Thoughts from a Management Lawyer

Reprisals Under the Employment Standards Act, 2000

This is the second in a (broken) series of posts about reprisals.  This time, reprisals under section 74 of the Employment Standards Act, 2000 which reads as follows:

No employer or person acting on behalf of an employer shall intimidate, dismiss or otherwise penalize an employee or threaten to do so, 

(a)  because the employee,

(i) asks the employer to comply with this Act and the regulations,

(ii) makes inquiries about his or her rights under this Act,

(iii) files a complaint with the Ministry under this Act,

(iv) exercises or attempts to exercise a right under this Act,

(v) gives information to an employment standards officer,

(vi) testifies or is required to testify or otherwise participates or is going to participate in a proceeding under this Act,

(vii) participates in proceedings respecting a by-law or proposed by-law under section 4 of the Retail Business Holidays Act,

(viii) is or will become eligible to take a leave, intends to take a leave or takes a leave under Part XIV; or

(b) because the employer is or may be required, because of a court order or garnishment, to pay to a third party an amount owing by the employer to the employee.

The onus rests on the employer to demonstrate that it did not contravene the Act. 

The purpose of these provisions is to ensure that employees can pursue their statutory rights without fear of adverse employment consequences.

The Ontario Labour Relations Board (the “Board) recently considered the reprisal provisions in Mucollari v 1196811 Ontario Limited (Il Gabbiano Ristorante), 2013 CanLII 21009 (ON LRB). 

A long-term employee claimed that his employer had terminated his employment as a reprisal for having exercised certain rights, including filing a complaint, under the ESA.  The employer denied that there was a reprisal. 

The Employment Standards Officer (the “Officer”) held that a termination had taken place and awarded termination pay to the employee under the Act calculated on the basis of the complainant’s earnings in the 12-week period immediately preceding the termination, but declined to find a reprisal in the circumstances.

The background to the case is not complicated.

On April 8, 2011, there was a heated argument between the owner of the restaurant and the applicant in which the owner acknowledged using inappropriate language.  On April 9, 2011 the owner informed the applicant that his hours were being reduced by 50% for one week as discipline for not following his direction.

The complainant informed the owner on April 13, 2011 that he had filed a human rights complaint and a complaint under the Act with the Ministry of Labour in respect of payment of overtime. 

The complainant testified that:

…. the following week, until the termination of his employment his schedule was reduced from working three evening shifts to working two shorter dinner shifts.  [the applicant] provided copies of the restaurant’s schedule which corroborated his testimony. [the applicant] testified that he supplemented his hours by picking up additional shifts from other members of the staff.

The company paid the overtime claim in July 2011 and appears to have had some discussion with the Officer about terminating the complainant’s employment and the timing of a termination.  Following the resolution of the overtime claim, the complainant kept threatening “that he would make further claims against the restaurant”.

The incident that ultimately gave rise to the case was summarized by the Board as follows:

[The appliant] planned to take vacation time during the first week of August 2011.  [The appliant] testified that he followed the restaurant’s usual practice of requesting vacation by leaving a note on the schedule for the manager ....  Following his vacation when [the appliant] called the restaurant to inquire what his schedule was for the following week, he was told that [the owner] had erased [the appliant's] name from the schedule.  [The appliant] was provided with an undated letter which stated “Your services at Il Gabbiano are no longer need (sic) with us.”.

The employer took the position that the complainant was terminated for having taken vacation after the request had been denied.

Following the termination, the complainant testified that he found other employment between August 2011 and December 2011 and then collected employment insurance until August 2012. 

The complainant appealed the Officer’s decision to the Board.  There were two (2) issues before the Board:

1. Had the employer engaged in a reprisal contrary to section 74 of the Act; and
2. Should the award of termination pay be increased since it was based on the fact that the complainant’s hours had been decreased in the 12 weeks prior to the termination.

 Reprisal

As noted above, the Act specifically places the onus on the employer of establishing that the conduct complained of was not a reprisal.

The employer’s position was that the 50% reduction in shifts following the April 2011 altercation was a disciplinary response and that the ongoing reduction in shifts and the termination of the complainant’s employment was due to a decline in business.

However, the Board was concerned as the employer had also testified that the complainant’s employment was terminated because he went on vacation without permission and, further, that he had discussed with the Officer the possibility and timing of a termination. 

