Showing posts with label employment standards act. Show all posts
Showing posts with label employment standards act. Show all posts

Friday, June 05, 2020

Statutory Layoffs, Constructive Dismissal and Covid-19

BY SIMRAN BAKSHI, ASSOCIATE LAWYER
The Covid-19 pandemic has proven just how adaptive and resilient we are as a society. In the face of this crisis, we have embraced drastic changes to how we live, work, shop and even interact with one another.

Consider the actions that have been necessary in the employment law context.

With businesses across the province forced to shut down with little to no notice, many employers have had to make the difficult decision to lay off or downsize their workforce to stay financially afloat.

While in the normal course, such actions would be governed by the Employment Standards Act (ESA) and the common law, there are real questions in these unusal, pandemic times about whether the applicable laws will change or be re-interpreted.

It is generally settled law that despite the ESA's explicit layoff provisions, at common law, an employer in Ontario is not permitted to temporarily lay off an employee unless there is an employment contract permitting such action, or implied or express acceptance by the employee.

If the employer nonetheless imposes a layoff, the employee can treat such action as a constructive dismissal of her employment, and seek common law notice entitlements in a court acion for damages.

As the Ontario Court of Appeal affirmed in Elsegood v Cambridge Spring Service 2001 Ltd., 2011 ONCA 831 (CanLII):
[14] At common law, an employer has no right to lay off 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.
If the usual law is strictly applied to Covid times, any employer who has laid off employees to comply with the state of emergency may have constructively dismissed the laid off employees, unless the employer is relying on a layoff provision in an employment contract, or it has the employee’s consent.

To put this in context, as a result of Covid-19 closures, thousands of business across Ontario may have inadvertently severed their employment relationships with their employees, making them liable to pay hefty severance packages or damages awards.

The million dollar question remains, will our courts really allow this to happen, or will exceptions be made in interpreting the usual law of layoffs, in order to address the present reality?

Ontario Regulation 228/20, enacted by the Ford government on May 29, 2020, seems to signal that a new approach to Covid-related employment law claims may emerge.

This Regulation amends the Employment Standards Act to retroactively deem employees whose hours or wages have been temporarily reduced or eliminated due to Covid-19 to be on an infectious disease emergency leave, as opposed to being subject to a statutory layoff or constructive dismissal. 

It further deems that complaints filed with the Ministry on this basis as not having been filed at all, and protects employers from statutory termination and severance pay obligations otherwise arising from unlawful layoffs that may otherwise have given rise to constructive dismissal.

The Regulation, however, does not address the common law of constructive dismissal, nor does it bar an employee from bringing a civil claim for damages for constructive dismissal.

That, of course, brings us back to the question of what Ontario's Courts are likely to do with such claims

It would not be surprising if the Courts take a cue from the Ford government, finding that temporary layoffs necessitated by Covid-19 did not amount to a constructive dismissal.

The concern is that if employers are held liable for unlawful layoffs relating to Covid-19, there will be a floodgate of claims before the court, with a domino effect to follow of permanent business closures and bankruptcies. From a policy perspective, limiting constructive dismissal claims, at least temporarily, would provide much needed economic relief and stability, particularly to small and medium sized businesses that are otherwise on the brink of financial ruin. 

On the other hand, such an approach would eliminate an employee’s choice to assess whether an employment relationship has truly been severed. This will not always lead to a fair outcome. Legal advice should be obtained as to your rights and entitlements, if you wish to consider advancing a constructive dismissal claim.  

Many employees will be keen to return to work, irrespective of whether a Covid-19 layoff was technically sound. It may only be in circumstances wherein an employment relationship already stood on shaky ground that a layoff will be challenged. 

Even then, the context in which the layoff occurred will almost certainly be taken into account.

Going back to the basics, the act of unilaterally laying off an employee has typically been considered a constructive dismissal because it repudiates the expectation of continued paid employment.  There can be no such expectation if an employer is mandated by law to temporarily shut down its business due to the pandemic. The same cannot be said however, for an employer who seeks to take advantage of circumstances.

Our courts have always favoured a balanced approach when faced with competing interests and concerns.

Perhaps the most likely outcome is for the court to leave the door slightly ajar for exceptional claims of constructive dismissal, which arise during the Covid-19 period, looking closely at the actions and motivation of the parties.

- Simran Bakshi, Toronto

Sunday, May 31, 2020

Ford Government: Ontario's 13-Week Layoff Limit Eliminated During COVID Emergency

The Ford Government has made a crucial, temporary change to Ontario's Employment Standards Act (ESA) that will impact countless employers and employees in the Province.

By operation of Ontario Regulation 228/20, published on May 29, 2020, the ordinary 13-week limit on the duration of workplace layoffs has effectively been suspended. This time-limit will not apply to employees who have been laid off due to COVID-related slowdowns and closures.

The Regulation will apply from March 1, 2020 until six-weeks after the Government ends its March 17 emergency COVID-19 declaration. It repesents a significant change that many employers have been clamouring for.

Ordinarily, where an employee is not recalled from a layoff within 13 weeks, the layoff is deemed to be a termination of employment by operation of section 56 (2)(a) of the ESA. 

There are certain exceptions in the Act to this deemed termination rule. These occur:
  • Where the extended layoff is less than 35 weeks in any period of 52 consecutive weeks, and 
  • The employee continues to receive substantial payments from the employer and
  • The employer continues benefit payments for the employee.
Essentially, this Regulation means employers will no longer have a risk of liability for statutory notice or severance payments to employees who have been laid off for more than 13 weeks due to COVID-19, or to those whose hours or compensation are reduced during the COVID period.

In addition, the Regulation provides that no COVID-related reductions in employees' hours or compensation on or after March 1, 2020 will be treated as a constructive dismissal under the Act.

Many Ontario workplaces that are still closed due to COVID would have been approaching the statutory, 13-week layoff limit within the next week or two.

There was great concern among small employers and profesional practices, in particular, that they would face enormous, mandatory severance obligations to multiple employees at once at the end of the 13 week layoff period, even if they were still unable to open.

For some employers, such severance obligations could have become bankruptcy-triggering events.

As examples, most restaurants and mall-based retail outlets are not yet legally permitted to fully reopen, and after months of closure and partial-closures due the the Emergency Declaration, many could not possibly have withstood the costs of mandatory notice and severance obligations.

Similarly, many Ontario dentists - who until changes announced May 31 remained subject to significant regulatory restrictions that prevented them from providing non-urgent care, seeing recall patients or offering dental hygiene services - have simply been unable to re-open or to recall employees, given the potentially low demand for the few services they had been able to provide.

While some have argued that this Regulation represents a major blow for employees, I'm not pursuaded that there is much truth to that.

