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The Right to Strike: Changes to Alberta Labour Legislation

In light of the Saskatchewan Federation of Labour v Saskatchewan, 2015 SCC 4 decision, the Alberta government has undertaken a review of the Labour Relations Code (“LRC”) and the Public Service Employees Relations Act (“PSERA”). Following a consultation with affected employers, unions and employees, on March 15, 2016 the Alberta government introduced Bill 4, An Act to Implement a Supreme Court Ruling Governing Essential Services (“Bill 4”).

Prior to the amendments, public sector employees governed by PSERA and the LRC could not strike. The new legislation, colloquially known as the essential services legislation, allows for strikes and lockouts of public sector employees who could not previously strike. This includes health care workers employed by Alberta Health Services and other approved hospitals, employees of the provincial government and agencies, boards and commissions and non-academic staff at post-secondary institutions. The amendments do not impact firefighters, non-Alberta Health Services ambulance operators and their attendants, police officers, academic staff and graduate students at post-secondary institutions.[1]

The amendments will allow employees to strike while still maintaining essential services. In order to maintain essential services, the employer and the employees’ union will negotiate essential services agreements. The amendments require the negotiations to be in good faith and make every reasonable effort to enter into an essential services agreement. The following must be included in all essential services agreements:

  1. provisions that identify the essential services that are to be maintained by employees in the bargaining unit in the event of a strike or lockout;
  2. provisions that set out the classifications of employees, and the number of positions in each classification, required to perform the essential services referred to in clause (a);
  3. provisions that set out a method by which the employees capable of performing and qualified to perform essential services will be assigned to perform those services during a strike or lockout;
  4. provisions that set out the procedures to be followed in responding to emergencies and foreseeable changes to the essential services that need to be maintained during a strike or lockout;
  5. provisions describing changes or permitted changes, if any, to the terms and conditions of employment that are to apply to designated essential services workers under sections 130(2) and 147(4) of the Act and sections 24.1(2) and 46(2.1) of the PSERA;
  6. provisions that identify sufficient umpires, but at least one umpire, to be available to provide timely resolution of disputes under section 95.7; and
  7. any other provisions specified in the regulations.

Should parties be unable to agree on the contents of an essential services agreement, they may agree to use an umpire to mediate and, if necessary, may seek guidance from the Commissioner (the individual who oversees the administration of the essential services legislation, as defined in the legislation), to assist with settling the essential services agreement.

Once an essential services agreement is reached, it must be filed for each round of collective bargaining. The parties must also declare to the Commissioner: (a) whether the agreement ensures that essential services are maintained during any strike or lockout; and (b) whether the provision of essential services required by the essential services agreement during a strike or lockout will substantially interfere with meaningful collective bargaining. The Commissioner has several options should an essential services agreement be unacceptable, including making unilateral amendments to the agreement.

An essential services agreement accepted for filing is binding on: (a) the employer; (b) the bargaining agent; and (c) every employee of the employer who is in the bargaining unit represented by the bargaining agent.

Bill 4 has since undergone its second reading and amendments during the Committee of the Whole and on April 16, 2016, the Bill passed its third reading in the legislature. Bill 4 is currently waiting Royal Assent. The deadline to amend the legislation was extended to the end of the spring 2016 sitting of the Alberta Legislature.

Once given Royal Assent and the amendments have come into force, a number of public sector employees will now have the right to strike with only essential services designated workers being prohibited to do such.

[1] However, the Post-secondary Learning Act is currently under review.

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The Right to Strike: Changes to Alberta Labour Legislation

Early Termination of Fixed Term Contract Results in Employee Windfall (Or the Dangers of Dubious Drafting)

The Ontario Court of Appeal recently awarded an employee, whose fixed-term contract was terminated on a without cause basis twenty-three months into a five-year term, damages reflecting the balance of his remuneration under the Agreement.

The employee, John Howard, was employed in a management position pursuant to a five-year fixed-term Agreement, which provided for early termination in the event of his resignation, by the employer for cause, or by the employer without cause. If his employment was terminated without cause, the Agreement stated that “… any amounts paid to the Employee shall be in accordance with the Employment Standards Act of Ontario”.

Mr. Howard’s employment was terminated and he brought an action for breach of contract, seeking damages reflecting his remuneration for the balance of the contract, which equated to over three years’ of salary and benefits. In defence, his employer argued that any damages should be limited to the two weeks’ he was entitled to under the legislation.

Mr. Howard sought a motion for summary judgment which the motions judge granted, finding that the clause which provided for early without cause termination was unenforceable due to ambiguity. However, the motions judge did not award Mr. Howard the balance owing to him under his agreement, but rather, awarded him reasonable notice of termination at common law, subject to the duty to mitigate, all of which was to be determined at a mini trial. Mr. Howard appealed. Notably, there was no appeal of the motion judge’s determination that the termination clause in question was unenforceable.