The complainant noted that he had followed the usual procedure regarding the taking of vacation and that he never spoke with the owner and, of course, the employer never denied his request to go on vacation. 

In addition, the timing of the decision (possibly more than anything else) was of concern to the Board:

[The appliant's] employment was terminated approximately two weeks after the employer settled [The appliant's] initial MOL claim for overtime pay.  [The owner] testified that the [Officer] had told him that [The appliant's] employment could not be terminated until the MOL had concluded its investigation.

 In assessing whether the conduct amounted to a reprisal, the Board confirmed that if any part of a decision “was made as a result of the employee engaging in a protected activity, then the decision is tainted and a violation of the Act will be found”.  

While the Board did not discuss this, the Ministry of Labour Policy and Interpretation Manual has adopted a four-part test for determining if a reprisal has taken place:

Step 1. Is the person alleged to have committed a reprisal the employee's employer or a person acting on behalf of the employee's employer?

Step 2. Did the employer or person acting on behalf of the employer intimidate, dismiss or otherwise penalize or threaten to intimidate, dismiss or otherwise penalize the employee?

Step 3. Did the employee engage in any of the protected activities set out in clause 74(1)(a) or was the employer required by a court order or garnishment to pay an amount owing to the employee over to a third party as described in clause 74(1)(b)?

Step 4. Did the employer or person acting on behalf of the employer intimidate, dismiss or otherwise penalize or threaten to intimidate, dismiss or otherwise penalize the employee because he or she engaged in the protected activities described in clause 74(1)(a) or because of a situation described in clause 74(1)(b)?

The Board found that the employer had engaged in a reprisal and awarded damages for the period between the complainant’s termination and the date on which he secured other employment.  However, since the applicant found work immediately after his termination, he suffered no loss and no damages were awarded. 

The Board awarded the complainant $3,248.50 representing compensation for “loss of opportunity of continued employment”. 

The Board declined to award any damages for out-of-pocket expenses and emotional pain and suffering because of a lack of evidence. 

Termination Pay

The Officer awarded termination pay calculated based on the complainant’s earnings in the 12 weeks prior to the date of termination.  The earnings had been reduced by reason of the cut in hours. 

The Board held that “ Mr. Mucollari’s termination pay should be based on his schedule prior to the reduction in his hours.  The employer should not be allowed to benefit from his reprisal by illegally reducing Mr. Mucollari’s hours and then having termination pay calculated on those hours.”

The applicant should have received $2,702.76 representing termination pay and vacation pay thereon.  From this was deducted what he had already been paid and the Board found that he was entitled to a further $1,320.47.

Conclusion

Timing can really swing the decision-making pendulum in one direction or another.  The Board, in the recent case of Frances Eleanor Elie v. Rainone Construction (2007) Limited and Director of Employment Standards, (2013) CanLII 14073 (ON LRB) put it this way:

A termination that follows shortly after an employee’s engagement in a protected activity under the Act raises suspicions. 

No question that timing and optics are critically important here as elsewhere in employment law.  That being said, timing is not determinative and the suspicion can be rebutted through clear evidence that the decision to, for example, terminate, had nothing to do with the section 74 elements. 

In any termination or discipline case the employer should be able to answer the following questions:

1. Why are we terminating?
2. Why this employee?
3. Why now?

Objectively, dispassionately and honestly answering these questions before implementing the decision, can help avoid some heartache if challenged.  

Employers are always advised to proceed with care and thought when dealing with any employment situation, but especially where there are factual complexities present.  While the damages awarded in Mucollari might seem small, that was because the applicant found work almost immediately after being terminated. There is broad remedial authority under the reprisal provisions that can be significant.  

 

 

 

 

 

 

 

 

 

Wilful misconduct, disobedience or wilful neglect of duty under the ESA

The Employment Standards Act, 2000 provides that an employee who is terminated for wilful misconduct, disobedience or wilful neglect of duty is not entitled to be paid statutory termination pay and, if applicable, severance pay.

The Ontario Labour Relations Board in Hallmark Housekeeping Services Inc. 2013 CanLII 14638 (ON LRB) decided on March 18, 2013 considers what an employer must establish to prove that the employee engaged in conduct that met the statutory test.

In this case an Employment Standards Officer issued an Order to Pay in the amount of $1,166.88 against the employer.  The employer applied to review this decision.  The employer attended at the hearing and the former employer did not and the hearing proceeded in his absence.

