Employment & Labour Law 

The Accessibility for Ontarians with Disabilities Act (“AODA”) has been around for a while.  So what’s the big deal now?

For starters, recent Freedom of Information Act requests have demonstrated that about 70% of Ontario private sector employers with 20 or more employees have not yet complied with required self-reporting requirements to demonstrate that they are compliant with the AODA.  Perhaps more importantly, most private sector employers with 20 or more employees don’t even realize that they have certain obligations under the AODA as of January 1, 2014.

While reference should be had to the legislation for particulars as to the imminent requirements, the following should serve as a high level overview of what needs to be done by certain employers.

1.  Public sector employers with 20 or more employees are to file a compliance report with the Ontario government by December 31, 2013, confirming that they are currently compliant with the Accessibility Standards for Customer Service.  The filing can be done online.

2.  By January 1, 2014, those same employers must also develop policies governing how they will meet their requirements under the Integrated Accessibility Standards.   In addition, a multi-year accessiblity plan must  be developed, posted on the organizations’ websites, and provided in an accessible format upon request.

3.  For employers with 50 or more employees in Ontario that are launching a new website or undertaking a significant website refresh after January 1, 2014, the website is required to conform to the World Wide Web Consortium Web Content Accessbility Guidelines 2.0 Level A unless an exception applies or the company can demonstrate that meeting the guidelines is not practical.

Because most Ontario businesses are not compliant with the AODA, the Ontario government has begun issuing notices of non-compliance and has indicated that it intends to pursue businesses which are non-responsive.

For further information, see the Ontario government’s website on AODA requirements: http://www.mcss.gov.on.ca/en/mcss/programs/accessibility/

Way back in 2008, the Ontario Human Rights Code was amended to permit human rights claims to be piggybacked onto wrongful dismissal actions in the Ontario courts.  Prior to that time, the only recourse for an employee with a discrimination claim was to make a complaint to the [then] Human Rights Commission.  Some 5 years later, the Ontario Superior Court of Justice has recently released its very first decision in a joint wrongful dismissal/discrimination action.

The case in question was the September decision of Justice Grace in Wilson v. Solis Mexican Foods Inc.  Patricia Wilson was a 16 month employee at the time of her termination, and off work due to back problems.  The reason given for Ms. Wilson’s termination was a corporate reorganization, but the court found that reasoning “[defied] common sense” as Ms. Wilson was never told about the impending reorganization while it was taking place.  The court looked closely at the communications between Ms. Wilson’s doctor and employer, and found that the only conclusion that could be drawn was that the employer was not happy with Ms. Wilson’s ongoing back problems and absences from work, or her requests for accomodation.  Justice Grace reiterated that as long as an employee’s disability is a factor in the decision to terminate, there will be a finding of discrimination.  That is the case whether the disability is the sole factor or simply one small factor in the decision-making process.  In this case it was clear to the judge that Ms. Wilson’s back problems were a significant factor in the decision to terminate, but the result would have been the same even if her back problems were but one factor along with the reorganization.

Having determined that Ms. Wilson had been discriminated against, the court awarded her $20,000 due to the fact that she “lost the right to be free from discrimination” and experienced “victimization”, and due to the fact that the employer orchestrated her dismissal and was disingenuous both before and during the termination.  That amount was in addition to the damages received in lieu of notice of termination.

Interestingly, the court did not comment on whether or not reinstatement of employment was an option, thereby leaving that issue to another court on another day.  While employees pursuing complaints at the Human Rights Tribunal can seek reinstatement, and while the Human Rights Code appears to permit courts to make similar orders, we still have no guidance as to whether reinstatement will become a tool used by our courts.

To view the decision, click here:  http://canlii.org/en/on/onsc/doc/2013/2013onsc5799/2013onsc5799.html

The Pay Equity Act of Ontario requires every provincially regulated employer with ten or more employees to ensure that pay equity exists in the workplace. This is not a one-off compliance requirement. Rather, employers must maintain pay equity on an ongoing basis. This means that both unionized and non-union employers need to re-visit their pay equity compliance when changes occur in the workplace such as the creation of new job classes, significant changes to job duties, elimination of a prior male comparator job class or a business acquisition or reorganization. Pay equity compliance is voluntary and self-directed. However, the Pay Equity Commission operates two programs that permit the Commission to reach out to employers even in the absence of a complaint in order to determine whether the employer is pay equity compliant. These two programs are described briefly below.

Monitoring Program

The Monitoring Program has been underway for a number of years. By September 30, 2010 (most recent date for which information is publicly available), the Monitoring Program had contacted over 3,000 Ontario employers. In the past, the Pay Equity Commission tended to focus on particular industry sectors (for example retail, food) or geographic areas (for example Greater Toronto Area and northern regions of the province). However, the Monitoring Program is currently focussed on contacting employers who were flagged as part of the Wage Gap Program or did not respond to a contact under the Wage Gap Program. Pursuant to the Monitoring Program, the Pay Equity Commission contacts employers to request three years of compensation data and information about jobs, locations and the employer’s pay equity process. The Review Officer can require up to seven years of data where concerns are raised. If the employer is not compliant with the Pay Equity Act, the Review Officer will require compliance pursuant to a set time line.

Wage Gap Program

The Wage Gap Program was launched in 2011. Its goal is to cover all Ontario workplaces to determine whether wage gaps persist. Using the Dunn & Bradstreet listing of employers, the Pay Equity Commission has completed its pilot project of canvassing employers with 500 or more employees. As it winds down phase two, covering employers of 250 to 499 employees, it is now turning its focus to employers with 100 to 249 employees. Employers are not required to produce employee data for the unionized work force. Currently the Wage Gap Program is not contacting employers which have been visited by the Pay Equity Commission within the last ten years. If an employer does not respond by the deadline or the wage data indicates possible pay inequities, the file is referred to a Review Officer.

