Lengthier Notice Periods and Greater Challenges for Employers Bringing Non-Competition Cases

Our office has been involved in two recent decisions of the Ontario Court of Appeal, which are likely to impact different areas of employment law in Ontario and across Canada.

S.I. Systems Partnership v. Geng et al – Lawsuit Claiming Breach of Non-Competition Clause Thrown Out with Costs

In S. I. Systems Partnership v. Geng https://www.canlii.org/en/on/onsc/doc/2020/2020onsc8086/2020onsc8086.html, the Court dismissed an appeal brought by S.I. Systems and upheld the complete dismissal of a lawsuit that SI Systems had brought against some former subcontractors claiming breach of a non-competition clause of a sub-contractor agreement.

SI Systems is a supplier of IT services to the RCMP, among other clients. The defendants were sub-contractors who were retained to provide IT services to the RCMP through SI Systems. They were retained because of their past experience in dealing with the RCMP. Initially, the subcontractors were hired without any non-competition clause in their subcontractor agreements. When SI Systems later won a new contract, it included a new non-competition clause in its agreements for the subcontractors, which it asked them to sign through an on-line portal. At least one of the subcontractors did not even realize that SI Systems had added the clause to the contract when he renewed his contract with SI Systems.

After the sub-contractors left SI Systems to work for another sub-contractor (doing other RCMP work), SI Systems sued for damages, claiming that the sub-contractors had breached the non-competition clauses. The Ontario Superior Court held that the non-competition clauses were overbroad – since they would have prevented the sub-contractors from doing any work with the RCMP, anywhere in the world, even work that had nothing to do with the work project that they were actually working on with SI Systems. In any event, SI Systems had not even bid on future projects with the RCMP, so it was unable to prove that it had suffered any damages.

On Appeal, the Ontario Court of Appeal dismissed the appeal in its entirety in a short endorsement, while adding a $30,000 award of legal fees to be paid to the respondents. This case demonstrates the difficulties that employers and contractors can face in pursuing non-competition lawsuits, especially where the non-competition clauses are overly broad.

The case of Currie v. Nylene Canada Inc. involved a 39-year employee a company and its predecessors. Ms Currie was dismissed on a without cause basis but offered a very short period of notice. At trial, the trial judge awarded the plaintiff 26 months’ compensation. The judge held that her case was exceptional and warranted a longer than usual notice period because:

The judge reviewed all of the appropriate common law factors and also considered the Ontario Court of Appeal’s decisions in a number of cases including Lownds v. Summit Ford Sales and Dawe v. The Equitable Life Insurance Company. The Court of Appeal accepted the trial judge’s analysis and reasons and dismissed the appeal.

It is noteworthy that Nylene had also alleged that the plaintiff should be given a very short notice period because she had “retired” for the purpose of collecting a pension that she had earned with a predecessor company. Despite the allegations that she had “retired,” she actually continued to work for the company on all of the same terms and conditions. This argument that her “retirement” to collect a pension should be considered a “break in service” was roundly dismissed at trial and by the Court of Appeal.

One takeaway from this case is that long service employees, who have worked for one employer for most or all of their careers, are likely to fall into the “exceptional circumstances” category and may be entitled to notice in excess of the twenty-four month “soft cap” that the Ontario Court of Appeal has sometimes imposed.

A second takeaway is that litigants should try to go with their best arguments that seem to be reasonable in all of the circumstances. Advancing untenable positions is likely to irritate judges and cause them to award even more in damages to dismissed employees. We cannot say this was a key factor for the trial judge or for the Court of Appeal, but it certainly didn’t help the employer’s cause.

Congratulations to Melynda Layton who argued both of these cases at trial and at the Ontario Court of Appeal.

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As we face increasingly restrictive measures across Canada, employers and employees have many questions about rights and obligations in the workplace in times of a pandemic. I thought it would be helpful to discuss a few of these issues.

Safe Workplace

Employers always have an obligation to provide a safe workplace. But these days, many employees find themselves in workplaces with a high level of exposure to the public. That is becoming more and more dangerous. Given the spread of Covid-19, employers must be prepared to take all appropriate precautions immediately. Employees may need to wear masks, gloves and maintain an appropriate distance from customers and other employees. Is this enough? In some workplaces, it seems doubtful. The virus is spreading at an alarming rate. Many employees may conclude that the workplace is unsafe and may exercise their rights under the Occupational Health and Safety Act to refuse work and stay at home. Employers may not be obligated to continue salary during this period, but employees may be eligible for EI benefits. If employees are fired or disciplined for refusing to work, they may have rights under the OHSA to reinstatement and damages. Normally, there are several hurdles for employees to meet to be able to prove that the workplace is unsafe. However, these days, it is likely that it will be much easier for employees these days to demonstrate an undue level of risk if any of these cases are litigated.

Quarantine

Some employees may be quarantined. This could be because of recent international travel, exposure to someone who had the virus or their own illness. Employees should inform their employers immediately and should not try to come for work and endanger others. This may involve an unpaid leave but, again, quarantined employees may be entitled to EI benefits without the normal waiting period. Some employers may decide to implement a paid leave policy for some or all of the quarantine period. This may also depend on the employer’s general sick leave policy but will not be mandatory for many employers. Some insurance policies may cover quarantine periods. Employers are entitled and maybe even required, to ask employees questions about exposure levels, where they have travelled and whether they have any symptoms.

