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Archive for the ‘Employment Law’ Category

May 21st, 2013

This blog is written by our law summer student, Ira Marcovitch.

For any of us whose job or life involves a healthy amount of e-mailing, it’s the button we love to hate: the sometimes-useful-but-more-often-mistakenly-used “reply all” button. More often than not, the result is harmless; we mistakenly send a personal email to a co-worker, or mistakenly receive something similar. But what happens when you receive an email from your boss that was not only not meant for your eyes, but discussed whether or not you should be fired? Enter Maria Fernandes.

In March 2011, Ms. Fernandes, then Director of Client Services at Marketforce Inc., received an e-mail that her boss had intended for the company’s lawyers. The contents of the email were pretty straightforward, and damaging. It was a request for advice from the lawyers as to how Ms. Fernandes could be let go from the company. Documents filed in the Ontario Superior Court allege that Linda Guerin, Ms. Fernandes’ boss, immediately realized her mistake and, like many of us, immediately tried to rectify it. She sent three recall notices and finally sent Fernandes an email asking her to delete the unintended delivery without reading it. However, Ms. Fernandes did read the e-mail, and treated its contents as a constructive dismissal. Like anyone would, Ms. Fernandes copied the email and contacted a lawyer. And like anyone would, she went on vacation. Upon her return, she informed the company that she considered herself fired by email, and shortly after commenced a wrongful dismissal claim.
wrongful-dismissal-claims

While the case has yet to be decided, the company brought a motion for a declaration that the email was protected by solicitor-client privilege and that Ms. Fernandes could not rely on it in her claim. The motions judge, with whom an appeals judge agreed, found that the email was privileged and that its inadvertent disclosure did not amount to a waiver of that privilege.

Nonetheless, the judge decided that it would be unfair, both to Ms. Fernandes and to the judge who would eventually hear the case, to exclude the e-mail. He determined that the trial judge would have to determine whether Ms. Fernandes acted reasonably in treating the email as constructive dismissal and that, without the email, he could only rely on second-hand inferences from Ms. Fernandes’ behaviour. The interests of justice and fairness, he determined, would be best served by having the judge have access to the email. While the judge realized the unfairness that may befall the company by allowing the email in, he noted that while unfortunate, it was their own mistake that created the whole mess.

While the eventual decision will have implications as to what can constitute constructive dismissal, and whether Ms. Fernandes was right to treat the errant email as akin to a pink slip, the story so far contains some equally important lessons. Foremost, as we all know, the “reply all” button can have serious consequences; while they range from the mildly embarrassing email you mistakenly sent your boss about your weekend, to the devastating e-mail he or she mistakenly sent to you about your termination, we should all take an extra second before we click ‘send’ on our next email. Secondly, this case raises an important point about privilege.

Should an email be excluded from protection because the party mistakenly sent it and the recipient party relied on it in commencing litigation against the former? The judge had noted that the boss had taken all reasonable steps to preserve the confidentiality of the email and that the privilege itself remained intact; so why should they be penalized because the steps taken were for naught? Further he determined that the contents of the email could be introduced into court without introducing the email itself, namely by questioning witnesses, which makes the disclosure seems more convenient for the interests of justice rather than necessary. Regardless, I’m sure we will wait with bated breath for the determination of the case; but in the mean time I know I will check twice before I next hit ‘send.’

For the appeal decision of the motion: click here.

Tax Considerations in Wrongful Dismissal Settlements

April 3rd, 2013

When employment litigation resolves in a wrongful dismissal settlement, an important issue for the employer and the employee is the tax considerations and how the settlement funds will be allocated. Employees should ensure that the settlement funds are allocated in order to minimize their tax liability. Employers may also be able to settle cases for less if they cooperate with employees in the allocation of the settlement funds.

There are many different ways in which the payments can be allocated, such as wages, retiring allowance, general damages and legal fees.

Any money allocated as wages will be subject to withholdings. The employer is required to withhold Canada Pension Plan (CPP) and Employment Insurance (EI) contributions, as well as income tax from settlement funds allocated as wages.

The Canada Revenue Agency (CRA) defines “retiring allowance” as “an amount paid to officers or employees when or after they retire from an office or employment in recognition of long service or for the loss of office or employment.” Significantly, the employee does not have to be retiring in the colloquial sense in order to be entitled to a retirement allowance. In other words, an employee who is terminated from one job and starts a new one shortly thereafter could still be entitled to a retiring allowance.

The employer is required to withhold money on retiring allowance payments at the following lump sum rates:

10% for amounts up to and including $5,000.00;
20% for amounts between $5,000.00 and $15,000.00; and
30% for amounts of $15,000.00 and over.

