An Ontario court has determined that a former vice-president at Airways Transit Service, who was laid off amid the COVID-19 pandemic and never reinstated, was constructively dismissed.
The 53-year-old executive, with 28 years’ service, was awarded 24-months’ notice. Additionally, the Ontario Superior Court of Justice applied a “COVID bump,” extending the notice by an extra month, thus bringing the total severance to 25 months.
It also tacked on $30,000 in punitive damages, blasting the employer for putting him in an “impossible situation” as he waited in the wings to be recalled with no pay, benefits and very little communication.
Background
The executive, MC, joined the company — a shuttle service operating throughout the Greater Toronto Area — in August 1992. By May 2018, he had ascended the ranks to become the company’s vice-president. In this role, he reported directly to DB, the president and CEO of Airways Transit, and was responsible for a wide range of operational and strategic duties.
COVID-19 layoffs and aftermath
In March 2020, Airways Transit laid off its entire workforce due to the pandemic, including MC. While other management members were recalled in June 2020, he was never reinstated. Despite his layoff, MC voluntarily continued to perform work for the company without pay until June 2020, illustrating a commitment to the struggling business.
Airways Transit argued the layoff was justified under Ontario Regulation 228/20 – Infectious Diseases Emergency Leave, made under the Employment Standards Act, 2000. The company said MC was not constructively dismissed but rather resigned by virtue of a letter sent from his lawyer to Airways Transit in May 2021.
MC asserted he was constructively dismissed, noting he never resigned and that the company had stopped responding to his inquiries about re-employment and benefits. MC originally proposed returning to work at 80% of his salary, but this offer was not taken up by the company.
MC was the highest-paid employee, with a comprehensive compensation package that included an annual salary of $116,532, among other benefits. Meanwhile, the company received about $800,000 from the Canada Emergency Wage Subsidy (CEWS) program between March 15, 2020, and Dec. 18, 2021. However, DB confirmed that they did not apply for the subsidy for MC, attributing the decision to his high salary.
In August 2022, Airways Transit hired a new operations manager who assumed some responsibilities previously held by MC.
Legal framework and discussion
The court referred to the Potter test, which established two branches to determine constructive dismissal. MC had the burden of proving, on a balance of probabilities, that he was dismissed. The court found that he had met this onus.
There was no employment contract between MC and Airways Transit that gave the company the right to lay him off. While MC initially did not oppose the layoff, the circumstances changed when other employees were recalled and he was not.
In the absence of any agreement to the contrary, a unilateral layoff by an employer is considered a constructive dismissal.
Award
It took MC 23 months to find a new job, eventually landing a position at a funeral home that paid $85,000 annually — considerably less than his position at Airways Transit.
MC sought 24-months’ notice, along with a one month bump because of the pandemic. The employer countered that a range of 16 to 22 months was more reasonable. The court settled on 25 months’ notice — 24 months plus the additional month MC sought because of COVID.
“I am satisfied that the evidence establishes that the airport shuttle transportation industry was severely affected by the COVID-19 pandemic and the resultant border shutdowns and restrictions on travel,” the court said. “MC had spent 28 years working in that industry and his experience was fairly specialized to it. Airways Transit placed (him) into the precarious pandemic and post-pandemic job market by its conduct.”
The employer said MC failed to mitigate his damages, but the court rejected that argument.
Aggravated and moral damages
MC sought an award of combined aggravated, moral and/or punitive damages in the amount of $200,000.
He noted that he was laid off during the pandemic, wasn’t recalled and Airways Transit didn’t apply for a federal wage subsidy program that was designed to help bring workers like him back. Even when he offered to return at 80% of his salary, the company rejected him.
It also failed to keep him informed about his employment status, or respond to his requests to return to work, and it did not pay his accrued statutory vacation or make annual contributions to his RRSP. The behaviour of his employer was characterized as “malicious, oppressive and high-handed” and led to severe anxiety and stress over his financial future.
While the court said the employer’s conduct was “untruthful, misleading or unduly insensitive,” there was not enough evidence that MC suffered mental anguish over and above the ordinary distress and hurt feelings that result from a dismissal. It declined to award aggravated/moral damages.
Punitive damages
The court, though, did award $30,000 in punitive damages.
“I find that Airways Transit did not satisfy its duty of good faith in its dealing with (MC) and recalling him to work. (DB’s) evidence was that he intended to return (MC) to work at the end of the COVID-19 Period,” it said. “I find (DB’s) statement in this regard to be a feeble attempt to justify the inexcusable failure to recall (MC) in a timely manner or, in the alternative, to lawfully terminate his employment.”
It said the employer ought to have known that stringing MC along, with a belief he could be potentially recalled at some unknown point in the future, was placing him in an “impossible situation.”
“He would have to sit and wait quietly ‘in the wings’, with no pay or benefits, for an indeterminate duration and rely on the limited communication or feedback offered by Airways Transit. This is completely unreasonable and unacceptable behaviour on the part of an employer,” it said.
For more information, see Chalmers v. Airways Transit Service Ltd. and Badder Capital Group Ltd., 2023 ONSC 5725 (CanLII)
