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Bill 132 Update: MOL Releases Code of Practice to Help Employers Comply with OHSA’s Harassment Provisions

Further to our series of posts on Ontario’s new Sexual Violence and Harassment Legislation, which amends the Occupational Health and Safety Act, the Ontario Ministry of Labour has recently issued a Code of Practice to Address Workplace Harassment under Ontario’s Occupational Health and Safety Act. The Code of Practice deals with the OHSA’s new Workplace Harassment provisions, which come into force on September 8, 2016. The Code of Practice is effective as of that same date.

Importantly, although employers are not legally required to comply with the Code of Practice, those who do will be considered by the Ministry to have complied with the harassment provisions of the OHSA. As such, the Code of Practice is a practical tool that employers can use to ensure compliance.

The Code of Practice is divided into four Parts, each of which is further subdivided into a “General Information” section, which provides guidance on the interpretation of the OHSA’s Workplace Harassment provisions, and a “Practice” section, which details requirements that employers may follow to comply with the OHSA.

The Code of Practice’s Preface indicates that following its requirements is “just one way in which employers can meet the legal requirements regarding workplace harassment” and a failure to comply with all or part of the Code of Practice may not be a breach of the OHSA. However, the Code of Practice also states that, while employers may choose to adhere to one or all of the Code of Practice’s Parts, if an employer does adhere to a Part, it must adhere to all of the Practice requirements under that Part in order to be deemed in compliance with the related Workplace Harassment provision in the OHSA.

The Code of Practice’s “General Information” sections provide guidance on the interpretation of the OHSA’s Workplace Harassment provisions, as follows:

  • Part I: Workplace Harassment Policy – This section outlines the contents of a Workplace Harassment Policy and explains that employers may choose to prepare a separate Workplace Harassment Policy or combine it with their workplace violence, occupational health and safety and/or anti-discrimination and anti-harassment policies. A template Workplace Harassment Policy is included in the Code of Practice (Sample Workplace Harassment Policy)
  • Part II: Workplace Harassment Program – This section considers reporting mechanisms for incidents and complaints of Workplace Harassment. In particular, it clarifies that a person who receives a complaint of Workplace Harassment should not be under the alleged harasser’s direct control. Further, in instances where the worker’s employer or supervisor is the alleged harasser, an alternate person who can “objectively address the complaint” must be designated to receive reports of Workplace Harassment, such as an employer’s board of directors and/or a consultant. Further, the Workplace Harassment program should set out whether this person would only receive the complaint, or whether this person would be expected to carry out an investigation.

    This section also considers the consequences of incidents of Workplace Harassment. In incidents arising from individuals who are not the employer’s workers, the section suggests that employers could either modify or refuse its services to such people. Consequences for workers could include: apologies, education, counseling, shift changes, reprimands, suspension, job transfer, termination or, in instances where workplace harassment is prevalent or commonplace, training for everyone in the workplace.

  •  Part III: Employer’s Duties Concerning Workplace Harassment – This section relates to investigations into Workplace Harassment and provides that: an “appropriate investigation” must be “objective”; the investigator must not be “directly involved in the incident or complaint” or “under the direct control of the alleged harasser”; and the investigator should have knowledge of how to conduct an investigation appropriate in the circumstances. The parties to the complaint should be updated periodically on the status of the investigation. The Code of Practice includes a sample investigation template, which can be found here: Sample Investigation Template
  • Part IV: Providing Information and Instruction on a Workplace Harassment Policy and Program – This section outlines the scope of the “Information and Instruction” that an employer must provide to its workers under the OHSA. Employers provide information and instruction on “what conduct is considered workplace harassment” and supervisors need to receive specific instruction on “how to recognize and handle a workplace harassment incident”. The employer should keep records of the information and instruction provided to its workers for at least one year.

Notably, the “Practice” sections list additional requirements that are not contemplated by the OHSA’s new Workplace Harassment provisions, including, but not limited to:

  •  Indicating, in a Workplace Harassment Program, when an external person will be retained to conduct a workplace harassment investigation (for example, but not limited to, when the alleged harasser is a president, owner, high-level management or senior executive);
  • A timeframe of 90 calendar days or less to complete an appropriate investigation, unless there are extenuating circumstances warranting a longer investigation (e.g. more than five witnesses or key witnesses unavailable due to illness);
  • Listing seven steps to an investigation that an employer must complete, at a minimum, including giving the alleged harasser(s) the opportunity to respond to allegations raised and, in some circumstances, providing the worker who has experienced Workplace Harassment with a reasonable opportunity to reply; and
  • That corrective action, if any, that is or will be taken as a result of the investigation, must be communicated in writing within 10 calendar days of the investigation being concluded.

