CITATION: Wood v. CTS of Canada Co., 2017 ONSC 5695

COURT FILE NO.: CV-15-2547-00

DATE: 20170926

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CLAUDETTE WOOD, BRUCE COOK and JOHN FEATHERSTONE

Plaintiffs

– and –

CTS OF CANADA CO. and CTS CORPORATION

Defendants

Stephen Moreau and Genevieve Cantin, for the Plaintiffs

Kristin Taylor, Caitlin Russell and Pam Hinman, for the Defendants

HEARD: July 17 – 19, 2017

REASONS FOR JUDGMENT

Contents

OVERVIEW... 2

THE ESA.. 4

THE EVIDENCE.. 7

(a) Conduct of the Mass Termination. 7

(b) The Significance of Form 1 Notice to the Director 10

THE LAW... 16

(a) Introduction. 16

(b) Interpretation of Employment Standards Legislation. 16

(d) Aids to Statutory Interpretation. 18

ANALYSIS.. 20

(a) Did CTS Contravene the ESA by Failing to Give Form 1 Notice on Time?. 20

(i) Introduction. 20

(ii) The Position of the Plaintiffs. 21

(iii) The Position of CTS.. 23

(iv) Analysis and Conclusion. 24

(b) Does the Fact that CTS Failed to Give Form 1 Notice on Time Void or Negate the Right of CTS to Credit for Working Notice of Termination?. 31

(i) Position of the Plaintiffs. 31

(ii) Position of the Defendants. 32

(iii) Analysis. 32

(c) In Any Event, Does the Manner in Which CTS Conducted the Closure Void or Negate the Right of CTS to Credit for Working Notice of Termination?. 38

(d) Did CTS Engage in Bad Faith Conduct?. 45

(e) Is CTS Entitled to Credit for Amounts Paid on Account of Severance Pay?. 49

(f) The Five Employees Who Worked More than Thirteen Weeks Beyond Their Original Separation Date 50

(g) The Eleven Employees Who Resigned During the Period of Working Notice. 53

(h) Claim to Greater Common Law Notice. 54

CONCLUSION.. 54

Sproat, J.:

OVERVIEW

[1] This is a summary judgment motion by the plaintiffs in a class proceeding. The parties agreed that all of the common issues raised were appropriate to be dealt with on a summary judgment motion. I agree that this is an appropriate case to grant summary judgment.

[2] The plaintiffs are 74 former employees of the Defendant CTS of Canada Co. (“CTS Canada”), which closed its Streetsville plant in 2015. The Defendant, CTS Corporation (“CTS U.S.”), has its head office in Indiana and is the parent company of CTS Canada. It is conceded that the defendants are common employers and I will therefore simply refer to them collectively as “CTS”.

[3] The decision to close the plant resulted in what is commonly referred to as a “mass termination.” The Employment Standards Act (the “ESA”) provides in s. 58 (1) that if an employer terminates 50 or more employees in the same 4-week period, the employer must give at least 8 weeks’ notice of termination. Section 58(2) provides that an employer required to give notice under s. 58(1) shall provide the ESA Director with prescribed information in Form 1 and post the Form 1 on the employer’s premises. Section 58(4) deems the employer’s notice of termination not to have been given until the Director receives the required information.

[4] On April 17, 2014, CTS advised 77 employees by letter that their employment would terminate on March 27, 2015. CTS subsequently extended the termination date for most employees to June 28, 2015. CTS did not serve and post the Form 1 notice until May 12, 2015.

[5] The central issues are as follows:

(a) Did CTS violate the ESA by failing to give Form 1 notice to the Director on April 17, 2014, being the day it provided more than 50 employees with approximately 12 months’ notice that their employment would terminate on March 27, 2015? (The position of CTS is that notice to the Director was only required on the first day of the 8 week statutory notice period being 8 weeks prior to the termination date).

(b) If CTS breached the ESA by not giving timely Form 1 notice, does that deprive CTS of credit for working notice of termination up to the date notice was given?

(c) If not, does the manner in which CTS conducted the mass termination, such as by excessive overtime requirements, deprive it of credit for working notice of termination?

(d) Did CTS act in bad faith?

(e) Is CTS entitled to credit for amounts paid on account of severance pay?

[6] The parties have agreed on 17 common issues. The answers to the common issues will be dictated by how a few central issues are decided.

THE ESA

[7] In overview, the ESA provides:

(a) Section 5 – no employer or employee can contract out of an employment standard and any such contracting out is null and void.

(b) Sections 54–57 – employees are entitled to notice of termination or pay in lieu of notice on a sliding scale which is essentially one week per year of service to a maximum of eight weeks.

(c) Section 58 – on a mass termination, all employees have an enhanced right to notice of termination. As CTS terminated 50-100 employees, their entitlement was to 8 weeks’ notice of termination.

(d) Section 64 – employers such as CTS, with a payroll in excess of $2.5 million per year, must also pay employees with 5 or more years of service “severance pay”. Severance pay is one week’s pay for each year of service to a maximum of 26 weeks. The employer must actually pay severance pay, and not simply continue to pay wages over the severance pay period, unless the employee agrees otherwise.

[8] For present purposes, the most important provisions of the ESA are as follows:

1(1) In this Act … “statutory notice period” means,

(a) the period of notice of termination required to be given by an employer under Part XV, or

(b) where the employer provides a greater amount of notice than is required under Part XV, that part of the notice period ending with the termination date specified in the notice which equals the period of notice required under Part XV;

(1) … the employer shall give notice of termination in the prescribed manner and for the prescribed period if the employer terminates the employment of 50 or more employees at the employer’s establishment in the same four-week period.

(2) An employer who is required to give notice under this section,

(a) shall provide to the Director the prescribed information in a form approved by the Director; and

(b) shall, on the first day of the notice period, post in the employer’s establishment the prescribed information in a form approved by the Director.

(3) The information required under subsection (2) may include,

(a) the economic circumstances surrounding the terminations;

(b) any consultations that have been or are proposed to take place with communities in which the terminations will take place or with the affected employees or their agent in connection with the terminations;

(d) a statistical profile of the affected employees.

(4) The notice required under subsection (1) shall be deemed not to have been given until the Director receives the information required under clause (2) (a).

(5) The employer shall post the information required under clause (2) (b) in at least one conspicuous place in the employer’s establishment where it is likely to come to the attention of the affected employees and the employer shall keep that information posted throughout the notice period required under this section.

[9] Section 58(2)(a) requires that the Form 1 be provided to the Director and s. 58(2)(b) requires that it be posted in the employer’s establishment on the first day of the notice period. It was common ground, and I agree, that the Form 1 must be provided to the Director prior to or at the same time as it is posted. As such, as I will refer to the service on the Director and posting requirements collectively as “Form 1 notice.”

THE EVIDENCE

(a) Conduct of the Mass Termination

[10] The decision to close the plant and the execution of the closure was managed by the CTS U.S. head office in Indiana, led principally by Tony Urban, Vice President and General Manager and Mary DeVous, a senior manager. Ugo Baldassare was the CTS Canada plant manager at Streetsville.

[11] On February 28, 2014, Mr. Baldassare and Ms. DeVous advised the Streetsville plant employees that the plant would close in the first half of 2015.

[12] On April 17, 2014, 77 CTS employees received letters that indicated their termination date was March 27, 2015. The letters also indicated that CTS was permitted to extend the termination date by up to 13 weeks.

[13] The parties agree that the plaintiffs were employed under unwritten contracts of indefinite duration that could be terminated on reasonable notice and that the terms of the ESA were implied terms of the contract.

[14] On May 12, 2014, Mr. Urban and Ms. DeVous met with the Streetsville plant employees. At the end of the meeting, CTS handed out a revised termination letter which differed from the first in that it provided an increased termination payment if the employee remained until their termination date. For some employees, the revised termination letter also offered an amount in lieu of benefits for a period following the termination date.

[15] In late February 2015, CTS moved the final date of work for most employees from March 27, 2015 to June 26, 2015. Other employees that had different separation dates had their final dates extended as well.

