Court File and Parties
Court File No.: 17-71150 Date: 2017/06/26 Ontario Superior Court of Justice
Between: Omar Hassan Farah, Applicant And: EODC Inc., aka EODC Engineering, Developing and Licensing Inc., aka Engineering Office Deisenroth Canada Incorporated, Respondent
Counsel: Sean P. Bawden, for the Applicant Alan Riddell and Kyle Van Schie, for the Respondent
Heard: April 25, 2017
Reasons for Judgement
S. Kershman J.
Background
[1] The Applicant, Omar Hassan Farah (the “Applicant”), was 47 years old as at the date that his employment with the Respondent, Engineering Office Deisenroth Canada Incorporated (“EODC”), was terminated. At that time, his annual salary was approximately $76,481.60.
[2] The Applicant holds a college diploma in programmer analyst, information technology from Collège d’informatique Marsan. Prior to working for EODC, the Applicant worked for, amongst others, Hartco, the Immigration and Refugee Board of Canada, Transport Canada, Citi Cards Canada (CitiGroup), and the Department of National Defence, all in various capacities as a computer network analyst.
[3] The Applicant began working for EODC in June 2010. At that time, he held the position of DBA Network Administrator, working in a form of database network administration.
[4] The Applicant was promoted several times throughout his tenure with EODC. During his six and a half years working for EODC, the Applicant signed five consecutive employment contracts:
(i) Contract of employment #1, effective June 7, 2010;
(ii) Contract of employment #2, effective September 5, 2011;
(iii) Contract of employment #3, effective September 3, 2012;
(iv) Contract of employment #4, effective September 2, 2013; dated September 20, 2013; and signed October 8, 2013 (the “4th Employment Contract”); and
(v) Contract of employment #5, effective September 2, 2013; dated June 1, 2015; and signed in June/July 2015 (the “5th Employment Contract”).
[5] It is EODC’s evidence that, on each and every occasion that the Applicant signed these consecutive employment contracts, EODC gave him a slight increase in his salary as financial consideration for his signing the contract.
[6] Each of these five employment contracts contained a contractual clause intended to displace the Applicant’s right to common law notice in the event of termination of his employment. Upon termination, the Applicant would only be entitled to the statutory entitlements prescribed under the Employment Standards Act, 2000, S.O. 2000, c. 41 (the “ESA”).
[7] In early January 2015, and immediately prior to his most recent promotion, the Applicant’s base salary was $31.08/hr. Later that month, he was promoted to the position of Senior Systems Administrator and his base salary was increased to $36.05/hr. He did not sign a written contract of employment at that time. Presumably his employment was continuing to be governed by the 4th Employment Contract, effective September 2, 2013 (the “4th Employment Contract”).
[8] In his new position of Senior Systems Administrator, the Applicant was the liaison between management and staff/personnel of EODC. He reported to EODC’s Head of Finance.
[9] The Applicant was enrolled in EODC’s group benefits plan, which provided him, among other things, health and dental benefits. He was also entitled to the use of a company-provided cell phone, the monthly cost of which was approximately $85.00.
[10] That spring, in an effort to standardize and update its employment contracts, EODC asked each of its employees, including the Applicant, to sign an updated employment contract. In return, EODC offered each of its employees a cost-of-living increase of 2 percent.
[11] This 5th Employment Contract was dated June 1, 2015, but was made effective as of September 2, 2013. Both parties signed the agreement. The signature of Philip Lynch, Managing Director of EODC, is dated June 30, 2015. The Applicant’s signature is dated July 8, 2015.
[12] Following his execution of the agreement, the Applicant’s base salary was increased from $36.05/hr to $36.77/hr.
[13] The relevant portions of the 5th Employment Contract read as follows:
- Conditional upon the Employee eventually being granted the proper security clearance, as outlines in his/her Job Description, the Employer shall employ the Employee in the position of Senior Systems Administrator starting the 2nd day of September, 2013 upon the following terms and conditions:
TERMINATION
- At any time, following the conclusion of the Probationary Period, the Employer may terminate the Employee without just cause simply upon providing him/her with the entitlements prescribed in the Employment Standards Act, 2000 (“the Act”) or any amendments thereto. The Employee hereby acknowledges that he/she has had the opportunity to review the relevant portions of the Act and/or to consult with legal counsel about their impact on his/her current entitlements upon termination of his/her employment.
GENERAL PROVISIONS
This agreement supersedes any and all other prior agreements, whether oral or written, between the parties hereto with respect to the employment of the Employee and contains the entire agreement between the parties. There are no warranties, representations or other agreements between the parties in connection with this agreement. It is further agreed that the terms of this agreement cannot be changed unless the change is confirmed in writing and initialled by both parties.
