CITATION: Michalski v Cima Canada Inc., 2016 ONSC 1925

COURT FILE NO.: CV-13-57112

DATE: March 18, 2016

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Peter Michalski Plaintiff

– and –

CIMA Canada Inc. Defendant

Graham Jones, for the Plaintiff

George V. Vuicic and Cheryl Waram, for the Defendant

HEARD: September 16, 2015

REASONS FOR DECISION

James J.

INTRODUCTION

[1] This is a motion for summary judgment brought by the plaintiff.

[2] The plaintiff was hired as a draftsman by Fox Engineering in 1997. The terms of his employment were set out in a written offer of employment dated September 24, 1997 which was accepted by the plaintiff (the “letter agreement”). The letter agreement made no reference to the possibility of temporary layoffs. Fox Engineering merged with CIMA Canada Inc. in 2011. The plaintiff was continuously employed from 1997 until he was temporarily laid off in January, 2013. At the time he was laid off, the plaintiff occupied the position of lead engineering technician for which he was paid about $76,000 per year plus benefits.

[3] For the reasons that follow, I have determined that a temporary layoff cannot be invoked unless the employer is contractually entitled to do so, that the employer here acted without the benefit of such a term and that in so doing, the plaintiff was constructively dismissed.

Position of the Plaintiff

[4] The plaintiff says that an employer must have a contractual right to invoke a temporary layoff notwithstanding sections 56(1) and (2) of the Employment Standards Act (“ESA”). Secondly, the plaintiff says that it was neither an express nor implied term of his contract that the employer could invoke the layoff provisions of the ESA.

[5] Prior to October 2012 the defendant had not laid off any employees in the Ottawa office.

[6] As a result of the defendant’s unilateral decision to invoke a temporary layoff of the plaintiff, the plaintiff was constructively dismissed. He says he has a statutory entitlement to 8 weeks’ salary in lieu of notice ($11,733) and 15 weeks’ salary for severance[^1] ($21,999.37) for a total of $33,732.37.

[7] The plaintiff also seeks the defendant’s portion of RRSP contributions, a vacation adjustment, lost overtime and reimbursement for parking expense for 12 months for a total claim of $44,305.47 plus interest and costs.

Position of the Defendant

[8] The defendant says that the plaintiff was aware that he was subject to a temporary layoff, that there had been previous instances of temporary layoffs in the Ottawa office and that the plaintiff did not object when notified that his employer intended to invoke a temporary layoff.

[9] The defendant further states that layoffs do not constitute terminations or severances within the meaning of sections 56 and 63 of the ESA and that there is no entitlement to damages for wrongful dismissal when an employee has been laid off temporarily in compliance with the provisions of the ESA.

[10] The temporary layoff in this case complied with all statutory requirements and the plaintiff was advised that the layoff would not last longer than 35 weeks. Further, he was notified that his benefits would be maintained during the layoff period.

[11] The defendant states as well that when a temporary layoff complies with the requirements of the ESA there is no possibility that the layoff can result in a constructive dismissal. (See Trites v Renin Corp. 2013 ONSC 2715 at para. 29).

[12] Alternatively, the defendant says that there was an implied term in the employment contract with the plaintiff that permitted the employer to invoke a temporary layoff. The plaintiff knew or ought to have known that a temporary layoff was a possibility because of his knowledge of the consulting industry. Also, three workers in the Ottawa office of the defendant were laid off in 2012.

[13] The defendant also says that if the plaintiff was constructively dismissed, he was able to obtain alternative employment on February 14, 2013, about 20 days after his layoff went into effect, and a reasonable notice period would be 3 to 9 months for an employee in similar circumstances to the plaintiff, being 54 years of age with 22 years of service in employed in an intermediate position.

Discussion and Analysis

i) Summary Judgment

[14] Motions for summary judgment are governed by the principles set out by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7 where Justice Karakatsanis said as follows:

Summary judgment motions must be granted whenever there is no genuine issue requiring a trial (para. 47)… There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits of the motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact; (2) allows the judge to apply the law to the facts; and (3) it is a proportional, more expeditious and less expensive means to achieve a just result (para. 49)... The enhanced fact-finding powers granted to motion judges in Rule 20.04(2.1) may be employed on a motion for summary judgment unless it is in the “interests of justice” for them to be exercised only at trial (para. 53).