[16] On May 12, 2015, CTS filed the Form 1 with the ESA Director at the Ministry of Labour (“MOL”), and posted it at the Streetsville Plant. On May 13, 2015, the MOL forwarded the Form 1 to representatives of the Ministry of Training Colleges and Universities (“MTCU”) (now called the Ministry of Advanced Education and Skills Development (“MAESD”)). As discussed later in detail, the MAESD works with employers to provide access to adjustment and retraining services when there is a mass termination.

[17] Prior to the plant closure, CTS brought in “Right Management”, which conducted five group outplacement workshops for hourly paid employees at a cost of $14,400 plus HST. Salaried employees were provided with an introductory workshop and, for those employees who accepted the separation package, CTS offered access to one-on-one career management services and online services.

[18] MTCU offered to provide an information session to CTS employees. CTS declined the offer as a Service Canada employee was going to make a presentation which would also advise employees of the Employment Ontario services available to them. On June 18-19, 2015, a Service Canada employee made a presentation to the Streetsville plant employees. Manufacturing operations at the Streetsville plant ceased as of June 26, 2015.

[19] Most of the relevant facts are not in dispute. CTS pointed out that the employees who provided evidence were self-interested and did not raise certain complaints prior to this litigation. CTS did not otherwise seriously challenge the evidence of the former CTS employees. The plaintiffs did, however, argue that I should make certain findings adverse to CTS and I will now address these arguments.

[20] The plaintiffs submitted that I should find that Mr. Urban was dishonest, or at least careless with the truth, because his evidence was inaccurate in a number of respects and also short on detail. For example, he deposed that CTS Canada was an Ontario corporation when it was in fact incorporated in Nova Scotia and that a prior closure involved 60-70 terminations when in fact there were 93 terminations. My assessment is that such inaccuracies, and lack of detail, simply reflected the fact that Mr. Urban had limited knowledge of CTS Canada as it represented only a small part of his responsibilities. Further, he resigned from CTS in 2015. I, therefore, regard Mr. Urban, much as I regard the evidence of the other witnesses, as an honest witness. The plaintiffs also submitted that I should draw an adverse inference against CTS due to the fact it did not put forward evidence from Ms. Devous who left CTS in 2015. There were relatively few facts in dispute and so little reason to put forward evidence from Ms. Devous. Ms. Devous is no longer employed by CTS. As such I do not draw an adverse inference from CTS’ failure to provide evidence from her.

(b) The Significance of Form 1 Notice to the Director

[21] CTS argues that the affidavit evidence tendered by the plaintiffs, relating to what the government does in response to receipt of a Form 1 notice, is improper and should be disregarded, with the exception of the evidence of government programs obtained by the deponent from government websites. I will, therefore, address this at the outset.

[22] Members of the plaintiffs’ law firm had discussions with employees of the MOL and the MAESD and prepared a summary of the information provided. An articling student then forwarded the summary to two responsible government employees asking for confirmation that the summary was accurate. The government employees then confirmed the accuracy of the summary provided. The articling student then deposed on information and belief that the information was true.

[23] CTS argued that this constituted double hearsay. CTS pointed to the fact the deponent could not answer questions related to whether the government services were available only on mass terminations; whether a Form 1 was a pre-requisite; and the eligibility requirements for certain programs. CTS noted that there was no explanation as to why the government representatives did not swear affidavits.

[24] I do not accept the CTS submissions. This is not double hearsay. The deponent was informed by the government employees that certain facts were true and he deposed that he believed them. As a matter of common sense and experience, government officials often are not permitted or decline to provide affidavit evidence in litigation. Mr. Moreau, an officer of the court, advised that was the case with these individuals. The fact the deponent could not provide additional information does not adversely affect the credibility and reliability of the evidence he did provide. I also note that this is an adversarial process. Defence counsel could have spoken with these government employees or summoned them to give evidence on the pending motion. Defence counsel did not take these steps, probably recognizing that long serving government employees, with no interest in the litigation, were providing fair and accurate information.

[25] I therefore conclude that this evidence is credible and reliable in terms of the nature and extent of government programs. There was no suggestion that the range of programs available in 2016 when the deponent gathered his information was materially different than the programs that existed in 2014. I now turn to that evidence.

[26] On receipt of a Form 1, the MOL prepares a Form 1 summary which is forwarded to the MOL staff and the MAESD. The MAESD, through its Rapid Re-employment and Training Service (“RRTS”), then contacts the employer. If the employer indicates that it is aware of the Employment Ontario programs and services that are available to assist employees and has already put in place the appropriate types of support services, the employer may decline assistance and the RRTS will not attend the employer premises. If the employer, as in the case of CTS, indicates that it has no adjustment services in place, the MAESD will work with the employer to provide the affected workers with the MAESD services.

[27] In the case of CTS, the RRTS would at least have proceeded to a Level 1 response in which a representative of a local service provider attends the employer premises and outlines the supports and services available through Employment Ontario.

[28] The Employment Ontario Program Guide includes the following information:

(a) 70% of all new jobs require post-secondary education or enhanced skills training.

(b) Counsellors are available at assessment centres to meet in the language of your choice.

(d) Counsellors can provide information as to the local job market and what jobs are in high demand.

(e) The Second Career program provides eligible laid off workers with up to $28,000 to train for certain occupations that are in high demand

(f) Counsellors can provide information on starting a business and the Ontario Self-Employment Benefit.

(g) Counsellors can provide information on apprenticeship programs including financial assistance programs.

(h) Reading, writing and math skills assessment and training are available.

(i) English and French language training is available.

[29] A 2010-11 MTCU publication indicated that more than 28,000 laid off workers had received financial support under the Second Career program.

[30] An Ontario government website describes the Adjustment Advisory Program, a program available to persons terminated in a mass termination that makes available an advisor to meet with employees to provide career, financial and personal counselling and assist in registering for other services. Lynne Campbell was employed by CTS as a Human Resources Generalist at the Streetsville plant and she was the senior human resources person in Canada. Ms. Campbell swore an affidavit on behalf of CTS and acknowledged in cross-examination that the Right Management services did not provide any of the government services just discussed.

[31] I note that:

(a) On the Form 1, in response to the question, “Has the employer implemented or proposed any adjustment measures with employees?”, CTS answered “None”.

(b) Mr. Urban indicated that CTS would have permitted MAESD to provide services.

[32] In these reasons, I will refer to the range of government information, services and programs that are or may be made available following Form 1 notice simply as “government services”.

[33] In argument, CTS referred to the fact there was evidence from Ms. Campbell, a human resources generalist employed at the Streetsville plant, that she received a call from a MTCU employee who had read about the plant closure in the newspaper prior to the date CTS gave Form 1 notice. Ms. Campbell did not indicate when this call was received, but I conclude it was in late March or early April, 2015, having regard to the following:

(a) Fred Gill made an oral complaint to the MOL on March 26, 2015 that he was owed severance pay and followed that up with an online complaint which referred to the CTS plant closure.

(b) Matthew from the MOL called Mr. Gill and indicated the MOL had no record of a CTS plant closure.

(c) Matthew called back and left a voicemail message, which Mr. Gill preserved, to say he had spoken to someone at CTS who confirmed there had been a plant closure.

(d) Mr. Gill deposed that he believed the information received from Matthew.

(e) Mr. Gill also spoke to Ms. Davis of the MOL in April or May, 2015 who questioned whether there had been a plant closure and he sent her a news article that commented on the closure.

[34] Given this chronology, it makes sense that the MOL learned of the closure informally only in April or early May, 2015, prior to the Form 1 filing on May 12, 2015. As such, this informal notice to the MOL was inconsequential to the CTS employees and does not affect my analysis.

THE LAW

(a) Introduction

[35] Under this heading, I will address legal principles that generally inform my analysis of the common issues. I will refer to legal principles that apply to only specific issues as part of my analysis of those issues.