The Employee acknowledges that s/he has reviewed and understood the terms and conditions of this agreement and that s/he has had an opportunity to seek clarification of those terms and conditions and to receive independent legal advice thereon. The Employee hereby agrees that the terms and conditions set forth in this agreement are fair and reasonable, that s/he is consenting to them voluntarily and without duress and by his/her signature agrees to be bound by this agreement.
[14] A year later, on the morning of Thursday, September 1, 2016, along with a number of other employees, the Applicant was presented with a letter terminating his employment with EODC. That letter was signed by Mr. Lynch, still Managing Director of EODC.
[15] The Applicant was escorted to his work station in order to allow him to collect his personal items, after which he was escorted out of the building.
[16] Later that afternoon, the Applicant received a telephone call from EODC advising him that the notices of termination were issued erroneously and that he was to report back to work the following morning (Friday, September 2, 2016).
[17] That next morning, the Applicant was told to consider himself an EODC employee. The Applicant then continued to work as before. No new written offer of employment of contract of employment was ever offered to the Applicant.
[18] On November 23, 2016, EODC again terminated the Applicant’s employment. At that time, EODC offered to provide the Applicant with 6 weeks’ termination pay and 6.42 weeks of severance pay, plus an additional one week’s pay in consideration of the Applicant’s execution of a full and final release.
[19] The Applicant refused to accept EODC’s offer, refused to sign the full and final release, and brought this application for damages for wrongful dismissal.
[20] The Applicant disputes the enforceability of the termination provision of the 5th Employment Contract (the “Termination Clause”) — which limits his entitlement to notice of termination as prescribed under s. 57 of the ESA — and seeks damages at common law equal to nine months’ pay in lieu of reasonable notice.
[21] The Applicant does not contest, and these Reasons do not address, the Applicant’s entitlement to severance pay under s. 64 of the ESA, which EODC has calculated to be 6.42 weeks.
Issues
[22] The issues are as follows:
a. Is the 5th Employment Contract legally enforceable, such that the Termination Clause clearly rebuts the common-law presumption of termination only upon reasonable notice?
i. Is the Termination Clause ambiguous?
ii. Is the Termination Clause supported by consideration?
b. If so, when was the 5th Employment Contract terminated; and what effect does the Applicant’s termination have on his entitlement to notice under the 5th Employment Contract or at common law?
c. For any period of time for which the 5th Employment Contract is not legally dispositive of the amount of reasonable notice, what is the reasonable notice period?
[23] Both parties agreed, and this Court finds, that this matter is appropriate for resolution by way of an application under r. 14.05(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
Issue 1: Enforceability of 5th Employment Contract
Position of the Applicant
[24] The Applicant argues that the 5th Employment Contract is not legally enforceable for two reasons: first, the terms of the agreement are ambiguous and thus fail to rebut the common-law presumption of termination only upon reasonable notice; second, the Applicant received no consideration for the execution of the agreement.
[25] The Applicant points to two ambiguities arising from the Termination Clause within the 5th Employment Contract:
At any time, following the conclusion of the Probationary Period, the Employer may terminate the Employee without just cause simply upon providing him/her with the entitlements prescribed in the Employment Standards Act, 2000 (“the Act”) or any amendments thereto. The Employee hereby acknowledges that he/she has had the opportunity to review the relevant portions of the Act and/or to consult with legal counsel about their impact on his/her current entitlements upon termination of his/her employment. [Emphasis added.]
[26] The Applicant first argues that the agreement fails to define what the “Probationary Period” is. There is no other reference to a “Probationary Period” within the 5th Employment Contract, and thus it is ambiguous when such a probationary period ends and what the employee’s rights are during such a period.
[27] The Applicant then argues that the phrase “with the entitlements prescribed in the Employment Standards Act, 2000” is ambiguous and thus fails to rebut the common-law presumption of termination only upon the provision of reasonable notice. As a result, it argues that the provision should be void for want of certainty.
[28] For this latter argument, the Applicant points to Dwyer v. Advanis Inc., 2009 ONSC 23869 (Ont. S.C.), where this Court held that the a clause stipulating the receipt of a “severance as determined by the applicable Employment Standards Act” is at least ambiguous as to whether the clause limited entitlement to the ESA and nothing more.
[29] The Applicant then cites Dodich v. Leisure Care Canada, 2006 BCSC 93, 47 C.C.E.L. (3d) 206, for the proposition that the failure to prescribe a clear, maximum entitlement does not rebut the common-law presumption.
