Pioneer Youth Services (Toronto) Inc. v. Denise Fitzpatrick and Ministry of Labour
2676-98-ES Pioneer Youth Services (Toronto) Inc., Applicant v. Denise Fitzpatrick and Ministry of Labour, Responding Parties.
BEFORE: Mary Ellen Cummings, Alternate Chair.
APPEARANCES: Clifford J. Hart, Paul Hensel and Rhonda Lahnokowski for the applicant; Denise Fitzpatrick and Jeffrey E. Canto-Thaler for Denise Fitzpatrick; no one appearing for the Ministry of Labour.
DECISION OF THE BOARD; March 9, 2000
1This is an appeal by Pioneer Youth Services Toronto Inc. (PYS or the employer) from an Employment Standards Officer's determination that PYS violated sections 43 and 44 of the Employment Standards Act in its termination of Denise Fitzpatrick at a time when she was pregnant and entitled to take a leave under the Act.
2Counsel for the Ministry of Labour and the Officer did not participate. Minutes before the start of the hearing counsel informed the parties (but not the Board since I had not yet arrived at the hearing room) that the Ministry would not be participating since both workplace parties were represented by counsel and the Ministry was of the view that the proceeding did not involve significant policy issues. Although the Ministry can choose to participate or not, I note that the parties were surprised by the decision, and its late communication.
FACTS
3PYS operates 4 group homes in Toronto for mentally challenged or developmentally challenged young people who also exhibit behavioural problems. PYS is licensed for 33 children, who are mostly referred by children's aid services. The houses are staffed 24 hours a day. The young people attend a local school, where the teachers are supplemented by two teaching assistants provided by PYS.
4PYS is privately owned and operated by Paul Hensel, who bought it in July 1996. Mr. Hensel worked for the previous owners in the roles of Administrative Director and Executive Director for a total period of 11 years.
5Mr. Hensel testified that when he bought PYS, it was operating at an occupancy of 75% to 80%, creating financial problems because it was funded by government on a per child, per diem basis. Mr. Hensel found the homes to be in poor physical condition, and staffing, programming and administration wanting. At that time, the business just about broke even. Mr. Hensel felt there was room for improvement. His first move was to transfer the head office from Kitchener-Waterloo (where it had co-located with its former parent organization) to Toronto, allowing the elimination of a senior management position. Mr. Hensel then contracted with a consultant, Clarence Wheaton, with expertise in group home operations, to prepare a report with respect to PYS.
6Mr. Wheaton's final report was presented to Mr. Hensel at the end of May, 1997. The report identified its purpose as a review and evaluation of all programs and services provided by PYS as well as its administrative policies. The work plan saw Mr. Wheaton inspecting the residences, reviewing programming and policy documents, interviewing residents and staff, as well as personnel from referring agencies. The report sets outs Mr. Wheaton's findings in each area (for example, consistency of programming, state of files, condition of residences) followed by his recommendations.
7With respect to staffing, Mr. Wheaton concluded that employees in the residences were not used effectively, with inconsistent implementation of programming, and a lack of overall direction. He also identified a need to clarify roles, and eliminate overlapping responsibilities. Each residence was staffed by a House Supervisor, an Assistant Supervisor and a number of Child and Youth Workers. Mr. Wheaton found no clear lines between the jobs of Assistant Supervisor and House Supervisor, with overlap as well as consequences for accountability. He also observed that the House Supervisor and Assistant Supervisor were performing work that should have been done by the Child and Youth Workers. Mr. Wheaton also commented on PYS' weekend supervisory "on call" schedule, which had two supervisors on call at all times, with frequent calls in, at significant cost to the employer. Mr. Wheaton recommended the dismantling of the "on call" system.