(b) Interpretation of Employment Standards Legislation

[36] In Rizzo & Rizzo Shoes (Ltd.) (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27, Iacobucci J., for the court, stated:

24 In Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992] 1 S.C.R. 986, at p. 1002, the majority of this Court recognized the importance that our society accords to employment and the fundamental role that it has assumed in the life of the individual. The manner in which employment can be terminated was said to be equally important (see also Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701). It was in this context that the majority in Machtinger described, at p. 1003, the object of the ESA as being the protection of “. . . the interests of employees by requiring employers to comply with certain minimum standards, including minimum periods of notice of termination”. Accordingly, the majority concluded, at p. 1003, that, “. . . an interpretation of the Act which encourages employers to comply with the minimum requirements of the Act, and so extends its protections to as many employees as possible, is to be favoured over one that does not”.

25 The objects of the termination and severance pay provisions themselves are also broadly premised upon the need to protect employees. Section 40 of the ESA requires employers to give their employees reasonable notice of termination based upon length of service. One of the primary purposes of this notice period is to provide employees with an opportunity to take preparatory measures and seek alternative employment. It follows that s.40(7)(a), which provides for termination pay in lieu of notice when an employer has failed to give the required statutory notice, is intended to “cushion” employees against the adverse effects of economic dislocation likely to follow from the absence of an opportunity to search for alternative employment. (Innis Christie, Geoffrey England and Brent Cotter, Employment Law in Canada (2nd ed. 1993), at pp. 572-81.)

(c) Interpretation of Employment Contracts

[37] In Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, Laskin J. A. for the Ontario Court of Appeal canvassed the law on the interpretation of employment contracts, specifically with respect to whether a termination clause will be found to violate the ESA:

[26] In general, courts interpret employment agreements differently from other commercial agreements. They do so mainly because of the importance of employment in a person’s life. As Dickson C.J.C. said, in an oft-quoted passage from his judgment in Reference re Public Service Employee Relations Act (Alberta), 1987 CanLII 88 (SCC), [1987 1 S.C.R. 313, at p. 368:

Work is one of the most fundamental aspects in a person’s life, providing the individual with means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being.

[27] As important as employment itself is the way a person’s employment is terminated. It is on termination of employment that a person is most vulnerable and thus is most in need of protection: see Wallace v. United Grain Grower Ltd., 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701.

[28] The importance of employment and the vulnerability of employees when their employment is terminated gives rise to a number of considerations relevant to the interpretation and enforceability of a termination clause.

When employment agreements are made, usually employees have less bargaining power than employers. Employees rarely have enough information or leverage to bargain with employers on an equal footing: Machtinger, p. 1003.

Many employees are likely unfamiliar with the employment standards in the ESA and the obligations the statute imposes on employers. These employees may not seek to challenge unlawful termination clauses: Machtinger, p. 1003

The ESA is remedial legislation, intended to protect the interests of employees. Courts should thus favour an interpretation of the ESA that “encourages employers to comply with the minimum requirements of the Act” and “extends its protections to as many employees as possible”, over an interpretation that does not do so: Machtinger, p. 1003.

Termination clauses should be interpreted in a way that encourages employers to draft agreements that comply with the ESA. If the only consequence employers suffer for drafting a termination clause that fails to comply with the ESA is an order that they comply, then they will have little or no incentive to draft a lawful termination clause at the beginning of the employment relationship: Machtinger, p. 1004.

A termination clause will rebut the presumption of reasonable notice only if its wording is clear. Employees should know at the beginning of their employment what their entitlement will be at the end of their employment: Machtinger, p. 998.

Faced with a termination clause that could reasonably be interpreted in more than one way, courts should prefer the interpretation that gives the greater benefit to the employee: Ceccol v. Ontario Gymnastics Federation (2001), 2001 CanLII 8589 (ON CA), 149 O.A.C. 315, Family Counselling Centre of Sault Ste. Marie and District (2001), 2001 CanLII 4698 (ON CA), 151 O.A.C. 35.

(d) Aids to Statutory Interpretation

(i) Legislative History

[38] In R. v. Ulybel Enterprises Ltd., 2001 SCC 56, [2001] 2 S.C.R. 867, the court considered the Fisheries Act (“the Act”) provisions addressing illegal fishing in Canadian waters. Prior to 1991, the Act provided that a court could only order forfeiture of the proceeds of sale of perishables that had been seized. The Act was, however, amended to allow for forfeiture of “anything seized under this Act.” The court concluded that this language permitted the court to order forfeiture of the fishing vessel itself.

[39] Iacobucci J. noted that no references were made to this change in language in Committee hearings or in Parliament. Iacobucci J. then stated:

It is possible that the removal of the reference to the proceeds of a disposition of perishables, in favour of a general reference to the proceeds of “any thing seized under this Act”, was intended by the drafters merely to streamline the language of the section, and not to broaden the scope of forfeiture as it relates to proceeds. However, there is a presumption that amendments to the working of a legislative provision are made for some intelligible purpose, such as to clarify the meaning, to correct a mistake, or to change the law: see Sullivan, supra, at p.450. Laskin J. (as he then was) applied this presumption in Bathurst Paper Ltd. v. Minister of Municipal Affairs of New Brunswick, 1971 CanLII 176 (SCC), [1972] S.C.R. 471, at pp. 477-78. Writing for the Court, he held that “[l]egislative changes may reasonably be viewed as purposive, unless there is internal or admissible external evidence to show that only language polishing was intended”. In this case, through its wholesale removal of specific limiting language, the effect of the 1991 amendment to s.72(1) is to broaden the scope of the forfeiture provision to include the power to forfeit proceeds of the sale of a vessel. This effect is consistent with the intention of Parliament, as recorded in Hansard, to increase the flexibility and severity of available penalties for Fisheries Act offences

(ii) Ministry Policy Statements

[40] In National Automobile Aerospace Transportation and General Workers Union of Canada (C.A.W. – Canada) Local No. 27 v. London Machinery Inc., 2006 CanLII 8711 (ON CA), [2006] O.J. No. 1087 (C.A.), Laskin J.A. cited the MOL’s ESA Policy and Interpretation Manual, and stated:

[123] The Ministry's Manual on s.56(2)(c) obviously takes a view diametrically opposed to the arbitrator's view. Of course, the Manual is not binding on this court. It was prepared for the public and especially for employment standards officers who must apply the Act daily. However, though not binding, courts are entitled to take account of administrative guidelines in interpreting a statutory scheme. This point is recognized in Sullivan and Driedger on the Construction of Statutes at p. 505:

It is well established that administrative interpretation may be relied on by courts to assist in determining the meaning or effect of legislation. However, the opinion of administrative interpreters is not binding on the courts.

[124] Indeed, in R. v. Nowegijick, 1983 CanLII 18 (SCC), [1983] 1 S.C.R. 29, 144 D.L.R. (3d) 193, at p. 37 S.C.R., Dickson J. wrote that "[a]dministrative policy and interpretation are not determinative but are entitled to weight and can be an 'important factor' in case of doubt about the meaning of legislation". So here, it seems to me, the Ministry's Manual lends further support to the conclusion that the arbitrator's decision is patently unreasonable.

(iii) Headings in Statutes

[41] The Legislation Act, 2006 provides in s. 70 that headings are inserted in legislation for convenience of reference only and do not form part of it. Sullivan and Driedger on the Construction of Statutes, (4th Ed. 2002) states that:

The view favoured in recent judgments from the Supreme Court of Canada is that for purposes of interpretation headings should be considered part of the legislation and should be read and relied on like any other contextual feature.

ANALYSIS

(a) Did CTS Contravene the ESA by Failing to Give Form 1 Notice on Time?

(i) Introduction

[42] The plaintiffs contend that CTS was obliged to give notice of the mass termination to the ESA Director on April 17, 2014, being the day that CTS gave termination letters to 77 employees indicating their employment would end on March 31, 2015 (the termination date was later extended). CTS contends that it was not obliged to notify the Director until May 2, 2015, being the first day of the 8 week statutory notice period leading to the ultimate termination date of June 26, 2015.

[43] I will begin by outlining the competing arguments.

