Author: barryfisher

In Kitchen v Brandt Tractor ( 2021 NBQB 064) Justice Terrance has a situation where after an asset sale the new employer offered the employee from the vendor employment and specified that his adye of hire would be the date of the transaction closing but there was no specific mention of whether his  prior service would be regognized.

This is what the Judge said:

[30] Nowhere is previous service mentioned in the context of termination or reasonable notice. The Employment Contract only recognizes past years of service for purposes of vacation. The defendant submits that because the Employment Contract only references vacation and is silent on the issue of reasonable notice then, by implication, prior service is excluded from the calculation of reasonable notice (expressio unis est exclusio alterius). I disagree. The purpose of advising the employee of whether or not prior service will be included in the calculation of reasonable notice on termination is to permit the employee to make an informed decision whether it is better in his interest to claim against his former employer for damages or accept the new offer of employment. An important part of that calculation is whether his prior years of service will be counted if he is terminated by the new employer. The offer of employment made by Brandt in this case is, at best, ambiguous. It does not expressly state that prior service will not be counted. In my view, the offer of employment made by Brandt was not sufficient to put the plaintiff on notice of the consequences of his decision to accept the new employment with Brandt. The defendant has failed to rebut the presumption identified in Sorel andrecognized in Stone.

[31] The plaintiff’s entitlement to reasonable notice will be based on 11 years and 8 months service.

MY COMMENTS:

Under the ESA this is not an issue as the Act provides for deemed continuous service where the purchaser continues the employment of the vendor’s employees whether the transaction is a share sale or an asset sale.

However under the common law, one must first distinguish between an asset sale and a share  sale. There is no issue with a share sale as the employer is the same corporate entity, only the owner of the shares changes. However the case law supports the proposition that that is different for an asset sale. This actually goes back to ancient anti slavery provisions which prevented the Master from selling the Slave.

Quere, isn’t it ridiculous that an employee’s legal rights flow from how a bunch of tax lawyers decide to set up a transaction? How is the employee supposed to know or understand the difference between these two types of sale ? I digress.

As a workaround to this absurd law, judges have created this presumption of inherited prior service. However like all presumptions, they  can be overturned with evidence to the contrary.

So if an employer successfully negates the presumption then for common law purposes there is new employment but for ESA purposes there is  continuous employment. Moreover if the contract purports to say that for all purposes service is not continuous, is that provision void as it is contrary to the ESA?

Who ever said that employment law was easy.

In Lamontangne v J.L Richards & Assocuates ( 2021 ONSC 2133) Justice Roger had a case where the employment contract had a termin ation provision which said “Employment may be terminated for cause at any time, without notice. ”

Under Waksdale v. Swegon North America Inc., 2020 ONCA 391 , the use of the term “just cause” instead of the defintion of wilful misconduct under the ESA has been found to invalidate the entire termination clause.

In this case the Defendant tried to distinguish thier clause by saying it only said ” cause” not “just cause “.

The Judge did not buy it. Here is what the Judge said :

[37] As a result, the “for cause” termination provision is illegal as it incorporates the common law “just cause” concept, which means that an employee could be terminated without any notice for conduct that is not “willful” or “bad on purpose”. This is an attempt to contract out of the minimum standards prescribed by the ESA and voids the entire clause. It does not matter what the employer might have done, the wording of the clause is determinative.

If you would like a copy of this case email me at barryfisher@rogers.com

In DALTON v FRASER VALLEY FIRE PROTECTION LTD ( 2021 BCPC 146) Judge Skilnick decided that the Plaintiff’s age was such an important Bardal Factor that the reasonable notice period was a pretty shocking 3 months notice. The judge also found that there was no enticement and the poorly worded probationary clauise did not apply .This is what the Court said.

[33]     Older employees, particularly those over 50, may be entitled to a longer period of notice. Age is a factor that bears so importantly upon the prospects for other similar employment and employers who terminate the employment of older employees must appreciate the difficulty that is thrust upon older employees who are on the receiving end of a wrongful dismissal.

