0641-01-ES Web Impact Inc., Applicant v. Marc Tarique (Rikk) Salamat, and Ministry of Labour, Responding Parties.
Employment Practices Branch File No. 32007438
BEFORE: Bram Herlich, Vice-Chair.
APPEARANCES: Christopher Leafloor and Kaleem Ahmad for the employer; Mia London, Marc Tarique (Rikk) Salamat and Elisabeth Bruckmann for the employee; no one appearing for the Ministry of Labour.
DECISION OF THE BOARD; October 22, 2001
1This is an application to review Order to Pay #57727 issued by the Employment Standards Officer on April 12, 2001.
2The Officer’s order pertains to a claim for unpaid wages (including related vacation pay).
3Counsel for the parties, to their credit, were able to structure the litigation in an extremely expeditious fashion. By so doing, they were able to economize the time and resources that they and their clients (and the Board) would have had to have expended in what easily could have been a multi-day proceeding. For that cooperative effort, counsel no doubt deserve the gratitude of their clients and the Board.
4The position of the applicant (the “employer” or the “company”) is somewhat novel. For it was not seriously disputed that the wages which were the subject of the Order to Pay were in fact owing to the affected employee.
5Counsel for the employer explained, however, that the undisputed employment relationship between the employer and the employee is but a small piece of a much larger web of contractual and commercial relationships involving these parties and others.
6Essentially, the chronology begins at a point in time when the employee, Mr. Salamat, (also referred to as “Salamat”) was the major shareholder of the company. In a commercial transaction which involved the employee and Mr. Kaleem Ahmad (“Ahmad”), in trust for a company to be incorporated, ownership of the shares was transferred to Ahmad. The commercial contract attending this sale was filed as an exhibit. It is a lengthy and comprehensive document setting out various terms and obligations, including a continuing obligation on Salamat to pay to the employer, or to indemnify it with respect to “all amounts owing to Rajesh Goyal (“Goyal”) or his designated company, in connection with his employment with the Corporation prior to the Closing Date”.
7Concurrent with that commercial agreement, an employment contract was executed between the employer (whose legal corporate identity was, of course, unchanged by all of the various transactions) and Salamat, its former principal shareholder.
8Without plumbing the details of all the resulting pathologies, it appears that numerous direct and indirect participants in these various transactions are of the view that promises have not been kept.
9Mr. Salamat’s Employment Standards Act complaint against the company is but one of the ways in which various parties appear to be seeking to vindicate their asserted rights.
10We were told that Mr. Goyal (the “other employee” of the company) has (through another company with which he is associated) commenced a civil action against the employer and Mr. Ahmad personally. Part of that claim, but only part of it, asserts a claim for unpaid wages.
11Counsel for the company explained that subsequent to a delay associated with an agreement to permit an amended statement of claim, the company has only very recently (i.e. just days before the hearing before me commenced) served a third-party notice on Mr. Salamat claiming and asserting a right of indemnification under the commercial contract.
12Thus, it appears that a complex legal proceeding has only just begun. Indeed, even pleadings have yet to be completed. Mr. Salamat, having only very recently been served with the third-party notice, has yet to file any defence or counterclaim. His counsel advised, however, that there is no current intention to include or rely on any claim for the wages which are the subject of these proceedings in the civil action.
13In this context, the employer asserts that Mr. Salamat’s claim for wages is but a small piece of a larger litigation puzzle.
14Counsel suggests that fairness dictates that all of these various claims be resolved together and at the same time. This objective is to be understood in a context where counsel claims that any resulting employer liability in the civil action may ultimately be offset by some or all of the instant claim for wages (those monies having already been paid, at least in trust to the Director).
15In that context, the employer does not so much dispute the propriety of the order to pay but, rather, asks that this proceeding be adjourned or, more specifically, that the monies currently being held in trust by the Director continue to be so held until such time as all of the litigation dust settles and a proper, final and precise accounting of who owes how much to whom can be effected.
16In advancing that position, and perhaps in aid of an alternative position, the employer asserts that these are not the circumstances to which the statutory prohibition against set-off is meant to or ought to apply.
