Workplace Wire - Connecting Employers to Developments in Labour, Employment & Pension Law

Employers have reason to worry about a recent decision from the Court of Appeal for Ontario which allowed an employer to sue an employee in Ontario even though the employee had few connections with the province.

Employees will likely be allowed to sue their employer in Ontario even though they are employed abroad and have very few ties with the province. The Court of Appeal in Dundee Precious Metals Inc et al v Marsland et al, 2011 ONCA 594 determined that coming to Ontario for meetings a few times a year was enough to expose an employee to lawsuits in the province.

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As I have written about in previous blogs, the number of temporary foreign workers in Canada continues to skyrocket.  Growth of this category of foreigners has been large and consistent so that the number of temporary foreign workers in Canada now confidently outstrips the number of new permanent residents allowed into the country each year.

Until relatively recently, this category of workers had received little if any attention.  The fact however is that temporary foreign workers represent the largest source of foreign labour in Canada, one which employers in Canada are becoming increasingly dependant.

With such large numbers, courts across the country are increasingly being faced with employment-related cases for temporary foreign workers.  One example is a recent decision of the British Columbia Supreme Court in Dominguez v. Northland Properties Corporation, 2012 BCSC 328 (CanLII).  

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We strive to bring you the most recent and significant updates in labour, employment, and pension law, but sometimes (particularly on a Friday) we like to bring you something a bit more light-hearted.  Rhonda’s poem about the tort of intrusion upon seclusion was a great example.

This one is from the creative discipline file. According to a UK newspaper, the Milan flagship store of a fashion retailer—equally well known for the physical appearance of its staff and its racy advertising as its clothing—has instituted a novel disciplinary measure.  Male staff members who fail to properly greet customers or to follow supervisors’ instructions are required to do 10 push-ups.  Female staff members are required to do 10 squats.

It is an interesting approach to discipline and perhaps it helps to maintain the renowned/reviled physique of the company’s staff, but it is not one we would recommend here in Ontario.  If you are looking for some legal (if less creative) information about progressive discipline, consider registering for our Managing the Workplace seminar on discipline.

The BC Court of Appeal says: Quit when given inadequate working notice of termination and still sue for wrongful dismissal;

Facts:

Part time bus driver employed for 5 years is provided written notice of termination of 5 weeks.   

Bus driver leaves the day he was provided working notice and refused to work out his notice.   

Bus driver sues for wrongful dismissal. 

Company says bus driver quit and has no cause of action.

The BC Court of Appeal says:

The bus driver can still sue because the insufficient notice constituted a breach of contract by the employer creating a cause of action for wrongful dismissal.   Even though the bus driver's failure to work the notice itself constituted repudiation bringing employment to an end, the bus driver's repudiation did not take away his cause of action for damages for being provided insufficient notice.   The driver was entitled to damages for the difference between the working notice period that the employer had offered and what the Court determined was his reasonable notice period. 

Its noteworthy that the Court's theory is not based on inadequate notice constituting constructive dismissal. In fact, the Court found that the employer had not constructively dismissed the bus driver by providing inadequate notice.  Rather, the Court reasoned:  "although [the bus driver's] repudiation ends the ongoing rights and obligations of parties under a contract, it does not affect rights and obligations that have accrued.  In the present case, the [bus driver's] right to damages in lieu of reasonable notice had accrued when he was given inadequate notice.  His repudiation did not take away that right and it did not take away the right of the [employer] to the [bus driver's] services during the period of notice given."  Consequently, the driver was entitled to damages for the difference between the working notice period that the employer had offered and what the Court determined was his reasonable notice period.

 Concerns:

Previous caselaw in B.C. had established that when an employer gives working notice of termination, the employer has the right to the services of the employee, meaning that the employee must remain ready and willing to carry out the contract of services until the end of the notice period. The BC Court of Appeal has departed from that view and said that although the employee's early departure was improper, it only reduced the amount of damages they could recover rather than depriving them of the right to sue the employer at all.

