable.
Reference : Paradis v. 9123 – 1878 Québec Inc. 2021 QCTAT 2632
