The worker died in August 2002 after a farm skid fell on him.  At the time of his death, he was working for a tobacco farm just outside of Brantford, Ontario.   

Although local police investigated the circumstances surrounding the worker's death, the family of the deceased worker believes that there remain many unanswered questions.  The family accordingly requested that a coroner’s inquest into his death be conducted.  This request was refused. 

The family claims that the refusal to conduct an inquest violates the Ontario Human Rights Code because it disproportionately discriminates against seasonal agricultural workers, a large number of whom are foreigners.  The family specifically argues that a coroner's inquest should be mandatory in deaths involving seasonsal agricultural workers.  Currently coroner inquests are only mandatory in cases involving deaths in construction, mining, or quarry work. 

The Toronto-based non-profit group Justice for Migrant Workers is representing the deceased worker’s family. They believe temporary foreign workers are not accorded the same protection as Canadians and permanent residents when it comes to employment standards and health and safety protection. They also claim that temporary foreign worker live in Canada in a precarious state with significantly less security than local workers.

According to Human Resources and Skills Development Canada 14 agricultural workers died at work between 1996 and 2002. 

We will provide updates to this case as the hearing continues and more information becomes available.

For further information please do not hesitate to contact the writer at ssultan@heenan.ca or 416-7774175.

The program is being charged with taking jobs away from Canadians and permanent residents, leaving locals unemployed while depressing the wage levels of those who are employed.   The criticism of the program has been both severe and swift.  The pressure has been so great that the federal government has just this week proposed various reforms to the program.   

Throughout the latest firestorm there has not been enough debate of substance. Rather, and unfortunately, the bulk of the discussion on this issue has consisted of overreaching claims regarding the apparent damage this program is doing to Canada’s labour market and the impact it has on foreigners. 

While this can be partly explained by the emotions that this topic has ignited, it is of paramount importance that policy relating to the Temporary Foreign Worker Program be formed in an atmosphere of reasoned and informed debate. 

What is the Temporary Foreign Worker Program? To read further please click here.

The proposed changes include the following:

• A requirement that employers have in place a plan to shift to hiring Canadian workers
• Cancellation of a pilot project that allowed employers in certain circumstances to pay up to 15 percent below the prevailing wage rates to temporary foreign workers
• Increased government authority to suspend and revoke work permits where employers are deemed to be abusing the program
• A requirement for employers to pay new fees in requesting to hire a foreigner
• An immediate suspension of the Accelarated Labour Market Opinion process, which allowed for expedited processing of temporary work permits
• A rule that English and French can be the only languages required for job 

We will be both assessing and providing further analysis of these changes shortly.  We are also hosting a session at our Toronto offices on May 22nd on managing global mobility in the light of changing immigration and employment rules and regulations.  Do not hesitate to sign up for this free seminar at the following link.

For further questions, please do not hesitate to contact the writer at ssultan@heenan,ca or 416-777-4175.   

The case involves HD Mining, a Vancouver-based mining company, which came under intense public scrutiny for its hiring of hundreds of Chinese nationals to work at its Murray River Coal project, a major coal mining project in northern British Columbia.  The company was initially granted approval by Human Resources and Skills Development Canada (“HRSDC”) to have over 200 Chinese workers enter Canada to work in developing the mine. 

Two prominent labour unions, the International Union of Operating Engineers (the “IUOE”) and the Construction and Specialized Workers' Union (the “CSWU”), charge that HD Mining did not follow the proper procedure in hiring foreigners.  The unions specifically argue that HD Mining did not make enough efforts to find Canadians for these jobs and that accordingly, the decision of HRSDC was improper. 

In securing permits for the Chinese workers, the company applied to HRSDC in British Columbia for positive Labour Market Opinions (“LMOs”). Approval from HRSDC is a necessary prerequisite to the entry of most foreign workers into Canada’s labour market. This process involves an assessment of the local labour market to determine whether allowing a foreigner to work in Canada is justifiable in the circumstances, such as where there is a shortage of skilled labour.

The unions argue that HD Mining was presented with several qualified Canadians who were more than capable of doing the jobs needed. The unions also accuse HD Mining of acting inappropriately in not interviewing or otherwise seriously considering local applicants. The unions specifically point to the fact that HD Mining received approximately 230 resumes from Canadians or Permanent Residents, but hired only 12 to support their claim that the company did not make sufficient efforts to hire locally.   

The federal court will now have an opportunity to weigh in on the matter.  The court’s decision will be closely followed as it will likely set an important precedent in the law applicable to the hiring of foreign workers.   

What does this mean for employers?

This case is important for any employer that has ever or may ever hire foreigners.  The number of temporary foreign workers has exploded in recent years, in part because of the prominent and growing skills labour shortage in Canada.  This decision could accordingly have serious implications for employers who are struggling to find practical strategies to secure the right skills for their labour force. 

We will continue to monitor this case and provide updates and analyses as more information becomes available.   

For more information please contact Sharaf Sultan (ssultan@heenan.ca) or at (+1)416-777-4175. 

There are widely differing opinions as to whether this is a positive, negative or neutral development.   Setting aside the often inflammatory and populist commentary on this issue, the reality of Canada's economy and labour market means that the country will almost certaintly continue to accept high numbers of temporary foreign workers. 