The Board reviewed a number of disciplinary notices issued to the employee for a number of performance related issues arising, in part, out of customer complaints.  Ultimately, in the course of a meeting to confront the employee about a variety of inconsistencies in the tracking and reporting documents, the employee “became hostile, confrontational and told King and Melo that they were violating several labour laws.”  His employment was terminated on March 19, 2010.  

The employer argued that the employee had been terminated for wilful misconduct, disobedience or wilful neglect and therefore was not entitled to receive termination pay under the ESA.  According to the Board:

To deny an employee termination pay the employer must establish on the balance of probabilities that the employee engaged in behaviour that constitutes wilful misconduct, disobedience or wilful neglect of duty that was not trivial and not condoned by the employer.

In VME Equipment of Canada Ltd. (Re), [1992] O.E.S.A.D. No. 230, the Referee stated:

[…] There are two general categories of serious misconduct.  There will be single acts: insubordination, theft and dishonesty, and physical violence against other employees, for instance, which may, standing on their own, meet that standard of seriousness.  As well, there will be less serious repetitive forms of misconduct, which if handled properly by the employer, will also meet this standard of seriousness.  The employer, in this scenario, must have explained to the employee after each occurrence that the conduct in question was not acceptable and that if continued would result in termination and there must be, subsequent to these warnings, a culminating incident.

In addition to proving that the misconduct is serious, the employer must demonstrate, and this is the aspect of the standard which distinguishes it from 'just cause', that the conduct complained of is 'wilful'. Careless, thoughtless, heedless, or inadvertent conduct, no matter how serious, does not meet the standard. Rather, the employer must show that the misconduct was intentional or deliberate.  The employer must show that the employee purposefully engaged in conduct that he or she knew to be serious misconduct.  It is, to put it colloquially, being bad on purpose.

The Board found that, given the un-contradicted evidence occasioned by the employees’ failure to attend at the hearing, it had to accept the employer’s evidence.  Based on that evidence, the Board concluded that the employee “engaged in a pattern of wilful misconduct despite the clear warnings to cease such behaviour.”  The Board revoked the order to pay.

This case provides a recent, albeit brief, review of the wilful misconduct exception under the ESA.  You might also be interested in Just Cause... Yes ... But ... , Oosterbosch v. FAG Aerospace Inc., 2011 ONSC 1538 (CanLII) and the more extensive discussion in Wal-Mart Canada Corp. v. Gray, 2002 CanLII 31452 (ON LRB).

Ontario Government Introduces Family Care Leave Bill

The Ontario Government introduced a Bill on March 5, 2013 that, if passed, would amend the Employment Standards Act, 2000 to “provide unpaid job-protected leave for employees while they care for sick or injured loved ones or cope with the illness or loss of a child". 

Bill 21, Employment Standards Amendment Act (Leaves to Help Families), 2013 would build upon the current leaves in the ESA and would introduce three (3) unpaid leaves.

The Minister of Labour noted in response to a question in the Legislature that:

Our government recognizes the challenges that hard-working Ontarians face when they must provide care for a loved one while also working full-time, and we believe that the last thing Ontarians should worry about when the health of their loved one hangs in the balance is the stress of work or the fear of losing their job. That’s why our government already provides Ontarians with a personal emergency leave for up to 10 days or a family medical leave for up to eight weeks to care for a family member at risk of death.

But we know that there is a gap for those hard-working Ontarians who are increasingly caring for their elderly family members with a chronic acute medical condition, not to mention other family members facing serious illnesses that do not necessarily pose a risk of death.

I will be tabling this afternoon family caregiver legislation and I am proud that our government is following through on this commitment to Ontario’s families.

Family Caregiver Leave ("FCL")

This portion of Bill 21 is similar toBill 30, the Family Caregiver Leave Act (Employment Standards Amendment), 2012 that was refered to a Standing Committee on September 6, 2012 but died on the order paper when the Ontario Liberals proroged of the Legislature. 

Where triggered, a FCL would provide the employee (caregiver) with up to 8 weeks of unpaid, job-protected leave to provide care and support to a family member with a serious medical condition.

The Bill provides as follows:

An employee is entitled to a leave of absence without pay to provide care or support to an individual described in subsection (4) if a qualified health practitioner issues a certificate stating that the individual has a serious medical condition.