With the elimination of the 13-week layoff limit, employees ultimately get some degree of job protection. They will not automatically be deemed to be terminated. Many love their jobs and are chomping at their collective bits to get back to work, as soon as possible.  They are prepared to work collaboratively with their employers toward re-opening and do not want to be automatically dismissed by operation of the ESA.

For those that ultimately will not be returning, their entitlements to notice and severance have been delayed, not eliminated. Most are currently receiving EI or other government benefits, in the interim. That's not a perfect solution, of course, and the uncertainty about the future remains.

Without this Regulation, however, many workplaces faced a serious risk of insolvency and closure due to notice and other statutory obligations, alone.  This legislation temporarily removes that immediate risk, and gives employers additional time to get back on their financial feet so that jobs can be preserved.

Beyond that, this Regulation 228/20 gives employers and employees the flexibiity - with mitigated legal risk - to implement the gradual, staged approach to re-opending mandated by the Province and by public health authorities.

COVID closures were not the fault of employers or employees. This Regulation appears to be a fair effort to share the burden, balance the respective interests and at very least, to buy some much needed time.

As a final note, while the Regulation addresses the statutory standards set out in the ESA, it does not at first glance appear to impact or preclude Court-based claims for damages for wrongful dismissal or constructive dismissal. This is particularly important for those employees who did not expressly agree to their current layoffs and those who have not signed valid employment agreements that permit such layoffs.

It should also be noted that his new Regulation will not be applicable to those whose workplaces reduce hours or compensation for discriminatory or improper reasons that are unrelated to COVID, or to employers that otherwise go rogue. 

As always, there remains uncertainty as to how the Courts will ultimately address such claims.  Legal advice should be obtained by any employee with concerns related to COVID in the workpace.

To arrange a consultation with a Wise Law workplace and employment lawyer, click here.

- Garry J. Wise, Toronto

Visit our Toronto Law Office website: www.wiselaw.net

Tuesday, April 24, 2018

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Tuesday April 24, 2018.

Today we are talking about Employment Law.

Do employees have different severance entitlements under the Employment Standards Act and in wrongful dismissal cases that are decided in Court?

Ontario’s Employment Standards Act provides only for employees’ minimum notice and severance entitlements.  Common law entitlements can be as much as one month for each year of service, or even more in exceptional circumstances. 

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For more information, visit our website at http://www.wiselaw.net.
- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Wednesday, October 11, 2017

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Wednesday, October 11, 2017.
Today we are talking about Employment Law.


In addition to the minimum notice and severance required by the Employment Standards Act, Ontario employees are entitled to reasonable notice of termination (or pay in lieu of thereof upon termination of employment

Unless an employment contract limits an employee’s entitlements, reasonable notice will be based on duration of employment, type of position, age and many other factors.

For more information on Employment Law, Family Law, Wills, Estates, and Estates Litigation, visit our website at http://www.wiselaw.net.
- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Tuesday, October 03, 2017

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Tuesday October 3, 2017.

Today we are talking about Employment Law.


Do employees have different severance entitlements under the Employment Standards Act and in wrongful dismissal cases that are decided in Court?

Ontario’s Employment Standards Act provides only for employees’ minimum notice and severance entitlements. Common law entitlements can be as much as one month for each year of service, or even more in exceptional circumstances.

For more information on Employment Law, Family Law, Wills, Estates, and Estates Litigation, visit our website at http://www.wiselaw.net.


- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Tuesday, May 30, 2017

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law Toronto for Tuesday May 30, 2017.

Today we are talking about Employment Law.



Do employees have different severance entitlements under the Employment Standards Act and in wrongful dismissal cases that are decided in Court?

Ontario’s Employment Standards Act provides only for employees’ minimum notice and severance entitlements. Common law entitlements can be as much as one month for each year of service, or even more in exceptional circumstances.
For more information on Employment Law, Family Law, Wills, Estates, and Estates Litigation, visit our website at www.wiselaw.net



- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Tuesday, March 21, 2017

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Tuesday March 21, 2017.

Today we are talking about Employment Law.


Did you know that a probationary period may go longer than three (3) months?

The Employment Standards Act does not impose a probationary status for employees. It simply provides that there is no minimum notice or pay in lieu of notice required for employees with less than three months of service.

For more information on Employment Law, Family Law, Wills, Estates, and Estates Litigation, visit our website at www.wiselaw.net.
- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Wednesday, February 22, 2017

Wrongful Dismissal and Ontario's Employment Law Framework

BY SIMRAN BAKSHI, ASSOCIATE LAWYER

At first glance, Ontario’s employment law framework is deceivingly simple.
If an employer seeks to terminate an employee without having any just cause to do so, it must simply provide that employee with reasonable notice of its intentions to terminate the employment, or alternatively pay the employee in lieu of providing this notice.

Simple enough, right? Well, as your lawyer will be the first to tell you, its not quite that straightforward…
Determining reasonable notice?

As you may have guessed, one of the underlying question in any wrongful dismissal claim is just how much notice is reasonable in the circumstances.

As a general principle, an employee’s entitlement to reasonable notice is based upon, among other things, an assessment of how long it will likely take to find comparable alternate employment. After all, the purpose of providing reasonable notice of a termination is to compensate the employee until he or she is reasonably able to end the financial losses arising from the dismissal, by transitioning into new employment.

In practice, Ontario has a two-tier framework when it comes to determining notice and severance entitlements. An employee's entitlements are determined by both the statutory minimum amounts and the common law requirement of reasonable notice, which can extend far beyond the statutory entitlements.
 
The Ontario Employment Standards Act sets the floor for the minimum notice (or pay in lieu of notice) of termination that an employer must provide an employee with (also known as statutory notice).

(In the case of federally regulated businesses, the Canada Labour Code governs and sets the statutory minimums ) 
Here's the catch: Where there is no employment agreement that clearly and precisely limits the employer's obligations upon termination to the statutory minimums, the employee will in all likelihood have further entitlements, under common law.

A determination of an employee's common law entitlements requires a far more in-depth and contextual analysis of the nature of the employment relationship, the position occupied and duration of service, the employee circumstances and qualifications, and the employee's prospects of finding comparable new employment.

As an example, a senior executive for a specialized technology firm who is nearing sixty, is likely to need considerably more time to find a comparable position of employment, than a youthful, entry-level salesperson.

While each case will turn on its own facts, the benchmark for common law entitlements is often regarded as being three to four weeks of notice per year of service with an employer. This is by no means a hard and fast rule, and will vary (higher or lower) depending on circumstances.

Breaking down Statutory Notice Entitlements:

To add another layer of complexity, employment standards legislation, define entitlements upon termination in two separate categories: (i) Notice of Termination or Termination Pay and (ii) Severance Pay.