My Comments:

Although age is definitely an important Bardal Factor, it is not usually that important where the service is short. In part this is because if older short service workers were automatically entitled to much longer notice periods that younger workers, this would simply create another barrier to the hiring of older workers.

By the way, the Plaintiff represented himself.

In McCallum v Saputo ( 2021 MBCA 62 ) JA Pfuetzner made it clear that under the common law an employer has no duty to investigate prior to dismissing an employee although if they do not and just cause is not found they run the risk of additional damages for not doing so.

In other words, if you hired Sherlock Holmes as a workplace investigator who concluded that you did have just cause but the judge disagreed with Mr Holmes, then the employer would lose.

On the other hand if you did no investigation at all but proved your case in Court, then the employer would win.

Companies often spend huge amounts of money on workplace investigations but then are shocked to find out that they are of little or no assistance when it comes to actually proving their case in a court of law. The witness statements taken down by the investigator cannot be used as direct evidence in Court and even the Plaintiff’s statements can only be used to contradict what he or she says in Court. Of course the investigators assessment of credibility and or their conclusions on liability are not admissible as this is the exclusive function of the judge or adjudicator.

In Kraft v Firepower Financial Corp ( 2021 ONSC 4962) Justice Morgan had a somewhat unique situation.

It was not disputed that on two different transactions the Plaintiff salesman had done everything that was expected of him up to his termination date and the only issue was whether the transaction would actually close and thus the Defendant would receive the sale proceeds. On of the closings took place within the 10 month notice period and one had not closed within the 10 months nor by the date of the hearing.

The Judge awarded the Plaintiff his commission for the first transaction but not for the second one ..

This is what he said :

[26] On the other hand, I am not prepared to award the Plaintiff commission on the Schure Sports deal if and when it ever closes. The Plaintiff’s notice period has come and gone, and his entitlement to wages – whether salary, bonus, commission, or other incentive payment – does not go on forever.

[27] The notice period defines the time frame after which both the employee and the employer must put the employee’s wages flowing from his termination behind them. Otherwise, an employer and employee would be tied to each other indefinitely. I am of the view that a judgment in a case like this should bring finality to the issues between the parties.

For a copy of this case, send a email to barryfisher@rogers.com

In Russell v The Brick Warehouse ( 2021 ONSC 4822) Justice Vella awarded 24 months notice to a 57 yearly Senior Supervisor making $75k with 36 years service.

However the surprising part of this case is that the Judge also awarded $25,000 for certain events following the termination. In essence, the Defendant failed to tell the Plaintiff that if he did not accept their offer ( which was in excess of the ESA minimums) they would nevertheless pay him his ESA minimums.

This is what the Judge had to say about the employer’s behaviour

[51] In considering the factors that inform an award for moral damages, the court is to look at the manner in which the dismissal was carried out. This can include conduct at the time of the dismissal and following the dismissal provided it is related to the dismissal: See Doyle at paras. 26 and 39. 

[52] The termination letter provided to Russell, dated July 21, 2020, is the focus of this analysis. It provided a without prejudice offer to settle Russell’s termination and severance obligations by providing terms that were, generally, more generous than the statutory minimum entitlement, but less than his common law entitlement for other aspects of his compensation. Russell had three days to accept this offer and would have had to sign a Release in favour of the employer. 

[53] The termination letter was not fully compliant with the minimum statutory entitlements of the ESA insofar as it did not reflect an extension of Russell’s employment related long term disability, accidental death and dismemberment coverage or ongoing participation in the Group RRSP and DPSP programs during the statutory notice period. Furthermore, the termination letter provided that vacation pay would only be paid accrued to the date of termination. Under the ESA, vacation pay continues to accrue over the statutory notice period, or eight weeks beyond termination in Russell’s case. 

