Clair Dimuantes v. Canada Trust Realty Inc. and Ministry of Labour, 2000 CanLII 13501

3984-97-ES Clair Dimuantes, Applicant v. Canada Trust Realty Inc. and Ministry of Labour, Responding Parties.

BEFORE: Laura Trachuk, Adjudicator/Referee.

APPEARANCES: Clair Dimuantes appearing on her own behalf; James B. Noonan, Bonnie McTaggart and Gene Baillargeon for Canada Trust Realty Inc.; Murray Klein for the Ministry of Labour.

DECISION: March 31, 2000

1. This is an application under section 67 of the Employment Standards Act (the “Act”) requesting a review of a decision of an Employment Standards Officer not to make an order.

2. The applicant was a real estate agent who had been employed by Canada Trust Realty Inc. (referred to as the “company”) for approximately ten years. She commenced a disability leave on November 4, 1993 which ended with the birth of her baby in February, 1994. She was on maternity leave until September 1994. When she returned to work she received notice of termination as Canada Trust had sold its real estate division in her absence. She received severance and termination pay in lieu of notice, calculated on the basis of the benefits she was receiving during the last 13 weeks of her disability leave. The company explained that they used this method because she had no earnings during the 13 weeks before she went on a disability leave. Ms. Dimuantes claims that she had no commission during that period as she was on an unpaid leave due to her disability at that time. She claims that the 13 weeks used to calculate her entitlement to severance and termination pay should be the 13 weeks prior to December 8, 1992 when she went off work due to a back injury. Her earnings during that period were approximately $22,000.00. The company claims that the three months prior to her back injury happen to have been the most lucrative in her career with the company. Ms. Dimuantes denies that allegation.

3. Ms. Dimuantes testified that she strained her back pushing her stalled car on December 5, 1992. She went to the emergency department three days later with back pain and was prescribed painkillers. She had the prescription refilled on December 22. Ms. Dimuantes claims that she called her manager in January, 1993 and advised her that she was taking leave due to her back injury. She says that her manager never mentioned her entitlement to disability. Her manager’s employment was terminated shortly thereafter. Ms. Dimuantes asserts that another manager was not assigned to her office for some months. She became pregnant in June or July of 1993. In August she received a letter from the new manager querying why she had not made the requisite $10,000.00 in sales in the past 12 months. She said she spoke to him and explained her situation. In September she received a letter from him with respect to her outstanding advertising account. That month she called the manager at another branch and was told she might be entitled to disability benefits. She applied for them in mid-November and they were granted commencing November 2, 1993. Ms. Dimuantes testified that they could not be back-dated for more than two weeks. Her disability benefits were subsequently extended until the birth of her baby in February, 1994 at which time she went on maternity leave. Ms. Dimuantes testified that she saw a chiropractor between January and November 1993 but that she could not locate her records of those visits and the chiropractor has since moved away. Ms. Dimuantes did not apply for unemployment insurance benefits during 1993.

4. Ms. Dimuantes submitted the following documentary evidence. She provided a short letter from the doctor who attended her at the emergency ward on December 8, 1992. He indicates that it was his impression that she was suffering from strain to her back muscles and was advised to follow up with her family doctor. He also indicates that she was neurologically sound and no x-rays or other investigations were taken. She was prescribed painkillers. She introduced the receipts showing that the prescription was refilled on December 22, 1992. She also presented a note from her family doctor indicating that he saw her on January 14, 1993 and November 2, 1993 for back problems. He advises that her treatment consists of rest and back care education and exercises. He does not say she was unable to work during the period between the two visits. She also produced another note from her doctor stating that she is unable to work “from Nov. 1 /93 until further notice due to medical illness”. She testified that the doctor referred to November 1 as she could not receive retroactive disability benefits. She also produced a note from her obstetrician dated January 24, 1994 indicating that she is under his care for sciatica and pregnancy. Ms. Dimuantes also submitted a duty roster for May, 1993 on which her name does not appear. She claims that in her office the duty roster was mandatory. She also testified that her office had weekly sales meetings that she did not attend in 1993. She also produced a letter from the manager at another branch indicating that the applicant had sought her advice and been advised that she should report her current circumstances directly to Canada Trust. This manager states that it is her opinion that prior to their conversation she did not believe that the applicant had been advised of her “options or the protocol regarding their implementation”. The letter is dated September 30, 1998. The applicant also produced part of a policy document from the company which outlines an employee’s entitlement to short and long term disability benefits. It also indicates that an employee’s manager will file a short term disaibility claim with the Regional Personnel Service Office if the employee’s absence is expected to exceed five days.

