Showing posts with label layoff. Show all posts
Showing posts with label layoff. 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 11, 2017

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Tuesday April 11, 2017.

Today we are talking about Employment Law.




An employee who has been temporarily “laid off” may be entitled to treat the layoff as a permanent termination and claim notice and severance payments and other compensation.

Temporary layoffs may not be permitted unless there is employment contract that specifically allows for such layoffs. Seek legal advice to determine your rights and entitlements if you have been “laid off.”
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, December 20, 2016

When is a Layoff Really a Termination in Disguise?

BY SIMRAN BAKSHI, ASSOCIATE LAWYER 
Simran Bakshi

There are big differences between the ways the law treats employee layoffs and permanent terminations. 

Although the terms are often used interchangeably when describing employment that has ended, they are not the same thing at all.


A layoff, by definition, is temporary in nature, premised on the mutual understanding that the employee will in due time be recalled to return to work. In contrast, a termination is generally intended to be a permanent end of employment, and requires that the employer provide notice or pay in lieu of notice, where the dismissal occurs without any just or proper cause.


Where an employee has not consented to this arrangement, the attempted layoff may be challenged as actually being a constructive dismissal. That is, the employer may be seen as having fundamentally altered the terms of the parties’ employment agreement, by choosing to no longer actively employ the employee. In such circumstances, the employee may be entitled to treat the employment relationship as having been effectively terminated, and claim notice or pay in lieu of this notice for this termination.


It is therefore a good idea to consult with an employment lawyer if you have been laid off, to determine assess your circumstances and entitlements.An important question to consider then is when is a layoff actually a layoff, and when is it merely a termination in disguise?


Ontario's courts have long held that for an employer to legally lay off any employee, there must be an employment contract with that employee that specifically or implicitly authorizes such a layoff. 





[As a side note, in the 2013 decision of Trites v Renin Corp., the Court suggested that, contrary to this generally-accepted legal principle, there is in fact no formal requirement that an employment contract include any layoff-permitting provisions, so long as the employer otherwise complied with the ESA. This decision does not however appear to have been applied or followed by the Courts thereafter, and in fact was expressly rejected in the more 2016 case of Michalski v Cima Canada Inc.


The employer must also fully comply with the layoff provisions set out in the Employment Standards Act. In particular, in accordance with section 56(2) of the ESA:
Temporary lay-off
(2) For the purpose of clause (1) (c), a temporary layoff is, 
(a) a lay-off of not more than 13 weeks in any period of 20 consecutive weeks; 
(b) a lay-off of more than 13 weeks in any period of 20 consecutive weeks, if the lay-off is less than 35 weeks in any period of 52 consecutive weeks and, 
(i) the employee continues to receive substantial payments from the employer,(ii) the employer continues to make payments for the benefit of the employee under a legitimate retirement or pension plan or a legitimate group or employee insurance plan,(iii) the employee receives supplementary unemployment benefits,(iv) the employee is employed elsewhere during the lay-off and would be entitled to receive supplementary unemployment benefits if that were not so,(v) the employer recalls the employee within the time approved by the Director, or(vi) in the case of an employee who is not represented by a trade union, the employer recalls the employee within the time set out in an agreement between the employer and the employee; or 
(c) in the case of an employee represented by a trade union, a lay-off longer than a lay-off described in clause (b) where the employer recalls the employee within the time set out in an agreement between the employer and the trade union.  

The employer may not be required to provide a specific recall date (unless the employment contract provides for otherwise), but it must strictly adhere to the time frames set out in the ESA. If the employer lays the employee off for a period longer than the period of a temporary lay-off, it will be held to have terminated the employee’s position of employment.

Overall, it is important to appreciate the requirements of a layoff in order to better understand whether the circumstances presenting constitute an actual temporary layoff, or rather reflect a permanent termination of employment.