[54] More importantly, the termination letter did not advise that if Russell declined the offer, he would be immediately provided with his statutory entitlements under the ESA. I find this to be a serious defect with the termination letter, as it implies employees will know that they can demand their statutory entitlements forthwith upon rejection of these types of offers. This defect reflects a failure by The Brick to deal fairly with Russell. By failing to include this proviso in the termination letter, The Brick was not being honest and forthright with Russell. 

[55] Furthermore, while The Brick’s failure to immediately transfer the correct amount of severance and termination pay into Russell’s RRSP was largely due to a series of “inadvertent” missteps on its conduct post termination, it nonetheless reasonably caused Russell distress beyond the “normal” hurt feelings that accompany termination without cause. 

[56] There is some evidence in the record that supports the requisite degree of mental distress, recognizing that mental distress need not be proven by medical evidence: Groves v. UTS Consultants Inc., 2019 ONSC 5605 at para. 113. 

[57] I recognize that an employee, like Russell, does not have a statutory entitlement to have his severance and termination pay directed to an RRSP. However, there is no suggestion by The Brick that it would not accommodate such requests from terminated employees and Russell made this request on July 23, 2020 – three days’ after receiving the termination letter – and this request was repeated by his lawyer. Eventually, The Brick did arrange for a direct deposit into Russell’s RRSP. 

[58] Russell was without income or, to his knowledge, benefits for approximately seven and a half months post termination. His spouse was forced to go back to work full time and Russell had to use his savings to make ends meet for the family during this period. Russell has been receiving some medical treatment and medication for stress related issues according to his unchallenged evidence. There was no good reason for The Brick to have failed to advise Russell by at least July 23, 2020 (after receiving his counterproposal) or shortly thereafter that the majority of his benefits would be extended beyond termination, in compliance with the ESA. There was also no good reason for The Brick to have not immediately advised Russell that he would receive his statutory notice and severance pay in the event its without prejudice offer was rejected. This is no way to treat any employee, much less a long-term loyal employee of over 36 years. 

[59] The fact that The Brick offered for Russell to keep the funds totalling the net ESA entitlements does not relieve it from its errors and lack of timeliness (see the chronology and evidentiary cites at para. 16 of Russell’s factum). The whole point was that Russell wanted the funds deposited into his RRSP so that there would be no personal tax withholdings from it. The 

Brick had already taken far too long to get the statutory entitlements right irrespective of the date when it was provided with the RRSP bank deposit information by Russell’s lawyer. 

[60] Furthermore, The Brick used the same basic template termination letter, modified to the circumstances of each terminated employee, as was used for Russell. While no direct evidence was led on the issue of how the “template” termination letters were modified, the inference is either none of the termination letters reflected the advice to employees terminated at around the same time as Russell that if The Brick’s offer to settle was rejected, they would receive the statutory minimum entitlements, or the other letters did reflect that advice and it was omitted from Russell’s termination letter. Either way, this factor supports an award of moral or aggravated damages, in combination with the other factors reviewed. 

[61] Russell asks for an award of $50,000 as moral or aggravated damages. 

[62] In the circumstances of this case and having regard to awards made by this Court in other cases featuring similar types of unfair dealings during the course of termination, I am awarding $25,000.00 as moral damages for the following reasons: 

a) A lack of transparency and fair dealing by The Brick in the termination process by failing to advise that Russell would be provided with his full statutory (ESA) entitlements in the event he rejected the offer reflected in the termination letter; 

b) A lack of transparency and fair dealing by failing to advise Russell that his benefits would be extended consistent with his statutory notice period irrespective of whether he accepted The Brick’s offer; 

c) The failure of the offer to meet all of the statutory entitlements, including vacation pay accrued over the course of the statutory notice period; and 

d) Mental distress Russell suffered beyond the usual hurt feelings and distress of being dismissed, and which was reasonably foreseeable to The Brick arising from its lack of transparency and fair dealing in the manner of terminating his employment. 

My Comments:

This is another example of how the Courts are reacting to behaviours by the employer that in their opinion fall below the acceptable standard.