[30] In Dodich, the termination provision in the letter of employment read as follows:
Should it be necessary, Lifestyle may end the employment relationship by providing you with a minimum of two (2) weeks notice, or pay in lieu of notice, or such that is required by the Employment Standards Act, whichever is greater. In any event, we guarantee that you will be provided with compensation upon the severance of the employment relationship, on a without cause basis, which shall not be less than two (2) weeks per year of service. This payment will include any statutory obligations Lifestyle may have under the Employment Standards Act.
[31] Justice Holmes of the Supreme Court of British Columbia rejected the defendant employer’s contention that the plain meaning of the provision was that the minimum period of notice (two weeks per year of service) and the maximum were the same.
[32] Instead, Holmes J. found the provision to be ambiguous and held that the employer had not shown that the provision had displaced the plaintiff employee’s common-law entitlement to reasonable notice:
The termination clause therefore purports to provide minimum amounts that will accrue to the plaintiff and to guarantee payment will not be less than a specified amount. The wording of the guarantee does not suggest a maximum or upper limit and the presumption of reasonable notice is not clearly displaced by another notice period (at para. 11).
[33] Finally, the Applicant also relies on the following passage of Justice Low at paragraph 36 of Wright v. The Young and Rubicam Group of Companies (Wunderman), 2011 ONSC 4720:
There is, in my view, no particular difficulty in fashioning a termination clause that does not violate either the minimum standards imposed by the Employment Standards Act or the prohibition against waiving statutory minimum requirements and there is no compelling reason to uphold a termination clause which the draftsman may reasonably be understood to have known was not enforceable either at all or under certain circumstances.
[34] In that case, the contract of employment included an all-inclusive clause, which was held to evidence an intention to treat the payment of base pay under the termination provisions as the totality of the employee’s entitlements to compensation on termination, regardless of whether the contractual provisions met the statutory minimums or not. As some of the contractual provisions fell short of the statutory minimums, Justice Low found the agreement in violation of s. 5(1) of the ESA.
[35] As part of its argument against enforceability, the Applicant next argues that the 5th Employment Contract fails for want of consideration and is thus void ab initio.
[36] As set out above, the 5th Employment Contract provides that EODC shall employ the Applicant “in the position of Senior Systems Administrator starting the 2nd day of September, 2013”.
[37] Among other promotions during his time at EODC, the Applicant was promoted to the position of Senior Systems Administrator in January 2015, at which time his base salary increased from $31.08/hr to $36.05/hr. Until that date, he held the position of DBA Network Administrator.
[38] The 5th Employment Contract was signed by EODC on June 30, 2015 and was signed by the Applicant on July 8, 2015.
[39] As evidenced by a payment summary dated July 22, 2015, the Applicant’s base salary was increased by two percent, from $36.05/hr to $36.77/hr, which he contends represented a cost-of-living adjustment provided to all EODC employees.
[40] The Applicant argues that neither his position nor his responsibilities changed as a result of executing the agreement; that he was never advised that he was required to sign the contract in order to receive the cost-of-living adjustment or that his failure to do so would result in not getting the raise; and that he was never advised that the cost-of-living adjustment was in consideration of his execution of the new agreement. As far as the Applicant was aware, his salary was increased by two percent as a result of a cost-of-living adjustment, to which all EODC employees were entitled.
Position of EODC
[41] In response to the Applicant’s suggestion that the 5th Employment Contract is ambiguous, EODC argues that neither of the two alleged ambiguities should permit this Court to refrain from enforcing the agreement.
[42] EODC submits that it inadvertently inserted into the Termination Clause the words “following the conclusion of the Probationary Period”. Although not a defined term in the 5th Employment Contract, “Probationary Period” was a defined term in the 4th Employment Contract, being “the first three (3) months of employment…during which time the Employer may choose to terminate the Employee’s employment at any time, without notice or pay-in-lieu of notice”.
[43] As with the 5th Employment Contract, the Applicant’s employment under the 4th Employment Contract as for the “position of Systems Administrator effective the 2nd day of September, 2013”. The 4th Employment Contract was signed by both parties on October 8, 2013.
[44] As such, EODC argues that the Applicant was fully aware, when he signed the 5th Employment Contract in July 2015, that “Probationary Period” referred to the first three months of his employment in his new position of Systems Administrator commencing as of September 2, 2013.
[45] In light of the contractual history between the Applicant and EODC, the termination clause in the 5th Employment Contract was unambiguously clear to any reasonably educated employee who, like the Applicant, had read the 4th Employment Contract.