No withholdings are required for CPP, EI and income on retiring allowance payments.

wrongful-dismissal-settlements-toronto

General damages are monies awarded to a litigant as compensation for pain and suffering for bullying/harassment, breaches of human rights legislation and other torts. If settlement funds are allocated as general damages, and the payment relates to the loss of employment, it would be subject to withholdings at the lump sum rates. In other words, if the employee would not have been entitled to the payment but for the loss of employment, the money is subject to withholdings.

On the other hand, if a payment of general damages is made as compensation for events that are unrelated to the loss of employment, the money would be non-taxable.

Settlement funds allocated as legal fees are non-taxable. No withholdings are required and the employee will not pay tax on these amounts. This is dealt with in the Income Tax Act by way of an income inclusion and an offsetting deduction.

Please talk to one of our employment lawyers to review your tax considerations and legal options before accepting a wrongful dismissal settlement.

Wrongful Dismissal Case Garners Record Punitive Damages Award

April 1st, 2013

The plaintiff, Larry Higginson, was employed as an electrician for 34 years by a sawmill, in the B.C. mill town of Burns Lake. In later years, Mr. Higginson served as a manager in the electrical department.

In or about October 2006, the sawmill was sold to a new American owner, Hampton Lumber Mills (“Hampton”). Mr. Higginson was dismissed for cause three years later in October 2009.

In Higginson v. Babine Forest Products Ltd., 2010 BCSC 614 CanLii, Mr. Higginson’s alleged causes of action ofwere wrongful dismissal and inducing breach of Mr. Higginson’s contract of employment. According to Mr. Higginsonhim, he was terminated in an attempt to avoid paying severance to long-serving employees, a practice, Mr. Higginson submitted, that was part of a full-scale institutional scheme. Moreover, the new American owner created a hostile and miserable working environment for Mr. Higginson in the hope that he would quit. Hampton argued that it had just cause for the dismissal.

In deciding that there was no cause to terminate Mr. Higginson, the jury awarded him $236,000 in compensatory damages for wrongful dismissal and $573,000 in punitive damages for the company’s conduct in terminating him.

The historic jury award lends itself to a discussion of several legal and business issues.

Whether the punishment fits the crime is arguable. Indeed, if Hampton’s actions were isolated to Mr. Higginson rather than systemic as against all long-serving employees, the quantum of punitive damages, if any, would at least be called into question. Which begs the question, how much of Mr. Higginson’s reward should be based on Hampton’s actions as against other employees?

wrongful-dismissal-toronto

It will also be interesting to see whether this jury award paves the way for new legislation. At a minimum, continuity of employment provisions under the Employment Standards Acts (“ESAs”) across the country should be revisited to ensure that ESAs are adequately protecting employees during the process of a business being sold. On the other hand, the foregoing continuity of employment provisions should not be unduly restrictive on buyers, as that may have the unintended consequence of disincentivizing purchases of existing businesses and harm buyers, sellers and employees alike.

This jury award will likely have more far-reaching implications in small and single industry/employer communities because the circumstances of displaced workers in those communities tend to be bleaker. At this stage, however, it is not clear whether the jury award will have any traction in major metropolitan areas, where there tends to be greater employee mobility and industrial diversity.

The jury award will invariably force employers and their lawyers to take notice, which may in turn, facilitate more out-of-court settlements in efforts to avoid litigation.

What is clear from this jury award is that employer misconduct will not be tolerated, nor should it be. It is beyond the scope of this article to recite the innumerable types of employer misconduct, instead, I will borrow and rely on U.S. Supreme Court Justice Potter Stewart’s famous characterization of pornography in his concurring opinion in Jacobellis v. Ohio, 378 U.S. 184 (1964), a First Amendment case dealing with obscenity and constitutionally protected speech, where he stated: “I know it when I see it”. Justice Potter Stewart’s characterization of pornography rings true for employer misconduct, which was obviously present in the instant case (Subsequent to the jury award, Hampton filed an appeal and the parties settled the case out-of-court for an undisclosed amount. As such, the appeal was withdrawn).

Calling your boss dishonest could amount to just cause termination

March 25th, 2013

Many disgruntled employees have thought about writing angry letters to their “horrible bosses” which could amount to just cause termination. One such employee, Ms. Bennett, a Mississauga lawyer, accused her employer, Ms. Cunningham, of taking credit for work she completed and billing clients for time Ms. Bennett spent on files. Ms. Bennett paid the ultimate price for a letter calling her employer dishonest and negligent; she was fired from her position without notice. In response to the termination, Ms. Bennett brought a lawsuit for wrongful dismissal. Bennett v. Cunningham went through three levels of court, ending unsuccessfully for Ms. Bennett at the Court of Appeal.