Temporary Layoffs

Employment standards legislation across Canada allows employers to put employees on an immediate temporary lay-off without pay for a limited time period – and provided the employer continues providing benefits during a lay-off period. However, Canadian common law has traditionally viewed most lay offs as a “constrictive dismissal.” Since it is a term of employment that an employee will work and expect to be paid, when an employee’s work stops, that has been viewed as a breach of the contract and therefore a dismissal. Historically, there have been a few exceptions to the common law. If the employee has an employment agreement that allows for a temporary lay-off, works in a seasonal business or other type of business where layoffs are expected or if the employer has traditional put employees on layoffs, a lay-off is permissible. If the situation does not fit one of these exceptions, employees have been able to assert claims of “constructive dismissal” and demand full severance.

Some employment lawyers have suggested that employees who face a temporary lay-off can claim constructive dismissal and sue their employers for full severance. I think this is risky business. For employers who are facing a massive reduction in business, it would make no sense to force those employers to continue to pay their employees where there is no work. I would think that Ontario courts would recognize that all employers are facing a similar situation and that this type of rare and exceptional situation falls into one of the categories of traditional exceptions to the common law rule.

Employers may need to disclose their confidential information including sales and other data as part of providing their case. This is not to say that employers should use the current coronavirus crisis to “lay-off” workers without compensation where they cannot justify it economically. For example, if only one or two employees are put on layoff, that might be a fairly transparent case of constructive dismissal. Courts are entitled to review these situations on a case by case business. But if government-imposed restrictions have led to a massive decline (or shutdown) of the business, it seems to me that common sense will prevail here. Bringing a constructive dismissal claim in these circumstances may only benefit the employment lawyer who suggested it.

Creative Solutions

Some workplaces may suggest work from home arrangements, reduced hours, reduced pay or other changes to the terms of employment. Normally these types of changes would also lead to constructive dismissal claims. For example, an employer cannot normally insist that an employee accept a significant pay cut. Imposing one is a constructive dismissal and allows an employee to sue for full severance.

But in crazy and challenging times, employees will need to show some flexibility to try and retain employment and help their employers get through this crisis. Obviously, employees will have to make their own assessment of what is actually taking place. For example, if employees of a supermarket chain or a drug store are asked to take a pay cut while the company is enjoying some of its highest sales ever, that would make no sense. On the other hand, employees of a business that is obviously facing drastically reduced sales may be willing to discuss temporary changes to their terms of employment.

If an employer is suggesting these changes, employees should try to negotiate and insist on certain protections. Get the employer to put everything into writing and confirm that the changes are temporary. Ask for information that will help demonstrate the need for the changes. Insist that the measures are being imposed fairly and that all levels of management are also making sacrifices. Depending on the size of the company, employees may need to act collectively here, and this may be trickier than it sounds. But the point here is that both employees and employers may take a different approach to this unanticipated situation.

Conclusion

Ultimately, in this crisis, many employees will be facing an extremely tenuous situation with little or no income coming in. This is especially problematic for people who are already having a tough time getting by. The Federal government has started to address this by rolling out a plan for emergency EI benefits. But these benefits will not provide nearly enough income for most people who find themselves out of work. Some employees in these situations will benefit from wrongful dismissal lawsuits and will be able to get reasonable compensation from their employers.

But some employers are also facing enormous challenges and may wind up requiring creditor protection or may simply go out of business. In these circumstances, wrongful dismissal litigation may not get employees anywhere since there may be no money to pay, even if the employees win a judgment.

Hopefully, we will find a medical solution to the Coronavirus problem sooner than anticipated so that many of these issues will be moot. But in the meantime, employees and employers should get proper legal advice in these situations before making any rash decisions, which might have significant financial consequences.

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Non-unionized employees who work for banks, cable and telephone companies, radio and television stations, and other federally regulated enterprises can file an unjust dismissal complaint within 90 days of being let go.  This only applies for employees who have worked for the employer for at least one year and who are not “managerial employees.”  It is worth noting that “managers” are considered to be people with significant managerial authority.  Some cases have held that Branch Managers and Assistant Branch Managers in Banks are not excluded from accessing these provisions.

The key is that Canadian courts have affirmed that qualifying employees cannot just be dismissed “without cause” and provided with a severance.  If the employer can show that there was a genuine restructuring, with the discontinuance of a role or function, a dismissed employee may not qualify.  But in other cases, the employee can challenge the decision to terminate employment and ask for reinstatement with full back pay.

This is very different from the general common law that applies to employees across Canada.  In most cases, a Canadian employer can dismiss an employee at any time, “without cause” as long as the employer provides reasonable advance notice – or compensation instead of notice.  The dismissed employee can really only fight over the amount of money and, in some cases, whether the employer has committed any acts of “bad faith” or violated any other statute, such as the Canadian Human Rights Act.

But Federally regulated employees can claim that the dismissal was “unjust” under the Canada Labour Code and can ask for reinstatement to their old position.  If successful, they can be awarded reinstatement PLUS full back pay for the time that they were out of work and legal costs. 

The power of the Canada Labour Code Unjust Dismissal provisions was affirmed by the Supreme Court in Wilson v. Atomic Energy in 2016.  The Supreme Court’s approach was adopted last year (2018) by the Federal Court of Canada in Bank of Nova Scotia v. Randhawa, a case that was argued by our office. 

If you have been dismissed by a Bank or another federally regulated employer in Canada, it is crucial that you obtain proper legal advice and consider whether to file a Canada Labour Code Unjust Dismissal complaint within 90 days.  For most other wrongful dismissal lawsuits, employees have a longer period of time. 

• The Wilson v. Atomic Energy of Canada
• The Bank of Nova Scotia v. Randhawa

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At the same time, other rights are no less important.  Equality rights, whether based on gender, racial background, sexual orientation or other grounds are equally important for the very same reason. A free and democratic society must recognize the intrinsic value of each member to participate irrespective of any of these different personal characteristics.