[15] In this case, the issues can be determined fairly and justly without a trial. The documentary record is extensive and reliable. The material facts necessary to achieve a just result are established by the available evidence and form part of the record on this motion. Cases involving employment issues can be well-suited to disposition by way of a motion for summary judgment.

ii) Did the layoff result in a constructive dismissal?

[16] In Stolze v. Addario et al., 1997 CanLII 764 (ON CA), [1997] 36 O.R. (3d) 323 (C.A.) our Court of Appeal considered the situation of an employee who said he was constructively dismissed when he was laid off because neither the express nor implied terms of his employment permitted the employer to invoke an unpaid layoff. The court noted that the employee had 32 years of salaried, full time employment with his employer. His employer occasionally referred to him as a key employee. The court found that there was no evidence of discussions or a company policy respecting layoffs of salaried employees during his 32 years of employment.

[17] The Court of Appeal held that in the absence of evidence of a policy or practice within the employer company of laying off key employees, the layoff of the plaintiff in Stolze constituted a repudiation of a fundamental term of his employment contract thereby resulting in a constructive dismissal. The Court of Appeal sent the matter back for an assessment of the appropriate amount of termination pay and severance pay to which the employee was entitled.

[18] In the case of Chen v Sigpro Wireless Inc., 2004 CanLii 13956, G.R. Morin, J. concluded that “the law is clear that the imposition of a layoff where there is no express or implied term in the contract of employment permitting such, repudiates a fundamental term of the employment contract” (paragraph 12). The court concluded that as a result of the temporary layoff, the employee was dismissed from his employment without notice and without cause as of the same date that the layoff took effect.

[19] To the same effect is the decision in McLean v The Raywal Limited Partnership (2011) ONSC 7330. There the employee was laid off in 2011 in circumstances where the employee handbook had been amended in 2008 to include a reference to the employer’s entitlement to invoke a temporary layoff. In referring to several cases that had dealt with this question, Whitaker J. concluded that the amendment to the employee handbook did not result in an enforceable alteration of the employees’ employment contract. He concluded that a mere continuation of employment cannot amount to consideration in exchange for a change in the terms of employment (see Frances v Canadian Imperial Bank of Commerce 1994 CanLII 1578 (ON CA), [1994] 21 O.R. (3d) 75 (C.A.)).

[20] I note as well in the text, Employment Law in Canada,[^2] the authors state that “the traditionally-accepted view is that there is no standard implied term in the employment contract permitting an employer to lay off or suspend an employee from work without pay (page 11-56)… The common law does not recognize the concepts of economic layoff, disciplinary suspension or lockout in their own right… Thus, there is no principle of employment law that allows an employer to impose layoffs, disciplinary suspensions or lockouts (page 18-17).

[21] I do not accept the evidence of Chris Fox where he suggests that the right to impose a temporary layoff should be regarded as an implied term of the plaintiff’s employment contract as set out in paragraphs 17 to 21 of his affidavit. I regard this as self-serving inadmissible opinion evidence. The fact is that over many years prior to 2012, layoffs were not a feature of the defendant’s Ottawa office.

[22] Also, the mere fact that a co-worker had been previously laid off does not create a legal basis for the defendant to impose a layoff on the plaintiff. The right to impose a layoff as an implied term must be notorious, even obvious, from the facts of a particular situation. It may be that the co-worker accepted the layoff although not bound to do so. Standing alone, it is difficult to see how the layoff of one worker can result in a unilateral amendment of the employment contracts of other workers.

[23] The defendant relies on the decision of Moore J. in Trites v Renin Corp., 2013 ONSC 2715 where he says “in my view, there is no room remaining at law for a common law claim for a finding of constructive dismissal in circumstances where a temporary layoff has been rolled out in accordance with the terms of the ESA (paragraph 29). It appears to me that the Trites decision is out of step with the weight of the prior authorities previously referred to. To the extent that the decision of Moore J. in Trites stands for the proposition that the common law conditions precedent to a lawful layoff have been completely displaced by the ESA, I respectfully disagree.