The Code of Practice attaches a Sample Workplace Harassment Program, which provides guidance on addressing the Code of Practice’s requirements.

The Ministry of Labour indicates that the Code of Practice is “designed to help employers meet their obligations” with respect to the OHSA’s Workplace Harassment provisions. As such, it provides insight on the Ministry of Labour’s expectations for developing, implementing and maintaining Workplace Harassment Policies and Programs. While employers do not need to comply with the Code of Practice’s requirements to ensure compliance with the OHSA, a consideration of the information and requirements set out in the Code of Practice will help employers address Workplace Harassment in a manner that is consistent with the Act and the Ministry’s expectations. The full text of the Code of Practice can be found here.

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Bill 132 Update: MOL Releases Code of Practice to Help Employers Comply with OHSA’s Harassment Provisions

Double Check those Bonus Plans!

The Ontario Court of Appeal’s decision in the case of Paquette v. TeraGo Networks Inc. should have all employers running to double-check and possibly amend their bonus plans.  A further case released on the same day by the same panel of judges further confirmed the law set out in the Paquette decision.

Trevor Paquette had been employed by TeraGo Networks for approximately 14 years at the time of termination.  He brought a motion for summary judgment and his common law notice period was found to be 17 months.  The motions judge also determined that he was entitled to damages in lieu of his remuneration for the entire notice period, although he denied entitlement to damages in lieu of bonus entitlement over the notice period.  The matter proceeded to appeal solely on the basis of whether or not Paquette was entitled to damages in lieu of bonus during his 17 month notice period.

Paquette’s bonus plan stated that he had to be “actively employed” at the time the bonus was paid in order to receive same.  The Court of Appeal reviewed a number of similar bonus and stock option plan cases, and confirmed that the following is the state of the law in Ontario:

  • Subject to contractual terms, a terminated employee is entitled to compensation for all losses arising from the employer’s failure to give proper notice, and the damages award should place the employee in the same financial position he or she would have been in had such notice been given.  In Paquette’s case, since he would have earned a bonus had he been given working notice, the use of the words “active employment” could not be used as an end-run around his claim for the bonus over the pay in lieu of notice period.
  • The test to be followed is two-fold: (i) the first step is to determine an employee’s common law rights and whether a bonus forms an integral part of the employee’s compensation; and (ii) the second step is to determine whether there is something in the bonus plan that would specifically remove that common law entitlement.
  • An “active employment” requirement does not preclude the employee from receiving damages representing compensation for the bonuses which the employee would have received if employment had continued through the reasonable notice period.

The key for employers then, is to ensure that the language of any bonus plan is sufficiently clear that the common law entitlement to damages in lieu of bonus is expressly removed.  As every bonus plan is different and as the drafting of this sort of exclusionary language is obviously complex, legal advice should always be sought by employers when it comes to limitations set out in bonus plans.

The Court of Appeal’s decision in Paquette v. TeraGo Networks Inc. can be found here:  http://www.canlii.org/en/on/onca/doc/2016/2016onca618/2016onca618.html.

Double Check those Bonus Plans!

Intrusive surveillance systems for security purposes: the line Big Brother must not cross

Technological developments and the need for employers to monitor employees’ activities and to minimize accidents and hazards require constant adjustments in order to respect the right to privacy. While it may be tempting for employers to replace old surveillance methods with new technologies capable of watching their personnel’s every move, the inclination to use easier and more reliable ways of supervising employees must nonetheless not violate employees’ right to privacy, which, while being more limited in a work context, nevertheless exists.

In a recent Quebec arbitration ruling, Sysco, a food delivery company, had decided to install a DriveCam® safety program inside the drivers’ cabins of its trucks in Quebec. The Union disagreed with the introduction of this new surveillance measure and filed a grievance to have said cameras removed, alleging that they were not only violating the truck drivers’ rights to privacy and dignity, but that they were also leading to unfair and unreasonable working conditions.  In addition, the Union claimed that Sysco had failed to establish serious motives which would justify its resort to the use of such invasive surveillance, especially considering the existence of a no‑fault system in Quebec.  On its end, Sysco claimed that it was justified to install the cameras as they were meant to (i) be used as a training tool for the drivers, (ii) increase and encourage safe driving and (iii) assist with liability determination or exoneration in case of accident.