For instance ,the Court felt that not telling the Plaintiff that if did not sign the release he would still be paid his ESA minimums was wrong. However, within one month of his termination he retained an experienced employment counsel who would have told him this. In fact, within 10 days of his termination the employer not only paid the ESA minimums but overpaid it by paying it twice. Therefore how was the Plaintiff possibly misled?

The problems seem to arise from this “overpayment “. Once they realized this “overpayment” the Defendant  asked that the Plaintiff return the portion in excess of his ESA. The Plaintiff refused and instead the Plaintiff returned the whole net amount. Why did he not simply keep all the money and tell the defendant it was a credit to his common law entitlement?

Through a series of screw ups the ESA payment was not properly paid to his RRSP until 7 months later.

The Judge made references to  some without prejudice offers made by both the Defendant and the Plaintiff . Funny, I always  thought that offers that were not accepted were not even to be disclosed to the Court, let alone referred to or relied upon.

One of the basis for the moral damages was the failure to pay vacation pay on the termination pay. At 12% of 8 weeks salary  at $75,000 /year this would amounted to $1,385.  But in fact the Defendant paid twice the ESA amount , an overpayment of 34 weeks ( $50,480) which more than covered the vacation pay underpayment of $1,385. Remember, the Plaintiff chose to repay the entire amount ( presumably because he wanted it in RRSP not subject to tax withholding ) and now was complaining that he did not get his ESA payments for 7 months.

My personal feeing is that certain judges feel compelled by the Court of Appeal to cap notice periods at 24 months absent special circumstances. However they feel that the Plaintiff should receive more than this informal cap and therefore will find other creative ways of rewarding extra monies to plaintiffs they believe are deserving by focusing closely on the Employer’s actions at the time of and following the termination.

If you would like a copy of this case, send me an email at barryfisher@rogers.com.

In Fogelman v IFG ( 2021 ONSC 4042) Justice Vella made three interesting decisions on some recent COVID related issues:

1. IDEL Layoffs are Constructive Dismissals: This is what the Judge said :
2. [45] O. Reg. 228/20 was enacted by the Ontario government as a measure to provide temporary relief to employers from paying statutory notice and severance under the ESA during the course of the COVID-19 pandemic by providing that, for purposes of the ESA, temporary lay-offs would not constitute constructive dismissal (subject to stated exceptions) within the meaning of that statute. Section 7 of O. Reg. 228/20 states: 

   7. (1) The following does not constitute constructive dismissal if it occurred during the COVID-19 period: 

   1. A temporary reduction or elimination of an employee’s hours of work by the employer for reasons related to the designated infectious disease. 

   2. A temporary reduction in an employee’s wages by the employer for reasons related to the designated infectious disease. 

   (2) Subsection (1) does not apply to an employee whose employment was terminated under clause 56(1)(b) of the Act or severed under clause 63(1) (b) of the Act before May 29, 2020.

   [46] Subsection 56(1)(b) of the ESA states: 

   56 (1) An employer terminates the employment of an employee for purposes of section 54 if, 

   (b) the employer constructively dismisses the employee and the employee resigns from his or her employment in response to that within a reasonable period; 

   [47] Furthermore, the Ontario Ministry of Labour bulletin entitled “COVID-19: temporary changes to ESA rules” states: “These rules do not address what constitutes a constructive dismissal at common law.” 

   [48] The ESA provides the answer to this issue under s. 8(1): 

   8 (1) Subject to section 97, no civil remedy of an employee against his or her employer is affected by this Act. 

   [49] In other words, s. 8(1) provides that the ESA does not supercede the civil remedies otherwise available to an employee at common law or in equity. 

   [50] As Mr. Fogelman was not pursuing his rights under the ESA but rather was pursing his civil remedies, O. Reg. 228/20 does not apply to Mr. Fogelman’s claims made under the common law pursuant to s. 8(1) of the ESA. 