[46] In the alternative, EODC argues that, even if the term “Probationary Period” had not been defined in the 4th Employment Contract, the failure to define the term would not create sufficient grounds for this Court to declare the clause inoperable. It relies on Oudin v. Centre Francophone de Toronto, 2016 ONCA 514, for the proposition that this Court is to apply contractual termination clauses in accordance with the clear intention of the parties, and to not let minor ambiguities in the language of those clauses defeat the enforcement of the parties’ obvious original intention to be bound by those clauses.
[47] With respect to the Applicant’s position that the phrase “with the entitlements prescribed in the Employment Standards Act, 2000” is ambiguous and unenforceable, EODC asserts that Ontario courts have repeatedly ruled that such terminology constitutes a valid and enforceable waiver of an employee’s right to reasonable notice at common law, limiting the employee to the statutory entitlements prescribed under the ESA:
(a) “…by giving not less than one (1) month’s prior written notice…” (MacDonald v. ADGA Systems International Ltd. (1999), 1999 ONCA 3044, 117 O.A.C. 95 (C.A.));
(b) “…upon the provision of reasonable notice equal to the requirements of the applicable employment or labour standards legislation … [and that] no further amounts will be due and payable to you whether under statute or common law” (Clarke v. Insight Components (Canada) Inc., 2008 ONCA 837, 243 O.A.C. 196.);
(c) “…in accordance with the standards set out in the Ontario Employment Standards Act …” (Dimson v. KTI Kanatek Technologies Inc., 2012 ONSC 6556);
(d) “…on two weeks’ prior written notice or such greater period of notice as is prescribed by statute or regulation or pay in lieu thereof” (Thomas v. EDS Canada Inc., 2011 ONSC 101010);
(e) “…one week per year of service with a minimum of four weeks or the notice required by the applicable labour legislation” (Cook v. Hatch Ltd., 2017 ONSC 47).
[48] Specifically, EODC notes that, in Cook v. Hatch Ltd., at para. 33, this Court distinguished Dwyer v. Advanis Inc. (cited by the Applicant) as follows:
The judge [in Dwyer], while acknowledging that “…an original contractual provision for termination can continue or survive other changes…” to the employment contract, the facts of the case he was considering, led him to conclude that “…the original provision was no longer part of the mutual understanding of the parties after the plaintiff had assumed his new role…” In other words, when the plaintiff was terminated, the clause referencing the Employment Standards Act no longer applied. Moreover, that legislation provided that the plaintiff was entitled to four weeks’ notice and to the maintenance of his employee benefits during that period. The defendant, in terminating the plaintiff, did not comply with this direction. The judge noted that the defendant “should not be afforded the protection of a contractual provision it breached itself”. To my mind this is more than enough to set this case apart and to distinguish from the one I am asked to decide and the others to which I have referred. [Footnotes omitted.]
[49] EODC also disputes the Applicant’s reliance on the Supreme Court of British Columbia’s decision in Dodich. To EODC, not only is Dodich inconsistent with Ontario jurisprudence, but subsequent decisions in British Columbia cast doubt on its application (see e.g. Damani v. Stuart Olson Construction Ltd., 2015 BCSC 2322, at para. 18).
[50] Finally, in response to the Applicant’s arguments regarding the lack of consideration supporting the Termination Clause, EODC submits that the Applicant did receive fresh financial consideration for executing the 5th Employment Contract, being the two-percent salary increase. EODC argues that it provided the Applicant this salary increase as a direct result of his execution of the agreement and that it would not have granted him any such salary increase had he refused EODC’s request to execute the agreement.
[51] It is EODC’s evidence that every one of its employees who signed the updated employment contract in 2015 received the cost-of-living increase of two percent; equally, no EODC employee who refused to sign the updated contract was given any salary increase — which EODC claims occurred with one of its employees, who was subsequently denies all salary increases in 2015.
[52] Further, it is EODC’s evidence that it notified each employee, and in particular the Applicant, that the two-percent increase was being provided to him or her in exchange for the execution of the updated employment contract. Given that the Applicant received a salary increase each time he signed a new employment contract, it should not have been a surprise to the Applicant that the salary increase was connected to the employment contract he was simultaneously executing.
Analysis
[53] With respect to the impugned agreement, this Court finds that the terms of the Termination Clause are not ambiguous and sufficiently rebut the common-law presumption of termination only upon reasonable notice, effectively limiting the notice requirements to those as set out in the ESA.
[54] The term “Probationary Period”, while undefined in the 5th Employment Contract, is unambiguous when read in the context of the employment relationship and the term as it is defined in the 4th Employment Contract.
[55] Mr. Hassan was given the opportunity to review the agreement with a lawyer (as set out in clauses 21 and 30 of the 5th Employment Contract). No evidence was tendered to the Court that he was prevented from dealing with the lawyer.
