Category: Wrongful Dismissal

Can an Employee’s Silence Constitute Implied Condonation to a Layoff?

Post author By Written on behalf of Willis Business Law
Post date June 29, 2023
No Comments on Can an Employee’s Silence Constitute Implied Condonation to a Layoff?

While a layoff and permanent dismissal may seem like similar concepts, the two terms refer to starkly different processes and consequences. A permanent dismissal, or termination, refers to the end of employment. In contrast, layoffs are generally intended as temporary measures in which the employer intends to recall the employee back to work once the layoff period is over. While an employee may be laid off for many reasons, it is not uncommon, particularly in the last few years, for layoffs to be caused by an employer’s economic challenges.

Legislation Governing Layoffs in Ontario

A layoff occurs when an employer seeks to temporarily end an employee’s employment for a specified reason and duration of time, after which point the employer will call the employee back to work. In Ontario, the Employment Standards Act states that an employer may layoff an employee for a total of 13 weeks within a 20-week period or for a total of 35 weeks within a 52-week period, as long as the employer maintains the employee’s benefits.

If the employer fails to recall the employee to work within the specified periods, the employee can presume their employment has been terminated. Further, while an employer’s decision to layoff an employee may be permitted under the applicable legislation, it may violate a common law principle. Therefore, to mitigate potential claims by an employee, employers need to ensure that the employment contract includes the right to layoff an employee.

Employee Brings Claim for Wrongful Dismissal Following Pandemic Layoff

In the recent Ontario Court of Appeal decision in Pham v. Qualified Metal Fabricators Ltd., the appellant employee began working with the respondent employer on October 16, 2000. He was subsequently laid off by the employer on March 23, 2020, at the age of 51. The employer, Qualified Metal Fabricators, manufactured metal structures, earning a significant portion of its sales from the aerospace and food service industries.

As a result of the global pandemic, the employer suffered substantial financial losses. Consequently, the employer laid off 31 of its 140 employees, including the appellant. The employee had not previously been laid off by the employer and was told by the plant manager that he would be called back to work by June 19, 2020.

During the layoff meeting, the employee was provided with a “Layoff Letter,” which stated that his benefits would continue during the layoff. The Layoff Letter also stated that the layoff was conducted in accordance with the employer’s work agreement. Despite there being a signature beside the employee’s name, the employee claimed that he did not sign the Layoff Letter.

Layoff Extended Multiple Times by Employer, Claiming Employee on Infectious Disease Emergency Leave

The employer extended the layoff for a period of “up to 35 weeks” on June 2, 2020. The employer subsequently extended the layoff from September 23, 2020, to December 9, 2020, through September 4, 2021.

The employer provided the employee with a letter indicating that the layoff was conducted in accordance with the Employment Standards Act, and more specifically, Ontario Regulation 228/20, which provides that an employee who had an elimination of, or a temporary reduction in, work hours due to COVID-19 was deemed to be on Infectious Disease Emergency Leave instead of being terminated.

Employee States He Did Not Consent to the Employer’s Layoff

The employee claimed that he did not provide his employer with consent to the layoff, nor did they request it. On December 22, 2020, counsel for the employee advised the employer that he would be commencing a claim for wrongful dismissal. The employer replied two days later, stating that the employee signed a document agreeing to the layoff, and the employer hoped he would be recalled shortly.

The employee filed a Statement of Claim in January 2021, after which the employer brought a motion for summary judgment to dismiss the employee’s claim because he had “agreed to or condoned the layoffs or alternatively, failed to mitigate his damages by not seeking new employment.”

The motion judge dismissed the employee’s wrongful dismissal claim and granted the employer’s motion for summary judgment. The employee appealed this finding to the Court of Appeal for Ontario.

Court of Appeal: Laid-Off Employees Entitled to “Wait and See” Before Electing to Sever Employment Relationship

The employee raised three grounds of appeal, claiming that the motion judge erred in the following:

Proceeding on the mistaken understanding that both the employer and employee sought summary judgment;
Finding an implied agreement to the layoff because he was aware that the employer had laid off several of his co-employees in previous years; and
Deciding that he had condoned the layoffs and was therefore not wrongfully dismissed by signing the letter, seeking legal advice, and/or not objecting to the layoff.

In its analysis, the Court noted that constructive dismissal may be established by either:

The employer’s breach of an essential term of the employment contract; or
A course of conduct by the employer that establishes that it no longer intends to be bound by the employment contract.