   [51] In the alternative, if I am in error regarding my conclusion, then, Mr. Fogelman was not captured by s. 7(1) of O. Reg. 228/20 because he was constructively dismissed within the meaning of s. 56(1)(b) of the ESA. Mr. Fogelman effectively resigned within a reasonable time thereafter (within days), and the constructive dismissal and Mr. Fogelman’s response occurred before May 29, 2020. Therefore, pursuant to s. 7(2) of O. Reg. 228/20, s. 7(1) did not apply to Mr. Fogelman’s termination by IFG. 

2. CERB is not deductible from wrongful dismissal damages. This is what the Judge said :

ii. Canada Emergency Response Income Support Payments  

[91] Mr. Fogelman applied for, and received, the income support payment under the Canada Emergency Response Benefit Act, S.C. 2020, c. 5, s. 8 (“CERB Act”), in the sum of $2,000 per month, for five months from April to August 2020. 

[92] IFG submits that I should reduce any award I make by the sum Mr. Fogelman received under the CERB Act. 

[93] The CERB Act does not offer much guidance on this topic. However, s. 12(1) does impose a repayment obligation on recipients of the income support payment should it be determined that the recipient should not have received it, or was overpaid: 

Return of erroneous payment or overpayment 

12 (1) If the Minister determines that a person has received an income support payment to which the person is not entitled, or an amount in excess of the amount of such a payment to which the person is entitled, the person must repay the amount of the payment or the excess amount, as the case may be, as soon as is feasible. 

[94] I have reviewed the legislation, and the decision of S.F. Dunphy J. rendered in Iriotakis v. Peninsula Employment Services Limited, 2021 ONSC 998, at paras. 20-21. I agree with Dunphy J. that the CERB Act payments should not be treated as income for purposes of mitigation. 

[95] Accordingly, I decline to deduct the CERB Act income support payments received by Mr. Fogelman from the damages awarded. 

3) Awarding Punitive Damages: This is what the Judge said :

[113] I am concerned that IFG refused to provide Mr. Fogelman with any statutory entitlements under the ESA once it received notice that Mr. Fogelman considered the lay-off to be constructive dismissal. It is well established that an employer cannot lay-off employees absent a contractual right to do so, and that any such purported lay-off will be treated as a constructive dismissal at common law. Initially, it will be recalled, IFG took the position Mr. Fogelman had no employment contract. 

[114] Even after IFG acknowledged that an employment contract existed, IFG did not pay the notice and severance requirements stipulated by the employment contract. 

[115] IFG has not behaved well in its dealings with Mr. Fogelman over the termination. First, it took the position that Mr. Fogelman was an employee since 2009 and produced sworn evidence to this effect. This position was also reflected in its statement of defence.

[116] Then, later, by way of a supplementary affidavit, IFG changed its position and stated that Mr. Fogelman was actually an independent contractor for the first five plus years of his employment and produced an employment contract. IFG did not amend its statement of defence to plead the employment contract and its termination clause. 

[117] IFG admits it knew that Mr. Fogelman took the position that the lay-off was a constructive dismissal almost immediately following his termination. IFG used this position as the excuse for not advising Mr. Fogelman of the prospects of his being recalled to work, notwithstanding its advice, reflected in its letter to Mr. Fogelman dated March 16, 2020, that it would provide him with an update of his lay-off status. At no point did IFG provide any such update, and at no point did it recall Mr. Fogelman back to work. 

[118] Indeed, efforts by Mr. Fogelman’s lawyer to initiate settlement discussions and his demands that Mr. Fogelman be paid at least his minimum entitlements under the ESA were met with radio silence after an initial letter from IFG’s lawyer saying that IFG would consider the proposal and would respond. 

