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Following the Waksdale decision by the Ontario Court of Appeal ( which overnight made most ESA only contracts null and void) many employers have revised their contracts for existing employees by substituting enforceable ESA termination clauses. They often  make no other changes to the agreement other than a nominal cash payment.

Where a nominal payment has been made, the employers have relied upon the fact that this was fresh consideration and therefore the new and improved ESA termination clause is enforceable.

The counter argument made by employee counsel is once the old ESA termination clause is voided the common law presumption of reasonable notice becomes the relevant termination provision. Therefore if the employee then signs a valid ESA termination agreement, the employee is giving up a significant benefit ( especially if their common law entitlement would vastly exceed the ESA minimums ) and in exchange is only getting a nominal cash payment. On any objective basis, the employee is worse off under the new agreement than they were under the common law regime of reasonable notice.

In a recent case of the Ontario Court of Appeal called Goberdhan v Knights of Columbus ( 2023 ONCA 327) the issue was the enforceability of a arbitration clause newly introduced by the employer  in an ongoing employment relationship.

The actual issue in the appeal was whether the arbitration clause was invalid because of a failure to provide fresh consideration.

This is what the Court said :

My Comments:

What I find fascinating about this case is that the Court seems to be weighing both the advantages and the disadvantages of the new contract and concluding that as the changes were an overall detriment to the employee, therefore there was no fresh consideration.

The Court also reinforces the concept that simply agreeing to continue the existing employment relationship is not in itself fresh consideration.

If this same analysis were applied to the ESA example I set out above, how could it be considered an  advantage to the employee to have given up their entitlement to common law reasonable notice in exchange for $500?

This case reminds me of a conversation I had with the late Mr Justice Randall Echlin many years ago. Randy always told me that as a lawyer drafting employment agreements he would always make sure that his agreements were at least a little better than the ESA minimums. His concern was that since the ESA was a statutory minimum guaranteed to all employees covered by the Act, what advantage ( in other words “fresh consideration” ) would flow to an employee who agreed to only receive what he was statutorily entitled to anyways?

Because of this conversation, I also adopted a practice that when drafting termination clauses for employers I made sure that the termination clause was at least a little bit better than the ESA.

I am proud to say none of those clauses that I drafted were even contested in court.

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In Quesnelle v. Camus Hydronics Ltd. ( 2022 ONSC 6156 ) Justice Charney was faced with the following termination clause :

“During your Probation Period and afterwards, you will be entitled only to notice of termination, termination pay and/or severance pay as required by the Ontario Employment Standards Act.”

The Judge found that this clause contravened the ESA for the following reasons:

1. The ESA requires the payment of both termination pay AND severance pay, not one or the other . Th employer probably meant to say that severance pay would only be paid if the underlying conditions were met ( 5 years service an a payroll in excess of 2.5 million dollars) , but they did not say it properly.

2. The clause does not include for the provision of benefits during the termination period and by inserting the word “only” it cannot be inferred that they intended to include benefits.

If you would like a copy of this case, email me at barry@barryfisher.ca

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In Mechalchuk v Galaxy Motors (1990) Ltd., 2023 BCSC 635 (CanLII) Justice Weatherill had a situation where the president of a number of car dealerships took his wife out for a $250 dinner and then sought reimbursement from his employer while claiming it was a business meeting with two employees.

When confronted by his employer, he continued to lie.

This was held to be just cause . This what the judge said :

[65]      I agree with the submissions of counsel for the defendant that the facts in Roe are analogous to those before me in this case. Although the total amount of the Parksville restaurant dinner and breakfast receipts (approximately $250) was relatively small, the misconduct went to the very root of the plaintiff’s employment relationship with the defendant. He was in the most senior management position at the defendant. His position commanded a high level of authority, responsibility, and trust. He breached that trust by submitting false expense receipts and thereafter being untruthful about them when given an opportunity to explain them on July 11, 2022. Moreover, he failed to “come clean” when he had a second opportunity to do so during the meeting on July 13, 2022. His conduct was such that the defendant’s loss of faith and trust in him was justified.

Lesson to be learned:

Don’t be a schmuck. When you take your spouse out for dinner, pay for it yourself.

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In Blomme v. Princeton Standard Pellet Corporation, 2023 BCSC 652, Justice Mac Naughton had a situation involving a 64 year old Plant Supervisor with 20 years service in a small town who was initially laid off due to COVID on April 4, 2020 with an unexpected date of recall. She accepted the layoff at that time and did not claim constructive dismissal. She had never been laid off before .