We have thus far been discussing notice of termination (or termination pay in lieu of notice).

The ESA further provides that long-term employees, who have worked for an employer for five (5) years or more, should receive additional compensation upon termination in recognition for their years of service, also known as severance pay:

Entitlement to severance pay64. (1) An employer who severs an employment relationship with an employee shall pay severance pay to the employee if the employee was employed by the employer for five years or more and,(a) the severance occurred because of a permanent discontinuance of all or part of the employer’s business at an establishment and the employee is one of 50 or more employees who have their employment relationship severed within a six-month period as a result; or(b) the employer has a payroll of $2.5 million or more.  2000, c. 41, s. 64 (1).


The Various Meanings of Severance:
It is quite common to hear people refer to "severance packages" when discussing how much notice (or pay in lieu) they have been offered by an employer. This term of course refers to the compensation package offered by an employer for having severed the employment relationship. 
It is important to bear in mind however that "severance package" and "severance pay" are two separate concepts, with the latter often being a small part of the former.
Statutory notice entitlements vs. Common law entitlements - Which one applies?
One of the most contentious issues in a wrongful dismissal action will often be whether an employee is limited to receive the minimum statutory requirements of notice, benefits and severance pay, or enjoys common law notice entitlements.
The answer to this question, like many other legal questions is of course, it depends...
Employment law is subject to the principles of bargaining and the rules of contract. 
Accordingly, where the parties to the employment contract, agree in writing prior to the commencement of the employment relationship, that the employer will only be obliged to provide the employee with the minimum statutory entitlements upon termination, this understanding may prevail going forward. 
Typically, an employee can expect to find a such termination clause in a well drafted employment contract, that will attempt to define the employer's obligations upon termination of the employment relationship.
Forum Shopping and The Perils of Picking the Incorrect Forum:
With a two-tiered framework in place, there are also two separate forums in which a claim for employment entitlements may be made.
The Employment Standards Office established by the Ministry of Labour can assist with claims relating to the enforcement of the ESA. Remember, an employee can only seek minimum entitlements that are provided for by the ESA in an employment standards claim. 

Where an employee is seeking  common law entitlements that go beyond the minimums set out in the ESA, he or she should strongly consider proceeding with a civil action before the Courts. 


It is important to weigh the various options carefully when it comes to choosing a forum for an employment law claim.  Once an Employment Standards complaint has been filed, the employee may effectively be barred from commencing further claims in a Court relating to the termination. 


As Section 97(2) of the ESA expressly states:
(2) An employee who files a complaint under this Act alleging an entitlement to termination pay or severance pay may not commence a civil proceeding for wrongful dismissal if the complaint and the proceeding would relate to the same termination or severance of employment.  
ESA claims may be withdrawn if the employee intends to pursue a court action, but this may only be done within two (2) weeks of the date the complaint was filed with the Ministry.

Though our discussion thus far has focused only upon notice entitlements upon termination, it bears noting that wrongful dismissal actions can often involve intricate issues of discrimination that should be factored in when assessing which forum to proceed in. If you are interested in learning more about the Court's rather new jurisdiction to award human rights damages, take a look at our earlier blog post which discusses this in detail.


Top Three Tips for Employees:


1. It is best practice to have a lawyer review your employment contract with you before you sign it so you have a good understanding of the terms you are agreeing to, and its potential implications in the future. This is also your window of opportunity to try to negotiate the terms of your employment if you are in a position to do so;


2. In the unfortunate event that your employment is terminated, don't sign any documents provided by the employer.  Contact a lawyer as soon as possible to discuss what your potential entitlements may be, before you proceed to accept any severance package or sign a release of any kind.
3. While you may have a number of different legal options available to you upon your dismissal, make sure you consult with a lawyer before making a final decision as to which forum you will proceed in. Remember, your claim for entitlements may be significantly curtailed if you proceed in the wrong forum.
Top Three Tips for Employers:
1. It is always a good idea to have template employment documentation prepared and reviewed by a lawyer to ensure that it is compliant with the applicable employment standards legislation. 
2. Make sure that you consult with a lawyer before taking any serious disciplinary action against an employee, including of course a dismissal from employment.
3. Your lawyer can also be an excellent resource when it comes to planning ahead for your business needs. Speak with your counsel early on to prepare for and troubleshoot any potential legal issues that may arise from changes that you intend to implement for your business.
- Simran Bakshi, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Tuesday, February 14, 2017

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Tuesday February 14, 2017. Today we are talking about Employment Law.

For more information on Employment Law, Family Law, and Wills, Estates, and Estates Litigation, visit our website at www.wiselaw.net.



In addition to the minimum notice and severance required by the Employment Standards Act, Ontario employees are entitled to reasonable notice of termination (or pay in lieu of thereof upon termination of employment

Unless an employment contract limits an employee’s entitlements, reasonable notice will be based on duration of employment, type of position, age and many other factors.
- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Tuesday, February 07, 2017

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Tuesday February 7, 2017. Today we are talking about Employment Law.

A video posted by Wise Law Office (@wiselaw) on

Do employees have different severance entitlements under the Employment Standards Act and in wrongful dismissal cases that are decided in Court?

Ontario’s Employment Standards Act provides only for employees’ minimum notice and severance entitlements. Common law entitlements can be as much as one month for each year of service, or even more in exceptional circumstances.
- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Tuesday, November 08, 2016

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Tuesday November 8, 2016. Today we are talking about Employment Law.

A video posted by Wise Law Office (@wiselaw) on


In addition to the minimum notice and severance required by the Employment Standards Act, Ontario employees are entitled to reasonable notice of termination (or pay in lieu of thereof upon termination of employment).

Unless an employment contract limits an employee’s entitlements, reasonable notice will be based on duration of employment, type of position, age and many other factors. 
- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Tuesday, October 18, 2016

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Tuesday October 18, 2016. Today we are talking about Employment Law.

A video posted by Wise Law Office (@wiselaw) on


Do employees have different severance entitlements under the Employment Standards Act and in wrongful dismissal cases that are decided in Court?

Ontario’s Employment Standards Act provides only for employees’ minimum notice and severance entitlements.  Common law entitlements can be as much as one month for each year of service, or even more in exceptional circumstances.
- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Tuesday, August 16, 2016

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Tuesday August 16, 2016. Today we are talking about Employment Law.

A video posted by Wise Law Office (@wiselaw) on

Did you know that a probationary period may go longer than three (3) months?


The Employment Standards Act does not impose a probationary status for employees. It simply provides that there is no minimum notice or pay in lieu of notice required for employees less than three months of service.
- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Thursday, June 09, 2016

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Thursday June 9, 2016. Today we are talking about Employment Law.

