The Render Decision: Court of Appeal ensures that employees will (almost) always receive their ESA entitlements

By Elliot Saccucci, Alessia Grossi, and Victor Turcanu (Articling Student).

A recent decision from the Ontario Court of Appeal has made it nearly impossible for Ontario employers to terminate employees without paying them at least their statutory minimum termination entitlements under the Employment Standards Act (“ESA”).

Last month, in the decision of Render v ThyssenKrupp Elevator (Canada) Limited, 2022 ONCA 310 (“Render”), the Court of Appeal held that when an employee is terminated for just cause they must still receive their minimum termination entitlements under the ESA, unless the employer can demonstrate that the employee engaged in wilful misconduct that was “pre-planned”. In practical terms, the decision means that in order to terminate an employee with no entitlements of any kind, Ontario employers will need to undertake investigations aimed at uncovering evidence of “pre-planning”.

ESA and the Common Law

According to the ESA, employees who have been employed for more than three months are entitled to notice of termination. If the employee has been employed for 5 years or more and the employer has a global payroll of $2.5 million or more, employees will also be entitled to severance pay. However, Ontario Regulation 288/01 provides that employees who have “been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer” are not entitled to notice and/or severance pay on termination, even under the ESA.

These ESA entitlements are completely separate from what are known as “common law” entitlements, which are awarded in most wrongful dismissal cases where employers do not have valid and up to date termination provisions that serve to limit an employee’s entitlements on termination.

The question Ontario employers have continually had to ask themselves was whether or not “wilful misconduct” and “just cause” were the same thing. The answer from the Ontario Court of Appeal is now clearly and conclusively that they are not.

It is much harder to disentitle an employee to their statutory termination payments as a result of “wilful misconduct” than it is to nullify their common law entitlements for “just cause”.

The Trial Decision

In Render, the Plaintiff, Mark Render, brought a wrongful dismissal claim against his employer, ThyssenKrupp Elevator (Canada) Limited (“TKE”), after he was terminated for just cause. His termination came about  after he had slapped the buttocks of a female co-worker.

Render was a 30-year employee who held the role of operations manager and worked out of TKE’s Mississauga office with 13 other employees, one of which was Ms. Linda Vieira, the accounts manager who he slapped.

The office had a history of workplace banter. However, in this instance it went too far. Six employees were present in one of the employee’s offices, and while joking with Vieira, Render made a sweeping gesture with his right hand and his hand slapped her left hip and buttock.  As he made the sweeping gesture he said “get outta here”, and after his hand came into contact with her buttocks, he said “good game”.

Vieira, shocked by what had occurred, reported the incident to TKE. After speaking with Vieira, Render and some of the employees that were present for the slapping, TKE decided to terminate Render’s employment with just cause.

TKE took the position that this conduct was a sexual assault and given that it has a zero tolerance Anti-Harassment Policy, the termination for cause was justified. The company did not pay any severance or termination pay, either under the ESA or at common law.

While there were differing accounts of the incident at trial, Render did not deny that his hand touched Vieira’s buttocks. However, he described the touching as accidental and denied there was a sexual component.  He also took the position that the termination of his employment was not proportionate or in accordance with the company’s Progressive Discipline Policy.

The trial judge ultimately held that the act of slapping Ms. Vieira on the buttocks in the presence of the other male workers was very serious and unacceptable conduct. Although Ms. Vieira may have participated in some jokes, this does not mean she consented to being touched on a sexual part of her body nor did she consent to being demeaned in front of her co-workers. 

The judge made note of the fact that Render did not take responsibility for his actions, failed to understand the seriousness of the incident, and lacked sufficient regret. His apology was regarded as insincere, and there was evidence that he made jokes about the incident to his male colleagues after the fact. The trial judge held that all of the foregoing was irreconcilable with sustaining his employment.

The court held that summary dismissal was an appropriate response by TKE and that Render had no entitlements whatsoever, and his claim was dismissed.

The Appeal, Mr. Render’s Misconduct and “Just Cause”

On appeal, Render disputed the trial judge’s findings that the slap was not accidental and the remorse was not genuine. He submitted that the trial judge erred in law in finding that there was just cause for his dismissal.

After a review of the factual background, the Court of Appeal concluded that there was no error in the trial judge’s factual findings regarding the accidental nature and remorse nor in his finding that there was just cause for terminating Mr. Render’s employment.

However, the Court of Appeal unanimously held that Mr. Render was still entitled to receive his statutory entitlements under the ESA.

The Court of Appeal found that the threshold for disentitling an employee to his statutory benefits (i.e. under ss. 2(1)3 and 9(1)6 of Ontario Regulation 288/01) requires more than just cause at common law.

The Court noted that to be disentitled from ESA benefits, the employee must be shown to have been doing something “deliberately”, while “knowing they are doing something wrong” to amount to “wilful misconduct”.

However, the Court of Appeal then took the analysis a step further by requiring that the conduct also be preplanned.

The Court of Appeal ultimately found that while Mr. Render’s conduct was sufficiently serious for TKE to terminate his employment for just cause (at common law), it did not amount to the level of wilful misconduct required by Ontario Regulation 288/01 to preclude him from receiving ESA entitlements.

The Court of Appeal reasoned that while the trial judge found that the touching was not accidental, there was no evidence that it was preplanned.  Instead, the Court opined that Mr. Render’s conduct was done “in the heat of the moment”, and that such conduct was not intended by the legislature to deprive an employee of their statutory benefits.

The Court of Appeal held that Mr. Render proved his entitlements to termination pay and was awarded 8 weeks. However, since he did not lead any evidence of TKE’s payroll or plead his statutory entitlements, he was not awarded what would have been an additional 26 weeks in severance entitlements under ESA.

Implications for Employers

The Render decision is a clear signal to employers that even though they may have just cause for termination at common law, employees may still be entitled to statutory termination benefits under the ESA.

Employers will now have the burden to prove that the wilful misconduct was both intentional and preplanned in order to terminate for just cause and withhold statutory entitlements (although the Court of Appeal did not provide clarity as to what degree of preplanning is required).

The case has also left both employers and employees with a number of additional takeaways, including:

  1. All employees will now be explicitly pleading for both ESA entitlements and common law entitlements;
  2. Employees will need to lead evidence about their employer’s payroll in order to establish a s. 64 severance entitlement;
  3. If there is no premeditation, an act will likely not rise to the level of “wilful misconduct” for ESA purposes;
  4. An investigation is not strictly necessary prior to firing an employee for just cause (at common law, at least), but may be necessary to show premeditation or “pre-planning”; and
  5. Employers are now left to consider a “hybrid termination”, i.e., to terminate employees for common law just cause while still paying out their ESA entitlements.

Employers with questions about how to conduct terminations or what entitlements you may be required to provide to an employee on termination should reach out to a member of our Labour and Employment team who can guide you through the process.

If you have any questions about this article or what it may mean for your company, please feel free to contact Elliot Saccucci (esaccucci@loonix.com) or Alessia Grossi (agrossi@loonix.com)

Thanks to Victor Turcanu for his assistance in writing this article.