Law Times

Law Times • February 13, 2012 COMMENT PAGE 7 Ontario Court of Appeal examined a novel legal issue of whether common law wrong- ful dismissal damages are available to em- ployees whose dismissal was triggered by the operation of the Employment Standards Act due to the prolonged layoff . Th e court resolved that dismissed employees' entitle- ments are not confi ned to remedies under the act and that common law concepts of reasonable notice would apply. Layoff s are spells of employees' tem- W porary unemployment. At common law, employers have no right to lay employees off . Nor does the act give employers such a right; instead, it regulates the periods and eff ects of layoff s when the right exists. Ab- sent an express or implied term in a contract of employment to the contrary, a unilateral layoff is a constructive dismissal that entitles employees to damages. Th e Elsegood decision concerned a 48-year-old technician, Brian Elsegood, whose seven-year employment was termi- nated by a series of temporary layoff s that exceeded the statutory maximum of 35 weeks within a 52-week period. On April 4, 2009, Elsegood was laid off for the fi rst time. Having recalled him on June 9, 2009, the company laid him off again on July 28, 2009. Aſt er the cumulative length of his tem- porary layoff s reached the statutory maxi- mum, Elsegood brought a claim for com- mon law wrongful dismissal damages in the Small Claims Court rather than claiming termination pay under the act. Th e em- ployer argued that common law damages were not available to Elsegood because his employment status at common law survived a statutory termination by the act. Th e essence of the employer's argument rongful dismissals come in many forms, including temporary lay- off s. In Elsegood v. Cambridge Spring Service (2001) Ltd., the was that common law and the act are independent regimes. It maintained that the common law defi nes an employee's actual em- ployment status and the act oper- ates only to entitle the employee to damages under it. On this premise, the employer unsuc- cessfully argued that common law damages for wrongful dis- missal are available only for what would constitute a dismissal at common law and are not avail- able for a deemed termination under the act. As a consequence, Elsegood received six months' pay in lieu of reasonable notice together with legal costs. In rejecting the employer's argument Labour Pains Even if one accepts that com- mon law continues to operate independently of the act, in the court's view the common law would always allow an employee laid off for more than 35 weeks to claim constructive dismissal. Th is is consistent with s. Nikolay Chsherbinin 67(3) of the act, which entitles an employee to elect whether to receive termination pay or re- tain the right to recall. In light of the Supreme Court of Canada's reasoning in Machtinger v. HOJ Industries Ltd., a term in an em- that the act and common law operate as two independent regimes, the court noted that "statutes enacted by the legislature displace the common law." Th is proposition seems to fl y in the face of the act, which in s. 8 states that "no civil remedy of an employee against his or her employer is aff ected by this act." Th e court ultimately resolved that an em- ployee's status does not survive a statutory termination because the act operates to ter- minate employment in law, which includes common law, and not just under the statute. Th e court also rejected the employer's theory that an employee could be on a pro- longed indefi nite layoff but terminated for the purposes of the act as untenable because it off ers no date specifying when a layoff would become a termination and thereby render the employer responsible for termination pay in lieu of notice. Referring to the terms of s. 56 of the act, which provides that the employee is terminated when a layoff reaches 35 weeks within a 52-week period, the court concluded that the legislature's action leaves no room for the continued operation of the common law on that question. ployment contract that provides for a layoff exceeding 35 weeks without giving the em- ployee the election available under s. 67(3) would be null and void because it would fail to comply with the minimum standard set out in the act. At the same time, unclear language in the act continues to mislead employers that it confers on them the power to temporar- ily lay employees off . Th e controversy stems from the language in s. 54 of the act that appears to recognize, within the very defi - nition of the termination, the legal right to lay off : "No employer shall terminate the employment of an employee . . . unless the employer has given the employee written notice of termination." A complicated mechanism set out in s. 56 of the act compounds the controversy through statutory qualifi ers to control the metamorphosis from a layoff to a dismissal. However, a number of decisions have con- fi rmed that reliance on the temporary layoff provisions of the act is only relevant where the right to lay off exists in the employment relationship. Given that a layoff is a contractual device, corporate counsel and human resources managers should be aware that the courts would recognize employers' right to lay em- ployees off when doing so forms an integral part of their employment contracts or they somehow acquiesced to it. Contractually unauthorized or autho- rized but prolonged layoff s are wrongful dis- missals because the continued attendance of employees at the place of work for pay is an essential term of their employment con- tracts. It is irrelevant that an employer mis- takenly or unintentionally repudiated the contract of employment as a fundamental breach occurs as a matter of fact. In light of the Elsegood decision, employ- ers and employees should beware of the fol- lowing practical considerations: • An employment contract is terminated under both the act and common law whenever a layoff triggers a dismissal un- der the statute. • Prolonged layoff s can lead to signifi cant common law damages. • Employers should vigilantly monitor the duration of layoff s in order to avoid wrongful dismissal claims. • Employers that use the word layoff as a synonym for termination, having no in- tention whatsoever of recalling employ- ees when business conditions