The trial judge found just cause for termination based on highly critical comments made against the operation of the law office and the integrity of the employer. As a result, the trial judge held that Ms. Cunningham had just cause for termination without notice. The Divisional Court on appeal reversed the trial judgment for failure to use a contextual approach that considers the circumstances surrounding the conduct as well at the nature and degree of conduct. On a further appeal, the Court of Appeal restored the decision of the trial judge of just cause termination.

just-cause-termination-toronto

The lesson from Bennett v. Cunningham is that employment law and actions for wrongful dismissal are not black and white. Three levels of court were asked to determine if an angry letter to a boss amounted to just cause termination. In addition, this case should be used as a precautionary tale for disgruntled employees to think twice of the consequences of hasty actions.

For further information or assistance in regards to just cause for termination or employment law, please contact any of our Employment Law Lawyers.

Working Overtime – Just Cause for Termination?

March 5th, 2013

Is Working On Break Considered Unauthorized Overtime and Cause For Termination?

The recent decisions of the Human Rights Tribunal in Shettleworth v. GAP (Canada) Inc. have upheld a employer’s right to terminate an employee for not taking mandatory breaks throughout the work day. The Tribunal found that the employer had a legitimate reason to enforce its mandatory break policy, since it could otherwise be liable for overtime pay under the Employment Standards Act, 2000.

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For the Tribunal’s decisions click Here and click here

For an article about other overtime cases click here.

Forced to Retire Involuntarily

January 14th, 2013

IT TAKES A LONG TIME TO BECOME YOUNG – PICASSO

In a recent British Columbia Court of Appeal decision, a lawyer attempted to challenge his law firm’s mandatory retirement practices before the British Columbia Human Rights Tribunal. Mr. McCormick was a partner at Fasken Martineau Dumoulin LLP (“Fasken”), a limited liability partnership. The Fasken partnership agreement provided for a mandatory retirement provision once partners, such as Mr. McCormick, turned 65. Upon turning 65 Mr. McCormick was forced to retire involuntarily.

The central issue before the British Columbia Court of Appeal was whether a partner in a limited liability partnership is an employee of the partnership for the purpose of claiming the protection of human rights legislation against age discrimination.

The British Columbia Human Rights Tribunal and a British Columbia Supreme Court chambers judge on judicial review held that for the purposes of human rights legislation, a partnership may be treated as a separate legal entity from its partners and as the employer of a partner, with the result that the British Columbia Human Rights Tribunal has jurisdiction to hear a complaint by a partner concerning discrimination in his employment.

Madam Justice Levine writing on behalf of a unanimous three-judge panel disagreed and held that the “fundamental and well-established principle of law that a partnership is not, in law, a separate legal entity from, but is a collective of, its partners, and as such, cannot, in law, be an employer of a partner.”

Mr. McCormick has filed an application for leave to appeal.

While I am inclined to agree with Justice Levine’s position I would like to canvass three additional issues.

The first issue is the comprehensive post-mandatory-retirement framework provided for in the Fasken partnership agreement. Subject to the discretion of the managing partner, the agreement provides for transitioning equity partners to stay on board either as equity partners or in various other capacities after they reach the mandatory age of retirement. While I do not take issue with the managing partner’s unfettered discretion to run the business and make personnel decisions that are incident thereto, I would prefer to see a mechanism in place whereby an equity partner such as Mr. McCormick may appeal the managing partner’s decision.

The second issue, which is crystallized in this case in particular, is the relative bargaining power of the parties. In this day and age, few lawyers, or any person for that matter, can say they have spent nearly four decades working at the same place like our protagonist. That type of tenure has both its advantages and disadvantages and I can’t help but wonder whether any additional safeguards at common law or otherwise over and above the Fasken partnership agreement should have been further explored.

The last issue I will consider is a theme borrowed from corporate law. As many of you may know, in corporate law courts have disregarded the separate legal status of the corporation and imposed personal liability on directors, officers and shareholders where the corporation is used solely for personal benefit, this is referred to as piercing or lifting the corporate veil. While this is an extraordinary measure that typically stems from fraud or a similar type of misconduct the underlying analytical framework should not be thrown out with the proverbial bathwater. Indeed, while I am not suggesting that there was any wrongdoing in the instant case, I can’t help but feel as though Justice Levine’s analysis could have gone beyond the form and substance of the Fasken partnership agreement.

Share your thoughts about mandatory retirement, the differing treatment of equity partners of law firms versus officers of corporations and whether you agree with the British Columbia Court of Appeal.

