Category: Employment Law

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Employment Law

An Employer’s Ability to Pay is Not a Factor to be Considered in Determining Reasonable Notice

An employment relationship is governed by the rules of the contract. Employers must give employees notice of an impending termination or pay in lieu of notice or risk a breach of the employment contract. So how much notice needs to be given or paid to an employee terminated without cause?

The Ontario Superior Court recently considered the amount of reasonable notice owed to employees who were terminated after their employer was financially impacted by the pandemic. Before reviewing the facts of the case and the court’s findings, we will briefly review an employee’s entitlements when terminated without cause.

Employee Entitlements for Termination Without Cause

There are two types of notice that apply to provincially-regulated employees: statutory notice and common law notice.

Notice Under the Employment Standards Act

Statutory notice is provided pursuant to the Ontario Employment Standards Act (the “ESA”), which sets out an employee’s bare minimum notice entitlements upon termination depending on the employee’s length of service. The ESA does not apply to all employees in Ontario. For example, federally-regulated employees fall under federal employment legislation.

Common Law Notice

In addition to notice under the ESA, an employee is also entitled to reasonable notice at common law. There is no set formula for determining reasonable notice at common law. It is a fact-specific exercise that depends on a number of factors, including:

  • the employee’s age
  • length of service
  • character of employment
  • availability of similar employment, having regard to the employee’s experience, training, and qualifications

These factors are generally employee-centric and are based on the employee’s ability to find alternate employment.

But what about employer-specific factors? Is an employer’s financial position a factor that may be considered when determining the length of reasonable notice to be awarded an employee? This issue is particularly important with so many employers having been impacted by the COVID-19 pandemic and thus being forced to reduce their workforce.

Employees Laid Off as a Result of the Pandemic

In Ristanovic v. Corma Inc., the defendant, Corma, was a manufacturer of corrugated tubing employing approximately 100 people. Corma depended on China for certain key supplies and also relied on overseas markets for 95% of its business.

In late 2019 and early 2020, the outbreak of the COVID-19 pandemic in China significantly disrupted Corma’s ability to carry on business as its supply chain was disrupted by shutdowns. Corma ultimately suffered a catastrophic decline in its revenues of about 40% and laid off 17% of its workforce, including the two plaintiff employees. The plaintiffs were 67 and 62 years old. They retained counsel shortly after receipt of their lay-off notices and advised Croma that they were electing to treat their lay-offs as constructive dismissals.

Although the lay-off notices indicated that the lay-offs would not exceed 35 weeks, neither of the plaintiffs were recalled within 35 weeks as indicated. Neither plaintiff was able to find employment since their lay-off notices went into effect. At the hearing, Corma indicated that it was able to recall both plaintiffs to full-time employment as soon as practicable.

Determining the Period of Reasonable Notice

The court found that “there was no question” the unwritten agreements governing the plaintiffs’ employment contained an implied term that their employment would not be terminated except on reasonable notice. The plaintiffs took the position that they were entitled to reasonable notice of between 22 and 24 months given their age, lengthy period of service (over 30 years and 28 years), the difficulties faced by people in their age bracket in securing alternative employment and, of course, the additional obstacles posed by lockdowns and the pandemic. 

The defendant generally agreed that a period of reasonable notice in the range of 18-22 months was appropriate. However, it urged the court to reduce the amount of notice given the impact of the pandemic on its business and the maintenance of benefits by the defendant during the layoff period.

Employer’s Financial Position Does Not Reduce Reasonable Notice Obligation

The court acknowledged that fixing a period of reasonable notice is always a difficult process. It also noted that the economic circumstances prevailing at the time of the employees’ termination were – and remain – difficult. 

Despite this acknowledgement, however, the court ruled that the defendant employer’s financial position should not reduce the employee’s entitlement to reasonable notice. The court noted the objective of reasonable notice is to give the employee reasonable time to find replacement work. According to the court, considering an employer’s ability to pay while determining reasonable notice is a “slippery slope.” As the court stated:

“While it is tempting to accede to the defendant’s suggestion that if the prevailing economic circumstances may operate to lengthen notice from the perspective of the terminated employee it should also serve to curtail it from the perspective of the employer who is also blameless and is being hard hit, that is not an analysis that I think can fairly be applied. Ability to pay as a criterion for fixing damages is a slippery slope to engage upon and I do not intend to do so here.”

Therefore, the court was satisfied that 22 months was a reasonable notice period for both employees.

Contact Baker & Company in Toronto for Advice in Employment Law Matters

The pandemic has created unprecedented difficulties for many industries. While there is no set formula for determining reasonable notice, the experienced team of employment lawyers at Baker & Company have extensive experience assessing and providing advice on termination packages. We can help in providing fair termination packages to avoid wrongful dismissal claims and costly litigation. To speak with a lawyer, contact us online or by phone at 416-777-0100.