5. Mr. Baillargeon, the company’s Vice-President, testified that agents decide how hard they want to work and that it is not uncommon for its real estate agents to choose not to work for many months at a time. According to him, that is the nature of the business and they are not required to acquire any permission or approval. On occasion, agents do not have any transactions for one or two years. He also testified that employees are encouraged to put themselves on the duty roster system but that it is not mandatory. He also testified that no employee has been terminated after receiving the first letter sent to Ms. Dimuantes with respect to the minimum $10,000 in sales. Further action is only taken if there is no improvement.

Argument

6. Ms. Dimuantes argues that she was on an unpaid leave throughout 1993 and therefore the company should have calculated her wages according to her earnings in the 13 weeks prior to December 8, 1992. She claims that she was unaware of her entitlement to disability benefits during the period but that her manager had been informed that she was taking a leave. Her manager should have informed her of her entitlement to benefits.

7. Counsel for the Ministry of Labour, while claiming that he was not taking a position on the merits, argues that consistent with the decision of the Supreme Court of Canada in Rizzo & Rizzo Shoes, 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27 the period of 13 weeks used to calculate the rate at which termination and severance pay will be paid should be the 13 weeks before any period of leave. According to the Ministry, it should not matter whether it is a maternity or disability leave or simply an employee’s desire to take a break from work. According to the Ministry anyone who is employed and not working must be on leave because otherwise that person would be terminated. In submissions pursuant to a direction of an Adjudicator prior to the hearing, the Ministry submitted two decisions for the proposition that the Act is benefits conferring legislation which should be considered according to its scheme as a whole and given a large and liberal construction. (Rizzo & Rizzo Shoes Ltd., (supra) and Maple Leaf Foods Inc. v. Alejandro et. al. (May 13, 1998 Ont. C.A., unreported) Any doubts should be resolved in favour of the complainant and the object of the Act is to protect the interests of as many employees as possible.

8. The company was surprised to hear a representative of the Ministry of Labour take the position articulated by Mr. Klein above. It noted that in the several years it spent working out these matters with its terminated employees and the Ministry of Labour it had never heard such a view expressed. It posits that the reason such a view was never expressed is that everyone knows that real estate agents work as much or as little as they want. As a result, there was a great variance in their entitlement to termination and severance pay depending upon whether they had worked or been successful in completing any transactions in the 13 weeks prior to notice of termination. In cases such as Ms. Dimuantes’ the company does not necessarily accept that it is legally required to use the 13 weeks prior to a disability or maternity leave to calculate earnings for the purposes of termination and severance pay. However, it did use that calculation in any circumstance in which the 13 weeks prior to leave resulted in a higher payment than using the disability benefits to make the calculation. In Ms. Dimuantes case however, she had no earnings in the 13 weeks prior to commencing her disability leave in November, 1993. Therefore it was to her benefit to use her short term disability benefits as the basis upon which to make the calculation. The company denies that she was on an unpaid disability leave prior to November 2. 1993. It claims that it had no knowledge nor any record that she was on such a leave, and the evidence she presented did not support it. As far as the company is concerned she just took time off from working as many agents do. The company argues that it cannot be expected to go back and calculate the rate at which termination and severance pay are to be calculated according to the last time an agent chose to work or actually completed a transaction. The company also argues that it is just not believable that Ms. Dimuantes did not know of the availability of disability benefits when she had been paying for them as part of her benefit plan for years.

Decision

9. The relevant provisions of the Act provide as follows:

57. (1) No employer shall terminate the employment of an employee who has been employed for three months or more unless the employer gives,

(h) eight weeks notice in writing to the employee if his or her period of employment is eight years or more,

58. (2) Where,

(a) fifty or more employees have their employment terminated by an employer in a period of six months or less and the terminations are caused by the permanent discontinuance of all or part of the business of the employer at an establishment; or

(b) one or more employees have their employment terminated by an employer with a payroll of $2.5 million or more,

the employer shall pay severance pay to each employee whose employment has been terminated and who has been employed by the employer for five or more years.

(4) The severance pay to which an employee is entitled under this section shall be in an amount equal to the employee's regular wages for a regular non-overtime work week multiplied by the sum of,

(a) the number of the employee's completed years of employment; and

(b) the number of the employee's completed months of employment divided by 12,

but shall not exceed twenty-six weeks regular wages for a regular non-overtime work week.

Regulation 325 section 11(2) provides:

(2) Subject to the definition of “regular rate” in section 1 of the Act, in determining the regular rate or regular wages of an employee whose hours of work differ from day to day or who is paid on a basis other than time, for the purposes of Part XIV of the Act, the wages of the employee for a regular non-overtime work week shall be determined by calculating the average of the employee’s weekly earnings, exclusive of overtime pay, for the weeks the employee has worked in the period of thirteen work weeks preceding the date the employee would have been entitled to receive notice of termination.