This is primarily because of the simple fact that there is an immense and growing skills gap in Canada's labour market.  Specifically, employers across the country continue to struggle to find applicants with the right skills to fill job vacancies.  This issue is only likely to become more pronounced in the future.  By some accounts, by 2020, there will be over a million unfilled jobs in Canada as a direct result of needed skills. 

While domestic job retraining programs may partially address the problem, this at best presents a partial solution to what is a large and chronic national issue.    Given this, Canada faces two options: (1) to significantly increase the annual intake of permanent residents from  approximately 250,000 to at least 400,000 or (2) to maintain or grow the number of temporary foreign workers granted access to Canada each year.  Given current public opinion, it is much more likely that Canada will choose temporary workers over a significant increase in the intake of permanent residents. 

Coming changes to the Temporary Foreign Worker Program

At the same time that the number of temporary foreign workers in Canada has increased, so has criticism aimed at the Temporary Foreign Worker Program (the “TFWP”) – the set of rules and regulations governing the employment of temporary workers. 

The Federal Government has been the target of a sustained campaign of harsh criticism for its management of the TFWP.  Specifically, prominent labour groups across Canada charge that the program has acted as a drag on local labour standards, depressing local wages and reducing the number of work opportunities available to Canadians.  The criticism is forcing a national conversation about a program that has to date received astonishingly little attention.

The Federal Government has responded to the criticism through a set of proposed changes to the TFWP, presented as part of the 2013 Federal Budget.  These include the following initiatives:  

• The Federal Government will work with employers to ensure that temporary foreign workers are relied upon only when Canadians genuinely cannot fill those jobs
• Employers will be expected to make greater efforts to hire Canadians before they will be eligible to hire temporary foreign workers
• The Federal Government will actively assist employers who rely heavily on temporary foreign workers to find local employees
• The Federal Government will amend the Immigration and Refugee Protection Act and Regulations to restrict non English or French job language requirements
• The Federal Government will introduce user fees for ministerial reviews of whether a foreigner should be allowed into Canada on a temporary basis  

What does this mean for employers?

The TFWP is still a largely positive program, providing employers with tools to secure skills needed from abroad which cannot be found locally.  The recent high profile criticism of the TFWP and the government’s response is important however because it serves as a warning to employers that they will be expected to adhere to what are likely to become increasingly strict rules and regulations surrounding the hiring of foreign workers on a temporary basis. 

Employers would accordingly be wise to treat the hiring of foreigners with the same importance as any other human resource matter, including through advanced planning and organized execution.  Such an approach can help to ensure that employers are in the best position to take advantage of the TFWP while avoiding potential associated liabilities. 

For more information, contact the writer at ssultan@heenan.ca or at (+1)416-777-4175

As the Globe and Mail reported this past week, the number of foreign labourers in Canada has increased to the point where they now represent 1 in 50 workers across the country.   

Unsurprisingly, as the number of temporary foreign workers increases, so does the number of disputes arising between temporary foreign workers and their employers. 

Foreign workers however often face both unique and significant obstacles when pursuing claims against their current or former employers.  This is primarily because of the fact that foreign workers by definition have temporary status in Canada.  What this means is that most temporary workers who pursue claims against their employers face a real possibility that their status will expire before a decision on or resolution of their matter.  This means that a foreign worker who brings files a claim may not be present in Canada nor have the papers necessary to return to Canada to attend in person for a tribunal or court appearance. 

These realities present a serious risk to maintaining access to justice, particularly given the sheer number of temporary foreign workers in Canada at present.   

Courts and tribunals have accordingly begun to seriously address this problem.  A good example is the recent decision of the Ontario Human Rights Tribunal (the “Tribunal”) of Hazel v. 624091 Alberta Ltd., 2013 HRTO 435 (CanLII).  The case addresses a claim by a foreign worker who states that his employer discriminated against him on the basis of citizenship, disability, and race.  The employee, a citizen of Trinidad, was in Canada under a temporary worker permit granted by the federal government’s pilot project for occupations requiring low levels of formal training.  The worker states that his employer improperly provided him low wages, denied him health insurance, did not provide him with certain safety equipment, and ultimately terminated his employment shortly after he became injured.

The employee asked for the Tribunal to adjourn a scheduled hearing on the basis that he did not have status to travel to Canada.  The Tribunal’s normal practice is to require that all parties attend in person in order to be available to present their case and to be available for cross-examination.  Exceptions to the requirement are generally dealt with on a case-by-case basis.  The employer took the position that the matter should not be adjourned.  The Tribunal however allowed the adjournment in order to provide the former employee with an opportunity to apply for approval to come to Canada to attend at the Tribunal. 

Why is this case important?

This case is important because it demonstrates that judicial and administrative bodies are willing to accommodate the immigration status of temporary foreign workers and former temporary workers.  It means that employers will not be able to rely on the fact that temporary workers will likely leave Canada to avoid potential liability.  To the contrary, employers are likely to see temporary workers pursue claims until they are heard by judges or other decision-makers. 

This case is an important development, particularly given that employers are already under greater scrutiny by Canadian immigration authorities with respect to the manner in which they treat foreign workers.  Employers would accordingly be wise to ensure that they are familiar with all rules and regulations pertaining to the hiring of foreign workers and that they take proactive steps to reduce the chance of potential liabilities. 

For more information, please contact the writer at ssultan@heenan.ca or at (+1)416-777-4175.

