Top Ontario employment law decisions of 2023, part one

Law360 Canada (January 10, 2024, 12:09 PM EST) --

Inna Koldorf

In 2023 we saw Ontario courts taking very clear (and sometimes surprising) stances on employment law issues. From awarding a longer notice period due to the pandemic, to finding that condonation of a change to the employment relationship requires positive action, the following are the leading 2023 decisions in the area of employment law.

1. Reasonable notice period

We saw two significant decisions on the issue of the reasonable notice period in 2023. In Milwid v. IBM Canada (2023 ONSC 490) Gregory Milwid’s employment was terminated during the COVID-19 pandemic shut-downs. At the time of the termination of his employment Milwid was 62 years old with 38 years of service and was a managerial employee. He was given 12 weeks of notice, 11 of which he was expected to work, and 26 weeks of statutory severance pay. The notice period given to Milwid was only three weeks longer than his minimum statutory entitlement.

Milwid filed a claim for wrongful dismissal, arguing that he was entitled to 30 months of notice as he was essentially forced into retirement. The Superior Court of Justice noted that working with the same employer for many years can be viewed as an impediment to finding alternate employment and will therefore increase the notice period. The court also found that Milwid’s job was specialized and geared toward the employer’s specific business, another factor which the court found would increase the reasonable notice period.

Most importantly, the court found that there is no ceiling to the reasonable notice period, although it did note that a notice period longer than 24 months would require special circumstances. Special circumstances existed in Milwid’s case for the reasons already noted, but also because his employment was terminated during the COVID-19 pandemic, which the court found increased his entitlement by one month. The court awarded Milwid a total of 27 months of reasonable notice given his circumstances.

In Manthadi v. ASCO Manufacturing (2023 ONSC 3499) the Superior Court of Justice held that even in an asset purchase the employee was entitled to reasonable notice on the basis of her service with both the vendor and the purchaser after she signed a release in favour of the vendor in exchange for receiving a lump-sum payment equivalent to her statutory notice entitlements.

Typically, in an asset purchase the purchaser is not required to continue the employment of the vendor’s employees. While the Employment Standards Act, 2000 (ESA) makes a purchaser presumptively liable for employees’ full length of service with both parties, there is no such presumptive liability in common law. In common law, the vendor remains liable to provide its employees with reasonable notice, unless such liability is negotiated into the transaction by the parties or the vendor continues to operate the business as a “going concern.”

In Manthadi, the employee had 36 years of service with the vendor at the time of the transaction. The employee was offered employment by the purchaser. She signed a release in favour of the vendor, releasing the vendor from liabilities related to the cessation of her employment after receiving a lump sum payment from the vendor when the transaction closed. Six weeks later, the employee was terminated without cause. She filed a wrongful dismissal claim against the purchaser.

The matter was heard on a summary judgment motion, appealed to the Court of Appeal for Ontario and sent back to the Ontario Superior Court of Justice. The Ontario Superior Court of Justice echoed the Court of Appeal’s determination that the employee was entitled to reasonable notice damages “by applying the Bardal factors, using a contextual approach and weighing the experience a long-time employee brings to the purchaser” (at paragraph 182). Based on the employee’s age, the nature of her employment, her years of service, the benefit her skills provided to the purchaser and the fact that the purchaser did not communicate to the employee the intention of only hiring her for a short period of time post-transaction, the court awarded the employee 12 months of reasonable notice.

2. Constructive dismissal

In Pham v. Qualified Metal Fabricators Ltd. (2023 ONCA 255) the Court of Appeal reiterated that complying with the ESA when laying off employees is irrelevant to the question of whether the layoff is a constructive dismissal. The importance of this decision, however, lies in the court’s discussion and findings with respect to whether the employee condoned the layoff.

After almost 20 years of continuous service, in March of 2020 Binh Viet Pham was placed on a layoff shortly after the COVID-19 pandemic began. The layoff was extended by the employer three times, until September 2021. Throughout this time the employer did not seek Pham’s consent for the layoff and Pham did not raise an issue with the layoff. He eventually filed a wrongful dismissal claim. On a summary judgment motion, the motions judge dismissed Pham’s claim. Pham appealed.

The Court of Appeal confirmed that “absent an express or implied term in an employment agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment contract that constitutes constructive dismissal. This is so even where the layoff is temporary” (at paragraph 29). This conclusion remains true even where the layoff was conducted in accordance with the ESA. An employee may not be able to claim constructive dismissal, however, if the employee condoned the layoff by leading the employer to believe at the time of the layoff that the employee consented freely to the change. 

The employer argued that Pham condoned the layoff by not objecting to it and by seeking legal advice. The motions judge agreed, but the Court of Appeal did not. In the Court of Appeal’s view, silence and lack of objection are not equivalent to condonation. Neither is seeking legal advice. The court found that condonation in the face of a layoff must be expressed by positive action such as expressed consent to the layoff, or expressing a willingness to work before claiming wrongful dismissal. Condonation can only be found where an employer could reasonably determine from the employee’s positive actions that the employee consented to the change in the terms of employment. 

This is part one of a two-part series.  

Inna Koldorf is a partner in KPMG Law LLP’s employment and labour law group, where she advises employers on labour, employment and human rights issues.

The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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