Sep 24, 2018

ONTARIO COURT OF APPEAL SUMMARIES (SEPTEMBER 17 – 21, 2018)

Wood v. CTS of Canada Co., 2018 ONCA 758 (CanLII)

FACTS:

This appeal arose from the closure of a manufacturing plant operated by CTS of Canada Co. The closure resulted in a “mass termination” for the purposes of the Employment Standards Act, 2000, SO 2000 c. 41 (“ESA”). A class action was brought on behalf of former employees (the “respondents”) against their common employers, CTS of Canada Co. and its parent corporation CTS Corp (the “appellants”). The class consisted of 74 former active employees who did not sign a release with the appellants and were not dismissed for cause. Both the appellants and respondents agreed to resolve common issues on a motion for summary judgment.

The appellants gave written notice to employees on April 17, 2014, that the plant was closing and that their employment would terminate on March 27, 2015. The termination date was subsequently extended for most employees to June 26, 2015. Under ESA s. 58(1) and its regulation, Termination and Severance of Employment, O Reg 288/01, s. 3(1) (the “Regulation”), an employer must give at least eight weeks’ notice of termination when they terminate 50 or more employees in the same four-week period. Under ESA s. 58(2), an employer who is “required to give notice” must serve the ESA director with the prescribed information in Form 1 and post Form 1 in the employer’s establishment on “the first day of the notice period” (the service and posting requirements collectively referred to as Form 1 Notice), and under ESA s. 58(4), notice is not deemed to have been given until the Form 1 Notice is completed. The appellant did not serve and post the Form 1 information until May 12, 2015, 12 days into the mandatory eight-week notice period.

The motion judge found that ESA s. 58(2) required the appellants to serve and post the Form 1 information when it gave notice to employees on April 17, 2014, as opposed to eight weeks before the date of termination. Due to this failure to complete Form 1 Notice, the appellants’ notice was found not to be effective until it did so, invalidating the 13 months of working notice the appellants had provided prior to the Form 1 Notice.

The motion judge decided two other issues. First, the appellants were not entitled to credit for working notice for any week in which an employee worked overtime contrary to the ESA or in which the employee was forced to work overtime that had a significant adverse effect on the ability of the employee to look for new employment. Second, in the case of the five employees who worked more than 13 weeks beyond their original separation date, the appellants were only entitled to credit for common law working notice from the date of the letter providing them with notice of their actual termination date.

ISSUES:

(1) Did the motion judge err in finding that ESA s. 58(1) required the appellants to serve and post the Form 1 Notice on April 17, 2014?

(2) Did the motion judge err in finding that the appellants were not entitled to credit for working notice in any week in which an employee worked overtime contrary to the ESA or in which the employee was forced to work overtime that had a significant adverse effect on the ability of the employee to look for new employment?

(3) Did the motion judge err in finding that, in the case of five employees who worked more than 13 weeks beyond their original separation date, the appellants were only entitled to credit for common law working notice from the date of the letter providing them with notice of their actual termination date?

HOLDING:

Appeal allowed.

REASONING:

(1) Yes. The appellant was only required to serve and post the Form 1 information at the beginning of the eight-week notice period, and since they were 12 days late, the class members were entitled to a further 12 days’ pay in lieu of notice. The Court stated that the purpose of the ESA, per the Supreme Court of Canada in Machtinger v HOJ Industries, [1992] 1 SCR 986, is to protect the interests of employees by requiring employers to comply with certain minimum standards, including minimum periods of notice of termination, as opposed to imposing requirements on employers in excess of statutory minimums. Tying the requirement to provide Form 1 Notice when an employer gives what it intends to be common law reasonable notice in excess of the statutorily-required minimum notice period is not consistent with the object of the ESA, which requires compliance with only certain minimum standards.

The Court also found that the appellants were not required to comply with ESA s. 58(1) on April 17, 2014 because, based on a textual reading, the section does not require an employer to give notice to its employees as soon as it decides that it will effect what would be a mass termination. All the appellants were required to do was give notice “for the prescribed period” of eight weeks prior to the date of termination, and were therefore only required to give notice by the first day of this statutory notice period. The motion judge had determined that, in line with Supreme Court of Canada Justice Iacobucci’s statement in R. v Ulybel Enterprises Ltd, 2001 SCC 56 (“Ulybel”) (“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”), a legislative change in 2000 to s. 58(2) to reference “the first day of the notice period” as opposed to “the first day of the statutory notice period” in a previous version of the ESA demonstrated legislative intention that Form 1 Notice must be given as soon as notice was provided to the employees.