The recent decision in Miller v. Canada (Minister of Labour) confirms the importance of timely and effective resignations by directors of a corporation, and the importance of retaining evidence of when and how a resignation was tendered if directors wish to avoid liability for unpaid wages and other compensation owing to employees. It also serves as a stark reminder that the payment order appeal process under the Code is not to be taken lightly.

The Labour Program subsequently wrote to Miller several times for further information, but he did not respond. Finally, on May 20, 2011, the Labour Program issued a payment order for $408,830.63 against Miller and had it served on him on or about May 29, 2011. Miller had until June 13, 2011 to file an appeal. Miller’s lawyer received the payment order by regular mail on June 10, 2011 and requested an extension of time to file an appeal. The request was denied because there is no provision in the Code that permits extending the appeal period. Miller did not file an appeal within the deadline. Instead, he filed an application for judicial review with the Federal Court seeking a declaration that his resignation was effective on December 15, 2008, and an order setting aside the payment order issued against him.

The court exercised its discretion to dismiss the application because Miller failed to pursue an appeal under the Code, which was an adequate alternative remedy to judicial review. The appeal process was found to be an adequate alternative remedy because the referee, who hears a payment order appeal, has the power to hear all the evidence, including new evidence, and has broad remedial powers to confirm, vary or rescind a payment order, and to award costs. The time and cost of an appeal, and the fact that the issue raised by Miller (i.e., that he was not a director at the time the order was issued) could have been adequately addressed by the referee also suggested that the appeal process was an adequate alternative remedy.

The court held that the failure to file an appeal within the limitation period did not render the appeal process inadequate. The court noted that Miller had been personally served with the payment order, which indicated that he had 15 days to appeal, and that the reasons why he failed to meet that deadline were ambiguous and unsupported by evidence. The late receipt of the payment order by Miller’s lawyer was not grounds for the court to exercise its discretion to hear the application. There was no obligation to send the payment order to the lawyer. Miller received the payment order on May 29, 2011 and had no explanation for why it was not sent to his lawyer at that time.

The court concluded that Miller could not seek relief from the court after failing to seek it through the appropriate appeals process under the Code. In the result, the application for judicial review was dismissed.

Individuals cannot generally avoid liability for wages and other amounts for which they may be held personally liable under the Code simply by resigning. That said, timely and effective resignations are key, because directors are generally liable for unpaid wages and other compensation that became payable while they were directors. One of the most significant potential personal exposures under the Code is directors’ liability for statutory termination pay. Liability for statutory termination pay arises from the employees’ termination, which in these cases is often the result of a bankruptcy. As such, a timely and effective resignation that takes place prior to the employee terminations, whether by bankruptcy or otherwise, can help a director avoid liability for statutory termination pay.

For example, in Manitoba (Director, Employment Standards Division) v. Shier, a director who tendered a valid and effective resignation the evening before a mass termination was communicated to employees was found not to have been director at the time of the termination, and therefore. He was therefore not liable for statutory termination pay.

A timely and effective resignation is also important because the applicable limitation period on any employee claims against the director will generally run from the date that the individual ceased to be a director.

When a director seeks to rely on the expiry of a limitation period following their resignation, the courts have tended to require strict compliance with applicable business corporation legislation, which prescribe rules regarding the procedure and effective date of directors’ resignation.

In light of the decision in Miller and given the importance of timely and effective resignations, it is important to ensure that:

• A director’s resignation is clear and unambiguous as to its effective date, and the positions and offices resigned;
• The technical requirements for a resignation in the applicable business corporation legislation are met;
• Copies of the original, executed resignation and proof of delivery and receipt are retained to establish the timing and effectiveness of the resignation; and,
• Following a resignation, directors avoid making or participating in decisions, signing correspondence, or otherwise holding themselves out in a fashion that could lead a court to find that, notwithstanding their resignation, they continued to act as de facto directors.

For more information about this decision, please contact Christopher Diamond by telephone at (416) 643-6838 or by e-mail at cdiamond@heenan.ca, or Shane D. Todd by telephone at (416) 643-6958 or by e-mail at stodd@heenan.ca.

The psychologist, Mr. Demichelis, claims that the Vancouver Canucks and co-owner Mr. Aquilini induced him to leave his employment with the Chelsea Football Club in the United Kingdom and to work for the Vancouver Canucks in Vancouver. 

Mr. Demichelis claims that he initially declined the Canucks offer of employment but that he later accepted it after sustained efforts on the part of Mr. Aquilini and the team.   Mr. Demichelis specifically states that the Vancouver Canucks stated to him that he was the person the Canucks needed to improve the players’ physical and psychological well-being.  Mr. Demichelis also claims that he was told that his expertise was essential to winning the Stanley Cup.

Mr. Demichelis further alleges that he agreed to a two year contract with the Canucks starting July 2012 for a salary of $700,000, along with a signing bonus of $400,000. He also states that the Canucks agreed to market Mr. Demichelis’ expertise to other professional clubs in North America. 

Mr. Demichelis was told in December 2012 that his employment would end at the end of January 2013.  He claims that the club explained to him that, as part of the process of trying to secure him a work permit, they found Canadians that were able to fulfill the requirements of his role. 

Mr. Demichelis claims that he has suffered significant damages in part because he gave up his employment in the United Kingdom and moved his family to Vancouver. 