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Compensation Design, Employee Contracts & Agreements

Employee Loses Stock Option Compensation by Leaving Company Early for “Greener Pastures”

A recent Ontario decision demonstrates the importance of reviewing and understanding the terms of an employment agreement, after an employee lost his stock options by leaving his employment before the agreed-upon term with the employer.

Plaintiff Agrees to Compensation in the Form of Stock Options

The plaintiff founded a business in 1995 which developed real estate information services for both the commercial and new homes markets. By 2014, the business had approximately 40 employees and annual recurring revenues of over $7 million. 

In early 2014, the plaintiff sold his business to another company, which provided real estate consulting and advisory services, software, and data solutions. The plaintiff negotiated a deal in principle with the company’s CEO and the transaction closed on July 23, 2014.

As part of the transaction, the plaintiff agreed to stay on as President of the business under the new company. The parties also agreed that the plaintiff would become eligible to receive stock options in the company as long as he stayed for three years or if the company terminated his position without cause prior to the end of three years. 

This agreement came to be because the company did not want to pay the plaintiff his previous salary of over $600,000 per year. Therefore, the plaintiff agreed to a lower base salary of $300,000 per year plus a grant of 50,000 stock options in the company. The stock options were to give the plaintiff the entitlement to purchase shares of the company at a pre-established price at a future date.

However, the plaintiff claimed that the company terminated his employment after one year and offered him no new role. This, he submitted, amounted to constructive dismissal without cause and entitled him to receive the stock options. 

In response, the company claimed that the plaintiff had worked for it for two years, transitioning from an employment position into a consulting position by mutual agreement after the first year. The company stated that the plaintiff voluntarily left at the end of the second year. Therefore, the company denied that the plaintiff ever became entitled to receive stock options.

The Employment Agreement 

The relevant clause of the employment agreement between the plaintiff and the company read as follows:

“During the first year of the Term of employment, your primary responsibilities will be to continue to manage the […] business in accordance with the business plan for [the business] as may be amended by future determination. In the remaining two (2) years of the Term, the Company is amenable to having discussions with you about redefining your ongoing role and accountabilities with the Company and, if mutual agreement is reached, amending the terms of this Agreement.”

Additionally, the parties agreed that the plaintiff would not become entitled to receive the stock options until the end of the last day of the three-year term. The relevant clause in the agreement provided:

“Except as otherwise provided herein, you must be actively employed with the Company on the last day of the Term or you must have entered into and be providing services to the Company under a consulting agreement on the day that would have been the last day of the Term.”

Finally, the agreement contemplated two conditions under which the plaintiff would become entitled to receive stock options. He could either be actively employed with the company on the last day of the three-year term, or he could be providing services under a consulting agreement on that day.

Plaintiff Not Entitled to Stock Options

The court found that  the plaintiff’s employment was not terminated without cause by the company. The court stated:

“I find that [the plaintiff] was not constructively dismissed from his employment. After one year, by mutual agreement, [the plaintiff] became an independent contractor or consultant. This change in status had been contemplated throughout and was not a dismissal by [the company]. At the end of the second year, [the plaintiff] decided to move on to greener pastures. He left by mutual agreement. [The plaintiff] therefore never became entitled to receive the options.”

Because the court concluded that the plaintiff did not work for three years and his employment was not terminated without cause prior to the three-year period expiring, the court found that he did not qualify for stock options under his agreement with the company.

Get Advice

Baker & Company has adopted all of the COVID-19 safety precautions and vulnerable employees have been invited to work from home. We are fully operational and continuing to work on client assignments. Where possible, meetings are being held via video link or by telephone conference.

Employment contracts are fundamentally important elements of every employment relationship, providing the terms and conditions that govern that arrangement. Whether you are an employer or an employee, it is important to have an employment contract reviewed by a knowledgeable employment lawyer before finalizing and signing it. A lawyer can ensure your rights are protected and help you mitigate any potential risk or liability.

For more than 30 years, the Toronto employment lawyers at Baker & Company have been reviewing, drafting, and negotiating employment contracts for employees and employers across all industries and sectors. We advise on the language and terms included, make changes where required, and negotiate with the other party to ensure that our client is always in the best position possible.

At Baker & Company we take the time to meet with you and understand your unique needs when it comes to drafting the terms of an employment relationship. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Compensation Design, Employee Contracts & Agreements Employment Law Severance Packages And Severance Package Review

Will a Signed Release Always Prevent an Employee From Suing?

Employers typically will have an employee sign a release document at the time of termination, which states that the employee has accepted the employer’s notice of termination and agrees not to bring any civil claims against the employer in the future. Such releases are executed to give employers peace of mind in knowing that the matter has been settled and there is no chance the employee will bring a claim for wrongful termination. However, the Federal Court of a Appeal recently affirmed a decision stating that a release will not bar a federally-regulated employee from bringing such an action, so long as they do so within three months of the dismissal date.