It is not clear what would constitute a "serious medical condition" under this provision.  The Family Leave provisions in current ESA qualify "serious medical condition" by going on to state that there must be "a significant risk of death occurring within a period of 26 weeks or such shorter period as may be prescribed". 

The "individuals" to whom the FCL request must relate are:

1. The employee’s spouse.
2. A parent, step-parent or foster parent of the employee or the employee’s spouse.
3. A child, step-child or foster child of the employee or the employee’s spouse.
4. A grandparent, step-grandparent, grandchild or step-grandchild of the employee or the employee’s spouse.
5. The spouse of a child of the employee.
6. The employee’s brother or sister.
7. A relative of the employee who is dependent on the employee for care or assistance.
8. Any individual prescribed as a family member for the purpose of this section.

To be eligible for the FCL the caregiver must submit a note from a "qualified health practitioner" (defined in the Bill, but also defined in the ESA under the Family Medical Leave provisions (section 49.1 to be specific).   

The FCL is up to 8 weeks in each calendar year which are to be taken in entire weeks.  The FCL is in adition to the current Family Medical Leave entitlements.  

Critically Ill Child Care Leave

The Federal government recently introduced amendments to the Employment Insurance Act and the Canada Labour Code to provide benefits to and "protect the jobs of parents who take a leave of absence to care for a critically ill child" .  

If passed, the new Critically Ill Child Care Leave and Crime-Related Child Death and Disappearance Leave would complement the newly extended federal income supports by providing eligible employees are provided with up to 37 weeks of job-protected leave to care for a critically ill child. 

The Bill provides that:

An employee who has been employed by his or her employer for at least six consecutive months is entitled to a leave of absence without pay to provide care or support to a critically ill child of the employee if a qualified health practitioner issues a certificate that,

 (a) states that the child is a critically ill child who requires the care or support of one or more parents; and

  (b)  sets out the period during which the child requires the care or support. 

Crime-Related Child Death and Disappearance Leave

This leave provides, in the case of the death of a child: 

An employee who has been employed by his or her employer for at least six consecutive months is entitled to a leave of absence without pay of up to 104 weeks if a child of the employee dies and it is probable, considering the circumstances, that the child died as a result of a crime. 

 The leave concerning the disapearance of the child provides:

An employee who has been employed by his or her employer for at least six consecutive months is entitled to a leave of absence without pay of up to 52 weeks if a child of the employee disappears and it is probable, considering the circumstances, that the child disappeared as a result of a crime.

The employee is not entitled to the leave if "the employee is charged with the crime or if it is probable, considering the circumstances, that the child was a party to the crime."

The leave is to be taken in a single period.

An employer may require an employee who takes a leave under this section to provide evidence reasonable in the circumstances of the employee’s entitlement to the leave.

Bill  21 is at First Reading but it is something the government is committed to.  Certainly more to come on this. 

 

Intersection of Deemed Termination Clause and ESA Emergency Leave

There are only a handful of cases that deal with the intersection between a ‘deemed termination’ clause and the emergency leave provisions found in Section 50 of the Employment Standards Act, 2000 (the “ESA”).   The most recent case is Revera Retirement LP, (2013) CanLII 9071 (ON LA).

The grievor was employed as a housekeeper.  She started working for the employer in 1989.  The employer regularly employs 50 or more employees.

On April 3, 2012, the crown on one of her teeth became dislodged and fell off. She was in significant pain, but completed her shift and called her dentist at the end of her shift to schedule an appointment.  Unfortunately the dentists office was closed for the day.  The following day, April 4, 2012, the grievor scheduled an emergency appointment with her dentist at 3 pm.  According to the arbitrator:

The Grievor was scheduled to work on April 4, 2012 from 8:00-4:00; however, she swiped out and left the premises at 2:17.  She did not ask permission from or inform any manager prior to leaving.  The Grievor did advise her colleague, Debbie Philips, that she was leaving to attend the dentist prior to departing the workplace.  Ms. Philips was employed as a Housekeeping Supervisor by the predecessor employer to Glynwood.  Ms. Philips has not had any supervisory responsibility over the Grievor in more than ten years.  Ms. Philips did not report the Grievor’s early departure to any member of the management team.

The dental appointment was necessary to deal with an emergency.  The Grievor was having chronic and worsening pain as a result of a loose crown.  The grievor failed to follow the proper procedures for reporting her absence from work.