[56] The wording that seeks to displace the common law is equally unambiguous.
[57] It is well established that the common-law presumption on termination only on reasonable notice is “rebuttable if the contract of employment clearly specifies some other period of notice, whether expressly or impliedly” (Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986, at p. 998).
[58] In Machtinger, the Supreme Court of Canada held that two termination clauses, one allowing the employer to terminate without cause and without any notice, and the other without cause on two weeks’ notice, to be null and void. The rationale behind Machtinger is that an employer who drafts a clause that attempts to avoid the minimum statutory notice requirements cannot rely on such a clause to show that the intent of the parties was to provide the minimum statutory notice (see Clarke, supra, at para. 6).
[59] In distinguishing Machtinger from the case before it, the Ontario Court of Appeal in MacDonald v. ADGA Systems, supra, compared the language of the termination clause in MacDonald’s employment contract with that found in Machtinger’s contract with HOJ Industries. (As set out above, in MacDonald v. ADGA Systems, the contract provided that either party may terminate the agreement at any time “by giving not less than one (1) month’s prior written notice”.)
[60] The Court of Appeal found that the McDonald clause did not, on a plain reading, conflict with any legislative entitlement: Neither on its face, nor inferentially, did the terms provide for a notice period less than that required by the ESA, nor reflect an attempt to contract out of that requirement. As such, the presumption was rebutted and the contractual term prevailed.
[61] The Court of Appeal noted, at para. 23, the following:
It would no doubt have been linguistically preferable had the termination provision in MacDonald’s contract contained words after the term of notice such as “in accordance with the relevant provisions of the Employment Standards Act.” But while this layer of specificity might have enhanced the clarity of the parties’ intentions, its absence does not detract from the provision’s legality.
[62] In line with this analysis, and following the remaining cases cited by EODC, the Court finds that the interpretation of the Termination Clause and its intention to provide the Applicant “with the entitlements prescribed in the Employment Standards Act, 2000” to be clear and unambiguous. Accordingly, the contractual term rebuts the common law presumption and prevails.
Issue 2: Termination of 5th Employment Contract
Position of the Applicant
[63] Should this Court find that the 5th Employment Contract binding, which it has, the Applicant submits that the contract was of no force or effect on November 23, 2016, when his employment was terminated, because, on September 1, 2016, EODC had terminated the contract.
[64] On September 1, 2016, Mr. Philip Lynch, Managing Director of EODC, provided the Applicant with a letter ostensibly terminating his employment. In its written submissions, EODC does not dispute Mr. Lynch’s authority to have terminated the contract or the Applicant’s employment.
[65] To the Applicant, there could be no doubt that EODC terminated his employment, and more importantly his written contract of employment, to be at an end at that time.
[66] However, the facts demonstrate that the Applicant did return to work for EODC the very next day following the termination of the contract.
[67] Relying on Whiting v. Boys and Girls Club Services of Greater Victoria, 2011 BCSC 681, the Applicant argues that an employee who continues to work beyond the termination of a written contract is deemed to be employed pursuant to an unwritten contract of employment.
[68] In Whiting, the employee was terminated in June 2008 without cause as a result of the employer’s need for organizational changes that would eliminate her position. After an initial probationary period beginning in November 1995, governed by a six-month written probationary agreement, Ms. Whiting was employed continuously for approximately eight years without a written agreement in place. Thereafter, there were various written agreements that governed various periods of time, the last of which ending in March 2007. No written agreement was in place at the time that the termination notice was provided.
[69] Justice Masuhara allowed Ms. Whiting’s action for wrongful dismissal and held that she was entitled to 18 months reasonable notice at common law. Given that the various agreements were definite-term contracts that had expired, the employment relationship was of indefinite duration and not governed by the termination provisions in any of the written agreements. Referring to, inter alia, Howard A. Levitt, The Law of Dismissal in Canada, 3rd ed. (Aurora, Ont.: Canada Law Book, 2010), Masuhara J. held, at para. 29:
The references and authorities provided by the plaintiff indicate that an employee who continues past the end date of a definite term contract is deemed to be employed for an indefinite term unless they are clear and unequivocal language that states the contrary.
[70] The Applicant argues that, when EODC continued its employment relationship with him after September 1, 2016, it did so pursuant to an unwritten contract of employment. Consequently, when EODC finally terminated the Applicant’s employment on November 23, 2016, such termination was from an unwritten contract of indefinite hire, an implied term of which was that the Applicant was entitled to reasonable notice of termination under the common law. The Applicant argues that the reasonable notice period in this case is nine months.