(ii) The Position of the Plaintiffs

[44] First, a number of ESA provisions specifically contemplate that the employer may give notice of termination that exceeds the statutory requirement:

(a) The definition of “statutory notice period” includes, in s.1(1)(b), reference to, “where the employer provides a greater amount of notice than is required under Part XV” [Part XV contains the termination and severance pay provisions].

(b) The employer obligation in section 57, respecting notice of termination, obliges the employer to give “at least” the stipulated notice of termination.

(c) O. Reg. 288/01, stipulating the required notice in a mass termination obliges the employer to give “at least” the stipulated number of weeks of notice.

[45] There is, therefore, a clear and well understood distinction between the “statutory notice period” and the typically much longer common law “notice period.” Section 58(2) obliges the employer to notify the Director on the first day of the “notice period.” The s.1 definition of “statutory notice period” states that if the employer provides notice in excess of the statutory requirement, the “statutory notice period” is the number of weeks required by statute falling at the end of the “notice period”. If the intent had been that the Director only be notified on the first day of the “statutory notice period” the Legislature would have used that defined term.

[46] Second, from 1987 until 2000, the ESA did provide that the Director receive notice on the first day of the “statutory notice period.” In 2000, in a wholesale revision of the ESA, the language was changed to the first day of the “notice period.” This change in language, in the absence of an explanation in Hansard or elsewhere, signals a different intent, namely that the Director receive notice at the beginning of any longer “notice period” and not the shorter “statutory notice period.”

[47] Third, an interpretation which allows government services to be made available to affected employees at the earliest opportunity is consistent with the fact that the ESA termination provisions, as stated in Rizzo, are “to provide employees with an opportunity to take preparatory measures and seek alternative employment.” The CTS interpretation would mean an employee receiving notice of termination on April 17, 2014 might never become aware of government services if the employee resigned prior to the commencement of the statutory notice period.

[48] Form 1 is a one page document which could easily have been provided by CTS to the ESA Director on the date the employees received notice of termination. No useful purpose is served by a statutory interpretation that delays the Form 1 notice and employee access to government services.

[49] Fourth, it makes sense that the s. 60 statutory freeze on reducing wages during the s. 57 or 58 “notice period” would apply during the entire notice period, and not just the last 8 weeks of statutory notice. Employees under notice of termination are vulnerable and must work until at least the statutory notice period to collect ESA severance pay. It would be unfair if the employer could force employees to accept reduced wages or adverse changes in terms of employment as a pre-condition to obtaining severance pay.

(iii) The Position of CTS

[50] First, in its July 2000 consultation paper, the MOL indicated the government was proposing only minor changes to the termination and severance provisions of the ESA. The ESA amendment in 2000, which changed the 1987 obligation to give Form 1 notice “on the first day of the statutory notice period” to an obligation on “the first day of the notice period”, was done for “language polishing purposes”. It was not intended to alter the date on which Form 1 notice was required.

[51] Second, the “notice period” referred to in s. 58(2)(b) is the 8 week notice period that is required by the ESA. The ESA provides for uniform minimum standards such that in all mass terminations the Form 1 notice is only required 8 weeks in advance of the termination date.

[52] Third, the MOL Employment Practices Branch, Employment Standards Act, 2000 Policy and Interpretation Manual, 2d ed. (Scarborough, ON: Carswell, 2001) states that if the employer provides greater notice of a mass termination than is required the Form 1 is to be filed “by the first day of the statutory portion of the notice period.” This manual also states that the s. 60(1) freeze on terms and conditions of employment only applies during the statutory notice period.

[53] Fourth, the s. 1(1) definition of “statutory notice period” has two components:

(a) The period of notice an employer is required to give; or

(b) If greater notice is given, the latter party of the notice period that satisfies the requisite notice.

[54] As a result, statutory references to the, “period of notice an employer is required to give,” are by definition a “statutory notice period.”

[55] Fifth, the ESA 2000 heading above s. 57 (which provides for notice of termination) is “Employer notice period” and above s. 58 (which provides for notice in mass terminations) is “Notice, 50 or more employees”, despite the fact these are statutory notice periods.

(iv) Analysis and Conclusion

[56] I start with the language of the ESA. For convenient reference I reproduce s. 58(1) and (2):

(1) … the employer shall give notice of termination in the prescribed manner and for the prescribed period if the employer terminates the employment of 50 or more employees at the employer’s establishment in the same four-week period.

(2) An employer who is required to give notice under this section,

(a) shall provide to the Director the prescribed information in a form approved by the Director; and

(b) shall, on the first day of the notice period, post in the employer’s establishment the prescribed information in a form approved by the Director.

[57] The first question then is whether CTS was required to give notice of termination under s. 58(1) notice on April 17, 2014. In my opinion, it was. On April 17, 2014 CTS gave notice to 77 employees that their employment would terminate March 27, 2015. It follows that on April 17, 2014, CTS had to comply with s.58(1) of the ESA and provide notice of the mass terminations “in the prescribed manner and for the prescribed period”.

[58] O.Reg 288/01 provides:

• In s. 3 that the prescribed period is “at least eight weeks prior to termination”; and

• In s. 5 that the prescribed manner of termination is in writing, addressed to the employee, and served in accordance with s. 95 of the ESA.

[59] In my view, the plain meaning of the ESA is that an employer gives s. 58(1) notice one time. An employer in the position of CTS can give that notice 8 weeks prior to the termination date or at such earlier date as the employer chooses. In this case, CTS chose the earlier date of April 17, 2014. I do not see how CTS can get around the fact that it instituted a mass termination on April 17, 2014 and had to comply with s. 58(1) on that date.

[60] I then turn to the introductory words of s. 58(2), “[a]n employer who is required to give notice under this section.” CTS was an employer required to give notice under s. 58 on April 17, 2014. Section 58(2) then requires Form 1 notice on “the first day of the notice period”. I think it inescapable that:

• The “notice” referred to in the introductory sentence to s. 58(2) must be the “notice of termination” required by s. 58(1); and

• When s. 58(2)(b) refers to the Form 1 posting on “the first day of the notice period”, it is the same notice period referred to in s. 58(1) and the introductory words of para. 58(2).

[61] Section 58(1) and (2) refer to one and the same notice period. In the case of CTS that is the notice period that commenced April 17, 2014. It follows from this reasoning that the “notice” referred to in s. 58(4) and the “notice period required” as referred to in s. 58(5) also refer to the notice period that commenced April 17, 2014.

[62] The argument of CTS is that the references in s. 58 to “required” refer to the minimum 8 week period plain and simple. As discussed, I think the flaw in this argument lies in the introductory words of s. 58(2). The requirement to provide Form 1 notice is linked to and triggered on the date when, “an employer […] is required to give notice under this section”. CTS was required to give such notice on April 17, 2014. The Form 1 notice requirement is not linked to the first day of the “required” period of notice.

[63] While headings are not part of the statute, they can be an aid to interpretation. The heading for s. 57 is “Employer Notice Period” and the heading for s. 58 is “Notice, 50 or more employees”. CTS submits that these sections in fact impose statutory notice periods, so that this is an example of the ESA referring to a “statutory notice period” simply as a “notice period”.

[64] I do not agree. It makes sense that the headings for s. 57 and 58 refer to “notice” and “notice period” because they both contemplate, by requiring “at least” a stipulated number of weeks’ notice, that the actual notice may exceed the statutory notice period.

[65] Further, while a small point, I note that the s. 57 heading refers to “Employer Notice Period”. It is self-evident that it is always the employer that provides notice of termination so there was no need to indicate “Employer Notice Period” to make that point. The use of the word “Employer” supports the position of the plaintiffs that the “notice period” referred to is the notice period in fact given by the “Employer”.

[66] CTS further points out that the part (a) definition of “statutory notice period” is “the period of notice required to be given”. CTS then argues that the s. 58(4) reference to “the notice required” and the s. 58(5) reference to “the notice period required”, should be read as referring to the statutory notice period only. I do not agree. If the intention had been to refer to statutory notice period, it would have made sense to use the defined term “statutory notice period”, as both the (a) and (b) components of the definition would be applicable in a situation in which an employer like CTS elected to give more than the required notice. Further, and more importantly, as already discussed, the Form 1 notice requirement under s. 58(2) applies to, “An employer who is required to give notice under this section […]”. In this case, CTS was required to give s. 58(1) notice on April 17, 2014.

