AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:
Employees in Ontario
can be formally dismissed or “terminated” from their jobs for just cause or
without just cause. If a dismissal is
for cause, such as in the case of serious misconduct, habitual neglect of duty
or incompetence, for instance, no prior notice is required. Where an employee’s job is terminated without
just cause, the employer must provide reasonable notice of termination to the
employee. The length of the notice
period will depend on factors such as the character of the employment, the length
of the employee’s service, the age of the employee, the availability of similar
jobs, etc. In some cases, working notice
will be given and the employee will continue to work until the end of the
notice period. In most cases, though,
payment in lieu of notice (i.e. the payments that the employee would have
received during the notice period) will be provided.
However, many
terminations occur without the employer formally firing or dismissing the
employee. An employee can be
constructively dismissed where the employer’s conduct amounts to a repudiation
of the employment contract. For example,
an employer might unilaterally change a significant term of an employee’s
employment such as imposing a pay cut and by doing give the employee the right
to treat the employment contract as terminated.
If the boss says that the employee now needs to work extra hours for less
pay, it may be that the employee can leave the job and then seek compensation
on the basis that the employee was constructively dismissed. The employment was effectively, but not
formally, terminated by the employer.
Constructive dismissal
was the finding in a recent decision of the Ontario Superior Court of Justice
in a case involving a long-time farmhand.
The claimant in the case had worked exclusively for one individual
farmer (and the individual farmer’s companies) for over 40 years, his entire
adult working life, employed as a farm labourer and manager in a mixed cash
crop and livestock operation. In
January, 2019, the claimant was told that he was laid off but that the layoff
would be temporary and would last only a few months. The claimant actually continued to assist the
employer from time to time with work tasks where needed during the layoff, but
was not paid by the employer after January, 2019.
In May, 2019, the
employer met with the claimant and told him that he could come back to work at
the farm on the condition that the claimant continue to collect Employment
Insurance benefits with the balance of his salary (about $55,000 per year) paid
in cash. Also, the employer confirmed
that the claimant would no longer have the assistance of a student for heavy
lifting jobs, something that the claimant required because of a back injury
suffered several years earlier when lifting a propane tank. In effect, the employer was asking the
claimant to do the same job as before but on vastly different terms.
Justice G.D. Lemon did
not hesitate to find that the claimant had been constructively dismissed by his
employer when the employer: 1) told the claimant that there would be
fundamental changes to his job duties, effective immediately; 2) required that
the claimant agree to improper and illegal payment arrangements as compensation
for the job; and, 3) having effectively terminated the claimant’s previous
employment, failed to provide the claimant with any notice of the termination
or payment in lieu of notice. Justice
Lemon examined the relevant factors for determining the reasonable notice
period and found that the claimant was entitled to 24 months of salary in lieu
of working notice, amounting to just under $110,000.
The claimant also
requested an order for payment of a retirement allowance from his former
employer. At the time of his layoff in
January, 2019, the claimant’s annual salary was approximately $55,000, an
amount that had remained more or less unchanged for the previous 25 years. Also, prior to 1996, the claimant had been
provided by his employer with an on-farm residence. After 1996, the residence was no longer
provided such that the claimant’s overall compensation was significantly
reduced. Nevertheless, the employer
induced the claimant to continue to work for less money, even including
overtime, on the basis of assurances and agreement that the employer would
provide a retirement allowance to the claimant.
The claimant sought
$250,000 for his retirement allowance.
The employer had told the claimant that he would be well taken care of
and would receive 8-10% of non-voting shares in one of the farm companies. The employer said that “the big money is at
the end”, being a reference to a future sale of the company. The claimant learned in 2008 or 2009 that the
company was sold for $2,200,000 and assumed that he would receive about
$250,000. For that reason, the claimant
continued to work on the farm, his concerns about a lack of a retirement safety
net having been addressed.
Justice Lemon awarded the full $250,000 retirement
allowance, finding that the claimant worked long hours at a “reducing income”
in reliance on the employer’s assurances.
Justice Lemon also awarded the claimant $5,000 for unpaid wages (for the
“layoff” period when the claimant continued to work without pay), $50,000 for
aggravated damages (based in part on the manner of termination of employment
which left the claimant with “the embarrassment of having been betrayed and cheated
by the man he had trusted for many years”), and $20,000 for punitive damages
(for conduct overall that “drops to the level of being so malicious and
outrageous that it is deserving of punishment on its own”).
Read the decision at: 2024 ONSC 3876 (CanLII).