Position of EODC
[71] EODC rejects the Applicant’s claim that he suddenly became entitled to common law notice as a result of EODC’s erroneous and temporary announcement, on the morning of September 1, 2016, that is was terminating the Applicant’s employment.
[72] Its argument is two-fold: not only was the notice of termination immediately rescinded that very afternoon, even if it had not been, the Applicant’s continued employment with EODC would be governed by the very same terms and conditions as those provided in the 5th Employment Contract. Hence, provided the written agreement is binding and operative (which the Court has found it is), the Applicant would only be entitled to notice as set out in the ESA.
[73] EODC submits that the notice given to the Applicant was done in error and was rescinded by EODC within only a few hours, retroactive to that same day. The Applicant was immediately informed of same and was told to attend a meeting the next morning at 8:00 a.m., which he did.
[74] EODC cites Roche v. Sameday Worldwide, 2014 NLTD(G) 26, 347 Nfld. & P.E.I.R. 181, where an employer erroneously believed the employee had been medically cleared to return to work following the termination of her long-term disability benefits. The employer then terminated the employee, for cause, for not reporting to her supervisor as instructed. Shortly thereafter, having learned of its error, the employer stopped the process necessary to give effect to the termination, and the employee remained employed, albeit on long-term disability.
[75] Justice Burrage of the Supreme Court of Newfoundland and Labrador dismissed the employee’s claim for wrongful dismissal. To him, she was not dismissed. Once the error was discovered the termination was immediately revoked by the employer before it could be given effect, which revocation was acknowledged by the employee through subsequent conduct in requesting and accepting certain health and dental benefits which were only available to employees.
[76] Next, EODC referred this Court to Raypold v. McEvoy Oilfield Services (1977), 2 A.R. 134 (Q.B.). Following a management meeting in the office of the vice-president of the employer, a drinking party developed, in the course of which the vice-president, substantially under the influence of liquor, threatened to fight the Canadian sales manager and told him he was fired.
[77] The sales manager’s action against the company for wrongful dismissal was dismissed. The Alberta Supreme Court held, at para. 14, the following:
When an immediate superior, in a moment of rashness and anger, and when his judgment has been clouded by drink as the employee could reasonably have realized, dismisses an employee, but, at the earliest possible moment, withdraws the dismissal, it cannot reasonably be said that in the totality of the circumstances there has been a dismissal by the employer.
[78] The Court also found that, even if there had been a dismissal, the employee’s actions in going over the head of the vice-president, his immediate supervisor, and being told that he was not to leave operated as a “stay”: it could not be said that there was a dismissal which the employee could treat as a repudiation of the contract.
[79] Finally, EODC relies on Metropol Security Co./Securite Metropol Ltee and Pankhurst (Re), 1981 CarswellMan 419 (Co. Ct.), where a security guard assumed he had been fired after being called in to the personnel manager’s office and confronted with a newspaper ad that appeared to show the employee operating a business in competition with his employer. While certain details were uncertain, both parties agreed that, within a couple of hours, the manager was trying to reassure the employee that he still had a job. The employee subsequently refused to work, insisted that he had been fired, and demanded his severance pay under Manitoba’s employment standards legislation.
[80] On an appeal de novo from a decision of the Manitoba Labour Board, the Manitoba County Court found it manifestly unfair to require the employer to have to pay any severance to the employee:
[W]here an event occurs which on the face of it would justify a dismissal, and an employer dismisses in haste and within an hour or two, with no prejudice to the employee, reconsiders and re-hires the employee, to award severance pay would be unfair (at para. 13).
[81] Thus, as EODC argues, the erroneous termination of the Applicant did not have the legal effect of triggering the termination of the Applicant’s employment contract.
[82] In the alternative, even had EODC not immediately rescinded the termination notice, it submits that the Applicant continued to be employed by EODC for the next two and a half months, subject to the very same contractual conditions of employment — and thus the same termination clause — as was set out in the 5th Employment Contract.
[83] It points to the fact that the Applicant resumed his work with EODC and went about his job as before, with no changes to any of the prior terms and conditions of his employment. The parties, thinking that the employment had never been validly terminated, did not enter into any discussions about the nature of the Applicant’s employment during the remainder of his tenure.
[84] To EODC, the law recognizes that, in such circumstances, the parties are implicitly agreeing that all of the terms and conditions of employment remain the same as those which existed prior to the employee’s erroneous termination. By virtue of such conduct by the employer and the employee, both parties are deemed to have condoned or acquiesced to being bound by the terms of that former contract.
[85] EODC offers Raypold, supra, as an example of this, where the employee’s conduct operated as a “stay” to any purported dismissal.
