'It's ludicrous to think that you can leave somebody in suspended animation for two-and-a-half years'
An Ontario worker did not condone spending nine months laid off during the pandemic before claiming he was constructively dismissed, the Ontario Court of Appeal has ruled.
“The principle is, you condone something when you're aware that it's wrong and you don't do anything about it – [the worker] wasn’t aware that it was wrong until he went to a lawyer and then, bang, the lawyer sent a letter right away,” says Barry Fisher of Barry Fisher Arbitration and Mediation in Toronto.
“The flip side of that is, if the evidence had come out that he sought legal advice and sat on it for six months, that might have made a difference.”
Layoff letter
Qualified Metal Fabricators is a manufacturer of metal structures in Toronto. The 54-year-old worker was a welder with Qualified since 2000.
When the COVID-19 pandemic arrived in March 2020, Qualified experienced major financial losses. The company temporarily laid off a number of employees, including the worker.
It was the first time that the worker had been laid off by Qualified and his manager told him that he hoped that the worker would be recalled within three months.
The worker was given a letter advising that his benefits would continue during the layoff, which would be for 13 weeks in accordance with the Ontario Employment Standards Act, 2000 (ESA). The worker claimed that he didn’t sign the letter, although a signature was on it.
On June 2, Qualified extended the layoff for “up to 35 weeks.” The company extended the layoff again on Sept. 30, advising that the layoff was subject to a new Ontario regulation that stipulated that “an employee whose hours of work were temporarily reduced or eliminated for reasons related to COVID-19 was retroactively deemed to be on Infectious Disease Emergency Leave (IDEL) rather than terminated.”
The company extend the layoff a third time on Dec. 9, indicating that it would last until Sept. 4, 2021.
By this time, the worker was getting fed up and consulted a lawyer. The lawyer wrote to Qualified on Dec. 22 to advise that the worker would be suing for wrongful dismissal. Qualified responded by saying that the worker had signed a document agreeing to the layoff and it hoped that the worker would be recalled in a few weeks.
The worker filed the lawsuit on Jan. 25, 2021. On Feb. 9, Qualified sent him a recall letter but the worker didn’t respond.
IDEL provided temporary shelter to employers in an impossible position, but decisions had to be made when it ended, say experts.
Motion for summary judgment
Qualified brought a motion for summary judgment dismissing the lawsuit on the basis that the worker condoned the layoff or failed to mitigate his damages by not seeking new employment.
The worker brought a cross-motion for summary judgment of his wrongful dismissal claim, but then changed his mind, claiming that he needed to seek further evidence for his assertions that he wasn’t told layoffs were terms of his employment, the signature on the layoff letter wasn’t his, and he didn’t know that he was about to be recalled when he started his lawsuit.
The motion judge granted Qualified’s motion for summary judgment dismissing the wrongful dismissal claim. The motion judge found that there was an implied agreement to lay off the worker because the worker was aware that other employees had been laid off previously, the worker condoned the layoff by signing the layoff letter, and he didn’t protest his layoff.
The worker appealed to the Ontario Court of Appeal.
The Court of Appeal noted that the motion judge proceeded under the mistaken understanding that both parties agreed to summary judgment. There should have been a consideration of the appropriateness of summary judgement dismissing the worker’s claim, said the court.
Despite what employment standards legislation says, in many cases employers cannot lay off employees without liability, says an employment lawyer.
Constructive dismissal issue
The court also found that the legal framework on constructive dismissal, including whether there was an implied term allowing layoffs and condonation of the layoff, needed to be discussed.
The court found that the motion judge erred in finding there was an implied term of layoff. The fact that other employees were previously laid off did not create a legal basis to impose a layoff without an express term in the employment contract, the court said, pointing to jurisprudence that establishes that “at common law, an employer has no right to lay off an employee.”
The appeal court agreed that an employer’s conduct that would otherwise be constructive dismissal can be condoned by an employee, if the employer could believe objectively that the employee “consented freely to the change.” However, the employer had the burden to establish condonation, the court said.
The worker disputed that he signed the layoff letter, but even if he had, there was no evidence that the signature “was anything more than an acknowledgement of receipt of the terms set by [Qualified] for the layoff,” the court said.
In addition, there was no evidence that the worker was aware of the ramifications of the layoff at the beginning – particularly since as soon as he sought legal advice in December 2020, he asserted his claim for constructive dismissal, said the court.
Recalling laid-off workers after the pandemic wasn’t easy with the risk of constructive dismissal, according to experts.
No condonation when not at work
The court also said that the worker’s failure to object to the layoff over the course of several months was not evidence of condonation because he wasn’t permitted to work during that period.
The motion judge erred when they failed to consider that there was a genuine issue as to whether the worker took a reasonable time to assess his situation before advancing a constructive dismissal claim, as the worker took a wait-and-see and approach because of the company’s statements that the layoff was in accordance with IDEL and that it intended to recall him, the court said.
“The point that the court seems to be making is, you have to know what your rights are before you can condone it - [the worker] believed his employer the first time that they were going to recall him,” says Fisher. “Everyone was doing that at the beginning of COVID, and lawyers were saying, ‘Calm down, we're going through a pandemic, wait a little while,’ and nobody thought it would last two-and-a-half years.”
The court also found that “condonation in the face of a layoff is expressed by positive action” such as expressed consent. In this case, there was no positive action by the worker because he was not actively working.
In addition, there was no requirement for the worker to ask when he might be recalled before beginning a constructive dismissal action and he couldn’t be expected to mitigate his losses if he didn’t realize that he was dismissed, said the court.
Ontario courts have debated over whether IDEL was constructive dismissal under common law.
Two levels of law
Fisher says that it’s hard to criticize an employee for not initially knowing his rights with regard to constructive dismissal, particularly since many small employers don’t know either.
“There are two levels of law [with constructive dismissal], the statute and the common law, and it's very confusing, to individuals and especially to small employers,” says Fisher. “If they went to the Ministry of Labour website or called Employment Standards, they’d say it was perfectly legal - they assume that’s the final answer.”
The appeal court set aside the order for summary judgment dismissing the wrongful dismissal claim and remitted the matter back to the Ontario Superior Court for a trial.
The case is an example of the uncertainty around the legislative extension of the layoff period through IDEL during the pandemic and how it relates to constructive dismissal, says Fisher.
“What's often happened during this period is lawyers and employers were using [IDEL] as a guide to get rid of people, and I said early on that if it keeps on going, the courts are not going to be sympathetic to employers,” he says. “It’s ludicrous to think that you can leave somebody in suspended animation for two-and-a-half years - in this guy's case, nine months - so it doesn't surprise me, but it's a forceful statement that you basically can't condone [a layoff or other unilateral employment changes] if you're not at work.”
Such uncertainty over whether layoffs are permissible means more employers are putting the expressed right to layoff in accordance with employment standards in their employment contracts, says Fisher.
“It's the consent necessary so the person could not claim constructive dismissal if they had a clause like that in their contract,” he says. “So that's the easy answer [to avoiding situations like this] - you want to have the right to put temporary layoffs in accordance with employment standards in your contract.”
