Termination under employment standards doesn’t preclude common law notice award: Court

Employer argued automatic termination under ESA after lengthy layoff didn’t warrant additional award for reasonable notice
|employmentlawtoday.com|Last Updated: 04/26/2012

An employee whose layoff becomes a termination under employment standards legislation is entitled to common law damages for reasonable notice, the Ontario Court of Appeal has ruled.

Brian Elsegood, 50, was a spring technician for Cambridge Spring Service in Cambridge, Ont. He was laid off on April 4, 2009 and recalled two months later on June 9. However, he only worked for a few weeks until Cambridge Spring Service laid him off again on July 28. Elsegood remained off work until Jan. 22, 2010, when his layoff reached 35 weeks within a 52-week period. Under Ontario’s Employment Standards Act, 2000 (ESA), this turned his layoff into a termination.

Elsegood sued for wrongful dismissal and the Ontario Small Claims court awarded him six months’ notice, equal to $9,900. Cambridge Spring Service appealed, arguing the ESA and common law were separate legal regimes and a dismissed employee should not benefit from both. It also argued that the termination was “deemed” by the ESA and not brought about by the employer, which should preclude any common law entitlement. The appeal was dismissed by the Ontario Divisional Court and the employer brought its case to the Ontario Court of Appeal.

The Court of Appeal found that the ESA did not specifically “deem” a termination, but rather deemed the date of the termination, stating employment “shall be deemed to be terminated on the first day of the lay-off.” The court also found the ESA did not specify the character of a termination and required the employer to give notice of any termination. To treat it as otherwise would mean in a prolonged layoff, there would be no date for which an employer would be on the hook for termination pay, said the Court of Appeal.

The appeal court also found legislative minimums did not displace common law notice obligations. In fact, the act stated an employee could seek a “civil remedy” from the employer and any right or benefit greater than that in the ESA would prevail the minimum standards. Common law reasonable notice is a benefit that an employee is entitled to if greater than the minimum, said the court.

The court also dismissed the employer’s argument that since the employee agreed to a previous layoff, it was an implied term of the employment contract. This was irrelevant because once the layoff reached 35 weeks out of 52, statutory termination kicked in. They could not contract out of the ESA minimums, said the appeal court. The employer’s appeal was dismissed and the six-months’ pay in lieu of notice award was upheld.

For more information see:

Elsegood v. Cambridge Spring Service 2001 Ltd., 2011 ONCA 831, 2011 CarswellOnt 14782 (Ont. C.A.).

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