The Ontario Court of Appeal recently decided an interesting case in which counsel for the employer/appellant raised a novel argument regarding the interESAion of the Ontario Employment Standards Act, 2000 (“ESA”) and the common law as they relate to lay-offs 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, the total of which surpassed 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 a variety of other conditions as described in the ESA. The upshot of this is that an employee will be considered terminated by an employer if a lay-off lasts longer than 35 weeks within a given year.
In Elsegood v. Cambridge Spring Service, the employer raised the argument that regardless of the ESA, at common law the employee is still considered employed despite being laid off for more than 35 weeks within the given year and, therefore, the employer is not required to pay notice and severance. In essence, the employer argued that the common law and the ESA operate independently of one another.
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. Further, the Court of Appeal found that the ESA ousts the operation of the common law unless it provides specifically for its continued operation, as the ESA does in some cases. For example, the ESA makes specific exception for such things as reasonable notice period, where the ESA stipulates minimum standards but allows for lengthier notice periods at common law. In the case of lay-offs and termination, however, this is not the case. There is no such thing as an indefinite, temporary lay-off. Rather, according to the ESA, once a lay-off has reached 35 weeks within a given year, an 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 claim he was constructively dismissed and sue for damages.
This interesting case clarifies how the ESA and the common law co-exist. It is definitely a recommended read for both employers and employees, and their legal counsel.