Inevitably, these rights are bound to clash.  At that point our courts are called upon to balance competing rights and to devise judicial solutions that consider all of the different rights and freedoms at issue.  These are not easy cases.  Every decision in this area is likely to create controversy since the courts wind up siding with one side or the other in these disputes.  There are likely to be winners and losers but we must address these issues and make these difficult decisions.

Some recent court decisions at the highest level illustrate the difference in approaches in Canada and the United States.  The Supreme Courts in both of these countries have recently issued rulings involving the clash between religious freedom and same sex rights.  The cases were decided quite differently and are based on very different and specific facts.  Yet they are illustrative of two different approaches to analyzing these types of cases.

In the Masterpiece Cakeshop decision, decided in June 2018, the United States Supreme Court overturned a decision of the Colorado Court of Appeals and a lower decision of the Colorado Civil Rights Commission (“CCRC”).  By a 7-2 majority, the Supreme Court held that a religious Christian bakery owner and cake maker could not be forced to make a wedding cake for a same sex couple.  The Supreme Court highlighted certain unique facts in this case.  The refusal to make the case occurred before same sex marriage was legal in Colorado.  Certain members of the CCRC made disparaging comments about the baker’s religious beliefs in the course of the hearing.  The Court also accepted that the baker was prepared to provide other baked goods to the couple, just not a wedding cake.  The Court concluded that the baker could not be compelled to make a wedding cake for a same sex couple since that would likely violate his freedom of religion rights as well as his rights of freedom of expression.

Interestingly, in coming to its decision, the Court’s majority opinion, written by outgoing justice Kennedy, included certain statements that would likely be acceptable in the Supreme Court of other country:

“gay persons and gay couples cannot be treated as social outcasts or as inferior in dignity and worth.”

At the same time, “the religious and philosophical objections to gay marriage are protected views and in some instances protected forms of expression.”

Further, the Court also noted “such objections do not allow business owners and other actors in the economy and in society to deny protected persons equal access to goods and services under a neutral and generally applicable public accommodations law.”

Reading the combination of these statements, one might have thought that Justice Kennedy and one or two other judges would have come down on the side of the two dissenters, Justices Bader-Ginsburg and Sotomayor, who would have upheld the decision of the CCRC.  But the Supreme Court’s decision provides little evidence of any balancing.  The Court comes down, ultimately, on the side of the religious freedom of the bakery owner.  The end result is that the statements made by the Court pronouncing the importance of protecting same sex rights are effectively eviscerated by this decision.  In fact, the Supreme Court, after the Masterpiece decision, has already sent a flower arrangement case, with some similar facts, back to the lower courts to review.  Ultimately, the Masterpiece decision provides little consolation to those who would have looked to the courts to balance religious freedom with other fundamental rights.

The Canadian Supreme Court reach the opposite results in a recent set of twin decisions that it released in the Trinity Western cases involving law societies in B.C. and Ontario.  These are very different facts and a very different issue to be decided.  However, like in the case of the U.S. Supreme Court decision, the Canadian Supreme Court had to balance religious freedom rights against same sex equality rights.  The balancing approach favoured by the Canadian Supreme Court led it to side with same sex equality rights over freedom of religion.

The Canadian Supreme Court addressed the issue of whether Trinity Western law schools in B.C. and Ontario should be licensed by these respective law societies.  Trinity Western is a Christian university that requires its students to sign a mandatory covenant in which they agree to live by Christian principles with respect to sexual relationships.  The effect of this covenant is to render LGBTQ persons effectively unable to attend these universities.  In both cases, in B.C. and Ontario, the law societies refused to accredit Trinity Western because of this mandatory covenant.

In both cases, the Canadian Supreme Court looked at the balance between the different rights at issue.  The majority of the Court held that the members of Trinity Western were able to maintain freedom of religion claims by asserting that attending this type of school would support and assist their religious growth.  Notably, Trinity Western did not assert attending a school with this type of covenant was a required Christian practice or that the state was trying to take away their rights to practice their religion in any particular way.  Rather, they asserted that it would help foster their religious growth and development.

However, in both cases, the Court sided with the law societies and against the university when it balanced these two claims against the assertion of same sex equality rights.

It is worth noting that the Canadian Supreme Court has not been shy in upholding rights to exercise religious freedom.  The Court has, in the past, ruled in favour of Sabbath observers, observant Sikhs who seek to wear turbans and Kirpans, Seventh Day Adventists, and Orthodox Jews who have sought Court assistance to practice certain holiday rituals.  In short, the Court has endorsed a robust vision of freedom of religion in Canada which has fostered and engendered greater religious equality.  Unfortunately, not all of the Court’s decisions have been decided in this spirit.  The Court has refused to address equality concerns when addressing the issue of the funding of Catholic public schools (Catholic elementary and secondary schools are fully funded in Ontario while those of other religious minorities are not).  But for the most part, the Court has generally been sensitive to religious freedom rights.

At the same time, the Supreme Court has also underscored the importance of other rights and freedoms in Canadian society.  It is a fundamental value in Canadian society, as stated by the court, that laws should not be upheld which create the possibility of a “person being treated in substance as less worthy of others.”  The Court continues on to say that it cannot condone a right or practice that has the effect of “injuring [a person’s] neighbour or their parallel right to hold and manifest beliefs and opinions of their own.”

