'If the employer is not going to cover all of its legal bases when it offers re-employment, the employee is going to be at an advantage'
“The employer is under a greater onus than the employee to make sure that everything is done properly and by the book - if the employer has not taken all of the steps to protect its interests, whether it be in the contract of employment, the manner in which it dismissed an employee, or the manner in which it deals with its employees generally, chances are the employee is going to be successful in litigation.”
So says Joseph Oppenheim, a lawyer at Carbert Waite in Calgary, after an Alberta employer lost its appeal of a wrongful dismissal award for what it called a temporary layoff.
The worker was a pilot who joined Northern Air, a chartered airline based in Peace River, Alta., in 2014. In June 2015, they entered into an employment contract that allowed for termination by “either party with written notice that complies with Employment Standards for the Province of Alberta.”
Northern Air also had an employee handbook that addressed temporary layoffs with the possibility of recall or permanent elimination of the position. However, the handbook stated that it was “not an employment contract and should not be treated as such.”
The worker and the airline entered into another employment agreement on Oct. 28, 2015, recognizing the worker’s promotion to base captain. This agreement allowed for termination by either party in compliance with the Alberta Employment Standards Code (ESC) and “applicable Federal regulations” under the Canada Labour Code. Neither this nor the previous contract referred to the employee handbook or layoffs.
Worker laid off
On June 30, 2016, Northern Air called the worker to say it was going to lay him off due to “restructuring and downsizing.” The worker was told to deliver all access cards and keys that evening and he was locked out of the company website.
Northern Air then sent an email to its employees saying that the worker was no longer employed with the company.
On July 19, the company issued a record of employment (ROE) stating that the termination was due to “shortage of work/end of contract or season” with an unknown recall date.
Two days later, the worker’s lawyer advised that the worker believed that his employment had been terminated. The company responded to say that he had been laid off, not terminated.
About one month later, the worker’s lawyer indicated that if the employment had not been terminated, Northern Air had repudiated the employment contract and the worker accepted that repudiation.
Employment standards legislation refers to temporary layoffs, but it doesn’t necessarily mean employers can lay off employees, says a lawyer.
Recall letter
On Sept. 15, Northern Air sent the worker a recall letter, but the worker’s lawyer advised that he intended to commence a constructive dismissal action.
The trial judge found that the employment handbook had no bearing on the worker’s employment since the employment agreements didn’t mention it and the handbook explicitly said that it was not an employment agreement. In addition, the October 2015 contract was contradictory because it referenced both the provincial ESC and the federal Canada Labour Code (CLC) regulations in its termination clause.
The trial judge found that once the worker pursued a remedy under common law, the CLC applied. The CLC gave the worker the right to pursue a civil remedy for unjust dismissal, the judge said.
The trial judge noted that in common law, a temporary layoff constitutes an immediate termination of employment if there was no contractual agreement allowing it. The worker’s employment contract did not grant Northern Air the right to lay off its employees, the judge concluded, ordering Northern Air to pay more than $33,000 in wrongful dismissal damages.
Northern Air appealed on the grounds that the trial judge erred by treating the stop to the worker’s employment as a termination instead of a layoff, or, in the alternative, the judge erred by not treating the end of the employment as a constructive dismissal to which the worker tacitly consented.
An employer constructively dismissed an employee it claimed to temporarily lay off, an Ontario court ruled.
Canada Labour Code layoff provision
Northern Air also argued that the CLC regulation stipulates that an employee laid off for less than three months cannot claim that their employment is deemed to have been terminated. This regulation allowed federally regulated employers to lay off their employees without contracting to do so, the company said.
The company also suggested that the worker failed to mitigate his loss when he declined its offer of re-employment.
On appeal, the Alberta Court of King’s Bench (ABKB) found that the CLC applied to employers and employees involved in “aerodromes, aircraft or a line of air transportation.”
The ABKB agreed that the CLC did not grant Northern Air the right to lay off the worker or prevent him from pursuing a civil remedy for dismissal. The CLC provided an alternative to the common law but did not modify the application of the common law where employees “choose to pursue remedies pursuant to the common law,” said the ABKB.
The ABKB also found that the trial judge made no error in finding that the employment contracts did not grant Northern Air the right to lay off the worker. The employee handbook showed that the company “was alert to the possibility that it would seek to lay off its employees,” but it didn’t choose to include that language in its employment agreements and specifically ensured that the handbook was not a part of them, the court said.
“The benefit of the doubt in employment cases, generally, goes to the employee to begin with,” says Oppenheim. “And employers have to be pretty diligent and explicit about what their intentions are in a contract, if they want to ultimately rely on them to remove any statutory or common law right that an employee might otherwise have.”
An employer’s verbal notice of a ‘furlough’ was not a temporary layoff, a New Brunswick Court ruled.
Employer’s actions showed intention
As for the finding that Northern Air terminated the worker’s employment, there was no palpable or overriding error there, said the ABKB. The company used the term “lay off” in the phone call, but its actions – such as requesting his access keys and telling other employees he was no longer with the company – indicated that the worker’s employment was at an end, said the court.
There was also no error in considering whether there was constructive dismissal, the ABKB said. Northern Air’s actions were not a unilateral change to the employment relationship but rather a “straightforward termination of employment” - particularly since the common law treats a layoff as a termination, said the court.
Even if it was a constructive dismissal, “three weeks of silence from an employee who has left the premises, turned in his access card, been removed from the website and… had his counsel write a letter stating that he had been terminated” did not constitute acceptance, the court said.
Northern Air’s suggestion of a constructive dismissal to which the worker acquiesced was a creative argument but it was doomed to fail, says Oppenheim.
“Constructive dismissal is where the employer does something that effectively amounts to a unilateral and fundamental change to the employee's terms of employment to the detriment of that employee, and the employee is reasonably entitled to conclude that the employer is bringing the existing terms of employment to an end,” he says. “I think the court looked at this and said, ‘For all intents and purposes, the company at the time of the initial ‘layoff’ treated this employee as though he had simply been dismissed - there's nothing constructive about it,’” he adds.
A termination generally describes a permanent cessation of employment relationship, while a layoff usually refers to a temporary interruption of employment, says a lawyer.
No obligation to accept offer
The ABKB also found that the worker did not have to accept the offer of re-employment, as it came after he had already taken the position that he had been terminated with no offer of making him whole. Had he returned to Northern Air, he would have been in an awkward position of either giving up his claim or be involved in legal proceedings with his employer. A reasonable person would not accept an offer of employment in those circumstances, said the court.
“If the employer is not going to cover all of its legal bases when it offers re-employment, the employee is going to be at an advantage,” says Oppenheim. “The employer has to really make sure that, objectively, the employee can return to work and that whatever wrong has been done has been corrected - if it hasn't been, there's still an existing claim to be made and the employer is going to be in a tougher spot.”
The ABKB upheld the wrongful dismissal award and dismissed Northern Air’s appeal.