The Plaintiff met with her boss on July 2 and expressed her anger that a more junior supervisor had been recalled but not her.

They met again on August 6 at which time the boss told her that they would extend her benefit coverage to December 31 and then if she was not recalled by that date, they would pay her her 8 weeks termination pay under the ESA.

On October 1 2020 the Plaintiff sent a demand letter from a lawyer claiming that she had been wrongfully dismissed as of August 30 as this was the end of the ESA temporary layoff period and asked that all responses be directed to him.

Rather than respond to the Plaintiff’s lawyer, the boss continued to communicate directly with the Plaintiff asking her if she wanted to return to her old job. Again her  lawyer directed that all communication be directed to him .

The boss again ignored the lawyer and told the Plaintiff that she could return November 3 to her regular job.

On October 30, the Defendant’s lawyer sent a letter to the Plaintiff’s lawyer and confirmed that she was owed 8 weeks pay and repeated the offer of the return to work on November 3.

That offer was not accepted .

The Judge found the following :

1. The Judge found that the Defendant did not understand that as of August 30 the Plaintiff was deemed to be terminated under the ESA until they got the demand letter of October 1. The Judge found that the employer never intended to terminate her employment.
2. The Judge  nothing wrong with the Defendant ignoring the Plaintiff’s lawyer letter to direct all comments to him not his client.
3. The Defendant always intended to recall the Plaintiff, the only issue was the timing .
4. Pursuant to the ESA, her employment was terminated on August 30 and the ESA termination pay of 8 weeks was owing. This was also her termination date under the common law.
5. The reasonable notice period was between 15 and 16 months.

The real issue was whether or not the Plaintiff failed to mitigate her damages by refusing the offer returning to work on November 3 and to receive 8 weeks termination pay.

This is what the Judge said on this issue :

[95] Reframed for the circumstances in this case, the issue is whether Ms. Blomme, who was terminated by operation of statute after a temporary layoff that she initially agreed to, and who by October 1, 2020, took the position that she had been terminated, was required to mitigate by returning to work for Princeton in the same job as she had before the termination. Ms. Blomme’s circumstances are far-removed from a termination based on concerns about her performance. There was nothing personal about the decision to lay off Ms. Blomme, and I have accepted that Princeton had a legitimate reason for deciding to recall Mr. Mills before her. Even if Princeton was wrong in that assessment, it was not a decision made with the intent to humiliate Ms. Blomme.

[96] In this case, Ms. Blomme was not singled out for layoff. She was one of a number of management and union staff at Princeton who were laid off as a result of the unprecedent global pandemic faced by many employers.

[97] In the absence of conditions that would render her return to work unreasonable, on an objective basis, Ms. Blomme was expected to mitigate her damages by returning to work for Princeton. A reasonable person would be expected to do so.

[112] I conclude that, in the circumstances of this case, a reasonable person in Ms. Blomme’s position would have accepted Princeton’s offer. Although the specific terms of her re-employment were not set out in Mr. White’s October 8, 23, and 26 emails, it was incumbent on her to at least explore the option of returning to work. Ms. Blomme was being asked to return to the same position, salary, and benefits, which had never been cut off: see e.g. Davies at para. 43. There was no evidence to support that she would be returning to an atmosphere of hostility, embarrassment, orn humiliation. There was no evidence that either Mr. White or Mr. Andrews bore Ms. Blomme any animus. Ms. Blomme’s mistrust of Mr. White appears to have been an unfortunate result of their miscommunication and misunderstanding.

[113] In any event, on October 26, 2020, Mr. White wrote to Ms. Blomme, suggesting a return to work as soon as November 3, 2020, on her regular shift. Again, Ms. Blomme did not respond.

[115] Even if Princeton’s decision to offer Ms. Blomme the option of returning to work was triggered by the Demand Letter and its wish to avoid litigation, it was an offer she should have considered: see e.g., Hooge at para. 89. Her failure to do so resulted in a failure to mitigate.

[116] The layoff occurred in the context of a global pandemic during which many employees were laid off, including many others at Princeton. There was a reasonable explanation for why Ms. Blomme was not recalled when other employees were.

[117] Alternatively, Ms. Blomme should have accepted Princeton’s offer of eight weeks’ pay in lieu of notice and re-employment set out in its letter dated October 30, 2020.

[118] Had Ms. Blomme returned to work as offered, and based on a termination date of October 1, 2020, she would have been made whole.

Thus her entire claim was dismissed.