The Court concluded in Trinity Western cases that no evangelical Christian would be prevented from practising his or her religion as and where they choose.  Trinity Western could still run this type of school and it could even suggest or request that those who come to the school agree to follow the code of conduct.  It just could not impose this requirement on others.  Ultimately, the majority concludes that “minor limits on religious freedom are often an unavoidable reality of a decision maker’s pursuit of its statutory mandate in a multi-cultural and democratic society.”

Contrary to the response of some to this decision, the Supreme Court’s Trinity Western decisions are not an attack on religious freedom. Rather they are a balancing between religious freedom and other equally important rights which the Court has taken into account in balancing both sides of the equation.  The Canadian Charter requires this type of balancing and the Supreme Court hears from a wide range of stakeholders in making these decisions.  There were a very large number of intervenors in the Trinity Western case who made all sorts of submissions for and against Trinity Western.  Certainly the Court weighed many different considerations and arguments.

It is hard to predict with certainty the direction that the Canadian Supreme Court might take when confronted with an issue like that raised in the U.S. Masterpiece Cakeshop case.  However, it seems likely that the case would be decided in Canada with an opposite result and an equally robust majority.  Among other things, the Court would be likely to consider the bakery’s general provision of services to the public at large, the impact on same sex persons when denied services that are otherwise available to everyone else, the concern about what other types of services could be denied to which other people and the level of infringement of religious rights.  That is not to say that the Court would necessarily compel a bakery to print a certain message or come up with a certain design.  But if one is in the business of supplying cakes, it seems unlikely that Canadian law would permit a cake supplier to refuse to supply those cakes to certain classes of individuals in a way that violated Provincial human rights legislation.

If we are all to be treated equally in a free and democratic society, there ought to be few, if any occasions in which we can use religious freedom rights to trump the rights of others to enjoy that same equality.

The post Religious Freedom: Canada versus the U.S.: Two Recent Cases, Two Different Results. appeared first on Joblaw.ca.

Surprisingly, this was not the conclusion of the Ontario Court of Appeal in a recent decision.  In Nagribianko v. Select Wine Merchants Ltd., the Court reviewed a case that had been to the Ontario Small Claims Court and the Divisional Court.  The employee had signed a contract that referenced a six month probationary period.  But the contract does not appear to have specified a payment that the employer was required to provide if dismissed after the first three months.  This should have made the contract null and void in accordance with the Supreme Court of Canada’s powerful decision in Machtinger v. HOJ Industries Ltd. [1992] 1 S.C.R. 986.

The employee had worked for the employer for just less than six months.  He was dismissed on a without cause basis.  He sued for damages and was awarded four months’ compensation in the Ontario Small Claims Court.  The judge ruled that he had been induced to join the employer and that the clause did not effectively oust the employee’s common law entitlement.  This seems consistent with most of the case law.

The Ontario Divisional Court reversed the decision and held that the trial judge had failed to give effect to the probationary language.  The Ontario Court of Appeal upheld the Divisional Court’s decision and held that the term “probation” was not ambiguous. It ruled that “probationary status enables an employee to be terminated without notice during the probationary period if the employer makes a good faith determination that the employee is unsuitable for permanent employment, and provided the probationary employee was given a fair and reasonable opportunity to demonstrate their ability.”

The Appeal Court went on to conclude that the employer could not contract out of the minimum standards required by the Ontario Employment Standards Act, 2000 and that therefore the employee was entitled to one weeks’ pay, which the employee received, even though this one week’s pay was apparently not specified in the contract.

This analysis all would have been correct if the contract had specifically stated that the employee could be dismissed after three months but before six months with the payment of one week’s pay and the continuation of one week’s benefits.  However, if the contract did not say that specifically, it should have been viewed as a contract that would violate the common law case law as set out in Machtinger v. HOJ.  The contract appeared to specify that the employee could be dismissed at any time during the six months as a probationary employee with no notice or payment.  The fact that the employer paid the minimum one week’s compensation required by the ESA 2000 ought not to have fixed a poorly drafted contract.

Here, in contrast to the Brake v. PJ-M2R Restaurant Inc. that I looked at last week, the Ontario Court of Appeal weighed in heavily on the side of employers and was quite unsympathetic to what should have been a reasonable employee claim.  The decision is good news for Ontario employers, even those with poorly drafted contracts, who may now find it easier and cheaper to dismiss probationary employees.  The decision also demonstrates, as I indicated previously, that the outcome of a case at the Ontario Court of Appeal may well depend on the particular panel that is hearing the decision.  In this case, justices LaForme, Hourigan and Paciocco have issued a ruling that strongly favours employers and provides quite the contrast with the previous decision that I examined in Brake v. PJ-M2R Restaurant Inc., which went the other way.

Other recent Ontario Court of Appeal decisions have also gone in different directions and I will review two or three more of them in coming blogs.  The most significant take-away is probably a strong measure of uncertainty, which underscores the risks inherent in civil ligation and, particularly, in employment law cases. Contact us today!

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Brake v. PJ-M2R Restaurant Inc. (2017) ONCA 402, is one of those wrongful dismissal cases in which the Court has sided with the dismissed employee completely.

Esther Brake was a McDonald’s restaurant manager for more than 25 years.  She had been working with a specific franchise owner for more than 20 years.  For most of her career, she had been given excellent performance reviews.

