Employment Contract Impossible to Perform: COVID-19 An Unforeseeable Event?
By: Michelle QuinnBusinesses all across Canada continue to be significantly impacted by the growing coronavirus pandemic. In the last few weeks we have witnessed, and continue to witness, unprecedented business and office closures, terminations and large-scale employee lay-offs that seem to be connected to the current COVID-19 global pandemic.
As a reminder, employees are entitled to a certain amount of notice (or pay in lieu of notice) when their employment is terminated without cause.
Under section 63 of the BC Employment Standards Act (the “ESA”), where an employer terminates an employee without just cause, the following amount of notice (or pay in lieu) must be provided:
- After three consecutive months of employment – one week’s pay;
- After 12 consecutive months of employment – two weeks’ pay;
- After three consecutive years of employment – three weeks’ pay, plus one week’s pay for each additional year of employment to a maximum of eight weeks
If an employer has terminated 50 or more employees at a single location within a short time-frame, then section 64 of the ESA, which governs group terminations, applies.
The group notice requirements are as follows:
| NUMBER OF EMPLOYEES | NOTICE REQUIRED |
| 50 to 100 employees | 8 weeks before effective date of first termination |
| 101 to 300 employees | 12 weeks before effective date of first termination |
| 301 or more employees | 16 weeks before effective date of first termination |
However, section 65 of the ESA outlines exceptions for when the requirements for employers to provide employees with individual notice of termination or pay in lieu of notice, or to provide notice of group termination, do not apply. Most notably, section 65(1)(d) provides that:
65 (1) Sections 63 and 64 do not apply to an employee
employed under an employment contract that is impossible to perform due to an unforeseeable event or circumstance other than receivership, action under section 427 of the Bank Act (Canada) or a proceeding under an insolvency Act,
If the closures are directly linked to COVID-19, and there is no way for the employee to perform work, such as working from home, the exception may apply to exclude employees from receiving compensation for length of service and group termination pay. In order to rely on this section, an employer must show two things:
- it was impossible to perform the contract; and
- impossibility of performance was due to an unforeseeable event or circumstances
The present situation involving COVID-19 is unprecedented and so it is difficult to determine at this time whether the “frustration” exception in section 65(1)(d) will apply to employees who are terminated. Therefore, each case will need to be closely assessed on its own set of facts.
If you have any questions or need specific advice about any of these statutory provisions, please contact a member of our Employment and Human Rights team. We are, as always, available by phone, email or video.
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The recent BC Supreme Court decision of Okano v. Cathay Pacific Airways Limited, 2022 BCSC 881, is a reminder to terminated employees that they must take reasonable steps to find new employment. In this decision, the judge found that the terminated employee, Frances Okano, who had been with her employer for almost thirty-five years, did not take reasonable steps to secure a new job, and held that a reduction in the period of notice of three months was warranted for failing to mitigate.
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Employers Beware – if you are contemplating retracting an offer of employment from a potential candidate you might want to think again in light of the recent B.C. court decision of Buchanan v. Introjunction Ltd., 2017 BCSC 1002. In this case, the B.C. Supreme Court found that the plaintiff employee was wrongfully dismissed when his employment was terminated shortly after his contract of employment with the defendant employer was executed but before he actually started work. The Court awarded him 6 weeks’ severance pay.