8Mr. Wheaton made no recommendations suggesting that the present level of staffing should be reduced. Mr. Hensel implemented the recommendation about dismantling the "on call" system almost immediately, replacing it with another system for making supervisors available, that cost half as much. Mr. Hensel testified his next step was to hire a Program Consultant in June 1997. Ultimately, Mr. Hensel decided to change the method of delivery of services to what is called a "client service" model, focused on goal setting and measuring the progress of residents. Each Child and Youth Worker was given responsibility to develop a plan and set goals for two residents. This change in focus, according to Mr. Hensel, significantly increased the responsibility of Child and Youth Workers for resident evaluation, as well as more mundane tasks such as grocery shopping.
9At the same time, Mr. Hensel was looking to cut costs and 75% to 80% of the agency's costs were for staff. Mr. Hensel decided to eliminate the position of House Supervisor. He came to the conclusion that the implementation of the "client service" model of delivery and the increase in responsibilities for the Child and Youth Workers meant residences could now be run with less supervision, and the House Supervisors were the highest paid. Mr. Hensel testified that since Mr. Wheaton had identified an overlap in the responsibilities of the House Supervisor and the Assistant Supervisors, he felt that the Assistant Supervisors would be able to do the work, particularly since some of the management tasks had been given to the Child and Youth Workers. PYS developed a new position called Residence Co-ordinator for each home, filled by the former Assistant Supervisors, at a salary somewhere between the Assistant Supervisors and the House Supervisors. Mr. Hensel testified that the elimination of one level of management resulted in savings of $150,000 to $160,000 a year.
10As a result of the decision to eliminate the position, four House Supervisors were given notice of termination on August 6, 1997 to be effective December 31, 1997. Mr. Hensel held a meeting with all four House Supervisors in which he set out the reasons for the organizational change and the elimination of their positions. Then all four got written notices of termination.
11It is important to note that no evidence was called to challenge or contradict the facts I have set out to this point.
12This proceeding arises because at the time the House Supervisors were given notice of termination, one, Denise Fitzpatrick, was pregnant and entitled to take a leave under the Act. There is no dispute that at the time the decision was made to terminate the House Supervisors, Mr. Hensel knew Ms. Fitzpatrick was pregnant.
13Ms. Fitzpatrick testified briefly. She said that she hesitated a few days after she knew she was pregnant in early May before telling Mr. Hensel. She said that she feared his reaction, and was apprehensive of being fired. Ms. Fitzpatrick recalled that Mr. Hensel had commented that women on leave cost the company money. Mr. Hensel denied making such a comment, noting that pregnancy and parental leaves don't cost the company. I did not permit counsel for Ms. Fitzpatrick to introduce other "anti-parental leave" statements allegedly made by Mr. Hensel because counsel had not put them to Mr. Hensel when he testified.
14Ms. Fitzpatrick told the Board that she approached Mr. Hensel and told him she had good news, that she was pregnant. Ms. Fitzpatrick recounted that Mr. Hensel turned his chair away from her, uttered "oh shit" then turned back to Ms. Fitzpatrick and said "congratulations". Then according to Ms. Fitzpatrick, Mr. Hensel asked her if she was feeling okay, and then they went on to discuss other matters. Mr. Hensel denies that he said "oh shit". It is common ground that Mr. Hensel and Ms. Fitzpatrick had no further discussions about her pregnancy during her employment.
15Counsel for Ms. Fitzpatrick suggested that her announcement of her pregnancy had been the catalyst to Mr. Hensel's decision to eliminate the House Supervisors. Counsel suggested that when Mr. Hensel realized that he would replace Ms. Fitzpatrick with one of the Assistants, it dawned on him that he could permanently replace all of the House Supervisors with their Assistants. Mr. Hensel denied that. He agreed it was a "given" that Ms. Fitzpatrick would be replaced by one of the Assistant Supervisors (though not necessarily from the same residence) during her leave, because that was how PYS had historically replaced House Supervisors during their leaves. However, Mr. Hensel said that Ms. Fitzpatrick's circumstances had nothing to do with the decision to eliminate the House Supervisors, and that decision was not made until months after Mr. Hensel knew of the impending leave.
