As the year draws to a close, many business leaders are reviewing budgets, performance, and staffing needs for the year ahead. That process may identify roles to eliminate, departments to restructure, or other workforce changes. Unless a change is urgent, however, November and December are rarely the right time to carry it out. In many cases, delaying a termination until January may be a better business decision. Terminating an employee during the holiday season can expose an employer to added legal, financial, and reputational risk, and courts can consider the timing and manner of a dismissal when assessing an employer’s conduct, particularly where the termination is handled unfairly or insensitively. 

Timing Considerations for Year-End Workforce Changes 

Year-end is a natural time to evaluate staffing, but timing should be part of the decision rather than an afterthought. A holiday-period termination can increase an employer’s exposure to liability. Financial pressures, personal circumstances, and potentially reduced hiring activity in some industries can make a dismissal particularly difficult for an employee, and if the employer’s conduct is later challenged, those circumstances may form part of the broader assessment. 

Before proceeding, employers should consider whether the change is truly urgent. Where a restructuring is part of longer-term planning rather than an immediate operational need, implementation may reasonably wait until January. If action is necessary now, the business should assess the employee’s entitlements and the full cost of the termination. 

How Holiday Terminations Can Be Costly 

Terminating an employee during the holidays can expose an employer to additional damages in the event of a wrongful dismissal. While courts assess each case on its own facts, the timing of a termination can make an already difficult situation appear unnecessarily harsh and may influence how the employer’s conduct is viewed. Employers have a duty to act in good faith and deal fairly with employees throughout the termination process. Additional damages may arise where an employer acts dishonestly, unfairly, or with undue insensitivity and the legal requirements for those damages are met. 

In Horner v. 897469 Ontario Inc., 2018 ONSC 121, an employee who was struggling with depression complained of workplace harassment shortly before Christmas. Her employer told her to “take time off” and that they would “figure this out in the new year”. Instead of doing so, the employer proceeded to terminate the employee with allegations of cause and delivered a termination letter during the Christmas holidays by leaving a letter at the back door.  

The court found that the employer’s conduct in this case was malicious, oppressive, and high-handed, meriting an award for punitive damages and aggravated damages in addition to the damages for wrongful dismissal. 

While the holiday timing was not the sole basis for the awards, it heightened the impact of an already insensitive approach. The court specifically noted that the termination occurred during the “Christmas holidays” and that timing compounded the insensitivity of the employer’s conduct. 

In Zesta Engineering Ltd. v. Cloutier, 2010 ONSC 5810, an employee was dismissed by telephone on the first day of his vacation, five days before Christmas. The termination occurred within a broader pattern of bad-faith conduct that included threats, failure to provide termination compensation, discontinued benefits, and an extended challenge to his Employment Insurance claim. 

The court awarded $75,000 in moral damages in addition to more than $200,000 for wrongful dismissal damages and specifically referred to the pre-Christmas timing when assessing the employer’s conduct. The lesson for employers is that holiday timing can aggravate an already poorly handled dismissal.  

In Black v. Robinson Group Ltd., affirmed by the Ontario Court of Appeal in 2004, a 61-year-old employee with approximately 12 years of service was dismissed shortly before the holiday season. The court awarded Black 12 months’ pay in lieu of reasonable notice, but also an additional two months for the employer’s “unconscionable decision made shortly before the holiday season.” 

Taken together, these decisions show that courts generally view a termination immediately before Christmas as a relevant contextual factor rather than an independent cause of action. Where the timing demonstrates a lack of good faith, insensitivity, or worsens the employee’s vulnerability, holiday timing may support: 

• aggravated damages;
• moral damages;
• punitive damages; or 
• an increased notice period. 

In each of the cases above, the holiday timing made an already poorly handled dismissal look worse. For that reason alone, employers should carefully consider whether a termination truly needs to occur before the holidays. If it can reasonably wait until January, postponement may eliminate an unnecessary risk factor.  

Postponing a Planned Restructuring Until January 

Employers considering a year-end restructuring should ask a simple question: does this need to happen before the holidays? If the business is facing immediate financial or operational pressure, postponement may not be practical. However, where changes are discretionary or part of next year’s planning, leaders may want to complete the legal and operational planning now and consider implementing the change at a more appropriate time. 

Preparation matters as much as timing. A carefully planned termination will not eliminate every risk, but it can help prevent avoidable disputes and additional exposure. 

For more practical guidance, see REL’s Simplifying Terminations: Best Practices and Key Takeaways and How Not to Terminate an Employee. 

Rodney Employment Law helps employers navigate restructuring, workforce reductions, and employee terminations across Canada. If you are considering year-end workforce changes, contact our employment law team to understand your obligations and determine the most appropriate way to move forward. 

Speak With an Employment Lawyer 

This article is general information, not legal advice. The Ontario employment standards discussion applies to provincially regulated workplaces. Obtain advice tailored to your circumstances.