Setting aside the decision of the motions judge on the issue of damages, the Court of Appeal confirmed the common law presumption that every employment contract includes an implied term that an employer must provide reasonable notice to an employee prior to termination of employment, but held that by virtue of choosing a fixed-term arrangement, the parties had “unambiguously ousted” this implied term in favour of a contractual obligation of a five year term.

According to the Court of Appeal, after the parties contracted out of the implied obligation for reasonable notice in this case, Mr. Howard was entitled to receive the balance of his remuneration under the agreement in the event of early termination because the contract did not otherwise specify a pre-determined notice period in the event of the same.

In other words, because the without cause termination clause was unenforceable, it could not operate to reduce Mr. Howard’s damages where reasonable notice was otherwise ousted. The Court rejected the employer’s arguments that this created an unfair windfall for Mr. Howard, as the employer was sophisticated, had drafted the agreement, had elected for a fixed term, and had attempted to limit its liability in the case of early without cause termination to legislative minimums. That this latter clause failed to meet the standards imposed by the courts was inconsequential: “If an employer does not use unequivocal, clear language and instead drafts an ambiguous or vague termination clause that is later found to be unenforceable, it cannot complain when it is held to the remaining terms of the contract”.

The Court then held, consistent with previous decisions regarding liquidated damages, that without a contractual requirement to mitigate his loss, Mr. Howard was under no obligation to do so. Where a contract stipulates the penalty for early termination there is no implied duty to mitigate–it matters not whether the penalty is stated expressly, or is by default the balance of the wages and benefits under the agreement. As a result, Mr. Howard was entitled to 3 years of compensation, with no obligation to mitigate.

This case is yet another example of the dangers of using fixed term contracts, and the importance of drafting clear, unambiguous termination provisions.

The Court’s decision can be found at Howard v. Benson Group Inc. (The Benson Group Inc.), 2016 ONCA 256 http://www.ontariocourts.ca/decisions/2016/2016ONCA0256.htm

Early Termination of Fixed Term Contract Results in Employee Windfall (Or the Dangers of Dubious Drafting)

Miscarriage is a Disability

In a recent interim decision of the Ontario Human Rights Tribunal, adjudicator Jennifer Scott found that miscarriage could constitute a “disability”.  The door was also left open for employees terminated due to miscarriage to claim discrimination due to sex.

In the case of Mou v. MHPM Project Leaders, Mou was off work for approximately 3 weeks in January 2013 due to injuries sustained from a slip and fall accident.  She subsequently suffered a miscarriage in June of the same year and was off work for 2 days.  Her employment was terminated in February 2014 and Mou alleged that the termination related to her absences from work.  In February of 2016, a hearing took place to determine the threshold issue of whether Mou had established that she suffered from a disability.

The employer argued that in order for an illness or injury to constitute a disability, there must be some aspect of permanence or persistence to the condition.  In short, the employer argued that Mou’s health issues were temporary in nature and that Mou fully recovered from them prior to her termination.  Adjudicator Scott felt otherwise.  In coming to her decision she noted that while normal ailments such as a cold or flu are transitory, a miscarriage is not a common ailment and is not transitory.  In reaching that conclusion, Adjudicator Scott made reference to the fact that Mou continued to feel “significant emotional distress from the miscarriage” to the date of the hearing.

No mention is made in the decision as to whether any expert evidence was adduced by the employer with respect to whether miscarriage is a common ailment and it is suspected that no such evidence was provided.  One wonders whether the decision might have been different if the adjudicator had heard evidence to the effect that at least 1 in every 4 pregnancies is believed to end in miscarriage, or that a majority of women have at least one miscarriage during their childbearing years.  While there is no doubt that miscarriage can lead to emotional distress and even physical problems, it is possible that had this expert evidence been provided, it might have affected the adjudicator’s conclusion that miscarriage is not a common ailment.

Separate and apart from the issue of the miscarriage, it is clear from the decision that Mou’s slip and fall injuries also constituted a disability as they took approximately 3 weeks to heal.  Just as importantly, Adjudicator Scott made note of the fact that the employer invited Mou to apply for short-term disability coverage after her slip and fall, which is presumed to have been an indication that the employer believed her to be disabled.

It is important to note that although the Tribunal concluded that a miscarriage can constitute a disability, there has not yet been a final hearing in this case and no determination has been made as to whether Mou’s disability was a factor in her employer’s decision to terminate employment.

The case of Mou v. MHPM Project Leaders may be found here:  http://www.canlii.org/en/on/onhrt/doc/2016/2016hrto327/2016hrto327.html.

 

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Miscarriage is a Disability

UPDATE ON THE EXEMPTION FOR NON-RESIDENTS FROM PAYROLL WITHHOLDING

The Canada Revenue Agency (“CRA”) recently introduced a program to ease the administrative burden associated with Canadian withholding on the salary, wages, or other remuneration paid to non-resident employees performing their duties in Canada for a short period of time. These measures aim to remove certain ‘qualifying non-resident employers’ and ‘qualifying non-resident employees’ from the withholding requirements imposed under subsection 153(1) of the Income Tax Act (Canada) (the “Tax Act”). Furthermore, these measures will alleviate the need for qualifying non-resident employees to apply for waivers from withholding (commonly known as regulation 102 waivers).