The employee in this matter had been employed with a national bank for six years as a financial advisor. When she was terminated, the bank offered her the option of remaining on the payroll for a period of 18 weeks or accepting a lump sum payment. She chose the lump sum, and in return was asked to sign a release in favour of the employer, which she did. The release contained the following clause:

In exchange for the consideration set out in paragraphs 2-3, the Employee hereby releases and forever discharges BMO, its subsidiaries, affiliates, and successors and each of their respective officers, directors, employees, and agents from any and all actions, causes of action, claims, demands and proceedings for whatever kind of damages, indemnity, costs, compensation, and any other remedy which Employee or Employee’s heirs, administrators or assigns had, may now have, or may have in the future arising out of Employee’s employment or the termination of employment.

Despite having signed the release, the employee later filed a complaint for unjust dismissal and for unpaid wages under the Canada Labour Code (the Code). The bank then requested a preliminary hearing to determine wither the Adjudicator had jurisdiction to hear the matter, given the fact that the employee had executed a release. The Adjudicator ultimately held that they were bound by the decision in National Bank of Canada v Canada (Minister of Labour), which stated that an employee was not precluded from relief under the Code by reason of an agreement made with the employer, including a release. The Federal Court upheld this decision, citing s. 168(1) of the Code.

The court noted that such a finding could create uncertainty in terminations across the country, but found that it would be up to Parliament to amend the legislation to change matters. The Federal Court of Appeal recently upheld the lower court’s decision.

What Federally-Regulated Employers Need to Keep in Mind

Given the fact that a release is not sufficient to prevent an action for unjust dismissal, what can federal employers do to protect their interests following a termination? One option would be to limit the amount paid upon termination to the statutory minimum, since even a generous package may still leave an employer open to a claim. However, the more generous the original payout, the more likely a court would be to find that there is no basis for awarding additional damages to the employee. It is also important to keep existing employee contracts in mind, as the terms set out may indicate an employee’s entitlement to termination pay beyond the legislative minimums. Failure to honour the terms of the contract could also expose an employer to a claim.

Does this Apply to Employees Governed by Provincial Legislation?

While a federal claim for unjust dismissal cannot be barred by the signing of a release, will the same be said for a claim for wrongful dismissal? Currently in Ontario, a release is still viewed by the courts as intended – a document that will prevent any further claims, so long as the release is fair. If the balance of power at the time of signing is uneven, if an employee is asked to sign the release before seeking legal advice, or if the terms are deemed unfair for any reason, the release may be disregarded by a provincial court.

At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems you may encounter in the workplace. The highly skilled Toronto employment lawyers at Baker & Company can review your employment policies and contracts to ensure that you are meeting your legal obligations while addressing and mitigating risk. Protect yourself, your workplace, and your employees. We rely on our broad base of experience and expertise to provide clear, pragmatic legal advice, and representation in litigation. Call us at 416-777-0100 or contact us online for a consultation.

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Compensation Design, Employee Contracts & Agreements Employment Law Wrongful Dismissal

Employers Cannot Rely on ‘Saving Clause’ to Preserve Unfair Contracts

It is common when starting with a new company, or changing roles with an existing employer, to enter into an employment agreement that spells out, among other issues, the terms that will apply upon termination. Every employer is permitted to set out the terms that they wish, so long as they are meeting their obligations under the provincial Employment Standards Act (the “ESA”) with respect to notice.

If an employment contract does not meet those minimum standards, the employee is then tasked with a) noticing this, and b) enforcing their rights against their employer in court. Relying on the fact that some employees may not know their statutory rights when it comes to termination, many employers have taken to including non-compliant terms, while also including what is known as a ‘saving provision’ in the agreement to preserve the validity of the termination clause in the event that they are challenged on their notice requirements.

A savings provision will generally state that should the provisions within the termination clause fail to meet statutory minimums, that the employee will receive what they are entitled to under the ESA. In a recent decision, the Ontario Court of Appeal has definitively stated that this practice will not be tolerated.

Termination Clause Was in Direct Violation of the ESA

The plaintiff employee had been with his employer, a solar panel manufacturer, for a number of years. He began in the role of Regional Sales Manager and was eventually promoted to a project management role a few years later. At the start of both roles, he was provided with an employment contract containing similar terms with respect to termination.

The contract itself provided for a notice period of two weeks and stated that benefits would cease after four weeks. This language was followed by a clause that stated as follows:

In the event the minimum statutory requirements as at the date of termination provide for any greater right or benefit than that provided in this agreement, such statutory requirements will replace the notice or payments in lieu of notice contemplated under this agreement.

Under the ESA, the statutory notice period is dependant on the length of employment. Depending on how long an employee is with an employer, they may be entitled to a minimum of 8 weeks’ notice upon termination without cause. The contract signed in the case at hand was intended to apply for an indefinite period of employment, meaning that the notice and benefits clauses were in conflict with the minimum standards under the ESA once the employee had been with the company for more than three years. Even if the provisions in the contract happened to satisfy the minimum in one particular case, they were intended to apply no matter how long the employee was with the employer.