In ruling that Sysco was not justified in installing those cameras and ordering that they be removed, the Arbitrator used a two-fold analysis. First, did Sysco have a specific problem that needed to be addressed with these cameras?  Second, were these cameras the only way to fix the alleged problem, or was there a less intrusive way to achieve similar results?

On the first part of the analysis, the Arbitrator found that Sysco had failed to establish that it had an existing problematic situation that needed to be fixed. The employer’s concern for prevention regarding safe driving and liability determination or exoneration did not constitute strong motives for which the surveillance would be warranted.  Considerable risks revealing an existing problem would have been enough to establish the presence of a problem, but Sysco had not established such a problem. For example, a widespread problem having to do with alcohol or drug consumption during working hours would have constituted a great risk in the matter of safe driving.

With respect to the second aspect of the analysis, Sysco’s concern could easily have been addressed by other less intrusive means, such as training, random safety spot-checks, or cameras installed outside of the trucks rather than inside the cabins. In fact, cameras constantly filming the drivers inside the trucks’ cabins had even proven to be distracting for the drivers, thus potentially creating a greater risk from a safety perspective.

Employers who may be tempted to install such surveillance systems on their fleet will need to remember that any such violation of their employees’ right to privacy will only be justified by identifying an existing specific problem that cannot be fixed by a less intrusive means than the surveillance system the employer wishes to install.

The decision can be found here: Syndicat des travailleurs et travailleuses de Sysco-Québec-CSN et Sysco Services alimentaires du Québec, 2016 QCTA 455.

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Intrusive surveillance systems for security purposes: the line Big Brother must not cross

Environmental, Social and Governance Factors: Does Failure to Consider ESG Issues Constitute a Breach of Fiduciary Duty?

Changes made to the Ontario Pension Benefits Act and Regulation (the “Ontario PBA”), which came into force on January 1, 2016, now require a pension plan’s statement of investment policies and procedures (“SIPP”) to include information as to whether environmental, social and governance (“ESG”) factors are incorporated into the plan’s SIPP and, if so, how those factors are incorporated.  The changes have raised more questions than there are answers for plan administrators.  The primary question is whether there is a legal requirement to take ESG into account or must the administrator simply consider whether, or not, to incorporate ESG?

Ontario is not the only jurisdiction to introduce ESG into the SIPP equation. In 2005, Manitoba indicated that fiduciaries could consider ESG factors provided administrators otherwise complied with statutory fiduciary duties.  Not taking ESG factors into account is not a breach of any statutory law (at least not yet), but Ontario’s recent move has certainly added to the not-so-old debate:  Is a failure to consider ESG factors in your pension plan’s SIPP a breach of fiduciary duty?

On a basic level, it is the fiduciary’s role as plan administrator to be responsible for investing the pension fund in accordance with the administrator’s standard of care, in a prudent manner and always in the best interest of plan beneficiaries. Pursuant to section 22 of the Ontario PBA, prudent investing entails understanding, monitoring and investigating risk.  The administrator is responsible for determining what prudence requires within the context of the plan in question.

North American investors have in general been slow to incorporate ESG factors into their investment research, analysis and decision making, whereas European investors have been doing so for many years.

Canada’s large public sector pension funds, including CPP, Ontario Teachers’, HOOPP, OMERS, bcIMC and others, have now incorporated ESG into their investment policies. CPP Investment Board has stated:

“We believe that organizations that manage Environmental, Social and Governance (ESG) factors effectively are more likely to create sustainable value over the long term than those that do not. As we work to fulfill our mandate, we consider and integrate ESG risks and opportunities into our investment decisions.”

The link between ESG issues and bottom line profits and share prices was illustrated late in 2015 when BHP Billiton and Vale’s horrific mine disaster in Brazil resulted in the deaths of 17 people as well as hundreds of individuals losing their homes due to a massive dam burst. In February 2016, BHP recognized a US$1.12 billion provision related to the disaster.

The questions for administrators include:

  • How should you balance your primary objective to achieve optimal rates of return within an acceptable level of risk?
  • Should an investment target company’s ESG record take precedence over its increase in share price?