Notice Period for Termination of Employment

November 16th, 2012

Notice Period for Termination of Employment

A recent Ontario decision, Hussain v. Suzuki Canada Ltd, awarded the plaintiff, a terminated employee, 26 months of reasonable notice for termination of his employment without cause. This is welcome news to terminated employees because the court awarded a notice period in excess of the usual 24 month upper limit. However, before disgruntled employees that have been recently terminated start asking for 26 month notice periods they should be aware that they still need to meet Bardal factors to even reach the assumed cap of 24 months. Furthermore, they should be aware of the exceptional circumstances that justified the increase of notice period in Hussain. The terminated employee in Hussain¸ worked continuously at Suzuki for almost 36 years and had no notice or even inkling of his termination. His last position was an Assistant Warehouse Supervisor in charge of 11 other employees, a position that Suzuki acknowledged was very important and valuable. Another key factor in the decision was the age of the plaintiff, who was almost 65 years old at the time of the termination. Despite the exceptional facts of the case, this decision is a good precedent for employees fighting to get a fair and just award to compensate them for a wrongful dismissal.

Human Rights in the Corporate Setting

August 31st, 2012

A recent article by Siobahn McClelland (Click here) discussed an interesting Divisional Court decision, Ontario Human Rights Commission v Farris (Click here for the decision). The Divisional Court decision set aside a Human Rights Tribunal of Ontario decision and in doing so has made what one would hope will be an important step towards vindicating human rights in the corporate setting. Katherine Farris found herself terminated without cause from her employment with the corporation Saubuch Ontario Inc. in 2003. This occurred after she brought her concerns about her work environment to her managers, Harry McKeague and Michel Leonard, who were also the principals and shareholders of the corporation. Her concerns arose when she learned that there were rumours circulating at her workplace that she was having an affair with McKeague. The Tribunal found these rumours to be directly related to Farris’ gender. Further, it was found by the Tribunal that the employees at Farris’ workplace were calling her names that were based on her sex such as “bitch” and “psycho”.

When Farris spoke with McKeague and Leonard about this issue, they refused to take adequate steps to address it. As such, the Tribunal found that the corporation, Staubuch Ontario Inc., was liable for engaging in sexual discrimination and creating a poisoned work environment and awarded Farris $30,000.

While this outcome may seem positive, there was one important issue: By the time the decision was made, the corporation was no longer operating. Further, the Tribunal refused to award joint-and-several liability against McKeague and Leonard, even though they were found to be individually liable by the Tribunal. As such, it would have been nearly impossible for Farris to receive the compensation awarded to her.

Fortunately, the Divisional Court set aside the Tribunal’s decision and held McKeague and Leonard liable for compensation and sent the case back to the Tribunal to apportion liability. The Divisional Court emphasized that it was a finding of the Tribunal that McKeague and Leonard failed to recognize that there was a poisoned work environment. This in itself was a violation of s. 5(1) of the Human Rights Corde. Further, they chose to terminate Farris rather than deal with the poisoned environment.

This decision could be an important step in the right direction of protecting human rights, by possibly ensuring in the words of Barbara Hall, chief commissioner of the Ontario Human Rights Commission that, “corporate liability not act as a shield against individual liability.” Further, it opens up the possibility of ensuring that in the appropriate circumstances, those who have faced human rights violations are adequately compensated by the managers, principals and owners of corporations, especially when compensation would otherwise be nearly impossible.

Norwich orders: a tool to gather evidence and locate stolen assets

August 10th, 2012

Norwich orders: a powerful tool for gathering evidence and locating stolen assets
by Lawrence Hansen

An employer being defrauded by an employee is often faced with a difficult problem: how to gather information about the fraud and the location of stolen assets, including money, before the employee takes steps to destroy evidence and dissipate or hide misappropriated assets?

To address this problem, Ontario courts may compel an innocent third party to disclose otherwise confidential information about a client, including his or her assets as well as the history and use of bank accounts and credit facilities. It does so by way of a “Norwich order”, named after a British case, which permits the victim to obtain information from third parties for the purpose of proving a fraud, identifying the wrongdoer and recovering stolen property.

An application for a Norwich order can be brought without notice, may be heard in a closed courtroom and will often be joined with confidentiality orders, including one which seals the court file for a certain period, so as to avoid tipping off the wrongdoer.

The order is, however, an extraordinary one, requiring the following:

that the applicant for it show that the fraud claim is valid, bona fide and not frivolous or vexatious;

that the third party from whom information is being sought is “involved”, even innocently, as will be the case with a bank holding, without knowing, stolen funds on deposit;

that the third party is the only practicable source for the information being sought;

that the applicant indemnify the third party for the costs associated with compliance with the order; and

that after weighing the interests of and potential injury to the parties involved, the court is satisfied that it is in the interests of justice that the order be made.