A video posted by Wise Law Office (@wiselaw) on


When can a terminated, non-unionized employee seek reinstatement of employment?

Under Ontario law, reinstatement of non-unionized employment can only be required if the termination was discriminatory or in reprisal to a workplace safety, employment standards, or similar statutory complaint. Unionized employees may have additional protection.

- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Saturday, January 14, 2012

This Week at the Ontario Court of Appeal - January 13, 2012

Each week, Wise Blog looks at recent decisions from the Ontario Court of Appeal.

Tuerr Holdings Inc. v. Vrankovic

The appellant, Peter Vrankovic, appealed from an order granting summary judgment to the respondent, Tuerr Holdings Inc., on the appellant's guarantee of a second mortgage on a commercial property owned by Cambridge Place Commercial Corporation ("Cambridge"). The appellant was the president and director of Cambridge.

The respondent served a Notice of Intention to Enforce Security on Cambridge and a Notice to Attorn Rents on Cambridge's tenants as a consequence of Cambridge being in default on its second mortgage to the respondent. On May 14, 2010, the parties executed a Minutes of Settlement and Forbearance Agreement. The respondent agreed to suspend any further enforcement proceedings on the mortgages until September 5, 2010. This agreement was contingent on Cambridge paying the arrears owing to the respondent and keeping its first mortgage on the property, held by Meridian Credit Union (Meridian), in good standing. Moreover, the Minutes of Settlement and Forbearance Agreement were confirmed by a consent court order.

Contrary to their agreement, Cambridge failed to pay the arrears owing to the respondent and defaulted on its first mortgage to Meridian. As a consequence, Meridian obtained an order appointing a Receiver to sell the property. Furthermore, the respondent commenced an action against the appellant on his guarantee of the second mortgage and obtained summary judgment on the claim.

The Court agreed with the motion judge that Cambridge breached the terms of the Minutes of Settlement and Forbearance Agreement by failing to pay the arrears owing to the respondent and by its default under the first mortgage provided by Meridian. Further, when Vrankovic signed the Minutes of Settlement, the respondent was unaware that Cambridge was already in default in its mortgage payments to Meridian (first mortgagee), and owed over $500,000 in municipal taxes on the property. The Court reaffirmed the motion judge's conclusion that by signing the document in his personal capacity, the appellant waived his right to raise any previous deficiencies in the respondent's enforcement proceedings in response to the motion for summary judgment.


The Court dismissed the appellant's position that Meridian verbally agreed to forbear on enforcement of its first mortgage and to permit Cambridge to pay reduced rent so that it could pursue lease negotiations that would yield increased revenue from existing or potential tenants. The appellant submitted that this evidence served a viable defence to Meridian's assertion that it was entitled to enforce its mortgage security. Additionally, the Court noted that the motion judge correctly rejected the appellant's assertions of an oral forbearance agreement with Meridian, as these assertions were not supported by any documentary evidence, were inconsistent with the terms of the first mortgage and failed to adduce any convincing evidence that Cambridge lost prospective tenants as a result of the respondent's actions.

The Court added that Cambridge was hopelessly in debt, in breach of the terms of the first mortgage and could not be rescued by any extended lease arrangements that were a long ways away from completion. As a result, the Court found that the appellant failed to raise any genuine issues requiring a trial.

Warren Woods Land Corporation v. 1636891 Ontario Inc.

The primary issue on appeal was whether the appellant satisfied the three criteria for the granting of a stay under rule 63.02(1)(b) of the Rules of Civil Procedure.The order sought to be stayed was an order removing all notices filed by the appellant on the land of the respondents (the "Owner"). The application judge held that the appellant did not have an interest in the land in question at the time the notices were registered.

Article 3.14 of the Development Management Agreement between the appellant and respondent contained a provision, which gave the appellant an option to purchase the land. The respondent was disappointed with the appellant's work and advised the appellant that it wished to terminate the Agreement. The respondent did not take the required steps to terminate as contemplated by the Agreement.

The appellant registered the notices in question on October 16 and 28, 2009, claiming entitlement to an unregistered interest in the Owner's property pursuant to s.71(1) of the Land Titles Act. The respondent subsequently sent a Notice of Complaint to the appellant on August 8, 2011, which referred to default on the part of the appellant. The appellant replied to the respondent's Notice of Complaint by letter a two and a half weeks later, providing its understanding of their agreement. Further, the respondent claimed to have formally terminated the Agreement on August 30, 2011 and brought an application to have the notices that the respondent registered on title removed.

Additionally, the appellant claimed that the fact the Agreement created a contingent option to purchase land signified that it had an interest in the land. The respondent submitted that the issue whether an interest in land had been created was a question of mixed law and fact. Moreover, they stated that the appellant only had a right to an "incorporeal hereditament" at common law, which is an intangible right. In Bank of Montreal v. Dynex Petroleum Ltd, the court held, "At common law, an interest in land could issue from a corporeal hereditament but not from an incorporeal hereditament". Therefore, the respondent's position was that since the appellant only had a right to an incorporeal hereditament, it did not have an interest in the land in dispute at the time it registered the notices.

The respondent also argued that Article 3.14 of the Development Management Agreement was void because it contained no time restrictions and thus violated the rule against perpetuities. According to Politzer v. Metropolitan Homes Ltd, an equitable interest is void if it can vest beyond the perpetuity period of twenty-one years.

The Court articulated the three criteria for the granting of a stay:
  1. The appeal must raise a serious question; 
  2. The appellant must demonstrate that it would suffer irreparable hard if the stay were not granted; 
  3. Finally, on a balance of convenience, the appellant must satisfy the court that it would suffer greater harm if the stay were not granted than the respondents would suffer if the stay were granted. 
In dismissing the appeal, the Court held that there was not a serious questioned to be determined. The appellant failed to provide any reasons why the common law prohibition on the creation of an interest in land from an incorporeal hereditament should not apply. Concerning the rule against perpetuities, the Court found that the appellant did not respond to the respondent's claim that the Agreement was void since it was in contravention of the rule.

Additionally, the Court noted that refusing a stay would not result in irreparable harm to the appellant. Irreparable harm is harm that cannot be quantified in monetary terms. The Court found that the appellant would not be able to enforce the Agreement by claiming specific performance, as it intended to sell the lands and it did not put forth evidence that the lands were unique in any fashion.

The appellant failed to satisfy the third criteria as the Court declared that the balance of convenience did not favour granting a stay. If a stay were granted, the respondent would not be able to refinance the lands and sell them pending the outcome of the appeal. On the contrary, if a stay were not granted, the appellant would not be without recourse as it would still be in a position to sue for damages for alleged breach of the Agreement.


