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Employment - Forum - Court - Jurisdiction. Render v. ThyssenKrupp Elevator (Canada) Limited
In Render v. ThyssenKrupp Elevator (Canada) Limited (Ont CA, 2022) the Court of Appeal distinguished between the test for common law wrongful dismissal and that for ESA termination and severance pay, and demonstrates that ESA remedies may be sought in the court system:(3) Did the trial judge err by failing to award the appellant his entitlements under the ESA?
[71] The appellant submits that he should have been awarded his statutory ESA entitlements and that the trial judge erred by failing to do so.
[72] Under the ESA, employees who have been employed for eight years or more are entitled to eight weeks of termination pay, unless they are disentitled to such pay under the statute:55 Prescribed employees are not entitled to notice of termination or termination pay under this Part.
57 The notice of termination under s. 54 shall be given,
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(h) at least eight weeks before the termination, if the employee’s period of employment is eight years or more.
61 (1) An employer may terminate the employment of an employee without notice or with less notice than is required under section 57 or 58 if the employer,
(a) pays to the employee termination pay in a lump sum equal to the amount the employee would have been entitled to receive under section 60 had notice been given in accordance with that section; and
(b) continues to make whatever benefit plan contributions would be required to be made in order to maintain the benefits to which the employee would have been entitled had he or she continued to be employed during the period of notice that he or she would otherwise have been entitled to receive. [73] The ESA also provides for severance pay under the following provisions:64 (1) An employer who severs an employment relationship with an employee shall pay severance pay to the employee if the employee was employed by the employer for five years or more and …
(b) the employer has a payroll of $2.5 million or more.
(3) Prescribed employees are not entitled to severance pay under this section.
65 (1) Severance pay under this section shall be calculated by multiplying the employee’s regular wages for a regular work week by the sum of,
(a) the number of years of employment the employee has completed; and
(b) the number of months of employment not included in clause (a) that the employee has completed, divided by 12.
(5) An employee’s severance pay entitlement under this section shall not exceed an amount equal to the employee’s regular wages for a regular work week for 26 weeks. [74] However, as stated in ss. 55 and 64(3) of the ESA, certain prescribed employees are disentitled to termination and severance pay. The disentitlement provisions are found in the Termination and Severance of Employment, O. Reg. 288/01 (the “Regulation”), a regulation to the ESA, which provides in relevant part:2. (1) The following employees are prescribed for the purposes of section 55 of the Act as employees who are not entitled to notice of termination or termination pay under Part XV of the Act:
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3. An employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.
9. (1) The following employees are prescribed for the purposes of subsection 64 (3) of the Act as employees who are not entitled to severance pay under section 64 of the Act:
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6. An employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer. [75] The respondent says that the appellant did not ask for these benefits either in his pleadings or at trial, and therefore cannot ask for them now. It also argues that having been dismissed for cause, he is not entitled to any benefits in accordance with ss. 2(1)3 and 9(1)6 of the Regulation.
[76] The respondent is correct that the appellant’s pleadings do not contain a reference to the ESA or the Regulation, nor did counsel make any submission about it in his closing. However, counsel for the appellant did refer to the ESA in his opening statement at trial in the following passage:Why this employer entirely and utterly rushed to judgment, summarily terminated the employee without any offer of compensation, even compensation under the minimums of the Employment Standards Act, suggesting that the act, the incident that we’re talking about, was both serious in nature, in compliance with their own policies and procedures and wilful. [77] The evidentiary basis for the ESA entitlement claim was also established at trial, where the appellant testified that he received no compensation or severance when his employment was terminated.
[78] In my view, the appellant is entitled to receive his proved statutory benefits unless that entitlement is precluded by the wording of ss. 2(1)3 and 9(1)6. ESA entitlements are statutory and disentitlement cannot be achieved by agreement, unless to provide for a greater benefit to the employee: ESA, s. 5(1). In this case, the issue was raised, at least indirectly, at the trial. I acknowledge that the better approach would have been to raise the entitlement issue directly so that the trial judge could decide at first instance whether the impugned conduct fell within the statutory disentitlement sections. However, in the circumstances of this case, where non-compliance with the statute was raised in the opening statement and the relevant evidence is in the record, I would not prevent the appellant from asserting the claim on appeal.