Our advice

The Pay Equity Act is unusual in that it does not include a limitation period. Therefore, it is possible for the Pay Equity Hearings Tribunal to order an employer to comply retroactively to a date in the early 1990’s, depending on when the company began operations in Ontario and depending on the size of the work force. We strongly recommend that all employers become compliant with the pay equity requirements, generally by selecting a realistic retroactivity date for which the employer has sufficient data about pay, gender dominance and job duties. Be sure that all new positions are evaluated under your job evaluation system. Keep records so that you can show compliance at least to your selected retroactivity date. Build pay equity compliance into the H/R systems by ensuring that all jobs have up to date job descriptions, all positions are evaluated under your job evaluation system and all newly created positions are immediately evaluated and paid according to your job evaluation system.

We hope that you will join us in Vancouver on Wednesday, November 20th as we discuss:

• When They’re Not at Work: Managing Employees on Leave – Jeff Bastien
• When They Don’t Return: Managing Employees who are Unwilling or Unable to Return – Andrea Raso
• They’re Baaaaack…: Managing Reintegration and Performance Expectations – Dana Hooker

BC HRMA members – this workshop may be eligible for CHRP recertification credits.

Event Details
November 20, 2013
8:00 AM – 10:00 AM PDT

Terminal City Club
Walker Room
837 West Hastings St.
Vancouver, British Columbia
Canada

This session is complimentary. Please email vancouver.events@dentons.com to RSVP before November 15th.

On September 12, 2013, the Supreme Court of Canada issued its decision in Payette v. Guay Inc. Although this decision originated in the Quebec courts and involved the application of the Civil Code of Quebec, the Court’s decision also dealt with common law principles and so this case is applicable throughout the common law provinces.

This decision is noteworthy for anyone dealing with restrictive covenants in the context of the sale of a business and is welcome news for businesses seeking to endorse restrictive covenants in order to protect their interests.

The key points made by the Court are as follows:

• The rules applicable to restrictive covenants relating to employment will differ depending on whether those covenants are linked to a contract for the sale of a business or to a contract of employment. This reflects the imbalance of power that generally characterizes the employer-employee relationship. No imbalance of power is presumed to exist in the vendor-purchaser relationship and so these rules will not have an equivalent in the commercial context.
• The common law rules for restrictive covenants relating to employment do not apply with the same rigour or intensity where those obligations are assumed in the context of a commercial contract, particularly where the parties negotiated on equal terms, were advised by competent professionals and the contract did not create an imbalance between them.
• In order to determine whether a restrictive covenant is linked to a contract for the sale of assets or to a contract of employment, it is important to clearly identify the reason why the covenant was entered into. The goal of the analysis is to identify the nature of the principal obligations under the master agreement and determine why and for what purpose the accessory obligations of non-competition and non-solicitation were assumed.
• A restrictive covenant in the commercial context is lawful unless it can be established on a balance of probabilities that its scope is unreasonable. Thus the burden of proof will be on the vendor to prove that the restrictive covenant is unreasonable.
• An acknowledgement by the parties subject to the restrictive covenant that the covenant is reasonable is not determinative, but it is a relevant factor and indicator that the Court will consider when determining whether the covenant is reasonable.
• In the commercial context, a non-competition covenant will be found to be reasonable and lawful provided that it is limited, as to its term, territory and applicable activities, to whatever is necessary for the protection of the legitimate interests of the party in whose favour it was granted. The factors that may be considered include the sale price, the nature of the business’ activities, the parties’ experience and expertise, and the fact that the parties had access to the services of legal counsel and other professionals.
• While in the case of a non-competition covenant, the applicable territory must be identified, a non-solicitation covenant may be considered reasonable and lawful absent a territorial limitation. In the modern economy, with new technologies and customers who are no longer geographically limited, territorial limitations in non-solicitation clauses have generally become obsolete.

Ultimately, on the facts before it, the Court found that the 5 year non-competition covenant with an expansive territory and 5 year non-solicitation clause were reasonable given the highly specialized and mobile nature of the purchaser’s business activities (crane rentals).

by Jordan R.M. Deering and Byron Reynolds

The Alberta Court of Appeal recently considered and clarified the nature of the relationship between employers and the employees they entrust with handling funds. As a result of the decision in 581257 Alberta Ltd. v Aujla, 2013 ABCA 16, employers may more easily recover assets stolen, converted or misappropriated by dishonest employees using a civil cause of action. The Alberta Court of Appeal found that, in cases of theft, an employee owes fiduciary obligations to its employer. In addition, the Court overturned the lower court’s decision that the plaintiff employer was responsible not only for demonstrating that a fraud or theft had occurred, but also for showing that all of the discovered loss was a result of the employee’s theft or fraudulent acts.

According to the Alberta Court of Appeal, where an employer gives an employee the responsibility for handling the employer’s funds, that employee has fiduciary obligations with respect to those funds. Employers have a strong argument that a similar fiduciary relationship exists where:

• Employees handle inventory or valuable assets.

• Employees handle cheques or transfers and have signing authority.

The fiduciary obligation does not impose obligations of non-competition or fidelity, but it shifts the evidentiary burden respecting dealings with those funds.

The Court of Appeal held that once the employer proves fraud or breach of fiduciary duty, the employer only needs to establish reasonable efforts to determine the amount taken by the thieving employee. At that point, the evidentiary burden shifts to the employee to disprove the amount and the cause of the loss. This shifting burden of proof enforces the policy that an employer should not be precluded from recovery where the employee has covered his tracks and compromised the ability of the employer to prove the quantum of loss.

In Aujla, the defendants were cashiers and shelf stockers at the plaintiff’s liquor store. The plaintiffs became suspicious that funds were going missing, but did not have sufficient evidence because their inventory system was unsophisticated and their surveillance was inadequate. The employer later installed a hidden camera, which showed the employees stealing some money from the till. This evidence established fraudulent behavior and breach of fiduciary obligations, but only proved a small quantum of thefts. However, the employee’s bank records disclosed $116,000 in funds that were not accounted for.

