Employee absent for years still owed termination pay: Arbitrator

Employer claimed worker who was off work for four years didn't have earnings with which to calculate termination pay
|Canadian Employment Law Today|Last Updated: 07/31/2012

An employee whose termination ended due to frustration of employment is entitled to termination pay, even if the employee hasn’t worked in years, an Ontario arbitrator has ruled.

Calvin Wright was a truck driver for Ricci Trucking and Communications, a lumber road and trucking company in Dryden, Ont. In November 2007, Wright was injured in a motor vehicle accident and was unable to return to work.

Wright obtained Workplace Safety and Insurance Board (WSIB) benefits for his loss of income and, in 2009, he entered the WSIB’s labour market re-entry program. Ricci Trucking deemed Wright’s employment to be terminated when he finished the program in November 2011.

Wright filed a grievance for termination and severance pay, as he hadn’t received anything from the employer. Ricci Trucking eventually paid Wright severance pay, but refused to pay termination pay.

The company claimed Wright’s termination was the result of frustration of employment because of his disability, and termination pay was supposed to be based on the employee’s earnings over a regular week. Because Wright hadn’t earned any wages in four years, his termination pay was equal to zero, said the company. It also argued that since Wright received benefits from the WSIB, he had no income to make up for in the notice period. Ricci Trucking said Wright had not been denied any opportunities to find alternate employment and received pay during any hypothetical notice period, which are the purposes of reasonable notice.

The arbitrator found that the Ontario Employment Standards Act, 2000, does not require termination pay only for weeks the employee would otherwise have been at work. The act states termination pay is calculated on “regular wages for a regular work week,” which the arbitrator found should refer to when Wright was actively working.

The arbitrator disagreed with Ricci Trucking’s assertion that termination pay was only meant to provide employees with the opportunity to seek another job — there was also an “element of sweat equity.” The act, said the arbitrator, defined “termination” the same as “severance” and, where one is due, so is the other.

“The statutory language does not support an interpretation that termination pay in lieu is not owed to a deemed terminated employee who, for an extended period of time prior to the commencement of the notice period, has been disabled and unable to work,” said the arbitrator.

The arbitrator also noted that if an employee who was deemed terminated by a disability wasn’t owed termination pay, then a disability would almost always disqualify her from termination pay due to the fact she didn’t work for a period of time before the termination.

In addition, the employer didn’t think receiving both WSIB benefits and termination pay in lieu of notice was an issue, because “the fact that compliance with a statutory requirement to pay termination pay in lieu of notice might result in the (employee) receiving more total income for a period than the amount that his regular wages would have been for the period is not sufficient reason to fail to comply.”

The arbitrator ordered Ricci Trucking to pay Wright termination pay in lieu of reasonable notice based on the wages he would have received in a normal work week had he been able to work. See Ricci Trucking & Communications v. C.E.P., Local 324, 2012 CarswellOnt 6411 (Ont. Arb. Bd.).