Elsegood v. Cambridge Spring Service

One of the primary issues of this appeal was whether the Employment Standards Act ("ESA")could support an employee's claim for common law damages.

The respondent worked for the appellant employer for seven years as a spring technician. There was no written employment contract. The respondent was laid off on two occasions. After the first occasion, he was recalled to work only to be laid off again approximately seven weeks later. The cumulative duration of the layoffs exceeded the statutory maximum of 35 weeks within a 52 week-period, as prescribed by s. 56(1)(c) of the ESA. Once the respondent's layoff period reached 35 weeks, he commenced an action for common law damages for wrongful dismissal rather than claiming termination pay under s.54 of the ESA. Holub Deputy J. awarded him $9,900 in damages reflecting a notice period of six months.

On appeal, the employer argued that an employee's employment status survives a statutory termination by the ESA.  It argued that the ESA and common law were independent regimes so that upon a statutory termination pursuant to the ESA, the employee was entitled only to remedies under the Act.

The Court did not agree. 

It held that the appellants could not rely on s. 56(1) of the Act, which provides that the employee is terminated "for purposes of section 54". The Court disagreed with the employer's position that the respondent was not terminated for all purposes, but only for the purposes of s. 54.  In fact, s. 56(1) prohibits an employer from terminating an employee without notice or payment in lieu of notice. The purpose of s. 54 is to prevent employers from avoiding their liabilities upon termination by pacing employees under a facade of indefinite layoff.

In holding that the ESA provides for the continued application of the common law despite its statutory termination provisions, the Court cited a passage by Iacobucci J. in Machtinger:
Section 4(2) states that a right, benefit, term or condition of employment under a contract that provides a greater benefit to an employee than the standards set out in the Act. I have no difficulty in concluding that the common law presumption of reasonable notice is a benefit...
The Court considered what would transpire if one accepted that the employee's employment at common law survived the operation s. 56(1). At common law, employers do not have a right to layoff employees. Unless there is an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee's employment and is considered to be a constructive dismissal.

Employees are entitled to reasonable notice of termination, regardless of what an employment contract states. In Machtinger, one of the employees' contracts allowed his termination without notice, and the contract of the other individual allowed his termination on only two weeks notice. The trial judge found that the termination clauses were invalid because they violated the ESA. He held that the employees were entitled to seven and seven and a half months pay in lieu of notice respectively. On appeal, the Court agreed that the termination provisions were invalid, but held that the termination provisions supported the inference that the employees intended to have very short notice periods. The Supreme Court disagreed and stated, "If a term in null and void, then it is null and void for all purposes, and cannot be used as evidence of the parties' intention". Since the employees' contracts failed to address notice requirements, they were entitled to reasonable notice at common law.

The Court rejected the appellant's claim that an implied term in the employment agreement allowed the employer to place the respondent on indefinite layoff exceeding 35 weeks in a 52-week period. The Court noted that since the indefinite layoff provision failed to meet the ESA's minimum standard, it was void.  As a consequence, the Court declared that the implied term should not be read down but rather excised from the employment agreement.

R. v. Lalumiere

The appellant was convicted of two counts of counselling to commit murder against his ex-wife and her boyfriend. Prior to the convictions under appeal, the appellant accumulated 23 convictions for offences involving his ex-wife and her boyfriend ranging from uttering threats to criminal harassment. Various violence risk assessment tests conducted on the appellant indicated that he had a 70% likelihood of assaulting his ex-wife at least once in the next five years.

In 2007, the appellant was in jail for uttering threats and for breaching his probation order. During his time in jail, a confidential informant divulged to the police that the appellant desired to hire someone to kill his ex-wife and her boyfriend. On June 14, 2007, a police officer posed as a member of the Hells Angels and met the appellant in the visitor's area of the prison and told him that he understood that the appellant wanted to eradicate two individuals. The undercover officer provided the appellant with his phone number and the appellant was agreeable to the arrangement but he stated that he could not pay the officer until after his release at the end of the year. After failing to hear from the appellant over the ensuing two weeks, the officer returned to the jail and raised the issue once again with the appellant about having the two individuals killed. The appellant agreed to pay the officer $5,000 and later telephoned him to provide personal details about the targeted victims.

At trial, the appellant claimed that he knew all along that the undercover officer's intentions were not legitimate. The appellant asserted that he led the undercover officer on and planned to report him to authorities. Furthermore, prior to the undercover officer's meetings with the appellant, the police obtained a judicial authorization, which permitted the officer to secretly record his conversations with the appellant.  Also at trial, the appellant brought an application to exclude the audiotape of the June 27, 2007 telephone conversation under ss. 8 and 24(2) of the Charter. Moreover, the appellant applied to have evidence of his police interview excluded under ss. 10(a), (b) and 24(2) of the Charter. The trial judge found a breach of s.8 but rejected the rest of the appellant's applications.

On appeal, the appellant argued that the trial judge erred by failing to exclude the audiotape under s. 24(2) of the Charter, by failing to exclude the evidence of his police interview under ss. 10(a), (b) and 24(2) of the Charter, in his instructions to the jury and in his ruling on entrapment.

Concerning the ss. 8 and 24(2) Charter issue, the Court noted that the trial judge correctly applied the Collins factors in support of his conclusion that the evidence obtained should not be excluded under s. 24(2) of the Charter. Furthermore, the Court stated that the Grant factors favoured admission of the evidence because the undercover officer's evidence concerning his telephone conversations with the appellant was admissible in any event.

In regards to the appellant's ss. 10(a) and 10(b) claims, the Court reviewed the trial transcripts and concluded that the appellant was advised of his 10(a) and 10(b) Charter rights and the police offered to assist the appellant in contacting counsel. Further, they asserted that the appellant invited the police to continue speaking with him and he declined to answer specific questions when he felt he should not do so without the benefit of counsel present.
Additionally, the Court found no legal errors in the trial judge's instructions to the jury, holding that the trial judge informed the jury that it was their recollection of the evidence that carried the most weight. More importantly, the jury heard the audiotape of the conversation between the undercover officer and the appellant as well as the appellant's explanation.

On the issue of entrapment, the Court saw no error in the trial judge's pronouncement that the police acted on reasonable suspicion and did no more than provide the appellant the opportunity to commit the crime. Also, they noted that the police were justified in giving credence to the tip received from the confidential informant and that the undercover officers' conduct fell short of inducement.

Poole v. Whirlpool Corporation

The appellant terminated the respondent without cause in early March 2010. The respondent brought a motion and was awarded summary judgment for wrongful dismissal, and the motion judge ruled that the respondent was entitled to a bonus in the amount of $5,598.38 per month during the 19-month notice period determined upon the motion.

The appellants challenged the motion judge's decision that the respondent was entitled to a bonus, her calculation of the bonus and her conclusion that no genuine issue requiring a trial arose concerning the respondent's bonus claim.