The Vancouver Canucks have yet to file a Statement of Defence.

What does this mean for employers?

This case demonstrates the potential pitfalls in the employment of foreigners.  In particular, employers can face significant liability when disputes arise from the hiring and/or employment of temporary foreign workers.  This issue is becoming increasing commonplace in large part because of the exponential growth in the number of temporary foreign workers in Canada.  There are now approximately 250,000 individuals entering Canada on an annual basis under a temporary work permit, and 500,000 temporary foreign workers in the country at any given time. 

Employers should accordingly ensure that they receive adequate employment and immigration advice to ensure that all matters relating to the hiring of foreign workers are addressed adequately and in a seamless fashion.  This can help to ensure that employers are in the best position to defend against claims should disputes arise. 

 For further inquiries, please contact the writer at ssultan@heenan.ca or (+1)416-777-4175  

The duty on an employee to mitigate one’s damages is not limited to simply making reasonable efforts to find another job during the notice period. In Ghanny v. 498326 Ontario Limited[1], the Ontario Superior Court of Justice rejected both of the plaintiff’s arguments that he should not have to accept alternate employment with the same employer at a different establishment because a) he might not be credited with his prior years of service, and b) there was a risk that the new job at the new establishment would end before the expiry of the reasonable notice period. 

Let’s consider what occurred.  The plaintiff, Aleem Ghanny, was a valued employee of 18 years, earning $80,000 annually as a Service Manager for Downtown Toyota in Toronto. In June 2008, the owner, Shahnin Alizadeh, decided to streamline management of the dealership by reshuffling and eliminating certain positions, including Mr. Ghanny’s position.  Since he still required Mr. Ghanny’s skills and experience, the owner offered to relocate him to the position of Parts and Service Manager at Downtown Suzuki, a recently acquired and related dealership that Mr. Alizadeh owned and operated just a few blocks away. Despite the fact that the position offered the same compensation as was provided to him at Downtown Toyota, Mr. Ghanny rejected the position and commenced an action for wrongful dismissal one month after the date of termination. The Suzuki dealership did eventually close in 2010, however, all Suzuki employees who were interested were subsequently offered employment at two other dealerships owned by Mr. Alizadeh.

The case turned on the meeting in June 2008, when Mr. Alizadeh advised the plaintiff that his years of service at Downtown Toyota would be transferred to Suzuki and that no matter what happened to the Suzuki dealership, the plaintiff’s job would not be at risk. 

The court had no difficulty in finding that Mr. Ghanny failed to mitigate his damages by turning down the position at Downtown Suzuki.

It is settled law in Canada that “[i]n some circumstances it will be necessary for a dismissed employee to mitigate his or her damages by returning to work for the same employer […].  [R]equiring an employee to mitigate by taking temporary work with the dismissing employer is consistent with the notion that damages are means to compensate for lack of notice, and not to penalize the employer for the dismissal itself.” [2] 

“Where notice is not given, the employer is required to pay damages in lieu of notice, but that requirement is subject to the employee making a reasonable effort to mitigate the damages by seeking an alternate source of income.”[3]

Where the employer offers the employee a chance to mitigate their damages by returning to work for them, the central question becomes whether a reasonable person would accept such an opportunity.

As noted by the Court of Appeal in Mifsud v. MacMillan Bathurst Inc.[4], a reasonable person should be expected to accept a replacement job offered by the dismissing employer where the pay is the same, the working conditions are not hostile, embarrassing or humiliating in any way, where the work is not demeaning nor where the personal relationships are acrimonious.

This analysis was approved by the Supreme Court of Canada in Evans and it was further explained that the reasonableness of an employee’s decision not to mitigate must be assessed on an objective standard.[5]

Therefore, when objectively viewed, it is not surprising that the court held that Mr. Ghanny’s refusal to accept the Downtown Suzuki position was unreasonable. The employer had offered Mr. Ghanny the same kind of job, with the same pay and offered to recognize his prior service with Downtown Toyota.  The relationship between Mr. Ghanny and Mr. Alizadeh was not difficult or acrimonious, nor was the position offered to him demeaning. In fact, the employer wanted Mr. Ghanny to accept the position and valued his experience and his work. With respect to Mr. Ghanny’s concern that the Suzuki dealership would be closed before the end the notice period, the court held that the dealership did not close until well after the appropriate notice period. Furthermore, the absorption of all Suzuki employees into other dealerships owned by Mr. Alizadeh further strengthened the employer’s argument.

[1] 2012 ONSC 3276 (CanLII).

[2] Evans v. Teamsters Local 31, [2008] 1 S.C.R. 661 at para 28.

[3] Ibid., at para 28.

[4] (1989) 70 O.R. (2d) 701 (C.A.).

[5] Evans, supra note 1 at para 32.

These concerns and deep seeded beliefs mean that courts are generally speaking only willing to enforce restrictive covenants both where such agreements are clear and unequivocal and where they are deemed necessary to protect a legitimate business interest. 

Given this, courts have the habit of putting any restrictive covenant language in dispute under a legal microscope.  The recent Ontario Court of Appeal decision in Martin v. ConCreate 2013 ONCA 72 (CanLII) carried out such an analysis.  The decision is helpful in that it provides an up to date assessment as to the elements necessary in order for a restrictive covenant to be found to be enforceable. 