[67] The legislative history also supports the conclusion that Form 1 notice is required on the first day of the notice period provided by the employer. From 1987, the ESA made it clear that Form 1 notice was required on the first day of the “statutory notice period”. In Ulybel, Iacobucci J. stated that “…there is a presumption that amendments to the wording of a legislative provision are made for some intelligible purpose, such as to clarify the law.” Iacobucci J. also endorsed the proposition that changes are intended to be purposive unless there is evidence that only “language polishing” was intended.

[68] The meaning of the 1987 ESA was clear that Form 1 notice was to be provided at the beginning of the “statutory notice period”. There was no mistake to correct. There is nothing to indicate that any “language polishing” was required. This supports the conclusion that the 2000 ESA amendments were intended to change the timing of Form 1 notice.

[69] The s. 60(1) statutory freeze applies “During a notice period under section 57 or 58[…]”. Those sections deal with notices of termination. In my opinion, they contemplate an employer providing one notice of termination and require the employer to provide “at least” a specified number of weeks’ notice. Section 60(1) does not utilize the defined term “statutory notice period”. The notice period under s. 57 and 58 is, therefore, the notice period actually given which cannot be less than the statutory minimum.

[70] I am also cognizant of the fact that the July, 2000 consultation paper indicated that the government proposed only “minor changes” to the ESA Part XV termination and severance pay provisions. In this regard, changing the date when an employer is required to provide a one page Form 1 to the Director, could certainly be regarded as minor. Further, after consulting the public, the 2000 ESA did make some substantive changes to the termination and severance pay provisions. For example, s. 65(2) was added which provided that for determining severance pay entitlement all years of employment with the employer should be counted whether or not they were continuous.

[71] I have given serious consideration to the fact the Employment Standards Act, 2000 Policy and Interpretation Manual supports the CTS position. It is, however, at least possible that the ESA policy manual, was not properly revised in 2000. The current MOL online guide simply refers to Form 1 notice being required on the “first day of the notice period”.

[72] In any event, what I regard as extremely important, much more than any policy manual, are the bedrock premises and principles endorsed time and time again by the Supreme Court of Canada:

(a) Employees, particularly at the time of termination, are vulnerable;

(b) Employees are probably not aware of their legal rights and, in my view, it follows that equally they are probably not aware of the nature and extent of government support available and not aware of or in possession of many job hunting skills.

(c) In the event of ambiguity, the statutory interpretation which provides the greater benefit to employees is to be preferred.

(d) In the event of ambiguity, a statutory interpretation which encourages employees to comply with the minimum statutory requirements and which provides a benefit to a greater number of employees is to be preferred.

[73] These bedrock principles are all served by the conclusion that Form 1 notice is required at the time the employer gives notice of a mass termination.

[74] The CTS interpretation would mean that employees given 12 months’ notice of termination, and who resigned before the final 8 weeks, would never be apprised of government services that could be life changing such as the Second Career program. It would obviously have been much more beneficial to CTS employees who required an upgrade to their math, writing or reading skills, or who wished to consider apprenticeship programs or possible benefits under the Second Career program, to have 12 months to do so and not simply the 8 week statutory notice period. It also seems inequitable, if not perverse, that CTS should be able to gain the benefit of a long period of working notice but not have to take the simple step of providing the Form 1 notice, thereby allowing the employees to benefit from the government services which are triggered by Form 1 notice.

[75] In conclusion, to my mind, the interpretation of s. 58 is clear and Form 1 notice was required on April 17, 2014. Even if s. 58 is ambiguous on the point, the ambiguity must be resolved in favour of the employees and the result would be the same.

(b) Does the Fact that CTS Failed to Give Form 1 Notice on Time Void or Negate the Right of CTS to Credit for Working Notice of Termination?

(i) Position of the Plaintiffs

[76] I have already decided that the notice “deemed not to have been given” by s. 58(4) is the notice of termination that CTS gave on April 17, 2014. I therefore start from that premise.

[77] First, consistent with Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992] 1 S.C.R. 986 and other binding authorities, when the ESA makes an agreement or waiver void, or deems something not to have happened, it does so for all purposes. In other words, for purposes of the ESA and for contract law purposes.

[78] Second, it was a term of the plaintiff’s employment contracts that CTS would comply with the ESA. The remedy for that breach should be that CTS is denied credit for working notice of termination.

[79] Third, in the course of performing the contract, CTS acted illegally by breaching the ESA and so should be denied credit for working notice.

(ii) Position of the Defendants

[80] I have already rejected the CTS argument that the notice that s. 58(4) deems “not to have been given” is only the statutory notice period.

[81] The remaining CTS argument is that Form 1 notice is not intended to provide notice of termination and providing Form 1 notice earlier would have had little or no practical significance to individual employees. As such, the fact that CTS was late in providing Form 1 notice should not negate the notice of termination given April 17, 2014.

(iii) Analysis

[82] I will first address the arguments based upon statutory interpretation.

[83] In Machtinger, the employment contract termination provision contravened the ESA and was therefore rendered void by section 5 of the ESA. The Court of Appeal held that the employees were entitled to ESA termination pay but that the employer was still entitled to rely upon the termination provision as evidence that rebutted the common law presumption that the employment contract could only be terminated on reasonable notice. Adopting the same line of reasoning, CTS argues that s. 58(4) deems the notice not to have been given so that employees are entitled to ESA notice but that this does not prevent CTS from relying on the notice for contract law purposes. The Supreme Court of Canada, however, emphatically rejected this line of reasoning. The termination provision in Machtinger was held to be void for ESA and contract law purposes.

[84] The plaintiffs’ position receives further support from a number of the bedrock principles previously discussed. Interpreting the ESA to deem the notice not to have been given for all purposes “…encourages employers to comply with the minimum requirements of the Act…” as discussed in Rizzo and provides a greater benefit to employees. As such, I conclude that the CTS letters giving notice of termination, sent prior to CTS giving Form 1 notice on May 12, 2015, are deemed for all purposes not to have been given. These letters cannot, therefore, be relied upon by CTS as providing working notice of termination.

[85] For the sake of completeness, I will also address the plaintiffs’ argument that CTS is not entitled to credit for working notice based on contract law principles. The parties agree that the ESA obligations of CTS are implied into the individual employment contracts. In order to assess the consequence of a breach of the Form 1 notice requirement, it is first necessary to consider the arguments advanced as to the significance of Form 1 notice.

[86] In support of its position that Form 1 notice has little practical significance, such that the failure to provide it should not negate working notice, CTS submits that:

(a) The ESA itself provides the employer with an “out” in that under s. 61, the employer can effect a mass termination without any advance notice of termination in which case the employer is obliged to file a Form 1 but it is never posted in the workplace. CTS further submits on this scenario that employees would not be provided with any government services.

(b) An employer has no obligation to co-operate with the MOL or MAESD, and specifically no obligation to permit government representatives on its premises to provide services.

[87] The plaintiffs submit that:

(a) The fact that s. 61 allows employers to effect a mass termination without notice simply reflects the economic reality that an employer may fail and not be able to continue in business and so provide notice.

(b) The Form 1 notice triggers the provision of government services that may be invaluable to some of the employees.

(c) While the ESA may not impose a positive obligation on the employer to facilitate the delivery of government services, the common law effectively does. An employer that refused to allow government representatives on its premises to provide services would clearly be acting in bad faith and, therefore, exposed to general damages.

(d) It is unthinkable that any employer wold be so callous as to refuse to co-operate with government service providers. In any event, the evidence of CTS is that it would have co-operated.

