Paquette v. Quadraspec Inc.*

Ontario Reports

Ontario Superior Court of Justice,

P.B. Kane J.

April 17, 2014

121 O.R. (3d) 765

Case Summary

• Reasons released in French. English version is a translation. Vous trouverez la version française à la p. 779, post.

Employment — Employment contract — Clause in employment contract providing for maximum payment of six months' wages and specifically stating that employee waived any right to claim any other amount, excluding salary, vacation pay and other benefits accrued and unpaid at time of termination — Employee covered by employer's group insurance plan at time of termination — Clause inconsistent with requirement in ss. 60 and 61 of Employment Standards Act that employer maintain all benefits until end of notice period — Clause null and void — Employment Standards Act, 2000, S.O. 2000, c. 41, ss. 60, 61.

Employment — Employment standards — Calculation of employer's total payroll for purposes of s. 64 of Employment Standards Act not limited to payroll in Ontario — Employment Standards Act, 2000, S.O. 2000, c. 41, s. 64.

The plaintiff was employed by the defendant and its predecessors since 1983, and had worked in Ontario since 1987. In 1998, the parties entered in a new employment contract. Clause 12.4 of the contract provided for a maximum termination payment of six months' wages and stated that the employee expressly waived any right to claim any other amount"excluding salary, vacation pay and other benefits accrued and unpaid at the time of termination". The plaintiff was dismissed without just cause in 2011. At the time, he was covered by the defendant's group insurance plan. The defendant paid the plaintiff an amount equal to six months' salary and an amount for benefits earned and unpaid at the time of termination. The plaintiff sued. He brought a motion for determination of two questions of law: whether clause 12.4 of the contract was null and void, and whether the words "in Ontario" should be read into s. 64 of the Employment Standards Act, 2000.

Held, the motion should be granted. [page766]

Clause 12.4 of the contract was inconsistent with the requirement in ss. 60 and 61 of the Employment Standards Act, 2000 that the employer maintain all benefits, including insurance benefits, until the end of the notice period. Clause 12.4 was null and void.

The plaintiff was entitled to severance pay under s. 64 of the Employment Standards Act, 2000. The defendant had a payroll of less than $2.5 million in Ontario, but a combined payroll of more than $2.5 million in Ontario and Quebec. The calculation of an employer's total payroll for the purposes of an employee's entitlement to severance pay under s. 64 of the Employment Standards Act, 2000 is not restricted to the employer's payroll in Ontario.

Sheet Metal Workers' International Assn., Local 397 v. Northland Superior Supply Co., [2004] O.E.S.A.D. No. 307, [2004] OLRB Rep. March/April 384, 2004 9137 (L.R.B.); Tullett and Tokyo Forex (Canada) Ltd. v. Singer, [1998] O.J. No. 2248, 46 C.C.E.L. (2d) 160, 80 A.C.W.S. (3d) 76 (Div. Ct.), distd

Altman v. Steve's Music Store Inc., [2011] O.J. No. 1136, 2011 ONSC 1480, 89 C.C.E.L. (3d) 120 (S.C.J.), not folld

Other cases referred to

King v. Weber Manufacturing Technology Inc., 2008 53124 (ON SC), [2008] O.J. No. 4033, 70 C.C.E.L. (3d) 30, 2008 CarswellOnt 6017, 172 A.C.W.S. (3d) 402 (S.C.J.); MacDonald v. ADGA Systems International Ltd., 1999 3044 (ON CA), [1999] O.J. No. 146, 117 O.A.C. 95, 41 C.C.E.L. (2d) 5, 99 CLLC Â210-018, 85 A.C.W.S. (3d) 586 (C.A.); Machtinger v. HOJ Industries Ltd., 1992 102 (SCC), [1992] 1 S.C.R. 986, [1992] S.C.J. No. 41, 91 D.L.R. (4th) 491, 136 N.R. 40, J.E. 92-783, 53 O.A.C. 200, 40 C.C.E.L. 1, 92 CLLC Â14,022 at 12108, 33 A.C.W.S. (3d) 256; Roden v. The Toronto Humane Society, 2005 33578 (ON CA), [2005] O.J. No. 3995, 259 D.L.R. (4th) 89, 202 O.A.C. 351, 45 C.C.E.L. (3d) 30, [2005] CLLC 210-043, 2005 CarswellOnt 4479, 142 A.C.W.S. (3d) 441 (C.A.); Shore v. Ladner Downs, [1998] B.C.J. No. 1045, 160 D.L.R. (4th) 76, 107 B.C.A.C. 142, 52 B.C.L.R. (3d) 336, 1998 5755, 79 A.C.W.S. (3d) 750 (C.A.); Stevens v. Sifton Properties Ltd., [2012] O.J. No. 6244, 2012 ONSC 5508 (S.C.J.); Wright v. Young and Rubicam Group of Companies (Wunderman), [2011] O.J. No. 4960, 2011 ONSC 4720, [2012] CLLC Â210-018 (S.C.J.)