The Court of Appeal’s assessment

The case involved a 20 year employee and partner of a construction firm.  The employee had signed an employment agreement which included restrictive covenants that described limits on the employee’s ability to compete or solicit business from the employer's clients in the event that his employment was terminated.

The company subsequently terminated the employee’s employment.  He then started another company and was sued by his former employer.  The court then assessed the enforceability of the restrictive covenants.  The Court of Appeal specifically overturned the Ontario Superior Court’s finding that the non-competition and non-solicitation clauses were enforceable.

With respect to the non-competition clause, the contract described a 24 month “prohibited period” which stated that the employee could not compete for 24 months following the sale of the former employee’s interest in the business. The court found that this language was unenforceable, primarily because it was not possible to ascertain when such a sale may occur.  The court accordingly held that the non-competition clause was unreasonable as it did not have any fixed time limit. 

With respect to restrictions from solicitation, the agreement stated that the employee was barred from communicating or otherwise dealing with any persons who were customers, dealers, agents or distributors, whether at the time of the sale of the former employee’s interests in the business or afterwards.  The covenant further referred to any products or services that compete with those offered by the employer, whether or not offered, or planned to be offered at the time of the sale of the employee’s business interest.  The court found that the language was unreasonable in that it restricted the employee from soliciting in relation to matters which the employee may not know about.  The court specifically remarked that there was no way the employee would be aware of all parties that his former employer was associated with or all the products or services the company offered or planned to offer following his departure from the company.   

What does this mean for employers?

The case makes clear the importance of conducting a careful review of any and all restrictive covenants provided to employees and to ensure that they are both clear and reasonable for the specific circumstances, including the employee in question. 

An employer will specifically need to be able to demonstrate that a deal was made, that the deal was clear, and that it was reasonable in terms of several factors, including the activities that were restricted, the length of time of the restriction, as well as the geographic area to which the restriction applied.

For further inquiries, please contact the writer at ssultan@heenan.ca or (+1)416-777-4175

This is happening because, as companies expand to new markets or have their production needs satisfied across countries, they need staff to work in various jurisdictions in order to attend to market specific issues. 

This global phenomenon has taken root in Canada.  This is verified when one looks at the number of temporary foreign workers entering Canada on an annual basis, which has exploded in recent years from 60,000 to over 250,000.  This increase is largely explained by the growth in the number of companies transferring employees from various global offices to Canadian ones.    

There is significant risk in transferring employees to Canada.  This is because a company can find itself liable in the event that a conflict arises between the employee and the organization or if the employee’s employment is terminated while in Canada.  Should this occur a company may find that an employee is entitled to significantly more in Canada than what may be the case in another jurisdiction.    Employment laws in Canada are, for example, more generous to employees than they are in most jurisdictions in the United States, particularly with respect to termination pay.  Other relevant laws, such as those relating to human rights and occupational health and safety, are often markedly different in Canada than in other jurisdictions. 

Given these issues, employers may find that a “straightforward” and “simple” short term assignment to Canada results in significant unforeseen liability. 

What to do?

The best way to avoid liability for employees transferred to Canada is to address all employment related matters in advance of an employee’s transfer.  Specifically, employment and immigration issues should be address simultaneously.  When thinking of relocating an employee to Canada, employers should be discussing at the same meeting immigration and employment matters.  The following provides examples of questions which employers should be asking when planning for a transfer:

• What are the immigration options for having the employee work in Canada?
• What are the relevant employment laws for the jurisdiction(s) in which this employee will be working in Canada?
• How can we most effectively address these liabilities?  

A systematic and efficient approach to the transfer of employees to Canada can help to significantly improve predictability of results while reducing risk of liability. 

For further inquiries, please contact the writer at ssultan@heenan.ca or (+1)416-777-4175

Temporary foreign workers are provided work permits which describe both the time period in which someone is able to work in Canada and any restrictions to the work, such as only being able to work with a specific employer or at some specific location within Canada or a province or territory.

The cuts affect a wide range of temporary foreign workers, including those with expired Social Insurance Numbers or, alternatively, those with expired work permits.  Under the old rules, such individuals were eligible to attain employment insurance benefits under certain circumstances. 

The changes are most likely to affect seasonal temporary workers who often work in Canada for several months before taking breaks in their country of citizenship.  Approximately 11,650 temporary foreign workers collected Employment Insurance benefits in 2011.  Such individuals would often collect Employment Insurance benefits while in their home country which would provide financial assistance during their absence from Canada. 

The Federal Government has stated that the cuts are aimed at maintaining the integrity of the Employment Insurance regime.  Specifically, government representatives pointed to the fact that under the normal Employment Insurance rules workers are not able to attain benefits when outside of Canada. 

The Federal Government further stated that providing individuals who are ineligible to work in Canada Employment Insurance is inconsistent with the underlying purpose of the program which is to provide assistance to individuals who are actively seeking employment. 

So, what exactly is “right to work” legislation and what is happening south of the border?

While “right to work” legislation comes in various forms, the common element among such legislation is a prohibition of union security agreements or agreements between labour unions and employers that force employees to join unions or to pay union dues either before or after hiring. 

At present, 24 US states have adopted some form of “right to work” legislation. While such legislation has traditionally been almost exclusively found among southern and western US states, more recently such laws have been adopted by northern states bordering Canada. The most recent state to adopt “right to work” legislation is Michigan, a state which is highly economically integrated with Ontario, particularly in the automobile manufacturing industry.