The shifting burden of proof of quantum of losses for breach of fiduciary or fraud dramatically reduces the difficulty faced by employers, who can only prove a few incidences of theft, but fairly believe this theft represents part of a larger pattern. Employers may be able to rely on the employee’s lifestyle, habits (such as gambling or shopping), or bank records to prove the loss.

While employers previously considered recovery impossible because of insufficient proof of the full quantum of the loss, the Alberta Court of Appeal has now leveled the playing field and provided significant recourse for employers.

Please feel free to contact Jordan Deering of our Fraud Corruption & Asset Recovery Group directly if you would like to discuss the application of this decision to your particular circumstances.

581257 Alberta Ltd v Aujla, 2013 ABCA 16

I have trouble programming my television and need my teenage daughter to lend a hand.  I also know that I am not alone in this world of rapidly changing technology.  It is of little wonder then, that even the best HR professionals can sometimes use a reminder of best practices when it comes to the use of technology in the workplace.  This ever-changing area encompasses so many technological issues that this is only intended to provide a very high level overview.

Workplace Surveillance:

For employers in a unionized workplace or employers which are federally regulated (eg. banks, telecoms), collective agreements and federal privacy legislation respectively  set out strict parameters with respect to what sort of workplace surveillance is permitted.  For employers in B.C., Alberta and Quebec, applicable provincial privacy legislation may also set out parameters with respect to permitted workplace surveillance.  For all other employers, the workplace surveillance findings of the Privacy Commissioner of Canada are instructive but not generally applicable.

With regard to the Privacy Commissioner’s findings, the use of video surveillance and GPS is generally not permitted for productivity management although it may be permitted if the employer can show a bona fide safety or security reason for the surveillance.  In those cases, employees should be given advance written notice of the surveillance and the surveillance must be reasonable in scope.  On the other hand, unionized workplace arbitration findings sometimes permit keystroke monitoring to manage productivity, but it is considered intrusive and other means of monitoring productivity should be used if possible.

Computer Use in the Workplace:

Much has been written about the extent to which employers can monitor an employee’s computer use in the workplace, particularly in light of the Supreme Court of Canada’s 2012 decision in the case of R v. Cole.  In that decision, the court held that employees have a reasonable expectation of privacy in connection with personal information on workplace computers.  This criminal decision involving Charter rights is only directly applicable to public sector employers, but it gives employers some idea of where the courts may go on this issue in the future.

As a result of this decision and the apparent desire of the courts to protect employee personal information even when located on company property, it is absolutely necessary for employers to have a computer use policy which confirms that: (i) the employer’s computer systems are company property and should only be used for company business; and (ii) employees should understand that they have no expectation of privacy when it comes to personal information when using the employer’s computer systems.  Employees should be regularly reminded about the policy and asked to confirm their understanding and agreement.

Teleworking:

The two biggest issues with allowing employees to work from home are productivity and confidentiality.  With respect to confidentiality, employers should assist in the set-up of the home office and insist upon some or all of the following protections: (i) home computers which are password enabled, email encrypted, firewalled and/or subject to biometric ID; (ii) all company work must go through the company’s internal network through a platform such as Citrix; (iii) sensitive company and customer information should not be maintained on laptop computers, cell phones or other portable devices; (iv) hard copies of sensitive company or customer information kept at home should be stored in a locked filing cabinet; and (v) home computers used for work purposes should not be accessible to family members.  It is also a good idea to conduct periodic checks in order to ensure that your employees are following proper procedures.

Social Media:

If your organization decides that it wants to permit social media in the workplace, drafting a good policy is your starting point.  Among other things, the policy should: (i) make it clear that employees cannot use social media to disclose company or customer confidential information, engage in workplace gossip, do anything discriminatory or harassing, or otherwise say anything which might harm the company or its customers; (ii) advise employees that their use of social media may be monitored; (iii) advise employees that the use of social media at work is for work-purposes only; (iv) require workplace bloggers to identify themselves by their real names and make it clear that the views expressed are not necessarily those of the organization (unless the organization requires blog entries to be approved prior to posting); and (v) require employees to have a stand-alone work account for their blogs so that they do not use a personal account for work-related matters.

On-Line Recruiting:

To understand what you can and cannot do on an on-line basis when it comes to recruiting, you need to understand what you can and cannot do off-line.  One of the general rules of thumb is that you cannot make a decision to not hire based on an employee’s age, race, religion, ethnicity, sexual orientation, etc.  If an employee is looked up online before a decision is made whether or not to hire, or even whether or not to interview, one runs the risk of finding out something about the employee’s personal background which could lead to a Human Rights complaint.  As a result, it remains best practice to interview first, and then make any hiring decision subject to reference checks and other background checks (and to obtain the prospective employee’s consent for those checks before undertaking them).

Closing:

Although technology is ever-changing and some of the issues set out above will become non-issues with the passage of time and technologies, the one constant thread which runs through most of these issues is the need to have strong policies which outline what is and isn’t permitted in the workplace.  Notwithstanding the same, employers should be aware of the fact that employees may have reasonable expectations of privacy in the workplace, even when using company technology.

General Motors of Canada suffered a blow this summer when an Ontario court held that GM was not entitled to reduce benefits it had promised to its retired workers. The decision can be found here.

GM informed non-union retirees in 2009 that as a cost-cutting measure, GM had to reduce benefits that it had promised to certain retirees while they were employed. The reductions included significantly lower amounts of life insurance, and the elimination of semi-private hospital coverage. The retirees responded with a class action claiming that they were “stunned” by GM’s actions, and that GM’s actions were illegal. GM’s position was that language in employee booklets allowed it to make such changes. GM’s employee booklets had typical language that purported to give GM the right to make changes to all benefits, “at any time”. The Ontario Superior Court of Justice disagreed with GM’s position. The language in GM’s employee booklets wasn’t sufficiently clear, said the Court, to allow GM to impose the unilateral changes on retirees following their retirement. The Court made very helpful comments about exactly what wording in employee booklets may be effective to give an employer the legal right to reduce retiree benefits.

