Arbitrarily resetting an employee's length of service breaches Employment Standards ActAriss v. NORR Limited Architects & Engineers, 2019 ONCA 449 (CanLII)
Can an employee and employer agree to reset an employee’s length of service in order to reduce the employee’s statutory notice and severance entitlements? No, according to the Ontario Court of Appeal in Ariss v. NORR Limited Architects & Engineers, 2019 ONCA 449.
The plaintiff, Mr. Ariss, approached his employer in 2013 and requested a reduction in his hours from full-time to part-time. The employer, NORR Limited Architects & Engineers, agreed to this request, but only if Mr. Ariss would resign from his employment and immediately recommence employment. This arrangement required Mr. Ariss to explicitly waive his previous years of service, resetting his length of service for the purposes of calculating notice and severance entitlements under the Ontario Employment Standards Act (the “ESA“). The agreement stated:
Please accept this letter as notice of my wishes to reduce my work week and resign from my full time position as Senior Architect from the NORR Kingston office. This is conditional on acceptance of a new offer of employment for part time hours, conditions which have been discussed with and agreed to by Brian Gerstmar.
I understand that the new employment terms will be in accordance with the Employment Standards Act of Ontario. Termination, notice and severance for my past employment will not form part of the new terms of employment.
Mr. Ariss agreed. He resigned as a full-time employee in 2013 and was rehired as a part-time employee.
In 2016, Mr. Ariss was terminated. For the purpose of calculating his notice and severance entitlements under the ESA, Mr. Arris’s employer argued that his years of service prior to 2013 should not count. Mr. Arris responded that the agreement to reset his years of service was void under the ESA.
Section 5(1) of Ontario’s ESA states that agreements to waive its minimum entitlements are void:
Subject to subsection (2), no employer or agent of an employer and no employee or agent of an employee shall contract out of or waive an employment standard and any such contracting out or waiver is void.
The Ontario Court of Appeal agreed with the lower court ruling that the agreement to reset Mr. Arris’s years of service was void because it breached the ESA. The Court of Appeal cited the lower court’s finding that “neither Mr. Ariss nor NORR intended him to resign from his employment.” As a result, the 2013 agreement was an ineffective attempt to circumvent the sections of ESA which require minimum notice and severance entitlements based on continuous years of service with an employer. The Court explained that “Mr. Ariss’ purported resignation and waiver of his accumulated years of service represented an illegal attempt, contrary to s. 5(1) of the ESA, to contract out of the ESA.”
It was not all positive news for Mr. Ariss, however, as the Court confirmed that a previous employment contract ousted his entitlement to common law reasonable notice.