Temporary Layoff and Condonation – A Surprising Court of Appeal Decision

April 19, 2023

Nancy Shapiro^*

In a recent decision of the Ontario Court of Appeal, the court considered a case of pandemic layoff and whether 9 months after the layoff occurred, the employee could be said to have condoned the layoff.

The Court of Appeal relied upon one of its earlier decisions in McGuinty v. 1845035 Ontario Inc., 2020 ONCA 816 which concluded that:

”           [W]hile it may be reasonable to find that an employer’s burden to establish condonation is discharged where the employee has continued to work for a lengthy period of time despite the employer’s impugned conduct, it is more difficult to conclude that condonation has been established where the employee has been unable to work because of the very conduct that establishes the constructive dismissal.” [emphasis added]

The Court concluded that because:

• • There was no evidence of agreement to the layoff;
  • No evidence that the employee had knowledge of the ramifications of the layoff or had received legal advice prior to his assertion of constructive dismissal;
  • Employees are entitled to a reasonable period of time to assess contractual changes before taking an irrevocable legal position; and
  • The Employer kept extending the layoff under the Infectious Disease Emergency Leave (IDEL) provisions in place during the pandemic and no period without an extension was outside the statutory requirements.

It was an error to equate silence by the employee with condonation.

The Court of Appeal held that “condonation in the face of a layoff is expressed by positive action. Positive action includes expressed consent to the layoff or expressing a willingness to work before claiming wrongful dismissal such that the employer would reasonably believe that the employee consented to the change in the terms of employment…. There is no such evidence here.”

The employee’s claim for constructive dismissal as a result of the layoff in March 2020 succeeded.

This case sets a very high bar for employers to meet on condonation in the face of layoff.  It creates a clear and surprising change in the law of condonation (previously related to inaction amounting to acceptance) to actually requiring a positive act before the employer could rely on it. Furthermore, a duration of 9 months is extraordinary in terms of a “reasonable period of time” as is required by the caselaw, for an employee to consider the changes and obtain legal advice in order to make an election about the changes to their terms of employment.

Contrast this to the Albert Court of Appeal decision in Kosteckyi v. Paramount Resources Ltd., 2023 ABCA 230, in which the court found 10 days to be a reasonable period of time to obtain advice and to make a decision concerning changes to terms of the employee’s employment and at most, that period of time the court said would be 15 days.

This seems to be an issue primed for a Supreme Court of Canada decision.

Pham v. Qualified Metal Fabricators Ltd., 2023 ONCA 255

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