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

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

TORONTO EMPLOYMENT LAW • TORONTO CIVIL LITIGATION & ESTATE LITIGATION • TORONTO FAMILY LAW & DIVORCE

ORIGINALLY POSTED AT WISE LAW BLOG • SUBSCRIBE TO WISE LAW BLOG