Further, without a contrary express or implied term in the employment agreement, a unilateral layoff by an employer constitutes a substantial change to an employee’s employment contract, which can be deemed a constructive dismissal, even when the layoff is temporary. In situations where the employment agreement does not contain a term regarding layoffs, such as in this case, it will not be readily implied that the employer has the right to do so. The Court found that the fact that the employee was aware of his co-employees’ previous layoffs was irrelevant and did not create a legal basis for the employer to layoff the employee.

The Court highlighted the fact that section 56(1)(c) and 56(c) of the Employment Standards Act provides a laid-off employee with 35 weeks to “wait and see” if they are called back to work before they may elect to terminate and/or sever the employment relationship through a claim for constructive dismissal.

No Requirement for Employee to Ask Employer for Recall Information Before Bringing Wrongful Dismissal Claim

In its review of the evidence, the Court found that the motion judge failed to consider that the employee is permitted to take “reasonable time to assess contractual changes before they are forced to take an irrevocable legal position.”

Secondly, the Court found no evidence that the employee expressed a positive action constituting condonation of the layoff.

Thirdly, the Court found that a previous decision that the motion judge distinguished was actually similar to the employee’s position, as the employee was unable to condone changes to his employment agreement because he was not actively working during this time.

Finally, the Court highlighted that there is no requirement for an employee to request additional information from their employer concerning their recall date before pursuing a claim for constructive dismissal.

Court of Appeal Finds Employee was Constructively Dismissed

The Court of Appeal for Ontario ultimately held that an employer cannot infer an employee’s consent to a layoff from mere silence alone. The Court held that there was no evidence to support the motion judge’s finding that the employee’s wrongful dismissal claim should be dismissed, as there was a live issue regarding whether or not the employee condoned the layoff.

This case is an important decision for employers to ensure that any written employment contract contains the right to layoff an employee. Further, this decision shows that while a layoff may be conducted in a manner permitted under the Employment Standards Act, this fact alone is irrelevant to the issue of whether the layoff may be constituted as a constructive dismissal.

Contact the Employment Lawyers at Willis Business Law in Windsor for Advice on Layoffs and Terminations

The trusted employment law team at Willis Business Law, led by J.P. Karam, works closely with employers to understand their needs and proactively mitigate potential employment law disputes. When an employer must defend a claim brought by an employee, we ensure that our clients have a comprehensive understanding of the law that applies to their situation and have sufficient information to make informed decisions as we work to resolve the matter.

Willis Business Law is based in Windsor’s downtown financial district and serves clients in Windsor-Essex and surrounding areas. To schedule a confidential consultation regarding employment contracts or wrongful dismissal claims, contact us online or by phone at 519-945-5470.

Does Mandatory Unpaid Leave for Unvaccinated Workers Constitute Constructive Dismissal?

Post author By Written on behalf of Willis Business Law
Post date November 25, 2022
No Comments on Does Mandatory Unpaid Leave for Unvaccinated Workers Constitute Constructive Dismissal?

After COVID-19 vaccines became widely available to the public, many employers in Canada sought to implement vaccination policies for their employees. If an employee did not comply with the policy and did not have a valid medical exemption, they could face significant consequences, including the imposition of unpaid leave. However, many of these policies, and the rights of employers, have since been challenged.

A recent decision from the Supreme Court of British Columbia dealt with an employee who commenced a wrongful dismissal action against her employer after being placed on unpaid leave due to non-compliance with the employer’s vaccination policy.

First Court Decision of Non-Unionized Employee Placed on Unpaid Leave for Failure to Comply with COVID-19 Vaccination Policy

The case of Parmar v. Tribe Management Inc. is the first time the courts have considered whether a non-unionized employee can be placed on an unpaid leave of absence for their failure to comply with an employer’s mandatory vaccination policy.

The employee worked as an accounting professional with Gateway Property Management, which company was acquired by Tribe Management Inc. in 2021. The employee signed a new employment contract with Tribe in July 2021, which required her to comply with all company policies “amended from time to time by Tribe in its discretion.” The contract further stated that if the employee was dismissed by Tribe without cause, she would be entitled to notice (or pay in lieu thereof) of 12 months’ base salary, plus one additional month of base salary for every completed year of employment, to a maximum of 24 months.

Employer Implemented COVID-19 Policy in Response to Public Health Information

In September 2021, Tribe learned that 35 out of 220 employees had not yet been vaccinated. Based on existing public health information, the employer felt this number was unacceptably high. The employer’s Vice President of Human Resources circulated a policy to all employees via email on October 5, 2021, requiring all employees, subject to medical or religious exemptions, to become “fully vaccinated” by November 24, 2021. Only the employee and one of her colleagues failed to comply.