Many workers’ organizations in Canada are concerned that the adoption of “right to work” laws would undermine the integrity of existing unions and prevent any future expansion of collective bargaining. A further concern is that Ontario and other Canadian jurisdictions will find it more difficult to compete with those jurisdictions with “right to work” laws. Michigan’s adoption of “right to work” laws has accordingly made many individuals in Ontario’s auto sector nervous.

Ontario currently produces 2.1 million vehicles per year. It is also the only jurisdiction in the world to produce vehicles for five of the world’s top automakers including Chrysler, Ford, General Motors, Honda, and Toyota. Ontario is also home to over 300 auto parts manufacturers which service and support auto manufacturing in the province. General Motors, Chrysler, and Ford are all unionized work places. While Toyota and Honda workplaces are not currently unionized, the Canadian Auto Workers continue to attempt to gain certification.

What does “right to work” legislation mean for Canadian employers?

The growth in the number of US jurisdictions implementing “right to work” legislation almost certainly means that there will be increasing pressure for jurisdictions in Canada to follow suit. Should this occur, this could represent one of the most significant challenges to unions in Canada in decades.

While many argue that “right to work” legislation could improve Canada’s competitiveness, particularly in manufacturing, it is not clear that this will be the result. Specifically, studies appear to support the notion that attracting investment in manufacturing appears to depend on a wide range of factors far beyond legislative frameworks governing unionization. This includes the availability of skilled workers, proximity to market, infrastructure, corporate tax rates, as well as currency valuations. In fact, reviews of “right to work” states appear inconclusive in terms of whether such laws promote job growth. Specifically, while some “right to work” states have seen job growth in manufacturing, others, such as Oklahoma, have lost significant manufacturing jobs in recent years.

Accordingly, while “right to work” legislation headlines tell a simple story, the reality of such legislation and its impact on Canadian employers and job growth is much more nuanced indeed.

The Ministry has identified the following industries that will be targeted for proactive inspections in 2012/2013:

• Auto mechanics
• Building services (e.g., security, parking, cleaning, and food services)
• Car dealerships
• Fast food restaurant franchises
• Gas stations
• Hotel and hospitality  
• Private schools  
• Temporary help agencies

All provincially-regulated employers should be aware of the possibility of increased workplace inspections because the Ministry of Labour has stated that proactive inspections are not limited to these targeted industries.

Employment Standards Officers may verify compliance with any standard in the Act, but the most commonly inspected standards are:

• Posting of the employment standards poster
• Wage statements
• Deductions from wages
• Record keeping
• Hours of work
• Eating period
• Overtime pay
• Minimum wage
• Public holidays
• Vacation with pay

If an Employment Standards Officer identifies a violation, he or she will usually give the employer an opportunity to voluntarily comply with the Act. If voluntary compliance is not obtained, or it would be inappropriate in the circumstances, the Employment Standards Officer may order the employer to comply with the Act, or to pay wages owing an employee. Employment Standards Officers may also issue tickets for violations of the Act, and recommend that an employer be prosecuted. Prosecution is usually reserved for cases of significant non-compliance or where the employer has failed to comply with an order.

Provincially-regulated employers can prepare their workplaces for increased proactive inspections by conducting an internal audit to ensure that they are in compliance with the Act generally, and with the most commonly inspected standards, in particular.

• Change the timeline for the payment of vacation pay after termination. Under the proposed amendments, employers will be required to pay unpaid vacation pay within 30 days of the date on which an employee ceases to be employed.
• Change the method of calculating holiday pay. Under the proposed amendments, most employees will be entitled to be paid holiday pay equal to one-twentieth of their wages (excluding overtime) in the four week period before the general holiday. Employees paid, in whole or in part, on the basis of commission, will generally be entitled to be paid holiday pay equal to at least one-sixtieth of their wages (excluding overtime) in the 12 week period before the general holiday.
• Formalize the process for unpaid wages and other minimum standards complaints, excluding unjust dismissal claims. Under the proposed amendments, employees will generally have six months from the date of an alleged violation to file a written complaint with an inspector. Inspectors will be authorized to mediate complaints. Inspectors will also be able to reject a complaint if, among other things, he or she is satisfied that the complaint is outside his or her jurisdiction, the complaint is frivolous, vexatious, or made in bad faith, or the complaints relates to a matter covered by a collective agreement. If a complaint is rejected, the employee may, within 15 days, request a review of that decision. The rejection may be confirmed or rescinded by the Minister.
• Limit payment orders. Under the proposed amendments, an inspector’s power to make payment orders in any employee complaint will be limited to the amounts allegedly owing in the 12 month period before a complaint was made, or the date the employee was terminated. If an employee has not complained, an inspector’s power to make a payment order is limited to the amounts allegedly owing in the 12 month period before the date the inspector began his or her investigation. The 12 month limit is extended to 24 months in cases of unpaid vacation pay.
• Create a new level of review for payment orders or notice of unfounded complaints. Under the proposed amendments, a person who is affected by a payment order, or who was issued a notice of unfounded complaint may file a written request for review within 15 days. The decision may be confirmed, rescinded or varied on review. The review decision may be appealed to a referee appointed by the Minister, but only on a question of law or jurisdiction. 