A meeting was convened with the grievor on April 5, 2012 during which "the Grievor admitted to leaving her shift early and acknowledged that she did not inform a manager prior to doing so".  Following a pre-approved vacation, the grievor was placed on a leave of absence and then terminated by letter dated May 22, 2012.

The collective agreement contained a deemed termination provision:

An employee shall lose all seniority and shall be deemed to have quit the employ of the Employer and the employment of the employee shall be deemed to have been terminated without further notice for any of the following reasons:

(f) leaving the Employer’s premises during regular working hours (not including meal breaks) without the permission of the Employer;

Furthermore, the collective agreement provided that "The Employer will comply with the requirements of the Employment Standards Act with respect to maternity leave, parental leave and emergency leave."

The Decision

Absent the application of section 50 of the ESA the deemed termination clause would be strictly enforced.  The effect of this would be to oust the arbitrators jurisdiction to mitigate against the "harsh consequences" of the clause.

Relying on a few earlier cases, Arbitrator Hayes concluded that "delay in providing the requisite note does not, however, vitiate the Grievor’s entitlement to a leave of absence under the ESA."

In Ryding-Regency Meat Packers Ltd. (2006) 155 L.A.C. (4th) 382 (Crljenica), the arbitrator considered the interaction between a deemed termination clause and the emergency leave sections of the ESA.  The grievor failed to obtain company permission for his absence from work in circumstances where the emergency leave provisions would apply.  The arbitrator held that a deemed termination provision could not be strictly construed where an employee brought him or herself within the scope of the emergency leave provisions in the ESA.  Specifically:

Arbitrators have construed deemed termination clauses strictly [authorities omitted].  Thus to comply with article 10.5(d), the employer had to establish that the grievor was absent for two or more days (which has been made out), and that he was absent without company authorization.   In my view, it cannot meet this requirement as, on the facts of this case, s.50 creates an absolute right to an emergency leave, without the need to obtain authorization from one’s employer.  The need for the company’s authorization necessarily implies the right to deny authorization, which cannot occur under s.50.  Thus, in accordance with the reasoning in Parry Sound, if Mr. Kelesis met the requirements of s.50, the employer could not rely on article 10.5(d), as it is more onerous than s.50 by adding an additional requirement of obtaining the company’s authorization.

The Arbitrator in Revera found that "the Grievor’s situation here presents a particularly sympathetic fact pattern" especially where "no question has ever been raised about the legitimacy of her requirement for emergency medical leave".

The failure to provide notice of the absence could, depending on the circumstances, attract discipline, but that does not remove the employee's absolute right to emergency leave under the ESA where the employee is able to establish that his or her circumstances fit within the four corners of that section.  In other words, according to the Ministry of Labour's Policy and Interpretation Manual:

Any discipline for failing to provide notice in situations where such notice is required under section 50(3) (i.e., where section 50(4) does not apply) would have to be appropriately linked to the failure to give advance notice and must not, in effect penalize the employee for exercising the right to leave.  The motive for any discipline that the employer does impose must clearly be the employee’s failure to give advance notice and not the taking of the leave itself.

In other words, as was accepted in Revera and  Ryding-Regency a grievor "could be disciplined for failing to give notice, but he did not lose his entitlement to the emergency leave."

Conclusion

Deemed termination provisions are common in collective agreements.  That said, they will generally have to give way to the leave provisions of the ESA where these are found to apply.  Furthermore, the fact that the employee failed or delayed in providing timely notice of the leave, while opening the employee up to appropriate discipline, did not result in a loss of entitlement to the leave.

Employers would be well advised to fully investigate a matter before applying the arguably harsh consequences of a deemed termination clause.  Automatic termination is not automatic where the ESA applies and care and patience are called for when applying a deemed termination provision.

Employee or Independent Contractor under the Employment Standards Act, 2000

The Ontario Labour Relations Board considered whether a registered massage therapist was an employee, and covered by the Employment Standards Act, 2000 or and independent contractor and excluded.

Deciding whether someone is an employee or independent contractor is determined by examining the substance of the relationship, not its form.  In other words,  the Board is more "interested in the substance of the relationship than in the manner in which the parties structure their compensation arrangements".  According to the Board:

Ultimately, the question is whether in performing the work he was engaged to perform by the clinic, Mr. Li was performing it as a person engaged in business on his own account.   If so, he was an independent contractor.  If not, then he was an employee within the meaning of the Act.