Certainty and Fairness Must Extend to All Employees

The Court of Appeal found that a saving provision is, on its face, unfair to employees and advantageous to employers. As stated earlier, it relies on the employee to notice that the termination clause does not meet ESA minimums and to enforce their rights against their former employer. Further, there is an unequal bargaining power inherent in the signing of employment contracts. It would not be right to allow employers to exploit that fact.

Employees need to know the conditions, including entitlements, of their employment with certainty. This is especially so with respect to an employee’s termination – a fragile moment of stress and uncertainty.

In this context, saving provisions in termination clauses cannot save employers who attempt to contract out of the ESA’s minimum standards. Holding otherwise creates the risk employers will slip sentences, like the four-week benefits clause, into employment contracts in the hope that employees will accept the terms. This outcome exploits vulnerable employees who hold unequal bargaining power in contract negotiations. Moreover, it flouts the purpose of the ESA – to protect employees and to ensure that employers treat them fairly upon termination.

The ONCA held that when a termination clause fails to meet the minimum standards under the ESA, it will not be preserved via a saving provision. Instead, the clause will be deemed unenforceable, and the employee will be entitled to common law minimums, which are often considerably more than the minimums provided under the ESA.

At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems you may encounter in the workplace. The highly skilled Toronto employment lawyers at Baker & Company can review your employment policies and contracts to ensure that you are meeting your legal obligations while addressing and mitigating risk. Protect yourself, your workplace, and your employees. We rely on our broad base of experience and expertise to provide clear, pragmatic legal advice, and representation in litigation. Call us at 416-777-0100 or contact us online for a consultation.

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Compensation Design, Employee Contracts & Agreements Employment Law

Non-Compete Clauses: How Far Can They Go?

A non-compete clause in an employment contract can drastically impact a person’s job and career prospects after being terminated from or voluntarily leaving a job. Many employees find themselves wondering if the clause is fair, and in fact, many clauses have been successfully challenged in court. What are the current guidelines for a non-compete clause that will hold up under legal scrutiny in Ontario, and what remedies does an employee have if faced with an overly-broad clause?

What is a Non-Compete Clause?

A non-compete clause is a form of a restrictive covenant, generally built into an employment contract, which spells out restrictions on the employee with respect to future work should they eventually leave their current employer. Courts are generally reluctant to enforce such a clause unless the employer can demonstrate a legitimate need.

Successfully Establishing the Need for a Non-Compete Clause

First and foremost, an employer must establish that they have a proprietary interest that requires protection through the use of a restrictive covenant. If they cannot establish that, it is unlikely a non-compete clause will be enforced. If they are able to meet this requirement, the court will look to a number of factors to aid in their decision:

  • How long was the employee with the employer?
  • How much contact did the employee have with the employer’s clients?
  • How much confidential information was the employee privy to during their employment?
  • How vulnerable the employer is to competition and the overall available market for the employer’s product or service
  • The nature of the business with respect to customer loyalty

In consideration of the above factors, courts will also seek evidence that it is within the public interest to enforce the covenant. Many, if not most, non-compete clauses will be considered too restrictive to be enforced, given the level of scrutiny they must pass through.

A Recent Example of an Overly-Broad Clause

In a recent decision, the Superior Court of Justice found that a plaintiff employer seeking to obtain a temporary injunction against a former employee was overstepping. The injunction the plaintiff sought would have prevented the employee from soliciting and targeting the plaintiff’s customers using the knowledge, experience and relationships he gained while employed with the plaintiff.

The plaintiff company was in the business of providing handyman services to grocery stores, which the plaintiff characterized as a niche market. The defendant employee had been the Chief Operating Officer of the plaintiff company before he was terminated. The parties were at odds as to whether the termination was for cause, or whether he was wrongfully terminated, and were engaged in litigation with respect to that issue. In the interim, the plaintiff brought an application for a temporary injunction to stop the defendant from soliciting the plaintiff’s clients in accordance with a non-compete clause the defendant had signed as an employee of the plaintiff.

In the defendant’s favour, the court found that the non-compete clause was overly broad, and was also signed when the employee had been in a different role than he was at the time of termination and there were no agreements signed as the defendant was promoted. Further, the court found that there was no evidence the defendant had used proprietary information such as price lists, customer databases or other physical property to compete with the plaintiff.

Ultimately, the court found as follows:

The order sought by the Plaintiff would constrain the Defendants in pursuing their livelihoods.  In my view this means that the first branch of the injunctive test requires more than the American Cyanamid/RJR MacDonald test of “serious issue to be tried” and instead demands the Plaintiff demonstrate a strong prima facie case. Given the hurdles the Plaintiff must meet in this case, it is not evident that this test can be met.

 In any event, and more importantly, damages are an adequate remedy if the Plaintiff is ultimately successful.  The evidence does not support a finding that permanent irreparable damage will be done to the Plaintiff’s business if the order is not granted.  To the contrary, the evidence establishes that the Plaintiff has hired replacement employees and its major contract is secure for the time being.  The competition to which the Plaintiff is exposed will impact only a percentage of its potential revenues.  It cannot be seen as an existential threat.  The balance of convenience in this case favours the Defendants.

