December is high season for layoffs, even though employers would be wise to wait

By Howard Levitt and Maria Belykh

The timing of a holiday termination may attract additional liability

For most employees, the holidays are a time to exchange Secret Santa presents, book vacations to tropical destinations and celebrate the past year’s successes at festive corporate functions. A happy time. Most of us look forward to it all year, and it serves as a yardstick in our lives.

For employers, on the other hand, it can be a much more stressful period. For them, the holidays serve as a reminder of the business that still must be wrapped up. In December, companies are occupied with reconciling year-end accounting, running through financial statements, tax planning, verifying vendors and suppliers, checking inventory and budgeting for the next year. While conducting these audits and financial inventories, some employers come to the difficult realization that they need to reduce headcount.

We strongly advise against layoffs during the holiday season. (Ironically, although we have no Canadians statistics, the U.S. bureau of labour statistics advises that December is the month with the second-most terminations. While January is first, that could simply be from laying off seasonal employees.) Not only are layoffs at this time of year insensitive, even callous, but firing someone during the holiday season creates a host of practical concerns.

Not the least of those is that breaking the news during the “most wonderful time of the year” increases the likelihood that an employee will seek the advice of counsel and therefore eventually end up with a higher severance payment.

Secondly, from a legal point of view, the timing of a holiday termination may attract additional liability. December is a challenging time to search for work. Companies are too busy wrapping up their year-end affairs to dedicate time and resources to hiring. With a greater-than-usual amount of their workforce on vacation, most companies slow down or even close for up to several weeks. Interviewees then face an uphill battle getting their foot in the door of an organization before the new year.

With more difficulty securing interviews when they are needed most and depleted finances precluding spending money when it is most desired, employees feel more than the usual humiliation and self-doubt. Having to explain one’s predicament to Aunt Becky during Christmas dinner only exacerbates the upset.

For those reasons alone, in our experience, workers terminated during the holiday season are more likely to seek counsel. January is historically one of the busiest months in our practice for this reason.

Courts do not view holiday terminations favourably. Some have gone out of their way to award employees more as a result of these year-end dismissals.

The Ontario Superior Court of Justice awarded a woman named Wendy Horner additional damages in large part for the timing of her termination from Superior Coatings. According to the court’s ruling, Horner raised a harassment complaint about a co-worker to management. In response, on Dec. 22, the owner of the company told Horner that she should take the next day off, and the company would “figure this out in the new year.” Shortly thereafter, and three days before the New Year, Horner received a termination letter stuffed in the back door of her home, the ruling said.

In addition to wrongful dismissal damages, she was awarded $20,000 for the “cold and brusque” way in which the employer ended the relationship.

In another decision involving the termination of Joe Durante by Zesta Engineering Ltd., the Ontario Superior Court of Justice found that the employer breached its duty of good faith by engaging in reprehensible misconduct, including dismissing the employee over the phone on his first day of vacation, only five days before Christmas.

We are not suggesting that there are no circumstances under which an employee should be fired during the holiday season.

We see far too many situations where an employer had hoped to bring unity and solidarity to their team by hosting a Christmas party, which ended in an employee drinking far too much and crossing a line that could not be uncrossed.

Where employees breach company policies or engage in sexual harassment at a holiday party, usually after a few sips or more of alcohol, employers may have grounds to terminate for cause and should do so. That holds true for any misconduct for which the vacation period provides no respite.