It is common for employers to change employee benefits promised to current, non-union employees. The considerations for terminated or retired employees are very different. The recent GM case confirms the reality that Canadian courts will likely not allow employers to unilaterally change the benefits of non-union retirees, unless the employer has communicated that possibility very clearly to the employees while they were employed.

GM has not given up the fight. It has announced that it will appeal the Court’s decision. Meanwhile, employers would be well-advised to take a look at the wording in their employee booklets and other benefit communications that says benefits can be changed in future. Will that language withstand a court challenge that it isn’t sufficiently broad or clear to allow changes to be made? The answer may lie in the reasons for judgment in the GM case and pending appeal.

On October 9th, 2013, Dentons hosted the Fall Employment and Labour Law Update.  This seminar featured presentations from our firm members Anneli LeGault, Jeff Mitchell and Andy Pushalik.

Presentations include:

• AODA Update: What Employers Should Know About the Accessibility for Ontarians with Disabilities Act, 2005, presented by Anneli LeGault
• Return to Work Strategies: Sick and Disabled Employees, presented by Jeff Mitchell
• Non-Solicitation and Non-Competition Covenants: Making them Enforceable, presented by Andy Pushalik

CHRP Accreditation

This program may be eligible for recertification points.

CPD Accreditation

This 1.5 hour program can be applied toward 9 of the 12 educational hours for Continuing Professional Development required annually by the Law Society of Upper Canada. Please note that these CPD hours are not accredited for the New Member Requirement.

This seminar is also offered via webinar.

To download a PDF of the presentation, or the seminar booklet, click here.

To view the full presentation, click here.

For additional information, please contact:

While not making new law, the recent Divisional Court decision in Ghanny v. 498326 Ontario Limited 2013 ONSC 4057 provides a useful reminder of the steps an employer should take to minimize the risk of constructive dismissal when engaging in a good faith reorganization that impacts on the terms and conditions of its employees’ employment.

The facts of the case are quite simple. The employee, Mr. Ghanny, had been employed with Downtown Toyota for 18 years as Service Manager, earning $80,000 per year. The owner of Downtown Toyota also owned Downtown Suzuki. The owner advised Mr. Ghanny in June 2008 that his position was being eliminated at the end of the month, but that Mr. Ghanny would be relocated to Downtown Suzuki, which was just a few blocks away. Mr. Ghanny was advised that he would continue as Parts and Service Manager at Downtown Suzuki, and would earn the same $80,000 compensation package.

Mr. Ghanny refused the position at Downtown Suzuki for two reasons. First, he believed that his 18 years of service would not be recognized at the new location, and second, he was concerned that the position at Downtown Suzuki was uncertain, because the owner had also told him that in the near future it was likely that the Suzuki location would either be converted into a Lexus dealership, relocated, sold or possibly closed. As such, Mr. Ghanny felt that the position at Downtown Suzuki would only be temporary.

There was a conflict in the evidence as to whether Mr. Ghanny was told that he would lose his seniority. The employer gave evidence that it highly valued Mr. Ghanny, and legitimately wanted him to accept the position at Downtown Suzuki. To that end, the employer’s evidence was that it told Mr. Ghanny that his years of service would be transferred to Downtown Suzuki, and further that Mr. Ghanny was told that whatever the future of Downtown Suzuki, his job was not at risk.

On the issue of recognition of service, the trial judge preferred the evidence of the employer over the evidence of the employee. The Court held that it was unlikely that the employer, who was attempting to convince a valued employee to accept a new role, would have told him that his service was being eliminated. It found that it was more likely that the employer told him that although his service at Downtown Toyota was being eliminated, his service would be transferred to Downtown Suzuki.

The Court found that one month’s notice of the change was insufficient, and that if Mr. Ghanny’s action had been successful, 14 months would have been reasonable notice. That said, relying heavily on the Supreme Court of Canada decision in Evans v. Teamsters Local 31, [2008] 1 S.C.R. 661, the trial judge dismissed the action, finding that it was unreasonable of Mr. Ghanny to refuse to accept the position at Downtown Suzuki. The Court stressed a number of factors in coming to this conclusion:

1. Although not an identical job, the position at Downtown Suzuki was the same type of job, and as such the new position would not have been demeaning or insulting.
2. The employer legitimately wanted to retain the employee, and as such this was not a veiled attempt to get rid of him.
3. The employee was given assurances that his overall compensation would remain the same.
4. The employee was told that although there was a risk that the dealership might close, the employer would find a place for him within its organization.

Key to the Court’s conclusion was the fact that with the exception of the issue of service recognition, the terms of the new position were clearly outlined by the employer. As such, there was no ambiguity as to the nature of the position or the compensation the employee would receive. Given that the new position was comparable to the previous position, Mr. Ghanny failed to mitigate his damages by refusing to accept the new role, and was not entitled to pay in lieu of notice. On appeal, in a brief endorsement, the Divisional Court determined that the trial judge had correctly applied the law, and upheld the decision.

For employers, this case reinforces that legitimate organizational changes can be implemented without triggering constructive dismissal where the new position and compensation are comparable to the previous role. When proceeding with organizational change that impacts terms and conditions of employment, this case highlights the importance of the following:

1. Give as much notice of the change as possible.
2. Be clear with the employee as to: (i) the nature of the new position; (ii) any revised compensation; and (iii) how the employee’s service will be recognized. In Ghanny, it appears that one of the reasons the employee rejected the change was a misunderstanding as to whether his service at the new location would be recognized. Had the employer been clear in its offer (for example, by sending an e-mail or other written communication confirming the terms of its offer), a significant issue at trial could have been avoided.
3. Where appropriate, make it very clear to the employee that this is an organizational change, and that he/she is a valued employee whom the employer wishes to retain.
4. If the employee rejects the change, make efforts to find out why, and if possible address the concerns, or at a minimum explain why the employer needs to implement the aspect of the change that the employee finds objectionable. The employee should then, if possible, be given the opportunity to reconsider accepting the role.