After years of receiving excellent reviews, she was given her first negative review in late 2011.  She was then transferred to a poor-performing location, one of the worst locations of all the McDonald’s in Canada.  Ostensibly, this was done to enable her to improve her performance.  After three months at the new location, she was called into a meeting and told that she was being put on a 90 day performance review program due to her poor performance.  The program included goals that were found to be “arbitrary and unfair” and very difficult to meet.  At the end of the 90 day program, in mid-2012, the employer gave Ms Brake a choice between accepting  a demotion and being fired, claiming that she had “failed” the program.  Ms Brake refused the demotion.  She brought a lawsuit for constructive dismissal.  She was successful at trial.  The trial judge held that this was a wrongful dismissal and awarded Ms Brake 20 months’ pay plus legal costs.

The trial judge had ruled that Ms Brake had not been given a sufficient and reasonable opportunity to correct issues that the employer may have had with her performance.  She was “set up to fail.”  The decision to demote her was “substantial and fundamental” and was a constructive dismissal.

The employer appealed on several grounds, all of which were dismissed.

The Court of Appeal came to the following conclusions, some of which will be quite helpful to other dismissed employees.

1.  If a trial judge reviews the evidence carefully, articulates the relevant legal principles and applies those principles to the facts, the trial judge’s decision will be entitled to reasonable deference from the Court of Appeal;
2. A demotion from a managerial or supervisory position to one that is non-supervisory is a constructive dismissal and does constitute a substantial or fundamental change to a an employee’s position;
3. Despite the Supreme Court of Canada’s decision in Evans v. Teamsters, Local 31, an employee is NOT obliged to mitigate damages after being dismissed by accepting an offer of continued employment with the same employer in an atmosphere of hostility, embarrassment or humiliation.  In this case, it would have been unreasonable to require Ms Brake to continue working in the demoted role.
4. A credit letter provided by the employer confirming years of service can be relied upon to demonstrate the length of service of the employee. The trial judge in this case was entitled to award 2o months to a 20 year McDonald’s employee.  The notice award was well within the reasonable range.
5. With respect to mitigation – the Court of Appeal noted that any amounts earned during the statutory notice and/or severance period are NOT deductible from the dismissal award.  In other words, a 20 year employee would be entitled to 8 weeks’ statutory notice pay and 20 weeks’ statutory severance pay under the Ontario Employment Standards Act.  Any earnings during those first 28 weeks would NOT reduce the amount owing to the employee.
6. The Court also noted that part time income that the employee was earning or could have earned while working in the previous position is not necessarily deducted from damages, especially in cases where the part-time employment is a continuation of part-time employment that the employee had while working in her or his old position.
7. The Court concluded by noting that some income earned during the notice period need not be deducted from the damages award if the income is not really a “substitute” for the original loss of income.  The Court noted that the income earned was part of the income that the employee could have earned anyways, even if she had still been working for the employer.  The Court expressly stated that EI payments are NOT to be deducted from the amount owed by the employer in a wrongful dismissal case.

Having dismissed all of the grounds of appeal, the Court of Appeal awarded costs in the sum of $19,500 for the appeal, which would be in addition to the costs awarded at trial.

For the most part, these points are not particularly new.  Much of this decision is a review by the Court of Appeal of the trial judge’s factual findings and the trial judge’s application of wrongful dismissal and constructive dismissal law to those factual findings.

However, the case does illustrate that the Court of Appeal can be very sympathetic to employees in specific cases.  In this case, Justices Gillese, Feldman and Pepall were wholly supportive of the decision of the trial judge and have provided a decision that fully vindicates the rights of the dismissed employee.

As I will note in my other blog posts, some other employees who have come before the Ontario Court of Appeal recently have had measurably less success.  Of course the panels have been different.  Aside from the specific factual details of the particular case, it is quite clear that the specific judges who form part of any particular Court of Appeal panel will also have a major effect on the outcome of almost any employment law case.

The post 20 Month Wrongful Dismissal Award for Employee Upheld appeared first on Joblaw.ca.

In other words, a Federally regulated employer, for example a bank or cable company, cannot simply dismiss an employee on a “without cause” basis and provide severance arrangements.  Dismissed employees in these circumstances can file unjust dismissal complaints and seek reinstatement.

The Wilson v. Atomic Energy decision considered the circumstances of a four and a half year employee with a clean disciplinary record.  The employee was dismissed on a “without cause” basis and provided with a severance package.  He challenged the decision and filed an unjust dismissal complaint.  Although successful at adjudication, the decision was overturned at the Federal Court and Federal Court of Appeal levels and worked its way up to the Supreme Court of Canada.

Writing for herself and five other Supreme Court justices, Abella J reviewed the history of the Canada Labour Code’s unjust dismissal provisions, which were enacted in 1978.  She concluded that the purpose of these enactments was to ensure that non-unionized Federally regulated employees would be entitled to protection from dismissal without cause.  Federally regulated employees, she concluded, enjoy “fundamental protection from arbitrary dismissal” even with pay.

Although there are certain exceptions including situations involving the “discontinuance of a function” or a “lack of work,” this Supreme Court decision makes it abundantly clear that employers in the Federally regulated sector cannot simply terminate the employment of most employees.

This decision could greatly increase the number of unjust dismissal complaints in Federally regulated workplaces.  For example, any non-managerial employee, with one year or more of service, working for a Canadian bank can seek reinstatement if the employee is dismissed on a “without cause” basis, even if a severance package is provided.  This would, of course, invalidate the minimum type severance provisions that some Canadian banks have tried to use in their employment contracts with employees.

Employees who have been dismissed by a Federally regulated employer must file the unjust dismissal complaint within 90 days of the dismissal.  If not, it appears from the decision that the employee loses the right to this statutory framework and is left with common law remedies alone.

Three of the Supreme Court justices endorsed a vigorous dissent in which they would have held that the Canada Labour Code is, essentially, procedural and does not override Canadian common law.  The minority interpretation would have gutted the Code of any real meaning for Federal employees.