The appellants argued that in order to qualify for a bonus under the applicable Bonus Plan, the respondent was required to be actively employed on December 31st of the year for which the bonus was claimed. Since the respondent was terminated in March 2010, he was not eligible for a bonus in 2010 or 2011.

The Court found that the motion judge did not err in her rejection of this position. The Court held that the bonus eligibility stipulation relied on by the appellants was not incorporated in the respondent's letter of employment. Moreover, there was no evidence that the stipulation was drawn to the respondent's attention at any time, whether in writing, orally, by means of the appellants' internal intranet communication system, or that he had ever agreed to it. Furthermore, the Court noted that the appellant's failure to cross- examine the respondent on his affidavit material, in which he swore that he never agreed to the stipulation, precluded any reliance by the appellants on the stipulation to defeat the respondent's bonus claim.

In regards to the motion judge's calculation of the bonus, the Court held that the motion judge was correct in her analysis as to the appropriate method for the bonus calculation. Finally, the Court found that the motion judge did not err in her ruling that no genuine issue requiring a trial arose in regards to the respondent's entitlement to a bonus or the method of calculating the bonus.
In dismissing the appeal, the Court concluded that once it was determined that the respondent was wrongfully terminated, the determination of his bonus was straightforward and based on evidence that was mainly uncontested.

 - Alim Ramji, Toronto

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Tuesday, July 05, 2011

Ontario Employment Law: Exemptions From The Overtime Provisions Of The Ontario Employment Standards Act

As a general rule, if an employee in Ontario works more than 44 hours per week, he or she is entitled to be paid one and one-half times his or her regular rate of pay for each hour worked in excess of 44 hours.

Section 22 of the Ontario Employment Standard Act provides:
PART VIII

OVERTIME PAY

Overtime threshold

22. (1) An employer shall pay an employee overtime pay of at least one and one-half times his or her regular rate for each hour of work in excess of 44 hours in each work week or, if another threshold is prescribed, that prescribed threshold. 2000, c. 41, s. 22 (1); 2011, c. 1, Sched. 7, s. 1.

Regulation 285 to the Ontario Employment Standards Act, however, contains some notable exemptions to the normal rule.

Two provisions contained in the Regulation are relevant to overtime claims:
  • Section 2(1), which sets out general exemptions from Parts VII-XI of the Act, including Part VIII dealing with overtime pay, and
  • Section 8, which sets out exemptions from overtime.
Section 2(1) provides:

Exemptions from Parts VII to XI of Act

2. (1) Parts VII, VIII, IX, X and XI of the Act do not apply to a person employed,

(a) as a duly qualified practitioner of,

(i) architecture,

(ii) law,

(iii) professional engineering,

(iv) public accounting,

(v) surveying, or

(vi) veterinary science;

(b) as a duly registered practitioner of,

(i) chiropody,

(ii) chiropractic,

(iii) dentistry,

(iv) massage therapy,

(v) medicine,

(vi) optometry,

(vii) pharmacy,

(viii) physiotherapy, or

(ix) psychology;

(c) as a duly registered practitioner under the Drugless Practitioners Act;

(d) as a teacher as defined in the Teaching Profession Act;

(e) as a student in training for an occupation mentioned in clause (a), (b), (c) or (d);

(f) in commercial fishing;

(g) as a salesperson or broker, as those terms are defined in the Real Estate and Business Brokers Act, 2002; or

(h) as a salesperson, other than a route salesperson, who is entitled to receive all or any part of his or her remuneration as commissions in respect of offers to purchase or sales that,

(i) relate to goods or services, and

(ii) are normally made away from the employer’s place of business. O. Reg. 285/01, s. 2 (1); O. Reg. 92/06, s. 1.

(2) Subject to sections 24, 25, 26 and 27 of this Regulation, Parts VII, VIII, IX, X and XI of the Act do not apply to a person employed on a farm whose employment is directly related to the primary production of eggs, milk, grain, seeds, fruit, vegetables, maple products, honey, tobacco, herbs, pigs, cattle, sheep, goats, poultry, deer, elk, ratites, bison, rabbits, game birds, wild boar and cultured fish. O. Reg. 285/01, s. 2 (2).

Section 8 provides:
Exemptions re Overtime Pay

Exemptions from Part VIII of Act

8. Part VIII of the Act does not apply to,

(a) a person employed as a firefighter as defined in section 1 of the Fire Protection and Prevention Act, 1997;

(b) a person whose work is supervisory or managerial in character and who may perform non-supervisory or non-managerial tasks on an irregular or exceptional basis;

(c) a person employed as a fishing or hunting guide;

(d) a person employed,

(i) as a landscape gardener, or

(ii) to install and maintain swimming pools;

(e) a person whose employment is directly related to,

(i) the growing of mushrooms,

(ii) the growing of flowers for the retail and wholesale trade,

(iii) the growing, transporting and laying of sod,

(iv) the growing of trees and shrubs for the retail and wholesale trade,

(v) the breeding and boarding of horses on a farm, or

(vi) the keeping of furbearing mammals, as defined in the Fish and Wildlife Conservation Act, 1997, for propagation or the production of pelts for commercial purposes;

(f) a person employed as a student to instruct or supervise children;

(g) a person employed as a student at a camp for children;

(h) a person who is employed as a student in a recreational program operated by a charitable organization registered under Part I of the Income Tax Act (Canada) and whose work or duties are directly connected with the recreational program;

(i) a person who is employed as the superintendent, janitor or caretaker of a residential building and resides in the building;

(j) a person employed as a taxi cab driver;

(k) a person employed as an ambulance driver, ambulance driver’s helper or first-aid attendant on an ambulance; or

(l) an information technology professional. O. Reg. 285/01, s. 8.

On the specific exemption applicable to employees whose work is "supervisory or managerial in character", please see our January 8, 2011 post, "Ontario Employment Law: Overtime Pay."

- Robert Tanha, Toronto
Visit our Toronto Law Firm website: www.wiselaw.net

Wednesday, May 04, 2011

Altman v. Steve's Music: Moral and Punitive Damages Awarded in Ontario Wrongful Dismissal Action

A leading Canadian musical instrument retailer, Steve’s Music, has been ordered by the Ontario Superior Court to to pay more than $200,000.00 in damages, including $55,000 in moral and punitive damages, to a wrongfully terminated 59 year-old store manager with more than thirty years of service.

In Altman v. Steve's Music, a March 8, 2011 ruling by Madame Justice Katherine J. Corrick, Steve's was held liable for the wrongful dismissal of a long-term employee who had been diagnosed with lung cancer. In addition to the moral and punitive damages granted, the Plaintiff was awarded twenty-two months' salary in lieu of notice and all amounts that were outstanding under the Employment Standards Act.