Proceeding with these considerations in mind will make an employee more likely to accept a new position, and if the matter proceeds to litigation, reduce the risk (and liability) of constructive dismissal.

To view the Trial Decision click here:

To view Divisional Court Decision client here:

On July 17th, the Ontario Ministry of Labour announced that it has appointed a Minimum Wage Advisory Panel, chaired by Anil Verma, Professor of Human Resource Management at the University of Toronto’s Rotman School of Management.  It is intended that the panel will examine the province’s current minimum wage policy and provide advice on how Ontario should determine the minimum wage in the future.  The Ontario government’s recent announcement stated that the panel will also recommend a process to set future minimum wages in a way that is both fair to workers and predictable for businesses. 

The panel intends to consult with business and labour groups, workers, anti-poverty advocates, young workers, and academics.

Interestingly, the current Ontario general minimum wage is $10.25 per hour, which is a 50% increase since 2003.  As well, Ontario already has one of the highest minimum wages in Canada.  That said, Ontario is one of only three provinces which does not have a formal mechanism for calculating or adjusting the minimum wage.  It can be expected, therefore, that the panel is likely to endorse some sort of mechanism as part of its report.

Interested parties are invited to make submissions to the panel prior to October 18, 2013.  Submissions may be made to the Minimum Wage Advisory Panel by mail to 400 University Avenue, 12th Floor, Toronto, Ontario, M7A 1T7, by fax to (416) 326-7650, or by email to minimumwage@ontario.ca.  In addition, interested parties can make online submissions through the Ministry’s website:  http://www.labour.gov.on.ca/english/es/submissions.php.

In an era where finding efficiencies and cost-cutting are often important tools for business, a question faced by business is how and whether benefits in place for current employees and retirees can be changed.

A recent decision of the Ontario Superior Court, O’Neill v. General Motors of Canada, 2013 ONSC 4654, provides significant guidance to employers on this question.

In the face of severe economic pressures facing its business, the employer, General Motors (GM), sought to reduce the retiree benefits available to its employees. There were three groups of individuals affected by GM’s attempted reduction:

• Current salaried employees, who were eligible to retire but who had not yet done so;
• Retired salaried employees; and
• Retired executive employees.

The Court approached the issue from a contractual standpoint, considering the reasonable expectations of both GM and the employees in each class, and examining whether, with respect to each group of employees, GM had contractually “reserved the right” to make changes pursuant to a reservation of rights (“ROR”) clause in its contracts. The Court accepted that if GM had made it clear in its contractual documents (such as benefit booklets, benefit summaries and other communications to employees) that it could make changes in future, then it had the right to do so. The Court also made clear, however, that the ability to make changes had to be explicit – clear and unambiguous – and that any ambiguity would be resolved in favour of the employees, since GM was the drafter of the documents.

In looking at the reasonable expectations of the parties, the Court started out by examining the booklets that GM had distributed to the salaried employees over the years, and in particular the representations that GM had made in those booklets. The booklets contained statements that the benefits being provided “should be of interest to your family and a useful tool for your own financial planning”, that they “are an important factor in making your life more enjoyable and the future of yourself and your family more secure”, and that “basic life insurance will be continued for you for your lifetime”, and the Court concluded that these statements were “representations” made by GM that the salaried employees could “rely on a core of health care and life insurance post-retirement benefits that would continue unchanged for the remainder of their life”, and that this was a form of deferred compensation and not a gratuitous benefit.

The Court also referred to the ROR clause introduced by GM in 2012 (after the commencement of the litigation), which contained the following language (the “2012 ROR clause”):

“General Motors of Canada Limited (“General Motors”) reserves the right to amend, modify, suspend or terminate any of its programs (including benefits) and policies covering employees and former employees, including retirees, at any time, including after employees’ retirements.” (emphasis in original)

The Court held that this clause was “clear and unambiguous”, and suggested that had it been in place during the retirees’ employment, it would have allowed GM to make changes to the benefits of retirees, even after retirement. While strictly speaking these comments are “obiter” (i.e. they were not necessary to the actual decision and therefore are not legal precedent), these comments are extremely helpful to employers in designing effective ROR clauses in benefit plans, particularly retiree benefit plans.

The Court then considered the ROR clauses that GM had in existence prior to the salaried employees’ retirements. Although various ROR clauses had been used over the years, for the purpose of the decision the Court focused on what it concluded was the most explicit clause that had been in existence during the salaried employees’ employment:

“General Motors reserves the right to amend, modify, suspend or terminate any of its programs (including benefits) and policies by action of its Board of Directors or other committee expressly authorized by the Board to take such action. The Programs, benefits and policies to which a salaried employee is entitled are determined solely by the provisions of the applicable program, benefits or policy.”

The Court found that this ROR clause did not allow GM to make changes to retirement benefits after the salaried employees retired. The Court relied on the fact that the ROR clause referred only to “salaried employees”, and did not suggest that GM reserved the right to make changes after employment ended (i.e. when the individual was no longer a “salaried employee”, but rather a “retiree”). Given the fact that ambiguities in these clauses are interpreted against the drafter (the employer), and the need to be explicit when limiting benefit entitlements, the Court found that the ROR clause in existence did not apply to enable GM to reduce retiree benefits after retirement. The Court specifically referred to the 2012 ROR clause (outlined above), and indicated that this modification suggested that prior to 2012 GM had not intended to reserve its right to make changes post-retirement.