[119] IFG also made it difficult for Mr. Fogelman to effect service of the statement of claim, notwithstanding the pandemic. According to Mr. Fogelman’s affidavit evidence, which I accept, IFG’s lawyer declined to accept service, and when Mr. Fogelman contacted IFG to ask if he could come and serve the statement of claim, he was advised that IFG’s personnel had been instructed not to accept service of his lawsuit. As a result, Mr. Fogelman, through a private process server, had to serve an IFG official at his place of residence. Even then, the official sent back the statement of claim by courier saying that IFG personnel were not allowed to accept service. This pattern of conduct, during the course of a pandemic, was designed to make it as difficult as possible for Mr. Fogelman to proceed with his lawsuit. 

[120] It is also my view that the failure to comply with the ESA is an independent wrong that is outrageous and reprehensible behaviour deserving of punitive sanction. The purpose of the ESA is to provide employees with minimum standards, including minimum notice and severance in the case of termination without cause. Employers cannot be permitted to ignore their obligations under the ESA while awaiting the outcome of a court proceeding where the termination was conceded to be without cause. It is critical that the courts protect the statutory rights of employees, especially in harsh economic times. I agree with Mr. Fogelman’s position that IFG’s refusal to pay anything to Mr. Fogelman was an attempt to play hardball with him.

[121] I have considered the compensatory aspects of the damages award and determined that “there is a shortfall between the amount of that compensation and the total amount required to accomplish the objectives of retribution and deterrence and denunciation of the defendant’s misconduct” to use the words of Cronk J.A. in Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669, 117 O.R. (3d) 481, at para. 228. 

[122] Having reviewed the case law submitted, and recognizing that IFG’s business has suffered an economic downturn in the wake of the pandemic, it is my view that an award of $25,000 is an appropriate award of punitive damages. This award proportionately meets the goals of retribution, deterrence, and denunciation of IFG’s misconduct. It also sends an appropriate message to employers that the mandatory requirements imposed upon them by the ESA, in favour of employees, must be abided by promptly. 

My Comments:

This is another in an increasing long line of cases about COVID related employment issues .

These are my concerns:

This case was heard on January 28, 2021 and released on June 2, 2021. The case of Taylor v Hanley Hospitality ( 2021 ONSC 3135) which came to the opposite conclusion on the IDEL issue was heard on April 2021 and released on June 7, 2021. In other words neither judge had the benefit of reading the others decision.

The Employer was whacked with a punitive damage award largely because they did not instantly pay the ESA minimums once the employee claimed that the layoff was a constructive dismissal However, if they would have won the IDEL argument , then the layoff would have been legal and no constructive dismissal would have occurred.

Moreover, since the entitlement to ESA termination pay and severance pay flows only from the ESA and not the common law, and the layoff was legal under the ESA but illegal under the common law, how can it flow that the employer should be punished for in effect following the exact wording of the ESA?

How can the employee claim a payment under a statute which the statute itself says there is no entitlement? You may agree or disagree with whether an IDEL layoff is a dismissal but certainly reasonable people ( including fellow judges of the same Court) can disagree without the punishment of punitive damages.

Some of the reasons for awarding punitive damages related solely to litigation tactics, which used to be covered in the costs aspect of the case but increasingly is finding its way into the punitive damages sphere. I am not convinced that this is a good development for the law where court time will be spent arguing over the various litigation tactics of each side before the issue of liability has even been determined. Why not shift these arguments to the cost aspect where the Court could award full indemnity costs as a way of regulating the litigation process?

In Mazanek v Bill & Son ( 2021 ONSC 4512) Justice Steele found that a tow truck driver was an employee and not a independent contractor for the following reasons :

1) The fact that he was paid through a company and not personally was not important.
2) The Plaintiff drove a branded truck owned the Defendant . All the tools of the trade were owned by the Defendant.
3) The Plaintiff wore a Company uniform.
4) He was paid on a strictly hourly basis.
5) He had been an employee of the predecessor company when the Defendant took over the towing contract and continued using the Plaintiff’s services.
6) There was a GPS in the truck so the Plaintiff could be tracked by the Defendant at all times .
7) Most importantly, his duties of driving a tow truck was the business of the Defendant. It was central to the business, not an adjunct to the business.

If you want a copy of this case email me at barryfisher@rogers.com