Determining an employee's reasonable notice period is not an exact science.   Judges exercise discretion in assessing a notice period and their assessment is often influenced by the job market and other factors that an employer cannot predict with any great certainty at the time of termination. The employer knows the range in which the employee's notice period is likely to fall, but the exact notice period will be determined many months - sometimes years - later by the court. According to the B.C. Court of Appeal's approach, if an employer is off on notice by a week, the employer can be deprived of the benefits of working notice.  It's a bit of a game of chicken.  This places employers in a difficult position in the event that they need the employee to work through all or part of their notice period. 

While most employees will choose not to give up the financial benefit of notice, termination is an emotional event and decisions are not always made rationally.  This can place an employer in a tough spot.  Imagine a situation where an employer terminates the employment of a highly skilled long term employee and provides a combination of one month's working notice and a lump sum payment in lieu of the remaining notice period.  From the employer's perspective, the month of working notice is critical to structure a transition period prior to the employee's departure.  An angry employee might be all too willing to give up 1 month of a lengthy notice entitlement by quiting immediately out of anger, frustration or embarrassment.  The employer, as a result, is deprived of the ability to effectively transition the terminated employee's work. 

I wonder if this case will bring back a discussion of "ball park" notice periods?  Certainly the doctrine creates one more incentive to avoid giving working notice. 

Read the case at:  http://canlii.org/en/bc/bcca/doc/2012/2012bcca18/2012bcca18.html

It is clear how important it is to conduct a proper workplace investigation.  It is also clear that failing to do so can scuttle an employer’s case for a just cause dismissal, expose an employer to Human Rights Code damages, and, depending on the harm actually suffered, create a risk of aggravated Keays damages as well.

According to a recent decision from the Alberta Court of Appeal, we also now know that an unfair investigation that is biased from the outset can ground an award of punitive damages, which courts reserve for only the most “malicious and high-handed misconduct that offends a court’s sense of decency.”

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Global demand has voted and the results thus far have produced clear winners and losers.

While Canada’s manufacturing sector continues to struggle under intense global competitive pressure, the commodities sector has found itself in the middle of a grand party, awash in new investment and  experiencing exponential growth.  This has resulted in increased job opportunities in western provinces as compared to their central Canadian compatriots. 

How big are commodities?

According to the Canadian Association of Petroleum Producers, Canada already produces approximately 3.2 million barrels of oil per day from a variety of sources.  This amount is forecast to increase to almost 5 million barrels by 2020, virtually all which will be produced in Western Canada.  Canada is already a major player in world oil production out-producing, among others, Venezuela, Brazil, Iraq, Kuwait, the United Arab Emirates, and Norway. 

Canada has also attracted a significant amount of investment in other commodity sectors.  For example, Canada is currently the largest producer and exporter of Potash and also the third largest producer of Natural Gas in the world. 

How is this growth affecting the labour market?

As Canada’s manufacturing sector loses ground to commodities, unemployment rates in both Ontario and Quebec  (along with all eastern provinces for that matter), continue to be significantly higher than western provinces.  To this end, the lowest rates of unemployment at present in Canada are Alberta, followed by Saskatchewan and Manitoba. 

At the same time, despite the rise in unemployment as a result of the last recession, there remain significant shortages of skilled labourers across a wide variety of industries.  Meanwhile, rapid expansions in natural resource production has led to growth in the underlying demand for skilled workers.

Crudely put (no pun intended), competition for skilled workers is heating up, and the commodities sector is becoming more aggressive at finding this talent wherever it can be found.

Given this environment, employers should be prepared for the increasing likelihood that they will be hiring foreign workers, either directly from a source country or from those who are already present in Canada.  As more companies hire foreign workers they will need to incorporate immigration matters, including hiring practices, into existing human resource policies.