After being diagnosed with lung cancer, the Plaintiff, Ms. Altman, was required to reduce her hours and to take two significant medical leaves, totalling approximately six months. Ms. Altman was terminated without reasonable notice, some 16 months following her diagnosis.

The Plaintiff was devastated by the termination and suffered a major depressive episode. The employer contended that Ms. Altman's employment had been frustrated by her illness and that she accordingly had no legal entitlement to compensation upon the termination.

The manner of the termination.

The Court took considerable exception to the manner in which the termination was conducted.

The employer did not directly communicate with Ms. Altman - rather, it outsourced the termination to its lawyers, whose handling of the matter was anything but delicate. Justice Corrick referenced pertinent passages from two letters sent by the employer's law firm to the Plaintiff for this purpose:
First Letter
We are the attorneys representing the interests of your employer Steve's Music....According to the information provided by our client, it appears that you have been remiss in your duties and obligations towards Steve's Music in failing to work minimum number of hours required by your employer from Monday to Friday . ... In view of the foregoing, we have as instructions to advise you that unless you fulfill your obligations toward your employer in full by working regular work days [sic] as stipulated by your employer's directives, Steve's Music will have no alternative but to advise you that your employment will be terminated, without further notice or delay.
Second Letter
We have as instructions from our client to advise you that in light of our correspondence addressed to both you and your attorney since October 2008 to date, as well as your application for long term disability and the fact that your position with Steve's Music, has since been abolished, Steve's Music has no obligation to reinstate you. . . . Steve's Music was full entitled to offset and deduct from your renumeration or for that matter any other sums due and owing to you, for your absenteeism, late arrivals and departures.
The first letter had caused the medically frail Ms. Altman to return to work the day immediately following receipt, for fear that if she did otherwise she would be terminated.

That would be the last day Ms. Altman worked at Steve's. Her medical needs would require her to begin a three-month medical leave immediately thereafter, which was followed by a further three-month medical leave. These leaves, apparently, were the last straws for Steve's Music.

Madame Justice Corrick's ruling addresses five issues:
  1. Does Steve's owe Ms. Altman any outstanding compensation for severance, wages, vacation, commission, bonus and deferred profit sharing plan?

  2. Was Ms. Altman's employment contract frustrated?

  3. If Ms. Altman's employment contract was not frustrated, what is the appropriate period of notice?

  4. Are moral damages for mental distress appropriate, and if so, what is the quantum?

  5. Are punitive damages appropriate, and if so, what is the quantum?
Outstanding Compensation

The Defendant took the position that it was entitled to withhold outstanding salary and substantial accumulated vacation pay from the Plaintiff, claiming set-off for overpayment. It had continued to pay Ms. Altman's full salary while she was receiving treatment for cancer and absent. It claimed a credit for these "gratuitous" payments.

Corrick J. flatly rejected the employer's position in this regard. She noted that the situations in which an employer can withhold outstanding salary and vacation pay are very narrow, indeed, and held that if Steve's genuinely believed that Ms. Altman was in arrears on account of salary, it should have cross-claimed or brought an action to recover these amounts.

Moreover, Corrick J. noted that Steve's had voluntarily made the decision to continue to pay salary to the Plaintiff while she was working at less than full-capacity; such arrangement was not contingent on Ms. Altman surrendering her other employee entitlements.

Employer's Defence of Frustration

In considering the defence of frustration put forward by Steve's Music, Corrick J. made a number of important points, each of which is worthy of specific note:
  1. Since the employer lacked medical evidence that Ms. Altman's condition was a "permanent disability" as at the date of termination (the relevant time at which the Plaintiff's disability is to be assessed) such that she would no longer be able to perform her duties at work, it could not rely on the doctrine of frustration to relieve it from its legal obligation on termination. The medical reports the Defendant sought to rely on were written more than a year after Steve's terminated Ms. Altman's employment, after Ms. Altman's cancer had spread to her brain and bones.

  2. Ms. Altman's application for long term disability benefits was not an admission by her that she had a "permanent disability" at law for the purposes of applying the doctrine of frustration of contract, even if she had met the definition of "permanent disability" as provided for in the Defendant company's Group Insurance Policy.

  3. Ms. Altman's job involved considerable paperwork. It was not a physical job entailing heavy lifting. Thus, the standard that had to be met by Steve's Music to show that Ms. Altman was physically incapable of performing her job was a high one, which it simply could not meet on the facts of the case.

  4. Despite the Defendant employer's bald assertion to the contrary, there was no evidence whatsoever that Ms. Altman had been remiss in her duties at work or that anyone was dissatisfied with her work. The fact that her cancer medically required her to work reduced hours clearly did not constitute neglect of duty.
The Period of Reasonable Notice

To determine the period of reasonable notice owed to Ms. Altman, Corrick J. turned to the oft-cited Bardal factors finding that Ms. Altman was entitled to 22 months of notice. The Court underscored that Ms. Altman's vulnerable medical state and age meant that her chances for reemployment into a comparable position were very low, and justified an extended period of notice.

Further, the long-term disability payments received by Ms. Altman during the notice period were not deductible because she, not Steve's Music, had paid the premiums, and the insurance company, not her employer, had paid the benefits.

Mitigation

Corrick J. found that Ms. Altman's modest job search efforts were enough to meet her duty at common law, and that Steve's has not discharged its onus of proving a failure to mitigate.

Moral Damages

In deciding whether Ms. Altman should be awarded moral damages, Corrick J. focused on the manner of termination and the actual damage that had been caused to the Plaintiff by the Defendant's misconduct in this regard.

She accepted medical evidence which demonstrated that Ms. Altman had suffered psychological distress consisting of a major depressive episode of moderate severity. The extent of the trauma suffered by Ms. Altman is revealed in Justice Corrick's reviews of the expert medical evidence adduced by the Plaintiff:
Dr. Li met Ms. Alman after she had undergone surgery, chemotherapy and radiation therapy. Dr. Brade referred Ms. Altman to Dr. Li as Ms. Altman was suffering from psychological distress. Dr. Li diagnosed her as suffering from a major depressive episode of moderate severity. In Dr. Li's opinion, this illness was precipitated by Ms. Altman's receipt by bailiff of October 7, 2008 letter from Kaufman Laramee informing her that she will be terminated if she does not work full-time hours. Dr. Li testified that this letter was more traumatic for Ms. Altman than being diagnosed with cancer or being told that her cancer could not be cured.
Dr. Li testified that Ms. Altman's depression required treatment because the presence of depression in cancer patients is very strongly co-related with poor survival, poor response to treatment, and higher mortality. . . .
Although Ms. Altman's depression remitted, her psychological distress has not abated, according to Dr. Li. Ms. Alman continues to be distressed over the conflicts she has had with her employer, which is activating her hormonal stress system and putting her health at further risk.
In deciding whether moral damages were warranted in Ms. Altman's case, Corrick J. emphasized that the employer's actions had to be viewed in the context of the employee's age, length of service, state of health and relationship with Steve's Music. The Court noted the following, justifying a significant award of moral damages:
  1. The letters, in particular the second letter, were highly insensitive and inappropriate, and did not accord with the way the law requires employers to treat employees

  2. If the correspondence was issued in error, why hadn't anyone from Steve's music contacted the Plaintiff to rectify the error?