Ultimately, therefore, the Court found that salaried employees who retired prior to 2012 had the right to have their existing retiree benefits maintained unchanged through their retirement, and GM did not have the right to make any changes to the retirement benefits in respect of this group, because until 2012, GM only retained the right to make changes to retiree benefits before an individual retired. That said, given the terms of the ROR clause in existence before 2012, GM could make changes to retiree benefits that would be applicable to existing salaried employees (including those eligible to retire but who had not yet actually done so) once they retired.

The Court came to a different conclusion with respect to the retired GM executives, who were subject to a different program, being the “Canadian Supplemental Executive Retirement Program (“CSERP”). The Court relied on the fact that different representations were made in the documents issued to executives to conclude that GM had sufficiently reserved its rights to make post-retirement changes to the benefits that the executives had been promised. The Court relied in particular on the following differences between the CSERP documentation and the salaried employee documentation:

1. It was clear that the CSERP was not “pre-funded”, and that benefits were provided from GM’s current earnings;
2. The statements to the executives made clear that the benefits were “not guaranteed” and could be “reduced or eliminated with the prior approval of the Board of Directors”;
3. Upon retirement, the executive was required to sign a document specifically including a statement that “benefits paid under this Program may be reduced or eliminated with the prior approval of the Board of Directors”.

The Court held that these facts, in combination, made it sufficiently clear to the executives when they retired that the CSERP could be changed by GM in future, which was different from the understanding of the salaried employees. The Court therefore concluded that GM was entitled to reduce the benefits provided to the executives, even after their retirement.

This decision underscores the need to take care when drafting ROR clauses, to ensure that any right to make changes in future is clear and explicitly includes a right to make changes after retirement. Although GM was unsuccessful in certain respects, the case provides a very useful guide to be used in drafting such clauses, and should be reviewed closely when preparing or revising a benefit plan.

O’Neill v. General Motors of Canada, 2013 ONSC 4654 (CanLII)

On June 14, 2013, the Supreme Court of Canada released its highly anticipated decision in Communications, Energy and Paperworkers Union of Canada, Local 30, v. Irving Pulp & Paper, Ltd., 2013 SCC 34 (http://www.canlii.org/en/ca/scc/doc/2013/2013scc34/2013scc34.pdf). In its decision, the Supreme Court of Canada signaled for the first time that employers in safety-sensitive work environments may be justified in implementing random alcohol testing when there is a safety risk in the workplace due to alcohol, such as evidence of a general problem with substance abuse in the workplace.

Facts:

In 2006, Irving Pulp and Paper (“Irving”) adopted a new policy on alcohol and drug use at its kraft paper mill in Saint John, New Brunswick. The mill is acknowledged to be a dangerous workplace with malfunctions carrying the potential for “catastrophic failures”. As part of the new workplace policy, Irving instituted a random alcohol testing program whereby 10% of the employees in safety sensitive positions were to be randomly selected for unannounced breathalyzer testing over the course of a year. In the 15 years which preceded the introduction of this policy, there were only eight documented incidents of alcohol consumption or impairment at the mill. Moreover, there were no accidents, injuries or near misses connected to alcohol.

On March 13, 2006, mill employee Perley Day, was randomly selected to submit to a breathalyzer test. As Mr. Day does not consume alcohol, his test returned a blood alcohol level of zero. Shortly thereafter, the Union filed a policy grievance alleging that the random alcohol testing component of the new alcohol and drug policy was unreasonable; the Union did not challenge the other aspects of the policy.

The arbitration board found that although random alcohol testing may be reasonable in some circumstances, there was not sufficient evidence in this case of an existing problem with alcohol use in the workplace. On judicial review, the Court of Queen’s Bench of New Brunswick set aside the arbitration decision. The New Brunswick Court of Appeal dismissed the appeal.

The SCC’s Decision:

While there was no debate about the safety-sensitive nature of the workplace, the majority held that the dangerousness of a workplace is only the beginning of the inquiry, “[w]hat has been additionally required is evidence of enhanced safety risks, such as evidence of a general problem with substance abuse in the workplace.” That said, Justice Abella, on behalf of the majority, went on to say that “[t]his is not to say that an employer can never impose random testing in a dangerous workplace. If it represents a proportionate response in light of both legitimate safety concerns and privacy interests, it may well be justified.” Considering the particular facts before them in this case, the Court found that random alcohol testing was not justified in the context of the Irving paper mill in Saint John, New Brunswick.

The three judges in dissent noted that an employer should not be required to wait for a serious incident of loss to take proactive steps to mitigate risk.

Barbara B. Johnston and April Kosten represented the Construction Owners Association of Alberta, Construction Labour Relations – An Alberta Association and Enform at the Supreme Court of Canada. Please feel free to contact Barbara or April directly if you would like to discuss the implications of this decision.

In the 2001 case of McKinley v. B.C. Tel, the Supreme Court of Canada ruled that a contextual approach is required in order to determine whether there is just cause for termination of employment.   A recent wrongful dismissal case involving receipt of pornographic material illustrates how the contextual approach will be applied by courts.

In February 2013, the Court of Appeal of New Brunswick upheld a lower court finding in the case of Asurion Canada v. Brown and Cormier,  to the effect that dismissal without notice was a disproportionately severe penalty for receiving pornographic emails at work.  At the time of termination, Cormier had been with Asurion for 8 years and was a call centre supervisor.  Brown was employed by Asurion for 9 years and was vendor payables specialist.  Both men had a good employment history with the company.  Both men, unfortunately, also had a mutual friend who liked to send them pornographic emails.

During the period from mid May to mid July 2010, Cormier and Brown were sent over a dozen unsolicited emails from their friend.  The emails were promptly sent to home email accounts and deleted.  They were not shared with anyone at work. When Asurion became aware of the emails in July as a result of its network monitoring system, both men were dismissed immediately due to breach of the company’s policies and breach of trust.