- Simran Bakshi, Associate Lawyer Toronto

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

Tuesday, December 06, 2016

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Tuesday December 6, 2016. Today we are talking about Employment Law.

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

An employee who has been temporarily “laid off” may be entitled to treat the layoff as a permanent termination and claim notice and severance payments and other compensation.

Temporary layoffs may not be permitted unless there is employment contract that specifically allows for such layoffs. Seek legal advice to determine your rights and entitlements if you have been “laid off.”
- Garry J. Wise, Toronto
Visit our Toronto Law Office website: www.wiselaw.net

Tuesday, September 20, 2016

LawFact of the Day: Employment Law

Here is your daily LawFact from Wise Law for Tuesday September 20 2016. Today we are talking about Employment Law.

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

An employee who has been temporarily “laid off” may be entitled to treat the layoff as a permanent termination and claim notice and severance payments and other compensation.

Temporary layoffs may not be permitted unless there is employment contract that specifically allows for such layoffs. Seek legal advice to determine your rights and entitlements if you have been “laid off.”
- 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

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

Monday, April 11, 2011

Ontario Employment Law: Deemed Wrongful Termination Under The ESA, But Damages Calculated At Common Law

In Elsegood v. Cambridge Spring Service, decided on December 20, 2010, the Ontario Divisional Court heard an appeal from a Small Claims Court ruling that brought the relationship between the Ontario Employment Standards Act, in particular its "deemed termination" provisions relating to lay-off, and the common law rules governing quantum of damages for wrongful dismissal to the fore.

In the case, numerous layoff periods had been imposed against the Plaintiff employee's will; no single period of which ran afoul of the Act. The relevant provisions provide as follows:

What constitutes termination


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. 2000, c. 41, s. 56 (1).

Temporary lay-off


(2) For the purpose of clause (1) (c), a temporary layoff is,

(a) a lay-off of not more than 13 weeks in any period of 20 consecutive weeks;

(b) a lay-off of more than 13 weeks in any period of 20 consecutive weeks, if the lay-off is less than 35 weeks in any period of 52 consecutive weeks and,

(i) the employee continues to receive substantial payments from the employer,

(ii) the employer continues to make payments for the benefit of the employee under a legitimate retirement or pension plan or a legitimate group or employee insurance plan,

(iii) the employee receives supplementary unemployment benefits,

(iv) the employee is employed elsewhere during the lay-off and would be entitled to receive supplementary unemployment benefits if that were not so,

(v) the employer recalls the employee within the time approved by the Director, or

(vi) in the case of an employee who is not represented by a trade union, the employer recalls the employee within the time set out in an agreement between the employer and the employee;

While the Court agreed with the Plaintiff employee, that prolonged periods of layoff amounted to a "deemed termination" of employment for the purposes of section 56, the question of how to calculate the wrongfully dismissed Plaintiff's employee's damages created some disagreement between the parties.

The appellant employer took the position that since the "termination" had arisen by operation of the Act, damages should be calculated in accordance with it. The respondent employee took the position that he was entitled to pay in lieu of reasonable notice at common law. The Court ultimately agreed with the latter position, reaffirming what at this point in Ontario's employment law history must be viewed as trite law:
I do not read the Act or the case law referred to me as restricting the calculation of damages in this fashion. Rather, the Act merely sets out the minimum to which an employer is exposed in the event of termination without adequate notice, and does not create a ceiling for damages in this field.
If you believe you have been wrongfully dismissed, whether by prolonged layoff or otherwise, please contact a lawyer who can advise as to your rights and entitlements both under the Ontario Employment Standards Act and at common law.
- Robert Tanha, Toronto


Wednesday, November 10, 2010

Ontario Employment Law: Temporary Layoffs - Common Law and the Employment Standards Act

One important area where the Ontario Employment Standards (ESA) and the common law appear to be wholly at odds relates to the consequences of temporary employee layoffs.