[79] The law on the interpretation of the prohibition sections has been consistently stated to require more than what is required for just cause for dismissal at common law. In Plester v. Polyone Canada Inc., 2011 ONSC 6068, 2012 C.L.L.C. 210-022, aff’d 2013 ONCA 47, 2013 C.L.L.C. 210-015 (the reasons on appeal found it unnecessary to address this point), Wein J. explained that in order to be disentitled from the ESA entitlements under the “wilful misconduct” standard in the Regulation, the employee must do something deliberately, knowing they are doing something wrong. In the case before Wein J., the conduct was not preplanned and not “wilful” in the sense required under the test, which she described as follows at paras. 55-57:The test is higher than the test for “just cause”.“In addition to providing that the misconduct is serious, the employer must demonstrate, and this is the aspect of the standard which distinguishes it from ‘just cause’, that the conduct complained of is ‘wilful’. Careless, thoughtless, heedless, or inadvertent conduct, no matter how serious, does not meet the standard. Rather, the employer must show that the misconduct was intentional or deliberate. The employer must show that the employee purposefully engaged in conduct that he or she knew to be serious misconduct. It is, to put it colloquially, being bad on purpose”. Both counsel seemed to be slightly bemused by the recent authorities that distinguish between the definition of just cause and wilful misconduct. In my view, however, the distinction is quite obvious: Just cause involves a more objective test, albeit one that takes into account a contextual analysis and therefore has subjective elements. Wilful misconduct involves an assessment of subjective intent, almost akin to a special intent in criminal law. It will be found in a narrower cadre of cases: cases of wilful misconduct will almost inevitably meet the test for just cause but the reverse is not the case.
The conduct of Mr. Plester was serious, and his failure to report deliberate. However, it did not rise to the very high test set for disentitlement to the statutory notice benefit. It was not preplanned and not wilful in the sense required under this test. There was an element of spontaneity in the act itself and at most a “deer in the headlights” freezing of intellect in the delay in reporting. On these facts willful misconduct should not be found. [Emphasis added.] [80] The differing standards at common law and under the ESA are further discussed in a number of cases, as well as in the Ministry of Labour’s Employment Standards Act Policy and Interpretation Manual (2020). The Manual states: “this exemption is narrower than the just cause concept applied in the common law and in collective agreement disputes. In other words, an arbitrator or a judge may find that there was just cause to dismiss an employee, but this does not necessarily mean that the exemption in paragraph 3 of s. 2(1) applies.” This principle has also been followed in a number of other authorities: see, e.g., Lamontagne v. J.L. Richards & Associates Limited, 2021 ONSC 8049, 75 C.C.E.L. (4th) 86, at paras. 16, 19, leave to appeal to Ont. C.A. requested, M53078; Cummings v. Quantum Automotive Group Inc., 2017 ONSC 1785, at para. 73; Ojo v. Crystal Claire Cosmetics Inc., 2021 ONSC 1428, 60 C.C.P.B. (2nd) 200, at para. 14; and Khashaba v. Procom Consultants Group Ltd., 2018 ONSC 7617, 52 C.C.E.L. (4th) 89, at para. 53.
[81] In my view, the appellant’s conduct does not rise to the level of wilful misconduct required under the Regulation. While the trial judge found that the touching was not accidental, he made no finding that the conduct was preplanned. Indeed, his findings with respect to the circumstances of the touching are consistent with the fact that the appellant’s conduct was done in the heat of the moment in reaction to a slight. Although his conduct warranted dismissal for cause, it was not the type of conduct in the circumstances in which it occurred that was intended by the legislature to deprive an employee of his statutory benefits.
[82] The appellant proved his entitlement to eight weeks of termination pay. However, as we were not directed to anywhere in the record of evidence that the respondent has a $2.5 million payroll, as required under s. 64(1)(b), the court is not in a position to award the requested 26 weeks of severance pay.
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