Rizzo & Rizzo Shoes: Reading Laws in Favour of Workers
Re Rizzo & Rizzo Shoes Ltd., [1998] 1 S.C.R. 27, began as a dispute about whether employees of a bankrupt shoe chain were owed termination and severance pay. It became one of the most cited cases in Canadian law because of how the Supreme Court said laws should be interpreted.
- Employees who lose their jobs because of their employer's bankruptcy are entitled to termination and severance pay under Ontario's employment standards law.
- The Court adopted the 'modern approach': read a law's words in their whole context, in harmony with the scheme and object of the Act and the intention of the legislature.
- Laws that confer benefits, like employment standards, are read generously.
- Courts avoid interpretations that lead to absurd or unfair results.
The case
When Rizzo & Rizzo Shoes went bankrupt, its employees lost their jobs. The trustee said that termination and severance pay were only owed when an employer terminated employment, and that a bankruptcy was not a termination by the employer. The Supreme Court disagreed. Reading the words literally would mean that employees who lost their jobs through bankruptcy got nothing, while employees of a solvent employer who were let go were protected. That result was inconsistent with the purpose of the legislation, which was to protect workers and cushion the blow of losing a job.
The modern approach
Quoting Elmer Driedger, the Court said that the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. This is now the starting point for interpreting any statute in Canada, from tax laws to the Residential Tenancies Act.
Why it matters to you
- If your employer becomes insolvent, you may still have claims for termination and severance pay. In a bankruptcy or receivership, the federal Wage Earner Protection Program may cover some unpaid wages, vacation pay, and termination and severance pay, up to a limit.
- When a law's wording is unclear, arguments about its purpose carry real weight at tribunals and in court.
- Employment standards are minimums that are read generously in the employee's favour.
Common questions
My employer went bankrupt. Who pays me?
You may be able to file a claim with the trustee in bankruptcy and apply to the Wage Earner Protection Program. Directors can sometimes be personally liable for unpaid wages under the ESA. Act quickly, because there are deadlines.
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This article is general information for people in Ontario, not legal advice. Rules, forms and deadlines change, and every situation is different. Check the current rule or speak to a licensed legal professional before you act.
Not sure where you stand? A licensed paralegal can look at your documents and tell you your options.
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