The Canada Revenue Agency has changed the way that it treats lump sum payments to retirees and employees in lieu of benefit coverage upon the cancellation of private health services plans. The Canada Revenue Agency had previously treated these lump sum payments as “advance reimbursements of medical expenses” and therefore, employers were not required to withhold income tax from the payments.

In the commentary accompanying the federal budget, the Canada Revenue Agency indicated that it had changed its position and that commencing January 1, 2012, employers would be required to withhold income tax from these amounts and report them on employees or retirees’ T4A Information Return. The Canada Revenue Agency recognizes a narrow exemption to this rule for payments received after the January 1st deadline from employers who became insolvent prior to that date.

The Canada Revenue Agency has provided detailed information regarding these new reporting and withholding requirements on its website.

A few weeks ago, Workplace Wire reviewed the Ontario Superior Court of Justice’s decision in McLean v. The Raywal Limited Partnership, 2011 ONSC 7330, where the Court held that unless an employer can show that it has such a contractual right, a lay-off, even a temporary one, will amount to a wrongful dismissal at common law, with all the consequences that flow from that.

The Ontario Court of Appeal’s recent dismissal of an employer’s appeal in Elsegood v. Cambridge Spring Service (2001) Ltd., 2011 ONCA 831 not only deals with the ability of a laid off employee to claim common law damages for wrongful dismissal, but is also a decision that addresses the relatively novel question of whether the lay-off provisions of the Ontario Employment Standards Act, 2000 (“ESA”) can support such a claim.

In Cambridge Spring, an employee, whose employment relationship with his employer Cambridge Spring Service was not governed by a written agreement, was on lay-off and considered himself subject to recall.  Section 56(1)(c) of the ESA provides that an employer terminates the employment of an employee “for the purposes of  section 54” [notice of termination section] if the employer lays of the employee for 35 weeks in a period of 52 consecutive weeks.  When the cumulative duration of lay-off reached the statutory maximum of 35 weeks within the 52 week period, the employee, rather than claiming termination pay under s. 54 of the ESA, commenced an action for common law damages for wrongful dismissal in Small Claims Court.

The Small Claims Court judge awarded the employee damages reflecting a notice period of 6 months and the employer’s appeal to the Divisional Court was dismissed.

At the Court of Appeal, the employer based its appeal on the premise that the ESA and the common law are independent regimes; an employee’s “actual” employment status is defined by the common law and the ESA operates only to entitle an employee to the remedies under statute.  On the other hand, common law damages for wrongful dismissal are only available for what would constitute a dismissal at common law and are not available for a “deemed termination” under the ESA. 

In dismissing the employer’s appeal, the Court of Appeal concluded that a termination by operation of statute, in this case s. 56(1) of the ESA, also constitutes a termination at common law, thereby entitling the employee to claim wrongful dismissal damages.

In stating that it had reached this conclusion in two ways, the Court first dismissed the employer’s argument that an employee’s employment status at common law could somehow survive a termination under the lay-off provisions under the ESA, noting that a termination under statute displaces the common law and that any contrary argument would represent an attempt to improperly contract out of statutory entitlements under the ESA. 

The Court also rejected the employer’s second argument that the employment agreement contained an implied term that allowed for the employee to be placed on indefinite lay-off.  At common law, the Court noted, an employer has no right to lay-off an employee.  Absent a written agreement to the contrary, a unilateral layoff by an employer represents a substantial change the employee’s terms and conditions of employment and is a constructive dismissal.  Further, even where there is such a written agreement allowing for lay-off, any agreement that provides for a lay-off longer than 35 weeks violates the minimum ESA standards and would be void. 

As this case demonstrates, while a written employment agreement can be of significant benefit to an employer in allowing for a lay-off to be initiated without triggering a constructive dismissal, such an agreement can only go so far in providing an employer with flexibility regarding the employment relationship and must operate consistently with employment standards legislation.