The ESA provides that under certain circumstances, an employer may temporarily lay off an employee, and even though no work is provided and no compensation is paid, the employment is not considered terminated, so long as the employer squarely complies with the Act.

No such right to layoff exists at common law. In a non-unionized workplace, unless an employment agreement provides that layoffs may occur or an employee acquiesces, a layoff may constitute a termination of employment, with the employee thereby becoming entitled to pay in lieu of notice and other compensation.

These drastically different approaches certainly create a bit of a legal fog that has great potential to confuse employers and employees alike as to the legal consequences of layoffs.

We'll try to shed some light in this article.

Background

Under the Ontario Employment Standards Act, an employer must generally provide termination pay where it chooses to sever the employment relationship. An employee will typically have additional rights to compensation at common law or, if unionized, under a collective agreement.

Of course, there are some notable exceptions to this, including:
  1. Where the employer can establish that it had “just cause” to terminate the employee;
  2. Where the employee can establish that the employee has engaged in wilful misconduct, disobedience, or wilful neglect of duty.
Under the Employment Standards Act, but not necessarily at common law, a further exception occurs, where the employer lays the employee off for a period not longer than the period of a “temporary layoff.”

Layoffs under the Employment Standards Act

Under the Act, a “temporary layoff” in the case of a non-unionized employee is defined as:
  1. a layoff of not more than 13 weeks in any period of 20 consecutive weeks, or
  2. a layoff of more than 13 weeks in any period of 20 consecutive weeks, if the layoff is less than 35 weeks in any period of 52 consecutive weeks and, at least one of the additional conditions prescribed by the Act is met, for example the employee continues to receive substantial payments from the employer during the period of layoff.
In the very recent case of Printlinx Corporation v. Errol Bennett and Director of Employment Standards, the Ontario Labour Relations Board explained the relationship between an employer’s termination pay obligations under the Act and the exception to this in the case of “temporary layoff,” also recognized by the Act:
Under the Act, termination pay is presumptively payable where an employment relationship is severed because of an employer’s actions. The Act recognizes that a period of layoff will not always sever an employment relationship. It therefore contains provisions that permit employees to be laid off temporarily without triggering notice of termination or termination pay obligations. The corollary is that where a layoff exceeds a temporary duration it is characterized as a termination with the attendant obligations.
What this means is that where an employer recalls the employee within the time frames and in fulfillment of any conditions required by the Act, termination pay will not be owed to the employee since a "termination" will not be found to have occurred.

In Printlinx, the employee, Mr. Bennett, chose to ignore a notice of recall that he believed had arrived too late and chose not to return to work, instead insisting that his former employer pay him termination pay in accordance with the Act.

The employee and employer in that case disagreed on whether the layoff to which Mr. Bennett was subject had exceeded a temporary duration, and thus whether a "termination" had occurred with the attendant obligations that would thereby be triggered under the Act:
The Employer’s position is that Bennett was temporarily laid off, and was recalled to work within that period of temporary lay-off. He did not report to work within a reasonable time after being given notice of recall. It was his failure to return that severed the employment relationship, and he is not therefore entitled to termination pay. Bennett’s position is that he was promised termination pay on January 26, 2009 and he was entitled to ignore the recall notice and collect the termination pay.
The Board concluded that Mr Bennett’s layoff had exceeded a “temporary layoff” and constituted a “termination” before any attempt to recall him was made:
Bennett was first laid off on April 14, 2008, and only recalled for a couple of weeks. Within the 52 week period commencing April 14, 2008, he had been laid off for 35 weeks by the time the last week of December 2008 came around. No attempt to recall him to work was made until the first week of January 2009. Bennett’s layoff therefore exceeded a “temporary layoff” and amounted to a termination before any attempt to recall him was made. It follows that he is owed termination pay.
Worthy of note, the Board pointed out that the number of weeks of layoff, for the purposes of the Act, are calculated on a cumulative basis over either a 20 or 52 week consecutive period; the weeks of layoff need not run consecutively for the layoff to exceed a "temporary layoff" as defined therein.