 The Board accepted the approach set out in its earlier decision of 2006515 Ontario Inc. (c.o.b. Greco Health Shack), [2005] O.E.S.A.D. No. 34 (January 12, 2005) which referenced the leading Supreme Court of Canada case of 671122 Ontario Ltd. v. Sagaz Industries Canada Inc where it was held that “there is no conclusive test which can be universally applied to determine whether a person is an employee or an independent contractor”.

The Board found that Mr. Li was an employee of Active Therapy and was influenced by the fact that:

• Mr. Li was dependent on the clinic for client referrals which he saw at Active Therapy.  Therefore his opportunity for profit was determined in great part by Active Therapy.
• Mr. Li had no share of the clinic’s business or any discretion in the manner in which it was conducted.
• During Mr. Li’s tenure at the clinic there were no other Registered Massage Therapists working at the clinic and, as such, he was not free to work as he pleased.  Mr. Li was an integral part of Active Therapy’s business which is a strong indication that he was an employee.
• I am satisfied that the clinic exercised considerable control over Mr. Li’s schedule.  The clinic had oversight of Mr. Li’s appointments, including returning clients.
• The clinic provided Mr. Li with the equipment including a massage table, sheet and towels which were required to perform his job.

This is the most recent application of the Sagaz case under the ESA and an important case particularly in this sector.  

Length of Service - Sometimes Not an Easy Matter

In the absence of a legally enforceable contract dealing with entitlement on termination, it has been said that an employee employed for an indefinite term may only be terminated summarily for just cause or in the absence of just cause, upon reasonable advance notice or pay in lieu of such notice.

Determining the period of reasonable notice of termination at common law is an exercise that is said to be more “art than science”.  As previously noted, courts have rejected any formula-based approach to notice determination in favour of a more individualized approach first espoused by the Ontario High Court in Bardal v. Globe and Mail Ltd. where the Court noted:

“There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case,having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.”

Length of service is one of the key factors that is used in deciding on the notional period of reasonable notice in any given case.  In most cases, length of service is easily determined.

However, in cases where the employee works for some period, leaves the employ of the company for whatever reason (e.g. resigns or is terminated) and is subsequently rehired after some break in service the issue of length of service isn't so clear.  How do we deal with the “break in service” in determining length of service for purposes of calculating the period of reasonable notice where the employee is subsequently terminated?

The issue was recently considered in Dobbs v. The Cambie Malone’s Corporation 2011 BCSC 1830 (CanLII).  In this case, the central issue was whether Mr. Dobbs “should be regarded as an employee with 11 years of continuous service or an employee with 30 months of service at the time of his termination”.  Although this was the “central issue” the Court noted that “ the length of continuous service may have less bearing on the notice period than the parties assume.”

The Court observed:

“On the undisputed facts, Mr. Dobbs has either 11 years of continuous service, or 11 years of service onsisting of an initial 8.5 years, a hiatus of 11 months and a subsequent 30 months of service prior to his termination. In my view, the issue is whether the notice period ought to be affected by the 11-month break in service given all of the factors present in this case.”  How is the “break in service” to be treated?

The Court summarized the law in Beach v. Ikon Office Solutions, Inc., [1999] B.C.J. No. 1574 (S.C.), where the Court said at para. 13:

Where there is no express term in the re-employment contract dealing with the issue, the question is whether the employer has effectively recognized continuity of service.

Following a review of a number of case, Madam Justice Wedge in Dobbs put the law this way:

All of these decisions stand for the proposition that in the absence of an express contract term dealing with a hiatus in an employee's term of employment, the question is whether the employer and employee conducted themselves at the point of rehire in a manner consistent with the employee being given credit for the entire employment period. It is a question of fact to be determined on all of the evidence.

In this case, the Court determined that in the discussions leading to Dobbs' return "the parties assumed that Mr. Dobbs would be treated as an employee with many years of service with the company and not as a newly hired employee".  Accordingly, the Court held him to be an 11 year employee not a 30 month employee.

