Superior force and COVID-19: Employers are not relieved of their obligation to provide a reasonable notice of termination despite the loss of millions of dollars
The COVID-19 pandemic has been, and continues to be, the source of many uncertainties for employers. Among other things, the characterization of the COVID-19 pandemic as an element of superior force in the context of a contractual relationship has been the subject of many queries in recent years. Just recently, the Quebec Superior Court decision, Nadeau v. Groupe Desgagnés inc. 2022 QCCS 2516, addressed the issue and concluded that the loss of several million dollars due to the pandemic is not a an event of superior force that relieves the employer of its obligation to give a reasonable notice of termination following a dismissal.
In this decision, the employee was hired as an information technology manager in 2003. In September 2020, citing the significant financial impact of the pandemic, the employer terminated his employment at the age of 56 and with 17 years of seniority. The employer offered him two weeks' notice and severance pay equal to 34 days of work.
The employee claimed a 21-month notice of termination, given his age and his high level of expertise in computer and communications technology in the maritime field. The employer argued that the employee's dismissal was due to superior force in connection with the pandemic and that it owed him nothing.
The Court therefore had to consider whether the pandemic was an event of superior force within the meaning of the Civil Code of Québec, allowing the employer to avoid its obligation to provide a reasonable notice of termination following the employee's dismissal. If not, the Court then had to determine what the appropriate notice period was.
2. The Court's analysis
The Court considered that the multi-million dollar drop in the employer's income in the months following the COVID-19 pandemic could not be considered an event of superior force relieving it of its obligation to give the employee a reasonable notice of termination. Indeed, despite the unforeseeable nature of the situation, it did not make the employer's performance of the obligation impossible, only more difficult. The company never interrupted its activities, the decision to terminate the employee was made in order to reduce the employer's expenses and the tasks performed by the employee were assigned to others within the company.
Interestingly, the Court noted that it would have been different if the employer had demonstrated that, due to the pandemic, it was forced to terminate the employee in September 2020. It is therefore possible to infer that such evidence would have relieved the employer of its obligation to give the employee a reasonable notice of termination.
Since the situation in this case did not meet the criteria of superior force, the Court proceeded to analyze the various factors to be taken into account in determining a notice of termination. It concluded that a notice period appropriate to the circumstances of the case was 12 months.
Finally, the judge considered the employee's obligation to mitigate damages. The employee did not take any steps to find a new job for a period of three months following his dismissal. The judge considered that, based on the objective prism of the conduct of a reasonable person, the employee had acted reasonably in order to reduce his damages. After 17 years of service, an adequate period of time must be allowed to absorb the shock of the loss of employment and to think about career orientation, particularly because of the pandemic, the scarcity of similar employment in Quebec and the fact that he is 56 years old. The employee's conduct was therefore not a breach of his obligation to minimize his damages and there was no reason to reduce the notice period.
3. Impacts on employers
Although in this case the Superior Court ruled that the COVID-19 pandemic is not considered an event of superior force within the meaning of the Civil Code of Québec, it leaves open the possibility that the conclusion would be different if COVID-19 had made the dismissal of an employee inevitable. To qualify as superior force, the effect of the pandemic on the employer must be such that payment of a notice of termination becomes impossible.
Furthermore, it is interesting to note that the fact that an employee waited three months before taking steps to find a new job after his or her dismissal does not necessarily constitute a breach of the obligation to mitigate his or her damages according to the circumstances of the case, namely the context of the pandemic.
If you have any questions on this subject, please do not hesitate to contact a lawyer in our national labour and employment law group.