The Ontario Nurses’ Association (the “Association”), representing a nurse who was terminated for innocent absenteeism due to disability (“Tilley”), successfully applied for judicial review of a decision of a Board of Arbitration which had held that the hospital’s failure to pay severance to Tilley did not violate s.15(1) of the Canadian Charter of Rights and Freedoms (the “Charter”)

23. March 2004 0

Administrative law – Employment law – Termination of employment – Severance pay – Human rights complaints – Disability – Charter of Rights – Discrimination – Decisions of administrative tribunals – Arbitration Board – Judicial review – Standard of review – Correctness

Ontario Nurses’ Assn. v. Mount Sinai Hospital, [2004] O.J. No. 162, Ontario Superior Court of Justice – Divisional Court, January 19, 2004, Blair, Gravely and Epstein JJ.

Section 58 of the Employment Standards Act, R.S.O. 1990, c.E.14 (the “Act”), provided general entitlement to severance pay upon termination of employment. Subsection 58(5)(c) operated to deny severance pay in circumstances where the contract of employment had become impossible of performance or frustrated by illness or injury. The issue on judicial review was whether s.58(5)(c) of the Act violated the Charter, and if it did, whether it was saved by Charter s.1.

The Court noted that decisions of labour arbitration boards were generally entitled to curial deference and subject to the patently unreasonable standard of review where the board was interpreting or applying a provision of a collective agreement, but that where the interpretation of the Charter was involved, correctness was the appropriate standard of review.

In reviewing the legislative history of severance payment, the Court found that severance pay is an earned benefit that compensates long-serving employees for their past services and for their investment in the employer’s business. Severance pay was held to be properly payable for any non-culpable cessation of employment pursuant to the decision in Rizzo & Rizzo Shoes Ltd. (1998), 154 D.L.R. (4th) 193 (S.C.C.).

The Court then considered the equality section of the Charter, s.15. The Court applied the tripartite test from Law v. Canada (Minister of Employment of Immigration) (1999), 170 D.L.R. (4th ) 1 to the question of whether the challenged section violated s.15.

The Court held that subsection 58(5)(c) of the Act drew a formal distinction between Tilley and others on the basis of disability, an enumerated ground under s.15(1) of the Charter. The Court also held that the differential treatment wrongly imposed a burden upon Tilley and promoted the view that the individual was less capable or worthy of recognition or value than others. The Court rejected the submission that Tilley’s disentitlement to severance pay was based on frustration of contract rather than disability. The viability of the contract was viewed as irrelevant in any event, in light of the purpose of severance pay being compensation for past service.

The Court considered the question on appeal using the principle of substantive rather than formal equality, and assessed whether the law had the effect of demeaning Tilley’s dignity from a subjective-objective perspective.

A contextual analysis revealed that the group of disabled employees being excluded from receipt of the benefits was the most disadvantaged group, those with more serious disabilities, and that there was no correspondence between the benefit and the differing needs of the disabled. The Court held that to “deprive a person of a benefit of employment relating to their investment in the business for which they have worked, based on severe disability, goes to the very core of the values contemplated in s.15(1) of the Charter.” (para. 47)

Although the Attorneys-General of Ontario and Canada each declined to participate in the matter with respect to whether the violation could be justified under s.1 of the Charter, the Court held that it was not saved by s.1.

The order of the arbitration board was quashed and an order was issued declaring the impugned subsection unconstitutional and of no force and effect. Tilley was entitled to receive severance pay under the Act, and the Association was awarded costs of the application.

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