The Court of Appeal dismissed this argument, reiterating the Supreme Court of Canada’s statement in Rizzo & Rizzo Shoes Ltd (Re), [1998] 1 SCR 27 (“Rizzo”) that words of the statute are to be read in their entire context and in their grammatical and ordinary sense, harmoniously with the scheme of the statute, the object of the statute, and the intention of the legislature. Based on this, the Court found that, due to the references to the “required notice period” used elsewhere in s. 58 meaning only the eight-week notice period, the notice period referred to in s. 58(2) was only the required eight-week notice period as opposed to the entire period where notice was given. Furthermore, an explanatory note to the legislative changes was viewed as evidence that only “language polishing” was intended, rebutting the respondent’s argument based on Ulybel, above. The Court of Appeal also noted the Ministry of Labour’s Manual stated that the “notice period” in s. 58(2) corresponded to the statutory notice period of eight weeks, and the Ministry of Labour’s online “Termination and Severance” document also supported this interpretation.

The Court also found that the wording of ESA ss. 60(1) & (2), which the respondents had argued should be used to interpret s. 58(2) as applying to period of notice actually given, was different from the wording at issue in s. 58(2) and therefore did not alter the conclusion that s. 58(2) only applied to the required notice period. The Court also noted that the respondents provided no judicial authority for their interpretation that ESA s. 60 should be used to interpret s. 58(2), and the case the respondents cited, Wood v Fred Deeley Imports Ltd, 2017 ONCA 158, was not authority for the proposition that the phrase “a notice period under section 57 or 58” included in s. 60 (1) & (2) meant the notice period actually given.

Finally, the Court concluded Rizzo does not direct that any doubt arising from difficulties in language of legislation should be resolved in favour of employees even where to do so would be inconsistent with the scheme of the ESA, its object, and the intention of the legislature. Although in Rizzo the Supreme Court of Canada directed that any doubt arising from difficulties of language should be resolved in favour of the claimant, the Court of Appeal stated that s. 58 was not ambiguous. Furthermore, even if there was difficulties in language, a different result would not be required because, per Novaquest Finishing Inc v Abdoulrab, 2009 ONCA 491 Rizzo does not require an interpretation in favour of employees running counter to the basic principles of statutory interpretation which the Court of Appeal applied, above.

Based on this finding, the Court of Appeal held that, per s. 58(4), the consequence of breaching s. 58(2)(a) was that the notice required is deemed not to have been given until Form 1 Notice is provided, and therefore the employees were each entitled to 12 days of pay for the 12 days for which Form 1 Notice was late.

(2) No. The motion judge did not err in finding that the appellants were not entitled to credit for working notice in any week which an employee worked overtime contrary to the ESA or in which the employee was forced to work overtime that had a significant adverse effect on the ability of the employee to look for new employment. In determining whether the employer is entitled to credit for working notice, it is relevant to consider the quality of the opportunity given to the employee to find new employment because, per Evans v Teamsters Local Union No 31, 2008 SCC 20 the primary objective of reasonable notice is to provide the dismissed employee with an opportunity to obtain alternate employment.

Exceptional workplace demands on an employee during the notice period may warrant disentitling an employer to credit for some or all of the working notice, and the Court found that overtime worked in violation of the ESA is such an exceptional demand that cannot be considered “consensual”. Additionally, ESA s. 5(1) makes contracting out of an employment standard void, and therefore, an employee’s consent to work overtime in violation of the ESA is not effective. Furthermore, considering the quality of employee’s opportunity to find alternate work during the notice period is not contrary to the Ontario Court of Appeal’s decision in Taylor v Dyer Brown (2004), 73 OR (3d) 358, nor does allowing employees who worked overtime a windfall if they agreed to overtime and then looked to invalidate their working notice after the fact.

(3) No. The motion judge did not err in finding that, in the case of five employees who worked more than 13 weeks beyond their original separation date, the appellants were only entitled to credit for common law working notice from the date of the letter providing them with notice of their actual termination date. Section 6(1) of the Regulation permits an employer to continue to provide temporary work to employees for up to 13 weeks after the termination date specified in the notice of termination given to an employee without giving a further notice of termination, and if temporary work exceeds that duration fresh notice is required. Notice, per Di Tomaso v Crown Metal Packaging Canada LP, 2011 ONCA 469 must be clear and unambiguous and include the final termination date.

The workers in question received a series of letters asking for their agreement to continue work during, and then subsequently, beyond, the permitted 13-week period, before being given a “final extension” of their termination dates in a letter. Therefore, the appellants were only entitled to credit for providing working notice in the case of the employees who worked more than 13 weeks from the date of this letter which provided them with notice of their actual termination date, and accordingly their April 17, 2014 notice was ineffective.