Court of Appeal Rules ESA Severance Provision Violates Charter

EP Update - May 25, 2005

In a decision released on May 4, 2005, the Ontario Court of Appeal has upheld a lower Court ruling that the Employment Standards Act, 2000 (the "ESA") discriminates against persons with long-term, severe disabilities contrary to section 15 of the Charter. Specifically, section 58(5)(c) was held to be unconstitutional. That section purported to allow an employer to deny severance pay to an employee whose contract of employment had become frustrated as a result of an illness or injury. The Court of Appeal struck down that provision.

Mr. Justice Juriansz of the Court of Appeal agreed with the lower Court that because severance under the ESA is an earned benefit based on an employee's past service, denying it to employees whose employment had become frustrated as a result of disability "perpetuates negative stereotypes and devalues the contributions of this group." In addition, the impugned provision was held to be based upon an "ill-founded and false presumption that persons with severe disabilities are not likely to be members of the work force in the future." Accordingly, section 58(5)(c) of the ESA was held to be unconstitutional and therefore of no force or effect.

The Employer, Mount Sinai Hospital, has not yet announced whether it will seek leave to appeal the decision to the Supreme Court of Canada. Regardless, Employers should be aware that the decision of the Court of Appeal regarding s.58(5)(c) remains good law unless the Supreme Court of Canada says otherwise.