Administrators face significant hurdles in gathering relevant non-financial (or extra-financial) data if they wish to take ESG factors into account. Independent ESG research and analysis firms are available to help pension fund administrators gather materially relevant information on potential investments and their respective corporate ESG performance as well as information on external managers, many of whom are already integrating ESG factors into their investment processes.

Bottom line for administrators, if ESG factors are determined to be of importance in their investment policies and procedures, their first step is to separate the identifiable legal implications that will arise from incorporating ESG information into their SIPP and how their governance committee is expected to assess ESG analytics into their overall risk management policies. Does ESG act as a tie breaker when other financial considerations appear equal?  How should administrators communicate (and document) their ESG factors and decision-making processes to the plan beneficiaries?

Plan administrators should seek legal advice to ensure their fiduciary duties are fulfilled if (and more likely when) they begin to embark on considering ESG factors into their investment decision-making process.

 

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Environmental, Social and Governance Factors: Does Failure to Consider ESG Issues Constitute a Breach of Fiduciary Duty?

U.S. employers targeted by lawsuits claiming excessive fees in employee retirement and savings plans: Could it happen in Canada?

I recently wrote about the legal risks regarding plan fees that should be considered by Canadian employers who sponsor group registered retirement savings plans and defined contribution pension plans (that article can be found here).  These risks have been emphasized by several lawsuits filed against U.S. employers in the last few months.  The following is a brief update on litigation activity in the U.S. which should give pause to Canadian employers who sponsor capital accumulation plans for their employees.

This week, no fewer than seven high-profile U.S. universities were sued regarding fees charged in their defined contribution retirement plans.  Plaintiffs are seeking class-action status against these U.S. educational institutions alleging, among other things, that their employers acted imprudently by selecting high-cost funds for the plans when lower-cost alternatives were available.  These lawsuits are part of a trend that has emerged in the last decade: claims against large and small U.S. employers which allege that fees haven’t been adequately disclosed, service providers are being paid unreasonable fees for the services they provide, and insufficient diligence has been carried out to properly select reasonably-priced funds and monitor whether fees remain competitive for years after funds are selected.

Some commentators have referred to this trend as a gold rush for lawyers. Several very large, respected U.S. companies have settled claims for tens of millions of dollars, while at the same time asserting that they have acted prudently in charging plan fees for administration, record-keeping and investment services.

The spate of U.S. litigation should prompt Canadian employers to mull over the following obvious questions: Do plan fees hold up against a benchmark of fees charged by other plans?  Could the same services be provided at a lower price?  Has the employer conducted, and kept records of, regular reviews of fee options?  Was expert advice obtained in selecting funds and negotiating with service providers and investment managers?  Consider this wording in a very recent claim against a small U.S. employer:

“Defendants had a flawed process – or no process at all – for soliciting competitive bids, evaluating proposals with respect to services offered and reasonableness of fees for those services, actively monitoring the reasonableness of fees assessed to Plan participants, and choosing a service provider on a periodic, competitive basis.”

Could all Canadian employers defend such allegations – especially those who have not paid attention to the fees charged in their plans for a few years? They may mistakenly think that their trusted service provider will inform them if fees could be reduced.  That may not be the legal obligation of a service provider.  And it may not be in the financial best interests of service providers to do so.

The Ontario pension regulator has formally encouraged pension plan administrators to shine a light on fees. It stated in a 2016 guideline that it expects employers who sponsor defined contribution pension plans to give “due consideration” to including wording in statements of investment policies and procedures that sets out “expectations, ranges, or limits on total plan expenses and fees; and guidelines for monitoring expenses and fees”. Good advice, especially in light of the litigation on this topic in the U.S.

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U.S. employers targeted by lawsuits claiming excessive fees in employee retirement and savings plans: Could it happen in Canada?

How should employers deal with pensions in a severance package?

HR professionals often ask us how to deal with pension issues when they structure severance packages for non-union employees. Should employees continue to earn pension benefits after termination of employment?  If so, for how long?

Here are some legal principles that will help the puzzled professional approach these questions. See the article by Taylor Buckley here [http://www.employmentandlabour.com/limiting-liability-incentives-and-benefits-on-termination-of-employment] that describes in a general way the treatment of a variety of employee benefits on termination of employment.  This article will focus on the treatment of pensions.

Is there anything in writing?  Is there a written employment contract, collective agreement, plant closure agreement or other document that clearly describes what will happen to pension benefits when the employee is dismissed?  If the answer is yes, follow the written document.  If the answer is no, read on.