Once granted, a Norwich order can be a powerful tool. With it, an employer can gather information that will often be critical to unraveling a fraud and determining where stolen property has gone – ideally well before the wrongdoer knows that he or she has been found out. The employer can then take steps to try to freeze assets and to preserve evidence, something which will be the subject of future blog entries.

Wrongfully Terminated? Why You Should Seek Independent Legal Advice

July 24th, 2012

By Lianne Sharvit – Summer Law Student

In a recent blog post titled “Fired at 63, court ups 7-month settlement to 12” (click here), Sheryl Smolkin made an important point very clear: While losing your job without cause can be extremely difficult and stressful, those feelings may be exacerbated if you do not seek independent legal advice to ensure you have been provided with a fair settlement in lieu of notice. That is what happened to Eric Rubin, a former Home Depot Canada employee who was fired after 20 years of working for the company.

In lieu of notice, Rubin accepted 28 weeks pay worth 38,977.81, as well as 28 weeks of life insurance, health insurance and dental benefits that would be terminated when he found a new job. He also received an extension of 8 weeks on his short and long term disability benefits. Rubin accepted this offer on the spot. He also signed a form releasing the company from further obligations, as he was told that the offer exceeded the legal requirements of 27 ¾ weeks of pay and that he had to sign the release within five days in order to secure it.

Realizing later that he had made a mistake, Rubin sued Home Depot, and was awarded one year’s pay by the Ontario Superior Court Justice Lederer (click here). Justice Lederer came to this decision by going through four criteria:

Firstly, Justice Lederer looked at whether the agreement was grossly unfair. The judge was of the opinion that an employee of 20 years that was nearing the end of his working life and was wrongfully dismissed should be entitled to more than 28 weeks notice.

Secondly, the judge looked at whether Rubin had independent legal advice when making the decision. The answer was clearly no, as a lawyer would have advised him that he in fact was entitled to at least 27 ¾ weeks of pay even if he did not sign the release, and that he could sue for more.

Thirdly, Justice Lederer looked at whether there was an imbalance of power. The judge held that there is an inherent power imbalance between an employer and employee, and that there is also an inherent power imbalance created when an employer is terminating the employee. Further, the employee did not mitigate the imbalance in any way, but rather likely exacerbated it by, for example, starting off the conversation by telling Rubin it was his last day.

Finally, Justice Lederer looked at whether Home Depot took advantage of Rubin in his vulnerable state. The judge held that the offer was presented to Rubin in a way which made it seem as if he had no choice but to accept it as he was essentially being given more than he was entitled to.

In the end, Justice Lederer held that the release Rubin had signed could not be enforced and that he was entitled to 1 year of salary and benefits. However, this all could have been avoided if Rubin had sought independent legal advice from the outset, demonstrating the importance of doing so. Fortunately, it also demonstrates that if you have settled for less than you deserve, there may still be legal recourse.

Recently Terminated? Know Your Legal Obligations

July 13th, 2012

The duty of a terminated employee to mitigate their losses by finding alternate employment during the notice period has been hotly debated for some time. It comes as no surprise that employers, who are providing salary continuance in lieu of notice, insist that they be notified if the employee finds new employment during the notice period. The consequences of doing so, however, may mean that the employer will reduce the salary continuance payments or even cut them off completely, as the employee has mitigated their losses.

The debate is centered on how to best interpret contractual ambiguities. That is, many employment contracts set out the terms of the notice period the employee will be entitled to upon termination, but remains silent on the duty to mitigate. Thus, the question is whether the employer is entitled to still rely on the duty to mitigate to cut off salary continuance payments when the employee becomes re-employed.

Ontario case law has never given a clear answer on this issue. This changed last month with the release of the Ontario Court of Appeal’s decision in Bowes v Goss Power Products Ltd. The employee contract in this case was exactly alike to the one described above. It set out the employee’s entitlement upon termination without cause to a fixed period of notice or payment in lieu of notice. It remained silent on the duty to mitigate. The employee found a new job within two weeks of his termination at the same level of income. When Goss found out, they ceased to make payments claiming they were not responsible to pay any amounts Bowes had mitigated.

The Court of Appeal ruled in the employee’s favour. It concluded that the specified termination payment was either a contractual debt due or a liquidated damages amount. Either way, it does not constitute an award of damages at large under common law, like those that arise when someone breaches a contract, and so is not subject to the common law duty to mitigate damages.

This does not mean, however, that there will never be a duty to mitigate. The Court of Appeal also held that it is indisputable that the parties could have specifically agreed that mitigation did apply. Thus, it is the default position in the absence of the term to the contrary that mitigation does not apply. It remains open to the parties to agree to a term that leaves the employee subject to an obligation to attempt to mitigate his or her damages.

