3390-00-ES The Ferrone Marketing Group Inc., Applicant v. Sheila Smith and Ministry of Labour, Responding Parties.
Employment Practices Branch File No. 43003154
BEFORE: Marilyn Silverman, Vice‑Chair.
APPEARANCES: Peter McSherry, Rosanna Ferrone, Ivan McBurney and Linda Ward for the applicant; Sheila Smith on her own behalf; Karima Chatur for the Ministry of Labour.
DECISION OF THE BOARD; July 19, 2001
This is an application for review filed under the provisions of the Employment Standards Act, R.S.O. 1990, c.E-14, as amended (“the Act”) of a decision of an employment standards officer and an Order to Pay dated January 11, 2001.
The matter concerns the payment of termination pay pursuant to section 57 of the Act. The applicant (“the employer” or “the company”) objects to the payment on the basis that it asserts that the employee quit. The employee claims that she was constructively dismissed as a result of the actions of the employer. The parties are agreed as to the calculation of termination pay in the event that the employer is found liable for payment.
The applicant, Ms. Sheila Smith, began working for the employer in November 1993 as an administrative assistant in their promotional marketing business. In the summer of 2000 the company began to experience a downturn in work and in June 2000 Ms. Smith was laid off. The company determined that it was unable to maintain Ms. Smith on a full-time basis and upon her return after the layoff, she was advised that her position would be changed to part-time. Although there had been some discussion of that previously, Ms. Smith was advised of the change to part-time in a meeting of September 19, 2000 attended by Ms. Rosanna Ferrone, the president of the company and Ms. Linda Ward, the company’s bookkeeper. Of significance in this dispute is that prior to this conversation Ms. Smith had requested and been approved for a two-week unpaid leave of absence to be taken in October 2000. She was not entitled to paid vacation as she had already used up such entitlement.
At the September 19, 2000 meeting the employer told Ms. Smith that the change to part-time would formally take effect and that she was entitled to four (4) weeks’ notice of her job change. The employer acknowledges that it learned soon thereafter that her employment standards entitlement was actually six (6) weeks notice or pay in lieu thereof. Ms. Smith advised Ms. Ferrone by letter dated September 21, 2000 that she would not accept the part-time position and that she was in fact entitled to six (6) weeks termination pay.
The employer had a subsequent meeting with Ms. Smith, this one on September 22, 2000 which was attended by Ms. Ferrone and Mr. Ivan McBurney, the production manager. There are different accounts as to what occurred at that meeting. However, at the meeting a letter was presented to Ms. Smith which provides in substance as follows:
Further to our conversation with Linda Ward on Tuesday, September 19, 2000 and as a result of reorganizational changes necessary of FMG due to technological advancement and changing business needs, effective today, September 22, 2000 we wish to inform you of the changes to your job at The Ferrone Marketing Group (FMG). Your job function of “Administrative Assistant, Promotion Service” has be changed to a permanent, part-time position requiring two days per week (flex hours) at the rate of $16.00 per hour.
Consider this letter your six (6) weeks of written notice of the new condition of employment. If you do not accept the changes to your employment at FMG, consider this letter your six weeks working notice of termination.
In keeping with the guidelines of Employment Standards, it is at the employers discretion to change holidays or leave of absence. As such, we hereby cancel your prior request for a two (2) week leave of absence and require you to work the next six weeks of your termination pay.
Please be advised that as per Employment Standards, should you quit before the six weeks are completed, you will not be entitled to the balance of the six weeks pay and you may jeopardize your entitlement to unemployment benefits.
It seems odd that the employer considered this letter to be notice in the event that Ms. Smith did not accept the part-time job in that Ms. Smith had already advised in writing in her letter that she was not going to. The employer asserts it understood that Ms. Smith was prepared to accept the part-time job. However, I do not find that anything turns on that because the issue of entitlement to notice is the same whether she accepted the part-time job or not.
The employer contends that it retracted the leave of absence on the telephone advice of representatives of the Ministry of Labour. There were a number of such telephone calls that the employer said it relied on in dealing with this matter. In any event, although the letter purports to withdraw approval for the leave, the employer asserts that it told Ms. Smith that if she requested the leave in writing it would be approved. Ms. Smith said that she had a vacation planned and it would be impossible to change it. Therefore, as a result of being advised in the September 22, 2000 letter that she could not take the time off, she left the workplace. By letter also dated September 22, 2000 from Ms. Smith to Ms. Ferrone, Ms. Smith stated that it was “impossible for me to continue working for you under the conditions you have set forth.” She then closed the letter by saying she resigned.