Layoffs under Common Law

At common law, an Ontario employer has no entitlement to temporarily lay off an employee, unless an employment agreement between the parties provides for this.

As a result, at common law, a temporary layoff without the employee's consent or acquiescence may give rise to a wrongful dismissal, irrespective of the provisions of the Employment Standards Act.

In Martellacci v. CFC/INX Ltd., 1997 CanLII 12327 (ON S.C.), Ontario Supreme Court Justice Anne M. Molloy considered the consequences of layoff without an employee's consent, and concluded unequivocally that in that case a wrongful dismissal had occured. Her judgment states:

2. Did The Lay-off Constitute Wrongful Dismissal?

29 It is trite law that if an employer changes a fundamental term of employment, this may constitute constructive dismissal. It is difficult to imagine a more fundamental term of employment than that the employee be paid his or her salary.

30 In this case, there was no agreement that the employer was entitled to lay off the employee for any period of time. In the absence of such an agreement, the employer cannot simply place an employee’s employment status on hold without pay and without substantial benefits and expect that this will not constitute constructive dismissal. If the demotion of an employee or a reduction in pay and responsibilities of an employee constitute constructive dismissal, then surely indefinite suspension with no guarantee of recall, no salary and virtually no benefits must also qualify for the same treatment at law.

31 This issue was dealt with by the Divisional Court in Style v. Carlingview Airport Inn. The Divisional Court found that a lay-off amounted to wrongful dismissal and held at page 166 to 167:

In the case at bar, the plaintiff had a contract of indefinite hiring. There was no express term contemplating layoff as in a collective agreement. There had been no lay-offs before, nor was any warning of possible layoff given. Nor were any benefits paid during the layoff. The hours of employment were adapted on an ongoing basis to the work available based on the occupancy of the hotel, but there had never been a layoff. Also, the plaintiff was often called upon when there was extra work to do, indicating that the employer was satisfied with her work.

In my view there was no express or implied term of the contract of employment that the employee could be temporarily laid off with out pay.

32 In the case before me, there was no agreement with respect to lay-offs and there were no warnings. The lay-off was imposed unilaterally. With respect to the April lay-off, however, there was at least a triable issue as to whether the employee acquiesced and accepted that particular lay-off as part of her employment agreement. I do not say that this is necessarily the case, but merely that on a summary judgment motion, I am not prepared to say that there is no triable issue on this point. Also, although the plaintiff’s material suggests that the employer was not acting bona fide when issuing the lay-off and that the employer, in fact, had no real intention of returning her to her position, again, in my view, the defendant has raised a triable issue on this point. I am not prepared to conclude, applying the test for a summary judgment motion, that the lay-off on April 12th was termination of employment.

33 However, with respect to the July lay-off, there can be no doubt. The employee by then had retained counsel. Clear letters were sent requesting clarification and assurances. Those were not provided. The July lay-off most clearly was not accepted by the employee. On the contrary, the employee, as a consequence, sued for wrongful dismissal.

34 When an employer without prior agreement lays off an employee, the employee may elect to wait and see. The employee may acquiesce in the lay-off to see if later he will be able to return to his previous job. However, an employee is not obligated to do that. An employee may treat the lay-off as a wrongful dismissal. Ms. Martellacci clearly treated the July lay-off as a wrongful dismissal of her employment.

35 I agree with counsel for the plaintiff. There had been a fundamental change in the employment relationship. Ms. Martellacci was not working and she was not being paid. This constitutes wrongful dismissal.

Accordingly, even if a layoff may be provided for by the Ontario Employment Standards Act, it may still give rise to a wrongful dismissal at common law, and a laid off employee may therefore have entitlement to significant compensation.

If you believe your layoff may amount to a wrongful termination, seek legal advice as to your specific entitlements under both the Ontario Employment Standards Act and at common law.