Any employer seeking to draft or enforce a non-compete clause should seek the advice of a skilled employment lawyer. As established above, clauses must be carefully drafted in order to withstand the scrutiny of a court, and may not apply in every circumstance. A good lawyer will advise on the creation and enforcement of non-compete clauses in order to mitigate damage to an employer’s business and limit their exposure to fruitless litigation.

At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems you may encounter in the workplace. The highly skilled Toronto employment lawyers at Baker & Company can review your employment policies and ensure that you are meeting your legal obligations while addressing and mitigating risk. Protect yourself, your workplace, and your employees. We rely on our broad base of experience and expertise to provide clear, pragmatic legal advice, and representation in litigation.  Call us at 416-777-0100 or contact us online for a consultation.

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Employee Policies (Including Sexual Harassment Policies) Employment Law

Vacation Time: Employee Rights and Obligations

Now that the end of the year is within sight, many employees across the province are examining the vacation time they have remaining in 2019 and making plans to use it before the end of the year. Given that many people have getaways on the mind leading up to and during the holiday season, it’s an opportune time to provide an overview of vacation entitlement in Ontario.

How Much Time Are Employees Entitled To Each Year?

Under provincial employment legislation, set out in the Ontario Employment Standards Act (ESA), employees have minimum entitlement with respect to both vacation time and vacation pay. It is important to note that some occupations and professions are excluded from coverage under the ESA, including:

  • Secondary school and post-secondary students working in co-operative programs authorized by their school board or school;
  • Police officers (with the exception of  lie detector sections in Part XVI of the ESA;
  • Politicians, judges, religious officials or elected trade union officials; and
  • Employees whose jobs are regulated by federal employment laws and standards.

The majority of employees in Ontario will be entitled to the minimums set out in the ESA, which states that employees with less than five years of service are entitled to two weeks of vacation time for each 12-month period of employment (otherwise referred to as an entitlement year). For any period of employment before the start of a full entitlement year (called the “stub period”), the vacation time earned during that period will be pro-rated. For example, if an employee were to begin work with an employer six months before the end of the entitlement year, they would be entitled to one week of vacation time during that period. Employees with over five years of service are entitled to three weeks’ vacation per entitlement year.

Of course, there is nothing stopping employers from going above and beyond the minimums set out in the ESA. So long as the minimums are being met, employers are free to offer additional vacation time as an enticement to attract prospective employees or as a reward for long-time or more senior employees.

Vacation Pay Entitlements

Rather than providing employees with vacation time, employers may instead provide vacation pay. This is especially common in part-time and contract or temporary roles. In this case, the ESA sets the minimum vacation pay requirements as follows:

Vacation pay must be at least four per cent of the gross wages (excluding any vacation pay) earned in the 12-month vacation entitlement year or stub period (where that applies) for employees with less than five years of employment. Employees with five or more years of employment at the end of a 12-month vacation entitlement year or stub period (if any) are entitled to at least six per cent of the gross wages earned in the 12-month vacation entitlement year or stub period.

Unused Vacation Time

Many employees will find that their employers will begin to send out reminders about unused vacation time as early as midway through the year. This is because of the obligation on employers to provide vacation pay in lieu of unused vacation days. Therefore, any unused days within the year must instead be paid out, which in turn affects the employer’s annual budget, particularly in large organizations where unused days can add up to a significant sum.

In the alternative, employers may allow employees to carry unused days forward to the following year, increasing the number of days the employee can take the next year. Some employers will allow for this, while others will not. The reason for this is likely for the benefit of the employees, despite the fact that some employees may find this frustrating. Many employers believe that employees derive a significant benefit from taking time off each year, and do not want their employees to hoard vacation time at the expense of their own well-being.

Employers also have a third option available to them with respect to employees who are not using their full vacation entitlement. Rather than paying them for the time or allowing a rollover, employers are also permitted under the ESA to schedule vacation time on behalf of an employee who has not used all of their days. New or prospective employees should be sure to check their employer’s vacation policies to see how vacation is handled beyond the minimum ESA standards so that they can plan accordingly.

At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems you may encounter in the workplace. The highly skilled Toronto employment lawyers at Baker & Company can review your employment policies and/or contracts and ensure that you are meeting your legal obligations while addressing and mitigating risk. Protect yourself, your workplace, and your employees. We rely on our broad base of experience and expertise to provide clear, pragmatic legal advice, and representation in litigation.  Call us at 416-777-0100 or contact us online for a consultation.

Categories
Employee Policies (Including Sexual Harassment Policies) Employment Law

Prospective Employee Awarded $120,000

In a previous post, we discussed various employer obligations to prospective employees with respect to human rights considerations. Not long after, the Human Rights Tribunal of Ontario issued a precedent-setting decision that found an employer in violation of the Ontario Human Rights Code (the “Code“) with respect to its hiring practices and ordered a hefty damages award in favour of the applicant.