17In its alternative position, the employer asserts that the Officer’s order ought to be set aside. That argument was not vigorously advanced and is clearly not one which can be seriously embraced. For it must rest (even ignoring the statutory prohibition on set-off) on the presumption that whatever other claims the employer has against the employee are valid and enforceable. They may be, but that is not for me to determine or presume in these proceedings.
18Thus, given the employer’s essential acceptance of the propriety of the Order to Pay, there is simply no reason or basis upon which I can or ought to vacate that Order.
19This leaves me to deal with the novel request that these proceedings be adjourned or, at a minimum, the monies currently being held in trust so remain and not be paid to Mr. Salamat unless and until such is appropriate after all of the various litigation briefly described herein is resolved.
20Section 8 of the Employment Standards Act provides:
- Except as permitted by the regulations, no employer shall claim a set-off against wages, make a claim against wages for liquidated or unliquidated damages or retain, cause to be returned to the employer, or accept, directly or indirectly, any wages payable to an employee.
And section 14(1) of Regulation 325 further provides:
- (1) Despite section 8 of the Act, an employer may set off against, deduct from, claim or make a claim against or retain or accept the wages of an employee where,
(a) a statute so provides;
(b) an order or judgment of a court so requires; or
(c) subject to subsection (2), a written authorization of the employee so permits or directs.
21Counsel for the employer candidly acknowledges that these sections would appear to prohibit the kind of set-off which underlies the novel request being made. But, he asserts, although there may not presently be the “order or judgement of a court” which would otherwise permit such a set-off, there will surely be one once the litigation is completed.
22Again, however, while one may be impressed with the optimism counsel exhibits on behalf of his client in the upcoming litigation, his conclusion is by no means a certainty. As indicated earlier, the claim his client advances in that litigation may well ultimately be vindicated, but there is no basis upon which I can presume that result to be a certainty.
23Similarly and despite the enthusiastic and perhaps intuitively understandable position advanced by company counsel, I am not persuaded that these are not the type of circumstances to which the statutory prohibition was intended to apply.
24On the contrary, I accept employee counsel’s assertion that these are precisely the type of circumstances to which the statutory provisions were intended to and do apply.
25The prohibition against set-off is intended to insulate enforcement of employment obligations under the Employment Standards Act from other employer claims. And while a chief benefit of such a prohibition is to prevent spurious claims or employer self-help from preventing the discharge of statutory obligations, the statute does not distinguish between meritorious and disingenuous claims in its prohibition.
26The Employment Standards Act has created a simple and expeditious process for the resolution of claims under that Act. It is perhaps no accident that the appeal in this matter has been concluded even before the very pleadings in the civil litigation have been closed.
27Employees have been provided (see section 64.3 of the Act) with the mutually exclusive options of advancing certain claims via the statutory process or through civil litigation. This employee has chosen the former and there is simply nothing before me to support or even suggest that the claims asserted in this proceeding would be proper or will otherwise find their way into the civil litigation.
28Thus, while involving some of the same parties, there is simply no apparent legal nexus between these sets of proceedings, apart from the fact that independent legal claims may ultimately be vindicated (or not) and may affect the ultimate total amounts of monies owing among and between various parties.
29Thus, I am not persuaded that there is any legal basis (given the essentially undisputed nature of the propriety of the Order to Pay) or other compelling reason to delay the payment to Mr. Salamat of the monies heretofore held in trust on his behalf.
30This application is hereby dismissed. There is thus no further impediment to the Director paying out to Mr. Salamat the amounts being held in trust on his behalf (together with any accrued interest thereon).
31Finally, I note that while the amount found owing by the Officer to Mr. Salamat was in excess of $14,000, the Order to Pay was in the amount of $10,000 plus $1,000 in Statutory Administration Costs. Documents filed with the Board indicate that the company has paid $7,253.25 to the Director in trust. The “unpaid” balance of $3,746.75 was identified by the employer as “statutory deductions”.
32That identification, of course, suggests that the employer has or will forthwith remit that amount to the CCRA on behalf of and for the benefit of Mr. Salamat.
“Bram Herlich”
for the Board