The statutory notice period?  Easy. In Ontario, employment standards legislation requires pension accruals to continue during the period of statutory notice.  For both defined benefit and defined contribution pension plans, the employee should be given credit and contributions in the pension plan for that period.  The challenge is what pension treatment should apply at the end of the statutory notice period.  Read on.

What about pension benefits during the period of common law notice?  A period of common law notice could extend for several months after a statutory notice period ends.  Courts have said that long-service, highly-paid employees who are terminated without legal “just cause”, could be entitled to a period of common law notice as long as two years.  The general rule is that an employee who is dismissed without cause is entitled to the value of the pension benefit that he/she would have received if he/she had worked for the entire period of common law notice.  The general rule won’t apply if there’s something in writing that provides for some different treatment – an employment contract, collective agreement, binding policy, etc.

If the general rule applies, the dismissed employee’s entitlement is to the value of the pension that he or she would have earned in the pension plan during the period of common-law notice. When dealing with a defined benefit pension plan, the amount of contributions is not the same as the value.  Advice of an actuary may be required to determine the value of a defined benefit pension accrual during a common law notice period.  It could be easier and less expensive for an employer to set up severance arrangements so that pension accruals continue in the pension plan, rather than pay a separate cash amount equal to the value of the pension accrual.

Are employers required by law to continue pension benefits through the entire period of common law notice?  If the general rule applies, that doesn’t mean that the dismissed employee must receive the value of pension benefits for the entire period of common law notice.  Employees can agree to some other deal.  A dismissed employee could sign a release and accept a severance arrangement that doesn’t include the accrual of pension benefits through the period of common law notice (as long as all statutory obligations are met).  That is legally acceptable, as long as the treatment of pension benefits is clear in the documentation, and the employer has acted appropriately in disclosing the pension issues to the employee.

How should an employer disclose pension issues when negotiating a severance deal?  Carefully.  Pension legislation requires an administrator of a pension plan to act as a fiduciary when explaining pension entitlements under the plan.  That includes a situation where a dismissed employee is considering pension issues in the context of a severance package.  Severance letters often say something like, “you will receive pension information under separate cover”.  If the employer is seeking a release at that point, the release may be challenged in future if the dismissed employee later says that he or she didn’t understand how his pension was being handled under the severance arrangement.  The better approach is to deal with the treatment of pensions up front, in the initial severance letter that sets out all payment terms.

Exactly what are the options in dealing with pensions during a severance period?  The easy point is that in Ontario accruals continue, without exception, during the statutory notice period.  The more difficult point is what should happen with pensions after the end of the statutory notice period.  There are two basic choices.  Pension accruals could cease at the end of the statutory notice period, in which case the dismissed employee simply receives his or her pension termination option statement.  Alternatively, pension accruals could continue for the period of time when the dismissed employee is still considered to be an employee for tax purposes.  The key here is that the status of being employed for pension accrual purposes can continue even if the individual does not report to work.  A severance deal can be structured so that for tax purposes, the individual’s employment has not terminated at the end of the statutory notice period.  Such arrangements are commonly referred to as “salary continuance arrangements”.  The individual’s salary and some benefits continue during the salary continuance period, without interruption, even though the employee no longer comes to work.  The employer doesn’t provide a Record of Employment until the end of the salary continuance period.  Documentation must be clear in confirming with the dismissed employee exactly what is happening with his/her benefits.  And the employer should be aware of what is permitted regarding benefit accruals/continuation in the relevant benefit plan text.

It is often simpler, and less expensive, to provide for continuing pension plan accrual within the pension plan during a period of salary continuance, rather than wrestle with the issue of a cash payment to compensate the dismissed employee for loss of pension accruals during a severance period.

The bottom line for employers with pension plans is that a proper structuring of a severance package requires thought beyond the question of “how many months is this employee entitled to?” There could be an expensive pension issue that employers should address at the outset.  Should the pension accruals continue throughout the salary continuance period?  Would it be easier and less expensive to simply provide a cash payment in lieu of pension accruals?  Has the dismissed employee been given clear and complete information about what his/her pension rights are in connection with his/her severance deal?  Employers should have solid answers to these pension questions before terminating employees.

Get legal advice.  We strongly recommend that employers get legal advice when dismissing employees.  Circumstances can vary, and there may be important exceptions and unique approaches to the principles described in this article.