What this means is that employers must protect themselves by carefully drawing up detailed employment contracts and employees must take due care in reading these contracts and knowing their obligations before signing.

Buyer Beware

April 13th, 2012

Did you know that under Ontario’s Employment Standards Act, a purchaser of a business will be deemed to be a successor employer, at least for the purpose of calculating reasonable notice of termination, if it hires an employee who worked for the company being sold within 13 weeks of the earlier of the employee’s last day of employment with the previous employer and the date of the sale – even if the employer was terminated with notice or pay in lieu of notice before the business was sold! Moreover, the new business would not get credit for any termination payments received by the employer from the previous business. That means, the employer is entitled to notice or pay in lieu of notice from the new business having regard to the day he or she started employment with the original business.

Employees Beware: Reasonable Notice is a Double-edged Sword

March 23rd, 2012

A recent Ontario Court of Appeal decision has endorsed the position of the Ontario Superior Court of Justice, that employees may owe their employee a significant amount of notice when planning to leave their employment. In the case of GasTOPS Ltd. v. Forsyth, four former employees of a company left their employment to start their own, competing business. Each of the four former employees provided the employer with two weeks notice, often considered to be a reasonable amount of time to offer when resigning from a job. However, given the importance of the roles that these employees played in the company they left, the trial judge held that they were integral to the direction and guidance of the company.

In upholding the trial judge’s decision, the Court of Appeal has reinforced the position that employees who are aware of their importance to the operations of their employer, and violate their responsibility to the employer by failing to provide adequate notice of resignation, may be financially liable to the resulting damage caused to their employer. In the GasTOPS case, the former employees, and their newly formed company, were found liable for damages to their former employer in the amount of over 12 million dollars, calculated as the amount of profits earned by the former employees through their newly formed company over a 10 year period. As well, an additional 3 million dollars in pre-judgment interest, and over 4 million dollars in legal costs, were awarded to the employer.

With regards to notice period, the trial judge noted the following:

“Failure of an employee to provide adequate notice will entitle the employer to an award of damages. Generally, reasonable notice is meant to give the employer time to hire and train a replacement. In determining the time required to hire and train a new employee, one must look at the nature of the employee’s position and the area of work that the employer was competing in.”

The Court of Appeal upheld the trial judge’s finding that the former employees had owed approximately 10 months notice to their former employer, given their roles and time spent with the company.

Perils of taking on a second job

February 8th, 2012

While many people are forced to work multiple jobs in this tough economy, employees should ensure that they properly consult with their primary employer before taking on any other unrelated work. The recent case of a bank employee, Marilyn Patterson, who worked as a real estate agent part time, serves as a warning for employees contemplating a similar move.

Ms. Patterson had been employed with a bank for 12 years, when she received a real estate license and began working part time with a local realty office. The bank became aware of this arrangement, and requested that Ms. Patterson discontinue her real estate activity or look for a new opportunity within the bank (one where no conflict with her current duties and her real estate activities would exist). After she refused these requests, Ms. Patterson was terminated without notice. Though no other performance issues were claimed by the bank, the judge in Ms. Patterson’s wrongful dismissal suit was forced to dismiss the action. The bank had clearly outlined guidelines regarding secondary employment and conflicts of interest, to which Ms. Patterson had agreed to in her employment contract.

The bottom line is that, while not all secondary employment will be viewed as posing a conflict with one’s primary employment, employees considering such an arrangement should spend the time reviewing their company’s policy regarding conflicts of interest and exclusivity of employment. Employers are entitled to set reasonable standards, such as prohibiting bank employees (where access to mortgage authorization may exist) from working as realtors. In light of Ms. Patterson’s case, conflicts that are obvious are likely to be upheld by the courts.

Mitigation is critical in unlawful dismissal disputes

January 18th, 2012

When a terminated employee decides to sue their former employer for damages, an important factor (which is often neglected) on the part of the suing employee is their responsibility to mitigate their losses resulting from the termination. Without proper mitigation, or the necessary documentation of mitigation efforts, the former employee may be entitled to a significantly reduced damage award.

Mitigation entails that the employee has made reasonable efforts to find new employment. Such efforts can be demonstrated by documenting all online job searches, preparing an updated resume, and utilizing the services of an employment agency or search firm. It is important to note that the mitigating claimant does not need to necessarily accept any offer of employment that comes their way, but merely must prove that reasonable attempts were made.