While the company did have a policy which prohibited “accessing, transmitting, receiving or storing discriminatory, profane, harassing or defamatory information”, the court found that the policy was not reasonable given that: (i) ”receiving” information does not involve a positive act; and (ii) the emails in question were unsolicited.  More importantly, the court confirmed that the response of the company was not proportionate to the actions of the employees.  In particular, these longstanding employees had unblemished records, none of the emails were shared with fellow employees, and the images attached to the emails fell within the category of “perfectly legal adult pornography” and were not in violation of the Criminal Code of Canada.

Asurion had an employee handbook with a comprehensive Computer Use and Harassment policy.  The company’s employees were required to read the company’s policies and there was some suggestion that they were reminded of the Computer Use policy each time that they logged onto their work computers.  The company went even further, and used a network monitoring system in order to ensure that the policies were being complied with.  Ultimately it was all for naught, as the policy was found to be unreasonable and the application of it was disproportionately severe when viewed through the lens of the employees’ years of service and specific actions or inactions in the case at hand.

This recent decision serves as a good reminder that any time a termination for cause is being considered, the employer should consider not just the offending actions of the employee, but the other relevant circumstances of the employee’s employment.

Asurion Canada Inc. v. Brown and Cormier, 2013 NBCA 13 (CanLII)

In a March 2013 decision that is likely to be challenged in the courts, the Ontario Human Rights Tribunal has ordered the reinstatement of an employee a decade after she went on disability leave, together with loss of wages from June 2003 until the date of reinstatement.

In a 2012 decision in  Fair v. Hamilton-Wentworth District School Board, adjudicator Joachim found that the respondent school board had discriminated against the employee by failing to accommodate her disability.  In particular, in 2001 she developed an anxiety disorder as a result of the highly stressful nature of her job, and went on long-term disability.  She was subsequently assessed as capable of gainful employment in 2004.  From mid 2003 onwards however, the school board failed to take any steps to offer her available alternative work, even though similar jobs were advertised and the employee underwent job hardening in positions for which the employer was seeking employees.

In March 2013, adjudicator Joachim rendered her decision in relation to the remedy for this case of discrimination.  She found that because: (i) the employee had commenced her initial complaint with the Ontario Human Rights Commission only 4 months after her employment was terminated; (ii) the delay was largely at the hands of the Commission; and (iii) the employee had confirmed that she was seeking reinstatement when her application was subsequently filed with the Tribunal, there was no good reason to not order reinstatement due to the passage of time.

As a result, the employer was ordered to reinstate the employee despite her absence from work for almost a decade.  In addition, the employer was ordered to pay the employee’s lost wages, benefits, expenses and pension contributions over that period of time, which amounted to over $400,000 (subject to any employment insurance and related deductions).  Finally, adjudicator Joachim awarded the Applicant $30,000 as compensation for the injury to her dignity, feelings and self-respect.

Despite the likelihood of an appeal, this is an important decision as it illustrates the potential liability associated with a failure to return an employee to work after his or her disability leave.

Hamilton-Wentworth District School Board, 2013 HRTO 440 (CanLII)

An employee of a drive test centre has been jailed for accepting a bribe from a driving instructor, who has also been jailed.

Harvey Aitchison worked as a driving examiner for DriveTest Centre, the agency that tests Ontario drivers, in Oakville. He accepted bribes from Cyril Julius Marques, who was the owner and driver instructor of a driving school, to guarantee that that Marques’ driving students passed their Ministry of Transportation road examination.

Marques would charge $450.00 to his driver students, $300.00 of which he would give to Aitchison.  Marques would keep the remaining $150.00.  The bribing came to light after Marques offered a DriveTest coordinator a pack of cigarettes if she assigned Aitchison to test his student.  The coordinator blew the whistle.  Aitchison resigned from his job.

Both Aitchison and Marques pleaded quilty to accepting a bribe, contrary to section 426(1)(a) of the Criminal Code. That section provides:

426 (1) Every one commits an offence who

(a) directly or indirectly, corruptly gives, offers or agrees to give or offer to an agent or to anyone for the benefit of the agent — or, being an agent, directly or indirectly, corruptly demands, accepts or offers or agrees to accept from any person, for themselves or another person — any reward, advantage or benefit of any kind as consideration for doing or not doing, or for having done or not done, any act relating to the affairs or business of the agent’s principal, or for showing or not showing favour or disfavour to any person with relation to the affairs or business of the agent’s principal

Aitchison claimed the he accepted the bribes out of frustration towards his employer; Marques said that his actions were caused by his financial problems and his wife’s health problems.

The court sentenced Aitchison, a 64-year-old man with no criminal record, to a jail term of 4 months to be followed by 2 years of probation. The court sentenced Marques, a 58-year-old man who also did not have a criminal record, to a jail term of 90 days, which he was permitted to serve intermittently given his employment status and his wife’s medical needs.  The court stated that their corrupt scheme was a breach of trust offence that put the public at real risk of harm: sending unqualified drivers onto the roads.  The court pointed out that, ”Public corruption is of significant concern to the citizens of Canada and general deterrents and denunciation must be the dominant sentencing factors.”

While there is no indication in this decision that the employer was charged or implicated in this case, employers that knowingly permit employees to accept bribes could also be subject to prosecution under the Criminal Code: subsection 426(2) of the Criminal Code provides that, “Every one commits an offence who is knowingly privy to the commission of an offence under subsection (1)”.

R. v. Aitchison, 2013 ONCJ 74 (CanLII)

On March 5, 2013, the Ontario government introduced new legislation which, if passed, would create three new job-protected leaves.

The Employment Standards Amendment Act (Leaves to Help Families), 2013, proposes new leaves that build on the existing Family Medical Leave under the ESA.  They are as follows:

Family Caregiver Leave - up to 8 weeks of unpaid leave for employees to provide care and support to a family member with a serious medical condition.

Critically Ill Child Care Leave – up to 37 weeks of upaid leave to provide care to a critically ill child.