Statutes referred to

Employment Standards Act, 2000, S.O. 2000, c. 41 [as am.], ss. 1(1) [as am.], 2(2) [as am.], 3(1), (3), 5, (1), 57-59, 60 [as am.], (1)(c), 61 [as am.], (1), (b), 64 [as am.], 1(b), 2 [as am.], (a) [as am.], (b) [as am.]

Employment Standards Amendment Act, 1981, S.O. 1981, c. 22

Pay Equity Act, R.S.O. 1990, c. P.7, ss. 1(4), 13(8)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 21.01(1)

Authorities referred to

Ontario, Legislative Assembly, Official Report of Debates (Hansard), No. L027 (June 15, 1987) (Hon. Bill Wrye)

MOTION for the determination of questions of law.

S. Margot Blight and Daniel Girlando, for plaintiff/applicant. [page767]

Sébastien Lorquet and Jocelyn Duquette, for defendant/ respondent.

P.B. KANE J.: —

Motion

[1] The plaintiff filed a motion under rule 21.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 in order to raise a question of law.

[2] The plaintiff applied for a court order stating that clause 12.4 of the employment contract entered into by Mr. Paquette and Quadraspec Inc. and dated December 17, 1998 (the "contract") regarding notice of termination of employment ("clause 12.4") is considered null and void since it does not comply with the minimum requirements of the Employment Standards Act, 2000, S.O. 2000, c. 41 (the "Act").

[3] Mr. Paquette had been employed by the respondent and their predecessors since July 22, 1983. The plaintiff worked in Ontario since 1987 and the Act applied to his position.

[4] On or around December 17, 1998, the parties signed a new employment contract.

[5] On March 14, 2011, Quadraspec terminated Mr. Paquette without notice and without just and sufficient cause.

[6] Mr. Paquette alleges that according to the case law based on the decision in Machtinger v. HOJ Industries Ltd., 1992 102 (SCC), [1992] 1 S.C.R. 986, [1992] S.C.J. No. 41, clause 12.4 of the contract regarding notice of termination and pay in lieu of notice is null and void because it does not comply with the minimum requirements of the Act, namely, ss. 60, 61 and 64.

[7] Quadraspec alleges that clause 12.4 of the contract dealing with termination is valid and enforceable against the plaintiff and that by signing said employment contract, Mr. Paquette waived any claim to any additional amount as an alternative to notice of termination, under the common law.

The Facts

[8] Quadraspec is a company headquartered in Quebec. Quadraspec specializes in plating, machining and adjusting of industrial equipment parts. The company operates three plants in Quebec and Ontario, that is in Montreal, Lively and Oakville.

[9] Mr. Paquette had been hired by another company predecessor of Quadraspec on July 22, 1983. He has been continuously employed by Quadraspec and their predecessors at least since the spring of 1987. [page768]

[10] On or around December 17, 1998, Mr. Paquette ratified the contract in his capacity as general manager of Placages au chrome de l'Ontario Inc. ("Placage Inc.") in Oakville. This contract was in force between the parties at the relevant times of this dispute.

[11] In 2009, Placage Inc. merged with several other companies. This merger gave rise to Quadraspec Inc.

The Contract

[12] The 15-page contract is heavily detailed, particularly as to Mr. Paquette's obligations towards Quadraspec regarding non-competition, confidentiality, non-solicitation of customers and employees, as well as penalties in case of a breach of these obligations. These provisions intended to protect Quadraspec take up almost five pages of this contract.

[13] In terms of compensation, clause 5 of the contract provided for the following:

(a) gross annual remuneration (salary) of $80,000 in 1998,

(b) commission equal to 5% of gross yearly profits at the Placage Inc. plant,

(c) commission of 5% of growth at the Placage Inc. plant

(d) lump sum equal to 2% of gross yearly profits at the Placage Inc. plant for hospitality, entertainment, travel, etc.