[88] I start with the proposition that the ESA recognizes that employees are particularly vulnerable in the event of a mass termination. The legislature has seen fit to make services available to these employees. I understand and accept that not all employees will necessarily benefit from these government services. Some may be capable of independently identifying and accessing the information and government programs that will assist them. It remains, however, that some employees will learn about programs they would otherwise would have never known about or receive services such as resume writing or reading, writing and math training that will make the difference in obtaining a new job. For an employee who learns of, and is able to access a program, such as Second Career or an apprenticeship, the consequences of Form 1 notice may be life changing. I therefore conclude that the Form 1 process offers significant assistance and benefits to employees such that compliance with the Form 1 notice requirement is a significant contractual term for employees.

[89] As such, the unwritten employment contracts contain two provisions which are directed to helping the employee to avoid unemployment, being:

CTS shall give reasonable advance notice of termination, and;
CTS shall provide Form 1 notice to the Director so the employee will receive government services.

[90] CTS has, therefore, breached the contractual term requiring Form 1 notice. As a general principle of contract law, where there is a contractual right, there is a remedy directed to restoring the contracting party to the position it would have had but for the breach. Using the first termination letter as an example, the CTS employees had the contractual right to 12 months of working notice during which, from near to the start of the 12 month period, they would benefit from the government services that follow on Form 1 notice.

[91] There are two alternatives:

(a) That the working notice prior to Form 1 notice not be credited, with the result the employees are made whole, in the sense of being able to look for a job over the common law notice period having the benefit of the government services that flow from Form 1 notice; or

(b) That the employees who were deprived of the government services that flow from a Form 1 notice until the 8 weeks of the statutory notice period receive no remedy for that breach.

[92] Again, I find that the bedrock principles already discussed effectively dictate the result. The conclusion that CTS is not entitled to credit for working notice prior to giving Form 1 notice encourages employers to comply with the ESA. Further, the court should prefer the reasonable interpretation that gives the greater benefit to the employee.

[93] On the basis of both statutory and contract interpretation, I conclude that CTS is not entitled to credit for working notice until such time as it gave Form 1 notice. If correct in that conclusion, I need not address the plaintiff’s argument based upon illegality. If I am not correct in that conclusion, and if a contravention of the ESA and the bedrock principles discussed are not sufficient to deprive CTS of the credit for working notice, I do not think the principles of illegality could possibly achieve a different result. As such I do not address the further argument based on illegality.

[94] In closing, I will comment briefly on the argument that denying CTS credit for working notice is a harsh result. First, a harsh result in the sense of an employer having to pay far more than anticipated is often the result of an ESA contravention. In the Machtinger case, the employment contract of the co-appellant Lefevre fell two weeks short of proper notice and the employer was obliged to pay him 7.5 months’ pay. Secondly, and more importantly, one must also consider this from the perspective of the terminated employees. For an employee who might have decided to pursue an apprenticeship program, or who might have been eligible for up to the $28,000 in support offered by the Second Career program, or who might have needed upgraded math skills, being denied information about these programs for more than a year can also be characterized as harsh.

(c) In Any Event, Does the Manner in Which CTS Conducted the Closure Void or Negate the Right of CTS to Credit for Working Notice of Termination?

[95] I will address this issue for the sake of completeness, and because this argument is significant in any event because it could negate the right of CTS to credit for working notice from and after the time CTS gave Form 1 notice.

[96] I start with the proposition that under Ontario law, an employer is entitled to give working notice of termination (see Taylor v. Dyer Brown (2004), 2004 CanLII 39004 (ON CA), 73 O.R. (3d) 358 (C.A.) and Rombis v. Zeppieri and Associates, [2007] O.J. No. 2291 (Ont. S.C.J.)). In Taylor, the Court recognized at para. 14 that finding alternate employment was, “… a task made more difficult while the employee undertakes to fulfill the terms of working notice”.

[97] The plaintiffs argue that CTS should be denied credit for working notice because:

(f) It misled employees into thinking they were required to work up to their termination date; and

(g) It assigned excessive overtime to employees during the period of working notice which would have impeded their ability to look for new employment.

[98] I do not agree that the severance letters and other communications were seriously misleading. The severance letters were framed as offers that were in excess of statutory requirements. It was, therefore, not misleading for CTS to stipulate that the payments offered would not be made unless the terms of the offer, including that the employee remain to the termination date, were met.

[99] Even if an employee was misled into thinking there was a legal requirement to work until the termination date to receive statutory severance pay, this would have had a minimal impact on the ability of the employee to find new employment. The first termination letter dated April 17, 2014, gave notice of termination effective March 27, 2015. A correct statement would have been that to collect severance pay the employee must resign on 2 weeks’ notice with the resignation to take effect during the 8 week statutory notice period. In other words, the employee would have to work for approximately 9 of the 11 months of working notice in order to get severance pay.

[100] I do not see how these employer communications had any significant effect on the ability of the class members to look for new employment. As such, this is not a basis upon which to deny CTS credit for working notice.

[101] The plaintiff’s also allege that employees worked excessive overtime and that CTS should be denied credit for working notice for that reason.

[102] To put this in context, an integral part of the CTS shutdown plan was to ramp up production in order to “bank” an inventory of parts which could then be supplied to customers during the interim period when CTS would have no manufacturing capacity, having closed the Streetsville plant and having not yet started manufacturing in Mexico.

[103] The ESA s. 17(1) (b) provides that “no employer shall require or permit an employee to work more… than 48 hours in a work week.” Section 17(3) then creates an exception if the employee has agreed in writing to work additional hours and the employer has obtained the approval of the Director allowing the employee to work more than 48 hours per week.

[104] Mr. Lipton, the CTS Operations and Technical Service Manager, analyzed CTS payroll information, which evidenced that a group of hourly paid production employees worked approximately 55 hours a week during the notice period. In cross-examination, he acknowledged that these employees were not pressured to work and understandably wanted to make more money.

[105] There is also direct evidence that hourly paid employees worked substantial overtime. For example, Cheryl Aultman estimates that she worked on average 10.4 hours of overtime during her final 5 months of employment. Fred Gill estimates that he worked on average 14.6 hours of overtime during his final 3 months of employment. Manmohan Bhogal indicated that many weeks he worked nearly 60 hours which was tiring and made it difficult for him to look for work.

[106] Mr. Lipton further stated in his affidavit:

For a number of the employees, especially technicians, I am afraid to admit that I pushed them really, really hard to work overtime. I essentially forced them to do so by telling them that CTS could force them to work overtime up to 60 hours a week, that their job required that they stay and work overtime to get the work done, that CTS could make employees work overtime if proper notice is given, and that as a result of all of that, to use the words I recall using frequently, “you have no option”.

[107] In cross-examination Mr. Lipton said that, as to forced overtime, he was referring to 18 key people being electricians, “mechanical people”, and lead hands. CTS argued the 18 employees “may” have been exempt from ESA overtime requirements. While there is little evidence on point, I doubt that electricians, “mechanical people”, and lead hands would fall within the O. Reg. 285/01 definition in s. 4(1)(b) of “a person whose work is supervisory or managerial in character”, such that they are exempt from the ESA overtime requirement.