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How should employers deal with pensions in a severance package?

New Court Decisions Reinforce Need for Benefit Communications Policy

In my last post to this blog I extolled the virtues of a benefit communications policy for HR professionals who communicate pensions and benefits to fellow employees. I pointed out that years of benefit miscommunication has an overwhelming impact on an organization’s potential legal liability. I also highlighted the fact that court decisions demonstrate time and again that important cost-savings measures, such as reducing post-retirement benefits or eliminating future pension accruals, can be derailed by ambiguous communications.

Canadian case law demonstrates how widely courts and arbitrators are prepared to cast their nets when awarding damages for benefit miscommunication. Cases involving negligent misrepresentation, for example, have resulted in awards for retiring employees, terminated employees, spouses of deceased employees and future employees. Two recent cases dealing with employee benefits and pensions demonstrate how a benefit communications policy can make a difference to employers.

In Feldstein v. 364 Northern Development Corporation, the B.C. Supreme Court awarded more than $93,000 in damages to a 364 employee, Feldstein, in respect to inaccurate information provided to him about the company’s long term disability (LTD) program during the hiring process.

During pre-employment interviews Feldstein disclosed that he suffered from a condition that could require him to apply for LTD benefits at some future date and, understandably, asked pointed questions about 364’s LTD program. The hiring manager misrepresented how the program operated and when Feldstein ultimately applied for benefits, he was denied full coverage. The court confirmed that the law required 364 to ensure that representations made to Feldstein about the LTD program were accurate and not misleading.  It concluded that Feldstein, to his detriment, had accepted employment on the strength of the company’s negligent misrepresentation and was entitled to recover damages.

Among the features of a benefit communications policy is the thorough vetting of all communications that may be relied upon by potential and current employees to make important decisions. With Feldstein’s disclosure of a pre-existing medical condition and pointed questions about 364’s LTD program, it would have been obvious to even the most casual observer that he intended to rely on the company’s explanation in making his employment decision. That alone should have spurred the hiring manager to refer to 364’s benefit communications policy (assuming it had one) which, one hopes, would have required the explanation to be thoroughly vetted before being delivered to Feldstein.

While the Feldstein case addresses communications to future employees, a more recent Quebec Superior Court decision deals with communications to current employees.

In Samoisette v. IBM Canada the employer amended its defined benefit (DB) pension plan to eliminated bridge benefit entitlements for its employees in respect of their future retirement benefits and unilaterally terminated health insurance coverage for certain employees over age 65. Affected employees challenged IBM’s right to make those changes.

The court upheld IBM’s right to unilaterally modify its health plan on the basis that all benefit communications to employees had clearly reserved to IBM the right to amend those benefits at any time. However, the bridge benefit amendment was held to be invalid on the basis that employees had relied on IBM’s unqualified representations about that benefit, which said nothing about possible future changes, when making the important decision to remain in the DB plan when an alternate (defined contribution) plan was introduced by the company. The court found that most employees who chose to remain in the DB plan did so to take advantage of the bridge benefit and, hence, IBM was prohibited from amending the bridge benefit notwithstanding that it had reserved the right to amend its pension plan in the future.

IBM was ordered to pay more than $23 million plus interest to active and retired employees a decade after the original bridge benefit amendment. Keep in mind that the Quebec court’s decision may be appealed.

While IBM effectively reserved the right to amend or terminate its health insurance coverage, it appears that its pension communications were not sufficiently explicit to overcome the expectations of employees who elected to remain in the DB plan to take advantage of the bridge benefit feature. An effective benefit communications policy will recognize when representations will be relied upon by employees to make important decisions and, among other things, will ensure that such representations include language highlighting the employer’s right to implement future changes to benefit programs.

As noted in my earlier post, a benefit communications policy should become an integral part of an organization’s risk management strategy and be aligned with existing procedures and human resource capabilities. There is no guarantee that phantoms of past benefit communications will not haunt an employer in the future.  Nevertheless, a benefit communications policy can significantly decrease the risk of future legal claims against an employer and increase the likelihood that upcoming cost-saving measures, which include changes to pension and benefit programs, will not be derailed by ambiguous employee communications.

Ensure that your organization adopts a benefit communications policy as soon as possible. If you require assistance, speak with one of our experienced pension and benefits lawyers.