(e) flat-rate monthly allowance of $1,041 ($12,500/year) for all expenses and travel costs.

[14] Clauses 12.3 and 12.4 of the contract provided for a termination clause which consists of a single page.

[15] Clause 12.4, which establishes the rights and obligations of both parties in case of termination without just cause, limits the employer's obligations. Clause 12.4 reads as follows:

12.4 The employment of the employee may be terminated by the employer for any other reason on two (2) weeks' prior written notice per every complete year of continuous service, up to a maximum of six (6) months.

Where the employer fails to give prior written notice or if the notice is of insufficient length, it must give the employee pay in lieu of such notice equivalent to the employee's base salary (excluding any commission), for a period equal to the period or remaining period of notice to which the employee was entitled. This indemnity, if applicable, shall be paid weekly as of the employment termination, until expiry of the period or until the employee finds employment with another employer or becomes self-employed, whichever comes first.

In consideration of the terms in this provision, the employee expressly waives any right to claim from the employer, in case of termination, any other amount, be it as damages, pay in lieu of notice, or on any other ground resulting from his termination, excluding salary, vacation pay and other benefits accrued and unpaid at the time of termination. [page769]

[16] Clause 5.8 of the contract relates to group insurance:

5.8 The employee will be eligible for the employer's group insurance plan or that of Quadraspec.

[17] At the time of termination, Mr. Paquette was covered under the life insurance and long-term disability provided by this group plan.

[18] On March 14, 2011, the respondent proceeded with the dismissal of Mr. Paquette without just cause.

[19] After Mr. Paquette's dismissal on March 14, 2011, Quadraspec paid the plaintiff an amount equal to six months' base salary, that is $48,244.06, as provided under the employment contract, and an amount of $3,100.39 for benefits earned and unpaid at the time of termination.

Severance Pay -- Section 64 of the Act

[20] During 2009 and 2010, the payroll for all the respondent's employees in Ontario totalled $1,241,456 and $1,231,818 respectively.

[21] During 2009 and 2010, the payroll for all the respondent's employees, including those who perform services in Quebec, totalled $3,122,296 and $2,709,470 respectively.

[22] The total wages earned by all employees based in the respondent's Ontario operations during the four weeks ended March 12, 2011, that is, the last pay period of the respondent prior to the plaintiff's termination, when multiplied by 13, amounted to $1,515,492.

[23] The total wages paid to all the respondent's employees, including those who work in Quebec, during the four weeks ended March 12, 2011, that is, the last payroll period of the respondent prior to the plaintiff's termination, when multiplied by 13, amounted to $3,176,040.

Clause 12.4 of the Contract and Sections 60 and 61 of the Act

[24] Section 5 of the Act reads as follows:

5(1) Subject to subsection (2), no employer or agent of an employer and no employee or agent of an employee shall contract out of or waive an employment standard and any such contracting out or waiver is void.

[25] When a clause in an employment contract does not comply with the minimal requirements of the Act by violating its s. 5(1), this contractual clause is null and void: Machtinger v. HOJ Industries Ltd., supra, p. 1000 S.C.R.; MacDonald v. ADGA Systems International Ltd., [1999] O.J. No. 146, 41 C.C.E.L. (2d) 5, 1999 3044 (C.A.); [page770] and Shore v. Ladner Downs, [1998] B.C.J. No. 1045, 1998 5755, 160 D.L.R. (4th) 76 (C.A.).

[26] If a clause in an employment contract fails to comply with the minimum statutory notice provisions, then the presumption of reasonable notice will not have been rebutted: Machtinger, supra, pp. 999-1000 S.C.R.

[27] The definition of "wages" in s. 1(1) of the Act requires the employer to pay the employee all commissions under the terms of the contract.

[28] "Wages" means:

(a) monetary remuneration payable by an employer to an employee under the terms of an employment contract, oral or written, express or implied;

(b) any payment required to be made by an employer to an employee under this Act;

(g) subject to subsections 60(3) and 62(2), employer contributions to a benefit plan and payments to which an employee is entitled from a benefit plan;

[29] The termination clause limits the pay in lieu of notice to the gross salary, other than commissions.