Background of the Case

The applicant was a mechanical engineering student at McGill University in Montreal who applied for a position with the respondent Imperial Oil Company. He was an international student with a visa that granted him the right to work on-campus during the academic year and on breaks between terms. Upon graduating, he was eligible for a post-graduate work permit (PGWP) that would allow him to obtain full-time employment anywhere in Canada for a period of three years. He expected that he would be able to obtain permanent residency status within the three-year period, allowing him to settle down in Canada indefinitely.

He applied for a role as a Project Engineer with Imperial Oil. He had learned from his peers that Imperial Oil required non-citizen applicants to have already obtained permanent residency status in Canada in order to be considered for a role. As a result, he provided false answers throughout the interview process whenever he was questioned about his eligibility to obtain permanent, full-time work in Canada.

The applicant was the top choice for the role and was offered the job on the condition that he provide evidence of his ability to work in Canada on a permanent basis, such as a birth certificate, citizenship card or evidence of permanent residency. He was unable to do so, and so the offer was rescinded.

He received a letter stating that should he become eligible for permanent work in Canada, he should reapply to the company. The applicant commenced a proceeding before the HRTO claiming Imperial Oil had discriminated against him on the basis of citizenship.

Discrimination Based on Citizenship

Before the HRTO, the applicant set out the fact that he was eligible to work in Canada at the time the offer was made, and that he expected to be able to work indefinitely after being granted permanent residency status. He felt that he would have become a permanent resident prior to the expiration of the PGWP visa, so he would have been able to continue working for Imperial Oil uninterrupted. He brought in an expert witness to testify to the likelihood and reasonableness of this plan.

Imperial Oil raised three defences to the claim of citizenship discrimination; specifically:

  1. The applicant had demonstrated dishonesty throughout the application and interview process;
  2. The company did not discriminate based on citizenship, as it welcomed employees with permanent residency status. If there was discrimination, it was on the basis of immigration status, which was not a protected ground under the Code; and
  3. It is reasonable for an employer to require the ability to work in Canda indefinitely due to the significant investment a new employee requires.

The HRTO disagreed with point two above, finding that discrimination based on immigration status was tantamount to discrimination based on citizenship. Distinguishing potential candidates based on their eligibility to work permanently in Canada was a direct violation of the Code. Further, the tribunal held that permanent residency was not an essential requirement to perform the role in question.

With respect to the applicant’s dishonesty during the interview process, the HRTO held that were it not for Imperial Oil’s discriminatory policies, the applicant would have had no reason to lie.

Pending any judicial review, this case has a significant impact on any employer who has used immigration or citizenship status as a basis for selecting or ranking job candidates. Any employer who has done so in the past would be advised to reconsider and make changes to its policies. It is still wise to enquire about a candidate’s legal entitlement to work in Canada at the time of hiring, however inquiries beyond that point run the risk of violating the candidate’s human rights under the Code.

At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems you may encounter in the workplace. The highly skilled Toronto employment lawyers at Baker & Company can review your employment policies and ensure that you are meeting your legal obligations while addressing and mitigating risk. Protect yourself, your workplace, and your employees. We rely on our broad base of experience and expertise to provide clear, pragmatic legal advice, and representation in litigation.  Call us at 416-777-0100 or contact us online for a consultation.

Categories
Employment Law

Employer Not Bound to Provide Benefits to Part-Time Employee

The Ontario Superior Court recently overturned an arbitrator’s decision which said that the City of Toronto had erred by transferring a disabled employee from full-time to part-time status, affecting his benefits. The arbitrator held that the employer’s decision had resulted in a breach of the City’s duty to accommodate an employee with a disability. The City appealed the decision in court and was successful.

Background Facts

The respondent had been employed with the City of Toronto on a full-time basis for eight years. When the employee’s disabilities prevented him from working a full week, he reduced his hours to a four-day week. At the time, he was permitted to use a sick day for the day each week that he wasn’t working, until his sick days were exhausted, after which he would not be paid for the days he wasn’t able to work.

In 2009, the City and its employees entered into a new collective agreement, which offered a new Illness or Injury Plan for existing employees. It would allow any employee who joined the plan to receive pay for up to 26 weeks per year when the employee was away for health reasons. The employee, in this case, chose to opt into the plan. From that point on, he was able to work four days per week but be paid for five, under the new plan.

The following year, the employee needed to reduce his working hours further so that he was only working three days per week. He remained in the full-time collective bargaining group. A few years later, the City asked the employee to provide medical documentation as to whether the accommodation was a permanent one. He did provide that evidence, with his doctor confirming that he would not be in a position to resume working full-time hours in the future.