16Ms. Fitzpatrick's due date was in February 1998, but on account of medical problems, Ms. Fitzpatrick's last day of work was October 13, 1997. Consequently, she did not work out the whole of the notice given to her by PYS.
DECISION
17The Employment Standard Officer found that PYS had violated sections 43 and 44 of the Employment Standards Act, and made a reinstatement order pursuant to section 45:
- (1) The employer of an employee who has taken pregnancy leave or parental leave shall reinstate the employee when the leave ends to the position the employee most recently held with the employer, if it still exists, or to a comparable position, if it does not.
(2) If the employer's operations were suspended or discontinued while the employee was on leave and have not resumed when the leave ends, the employer shall reinstate the employee, when the operations resume, in accordance with the employer's seniority system or practice, if any.
(3) The employer shall pay a reinstated employee wages that are at least equal to the greater of,
(a) the wages the employee was most recently paid by the employer; or
(b) the wages that the employee would be earning had the employee worked throughout the leave.
An employer shall not intimidate, discipline, suspend, lay off, dismiss or impose a penalty on an employee because the employee is or will become eligible to take, intends to take or takes pregnancy leave or parental leave.
Where an employer fails to comply with the provisions of this Part, an employment standards officer may order what action, if any, the employer shall take or what the employer shall refrain from doing in order to constitute compliance with this Part and may order what compensation shall be paid by the employer to the Director in trust for the employee.
18Although the Board does not generally take an interest in the reasoning of the Officer, since the hearings before the Board are de novo, I want to comment on the Officer's reasoning, because, to put it bluntly, his complete misunderstanding of the law no doubt significantly contributed to putting the parties before me. The Officer said that PYS had violated section 44 but made no findings to support it. In other words he made no findings that Ms. Fitzpatrick was terminated "…because the employee is or will become eligible to take…pregnancy leave or parental leave". Instead he concluded that because the work of supervising the residences continued to exist after Ms. Fitzpatrick's leave expired, she was entitled to be reinstated to her old position, and made such an order. This approach has two fundamental flaws. First, section 43 does not apply to these circumstances. Section 43 governs the rights of employees after a leave has been taken. Ms. Fitzpatrick was terminated before her leave was taken. Consequently, her rights and the conduct of the employer are determined on an application of the broader provisions of section 44. The remedial options, as set out in section 45, are available for breaches of either section 43 or 44, but section 43 and 44 are not interchangeable, or to put it less kindly, open to be ignored. Secondly, the Officer completely failed to make an assessment of whether Ms. Fitzpatrick's termination occurred because she was entitled to take a leave. He did not appear to consider this a relevant question, when it is the key question. Taking the Officer's thinking to the extreme, an employee entitled to a leave could not be terminated or otherwise penalized for any reason because the right to reinstatement transcends even a bona fide termination. None of the case law supports such an interpretation of section 44 and would run contrary to its language; section 44 prohibits terminations and other penalties only where they occurred "…because the employee is or will become eligible to take…pregnancy leave or parental leave".
19The cases interpreting section 44 have said that an employer has an obligation to explain the termination of an employee entitled to take a leave, but where the employer advances bona fide business reasons with no taint, then the termination does not constitute a breach of section 44, [see for example York Condominium Corporation 506 (Board File 1704-98-ES, October 28, 1999) and Electronic Direct Marketing Ltd., June 5, 1996, ESC 96-123].
20This case will be determined on the basis of whether section 44 has been breached. Section 43, and all of the cases decided under it, have no relevance in this factual context, a termination before the pregnancy and parental leave was taken.