[30] Sections 60(1)(c) and 61(1)(b) of the Act require Quadraspec to maintain all benefits available to the employee under the benefit plans applicable to Mr. Paquette, until the end of the notice period.

Requirements to comply with during the notice period

60(1) During a notice period under section 57 or 58, the employer,

(c) shall continue to make whatever benefit plan contributions would be required to be made in order to maintain the employee's benefits under the plan until the end of the notice period.

Pay instead of notice

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. [page771]

[31] Section 61(1) of the Act provides that an employer continue to make the benefit plan contributions required by the benefit plans until the end of the notice period. However, the termination clause excludes payment of such contributions and provides only for payment of benefits earned and unpaid at the time of termination

[32] A relevant part of clause 12.4 in the contract reads as follows:

In consideration of the terms in this provision, the employee expressly waives any right to claim from the employer, in case of termination, any other amount, be it as damages, pay in lieu of notice, or on any other ground resulting from his termination, excluding salary, vacation pay and other benefits accrued and unpaid at the time of termination.

(Emphasis added)

[33] In its memorandum, Quadraspec (para. 72) acknowledges that "the termination clause does not expressly provide for retention of benefits during the notice period". However, Quadraspec refers to the case law to support the principles that

(a) the employer has a legal obligation as to this type of benefits, even if the contract is silent in that connection;

(b) the benefits represent any benefits accrued at the time of termination and are therefore enforceable by the employee.

[34] When drafting clause 12.4 of the contract, regarding benefits plans, Quadraspec had at least the three following possibilities:

(a) Remain silent as to benefits and not mention them at all. When drafting clause 12.4, Quadraspec chose to refer to these benefits.

(b) Indicate that Quadraspec would maintain the benefits to which the employee would have been entitled at the time of termination until the end of the above-mentioned notice period. This wording meets the requirements under ss. 60 and 61 of the Act. Quadraspec chose to not use such phrasing.

(c) Create a particular exception to waiving and precluding the employee from making future claims, namely, regarding wages, vacations and accrued benefits, but then also restrict this exception to "and unpaid at time of termination". Quadraspec chose this wording intentionally. [page772]

[35] The respondent draws on exhaustive case law which refers to silence as to benefits, namely: Roden v. The Toronto Humane Society, 2005 33578 (ON CA), [2005] O.J. No. 3995, 2005 CarswellOnt 4479, 259 D.L.R. (4th) 89 (C.A.); MacDonald v. ADGA Systems International Ltd., supra; and King v. Weber Manufacturing Technology Inc., 2008 53124 (ON SC), [2008] O.J. No. 4033, 2008 CarswellOnt 6017, 70 C.C.E.L. (3d) 30 (S.C.J.). These courts did not have to rule on the matter before me.

[36] Wright v. Young and Rubicam Group of Companies (Wunderman), [2011] O.J. No. 4960, 2011 ONSC 4720 (S.C.J.) and Stevens v. Sifton Properties Ltd., [2012] O.J. No. 6244, 2012 ONSC 5508 (S.C.J.) more precisely deal with the issue in this matter. In these cases, the employment contracts contained no clauses that refer to or address benefits.

[37] In Wright, para. 4 of the termination clause stipulates that

The employment of the Employee may be terminated by the Employee at any time on 2 weeks prior written notice . . . upon payment in lieu of notice, including severance pay as follows:

b) within two years of commencement of employment -- four (4) weeks Base Salary;

c) after two and up to three years after commencement of employment -- six (6) weeks' Base Salary[.]

This payment will be inclusive of all notice statutory, contractual and other entitlements to compensation and statutory severance and termination pay you have in respect of the termination of your employment and no other severance, separation pay or other payments shall be made.

[38] In the above-mentioned Wright decision, Justice Low concludes [at paras. 16-17]:

The fact that the respondent continued benefits for the statutory notice period under the Act does not change the meaning of the language in the agreement stipulating that the payments under the termination provisions are to be inclusive of "all . . . entitlements to compensation". The agreement provides for payment of base salary only. Payment of base salary, if treated as inclusive of all entitlements to compensation, means that there will be no other compensation flowing to the employee -- in short, no benefits.

In my view, the clause excludes benefits and is therefore in violation of s. 5(1) and s. 61(l)(b) of the Act.

[39] In Stevens, para. 4 of the termination clause stipulates that

13 . . .