The employer contends that it never had any intention of terminating Ms. Smith’s employment nor was it ever its intention to cancel her leave of absence. The employer contends that its understanding of the advice from the Ministry of Labour was that the employee was entitled to six weeks notice and that the leave of absence issue should be handled on a verbal basis followed by a letter from the employee.
There was no intention to pay Ms. Smith for the two weeks leave of absence. Essentially the employer’s stated intention was that the employee had two choices; firstly, she could work the six weeks notice in full and forego her planned vacation or, secondly, she could work two weeks, take her unpaid leave as scheduled and work another two weeks. Ms. Smith’s evidence was that she took the letter of September 22, 2000 at face value and assumed that her leave of absence was cancelled.
Submissions
The employer contends that it was experiencing a negative business environment and had no intention to be anything but fair to Ms. Smith in the change from full-time to part-time status. It contends that Ms. Smith acted precipitously and without justification in leaving her employment after the discussion and letter of September 22, 2001. As a result the employer argues that she quit and there was no violation of the Act.
The Ministry of Labour says that any verbal agreement regarding the leave of absences would be overridden in fact and in the employee’s mind by the letter of September 22, 2001. As such Ms. Smith was forced to quit or would be deemed to have accepted the offer and thereby forced to lose her leave of absence.
Decision
While it appears that the employer acted bona fide upon either mistaken advice or a misunderstanding, the Act requires compliance. I refer to paragraphs 8 and 9 in the John Howard Society of Peel, Board File No. 1395-00-ES, dated January 2, 2001 (unreported):
The responding party also stated that it based its action on information and advice allegedly received from a named employee of the Ministry of Labour in a telephone conversation which its representative stated occurred at 1:15 on June 5.
The Board considers that evidence about advice received from any source, be it the Employment Standards Branch or otherwise, is irrelevant. The Board adjudicates the merits of the applications before it on the basis of the evidence called. If advice was incorrect, that is a matter between the advisor and the individual. It does not affect the legal rights or obligations of the parties. This Board, although it is a tribunal falling within the responsibility of the Ministry of Labour, is an independent tribunal which adjudicates disputes before it. Advice received from any source, be it the Employment Standards Branch, a lawyer, or a paralegal agent is not a matter with which the Board is concerned. The Board operates independently from all of those sources of advice. Its sole responsibility is to hear the evidence that parties call with respect to an application and to apply the law correctly to the events which it finds to have occurred.
In this case, the employer was not entitled under the Act to present Ms. Smith with the choices it did. It could not take away her agreed upon leave of absence without running afoul of section 57(13)(a) which reads:
(13) Where the notice referred to in subsection (1) or (2) has been given,
(a)....... no employer shall alter the rates of wages or any other term or condition of employment of any employee to whom notice has been given;
The employer agreed to the unpaid leave of absence; Ms. Smith made her plans in reliance upon that agreement and then the letter of September 22, 2001 purported to alter that term of her employment during the notice period. Had Ms. Smith agreed to the “two week on, two week leave of absence, two week on” proposal, that too would not have met the requirements of the Act since she would not then have been afforded the full six (6) week notice entitlement as the two week leave of absence was unpaid. There was not sufficient notice given to the employee unless such notice included the period of her unpaid leave of absence. If it did include her working during that period then it amounts to an alteration of her terms and conditions of employment. Either way the employer did not provide Ms. Smith with a legally viable choice.
Having heard the evidence of the parties, it perhaps would have been advisable in hindsight for Ms. Smith to have spoken to the employer and attempted to clarify and resolve the situation rather than leave so precipitously. It seems to me that both her entitlement to the previously agreed to leave of absence and her entitlement to six (6) weeks notice or pay in lieu thereof might well have been achieved. However, in view of the fact that the option she was presented with violated her rights under the Act, I find that it was not unreasonable for her to consider that she was constructively dismissed.
I find that the employer violated the Act by either providing insufficient notice or providing notice which could only be rendered sufficient by altering the terms and conditions of her employment. Accordingly, this application is dismissed. The monies paid to the Director in Trust shall be paid out to Ms. Smith with the appropriate amounts withheld as the administration fee to be dealt with in the usual way.
“Marilyn Silverman”
for the Board