My Comments:

This case illustrates the extreme risk that Plaintiffs take when they refuse an offer to return to work. As long as the offer is not tied to a release and the employer offers to pay any losses up to the date of the return to work date, there is a real chance that the Plaintiff’s claim will fail .

In this case, the Plaintiff only claimed that the dismissal took place at the end of the ESA temporary layoff period. The outcome may have been quite different had she claimed that her dismissal took place either  at the time of  the original layoff or at least when she expressed her anger at not being recalled in July.

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In Tan v. Stostac Inc., 2023 ONSC 2121 Justic Dineen was faced with a termination clause that said the following in part :

The Employer may end the employment relationship at any time without advanced notice and without pay in lieu of such notice for any just cause recognized at law. 

The provisions of the Ontario Employment Standards Act, 2000, as they may from time to time be amended, are deemed to be incorporated herein and shall prevail if greater. 

This is why the judge found the clause illegal :

[11] In my view, the termination clause in this case suffers from the same flaw identified in the line of cases cited above by giving the defendant the right to terminate the plaintiff’s employment without notice or payment for just cause that might fall short of non-trivial willful misconduct. I do not accept that the attempt to incorporate the ESA’s provisions in the final sentence of the clause’s “without cause” portion detracts from the clear assertion of a right to terminate without notice for any just cause. 

My Comment:

This case again declares that any illegality in a termination clause anywhere in the employment documents is not made suddenly legal because they have one of these savings clauses.

The clause itself must be in compliance with the ESA. It is not sufficient to have an illegal clause and then say ” In any event you shall always receive no less than required by the ESA “.

The policy reason behind this case seems to be that a person should be able to read their employment contract and know what he or she will and will not receive upon termination, without the requirement of also having intimate knowledge of the numerous provisions in the ESA that deal with termination and that might conflict with the plain reading of the termination provision.

If you want a copy of this case, email me at barry@barryfisher.ca

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In  Pham v. Qualified Metal Fabricators Ltd., 2023 ONCA 255 , an appeal to the Ontario Court of Appeal, the Court overturned the trial judge’s finding that because the Plaintiff did not actively protest his layoff for 9 months, that he had in fact accepted the legitimacy off the layoff and thus could not claim that he had been constructively dismissed at the time of the layoff .

The plaintiff was temporarily laid off in March of 2020 and retained a lawyer in December 2020 who promptly sent a demand letter to the Defendant.

The Court stated these principles in deciding whether or not there was condonation.

1. The signing of the layoff letter was not not evidence of acceptance of the legality of the layoff, it was merely acknowledgement of receipt of the letter.
2. The fact that he claimed constructive dismissal immediately after retaining a lawyer shows that he only became aware of his right to claim constructive dismissal at that time and responded immediately.
3. An employee is to be given a reasonable time to assess their legal situation. In this case the Plaintiff had been given a series of layoff notice and seemed to adopt a wait and see approach to see if he would actually be recalled.
4. Most importantly, “condonation in the face of a layoff is expressed by positive action. Positive action includes expressed consent to the layoff or expressing a willingness to work before claiming wrongful dismissal such that the employer would reasonably believe that the employee consented to the change in the terms of employment: 
5. The fact that the employee was not actively at work during the layoff period means that he could not condone the change in his employment .
6. “Moreover, there is no requirement for an employee to ask when they might be called back to work before commencing an action for constructive dismissal: “

My Comments:

When an employee is given a temporary layoff notice, there is an implicit promise that the employee will be recalled, otherwise it is a permanent layoff.

In this case,  the Plaintiff was given a 13 week layoff notice at the beginning of the pandemic. Surely he was entitled to believe his employer that he would be recalled within that 13 weeks. When it got extended the second time to 35 weeks, the Plaintiff accepted it for a time because again he probably believed that he would be recalled shortly.

But by December he was fed up.  He had been on layoff for 9 months. He had now lost faith in his employer’s promise. He went to see a lawyer , was told of his rights, and acted promptly.

If the law was that a failure to respond to a temporary layoff had to be immediately acted upon otherwise it is deemed to be accepted, then employers would be faced with a plethora of lawsuits every time they conducted any layoff.

Moreover, how could one determine when  the condonation through silence actually occurred ? Is it one day, one month , 6 months ? Are we going to add even more uncertainty to the area of employment law?

Surely it is not an onerous burden on employers to require them to obtain the employee’s express consent to their right to layoff, either in the initial employment contract or at the time of the layoff. Employment contracts are two way agreements. Employees certainly don’t have the right to say to their employers ” Hey boss, I am going to take a 6 month leave of absence. See you in the fall sometime. Oh, by the way, I may extend my leave even longer, but I haven’t decided yet.”