improve, expose themselves to substantial com- mon law damages. • Prudent employers should reference the possibility of layoff s in company per- sonnel manuals, a move that could save them money at times when their fi nan- cial needs are greatest. Overall, however, there appears to be a need to reform the act in order to clarify the language dealing with employers' statutory right to lay employees off . LT uNikolay Chsherbinin is an employment lawyer in Toronto. He can be reached at 416-907-2587, nc@nclaw.ca or nclaw.ca. BY MICHAEL AMERNIC For Law Times chise litigation. Goldman has a successful practice and, like S many lawyers, works long hours. He's 56 and in reasonably good shape, which he says gives him a leg up when it comes to work. But it took reading a book last fall called Younger Next Year, which was co-authored by a former New York litigator who decided that his poor diet and lack of exer- cise were no way to live, for Goldman to change his lifestyle. Today, Goldman doesn't only belong to the Adelaide Club; he actually uses it. In fact, he works out five times per week, including a session with a personal trainer once a week. With their typically long hours, lawyers prob- ably have less time than most professionals to think about physical fitness, never mind health in general. But making time available for health and fitness can have huge benefits at work. Studies repeatedly show that fit people are more pro- ductive and take fewer sick days, which for the managing partner means reduced absenteeism in terms of short-term and long-term disability. The first thing a busy lawyer should do is recognize the need. The next thing is to do something about it. Many law firms offer subsidized gym mem- berships as a perk. Sandra Dawe is managing partner at Shibley Righton LLP, a mid-size firm with 35 lawyers that offers subsidized gym mem- berships to everyone, including legal assistants and administrative staff. Many of its lawyers are diligent about taking full advantage of this benefit. Even lawyers can find time to get fit u SPEAKER'S CORNER teven Goldman is a partner with Goldman Hine LLP in Toronto and one of Canada's top legal minds when it comes to fran- Says Dawe: "We value lawyers having balanced lives, and when given that opportunity, I think most of them will find some physical activity to keep in shape. A fit and healthy body gives energy and confidence, and we like to see both in our people. It's a win-win." Dawe, who lifts weights with a personal trainer and takes horseback-riding lessons with her daughter, runs down the list of Shibley Righton's lawyers and what they do. There are black belts in martial-arts disciplines, cyclists, body builders, tennis players, and runners, including a marathoner. Pilates is also popular. In fact, one senior lawyer took that activity up in his 60s and seldom misses a lunchtime workout. Some big firms also provide subsi- dized gym memberships, as well as a modest contribution to the purchase of equipment for home fitness. Not taking part in any physical activity at all can easily lead to dire warning signs about the state of a person's health. Some of the signs include sleep deprivation — not an unknown element in a busy lawyer's life — as well as weight gain, rising blood pressure, decreased levels of concentration, lethargy, and ergonomic problems. Then there are headaches. Put some of these things together and you're talking about absenteeism from work. In addition, there are the big risks such as heart problems and strokes. Claudette Pennesi is a lawyer I train regu- larly. She's a senior legal counsel with McDonald's Restaurants of Canada Ltd. She was already in good shape but wanted to build muscle and www.lawtimesnews.com improve her physique and has done both. If lawyers claim they don't have time for this sort of thing, take a look at her. Despite many long nights that see her working late, she gets in a workout at 6 a.m. every morning either with me or by doing Pilates or a 45-minute cardiovascular session. Claudette has loads of energy and is very productive at work. She also looks great. No matter what business you're in, an unhealthy and unfit workforce translates into a recipe for costly sick leave and high turnover. Having a program that encourages people to get active leads directly to increased energy, better posture, and improved core strength, and that means a healthy lower back and neck, as well as an improved cardiovascular system. This allows the body to build muscle, which means you burn body fat. That, in turn, leads to weight and fat loss. You'll also sleep better at night. I haven't even begun to explore the issue of improved mental health, but consider this: the Conference Board of Canada says that 44 per cent of employees have experienced a mental- health issue, which costs our economy $51 billion a year. What's more, many organizations don't know what to do about it. Encouraging a healthy lifestyle is a good start, but that should begin with a fitness assessment of the individual and identi- fying the person's goals. Designating 30 minutes a day to a calorie-burning workout or perhaps a brisk walk or jog on a treadmill will give you a noticeable jolt of energy that carries through the rest of the day. LT uMichael Amernic is a fitness trainer and owner of Michael Amernic Fitness. He can be reached at mikejoseph_fit@rogers.com or michael amernicfitness.com. uLETTER TO THE EDITOR CLARIFYING SURROGACY RULES Regarding your Jan. 2, 2012, article, "Loopholes in law spark rise in illegal surrogacy deals," we would like to clar- ify that the Assisted Human Reproduction Act applies in respect of the reimbursement of sperm and egg donors as well as surrogate mothers for their expenses. The majority of the Supreme Court of Canada was of the opinion that s. 12 of the act, which allows for regulations dealing with reimbursement, is within the legislative authority of the Parliament of Canada. Donors and surrogate moth- ers continue to be entitled to be reimbursed for their actual expenditures relating to their donation or surro- gacy. Thank you for the oppor- tunity to clarify this point in the article. Yvette Lebrun-Campbell executive director, planning, communica- tions, and outreach, Assisted Human Reproduction Canada Layoffs can trigger common law payoffs

• Cover