[86] Likewise, EODC directs the Court’s attention to the principles of acquiescence set out in Wronko v. Western Inventory Service Ltd., 2008 ONCA 327, 90 OR (3d) 547, and Russo v. Kerr, 2010 ONSC 6053, 326 DLR (4th) 341, which were recently outlined at paragraphs 32 and 34 of Fasullo v. Investments Hardware Ltd., 2012 ONSC 2809.
[87] Finally, in response to the Applicant’s reliance on Whiting, supra, EODC indicates that the Court in Whiting was determining the effect of continued employment following the expiry of a definite-term contract, unlike here where the Applicant was employed on an indefinite basis under the 5th Employment Contract. As set out above, “an employee who continues past the end date of a definite term contract is deemed to be employed for an indefinite term unless they are clear and unequivocal language that states the contrary” (Whiting, at para. 29, emphasis added).
[88] Thus, to EODC, Whiting has no relevance and cannot be applied here.
Analysis
[89] For the reasons that follow, the Court finds that the Applicant was terminated on September 1, 2016 after roughly six years and three months of employment. As set out in s. 57 (f) of the ESA, the Applicant is entitled to six weeks’ notice of termination.
[90] Further, the Court finds that the Applicant returned to work the next day pursuant to the terms of the 5th Employment Contract, a valid term of which limiting the period of reasonable notice to that as set out in the ESA. The Applicant continued to work at EODC until November 23, 2016, when he was terminated once again. For these two and a half months, the Applicant is entitled to a further one week’s notice of termination (see ESA, s. 57(a)).
[91] Thus, the Court finds that the Applicant is entitled to a total of seven weeks’ notice, the reasons for which follow.
[92] On September 1, 2016, the Applicant was advised in writing of EODC’s termination of his employment and immediately escorted him out of building. It was not until several hours later that EODC, according to it, had erroneously issued the termination of employment letters and then contacted the Applicant to request his presence the following day. The Court notes that this act of termination involved several other employees, other than the Applicant, on that day.
[93] The Court distinguishes the decision of Roche v. Sameday Worldwide, supra. That decision was recently considered by this Court in Nason v. Thunder Bay Orthopaedic Inc., 2015 ONSC 8097. Mr. Nason, an orthotic technician, was on disability leave and successfully underwent various surgeries to restore the gripping and squeezing functions he required to properly continue with the casting, fitting, and manufacturing of braces and casts.
[94] On several occasions, Mr. Nason’s wrote to his employer, TBO, requesting to return to work with accommodations in place, but received no response. On January 9, 2013, having been informed by WSIB that TBO no longer had a position for him, Mr. Nason wrote to TBO and asked to discuss a severance package. In response, on January 22, TBO sent him letter terminating his employment. On February 8, Mr. Nason received an email from TBO, asking him to disregard the letter until further discussions took place, “at which time the letter may be formally rescinded”. Two weeks later, the parties met and TBO confirmed that it was rescinding Mr. Nason’s termination, and he was offered full re-employment pending medical clearance.
[95] Mr. Nason never agreed to a rescission of TBO’s termination of his employment, treated his termination as effective, and asked to be removed from the company’s benefit plan and placed onto his wife’s TBO benefit coverage, which was not done.
[96] Justice Fregeau found that TBO terminated Mr. Nason’s employment without cause on January 22 and characterized the issue, at para. 185, as whether an employer can unilaterally withdraw an unconditional termination of an employee’s employment contract prior to the effective date of termination. To Fregeau J., an employer cannot. In distinguishing Roche v. Sameday Worldwide, he held that Mr. Nason never expressly or impliedly consented to TBO’s attempt to withdraw the termination of his employment. The parties had not agreed to cancel the termination or to continue the employment relationship, and TBO’s unilateral continuation of Mr. Nason's benefits cannot alter the contractual relationship.
[97] The Court agrees with the conclusion of Fregeau J. in that an employer cannot unilaterally withdraw an unconditional termination of an employee’s employment contract prior to the effective date of termination. But, in the present case, the effective date of termination was at the time on September 1, 2016 that EODC handed the Applicant his letter of termination and escorted him from the building.
[98] The jurisprudence may tend to suggest that, because the Applicant in the present case was advised of the error that afternoon by telephone and returned to work following the incident, he has impliedly consented to EODC’s attempt to withdraw the termination of his employment and that he has agreed to continue the employment relationship. However, this creates a legal fiction and denies the fact that the Applicant was in fact terminated on the morning of September 1, 2016, when he was handed his termination letter and escorted from the building. The employer cannot rewrite history and claim that its employee was never fired. Moreover, the employee’s voluntary return to work does not equate to an acceptance of the employer’s rescission of his termination. The Court declines to follow Roche v. Sameday Worldwide; the Applicant did not consent and to EODC’s attempt to withdraw the termination of his employment, nor did the parties agree to cancel the termination. The Court finds that the employment relationship was severed on September 1, 2016 and that the Applicant was re-hired the following morning when told to consider himself an EODC employee once more.