[24] The amounts payable to an employee pursuant to the notice and severance provisions of the ESA are not subject to mitigation (see Boland v. APV Canada Inc. (2005), 2005 CanLII 11980 (ON SCDC), 40 C.C.E.L. (3d) 139 (Ont. Div. Ct.) at para. 23. The plaintiff is entitled to 8 weeks’ salary in lieu of notice and 15 weeks’ salary for severance which the parties have agreed total the sum of $33,854.71.

iii) Notice and damages at common law

[25] The plaintiff also claims damages arising from the termination of his employment as a result of his constructive dismissal. Included in this part of the plaintiff’s claim is salary continuation (subject to mitigation) and assorted benefits consisting of overtime compensation, the employer’s contribution to the employee’s RRSP account and the loss of free parking at his workplace.

[26] The plaintiff requests a twelve month notice period or payment in lieu thereof based on fifteen years continuous employment. Determination of an appropriate notice period engages a consideration of the so-called Bardal factors. They include the character of the employment, the length of service, the age of the employee and the availability of alternative employment having regard for the experience, training and qualifications of the employee. The defendant says that a notice period of three to six months for a 64 year old employee would be appropriate. I do not agree and conclude that the plaintiff’s request for twelve months’ notice is reasonable in the circumstances present here, subject to mitigation and set-off considerations.

[27] Notwithstanding the finding that the plaintiff was entitled to common law damages in lieu of notice, the calculation of these damages is liable to adjustment on account of a finding that the plaintiff failed to mitigate his damages. In appropriate circumstances, an employee can be required to return to his or her workplace when recalled, even after a constructive dismissal. The key consideration is whether the employee may be exposed to hostility, embarrassment or humiliation upon returning to the workplace, thereby excusing him from the obligation to mitigate the damages he is or will sustain by returning to his former position. The evidence here is that the plaintiff was recalled to work on June 24, 2013. The plaintiff declined to accept this recall, which he was entitled to do, but there is nothing in the evidence that suggests he would have faced embarrassment, hostility or humiliation if he had elected to return to his former workplace to resume his former duties on the same terms as before. Accordingly, my view is that any entitlement to damages at common law ought to terminate with the recall notice, capping the time period at five months or 21.65 weeks (see Evans v. Teamsters, Local 31, (2008), 65 C.C.E.L. 93d) 1 (S.C.C.))

[28] The severance and termination payments under the ESA and any income derived from alternate employment during the notice period must be set off against the plaintiff’s common law damages (see Yanez v. Canac Kitchens (2004), 2004 CanLII 48176 (ON SC), 45 C.C.E.L. (3d) 7 (Ont. S.C.J.) paras. 45 to 53). In this case the plaintiff secured alternate employment about twenty days following his layoff at a weekly salary of $1,461.53. The total set-off for the notice and severance entitlement is $33,854.71 plus the new employment income for the period from February 14, 2013 to June 24, 2013 (18 weeks) of $26,307.69 for a total of $60,162.40. This may be compared with his notice period income payable by the defendant (capped at 21.65 weeks) of $31,752.53 ($1,466.63 x 21.65). The set-off for statutory payments and earnings in mitigation greatly exceed the plaintiff’s prospective common law damages, making it unnecessary to determine the validity of the plaintiff’s claims lost overtime, vacation adjustment, foregone employer RRSP contributions and parking expenses.

Disposition

[29] The plaintiff is entitled to summary judgment for the sum of $33,854.71 plus interest.

[30] On the issue of costs, the parties have delivered sealed bills of costs but may provide further costs submissions if they wish to do so within 30 days on a schedule agree to by counsel.

The Hon. Mr. Justice M. James

Released: March 18, 2016

CITATION: Michalski v Cima Canada Inc., 2016 ONSC 1925 COURT FILE NO.: CV-13-57112 DATE: March 18, 2016

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Peter Michaelski Plaintiff

– and –

Cima Canada Inc. Defendant

REASONS FOR Decision

James J.

Released: March 18, 2016, 2016

[^1]: The defendant’s payroll is greater than $2,500,000 so section 64(1) ESA applies. [^2]: Peter Barnacle et al., Employment Law in Canada, 4th ed., (Markham: Lexis Nexis Canada Inc., 2005)