The employee’s objection to the vaccination was based on her review of the literature and her observance of health complications in family members after receiving their vaccines. The employee clarified this reasoning to her employer and suggested alternative accommodations. However, the employer advised that there would be no exceptions to the policy.

Employee Claimed Constructive Dismissal Arising from Unpaid Leave

On November 25, 2021, the employer told the employee she would be on unpaid leave from December 1, 2021 to February 28, 2022. A few weeks into her leave, the employee requested to return to work; failing which, she would commence a claim for constructive dismissal. The employer declined and placed the employee on unpaid leave indefinitely until she complied with the policy. The employee subsequently resigned and filed her claim.

The plaintiff employee claimed she was placed on an unpaid leave of absence due to non-compliance with the policy. She alleged the employer breached its contractual obligations, therefore entitling her to consider the employment relationship as having been constructively terminated. The plaintiff further claimed that the policy was unreasonable as it did not make an exception for employees working almost entirely from home

The employer claimed that the policy was a reasonable response to the uncertainties of the COVID-19 pandemic and was authorized under the employment contract’s terms. The employer argued that the employee chose not to comply with the policy and, as a result, any consequences to the employee were foreseeable. The employer further claimed that any losses to the employee, were caused by the employee’s failure to mitigate her losses by choosing not to get vaccinated. The employer told the employee that she could have returned to her job anytime if she received the vaccination.

B.C. Supreme Court Finds Employee Not Constructively Dismissed

The Court found that the vaccination policy was reasonable and lawful. The Court also took judicial notice of the transmissibility and potential effects of COVID-19. After a consideration of relevant arbitration cases, it held that the employer’s decision to place the employee on unpaid leave was reasonable in the unprecedented times during which the policy was implemented.

Consequently, Justice MacNaughton dismissed the employee’s claim, finding there was no constructive dismissal as it was the employee’s choice not to get vaccinated.

Ontario Arbitrator Upholds Mandatory Vaccination Policy Despite Government Directive Being Lifted

Meanwhile in Ontario, Arbitrators have been asked to consider similar fact scenarios involving the employer’s implementation of mandatory vaccination policies. In Maple Leaf Foods Inc., Brantford Facility v UFCW, Local 175, an Arbitrator upheld a mandatory vaccination policy requiring all employees and contractors to be fully vaccinated by March 31, 2022, barring exemptions per any human rights grounds. The Arbitrator found the policy reasonable and enforceable and noted that other health and safety measures were insufficient to protect the workplace absent the vaccination policy. Further, the policy was consistent with the collective agreement and remained reasonable in light of recent changes to COVID guidelines adopted by the government and the employer.

In August 2022, the Arbitrator in the case of Regional Municipality of York v Canadian Union of Public Employees, Local 905 (Long Term Care Unit) upheld a mandatory vaccination policy in a long-term home care facility that required employees to have three doses of an approved COVID-19 vaccination. The employer implemented their policy after the Government of Ontario directed that all long-term care home workers must have three doses of the COVID vaccination. The policy was upheld despite the Government of Ontario revoking the directive in March 2022.

When mandatory vaccination policies began to roll out during the height of the COVID-19 pandemic, the Ontario Human Rights Commission indicated that mandates are “generally permissible under the Human Rights Code as long as protections are put in place to make sure people who are unable to be vaccinated for Code-related reasons are reasonably accommodated.” Workplace mandates must also comply with privacy laws.

Reopening Ontario

Under the Plan to Safely Reopen Ontario, mandatory vaccination policy requirements have mostly been revoked. However, when faced with policy cases, decision-makers will review any applicable employment or collective agreements, the employer’s statutory obligations, the nature of the workplace, and the health information available when the policy was implemented.

Employers must take every reasonable precaution to protect the health and safety of their employees under Ontario’s employment and labour laws. In doing so, they can maintain some of the precautions put in place to address COVID-19 but must be wary that precautionary measures taken in 2021 may not be regarded as such in 2022 and beyond. Therefore, employers should understand that these cases are fact-specific, and additional considerations may be relevant when determining the reasonableness of policies and enforcement measures in the future.

Willis Business Law Provides Advises Employers on Wrongful Dismissal Claims and Vaccination Policies

The knowledgeable employment lawyers at Willis Business Law have extensive experience guiding employers through various employment law and labour law matters, including wrongful dismissal claims and navigating workplace policies. Our lawyers remain current on the latest legal cases to help ensure that employers understand their rights concerning workplace policies to ensure they effectively mitigate risk and litigation.