If you like a copy of the case, email me at barry@barryfisher.ca

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In Northern Air Charter (PR) Inc v Dunbar, 2023 ABKB 171, Justice Woolley sitting on an appeal, had to deal with an increasing common situation.

The plaintiff was laid off and was given no notice. The plaintiff hired a lawyer to send a demand letter claiming wrongful dismissal damages. The employer then turned around and offered the Plaintiff his job back but made no offer to pay him for the time off, which was 2.5 months.

This is what the judge said :

[63]        The trial judge correctly summarized the Supreme Court’s decision in Evans. The rest of his decision on the issue of mitigation involved a question of mixed fact and law, and is subject to review for palpable and overriding error.

[64]        The trial judge made no such error. An employee’s failure to accept an offer to return to employment, even in uncomfortable or unhappy circumstances, can constitute a failure to mitigate, as was the case in Evans. An employee is not, however, required to accept an offer of employment regardless of the circumstances: Fredrickson v Newtech Dental Laboratory Inc, 2015 BCCA 357; Oostlander v Cervus Equipment Corporation, 2022 ABQB 200.

[65]        Here, Northern Air did not provide Mr. Dunbar with notice. He had been out of work for two and a half months, half the notice period to which he was entitled, as found by the trial judge. Northern Air did not offer to make Mr. Dunbar whole. As such, had Mr. Dunbar returned to work at Northern Air he would have been in the awkward position of either giving up his legal claim for notice, or being engaged in legal proceedings with his employer. The trial judge did not make a palpable or overriding error in finding that a reasonable person would not accept an offer of employment in those circumstances.

My Comments:

This case reminds us that in order for an Evans v Teamsters type tactic to succeed the employer should offer full backpay to the employee or the refusing Plaintiff will probably have the right to refuse the offer.

Another common mistake of employers is to make the recall an offer intended to end the proposed litigation. If this is done then the Plaintiff can argue that as this was a settlement offer, it is inadmissible in Court as it is contrary to the settlement privilege rule.

Thus the recall letter should be “with prejudice” and the employee should be advised that they are not required to discontinue the lawsuit in order to return to work. They should further be advised that of they refuse the recall, the employer will claim that the plaintiff has failed to mitigate his damages from that date forward.

If you would like a copy of this case, email me at barry@barryfisher.ca

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In. Erin McKenzie v Orkestra SCS Inc. ( 2023 Cali 13891 ( On LRB ) Roslyn McGilvery, Vice‑Chair, had an opportunity to comment on the following section of the Ontario Occupational Health & Safety Act:

Order for workplace harassment investigation

  55.3  (1)  An inspector may in writing order an employer to cause an investigation described in clause 32.0.7 (1) (a) to be conducted, at the expense of the employer, by an impartial person possessing such knowledge, experience or qualifications as are specified by the inspector and to obtain, at the expense of the employer, a written report by that person.

In this case there was a complaint by the the CFO / General Counsel  that she was being harassed by the CEO. The Company hired an HR Consultant to conduct an investigation but the CFO objected saying that the HR Consultant had a conflict of interest. At the same time the CFO filed a complaint with the Ministry of Labour and a Ministry Inspector was appointed .

Before the Inspector could even start the investigation, the HR Consultant withdrew from the assignment. The Company thereafter appointed a lawyer to conduct the investigation.

The CFO felt that this lawyer investigator  had insufficient investigation experience so she refused to participate in the investigation and appealed to the OLRB to appoint a new investigator .

The OLRB refused to do so on a number of grounds :

1 .As the Employer points out, the Act does not require individuals who conduct workplace harassment investigations under the Act to have any particular qualifications.  Further, the Act does not necessarily mandate the use of third-party investigators.  In the Board’s experience, such investigations are often conducted by individuals with a range of experiences and backgrounds, including (but not necessarily requiring) backgrounds in human resources and the law. 

2. It is not clear to me that an allegation that an employer has failed to conduct an investigation that is “appropriate in the circumstances” in most cases can be made pre-emptively, as opposed to requiring the worker to let an investigation run its course and then, upon its conclusion, having the opportunity to raise concrete examples of what allegedly rendered the investigation inappropriate.  After all, the ultimate result of an investigation may be favourable to the worker who filed the complaint, notwithstanding the worker’s initial misgivings.

My Comments;

In this particular case it was the Complainant who sought an order requiring the Employer to hire “an impartial person possessing such knowledge, experience or qualifications as are specified by the inspector.”

But it can also be the target of the investigation ( the alleged harasser ) who can also make this application.

