The Ontario Court of Appeal recently decided an interesting case in which counsel for the employer/appellant raised a novel argument regarding the intersection of the Ontario Employment Standards Act, 2000 (ESA) and the common law as they relate to layoffs and termination.
In Elsegood v. Cambridge Spring Service, 2011 ONCA 831, the employee/respondent had worked for the employer for seven years and was laid off twice in 2009, for a total period surpassing the allowable limit under the ESA.
Section 56(2) of the ESA defines a “temporary lay-off” as 13 weeks or less within a period of 20 consecutive weeks, or more than 13 weeks within a period of 20 consecutive weeks so long as it is not more than 35 weeks within a year, plus various other conditions described in the ESA. The upshot is that an employee is considered terminated if a lay-off lasts longer than 35 weeks within a given year.
In this case, the employer argued that, regardless of the ESA, at common law the employee was still considered employed despite being laid off for more than 35 weeks, and therefore the employer was not required to pay notice and severance. In essence, the employer argued that the common law and the ESA operate independently.
Justice Juriansz, writing on behalf of a unanimous Court of Appeal, disagreed. He decided that a termination under the ESA is the same as a termination under the common law. The Court of Appeal found that the ESA ousts the operation of the common law unless it specifically provides for its continued operation, as it does in some cases. For example, the ESA makes specific exceptions for reasonable notice periods, where it stipulates minimum standards but allows for lengthier notice periods at common law.
In the case of layoffs and termination, however, there is no such thing as an indefinite, temporary lay-off. According to the ESA, once a lay-off reaches 35 weeks within a given year, the employee is considered terminated and notice and severance obligations are triggered. Even if the common law were to continue to operate, Justice Juriansz reasoned that the employee could still claim constructive dismissal and sue for damages.
This case clarifies how the ESA and the common law co-exist and is a recommended read for both employers and employees, and their legal counsel.