[108] The plaintiffs rely upon Bramble v. Medis Health and Pharmaceutical Services Inc. (1999), 1999 CanLII 13124 (NB CA), 214 N.B.R. (2d) 111 (C.A.), in which Drapeau J.A. stated:

In challenging the notices set by the trial judge, the appellant urged this Court to give it full credit for the 15 weeks’ working notice it gave each respondent. To do so would, in my view, permit formalism to triumph over substance and visit an injustice upon the respondents.
I begin by observing that the inclusion of the working notice period within the overall notice periods set by the trial judge has a distorting effect; it makes the overall notice periods appear longer than they actually are.
The trial judge’s finding of fact, with respect to the working notice’s practical value, is unequivocal and clear: the respondents “could not actively seek work during the working notice period”. There is evidence upon which she could make such a finding of fact and, accordingly, we are not at liberty to disregard it. That being so, the portion of the overall notice periods spanning the working notice is, for all intents and purposes, illusory. The law would offend common sense if it dictated that, in such circumstances, a working notice nonetheless carries some weight. Legal results must be reality-based; they cannot rest on mirages. 1999 CanLII 13124 (NB CA)
In my view, the significance of any working notice is a function of the context in which it is given and played out. The ultimate issue will always be: did the employer provide the employee a reasonable opportunity to find alternate employment during the working notice period?
In Norrad v. LaHave Equipment Ltd. (1996), 1995 CanLII 4144 (NB QB), 169 N.B.R. (2d) 19 (Q.B.), Angers J. refused to give any weight to a one-month working notice where the employee was apparently required to devote much of his time during that month to “report to work to complete the odds and ends” of the sale of his employer’s New Brunswick Division. A different result obtained in McLeod v. ABM Systems Ltd. (1994), 1994 CanLII 8654 (NB QB), 144 N.B.R. (2d) 121 (Q.B.) where Russell J. equated the working notice with pay in lieu of notice. Viewed in its particular factual context, Russell J.’s logic is unassailable: indeed, the nature of Mr. McLeod’s job and the fact that he had, throughout the working notice period, every opportunity to seek alternate employment, compelled the conclusion that the 6-month working notice he had received was equivalent to pay in lieu of notice.
As noted earlier, the primary objective of notice is to provide the dismissed employee with a fair opportunity to obtain similar or comparable employment. It follows that the weight to be given to a particular working notice will vary depending on the quality of the opportunity it gives the employee to seek an alternate position. In this particular case, the trial judge’s finding of fact that the respondents could not actively seek work during the working notice period deprives the latter of any legal value. As a result, no weight can legitimately be attached to it.

[109] In the Norrad decision cited, there is no indication that the employee was required to do anything other than report to work as usual, although the decision does not review the evidence in any detail. In any event, I agree with CTS that under Ontario law, an employer who provides reasonable advance working notice of termination is acting in compliance with an employment contract of indefinite duration. As such, the employer is entitled to full credit for working notice during which regular duties are imposed.

[110] Our case presents a far different scenario. CTS had to ramp up its production and to create a bank of inventory in order to implement its corporate strategy. To do so, it both encouraged and condoned hourly employees working amounts of overtime in excess of what the ESA permitted. CTS, through Mr. Lipton, forced the 18 employees to work on the order of 60 hours a week.

[111] I agree with Bramble that, in determining whether the employer is entitled to credit for working notice, it is relevant to consider the quality of the opportunity given the employee to find new employment. Take the extreme example of an employer in the position of CTS that had employees work 16 hours a day during their notice period in order to attain its corporate objectives. That employer surely could not claim credit for working notice. To do so would be tantamount to saying, “You had 8 hours a day to look for new employment and if you frittered it away sleeping, that was your choice”.

[112] The onus is on CTS to prove that it provided reasonable advance notice of termination. I have concluded that there is both a quantitative and a qualitative component as to what is “reasonable”. To look for work, an employee needs both a reasonable aggregate notice period and a reasonable amount of time in the week. Requiring or condoning employees to work in excess of ESA maximums was not only unreasonable, it was unlawful. CTS has not discharged its onus to prove that it provided for “reasonable” working notice during any week in which an employee worked in excess of ESA maximums. It follows that CTS is not entitled to credit for working notice for any week in which a plaintiff, not exempt from the ESA overtime provisions, worked in excess of the maximums.

[113] There will have to be an individual assessment as to whether any of the 18 employees referred to are exempt from the ESA overtime provisions. If any are exempt, I conclude that CTS is not entitled to credit for working notice for any week in which the overtime worked had a significant adverse effect on the ability of the employee to look for new employment. Being forced to work overtime to that extent renders the CTS working notice unreasonable.

(d) Did CTS Engage in Bad Faith Conduct?

[114] The position of the plaintiffs was that I should determine, as a common issue, whether CTS engaged in the type of conduct which justifies an award of general damages, which I will refer to compendiously as “bad faith” conduct. It would then be open to individual plaintiffs to assert that this conduct caused damage.

[115] CTS pointed out that common issue (xiii), certified on consent, was whether the “class” was entitled to an award of general or aggravated damages. CTS submitted that since the plaintiffs acknowledge it would not be possible or appropriate to make an aggregate award, the answer to the common issue is “no” and that ends the matter. Alternatively, CTS submitted that if an individual assessment is appropriate, I should order that the nine CTS employees who filed affidavit evidence should not be able to file supplementary evidence of damage in the individual hearing process.

[116] I think the submissions by CTS are overly technical and I do not accept them. I would, therefore, construe the common question as being whether the conduct of CTS was such that class members could recover general damages. In any event, I would have granted leave to amend the common questions in accordance with the plaintiffs’ submissions. It follows that there is no reason to fault the plaintiffs who filed an affidavit or restrict the evidence each could file if I determine that CTS engaged in bad faith conduct.

[117] I will now address what, as a matter of law, constitutes bad faith conduct. In Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701, Iacobucci J. stated at para 98:

98 The obligation of good faith and fair dealing is incapable of precise definition. However, at a minimum, I believe that in the course of dismissal employers ought to be candid, reasonable, honest and forthright with their employees and should refrain from engaging in conduct that is unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive. In order to illustrate possible breaches of this obligation, I refer now to some examples of the conduct over which the courts expressed their disapproval in the cases cited above.

[118] In Mulvihill v. Ottawa (City), 2008 ONCA 201, the trial judge awarded bad faith damages, in part because the City had terminated the plaintiff while she was on sick leave. The award of general damages was set aside on appeal, and Gillese J.A. stated:

[65] However, the trial judge also found that the City made a "mistake" in dismissing Ms. Mulvihill while she was on sick leave. As explained above, the legal standard against which conduct is to be measured for the purposes of Wallace damages is not whether an employer made a mistake but, rather, whether the employer engaged in unfair or bad faith conduct. A mistake is not conduct that can be said to be unfair or bad faith. Thus, on the finding of the trial judge, dismissal while Ms. Mulvihill was on sick leave did not constitute a basis for the award of Wallace damages.

[119] The position of the plaintiffs is that CTS acted in bad faith. The plaintiffs’ principal submissions were as follows:

(a) The severance letters suggested incorrectly that employees had to remain until the separation date to receive severance pay, when in fact under the ESA an employee who resigned on two weeks’ notice during the statutory notice period was still entitled to severance pay.

(b) The severance letters were misleading in stating that the employee “may be entitled to ESA notice of termination and severance pay”, when in fact all were entitled to notice of termination and 120 of 129 were entitled to severance pay.

(c) The failure to give the Director Form 1 notice was intentional and contrary to legal advice based on an internal CTS document dated February 28, 2014, which stated:

Form 1 filing: This is not required on 2/28; filing required only if 50 or more employees terminated in any rolling 4-week period. Will avoid doing this with staggered releases.

(d) Notifying the employees of termination just prior to the Easter Holiday, and by email wishing them “prosperity this Easter” was insensitive.

[120] The principal submissions of CTS were as follows:

(a) The evidence of CTS representatives was that CTS intended to comply with legal requirements and obtained legal advice.

(b) CTS gave employees a lengthy period to consider the offers in the severance letters and suggested that employees obtain legal advice.

(d) The Easter greeting was well intentioned and, in any event, the employees had been notified of the plant closure at a meeting on February 28, 2014, well in advance of the Easter holiday.

[121] While CTS made mistakes in connection with the plant closure, I am not satisfied that CTS acted in bad faith.

[122] CTS obtained legal advice from a large Toronto law firm (not its current counsel). That advice is privileged. I was advised by counsel that CTS was not asked to waive privilege and I certainly cannot take anything from the fact it did not volunteer to do so. I cannot speculate as to matters such as whether or not the lawyer was consulted at every step and reviewed all communications

[123] Specifically, I cannot conclude from the cryptic reference in the February 14, 2014 CTS internal document that counsel had advised CTS that Form 1 notice was required at the time the first termination letters were sent out, unless the terminations were staggered to avoid 50 terminations in any 4 week period.

[124] The severance letters offered an amount greater than the minimum ESA entitlement. Specifying in an offer letter that the greater amount would not be paid unless the employee worked to the termination date is not the same as indicating that the statutory severance pay would not be paid. Further, at the employee information session on May 12, 2014, the PowerPoint indicated that employees who did not accept the separation package would be paid severance pay if they worked to the separation date, or such earlier date as permitted by the ESA. While CTS should have put this in the termination letters, I do not think this evidences bad faith.