On December 7, 2011, Bill 28, The Registered Human Resources Professionals Association Act, 2011, was introduced in the Ontario Legislature. If passed, the Bill would make the Human Resources Professional Association (the “HRPA”) a true professional regulatory body with the power to investigate and discipline members for failing to comply with conduct and practice standards.

In addition to establishing academic requirements for human resources professionals, the Bill creates general conduct and practice standards that will apply to human resources professionals and the violation of which would be grounds for discipline by the HRPA.  The Bill also provides for the establishment of a complaint, discipline and appeal process that could include the awarding of costs against human resources professionals. In connection with the new disciplinary powers, the Bill would also provide for investigations and “practice inspections” permitting investigators to question individuals and compel the production of documents relevant to the investigations. 

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The McGuinty government announced that it will table its Family Caregiver Leave amendments to the Ontario legislature later today.

The proposed changes add to the Employment Standards Act, 2000’s existing Family Medical Leave provision which gives workers the right to take up to eight weeks of unpaid, job-protected time away from work to attend to ill family members. Under the current scheme, employees can take leave to attend to only certain prescribed loved ones (children, parents and spouses) with medical conditions serious enough for there to be a risk of death within a 26-week period.

The new Family Caregiver Leave proposal expands the list of family members for whom a caregiver leave may be sought by including grandparents, brothers and sisters, and “other dependant relatives.” Employees will also be able to request these unpaid leaves to assist seriously ill loved ones, not just those who may be terminally ill. Medical certificates from qualified health practitioners attesting to the illnesses in question will still be required.

Check back here for news on future developments, as workplacewire.ca follows the proposed amendments through the enactment process.

North Bay General Hospital v. Ontario Nurses Association (decided by Arbitrator Jasbir Parmar on October 13, 2011) provides important practical reminders for employers involved in workplace investigations.

In this case, North Bay General Hospital received a complaint that an employee had engaged in bullying and harassment against co-workers.  The Hospital retained an independent investigator who was a practicing lawyer to conduct an investigation.  Following the investigation, the employee was disciplined.  The Union, the Ontario Nurses' Association, filed a grievance alleging that the discipline was unjust and retaliatory.

This case dealt with a request for pre-hearing production of documents by the Union.  In particular, the Union sought production of all communications between the investigator and the Hospital, specifically HR personnel and a Vice President.  The Hospital objected on the grounds that the communications were protected by solicitor-client privilege.

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While it is firmly established that a successful party may recover their legal costs from an opposing party in a civil court action, the same cannot be said for proceedings before administrative tribunals.  There has been significant debate about whether human rights tribunals in particular ought to make awards in respect of legal costs.  Some view this as a matter of access to justice, while others see it as an effective barrier to defending, if not precluding, frivolous and/or vexatious complaints.

The Supreme Court decisively resolved this debate at the federal level when it recently ruled that the Canadian Human Rights Tribunal’s power to compensate "any expense" suffered by victims of discrimination did not extend to an award of legal costs.  Simply put, the court held it was unreasonable to equate "costs", a legal term of art, with "expense".

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Winds of investigatory change are blowing through courts and workplaces.  Less then a decade ago, unfounded complaints made against a manager could justify stripping him or her of supervisory duties and bar an action for constructive dismissal.  These employees had no right to know the details of the complaints against them, nor were they entitled to give a response.  Simply put, procedural fairness received little consideration in the non-unionized workplace.

Now, however, with new human rights and occupational health and safety laws that put employers under a duty to investigate discrimination and harassment claims, courts are becoming aware of improper investigations carried out under the guise of other HR functions.

An Ontario court recently ruled on this topic in Chandran v. National Bank of Canada when it held that a senior manager demoted pursuant to an employee satisfaction survey had actually been constructively dismissed because of, among other things, improper workplace investigation procedures.