The dissenting justices correctly highlighted the fact that a Federally regulated employee can lose his or her protection if the employee misses the 90 day timeline.  Perhaps a future court decision will enable employees to use the civil courts, if necessary, to enforce the unjust dismissal provisions if the deadline has been missed.  However, for now, dismissed employees and their counsel should ensure that they file an unjust dismissal complaint within the 90 day time period.

It is interesting that the Supreme Court, in both the minority and majority reasons, chose to comment on the common law standards of dismissal by way of obiter.  The court noted that, at common law, employers can dismiss employees “for whatever reason they want so long as they give reasonable notice or pay in lieu of notice.”  This suggests that, for the time being, the court is not about to add in a “good faith” obligation as a requirement for dismissing a non-federally regulated employee.

This decision reinforces the wide gap between employees in the Federal sector and employees in most other provincial jurisdictions.  An employee dismissed on a without cause basis in Ontario can file a wrongful dismissal complaint and sue for dismissal damages in the court system.  In some cases, the employee may also have a valid claim for other damages or remedies.  But reinstatement is not an option, nor is the court required to consider why the employee was dismissed, if the dismissal was on a “without cause” basis.

But in the federal sector, it is now clear that the vast majority of dismissed employees enjoy “union-like” protection.  They can file unjust dismissal complaints and seek reinstatement or significantly increased damages.  Non-managerial employees with more than one year of service who have been dismissed from Canadian banks, telephone and cable companies, radio stations and other industries have significant negotiating leverage and may demand reinstatement or negotiate significantly higher severance packages.

Damages under the Canada Labour Code can be exponentially higher since employees can be awarded reinstatement and compensated for the time that they were out work.  Overall, this is an extremely helpful decision for federally regulated employees.

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In Canada, employees do owe a duty of fidelity to their employees.  This does not mean that employers can control an employee’s extra-office activities.  However, if personal activities can be linked back to the employer and can be seen to create a conflict of interest, employers may have legal grounds for concern.

In Mr. Solomon’s case, the Toronto Star has printed a story alleging that Mr. Solomon was engaged in brokering the sale of high end paintings and masks, accepting significant commissions for these activities, and failing to disclose the fact that he was earning commissions to the purchasers of the art.   The article alleges that Mr. Solomon came to know the buyers and sellers in the course of his role as a journalist working for the CBC.  The apparent suggestion is that he used his CBC access to certain individuals to further his private art brokerage business.  These allegations have not been proven in a court.  However, the Star has also referenced a public statement by Solomon in which he stated that he never “intentionally” used his position that the CBC to further his art business.

To make things a bit more interesting, the Star also quotes CBC spokesman Chuck Thompson as having stated that Mr. Solomon had disclosed his involvement in the art business and that CBC had not had any concerns.  Thompson supposedly stated that Mr. Solomon had not “traded on his journalistic contacts.”

It seems that the Star was not satisfied with this response and set out to push the matter further with the CBC by disclosing further results of its own inquiries.

There may well be significant factual disputes between Mr. Solomon, the Star and the CBC over these allegations.  It is impossible to know, at this point, what facts will emerge.

If all of the allegations as stated in the Star report were proven true and the CBC were to be able to demonstrate that Mr. Solomon was using his journalistic contacts to further his personal art brokerage business, this could well be the type of conflict of interest violation that would substantiate a dismissal for cause.

However, If Mr. Solomon were to show that he disclosed his activities in a truthful manner to the CBC and that the CBC had approved, even implicitly, Mr. Solomon could have a reasonable case.  Any examination of the facts will involve a careful review of the details that Mr. Solomon disclosed to the CBC compared to the actual facts and activities that can be proven.

In this picture, it appears that cracks in the paint started to appear when one of Mr. Solomon’s art deals became acrimonious.  Apparently there was a dispute over commissions owing with respect to one of Mr. Solomon’s sellers.   The story involving allegations of conflict of interest broke subsequently.

Although only a few Canadian employees might have the opportunity to broker high end artwork with the connections that they meet at the workplace, there are many other types of conflict of interest.  Hundreds of reported cases have looked at a wide range of conflicts and considered guidelines.  Many of these cases, for example, involve bank employees, who enter into deals with clients outside of bank auspices.  There are many other examples as well in other workplaces.

Here are few key points that both employers and employees should consider in conflict of interest cases:

1.  Employer Policy:  Employers should certainly have detailed conflict of interest policies in place that spell out expectations with respect to gifts, private activities with clients and other related matters.  Employees should be provided with these policies when they first commence employment.

2.  Disclosure:  Employees who would like to run a private business that might be viewed as a conflict are well advised to ensure that they have employer approval for their activities.  It may make sense to get legal advice first but, ultimately, full disclosure to an employer of the type of business activities that the employee intends to operate, coupled with explicit or, at least, tacit approval from the employer can have a prophylactic effect.  Having a paper record of these disclosure, even in email form, can be crucial.

3.  Honesty and Legality:  Even if the employer is aware of the activities, that does not give an employee carte blanche.  If the employee’s business veers into the realm of illegal activities or activities that otherwise create exposure for the employer, the employer may still have grounds to terminate employment for cause, even if some of the activities were disclosed initially.  In the CBC case, if the CBC were able to prove that any of Mr. Solomon’s activities were actually illegal (for example, earning a secret commission or tax evasion), this could put Mr. Solomon in a very difficult spot.  At this point, there is certainly no basis for believing that Mr. Solomon was involved in anything in this category.