[125] The Easter greeting was a well-intentioned customary greeting which came weeks after the announcement of the plant closure. I do not regard it as evidence of bad faith.

[126] While I have found that CTS breached the Form 1 requirement, it acted on legal advice and in accordance with MOL policy. This does not evidence bad faith. I, therefore, find that CTS did not engage in bad faith conduct.

(e) Is CTS Entitled to Credit for Amounts Paid on Account of Severance Pay?

[127] The plaintiffs argue that CTS should not receive credit for the ESA severance pay it actually paid because the CTS letters gave the “false impression” that an employee had to work to the termination date to receive payment, when in fact the employee could resign on two weeks’ notice effective during the statutory notice period and still be entitled to severance pay. As such, the plaintiffs argue that the severance payments by CTS were a form of a “stay bonus”. I have previously explained why I do not regard the offer letters as seriously misleading.

[128] In any event, I do not accept the plaintiff’s argument and will deal with it briefly. The plaintiffs cited Assurant Group v. Filion, 2004 CanLii 5721, aff’d [2006] O.J. No. 843 (Ont. Div. Ct.), in support of this argument. In that case, the court rejected the employer’s argument that a payment the employer characterized as a “stay bonus” of 25% of base salary should in fact be credited and regarded as a severance payment. Assurant is clearly distinguishable. The evidence is that CTS regarded the payments as ESA severance pay and calculated the amounts in accordance with the ESA requirements. Two plaintiffs acknowledged having been paid ESA severance. The plaintiff’s factum at para. 234 acknowledges that “CTS paid severance pay […]”. I therefore see no merit in this argument.

(f) The Five Employees Who Worked More than Thirteen Weeks Beyond Their Original Separation Date

[129] The parties agreed that the circumstances of Cheryl Aultman are similar to the other four employees in this category and that the decision as to her entitlement will govern the others. In summary, CTS provided Ms. Aultman with a series of letters as follows:

(a) April 17, 2014 – advised of March 17, 2015 separation date.

(b) February 25, 2015 – advised that her separation date was extended 13 weeks (as permitted by the ESA) to June 26, 2015 and that she would be paid an additional $500 if she worked to this date. Further, CTS asked her to agree to work for an additional 8 weeks to August 28, 2015.

(d) September 9, 2015 – CTS asked for her agreement to work until October 30, 2015.

(e) September 18, 2015 – advised of a “final extension” of her termination date and asked for her agreement to work until October 30, 2015. Ms. Aultman was paid $500 which was the amount offered to her for the first extension of 13 weeks to June 26, 2015.

[130] Ms. Aultman stated that she continued to work to October 30, 2015 because her family needed the money and she knew that she would soon be unemployed. On the authority of Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469, the plaintiffs argue that Ms. Aultman was entitled to fresh common law notice such that her period of working notice should be from her final notice of termination letter dated September 18, 2015 to the last day of her employment being October 30, 2015.

[131] CTS argued that the situation of these five employees was not certified as a common question and so should not be decided. There was no suggestion that the relevant evidence to decide this issue was not before the court and it was fully argued by counsel. If need be, I would have granted leave to the plaintiffs to certify this as an additional common question and so I will not address the competing arguments as to whether it does fall within the common questions that were certified.

[132] In Di Tomaso, the employer kept unilaterally extending the termination date providing five written notices of termination specifying four different termination dates. In total, the original termination date was extended by 3.75 months. The employer argued that s. 6 of O. Reg. 288/01, which allows an employers to provide an employee with temporary work for up to 13 weeks without providing a further notice of termination, allowed the employer to extend the termination date by 13 weeks multiple times. The Court of Appeal rejected this argument.

[133] For present purposes, however, I focus on the discussion in Di Tomaso as to what constitutes effective notice of termination for contract law purposes. In granting summary judgment, Allen J. stated:

20 I agree with the plaintiff that Crown was required to provide the plaintiff a “fresh notice” of termination once the extensions had exceeded the 13 weeks. The effect of Crown not doing so is that the period of working notice is null and void. Therefore, the period of working notice cannot be counted against the plaintiff in determining his severance pay entitlement.

21 The plaintiff’s position is also supported by the requirement that notice of termination is must be “clear and unequivocal”. [Levitt, Howard A., The Law of Dismissal in Canada, 3rd ed. (Canada Law Book), at pp. 135 and 136]. Crown says it is the February 18, 2010 notice that sets the clear and unequivocal date of February 26, 2010 as the final termination date. I do not agree with the Crown. I find the cumulative effect of the multiple extensions created uncertainty for the plaintiff as to when he would no longer have his job. That runs counter to the clear and unequivocal requirement.

[134] On appeal, MacPherson J.A. endorsed this reasoning stating:

[21] I would add only that “clear and unambiguous” notice of termination must include the final termination date. In the present case, the September 9, 2009 notice of termination included a termination date that came and went, as did several others during the five-month period that followed. As the motion judge found, “the cumulative effect of the multiple extensions created uncertainty for [Mr. Di Tomaso] as to when he would no longer have his job.” It was not until the February 24, 2010 letter that this uncertainty was cured. Mr. Di Tomaso’s termination date was confirmed, and Crown Metal’s notice to him was made good on that day.

[135] In the case of Ms. Aultman, it was not until September 18, 2015 that she was notified that her employment would in fact end October 30, 2015. I therefore find that Ms. Aultman found herself in much the same position as Mr. Di Tomaso. CTS was clearly going to keep extending her employment as long as it had production needs to meet. Ms. Aultman was clearly going to work as long as she could because, as she said, her family needed the money and she would soon be unemployed. In the words of Allen J., the cumulative effect of the multiple extensions created uncertainty as to when Ms. Aultman would no longer have a job. As such, CTS only gets credit for providing working notice to these five employees from the date of the letter providing them with notice of their actual termination date.

(g) The Eleven Employees Who Resigned During the Period of Working Notice

[136] CTS argued that the situation of these eleven employees was not certified as a common issue. The possible entitlement of these employees was, however, in evidence and fully argued. I find that it should be addressed as to do otherwise would be a waste of time and money.

[137] In accordance with my earlier ruling, the CTS employees were not provided with notice of termination due to a failure to comply with the Form 1 notice requirement. Eleven employees, faced with a breach of contract, resigned to take new employment.

[138] The employee’s obligation to act reasonably to mitigate damages does not mean that the employee has to act in the best interests of CTS: see Forshaw v. Aluminex Extrusions Ltd., (1989) 1989 CanLII 234 (BC CA), 39 B.C.L.R. (2d) 140 (B.C.C.A.). There could well be a scenario in which a CTS employee would act reasonably to mitigate damages by resigning from CTS to accept a job that paid less than CTS, but that appeared to offer long term secure job prospects. There is no reason why these eleven employees should not be able to advance a claim if the circumstances merit it.

(h) Claim to Greater Common Law Notice

[139] The plaintiffs characterized this as an alternative argument, should I find that CTS is entitled to credit for working notice prior to the date it gave Form 1 notice. As I have found that CTS is not entitled to credit for working notice prior to Form 1 notice, I will not address this argument.

CONCLUSION

[140] The parties agreed that if any common issues were decided in favour of the plaintiffs giving rise to a damage claim, there would have to be a further hearing to determine a process for adjudication of those claims. I leave it to counsel to discuss this. If the parties are able to consent to a process, I will review any proposed order and invite submissions. If the parties cannot agree, they should advise me. I will then schedule a teleconference to discuss the filing of materials and then schedule a hearing date to hear argument as to the process moving forward.

[141] I believe that these reasons effectively determine the common issues. I leave it to counsel to draft an order reflecting these reasons. Counsel should advise by letter if there is any uncertainty or outstanding issues and I remain seized to address this further.

Sproat J.

Released: September 26, 2017

Wood v. CTS of Canada Co., 2017 ONSC 5695

Case Summary