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New Court Decisions Reinforce Need for Benefit Communications Policy

Supreme Court of Canada to Federally Regulated Employers: No “Without Cause” Dismissals Under Canada Labour Code

In a decision which returns us to what many thought was the status quo, the Supreme Court of Canada has ruled that, (save for exempt employees), the unjust dismissal scheme in the Canada Labour Code (the “Code”) does not permit federally regulated employers to dismiss employees without cause once they have one year of service or more. This decision reverses the decisions of the Federal Court and Federal Court of Appeal, which had ruled that nothing in the Code precluded federally regulated employers from dismissing non-unionized employees on a without cause basis. As a result, for federally regulated employers, when it comes to dismissal, the right of non-union employees to protection from dismissal tracks the right of their unionized counterparts.

Facts:

In November 2009, Atomic Energy Canada Limited (“AECL”) dismissed a procurement supervisor after four and a half years of service. The employee promptly filed an “Unjust Dismissal” complaint, claiming that he had been unjustly dismissed contrary to the Code. In response, AECL argued that because it had provided the employee with a generous severance package well in excess of his minimum statutory entitlements (i.e. 6 months’ pay), the employee had not been unjustly dismissed. The Adjudicator appointed to hear the matter disagreed with AECL and ruled that an employer could not rely on severance payments, however generous, to avoid a finding that an employee had been unjustly dismissed under the Code.

In a surprise to many, the Federal Court of Canada, and then the Federal Court of Appeal, disagreed with the Adjudicator, holding that nothing in the Code prevented federally regulated employers from dismissing non-unionized employees without cause. The employee appealed to the Supreme Court of Canada.

Supreme Court of Canada:

Writing for the majority, Justice Abella stated that the purpose of the Code’s unjust dismissal scheme was to provide “…a cost-effective alternative to the civil court system for dismissed employees to obtain meaningful remedies which are far more expansive than those available at common law”. In Justice Abella’s view, the remedies contemplated by the Code for non-unionized employees were meant to reflect those generally available in the collective bargaining context. As such, in the federal sphere, the common law right of employers to dismiss “…whomever they want for whatever reason they want so long as they give reasonable notice or pay in lieu” was superseded by the Code, which did not give federally regulated employers such a right.

What this means for Federally Regulated Employers:

For better or for worse, the Supreme Court of Canada’s decision provides legal certainty for Canada’s federally regulated employers, as it ends the debate about whether the Code permits without cause dismissals. That said, the Supreme Court of Canada’s decision does not mean that an employee’s right to sue his or her former employer in court for wrongful dismissal has been extinguished. As the minority noted in this case, due to a legislative wrinkle, a federally regulated employer can dismiss an employee without cause as long as that employee chooses to challenge the lawfulness of the dismissal in the civil courts.  However, if the employee files a complaint under the Code’s unjust dismissal scheme, the notice provided to the employee will not insulate the employer from an adjudicator’s finding that the dismissal was nonetheless unjust.

Accordingly, unless and until the Code’s unjust dismissal scheme is amended to allow for without cause dismissals, federally regulated employers can only dismiss an employee with one year of service or more due to performance issues, a lack of work or the discontinuance of a function. Failure to meet this requirement could result in significant liability for the employer, including reinstatement.

Wilson v. Atomic Energy of Canada Ltd., 2016 SCC 29 (http://www.canlii.org/en/ca/scc/doc/2016/2016scc29/2016scc29.pdf)

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Supreme Court of Canada to Federally Regulated Employers: No “Without Cause” Dismissals Under Canada Labour Code

The Countdown is On: The New OHSA Amendments Come into Force in Less Than 60 Days

As we previously reported, the amendments to the Occupational Health and Safety Act introduced by Ontario’s Sexual Violence and Harassment Legislation, An Act to amend various statutes with respect to sexual violence, sexual harassment, domestic violence and related matters, come into force on September 8, 2016.

By way of reminder, the OHSA amendments expand the Act’s definition of “workplace harassment” to expressly include “workplace sexual harassment”. The amendments also impose additional obligations on employers with respect to their workplace harassment policies, programs and investigations.