The case of Leo Magnan, a nearly 30 year employee of Brandt Tractor in Alberta, provides a cautionary tale regarding the failure to mitigate damages resulting from an unlawful termination. Mr. Magnan was forced to retire, based on an unwritten company policy that demanded employees to step aside by age 65. Upon reaching 65 years of age, Mr. Magnan expressed his desire to remain employed, but the company refused, relying on the company policy that Mr. Magnan had consented to. Though Brandt Tractor eventually offered Mr. Magnan his job back, he refused the offer, and successfully sued the company based on constructive dismissal. Unfortunately, due to Mr. Magnan’s earlier indications that he would have accepted his forced retirement, and his failure to look for new work upon termination, the court only awarded him 3 months of income as a damage award, where he would have been entitled to a significantly larger notice period award, given his many years of service.

To summarize, despite the legitimacy of your claim for unlawful dismissal, if you cannot prove a financial loss by making reasonable efforts to find new employment, your damage award may be significantly reduced.

Independent vs. Dependant Contractors – What’s the difference?

November 14th, 2011

There are many examples of people who are employed in the workforce as “independent contractors”, such as independent sales agents, consultants, legal professionals, just to name a few. However, just because an employment contract states the employee is an “independent contractor/agent”, doesn’t necessarily mean that such an employee is “independent” for the purposes of employment rights. An “independent contractor” may in fact be a “dependant contractor”, or even a full-fledged employee, which changes their entitlements quite drastically.

In a 2007 Ontario Superior Court of Justice case, Slepenkova v. Ivanov, the employee, who was employed as an “independent contractor” real estate agent for a firm operating under a brokerage, was deemed to be an employee for the purposes of determining reasonable notice upon termination of employment. The plaintiff employee had signed multiple agreements over a 3 year period, agreeing to work for the defendant employer as an “independent contractor”. However, the plaintiff had also initially signed a general employment agreement with the real estate brokerage that employed her employer, which contradicted her subsequent agreements with the defendant employer.

In determining the issue of the nature of employment, the Trial Judge, considering the existing agreement between the plaintiff and the real estate brokerage, took note of the following factors:

That the employer had substantial control over the employee;
the employer owned and provided the majority of the tools the employee used in the course of her employment duties;
the employee’s chance for profit was limited;
the employer bore most of the risk of loss;
the business was clearly the employer’s.

The above factors, all answered in the affirmative, clearly demonstrate that, regardless of the label given to an employee in an employment contract, employers cannot contract out of their obligation to provide reasonable notice upon termination, among other entitlements afforded to employees under statutes such as the Employment Standards Act, as well as the common law, merely by stating that an employee is an “independent contractor”.

Medical Examinations and Employee’s Right to Privacy

November 8th, 2011

Though employers are legally responsible to maintain a healthy and safe workplace, that responsibility must be weighed against an individual’s right to privacy regarding his or her medical conditions. As such, if an employer has a legitimate purpose tied to the employer- employee relationship, it may be justified in requesting medical information regarding an employee. That being said, the extent of the information to be divulged should be limited to the extent to which the employee can perform his or her job function, and not necessarily the nature of the illness or injury.

The Declining Role of “Character of Employment”….

November 7th, 2011

The Declining Role of “Character of Employment” in Determining the Notice Period

“Character of employment” is one of the four factors that the courts consider in determining the notice period when an employee is wrongfully dismissed (the other 3 are age, length of service, and length of time needed for the employee to find a new comparable job). Typically, an employee who worked in an executive, managerial or skilled position is entitled to a longer notice period than an employee whose job is clerical or administrative in nature. This is an example of how the courts have dealt with the “character of employment” factor. The assumption was that there are more higher level positions available than administrative jobs, which means that an employee seeking a new managerial job would typically take longer to find employment than a recently terminated administrative employee.

In Di Tomaso v. Crown Metal Packaging Canada LP, the Ontario Court of Appeal recently considered what the appropriate role of an employee’s “character of employment” should be in determining the notice period. In this case, the employee worked for 33 years as a mechanic and press maintainer, and admitted that this was an unskilled labourer position. At trial, he was awarded a 22 month notice period. Despite the employee’s many years of service, the employer argued for a reduced notice period on the basis of the “character of employment.”

In upholding the 22 month notice period, the Court of Appeal suggested that character of employment is “a factor of declining relative importance,” especially when an employer “attempts to use character of employment to say that low level unskilled employees deserve less notice because they have an easier time finding alternative employment.” It is a proposition that “cannot simply be taken for granted, particularly in today’s world.” In other words, we cannot simply assume that an employee seeking a new managerial job will take longer to find employment than a recently terminated administrative employee, and that the managerial employee should therefore be entitled to a longer notice period.

Do Human Rights Bodies Have Jurisdiction to….?

November 7th, 2011

Do Human Rights Bodies Have Jurisdiction to Award Legal Costs to the Successful Party?