The Act passed second reading on October 30, 2012 and was referred to the Standing Committee on Finance for further consideration. We will keep readers updated as these proposed amendments progress towards becoming law.

In Zelsman, the plaintiff, Ms. Francine Zelsman, an employee of the College of Family Physicians of Canada was eligible for Long Term Disability (“LTD”) benefits according to a Group Policy between the College and Great-West Life (“GWL”).  Following the termination of her employment in April 2008, Ms. Zelsman filed a complaint with the Human Rights Tribunal of Ontario (“HRTO”) against the College claiming her employment was terminated on the basis of disability and reprisal.  At the same time, she applied for LTD benefits within the period of coverage with GWL.

In November 2008, Ms. Zelsman’s claim for benefits with GWL was rejected. In August 2009, Ms. Zelsman entered into Minutes of Settlement with the College in relation to the HRTO proceedings, receiving a payment from the College of some $90,000 which appears to have been largely based on compensation for the denial of her LTD benefits claim.   Ms. Zelsman then retained other counsel and appealed the denial of her LTD benefits with GWL.  Her appeal was successful and GWL paid the claim retroactive to August 2008. Ms. Zelsman did not disclose to GWL at any time before the approval of her LTD benefits that she had filed a Human Rights complaint against the College or that she had entered into Minutes of Settlement and signed a comprehensive release in settlement of that claim.  When GWL learned of the settlement between the College and Ms. Zelsman, including her waiving of any right to pursue any claims with GWL, it took immediate steps to reverse the payment for LTD benefits by relying on and enforcing the release.

Ms. Zelsman brought a motion seeking an order declaring the release did not have the effect of releasing any claims against GWL. She also sought a declaration that GWL could not enforce or rely on any of the terms of the Minutes against her.

Usually the doctrine of privity provides that a contact cannot confer rights or obligation on a third party. There are, however a few exceptions. These exceptions were argued by GWL in this case. The two factors the motions judge analyzed were:

a) Did the parties to the contract intent to extend the benefit in question to the third party seeking to rely on the contractual provision?

b) Were the activities performed by the third party the very activities contemplated as coming within the scope of the contract in general as determined by the intentions of the parties?

The motions judge held that the clear and unambiguous meaning and intention of the parties was to resolve all matters arising out of Ms. Zelsman’s employment with the College including the claims for benefits under the Group Policy. The intention to fully and finally release and discharge the College and GWL from all and any actions and claims relating to benefits, including short-term and long-term disability benefits, was also expressly stated in the Minutes.

Therefore, the motions judge held that GWL, a third-party insurer, satisfying the exceptions to the doctrine of privity of contract, was entitled to rely on and enforce the Minutes between the Group Policy holder and the employee and the Minutes therefore had the effect of releasing any claims of Ms. Zelsman against GWL under the Group Policy.

On appeal, Ms. Zelsman argued that the release clause should not be held enforceable as it violated sections of the Ontario Employment Standards Act, 2000 (the “ESA”), was ambiguous and that the motions judge erred in interpreting the clause.

The Court of Appeal dismissed the appeal. The Court noted that the motions judge had engaged in a very thorough and well-reasoned analysis in holding that GWL, a third-party insurer, was entitled to rely on and enforce the Minutes between the College and Ms. Zelsman. The Minutes therefore had the effect of releasing any claims of Ms. Zelsman against GWL under the Group Policy.

With respect to Ms. Zelsman’s argument regarding the ESA, the Court confirmed that the legislation provides that when an employee is terminated, the employer must provide either the minimum notice or payment in lieu thereof and must continue to make whatever benefit plan contributions are required to maintain the employee’s benefits during the notice period.

However, the Court dismissed Ms. Zelsman’s argument that by including a release of claims for benefits in the Minutes, the employer was requiring the employee to waive her right to receive benefits coverage during the notice period, contrary to the ESA. The Court commented that “[t]he ESA is minimum standards legislation. It is not benefits legislation. Once the appellant was entitled to benefits she could compromise the amount, if any, she was entitled to.”

The ESA provides that benefit coverage must continue, however, it does not require claims to be paid where there has been a contractual settlement of such claims. 

The implications of this decision are notable for employees, employers and third party insurers. 

During the notice period, the ESA provides that dismissed employees remain eligible to benefits pursuant to the Group Policy coverage; they are not entitled to a payment of benefits as a right.

The Court of Appeal upheld the parties’ right to freely contract out of such benefits or any other amounts paid above the ESA minimum standards.

For employers, it is important to continue coverage throughout the ESA notice period and to respect minimum standards legislation. For third party insurers, what is important is to work with your Group Policy holder to be kept abreast of any Minutes of Settlement reached with terminated employees, particularly the inclusion of any release clauses that may relieve the insurer of the responsibility of paying benefits.

On February 3, 2011, just before the end of his shift, Mr. Barrett took his forklift and drove at an elevated speed into a puddle on the warehouse floor, turning the wheel of the forklift as he hit the water and spinning out of control (colloquially, “performing a doughnut”).  The forklift hit a large concrete block and was visibly damaged.  Mr. Barrett wiped down the point of impact and left work for the day without reporting the accident. 

The next morning, two other employees reported the matter to their supervisor.  Sims conducted a full investigation in which Mr. Barrett was interviewed and given an opportunity to “come clean”.   However, Mr. Barrett claimed that he had spun out of control by accident when he hit the puddle and denied being involved in a collision.  Sims proceeded to terminate Mr. Barrett’s employment without notice or pay in lieu of notice on the basis that he had engaged in horseplay, he had failed to report an accident as required, and he had deliberately attempted to conceal the accident.   