As with the situation involving Mr. Ghomeshi, it will be fascinating to follow this case and see the ultimate outcome.  If a confidential deal is reached between Mr. Solomon and the CBC, Canadians may never really find out how the situation was resolved.  For now,  it certainly looks as though Mr. Solomon will require the services of an entirely different type of broker to arrange for a settlement that may well be worth far more than many of the pieces of art that he was allegedly involved in trading.

The post CBC Fires Evan Solomon for Conflict of Interest: Just Cause? appeared first on Joblaw.ca.

By now, you have probably read about or seen a video of the incident at BMO field.  A CityNews reporter was heckled with the obscene phrase “FHRITP” by a guy looking to grab some attention and get himself on the news.  One of the guys with him defended the vulgarity and expanded on it.  The reporter, Shauna Hunt, fired back.  She professionally pushed these guys, on air, to explain why they would act in such demeaning fashion towards a female reporter.  This was not the first time she had been faced with this harassment and she decided to push back.  The video made its way through cyberspace.  Shortly afterwards, HydroOne fired one of the guys involved in the incident.  Here is the video of the incident.

I am not looking to defend the behaviour of these louts.  There should be little societal tolerance for those who wish to attack and delegitimize women reporters by yelling obscene sexual phrases at them.  Perhaps a complaint could be filed with the Ontario Human Rights Commission and damages could be awarded.  Maybe some type of civil lawsuit would be appropriate.  Or perhaps there are other avenues for dealing with this.

But the question in an employment law blog – is whether this justifies the loss of employment for the obscene heckler and his off-duty conduct.  Even though this happened after a soccer match rather than a basketball game, The answer is still no slam dunk.

If these individuals had been employees of MLSE, for example, and had yelled out these phrases, on air, at an MLSE event, the connection would be clear.  They would have been acting as representative employees of MLSE and there would have been little doubt that dismissal would be the appropriate remedy.  Or if they had been fellow reporters, at the scene while conducting other interviews.

But the guy who was fired was an employee of HydroOne which had nothing to do with this incident.  So the individual was fired for off-duty, obscene conduct, which had no connection to his employment.  He was not charged.  The public would not have associated him with HydroOne, unless he was in a position in which he would regularly deal with public.  If for example, he was in a customer relations position at HydroOne, or a human resources role, the case might be a bit different.

HydroOne has stated that this was a violation of their “Code of Conduct.”  It is certainly admirable of the company to take a strong stand against sexual harassment in the workplace and in society in general.  It is understandable and legally supportable that HydroOne would take steps to ensure that nothing like this occurs in its workplace or in connection with its workplaces.

But off-duty conduct that violates a “code of conduct?”  What are the limits of that code?  Lots of activities might be violations.  Does an employer have the right to follow employees around, off hours, and check up on whether their off-duty activities may or may not violate a code of conduct?  Will HydroOne send representatives to its employees’ private, off-duty parties to monitor what happens once their employees have a few drinks?  Will HydroOne start firing employees for behaviour at their kids’ hockey games, where many parents yell all kinds of obscene things?  Where is the line?

In response, HydroOne might say that they did not need to follow anyone anywhere nor do they intend to do so.   This incident simply became so public that the association with HydroOne caused public embarrassment – to the employee and to the employer.  HydroOne had to act to send a public message that it takes sexual harassment seriously.

While I can certainly understand the embarrassment to the employee, I’m just not sure that anyone would have drawn a tie in between the employee and HydroOne if HydroOne had not identified the protagonist as a HydroOne worker.

If the employee was in a non-unionized position, the issue would simply be whether or not there was “just cause” for terminating his employment.  He would probably bring a wrongful dismissal lawsuit – and there is a reasonable likelihood that a settlement would be reached at some point, though it would be confidential.  But he would not get his job back and he would have few other remedies, aside from some compensation for the loss of his position.  If he could show that HydroOne’s conduct had violated the Ontario Human Rights Code in some way or if he could convince a judge that this was “bad faith” conduct, he might get additional damages.  But that seems like a stretch.  If successful, he would probably wind up with a decent severance package, perhaps in the range of one month per year worked.

On the other hand, if the employee was unionized, he could file a grievance and ask to be reinstated to his position.  He could argue that some action short of dismissal would have been appropriate.  A public apology, a short suspension or some other disciplinary measures.  Or perhaps, even, none at all.  An adjudicator will have to decide whether the employment relationship became so damaged that he could no longer continue as an employee.

In either case, the employer will argue that the employee’s very public behaviour was a violation of its code of conduct and caused the employer public embarrassment.  The employer had to make it clear that sexual harassment, by its employees, while not be tolerated even if the incidents in question involve off-duty conduct.

I have to conclude that this could be a frightening precedent.  Not because I am trying to defend this guy’s conduct, which I am certainly not.  But because I would have concerns about the extent to which a person’s unrelated off-duty conduct, even if reprehensible, can lead to termination of employment in a position that has nothing to do with the conduct.  If it is conduct for which someone is criminally charged – and perhaps even convicted, that becomes a different story.  Or if the conduct is somehow related to the type of position.  For example, if this guy had been a teacher.  One can easily see that parents would be wary of having their children taught by a teacher who conducts himself in this fashion.

But if the type of employment has no relationship whatsoever to the type of incident, the link becomes far more questionable.

We have already seen stories of employers scouring the Facebook pages of potential employees and even asking for Facebook passwords to be able to gather information about job candidates.   It has become clear that no conduct, these days, is truly private when everyone is equipped with a cell phone with a video camera and the ability to instantly upload movies.  But are there any limits as to how employers and potential employers can use all of this information and media?  This is probably an area of law that will continue to develop, quite rapidly.  But the incident does emphasize the point that any inappropriate conduct can become public extremely quickly.  Certainly police offers across Canada and the U.S. have been learning that lesson.