In legal proceedings that have been commenced in court, the party who is successful at trial is generally entitled to recover a portion of their legal costs from the opposing party.

The Supreme Court of Canada recently considered the question of whether a party who has succeeded at a hearing at the Canadian Human Rights Commission should also be awarded a percentage of their legal expenses, to be paid by the other side. More specifically, the court considered whether the provisions of the Canadian Human Rights Act which authorize the Tribunal to “compensate the victim for any expenses incurred as a result of the discriminatory practice” permit an award of legal costs.

The Supreme Court ultimately decided that the Tribunal had no authority to award legal costs, since “costs” are to be distinguished from “compensation” and “expenses.” The court further commented that the lower court decision, which would have permitted a costs award, made its decision based on what it thought was a beneficial policy outcome, rather than engaging in a proper legal analysis.

This decision will hopefully encourage the government to amend the Canadian Human Rights Act, and other provincial human rights legislation, to permit human rights bodies to award costs. This way, employees with valid human rights complaints will be encouraged to continue bringing them, and employers would be able to recover legal costs from employees who initiate frivolous human rights complaints.

Wrongful Dismissal or Frustration of Contract?

October 4th, 2011

If an employee is off work for an extended period of time due to illness or disability, is the employer entitled to terminate the employment contract? Or would this be considered a wrongful dismissal?

A contract is frustrated when it becomes incapable of being performed when new circumstances arise, by no fault of either party, that would turn the contract into something completely different than what was initially contemplated.

To avoid a wrongful dismissal claim, the employer must prove that the employee is no longer able to fulfill the basic obligations associated with the employment relationship for the foreseeable future.

In assessing whether an employment contract has been frustrated, the court will consider the following factors:

1) the terms of the contract;
2) how long the employment was likely to have lasted but for the illness;
3) the nature of the illness/injury;
4) how long the illness/injury had lasted and the prospects of recovery; and
5) the period of past employment.

If an employment contract is found to have been frustrated, the employer would have no common law obligations to the employee. However, the employer must still ensure that they comply with their obligations under the relevant employment standards legislation.

The Importance of Warnings

September 26th, 2011

Employers beware! If you are considering terminating an employee for just cause (to avoid giving the employee a severance package), it is important to give verbal and written warnings, and to document all incidents. The employer should also not condone any inappropriate behaviour by the employee, such as perpetual lateness. In one case, an employee was late for work 57 times in about 5.5 months, but the court found that there was no just cause for the termination because the employer had condoned the behaviour!

Larry Keown interviewed for Ryerson Journalism Article

September 16th, 2011

Senior partner, Larry W. Keown is quoted in this article from the Ryerson Review of Journalism. Check it out!

Damages for a Breach of the Human Rights Code – An Overview

August 31st, 2011

If an employee has been terminated, and one reason for the termination relates to a prohibited ground of discrimination, such as ethnic origin, religion or gender, the employee would be entitled to additional compensation from the employer. The employee has the burden to establish a prima facie case of discrimination, on a balance of probabilities. If the employee is able to do so, the burden then shifts to the employer to prove, also on a balance of probabilities, that the reasons for termination were unrelated to any prohibited grounds of discrimination.

Direct evidence of discrimination is not required in order for an employee to be successful on this type of claim. The decision-maker is permitted to draw an inference that discrimination occurred based on the facts presented.

An employee who believes they have been subjected to a discriminatory termination from his or her employment has the option of commencing a claim in the civil courts or at the Human Rights Tribunal.

The Human Rights Tribunal has the authority to award a wide range of remedies to the individual whose human rights have been breached. Some of these remedies have included requiring the employer to write a letter of apology to the employee, and to require the employer to complete a session of training with a human rights lawyer.

What is an Adequate Notice of Employment Termination

August 29th, 2011

There is no hard and fast rule as to what constitutes adequate notice of termination. In the absence of an employment contract dealing with termination, the courts look at employment statutes and cases to determine what is an appropriate amount of notice of termination for each individual. The courts take into consideration such things as: age, length of employment, duties, length of time it would reasonably take to find comparable employment.

On What Grounds can an Employee be Terminated?

August 24th, 2011

An employer is entitled to terminate an employee for virtually any reason so long as the employer provides adequate notice, or pay in lieu of notice, of the termination and so long as the reason for the termination is not related to the employee’s race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, record of offences, marital status, same-sex-partnership status, family status or disability. If the termination is related to one of those grounds listed, than there has been a contravention of the Ontario Human Rights Code with respect to which a claim may be made to either a Judge of the Court or an arbitrator at the Human Rights Tribunal. The Courts are empowered to make monetary awards to a wronged employee. The Tribunal is empowered to make orders both requiring monetary compensation as well as reinstatement of employment.