Willis Business Law is located in Windsor and serves clients throughout Windsor-Essex and surrounding areas. If you have questions or concerns regarding workplace policy implementation or are defending a termination claim, contact us online or call our office at 519-945-5470 to speak with a member of our employment law team.

Employment Contracts Employment Law Wrongful Dismissal

Unenforceable Termination Clauses & Worker Misclassification: A Cautionary Tale for Employers

As an employer, it is critical to ensure that an employment agreement is properly drafted in accordance with the applicable legislation and correctly sets out the intended employment relationship. If not, there could be serious consequences for an employer in the event of a wrongful dismissal claim.

A recent decision from the Ontario Superior Court of Justice illustrates such consequences and the dangers of an employer not complying with minimum legislative standards regarding an employee’s termination. The Court allowed the employee’s claim in part and awarded damages of approximately $70,000.

Plaintiff Claims He Is Employee of the Defendant, Not Independent Contractor

In the case of Baker v. Fusion Nutrition Inc., the plaintiff formerly worked for the defendant, Fusion Nutrition Inc. The parties’ relationship was governed by a fixed term contract that stated the defendant hired the plaintiff as an independent contractor. The contract also contained a termination clause.

The plaintiff claimed that he was an employee misclassified as an independent contractor under the agreement. He also claimed that the termination clause was unenforceable as it contradicted the minimum standards of the Employment Standards Act.

Plaintiff Sues Employer for Breach of Contract and Employee Entitlements

The plaintiff served the Statement of Claim on the defendant and despite emails from the plaintiff’s counsel to the employer, a Statement of Defence was not filed, and the defendant was noted in default. The plaintiff sought default judgement and damages for breach of contract, unpaid wages, unpaid vacation, unpaid holiday pay, and punitive, aggravated, bad faith and/or moral damages.

Two key issues were before the Court. The first was deciding whether the plaintiff was an employee or an independent contractor, and the second was assessing whether the termination clause was enforceable.

Nature of Working Relationship Found to Be Employer-Employee

The Court found that although the plaintiff had been labelled as an independent contractor in the agreement, the evidence was that the plaintiff met the criteria for the definition of employee and was therefore entitled to damages. The Court’s conclusion was based on various factors, including:

The plaintiff worked full-time, five days a week, from the employer’s premises;
He performed work activities that the employer controlled;
He could not refuse or contract out of the employer’s work;
He had no opportunity for profit or loss in the performance of his work tasks;
His pay did not fluctuate regardless of the quantity or quality of his work; and
He was required to advertise himself as a representative of the employer to customers.

The Superior Court noted that an agreement purporting to describe the nature of the relationship is not determinative on the classification of whether an individual is an employee or independent contractor. Instead, this classification is a question of fact to be determined by the evidence.

Termination Clause Deemed Unenforceable

The plaintiff argued that the termination and notice provisions in the agreement were vague and ambiguous, rendering them unenforceable. He further claimed that the termination clause contracted out of the requirements of the Employment Standards Act when it provided for termination for cause without further payments, and termination with notice, with a fixed notice payment of four months.

The Court noted that a termination clause must comply with the minimum standards under the Employment Standards Act and found that the termination clause in question was unenforceable as it allowed the employer to terminate the plaintiff for cause without complying with such minimum standards. Further, the clause must be clear and unambiguous, but the Court did not need to decide on this matter given that they found the clause to be unenforceable due to its lack of compliance with the legislation.

Court Allows Claim in Part, Employee Awarded Damages

Since the plaintiff was found to be a fixed-term employee, he was entitled to reasonable notice under the Employment Standards Act. Further, as an employee, he was entitled to the earnings he would have received up to the end of the fixed-term contract in the absence of a notice period.

Overall, the Court awarded the plaintiff approximately $70,000 in damages representing the balance of the contract term, unpaid vacation and unpaid holiday pay to the date of termination. The employer was also ordered to pay partial indemnity costs to the plaintiff.

The Court dismissed the plaintiff’s claims for future vacation, future holiday pay, and punitive, aggravated, bad faith and/or moral damages.

Contact Willis Business Law for Trusted Advice on Navigating Employee Termination

The trusted employment lawyers at Willis Business Law provide employers with proactive advice and unique solutions on a variety of employment law matters, including employment contracts and employee termination. The firm’s knowledgeable litigators also skillfully advocate for employers in wrongful dismissal claims.

Located in the heart of Windsor’s financial district, our firm proudly serves clients throughout Windsor-Essex and the surrounding areas. To schedule a confidential consultation with a member of our employment law team, contact us online or call us at 519-945-5470.