Crime-Related Child Death and Disappearance Leave - up to 52 weeks of unpaid leave for parents of a missing child and up to 104 weeks of unpaid leave for parents of a child that has died as a result of a crime.

If passed, the leaves would allow parents and other family caregivers to provide care and support for loved ones without fear of losing their jobs.  These leaves are in addition to the current Family Medical Leave, which is available when a family member has a serious medical condition with a significant risk of death occurring within 26 weeks.  A doctor’s note would be required for the Family Caregiver Leave and the Critically Ill Child Care Leave.

Complementing the new federal Helping Families in Need Act, employees covered by the Critically Ill Child Care Leave and the Crime-Related Child Death and Disappearance Leave would be eligible to apply for federal Employment Insurance benefits.

The Ontario’s government’s news release and “backgrounder” may be accessed here.

The British Columbia government introduced legislation on February 28, 2013 that once passed will make Pooled Registered Pension Plans (“PRPPs”) available to employees in the province. Features of the PRPP structure that may offer significant appeal to B.C. employers include:

• Reduced administrative requirements – PRPPs will not be administered by B.C. employers, but rather by licensed entities, such as insurance companies
• Low-costs realized through the pooled nature of the investments and central administration
• Employer choices – PRPPs are not mandatory for B.C. employers, and once a PRPP is offered employer contributions are optional
• Tax advantages for employers that are not available for other forms of workplace retirement savings plans
• Employers not exposed to underfunding issues – the PRPP will function on a defined contribution basis, which limits employers’ funding obligations
• Recruitment and retention advantages of providing a new option for retirement savings

The PRPP legislation is aimed to enhance pension coverage in B.C., where according to the Ministry of Finance News Release, approximately two-thirds of the workforce has no access to a registered pension plan.

Information about the federal government’s rules regarding PRPPs can be found here.

FMC will continue to monitor the legislation and provide updates on the implementation of PRPPs in British Columbia and across Canada. For more information please contact Colin Galinski at 604-443-7133 or colin.galinski@fmc-law.com.

Trish-Ann Tremblay had entered into a settlement agreement with her former employer, 1168531 Ontario Inc., on September 13, 2011, with respect to the Human Rights Application she had filed against 1168531 Ontario Inc.. The settlement agreement contained a standard confidentiality provision requiring parties to maintain the confidentiality of the terms of the Minutes of Settlement.

The next day after the mediation, Ms. Amy Lalonde, manager with the Respondent Company, was informed by a colleague that Ms. Tremblay had posted messages on Facebook about the mediation and settlement. In fact, the first message was posted during the mediation session itself:

“Sitting in court now and _______ is feeding them a bunch of bull shit. I don’t care but I’m not leaving here without my money…lol”.

After the Minutes of Settlement were signed, Ms. Tremblay posted the next message as follows:

“Well court is done didn’t get what I wanted but I still walked away with some…”

Shortly thereafter Ms. Tremblay posted the following message:

“Well my mother always said something is better than nothing…thank you so much saphir for coming today…”

While Ms. Tremblay argued that there was no proof that she was talking about the Respondents as she did not mention them by name, the Tribunal held that it was clear from the date of the postings and the comments made that she was referring to the mediation. The Tribunal found that Ms. Tremblay had breached the confidentiality provision of the Minutes of Settlement. However, the Tribunal found that the Respondent Company had also breached the Minutes of Settlement by not paying Ms. Tremblay the settlement amount.

The Tribunal ultimately ordered that the amount owing to Ms. Tremblay under the settlement agreement be reduced by $1,000. In determining the appropriate remedy, the Tribunal took into account that Ms. Tremblay did not disclose the amount of the monetary settlement in her Facebook posts. The Tribunal also considered the relatively public nature of Facebook, especially in the small community in which the applicant and respondent company resided.

When mediating issues of a sensitive nature, employers should consider including confidentiality provisions in settlement agreements that specifically prohibit disclosing terms of settlement on social media sites, including Facebook, Twitter, LinkedIn, etc.

Tremblay v. 1168531 Ontario Inc., 2012 HRTO 1939 (CanLII)

Did you know that the Ontario Ministry of Labour has a Q&A on how to deal with natural disasters in the workplace?

The Q&A, which can be found at the link listed below, covers issues such as whether or not an employee can be forced to take vacation days in the event of a natural disaster which prohibits him or her from working, or whether an employee must be paid if he or she is told to not come to work during the disaster.

Apart from basic issues covered in the Q&A, there are a number of other things to be aware of in the event of a natural disaster.  The Emergency Management Statute Law Amendment Act, 2006 (Ontario) permits the Premier and Cabinet to introduce legislation intended to govern emergencies such as natural disasters.  In addition, the Employment Standards Act, 2000 (Ontario)  provides for unpaid emergency leave for declared emergencies such as natural disasters, which is different than the standard emergency leave to deal with an ill or injured family member.

While an employer may not wish its employees to come to work in the event of a natural disaster, there may also be situations where certain employees are in fact required to work precisely because of the natural disaster, even if the workplace is under quarantine.  The ESA specifically permits certain employees to work in those situations, if their skills are required due to an emergency.  Likewise, although employees may rely on the Occupational Health & Safety Act (Ontario) (“OHSA”) to refuse to work if they are concerned that the condition of their workplace may jeopardize their health or safety, exemptions to OHSA require certain essential employees to work notwithstanding those conditions.

In addition to the above, there are a number of other pieces of provincial and federal legislation which work together to answer some of the key questions about how to deal with a natural disaster in the workplace.  Whether that disaster relates to health issues (eg. SARS, H1N1), loss of the workplace premises or something else, this combined legislation will help employers determine the appropriate response to disasters, and it is recommended that employers be proactive about understanding their obligations so that they are prepared in the event that disaster strikes.

To access the Ministry of Labour’s Q&A, click here.  For more information about all of the workplace issues involved in the event of a natural disaster, a more thorough discussion can be found here.