21In this case, PYS led uncontradicted evidence of a year long process of examining the weaknesses of the agency, in the areas of staffing, programming and finance. The evidence shows a series of steps taken from the elimination of a senior management position, to the retaining of Mr. Wheaton, through the hiring of a program consultant and the implementation of a different manner of service delivery, with a related devolving of formerly management tasks to front line workers. The final step (at least for our purposes) was the elimination of one level of management from each residence, with the result that each house was headed by one supervisor instead of two, with significant cost reductions. The employer has satisfied me that the termination of the four House Supervisors, of which Ms. Fitzpatrick was one, was made for bona fide business reasons. The evidence does not harmonize with counsel for Ms. Fitzpatrick's argument that the announcement of her leave was a catalyst for the decision to replace all the House Supervisors. This was not the first time that PYS would have replaced a House Supervisor with an Assistant during a leave; I heard that was the common practice. And there is no evidence to contradict Mr. Hensel's evidence that the decision to eliminate the House Supervisor position was made in late July, not close to Ms. Fitzpatrick's announcement.
22I also reject counsel's argument that the termination of all the House Supervisors was a smokescreen for Mr. Hensel's real intention, getting rid of Ms. Fitzpatrick so that he would not have to deal with another employee on leave. Mr. Hensel denied this, and it is not otherwise supported by the evidence. It also seems a very unlikely plan. As counsel for PYS submitted, it would be counterintuitive for an employer to terminate four employees, and run the risk of legal action from all, in order to camouflage the termination of one. Further, while the report of Mr. Wheaton did not call for downsizing of one level of supervision, Mr. Wheaton's observations and conclusions could reasonably have led a financially struggling organization to take a look at its management structure.
23I have also considered the alleged "anti-parental leave" statements made by Mr. Hensel. I will assume, without finding, that Mr. Hensel at some point (although not in relation to Ms. Fitzpatrick) made the statement that women on leave cost the company money. I will also assume, without finding, that Mr. Hensel's first reaction on being informed of Ms. Fitzpatrick's pregnancy was "oh shit", followed by a turning to her and saying "congratulations", accompanied by an enquiry about how she was feeling. There is no doubt that those kinds of comments do not contribute to an employee's sense of security about continued employment, at a time when an employee is likely already feeling quite vulnerable. On the other hand, we cannot demand a standard of perfection and complete graciousness from employers. An employee on leave does cause disruption, and it is no surprise that employers do not greet the news with complete equanimity. But the Act requires the Board to judge the employer's actions. The Act demands that an employer does not penalize employees. While an employer's comments are relevant to the context in which its behaviour is examined, a few arguably inappropriate, or at least, unwise comments, cannot on their own establish a breach of the Act. In this case, the employer has provided sufficient evidence of the plans and events leading to the termination of the House Supervisors that these unfortunate comments do not taint, or undermine, the bona fides of its decision.
24Counsel for Ms. Fitzpatrick made an alternative argument. He asked me to conclude that Ms. Fitzpatrick was penalized in not being able to take advantage of the full notice of termination provided by her employer. He noted that all the House Supervisors got upwards of 18 weeks notice of termination. However, because of the complications in her pregnancy, she had to leave work early. Counsel submitted that the leave provisions of the Act essentially mean that time spent on a leave is "frozen". An employee cannot be disadvantaged by the leave and moreover, should be placed in the same position as others. In this case, counsel argued, she should be compensated for her inability to take advantage of the full notice of termination.
25Counsel relies in part on the definition of "statutory notice" in section 1 of the Act:
"statutory notice period" means,
(a) the period of notice required to be given by an employer under section 57, or
(b) where the employer provides a greater amount of notice than is required by section 57, that part of the notice period ending with the termination date specified in the notice which equals the notice period required under section 57;
26Counsel argued that where an employer gives an employee more than the minimum statutory notice of termination, it is the last period which constitutes notice of termination for the purposes of the Act. In this case, counsel argued, Ms. Fitzpatrick was not able to work because of her pregnancy and complications related to it, during the last weeks of her notice, and more particularly, was not able to work during the period of her statutory notice. At a minimum, counsel for Ms. Fitzpatrick argued, Ms. Fitzpatrick should be reinstated to her former position for a period equal to the statutory notice period that she was unable to take advantage of.