However it seems that it is highly problematic for anyone to contest the qualification of the investigator until the perhaps unqualified investigator completes the investigation and their report. Presumably whoever does not like the outcome of the report ( as there is generally at least one disappointed party) could then ask the Ministry of Labour to force the Employer to do the whole investigation a second time.

This seems to me to be a real bad idea.

First,  we should assess at the beginning of the process if the investigator is “an impartial person possessing such knowledge, experience or qualifications as are specified by the inspector.” 

If this was a hearing before the OLRB and one of the parties felt that the Vice Chair had a conflict of interest ( in other words was not an impartial person ) that party would be required to make the application to recuse at the earliest possible time.

It would be absurd to say ” I will only complain about the conflict of interest if I  lose.”

This is like Trump saying ahead of the election that he will only accept the legitimacy of the vote if he wins.

Second, workplace investigations can be  extremely damaging to many workplaces,  not only to  the complainant and the target but also to co-workers.

These investigations can go on for months or years and be very costly in terms of money, time and morale.

To go through this  process twice would be unbearable.

Third, the new second investigator would presumably interview many of the same witnesses. What if there were differences between the two interview answers? Is the  new investigator permitted to rely on this differences in assessing the witness’s credibility? What if relevant witnesses are no longer available or refused to participate a second time?

Fourth, Section 53.3 speaks of. “knowledge, experience or qualifications” of the investigator. 

It does not deal with how the investigator actually handled a particular investigation. An investigator who was well qualified could still make an error in their investigation . Does this mean the Ministry of Labour Inspector and/ or the OLRB is to act as if they were conducting a judicial review of the investigation?

If you would like a copy of this car, email me at barry@barryfisher.ca

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In Greidanus v Inter Pipeline Limited, 2023 AHRC 31, Member Oshionbo of the Alberta Human Rights Tribunal had the following situation:

The Complainant applied for a safety sensitive job and was accepted subject to a pre-hire drug test.

He failed the test as it was shown that he had THC in his system.

The Company then revoked the offer of employment.

The Complainant then told the Company for the first time that he was taking medical cannabis for a PTSD condition.

The Tribunal ruled that since the employer had no knowledge of the Complainants’ disability BEFORE they retracted the offer of employment, the decision to retract the offer was not discriminatory.

The Tribunal also ruled that there was no duty to inquire nor to accommodate because there was no evidence of prima facie discrimination in the first place.

My Comments :

This case emphasizes that there must be evidence which shows the employer knew of or ought to have known of the disability in order to prove that an act of the employer was discriminatory.

However everybody knows that cannabis ( which is perfectly legal ) can be used for either valid medical purposes ( as it was in this case) or just to get stoned.

Therefore since the employer relied solely on the fact that the Complainant had THC in his system, should they not have a positive obligation to inquire of him why he was using cannabis to see if there was a valid medical reason ?

Is not asking a classic example of willful blindness?

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In Croke v VuPoint Systems ( 2023 ONSC 1234) Justice Pollak had a situation where the Plaintiff worked as an installer for the defendant whose only client was Bell. Bell imposed a rule on all of its contractors that anybody working on Bell matters must be vaccinated. The Defendant therefore adopted its own mandatory vaccine policy which said that if anyone refused they would not be assigned any work .

The Plaintiff refused to have the vaccine. He was then terminated .

The Court determined that the employment agreement had been frustrated because :

1) None of the parties at the time the employment relationship was formed in 2014 could reasonably have anticipated the COVID epidemic and the imposition of a vaccine policy by their only client.

2) The requirement of mandatory vaccination was brought on by a third party, Bell. and as such was an unforeseen intervening event.

3) As result of the policy and the plaintiff’s decision, he was no longer capable of performing the essential duties of his job

The result of this finding was that the employee was not entitled to common law reasonable notice.

My Comments:

One may ask how this could be frustration when the Plaintiff could have avoided this result by simply taking the vaccine ?

Justice Pollack found that this was like the case of an employee who was incapable of performing their job due to either a lack of security clearance or a loss of a professional license.

She said as follows:

” The fact that the Plaintiff could have chosen to be vaccinated does not mean that he was in default as the circumstance which caused the frustration was the result of a decision by Bell, not the plaintiff or the Defendant . “

I disagree.

Unlike those loss of ability to work cases where the restriction is imposed by a third party over which the employee has no control, in this case the Plaintiff made himself unable to work by refusing to be be vaccinated.

In any event, the outcome is the same as frustration of contract means the employee is not entitled to either statutory or common law notice.

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