In 2016, just before the negotiation of a new collective agreement, the City notified the union that it would be discontinuing its practice of allowing part-time employees to remain in the full-time bargaining unit if there was no reasonable expectation they would return to full-time work. Employees in this category were given a two-year grace period during which they remained in the full-time unit, before being transferred to the part-time unit. The part-time unit benefit coverage was less, requiring the respondent to pay a pro-rated portion of his extended health and dental care. His vacation days, sick days and pensionable service were also pro-rated.

The Arbitration

After examining the circumstances, the arbitrator noted that the transfer of the grievor to the part-time unit was an administrative act within the scope of the City’s management rights. Further, the arbitrator found the City had met its duty of accommodation in allowing the respondent to reduce his hours to part-time. However, the arbitrator did find that the City was not permitted to alter the existing accommodation without demonstrating either a change in circumstances or a significant hardship. The City had not established either, so the arbitrator found that the change was a violation of s. 17 of the Ontario Human Rights Code (the “Code”)

The Appeal

The Court found that the arbitrator’s decision had been unreasonable. The Court held that the change to the part-time bargaining unit was due to the hours that the employee was able to work, and not to his disability, and therefore the change was not in violation of the Code. This is positive news for employers, in both the labour and employment sector. Employees must be able to contribute the work necessary in order to accumulate the associated benefits. however, as always when navigating employee rights and accommodations, it is advised that employers seek legal advice before making changes to existing accommodations to ensure that they are not overstepping.

At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems you may encounter in the workplace. The highly skilled Toronto employment lawyers at Baker & Company can review your employment policies and ensure that you are meeting your legal obligations while addressing and mitigating risk. Protect yourself, your workplace, and your employees. We rely on our broad base of experience and expertise to provide clear, pragmatic legal advice, and representation in litigation.  Call us at 416-777-0100 or contact us online for a consultation.

Categories
Compensation Design, Employee Contracts & Agreements Employment Law Severance Packages And Severance Package Review Wrongful Dismissal

Resignation & Restarting the Clock on Terms of Service

It may be expected that any employee who resigns from their job and then later returns to the same employer will find that their ‘term of service’ is affected. It is unlikely that someone who had worked with a company for 5 years, left for two and then came back, would be entitled to pick up where they left off. However, what would happen in a situation where a long-term employee submits a resignation, and while still employed by the company, wishes to resume their employment?

A recent decision of the Ontario Court of Appeal has come down on the side of the employer in this situation, holding that the resignation must be taken into consideration, therefore creating an interrupted period of employment. This, in turn, affected the reasonable notice the employee was entitled to upon her eventual termination.

Facts of the Case

The respondent employee was a dental hygienist who had been employed with the appellant employer since 1993. In 2005, she decided to move to a new city with her fiance, and find work elsewhere. She submitted her resignation, which was accepted by her employer. While still working at the practice during the notice period, her relationship came to an end and she requested to be reinstated, as she would no longer be moving. Her employer agreed, and the employee signed a new contract of employment. The contract indicated that should she ever be terminated, she would only be entitled to the minimum notice set out in the Employment Standards Act.

Seven years later, the employee was terminated without cause. At the time of her termination, she was provided with notice pay equivalent to one week of employment. The employee brought an action for wrongful dismissal.

The Lower Court Decision

The Superior Court of Justice found that there was insufficient consideration to support the contract limiting the employee’s common law entitlement to reasonable notice. As a result, the court held that the employee had been wrongfully terminated. Further, it was determined that her damages would be based on the full period she was employed, disregarding the brief period during which she had resigned. She was awarded damages equivalent to 15 months’ notice, totalling $71,650.02.

The Appeal

The employer appealed the decision. The Court of Appeal found that there was valid conisderation to uphold the employment contract signed in 2005. The court further disagreed with the finding regarding the period of employment. The court held:

We agree with the appellant’s submissions that Ms. Theberge-Lindsay’s unequivocal resignation and re-hiring in 2005 marked a break in the employment relationship after which an entirely new contract was reached between her and Dr. Kutcher. There was consideration for that new employment contract, that is, Ms. Theberge-Lindsay’s offer to again be employed by Dr. Kutcher and his acceptance of her offer to again employ her. On this basis, the Employment Standards Act, 2000 minimum notice is the maximum amount to which the respondent is entitled, measured from 2005. On this basis, she is entitled to 7.5 weeks of salary at $1,204 per week, less $1,200 severance already paid.

It remains to be seen whether this decision will be appealed any further, but for now, it appears that a resignation, even a situation in which there is no actual break in the employment, will be found to ‘restart the clock’ with respect to an employee’s term of service.

At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems you may encounter in the workplace. The highly skilled Toronto employment lawyers at Baker & Company will review and draft employment agreements and advise on termination packages in order to protect employers from future litigation. We also provide practical and effective representation for employees faced with wrongful dismissal by their employer. We rely on our broad base of experience and expertise to provide clear, pragmatic legal advice, and representation in litigation.  Call us at 416-777-0100 or contact us online for a consultation.