(b) The Corporation may terminate your employment without cause at any time by providing you with notice or payment in lieu of notice, and/or severance pay, in accordance with the Employment Standards Act of Ontario. [page773]

(c) You agree to accept the notice or payment in lieu of notice and/or severance pay referenced in paragraph 13(b) herein, in satisfaction of all claims and demands against the Corporation which may arise out of statute or common law with respect to the termination of your employment with the Corporation.

[40] Justice Leach specified [at paras. 59 and 68]: Paragraph 13 "may not refer to benefits expressly, but they do address benefits implicitly and inevitably insofar as they purport to set forth an exhaustive summary what the plaintiff was to receive 'in satisfaction of all claims and demands against the [employer] which may arise out of statute or common law with respect to the termination of [her] employment'. The plaintiff has rights to benefit continuation arising 'out of statute . . . with respect to termination of [her] employment', and paragraph 13, on its face, purports to take those away upon mere payment of the required pay in lieu of notice and/or severance pay. . . . paragraph 13 of the employment contract is unenforceable" [emphasis in original].

[41] Quadraspec cannot write a detailed 15-page employment contract and then expect a favourable decision concerning its request that the court infer unwritten terms or ignore the terminology used in the actual wording of the contract. In the contractual conditions they drafted, Quadraspec

(a) created a barrier to any claim beyond payment of base wages for a period of 26 weeks;

(b) created an exception to this prohibition relating to wages, vacations and accrued benefits;

(c) and then restricted this exception to unpaid amounts at time of termination.

[42] The obligation under ss. 60 and 61 of the Act "to continue to make whatever benefit plan contributions would be required to be made in order to maintain the employee's benefits under the plan until the end of the notice period" flatly contradicts the above-mentioned provision which limits the employer's obligation to obligations unpaid at time of termination.

[43] The provisions in ss. 57 to 61 of the Act are not difficult to grasp. It is unreasonable that discharged employees should still have to litigate on their meaning. In view of its detailed 15-page working agreement, Quadraspec understood the obligation under ss. 60 and 61 relating to benefits plans and tried to minimize their costs resulting from terminations without cause.

[44] In the alternative, in case of ambiguity, this paragraph of clause 12.4 should be construed as an attempt to avoid or minimize the ongoing obligation to maintain the existing group [page774] benefits plans during the six months' notice following termination, in accordance with the contra preferendum rule of interpretation. Thus, Quadraspec purposefully put its employees in such a position, and let them hire a lawyer in order to challenge the employer's interpretation before the courts. Courts should not help employers to this end.

[45] Since clause 12.4 contravenes the provisions under ss. 60(1)(c) and 61(1), it is null and void.

Clause 12.4 and Section 64 of the Act

[46] The next issue of substance resides in whether the addition of the words "in Ontario" by law, or implicitly, should be read into s. 64 of the Act. The answer to this is of importance to both parties. In all, during the relevant period, total wages paid by Quadraspec to its employees

(a) in Quebec and in Ontario, exceeded $2,500,000. In this circumstance, Quadraspec is responsible for paying the severance pay provided for in s. 64 of the Act;

(b) in Ontario only, were less than $2,500,000. With this interpretation, Quadraspec is not required to pay the severance pay provided for in s. 64.

[47] The relevant parts of this section read as follows:

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,

(a) the severance occurred because of a permanent discontinuance of all or part of the employer's business at an establishment and the employee is one of 50 or more employees who have their employment relationship severed within a six-month period as a result;

(b) the employer has a payroll of $2.5 million or more.

Payroll

(2) For the purposes of subsection (1), an employer shall be considered to have a payroll of $2.5 million or more if,

(a) the total wages earned by all of the employer's employees in the four weeks that ended with the last day of the last pay period completed prior to the severance of an employee's employment, when multiplied by 13, was $2.5 million or more;

(b) the total wages earned by all of the employer's employees in the last or second-last fiscal year of the employer prior to the severance of an employee's employment was $2.5 million or more.

. . . . . [page775]

Location deemed an establishment

(4) A location shall be deemed to be an establishment under subsection (1) if,

(a) there is a permanent discontinuance of all or part of an employer's business at the location;

(b) the location is part of an establishment consisting of two or more locations; and;

(c) the employer severs the employment relationship of 50 or more employees within a six-month period as a result.