10. The Ministry has asserted, throughout the lengthy process of sorting out termination and severance pay for employees terminated by the sale of Canada Trust Realty Inc., that when calculating the regular wages for agents who were on disability or maternity leave in the 13 weeks prior to notice, that the company had to use the 13 weeks prior to the commencement of that leave to calculate the regular wages. The argument apparently, is that those are the last 13 working weeks. The company has been content to conduct itself according to that principle even though it has never conceded a legal obligation to do so. Indeed, if that calculation resulted in a lower rate than using the amount the employee received from disability benefits the company has used the higher rate.

11. The decisions submitted by the Ministry are not helpful to the facts of this case. However, the Adjudicator/Referee agrees that if the language of Regulation 325 11(2) can be considered at all ambiguous, the principles of statutory interpretation relied upon in Rizzo & Rizzo Shoes, (supra) and Maple Leaf Foods, (supra), plus, the fact that the Act must be interpreted consistently with the Human Rights Code R.S.O. 1990, c. H.19 and the Charter of Rights and Freedoms may well lead to the conclusion that when calculating the regular rate for employees on maternity leave, disability leave or workers’ compensation benefits in the 13 weeks prior to being given notice of termination a company must use the employees’ earnings in the 13 weeks prior to the commencement of the leave. However, those principles do not lead to the conclusion that, in circumstances where an employee’s terms of employment allow him or her to decide whether or not to work, an employer must use the last period in which the employee chose to work to calculate his or her termination or severance pay. If that were the case there would not be any point in the regulation referring to the last 13 weeks. This Regulation is aimed, after all, directly at the situation of employees who are “paid on a basis other than time.” It would be an absurd interpretation of the Regulation if a real estate agent who decides to take six months off after a particularly lucrative year is entitled to demand that his or her earnings be calculated using the 13 weeks ending with her or his last transaction.

12. It may seem unfair that an employee can have her employment terminated without the employer paying any termination or severance pay, due to section 11(2) of Regulation 325. However, the purpose of the Regulation is to assist the parties in calculating payments on termination with some certainty in circumstances where employees are paid on a basis other than time. In some cases, as here, the operation of section 11(2) may result in employee getting no payment because there were no earnings. However, in other cases, employees may get an inflated payment because they had substantial earnings in the 13 weeks prior to termination, if for example, a real estate agent made a number of large sales in the period. The Regulation is an attempt to balance certainty with fairness. The Board therefore rejects the Ministry’s argument that if Ms. Dimuantes was on any kind of leave, including one that was self-imposed, the company had to go back and calculate her regular rate according to her earnings in the 13 weeks before that.

13. Given the company’s agreement that it would voluntarily use the 13 weeks preceeding any disability leave and the Adjudicator/Referee’s comments above, the issue to be decided is whether Ms. Dimuantes was really on a disability leave throughout 1993.

Ms. Dimuantes bears the onus of proof in this matter. The undisputed evidence is that she commenced a disability leave in November, 1993. However, she was unable to show that she was even under the care of a doctor for nine months prior to that. It is possible that she may have decided not to work as she was not feeling up to it even though she would not have qualified for disability benefits. It is the nature of the business that she is in that she can choose not to work for all kinds of reasons, fatigue, education, spending more time with children, a long holiday etc. But it is hard to see how she could have qualified for disability benefits if it was not even necessary for her to see a doctor regularly. The only medical evidence that she was ever unfit for work is from November, 1993 when her disability leave actually began. She was unable to produce the manager to whom she claims to have spoken in January 1993. She asserts that her manager failed to take the necessary steps for her to receive disability benefits. It is just as likely that the manager did not consider it appropriate to take those steps. Perhaps Ms. Dimuantes was in some pain and preferred not to work. However, there is no evidence that she could not have worked. There is no evidence she would have qualified for disability benefits until her situation was exacerbated by sciatica brought on by pregnancy. Ms. Dimuantes’ circumstances are therefore no different from the hundreds of agents employed by the company who received no termination or severance pay because they had not tried to complete, or had not succeeded in completing, a real estate transaction in the 13 weeks prior to receiving their notice. In fact, she did receive some termination and severance pay unlike many of the other employees.

DISPOSITION

14. The Adjudicator/Referee therefore finds that Ms. Diminuantes was not entitled to further termination and severance pay and this application is hereby dismissed.

“Laura Trachuk”

Adjudicator/Referee

This decision is issued under the administrative auspices of the Ontario Labour Relations Board, 505 University Avenue, 2nd. Floor, Toronto, Ontairo, M5G 2P1