  3. The Defendant employer could not have issued two aberrant letters in error; this defied coincidence.

  4. Given the Plaintiff's length of service and dedication to her job, which she had performed without incident, management of Steve's Music should have spoken with the Plaintiff about her termination personally, not pawned this off on their lawyers to deal with in a cavalier manner.

  5. The letters were replete with mistruths from the Defendant employer's lawyers and signified that the Defendant employer was engaged in a campaign of deceit, which campaign attempted to conceal the true reasons for the Plaintiff's termination: the fact that her health problems had made her too much of burden and liability for Steve's to bear. Her job performance and competence were beyond reproach.
Corrick J. awarded $35,000.00 under this head of damages, holding as follows:

[117] The Supreme Court of Canada’s decision in Honda Canada Inc. v. Keays,[37] confirmed its earlier ruling in Wallace v. United Grain Growers Ltd.[38] that damages resulting from the manner of dismissal will be available if the employer engages in conduct during the course of dismissal that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.”[39] The normal distress and hurt feelings resulting from dismissal from employment are not compensable.[40] The award of damages for mental distress caused by the manner of termination must reflect the actual damage caused and is meant to be compensatory in nature.

[118] In my view, Ms. Altman is entitled to moral damages...

[129] The manner of communicating termination has been held to justify damages for mental distress. In Bohemier v. Storwal International Inc. the Ontario Court of Appeal upheld an award of damages for mental distress in circumstances where an employee of 35 years was terminated by means of a cold and perfunctory letter delivered to his house by taxi on a Friday evening.

[130] Similarly, an employer’s harsh treatment of an employee known to be in difficult circumstances has been held to be the proper subject of damages for mental distress. In Rae v. Attrell Hyundai Subaru the employer sent notice of dismissal to an employee of four years by courier two weeks prior to the birth of her child. The Court of Appeal upheld the trial judge’s finding that this inexcusable conduct on the part of the employer merited a two-month increase in notice.

[131] Steve’s treatment of Ms. Altman was callous and insensitive. She was a 30-year employee who had been treated like family, and who worked for Steve’s as if she were a member of the family. She deserved to be treated better than twice having a bailiff deliver her a letter replete with mistruths from Steve’s lawyers – especially when Steve’s knew she was recovering from cancer treatment. No one in the management of Steve’s had the decency or courtesy to speak to her personally to express their dissatisfaction with the work arrangement to which they had previously agreed. I conclude that once Steve’s decided that Ms. Altman had become more of a liability than an asset to the organization because of her cancer, they abandoned her to be dealt with by their lawyers. These letters devastated Ms. Altman and caused her significant mental distress to the point of clinical depression. Ms. Altman’s mental distress has been long lasting and is ongoing.

[132] I award Ms. Altman damages in the amount of $35,000.00 as compensatory damages as a result of Steve’s breach of its duty to deal with Ms. Altman in good faith and with fairness in the manner in which they terminated her employment.

Punitive Damages

In finding that the Defendant's misconduct also called for punitive damages, Corrick J. noted the following:
  1. The employer had committed multiple violations of the Ontario Employment Standards Act, including withholding salary improperly and refusing to pay Ms. Altman's statutory minimum termination pay as set out in the Act. This constituted an independent, actionable wrong, a prerequisite for an award of punitive damages;

  2. The Defendant had roadblocked the Plaintiff's attempts to obtain long-term disability benefits long after her wrongful termination by failing to complete the Policyholder's Statement in the claim form, despite numerous attempts by Ms. Altman and others to get it to do so;

  3. The Plaintiff had to retain counsel to obtain her Record of Employment which would permit her to apply for and receive Employment Insurance Benefits; and

  4. The Defendant employer had chosen to fire Ms. Altman when her illness made her more of a liability to the business than an asset.
Corrick J. awarded $20,000.00 under this head of damages, citing the employer's "reprehensible and high-handed conduct:"
[139] Steve’s conduct must be viewed in the totality of Ms. Altman’s circumstances. In October 2008, Ms. Altman had just completed very intensive cancer treatment. Steve’s did not pay her during her medical leave, which began on October 17, 2008. In fact, Steve’s did not pay her for the hours she had worked that week. Ms. Altman had no source of income. Steve’s failure to honour its statutory obligations to pay her termination pay, to provide her with a Record of Employment to allow her to obtain Employment Insurance benefits, to comply with an order made by Conway J. to provide Ms. Altman with an accounting of her share of the deferred profit sharing plan, together with the other misconduct listed in paragraph 136 is reprehensible and high handed conduct that is deserving of this court’s denunciation.
Moral Damages: The New Wallace Damages?

This ruling follows closely on the heels of Brito v. Canac Kitchens, another recent Ontario wrongful termination decision in which punitive damages were awarded against an employer for its callous treatment of an employee. In the February 2011 Brito ruling, Mr. Justice Echlin similarly admonished an employer for its conduct upon termination:

[18] Having regard for Canac’s cavalier, harsh, malicious, reckless, outrageous and high-handed treatment of Mr. Luis Romero Olguin, I award a further $15,000.00 in damages relating to its “hardball approach”.

[19] Pursuant to the Supreme Court of Canada’s decision in Honda Canada Inc. v. Keays 2008 SCC 39 (CanLII), [2008] 2 S.C.R. 362, I might have considered awarding “moral damages”. However, as indicated in Natalie C. MacDonald, Extraordinary Damages In Canadian Employment Law, Toronto: Carswell, 2010 at pp. 33-168 and 812-815, the relatively new common law head of damages, in this post-Wallace world, requires considerable specificity in pleading and further evidence which was not presented at this trial.

While it may be premature to assert that these heads of damages will be awarded with increasing regularity by Ontario Courts, employers should take note that in genuine cases of misconduct in the course of termination, Ontario courts are not averse to awarding substantial damages, including significant amounts for moral and punitive damages.

Employers should proceed with caution, accordingly. Plaintiffs will certainly rely on these recent rulings to hold employers accountable for the consequences arising from bad faith in the conduct of termination.