Categories
Employee Policies (Including Sexual Harassment Policies) Employment Law

Human Rights Considerations for Employers in the Hiring Process

Employers are aware that there are several human rights issues that must be considered and accommodated with respect to their employees. Failure to ensure that employees have a safe and hospitable working environment with respect to issues such as disability, advanced age or religious beliefs, for example, may justify a valid human rights complaint requiring remedial action from the Human Rights Tribunal of Ontario. However, employers may not be aware that they have an equal responsibility to respect the rights of prospective employees when interviewing and considering candidates for roles within the company. Below, we will provide an overview of the human rights of job applicants that employers must protect during the interview and hiring process, and conversely, the accommodations and rights that potential employees should expect when interviewing for a position with a new employer.

Protected Grounds Under the Ontario Human Rights Code

First, it’s helpful to review the various grounds that the Ontario Human Rights Code (the “Code”) is designed to protect. Under the Code, it is illegal for an employer (or potential employer) to discriminate against any person on the following grounds:

  • Age
  • Creed
  • Gender expression or gender identity
  • Disability
  • Family or marital status
  • Race and related grounds
  • Receipt of public assistance
  • Record of offences
  • Sex (including pregnancy)
  • Sexual orientation

Ensure a Fair Hiring Process

The Ontario Human Rights Commission provides guidelines for employers to ensure that the hiring process is as fair as possible for all applicants:

  • First and foremost, ensure that the process is consistent across the board for all employees, and be as objective as possible in the assessment of each candidate.
  • In-person interviews should be conducted with a panel of interviewers in an effort to account for individual biases, and the panel should ideally be comprised of diverse representatives of the company.
  • The same questions should be posed to each candidate. Employers should have a set of ‘ideal’ answers created in advance so that each applicant’s responses can be gauged in comparison.
  • If tests form part of the hiring process, ensure that the test is administered in the same way for each candidate. Further, all tests should be scored based on the same objective criteria.

Provide Necessary Accommodations for all Interviews

All employers are required to provide accommodations for any of the enumerated grounds listed above for any job applicant who requests them. The principles of accommodation are the same whether dealing with existing or potential employees. As described by the Ontario Human Rights Commission:

The most appropriate accommodation must be identified and implemented short of undue hardship. … An accommodation will be considered appropriate if it will result in equal opportunity to attain the same level of performance or to enjoy the same level of benefits and privileges experienced by others, or if it is proposed or adopted to achieve opportunity and meets the individual’s needs related to the relevant Code ground.

A candidate in need of accommodation is responsible for making a potential employer aware of their requirements and providing sufficient detail so that appropriate accommodation can be made.

Ensure Interview Questions Are in Compliance with the Code

Employers should be careful to make certain that interview questions are designed to obtain information specifically related to a candidate’s qualifications and factors needed to make an appropriate hiring decision. Employers are prohibited from asking questions relating to the grounds enumerated in the Code, with limited exceptions, including:

  • An employer may ask questions related to Code grounds to assess the applicant’s eligibility for a special program under section 14 of the Code. If the program is designed for people to whom certain enumerated grounds apply, it is okay to ask about them, as long as employers are clear with applicants about the reasons for asking.
  • Certain exemptions are allowed under s. 24 of the Code if requirements of the job necessitate hiring based on one or more enumerated ground. Compliance demands that the requirement is reasonable and bona fide based on the nature of the job.
  • Employers can expand the scope of questions asked if necessary, to determine the applicant’s ability to perform the duties of the job. For example, it is permissible to mention that a job requires heavy lifting in order to determine if the applicant would be capable of performing such a task. If an applicant raises the question of a potential accommodation on the job, it is permissible to discuss it. If not, discussions about accommodations must wait until a conditional offer of employment has been made.

Make Non-Discriminatory Hiring Decisions

Employers should ensure that only job-specific information is considered when making hiring decisions. If an applicant volunteered information about one of the enumerated grounds during the interview process, that information should not be considered unless one of the above exceptions applies.

An employer should be able to cite a non-discriminatory reason for each unsuccessful candidate. Avoid providing vague reasons to unsuccessful interviewees, as the candidate may interpret potential discrimination as the basis for the decision. For example, saying a candidate was not a ‘good fit’ for the company could be interpreted as being related to a candidate’s race, disability or religion. A candidate told they ‘lack long-term career potential’ or are ‘overqualified’ for a role may view the actual reason to be ageism.

As a best practice, employers should retain records from the interview process for at least six months if no complaint about the process is made, and if a human rights claim is made, records should be retained until the claim is resolved in court or before the Human Rights Tribunal.

At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems you may encounter in the workplace. The highly skilled Toronto employment lawyers at Baker & Company can review your employment policies and ensure that you are meeting your legal obligations while addressing and mitigating risk. Protect yourself, your workplace, and your employees. We rely on our broad base of experience and expertise to provide clear, pragmatic legal advice, and representation in litigation.  Call us at 416-777-0100 or contact us online for a consultation.