[99] Consequently, when the Applicant returned to work for the next two and a half months, he was doing so based on the same terms and conditions outlined in the 5th Employment Contract. The Court finds it immaterial that EODC did not provide the Applicant with a letter of offer outlining the terms of his employment. Both parties thought that the Applicant was to continue his work as per usual and pretend like the termination had never occurred. The Applicant’s duties, responsibilities, salary, and benefits continued to be the same as they were prior to September 1, 2016.
[100] The Court also finds that Raypold and Metropol Security are distinguishable on their facts. Both of those cases involve rashness and anger, where the employee is sharply confronted by their supervisor. In the present case, EODC had made a prior determination that the Applicant and others were to be terminated, and followed a protocol for terminating these employees, which included signed letters of termination and escorting him from the building.
[101] Finally, the Court notes that the principles of acquiescence, as reviewed in Fasullo v. Investments Hardware Ltd., supra, are not applicable to this case. The Applicant is not said to have condoned changes to terms of the governing employment contract. Instead, the issue is whether the Applicant is bound by a prior contract of indefinite duration when he is, in a sense, rehired immediately after termination.
[102] The 5th Employment Contract, as set out above, contained a valid term limiting the Applicant’s notice of termination to that as set out in the ESA. For the period of time between June 2010 and September 1, 2016, being roughly six years and three months, the Applicant is entitled to six weeks’ notice under s. 57 (f) of the ESA. For the period of time between September 2, 2016 and November 23, 2016, being roughly two and a half months, the Applicant is entitled to one week’s notice under s. 57(a) of the ESA. Thus, the Court finds that the Applicant is entitled to seven weeks’ notice.
[103] As noted above, the Applicant’s entitlement to seven weeks’ pay in lieu of notice is independent from his entitlement to severance pay under the ESA.
[104] A wrongfully dismissed employee is also entitled to the value of the lost benefits flowing from the dismissal.
[105] The cost to the Applicant of replacing the benefits provided under his group insurance policy is far more than his contribution while he was employed. As the benefits were not continued post-termination, the value of the benefits must be assessed for the remainder of the period of reasonable notice and paid to the Applicant at his cost of replacing such benefits in the marketplace, less any amounts the Applicant would have contributed during his employment, and less any amount which were paid by EODC for the disability benefits.
[106] Based on the average monthly replacement cost of insurance of $657.51, calculated using the three estimates obtained by the Applicant, the Court awards the Applicant $657.51 for 1.611 months (being seven weeks divided by 4.345 weeks in a month), or $1,059.25.
[107] In addition, the Applicant is entitled to the replacement cost of his mobile phone, the monthly replacement cost of which is $85.00. Thus, the Applicant is awarded $136.94, being $85.00 for 1.611 months.
[108] With respect to the Applicant’s claim for the $434.67 that EODC allegedly deducted from his final paycheck, there is insufficient evidence that EODC improperly or illegally did so. The Court declines to grant the Applicant’s claim.
Issue 3: Reasonable Notice Period
[109] Based on the foregoing, the 5th Employment Contract is legally dispositive of the amount of notice to which the Applicant was entitled both upon his termination on September 1, 2016 and his second termination on November 23, 2016. As such, there is no period of time for which this Court must determine the Applicant’s entitlement to reasonable notice at common law.
[110] If this Court is wrong, and the Applicant was employed pursuant to an unwritten contract of employment between the period of September 1, 2016 and November 23, 2016, an implied term of which was that the Applicant was entitled to reasonable notice of termination at common law, the Court fixes that period of reasonable notice at one week. Having regard to the factors as enunciated in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 240 (Ont. H.C.), including the character of employment, the length of service, the age of the Applicant, and the availability of similar employment, this Court finds that an employment relationship lasting roughly two and a half months attracts no more than one week of reasonable notice.
Costs
[111] Both parties have submitted costs outlines. The parties shall have 14 days from the release of this decision to determine whether they can resolve the issue of costs. If they cannot, they shall contact the Trial Coordinator who will set up a court attendance at 9:30 a.m. Both parties will have ten (10) minutes to argue their position as to costs. Both parties shall provide any Rule 49 Offers to Settle at the hearing.
[112] Order accordingly.