It is important for employers to turn their mind to breaks in service when re-hiring a former employee and decide how prior service will be treated .   A carefully drafted employment contract can specifically spell out the intentions about how prior service will be handled.   Although there may be some ability to deal in the contract with the impact of prior service on common law reasonable notice, for example, it is critically important to understand the rules regarding breaks in service and prior service under the Employment Standards Act, 2000 and that any attempt to contract out of these requirements will be void and unenforceable.

 

Layoffs Longer than 35 Weeks and Constructive Dismissal

The Ontario Court of Appeal recently released a decision that touches on the interaction between the Employment Standards Act, 2000 and constructive dismissal in the context of an indefinite layoff. 

The case is Elsegood v. Cambridge Spring Service. 

Section 56(1) of the ESA provides as follows:

56(1) An employer terminates the employment of an employee for purposes of section 54 if,

(a) the employer dismisses the employee or otherwise refuses or is unable to continue employing him or her;

(b) the employer constructively dismisses the employee and the employee resigns from his or her employment in response to that within a reasonable period; or

(c) the employer lays the employee off for a period longer than the period of a temporary lay-off.

 The Ontario ESA also provides that an employer terminates the employment of an employee “for purposes of section 54” if the employer lays the employee off for 35 weeks in a period of 52 consecutive weeks. 

The Ministry of Labour in one of its online Guides puts it succinctly:

If an employee is laid off for a period longer than a temporary layoff as set out above, the employer is considered to have terminated the employee's employment. Generally, the employee will then be entitled to termination pay.

The Ministry’s only jurisdiction is with respect to the enforcement of the ESA only.   

In the Elsegood case, the employee was on layoff and considered himself subject to recall.  However, when his layoff extended beyond the 35 week mark the employee commenced an action in Small Claims Court seeking damages for common law reasonable notice (rather than claiming termination pay under the ESA, as was his option). 

The employee won at trial and was awarded a period of reasonable notice of 6 months.  The employer appealed to the Divisional Court and lost.  It further appealed to the Court of Appeal.

The Court of Appeal put the issue as follows:

The employer’s appeal is based on a simple premise: the ESA and the common law are independent regimes; an employee’s “actual” employment status is defined by the common law, and the ESA operates only to entitle the employee to the remedies under the ESA. On this premise, common law damages for wrongful dismissal are only available for what would constitute a dismissal at common law and are not available for a “deemed termination” under the ESA. 

It’s a really interesting issue (to me at least) as the Court has, of late, considered in a few cases how the ESA interacts with the common law. 

The unanimous Court of Appeal concluded that section 56(1) of the ESA operates to terminate an employee’s employment in law, so that the employee may claim for common law wrongful dismissal damages.  

In other words, a “termination” by operation of the statute constitutes a termination for common law purposes and any purported argument to the contrary would constitute a contracting out from the minimum ESA requirements and would be void under section 5 of the ESA. 

The Court then went on to discuss layoffs “at common law” and held, consistent with other cases, “at common law, an employer has no right to layoff an employee.   Absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment, and would be a constructive dismissal.”

Any agreement that a layoff longer than 35 weeks in an employment contract (express or implied) would be void, according to the Court.

The interaction between the ESA and common law always seems to come back to the “you can’t contract out of the minimum standards under the ESA” analysis discussed in the leading case of Machtinger v. HOJ Industries Ltd. 

Non-unionized employers who conduct layoffs should take note of this decision. 

An interesting issue not discussed is where the employer recalls the employee to work after the 35 weeks and a possible failure to mitigate argument (based on Evans and Russo).  Maybe that will be the next chapter in the discussion.

 

Court Refuses to Certify a Class in Constructive Dismissal Case

Corporate change is a fact of business life, particularly in times of economic uncertainty.  But, implementing changes can have employment implications, notably claims of constructive dismissal (at common law or statute).  

Where the changes are sweeping across the organization or impact large groups, there is the risk of class proceedings.  Such was the case in Kafka v. Allstate Insurance Company of Canada decided earlier this week which involved a motion for  certification of a proposed class action pursuant to s. 5 of the Class Proceedings Act, 1992. 

The Court summarized the context of the motion as follows:

On July 24, 2007, Allstate issued a general announcement letter to all active Agents, advising that effective September 1, 2009 a revised product distribution model and agent compensation system would be implemented (the “New Model”).  The New Model was phased in from September 1, 2007 through 2009. 