Maybe it is ultimately beneficial for society that people can suffer significant consequences for highly inappropriate behaviour.  Such behaviour might include public instances of harassment, racism, anti-Semitism and other demeaning behaviour.  But I’m just not sure that summary dismissal with no compensation, the “capital punishment of employment law” and being left without a job or an income is the correct remedy here.

It will be interesting to hear what Canadian courts have to say about this.  We will have to watch and see how this case develops.

The post Fired for Off-Duty Conduct: Should that hold up? appeared first on Joblaw.ca.

In this post, I look at three recent decisions to show how useful this process can be for plaintiffs.  The conclusion is that it is getting more difficult for employers to drag their feet and lowball their dismissed employees in non-cause wrongful dismissal cases.  Employees faced with low, out of the range offers can use the summary judgment process to get a fairly quick judgment with minimal risk.

In Beatty v. Best Theratronics Ltd., (2015) ONCA 247, the court upheld a 16 month notice period for a radiation safety officer.  Clifford Beatty was 58 years old when he was dismissed.  He had worked for the employer for a period of 16 years.  In a summary judgment motion, he was awarded 16 months’ notice by an Ontario Superior Court judge.  The defendant appealed the decision and tried to argue that the appropriate notice period was only 12 weeks.  Not surprisingly, this seems to have angered the appellate court panel which sided, quite firmly, on behalf of the plaintiff.  The defendant might have attracted a bit more court sympathy if it had put forward a reasonable alternate notice period – perhaps 10 or 12 months.  But there was no basis, on the record, for proposing 12 weeks.  The defendant also argued that the plaintiff had failed to apply for a sufficient number of positions over the course of the notice period.  This submission was also rejected by the court, which upheld the trial court’s decision that the plaintiff had conducted a “reasonable” job search.  The court also, once again, noted that there were no real credibility or factual issues that would have required a trial rather than the use of a summary judgment process.  The appeal was dismissed with a costs award of $16,500.  This certainly looks like a reasonable victory for the dismissed employee.

In Maxwell v. United Rentals of Canada Inc. (2015) ONSC 2580, the summary judgment process was used by a service manager who had worked for his employer for 31 years.  Kevin Maxwell was 51 years old when he was dismissed on a without cause basis.  He was earning an annual salary of approximately $64,700 but with bonuses and other amounts his annual income came to $81,100.  The case went to a summary judgment motion.  The plaintiff asked for 20 months’ compensation.  The defendant proposed that 16 months should be the proper number.  The court awarded 18 months’ compensation.  A key issue seems to have been the annual figure to be used.  The defendant argued that the plaintiff’s base salary should be the appropriate figure.  The court chose to use the plaintiff’s T4 amount, which included bonuses and other amounts.  This represented the plaintiff’s earnings more closely.  The court also rejected the defendant’s arguments that the plaintiff had failed to mitigate damages properly by applying to 120 jobs.  The court specifically noted that the defendant had not provided any assistance and this “is an important factor to be taken into consideration when the employer then accuses the former employee of not taking adequate steps to secure alternate employment.”  While this decision highlights the fact that dismissed employees are entitled to be paid on the basis of their full annual income rather than base pay alone, the notice period awarded to the plaintiff was probably low.

In another recent decision, one of the key issues was how the money should be paid.  In Markoukis v. SNC-Lavalin Inc. (2015) ONSC 1081, the dismissed employee had worked for the defendant for almost 41 years.  Eftihios Markoulakis was 65 at the time of dismissal and was a senior civil engineer.  He was paid out 34 weeks’ pay, based on the Ontario Employment Standards Act minimums for notice and severance pay.  He sued his employer and asked for 30 months’ notice.

The trial court judge agreed that there were exceptional factors here including the almost 41 years of service that the plaintiff had under his belt.  She ordered a notice period of 27 months.  However, the motion was heard only 31 weeks after the plaintiff was dismissed.  It would be unfair to order the defendant to pay the full 27 months’ compensation when the parties were only in month 8.  The defendant would be entitled to credit if the plaintiff were to earn any other money or find alternate employment.  The court held that the defendant would be required to pay the plaintiff monthly until the end of the 27 month notice period.  The court held that the defendant reserved the right, during the notice period, to bring a motion challenging the plaintiff’s mitigation efforts or dealing with other issues that might be arise.  While the plaintiff won an extraordinarily lengthy notice period, he will have to continue to report to the defendant about his mitigation efforts for the balance of the notice period.  So this was not a “no strings attached” victory.

Looking at all three cases together, it is quite evident that summary judgment motions are one of the most appropriate ways of dealing with wrongful dismissal cases, where no cause is alleged.  They are relatively inexpensive, relatively quick and quite difficult to defeat.

The best approach for employers defending these motions is to take a reasonable approach to damages.  Employers that show up in court and put forward extremely low suggested notice periods are likely to find that the plaintiff has won everything that he or she requested.  On the other hand, where the defendant puts forward a reasonable notice period, as in the Maxwell case, the court might be more inclined to view the employer more favourably.

For dismissed employees, as in all wrongful dismissal cases, it is very important to prepare a detailed and reasonable record of job search and other mitigation efforts.  Although the standard is not an extremely onerous one, employees must be able to show that they have made reasonable efforts to try and find alternate employment or an alternate comparable income source.  If the dismissal was “without cause” and the dismissed employee is making reasonable efforts to find new employment, the summary judgment process can be invaluable.

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