[48] Based on the case law, Quadraspec alleges that the Ontario legislature intended for s. 64 to be interpreted as follows:

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,

(a) the severance occurred because of a permanent discontinuance of all or part of the employer's business at an establishment and the employee is one of 50 or more employees who have their employment relationship severed within a six-month period as a result;

(b) the employer has a payroll of $2.5 million or more in Ontario.

Payroll

(2) For the purposes of subsection (1), an employer shall be considered to have a payroll [in Ontario] of $2.5 million or more if,

(3) the total wages earned by all of the employer's employees [in Ontario], in the four weeks that ended with the last day of the last pay period completed prior to the severance of an employee's employment, when multiplied by 13, was $2.5 million or more; or

(4) the total wages earned by all of the employer's employees [in Ontario], in the last or second-last fiscal year of the employer prior to the severance of an employee's employment was $2.5 million or more.

[49] In Ontario, employers must pay severance pay since 1981; however, this obligation is limited to mass termination of 50 employees or more, as a result of a permanent discontinuance of all or part of the employer's business (Employment Standards Amendment Act, 1981, S.O. 1981, c. 22).

[50] In 1987, Ontario extended this obligation relating to severance pay and the right to individual termination to cases where the employer's payroll is $2.5 million or more (Employment Standards Amendment Act, 1981).

[51] When introducing this extension, the Minister of Labour stated to Parliament that, under s. 64(1)(b) [of the Act], this measure exempted smaller employers from the financial obligation of providing severance pay. The measure chosen targeted an employer's entire payroll. [page776]

[52] By amending the measure in 1987, Minister of Labour Wrye does not limit the payroll measure to wages paid only in Ontario, and he specified [in Ontario, Legislative Assembly, Official Report of Debates (Hansard), No. L027 (June 15, 1987) (Hon. Bill Wrye)]:

Severance pay recognizes that, over a period of years, a worker develops employer-specific skills, substantial seniority and associated benefits. When a long-serving employee loses his or her job, those employer-specific skills become redundant and those associated benefits are lost. Severance pay is compensation for those losses. That is why, effective today, under this legislation, any individual worker with five years' employment at an enterprise which has an annual payroll of at least $2.5 million would be eligible for severance pay in cases of termination or lengthy layoff.

By broadening the definition of the word employer to include a group of affiliated corporations with an annual payroll of $2.5 million, this legislation shall ensure payment of severance pay to a greater number of staff. This characteristic of the bill and the improvements to the Employment Standards Act, prove that our government recognizes the dignity and value of the men and women who work in this province.

The legislation would ensure protection for workers who are employed at a company that is part of a larger enterprise. For instance, if a worker was employed at a company with a payroll of only $2 million, the worker would be eligible for severance pay if the payroll of that company and related companies, combined, was at least $2.5 million.

Any employer who fears that the measures in this bill would cause financial hardship may apply for permission to meet severance pay obligations by instalment over a three-year period. Each case will be reviewed on its merits.

[53] The respondent asserts that when calculating the combined total employee wages, only those salaried in Ontario should be taken into account. Indeed, the additional restriction relating to the monetary threshold or the measure under s. 64(1)(b), that is restricting the measure to wages paid in Ontario, could have easily been included in the wording of the section, if that had been the intent.

[54] The additional criterion of specifying "Ontario" is not only absent from s. 64(1)(b), but also from s. 64(2) (a) and (b), which actually contradict it.

[55] Subsection 64(2) defines what is considered as payroll of $2.5 million, that is: "the total wages earned by all of the employer's employees" and " du total des salaires qu'ont gagnés tous ses employés " in French. As written, s. 64(2)(a) and (b) flatly [page777] contradict the interpretation, whereas only wages paid to Ontario employees are taken into account when calculating the total payroll required for the obligation to provide severance pay.

[56] Analysis of other legislation imposing obligations on employers according to their payroll reveals that when the lawmakers' intent is to include employers' payroll in Ontario only for calculation purposes, they say so clearly and explicitly. Section 1(4) of the Pay Equity Act, R.S.O. 1990, c. P.7 states clearly that reference in this Act to the number of employees of the employer "shall be deemed to be a reference to the average number of employees employed in Ontario".

[57] Moreover, s. 13(8) of the Pay Equity Act defines "payroll" as follows: "total of all wages and salaries payable to the employees in Ontario of the employer".