With September 8th quickly approaching, the countdown to compliance is on and employers must take the following steps to ensure they meet the Act’s requirements:

  1. Review and revise existing workplace harassment policies and programs to ensure that they specifically contemplate “workplace sexual harassment”.
  2. Work in consultation with the joint health and safety committee or health and safety representative (if applicable) to develop and maintain a written workplace harassment program, which sets out:
  • reporting measures and procedures for workers to report incidents of workplace harassment to their employer or supervisor and, in the event that the employer or supervisor is the alleged harasser, to a person other than the employer or supervisor;
  • how incidents or complaints of workplace harassment will be investigated and dealt with;
  • how information obtained about an incident or complaint of workplace harassment, including identifying information about any individuals involved, will not be disclosed unless the disclosure is necessary for investigating, taking corrective action, or by law; and
  • how a worker who has allegedly experienced workplace harassment and the alleged harasser (if s/he is a worker of the employer) will be informed of the results of the investigation and of corrective action that has been, or will be, taken.
  1. Establish internal timelines and practices to ensure that the written workplace harassment program is reviewed as often as necessary, but at least annually.
  2. Ensure that internal processes are developed and implemented to:
  • conduct investigations into all incidents and complaints of workplace harassment; and
  • inform the workers involved in the incident and/or complaint of the results of the investigation and of any corrective action that has been, or will be, taken as a result.
  1. Develop and maintain resources that provide workers with information and instruction on the contents of the workplace harassment policy and program.

In addition to the OHSA’s existing enforcement mechanisms, the amended Act grants inspectors the power to order an employer to have an impartial third party conduct a workplace harassment investigation, at the employer’s expense. Notably, the OHSA amendments do not detail the circumstances in which an inspector can, or will, issue such an order.

The Ontario Government’s It’s Never Okay Action Plan, which led to the OHSA amendments, indicates that the Government intends to issue a new “Code of Practice” for employers, which will describe in more detail the steps that employers must take to comply with the OHSA amendments. The Code of Practice is expected to be released on or around the September 8th coming into force date and will hopefully provide more guidance on the implementation of the Act.  Stay tuned as we will provide a further update upon its release.

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The Countdown is On: The New OHSA Amendments Come into Force in Less Than 60 Days

Sale of a Business is Not Constructive Dismissal

In the decision 2108805 Ontario Inc. v. Boulad[1] rendered on January 25, 2016, the Quebec Court of Appeal overruled the trial judge who had considered that the change of employer resulting from a change of ownership constituted a unilateral and substantial modification of Mr. Boulad’s essential terms and conditions of employment and therefore awarded him an indemnity in lieu of notice of termination of employment equivalent to 24 months of salary and benefits.

Mr. Boulad was director of a hotel owned by the Westmount Hospitality Group (“Westmount“) an important international hotel group. Westmount sold the hotel for which Mr. Boulad was responsible to Jesta, a much smaller hotel group.  Pursuant to the transaction and to section 2097 of the Civil Code of Quebec (“CCQ“), Jesta undertook to continue Mr. Boulad’s employment under the same terms and conditions of employment.  Mr. Boulad refused to pursue employment with Jesta and asked Westmount to relocate him at another hotel or pay him a severance package.  Westmount denied Mr. Boulad’s request as it considered his employment was being continued with Jesta pursuant to section 2097 CCQ.  Mr. Boulad sued Westmount claiming that the change of employer amounted to a constructive dismissal, namely considering the loss of prestige associated with his employment with an important hotel group and the loss of transfer and promotion opportunities at the international level.

In its decision, the Court of Appeal confirmed the imperative and declaratory nature of section 2097 CCQ which stipulates that the employment contract continues to be in force and binding following the alienation of an enterprise.

The change of employer shall not be considered a substantial modification of the essential terms and conditions of employment for the sole reason that the new employer becomes the debtor of the previous employer’s obligations. The Court of Appeal also acknowledged that a business is not static and may evolve through time.  The workplace atmosphere and environment, as well as transfer and promotion opportunities are generally not part of the terms and conditions of employment unless expressly stipulated in the employment contract. In this particular case, the evidence fell short from demonstrating that Westmount and Mr. Boulad had agreed to such considerations being part of the terms and conditions of employment.  Both Westmount and Jesta abided by their legal obligations pursuant to section 2097 CCQ and Mr. Boulad could not legally or contractually require Westmount to relocate him or pay him severance. Mr. Boulad’s refusal to work for Jesta therefore constituted a voluntary resignation.

Accordingly, an employee who does not wish to continue employment with a successor employer may resign from employment but will have no recourse against the vendor or the purchaser, subject to specific undertakings in the employment agreement.

[1] 2016 QCCA 75.

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Sale of a Business is Not Constructive Dismissal