27I reject this argument. It misses the point that an employer can terminate an employee entitled to a leave for bona fide business reasons. Or put another way, the remedial options in section 45 are available only where there is a finding that the employer has breached section 43 or 44. As I have already set out, section 43 is not relevant to the fact circumstances, and section 44 has not been breached because I am satisfied that Ms. Fitzpatrick was terminated for legitimate business reasons, with no relation to her entitlement to take a leave. It is also worth noting that time spent on leave is not "frozen", to the extent that employees can continue to accrue benefits, and thus improve their circumstances. What the Act prohibits is a worsening of the employment situation because of the leave.
28I have also considered another possibility, first advanced by the Officer when he canvassed other possible entitlements, and adopted by counsel for Ms. Fitzpatrick. He submitted that at a minimum, Ms. Fitzpatrick was entitled to six weeks pay in lieu of notice of termination, because her early leaving deprived her of her statutory notice of termination. In support of this argument, counsel relies on the definition of "statutory notice" set out above. Counsel proposed that Ms. Fitzpatrick was not able to work during the period of her statutory notice, and should be compensated.
29As counsel for the employer acknowledged, some referee/adjudicators have held that when an employee is absent due to illness, or other reason, and unable, as it were, to benefit from notice of termination, the employee is entitled to pay in lieu of notice. But that has not been the universal view. Indeed, the Court of Appeal in Maple Leaf Foods Inc., (May 20, 1999, court docket C30451) considered the employer's argument that the existence of two lines of jurisprudence should lead the court to hold the adjudicator (who had decided to award pay in lieu of notice to employees absent due to compensable injury when notice of termination was given) to a standard of correctness. But the Court disagreed and it concluded that the adjudicator had reached a decision which was reasonable. The Court reviewed the referee's analysis that section 57 did not require that work be performed to be entitled to termination pay, and that compensation benefits were not considered payments for the purposes of the termination provisions. The Court wrote at paragraph 31:
- The referee determined that these considerations yielded the conclusion that the statutory scheme entitles the complainants to termination pay for the period of notice even though they were not available for work and were receiving workers’ compensation payments throughout. In my view, this conclusion meets the standard of reasonableness. Indeed, I think it is the correct interpretation.
30With all respect, I prefer and adopt the opposing reasoning set out in St. Joseph's Health Care Centre of London, (November 22, 1991, ES 05/92) and the cases cited therein. Those cases hold that the termination provisions of the Act presume that an employer will give written notice of termination, and it is only where the employer fails to give notice, that pay in lieu of notice is required. It would be inconsistent with this scheme to require the employer to pay wages in circumstances not set out in the Act (that is to persons ill, or on leave), particularly when the terms of those leaves generally mean that the employee is not receiving wages.
31Applying that logic to this case, Ms. Fitzpatrick was given proper notice of termination, in accordance with her service. The employer met its obligations pursuant to section 57 of the Act. Then for medical reasons, Ms. Fitzpatrick was required to start her leave early. Typically, an employer does not pay wages to an employee on leave. It is counterintuitive to interpret the termination provisions in such a way as to require the employer to pay wages in the form of termination pay for a period when it would otherwise not pay wages.
32As counsel for PYS noted, the cases considered by the Court of Appeal involved employees absent from the workplace when notice of termination was given. In contrast, Ms. Fitzpatrick was at work when more than timely notice was given. I also concur with employer counsel's submission that it would be inconsistent with the overall scheme of the Act to interpret the "statutory" provisions in a manner that would discourage employers from giving more than the minimum notice requirements under the Act.
33In conclusions, for the reasons set out above, I find that PYS did not breach the Act in terminating Ms. Fitzpatrick nor does it owe her further termination pay.
DISPOSITION
34The Order to Pay is hereby rescinded. The Director shall return the monies held in trust, and any interest accrued, to Pioneer Youth Services (Toronto) Inc. as soon as practical.
“Mary Ellen Cummings”
for the Board```