Mr. Barrett filed a complaint with the Ministry of Labour for termination pay and severance pay.  The Ontario Labour Relations Board overturned an initial decision in favour of Mr. Barrett and noted that Sims had clear policies that prohibited horseplay in the workplace and required the reporting of all accidents.  The policies also made it clear that engaging in horseplay could lead to the termination of an employee’s employment without compensation.  The Board found that Mr. Barrett was aware of these policies and had intentionally contravened them, creating a significant safety hazard, which he then tried to cover up.  As a result, the Board concluded that Mr. Barrett had engaged in wilful misconduct or wilful neglect of duty that was not trivial and was not condoned by the employer and was therefore not entitled to termination and severance pay under the Employment Standards Act, 2000.

This case illustrates that where employers have clear and well-communicated safety and disciplinary policies, a violation of these policies can support the termination of an employee without notice or pay in lieu of notice.

Sims Group Recycling Solutions Canada Ltd. v. Barrett, 2012 CanLII 60662 (ON LRB)

These workers are brought into Canada on an annual basis under the Seasonal Agricultural Workers Program.   The program is jointly administered by Human Resources and Skills Development Canada (“HRSDC”) and Citizenship and Immigration Canada (“CIC”) and allows Canadian agricultural employers to hire workers from Mexico and various Caribbean nations on a purely seasonal basis.  The program has expanded so that there are now several thousand seasonal agricultural employees from Mexico and the Caribbean working in British Columbia.     The program requires employers to co-operate with both Canadian and Mexican government officials in order to both assess and monitor workers’ conditions on an ongoing basis. 

This story serves as a reminder to employers of the importance of good practices in both the hiring and employment of foreign workers. This issue is becoming relevant to more Canadian employers as the number of temporary foreign workers in Canada continues to increase exponentially. In response, the Canadian government, through agencies such as HRSDC and CIC, are scrutinizing the conduct of employers who employ foreign workers. Non-compliance with legislative and/or program requirements can and does often lead to serious consequences for employers, including but not limited to restrictions from hiring foreign workers, monetary penalties, and in the extreme, imprisonment.

• Making language the most important selection factor through establishing new minimum official language thresholds and increasing the points allocated to language skills
• Priority to younger immigrants through a reduction in points for older applicants
• Increasing points provided for Canadian experience while reducing points allocated for foreign experience
• Streamlining of arranged employment programs to facilitate staffing of positions
• Provision of points for spousal language ability and Canadian experience
• Mandatory review of educational qualifications gained abroad as against Canadian educational standards and an accompanying award of points for compatibility with Canadian standards

The new changes are likely to take effect in January 2013, the same time that the FSWP is scheduled to reopen for new applications. 

The press has generally heralded the rulings as a victory for the plaintiffs. This is somewhat ironic, as many pundits suggested that CNR would be the easiest to certify. BNS and CIBC were both “off the clock” cases, in which the claimants are all obviously eligible for overtime and so the main issue is whether they worked overtime for which they were not paid. To certify “off the clock” cases, the plaintiffs must overcome the argument that whether or not someone has been paid properly is an individual issue, and therefore not suited to a class action that must have issues and questions that are common to all the potential claimants in the class. 

CNR, in contrast, was a “misclassification” case. In such cases, the question is whether a group of employees have been improperly classified as being within a job category that is overtime exempt.  In most misclassification cases, all of the plaintiffs usually do the same job and as such, typically will all either fall within or outside the exempt category at issue. This being the case, there is usually a clear common issue that assists in obtaining certification as a class action. In fact, the lower court judge who originally refused to certify the CIBC case had specifically commented that misclassification claims were more amenable to certification than off the clock cases.

While the certification of CIBC and BNS are not good news for employers, CNR gives rise to some hope. More importantly, one critical part of the CIBC and BNS decisions has the potential to turn both into Pyrrhic victories for the plaintiffs in those cases.

The use of aggregate evidence was allowed in two previous appellate decisions, both of which involved credit card companies allegedly overcharging their clients for interest (see Markson v. MBNA Bank Canada and Cassano v. Toronto-Dominion Bank). It was a critical finding, because it may otherwise have been impossible, or at least uneconomical, for customers owed sometimes very small amounts of overcharged interest to have proven their damages individually.

Given this history, refusing aggregate evidence in CIBC and BNS becomes particularly significant. Many of the class members are current employees. This means that these employees will need to testify in the case in order to prove any claim and receive any payment. Some (or many) may decide it is better not to become actively involved in litigation against their employer, particularly if their potential overtime entitlement is small. Had the Court of Appeal allowed the use of aggregate damages, then many of these employees could have remained completely passive, and still received an award of damages based on the statistical evidence (albeit not one that necessarily reflected the amount of overtime that they actually worked). Moreover, the prospect of holding thousands of mini trials is unlikely to be attractive to the plaintiffs given the failed history of that procedure in earlier employment class actions.

While the banks will probably appeal the certification decisions in CIBC and BNS to the Supreme Court of Canada, it is even more likely that the plaintiffs will file appeals on the issue of the use of aggregate damages. We will continue to report on developments as they occur.