A recent decision from the Ontario Court of Appeal1,
has confirmed that employees who are entitled to termination pay
under the Ontario Employment Standards Act,
20002 (the "ESA"), will also be able to claim
damages for wrongful dismissal under common law.
Brian Elsegood worked as a technician for approximately seven
years until he was laid off in April 2009. Since his employer
Cambridge Spring Service continued to pay the employer portion of
benefits, the company was able to treat his period off work as a
"temporary layoff", which meant that his statutory
entitlements upon termination did not need to be paid out
immediately. By January 2010, Elsegood had exceeded the "35
weeks within a 52-week period" threshold so his rights to
statutory termination pay under the ESA crystallized.
Elsegood was paid the statutory amounts unconditionally, but the
employer then took the position that no other amounts were owing.
This resulted in a civil claim for wrongful dismissal damages. The
employer proceeded with the rather novel argument that
Elsegood's termination was only for statutory purposes, and his
entitlement under the ESA was all that was owed. The Ontario Court
of Appeal refused to overturn the decisions of the trial judge and
the Divisional Court, both of which held that there was a valid
common law claim for termination damages.
The employer unsuccessfully argued that the ESA and common law
regimes are independent. The Court rejected this view and held that
an employee's employment status simply cannot survive the
termination of that status through a valid enactment of the
legislature. The Court held that every employee should be able, in
virtually every case, to claim constructive dismissal at common law
if they are laid off for a period which exceeds 35 weeks in a
In dismissing the employer's attempt to argue for a
prolonged indefinite layoff, the Court noted that the employer
could not identify the date when this supposedly indefinite layoff
would become a termination. Put differently, it is inconceivable
for an employee to be "in limbo" perpetually.
The Court's decision in Elsegood confirms that
while the ESA sets out the minimum requirements for various
standards, these do not supplant the common law amounts which are
payable on termination. And with respect to the timing for when
claims arise, once an employee is terminated under the applicable
statutory regime, the right to claim common law damages is
triggered. As an interesting point to note, the Court of Appeal
confirmed that this analysis would apply even in circumstances
where an employment agreement contained an applied term allowing
the employer to lay off the employee.
The Elsegood decision provides some helpful guidance to
employers who are contemplating employee layoffs. Even in cases
where the employee may well hold out hope for the economic
circumstances to reverse and employment prospects with that
employer to re-emerge, there are now virtually no circumstances
where Ontario employees can be laid off for a period which exceeds
the 35 in 52-week threshold and not have a right to claim
1 Elsegood v Cambridge Spring Service (2001)
Ltd, 2011 ONCA 831.
2 SO 2000, c 41.
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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