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While Canada still mourns the passing of another prominent figure, the labour and employment bar was struck by the recent loss of one of their own: respected employment lawyer, mediator, prolific author, and later member of the judiciary, the Honourable Randall Scott Echlin of the Ontario Superior Court passed away earlier in August following a valiant battle with cancer.

In a world where conditions of work so deeply affect a person’s identity and emotional wellbeing, lawyers for both employees and employers alike frequently looked to Justice Echlin’s innovative and well-reasoned decisions for developments that improved employment law as a whole.

As a tribute to Justice Echlin’s prolific yet short time on the Bench, a review of selected key decisions are discussed below.

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Employers must be both cautious and fair when pressing for criminal charges against a dismissed employee. The Court of Appeal clarified in Pate v. Galway-Cavendish (Township) that it is easier for a dismissed employee to prove malicious prosecution by an employer than by a Crown attorney and in particularly egregious cases, trial judges will need to provide sound reasons as to why substantial punitive damages awards for wrongful dismissal should not be ordered against the employer.

Trial Judge: No Malicious Prosecution and Modest Punitive Damages

In Pate, the employer terminated a building inspector for discrepancies in remitting permit fees that had been paid to the inspector. The employer pressed for criminal charges to be laid against the inspector and withheld exculpatory evidence from the police.

After a four day criminal trial, the inspector was acquitted and exonerated. The employer’s actions with respect to the dismissal and withholding of exculpatory evidence came out at the criminal trial. The inspector then sued the employer for wrongful dismissal and malicious prosecution. The trial judge dismissed the claim for malicious prosecution. There was no dispute in the civil trial that there was no cause for termination. The trial judge awarded a reasonable notice period of 12 months plus: 

• a four-month bump-up to the notice period for Wallace damages;
• $75,000 for general and aggravated damages for intentional infliction of mental distress and social and economic damages;
• $7,500 for special damages; and
• $25,000 for punitive damages.

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Heenan Blaikie’s Jeremy Warning recently spoke at the Construction Labour Relations Conference in Toronto, hosted by Insight Information. During the session “Preparing for the Worst: How to Respond to a High Risk Incident” Jeremy provided advice to managers on how to respond if government inspectors show up.

This is the first of a four-part video series from Jeremy’s presentation, recorded by Reed Construction Data Canada. We will continue to post video clips over the next three weeks.

In a recent case, the Ontario Superior Court ordered a defendant employer to pay over $300,000.00 to cover a terminated hourly employee’s lost earnings and STD/LTD benefits, as well as punitive damages, costs and interest.  This should serve as a reminder that employers who provide ESA minimums upon termination and roll the dice in litigation sometimes pay a heavy price.

The employee in this case had been terminated as a result of restructuring after nearly 24 years of service, when he was 55 years old. Although he managed to get a new job less than a month after his dismissal, the pay at his new job was much lower and it did not offer disability insurance coverage.

As sometimes happens, the defendant employer in this case had continued the employee's benefits coverage only for the minimum ESA notice period of 8 weeks, and presumably hoped for the best. Unfortunately for all concerned, after the 8 weeks had expired, but before the end of the "common law" notice period (fixed by the court at 22 months) the employee was diagnosed with laryngeal cancer and had to undergo treatment and miss work without pay or disability insurance.  He had worked for 15 months at a new corporation, in mitigation of his damages, before becoming disabled and undergoing medical treatment.

The employee sued his former employer for pay in lieu of common law notice termination, as well as lost STD and LTD benefits, and punitive damages.

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Effective January 1, 2012, most private sector businesses will need to comply with new customer service requirements under the Accessibility for Ontarians with Disabilities Act.

The new requirements, which are described in the Accessibility Standards for Customer Service, are intended to promote the accessibility of goods and services to people with disabilities. These requirements already apply to parts of the public sector.

As of January 1, 2012, the requirements will apply to all people, businesses and organizations that:

• Provide goods or services either to the public or to other businesses or organizations; and
• Have at least one employee in Ontario.

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