[58] Sections 64(1)(b) and 64(2) of the Act are clear. There is no reason to interpret these provisions so as to narrow their scope by adding the words "in Ontario". If such was the legislator's intent, one has to presume that it would have been stated clearly and explicitly, as in the Pay Equity Act.

[59] In Tullett and Tokyo Forex (Canada) Ltd. v. Singer, [1998] O.J. No. 2248, 46 C.C.E.L. (2d) 160 (Div. Ct.), the employee had worked four years for Tullett US, an American company. He was transferred to Ontario, where he spent two years at Tullett Canada, a subsidiary of Tullett US. The Divisional Court stated [at para. 2] the question in dispute thus: "If the total service were treated as being employment with Tullett Canada, as the Adjudicator determined, then Singer would have been entitled to severance pay pursuant to s. 58(2) (b)."

[60] The Divisional Court held that [at para. 4]: "Section 2(2) is directed to Ontario-based employment: (a) specifically referred to the employment being for work to be performed in Ontario; and (b) only contemplates a situation where the work may be both in and out of Ontario provided the work out of Ontario is a continuation of the work in Ontario. It would seem that the Adjudicator leapt over this hurdle without appreciating that it was a foundation element of the case. This omission is in our view fatal and presents patent unreasonableness in her conclusion."

[61] Section 2(2) of the Act is now s. 3(3).

Who Act applies to

3(1) Subject to subsections (2) to (5), the employment standards set out in this Act apply with respect to an employee and his or her employer if,

(a) the employee's work is to be performed in Ontario; or [page778]

(b) the employee's work is to be performed in Ontario and outside Ontario but the work performed outside Ontario is a continuation of work performed in Ontario.

[62] In this case, the issue is utterly different.

[63] The Tullett decision is the basis for the Labour Relations Board decision on Northland. In Sheet Metal Workers' International Assn, Local 597 v. Northland Superior Supply Co., the Ontario Labour Relations Board held that only the payroll relating to the Ontario operations of an employer should be included for the purpose of s. 64(l) (b) of the Act, since the Province of Ontario has no authority to legislate with respect to payrolls in other provinces: Sheet Metal Workers' International Assn., Local 397 v. Northland Superior Supply Co., [2004] O.E.S.A.D. No. 307, 2004 9137 (L.R.B.), para. 15.

[64] In that decision, the board declared [at para. 15]: "The Ontario legislature has no authority to legislate concerning the payrolls of other provinces. It has legislative authority with respect to business operating in Ontario. It is the payroll of an employer's operation in Ontario which is relevant for the purposes of the Act payroll of an employer's operation in Ontario which is relevant for the purposes of the Act. . . . [T]he Board's jurisdiction is with respect to Ontario only."

[65] The court agrees that the board's jurisdiction is with respect to Ontario only. Nonetheless, this does not address the matter covered by s. 64.

[66] In no way does s. 64 provide that the Ontario legislature govern "payrolls in other provinces". The legislature is empowered to legislate with respect to employers with businesses operating in Ontario and that hire people in that province. Section 64 does not concern, nor is it directed at, requirements placed upon employers by and in other jurisdictions.

[67] The Ontario legislature holds the legislative authority to adopt the measure which will be used in applying the law in Ontario, specifically, which employers operating in Ontario have the obligation to provide severance pay. The application is provided in s. 64 according to employer size, number of employees or payroll. The measure and applicability of the obligation are established by "total wages earned by all of the employer's employees". The Act is worded clearly. The measure relates to wages paid by the employer in and outside of Ontario. There is no legal justification or authority to interpret these sections so as to insert restrictions that are not to be found in the Act.

[68] In the interpretation and conclusion in Altman v. Steve's Music Store Inc., [2011] O.J. No. 1136, 2011 ONSC 1480 (S.C.J.), paras. 32-36, regarding s. 64 of the Act, the court relies on the [page779] above-mentioned decisions in Tullett and Northland, and provides no assessment of the issue. With all due respect, I disagree with this conclusion, in light of the above-mentioned assessment.

Conclusion

[69] For the reasons outlined above,

(a) clause 12.4 of the contract is null and void;

(b) Quadraspec must still provide Mr. Paquette with severance pay.

Costs

[70] The claimant shall have 20 days to make submissions as to costs. The respondent must counter with its own submissions within 20 days following the claimant's conclusions.

Motion granted.

End of Document