The plaintiffs allege that the New Model unilaterally changed fundamental terms of their employment contracts and that these changes constitute constructive dismissal. They resigned from Allstate and commenced this proposed class action seeking termination and/or severance pay pursuant to the Employment Standards Act, 2002 ( the “ESA”).

At the heart of this certification motion is a debate about whether an action alleging constructive dismissal is suitable for certification. The plaintiffs argue that the question of whether Allstate constructively dismissed the Agents can be determined by looking at the “big picture”. Specifically, did the systemic changes that the New Model introduced result in a constructive dismissal of all Agents? It is Allstate’s position that the law of constructive dismissal requires an individualized inquiry and in this case the impact of the New Model on each agent depends upon a myriad of factors.

Section 5(1) of the CPA sets out the criteria for the certification of a class proceeding. The language is mandatory. The court is required to certify the action as a class proceeding where the following five-part test for certification is met:

(a) the pleadings or the notice of application discloses a cause of action;
(b) there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant;
(c) the claims or defences of the class members raise common issues;
(d) a class proceeding would be the preferable procedure for the resolution of the common issues; and
(e) there is a representative plaintiff or defendant who,
(i) would fairly and adequately represent the interests of the class,
(ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and
(iii) does not have, on the common issues for the class, an interest in conflict with the interests of other class members.

Winkler J. (now Chief Justice) held that that "the core of a class proceeding is 'the element of commonality' and, according to the Court in Kafka, "There must be commonality in the actual wrong that is alleged against the defendant and some evidence to support this".

After reviewing the law with respect to constructive dismissal under the ESA (and at common law), setting out the various issues (ten of them), and recognizing that "the common issues criterion is not a high legal hurdle" the Court held that this was not a proper case for certification.  

Again, changes to terms and conditions of employment can give rise to a variety of claims.  This case goes a long way in reviewing whether these types of claims are "right" for class certification and the appropriate analysis to be undertaken in deciding whether to certify a class.

 

Just Cause... Yes ... But ...

While just cause is tough to prove (as you'd expect it to be given that it has been described as the "capital punishment" of employment law), it's by no means impossible to prove, despite what some might suggest.  

A case in point is the recent Oosterbosch v. FAG Aerospace Inc. where the employer terminated a 53 year old, machine operator with 19 years service based on progressive discipline.  The employee had a number of discipline notices on his record.  The culminating incident occurred on March 28, 2009 which was described as "unsatisfactory work performance and falsification of records".  According to the Court:

It was determined that this incident warranted discipline but no warning was issued because the plaintiff had already accumulated the requisite four warnings to justify termination pursuant to the progressive discipline policy.

The Court summarized the legal principles as follows:

The onus is on the defendant to establish just cause for the termination of the plaintiff’s employment. The standard that the defendant has set is articulated in its progressive discipline policy.  Although the plaintiff’s dismissal following receipt of four written warnings within a year complies with that policy it does not necessarily follow that there was justification for his termination in law.  Just cause at common law requires proof of misconduct that constitutes a repudiation of the employment relationship

The reason I mention this is that many employers believe that their progressive discipline or performance management policies are determinative of a just cause finding.  They aren't.  The determination of whether there is just cause requires a contextual analysis (following McKinley v. BC Tel).  

Now, here's the rub of the case.  

While the Court determined that the employee was terminated for just cause and was not entitled to reasonable notice of termination at common law, the Court nonetheless went on to briefly consider whether the employees' conduct amounted to “wilful misconduct, disobedience or wilful neglect of duty” such that he would be dissentitled to receipt of termination and severance payments under the provisions of the Employment Standards Act, 2000.   

The judge in this case held that conduct that might justify a finding of just cause for common law purposes will not necessarily result in a finding of "wilful misconduct, disobedience or wilful neglect of duty" under the Ontario ESA, such that a finding of just cause at common law, would still require a further analysis of whether the conduct meets the ESA test.

In this case, the Court awarded the plaintiff $17,127.33 as termination and severance pay under the ESA.  

Employer's take careful note as this case opens up some interesting possibilities for plaintiffs.

Leave to Appeal Granted in Overtime Case

According to FP Legal Post CIBC tellers win right to appeal overtime class action.  

In 2009 Justice Lax refused to certify a class and this decision was upheld by the Divisional Court in a 2-1 split decision.  It's not surprising that leave was granted and won't be surprising if the Court of Appeal is not the final word on this important issue.