THE EXISTING EMPLOYEE WITHHOLDING REGIME AND NON-RESIDENTS OF CANADA

The Tax Act imposes employee withholding on non-residents to the extent they perform any employment duties in Canada regardless of whether these non-resident employees will ever have an ultimate tax liability under the Tax Act (for instance where an income tax treaty applies). The Tax Act also imposes penalties for failure to withhold amounts required even where no tax would ultimately be payable. Amounts which are withheld and remitted can only be recovered by the employee if they file a Canadian income tax return.

To deal with such situations where a treaty applies, the CRA allows for employees resident in a country with which Canada has a tax treaty to apply for a regulation 102 waiver which can be presented to the employer in order to waive the withholding requirements. However, the process for obtaining a regulation 102 waiver requires at least thirty days of lead time and is time consuming to complete, making the application impractical in many situations. Moreover, the CRA has imposed its own administrative policies over and above the requirements set out in most treaties, making regulation 102 waivers costly and burdensome to obtain.

THE NEW EXEMPTION

Recognizing that the existing system was impractical for many business travelers, an additional program was announced, allowing “qualifying nonresident employers” to forego Canadian tax withholding on amounts paid to “qualifying non-resident employees”.

A ‘qualifying non-resident employee’ is defined in the Proposed Amendments to mean an employee who (a) is, at that time, resident in a country with which Canada has a tax treaty, (b) not liable to tax under Part I of the Tax Act in respect of the payment because of that treaty, and (c) works in Canada for less than 45 days in the calendar year that includes that time or is present in Canada for less than 90 days in any 12–month period that includes that time.

A ‘qualifying non-resident employer’ is defined in the Proposed Amendments to mean an employer whom, (a) is resident in a country with which Canada has a tax treaty, (b) does not, in the relevant year, carry on business through a permanent establishment in Canada, and (c) is certified by the CRA by making an application in the prescribed form at least 30 days prior to the employee performing the services in Canada.

Because of this arbitrary restriction set out in the Proposed Amendments, there could still be a large number of business travelers who will either be required to apply for a regulation 102 waiver, or be subject to withholding tax and be required to file a return to obtain a refund of the tax pursuant to protections under one of Canada’s tax treaties.

RECORD KEEPING AND REPORTING FOR QUALIFYING NON-RESIDENT EMPLOYERS

It should be noted that even though this process removes the employer from the withholding and remitting requirements for qualifying non-resident employees, certain reporting obligations remain. Qualifying nonresident employers will be required to:

  1. determine whether the employees are resident in a country with which Canada has a tax treaty,
  2. track and record the number of days each employee is either working in Canada or is present in Canada and the income attributable to these days,
  3. complete and file the applicable Canadian income tax returns for the calendar years under certification, and
  4. prepare and file a T4 Summary and Information Return for the employees that are not excluded by proposed subsection 200(1.1) of the Regulations.

Proposed subsection 200(1.1) of the Regulations exempts T4 reporting for amounts that qualify under these new exemptions if the employer, after reasonable inquiry, has no reason to believe that the employee’s total amount of taxable income earned in Canada under Part I of the Act during the calendar year is more than $10,000.

WHAT THIS MEANS FOR NON-CANADIAN BUSINESSES

While these new exemptions do not cover every type of business traveler to Canada, they are very helpful for employers that periodically send employees to Canada for short periods of time. This is especially true in circumstances where business trips are unplanned or occur in a manner that does not allow sufficient time to obtain a regulation 102 waiver. For these non-resident employers, it will certainly be easier to comply with this new program, rather than rushing employees to obtain a regulation 102 waiver or withholding and remitting tax on the employees’ behalf. Once in the program, qualifying non-resident employers should continue to monitor employee travel and require employees that will be working in Canada for more than 45 days or present in Canada for more than 90 days to apply for regulation 102 waivers to ensure no withholding will be required.

We would be pleased to assist should you require assistance in making an application for the new program.

 – –Larry Nevsky, Associate, Dentons Canada LLP, [Toronto].(A modified version of this article originally appeared in CCH Tax Topics, number 2289, January 21, 2016).

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UPDATE ON THE EXEMPTION FOR NON-RESIDENTS FROM PAYROLL WITHHOLDING

Out with the Old, In with the New: What’s New with the Ontario Pension Regulator

FSCO reminds administrators about their roles and responsibilities

On January 25, 2016, the Financial Services Commission of Ontario (“FSCO”) issued a new policy that describes the roles and responsibilities of administrators of registered pension plans (policy A300-101). It replaces aging policies which were published in 1990 and 1992 (policies A300-100 and A300-150). Things have not changed drastically in the last two and a half decades. In fact, much of the new policy echoes the old. Some of the new elements in the policy refer to recent legislative and regulatory changes. In summary:

  • FSCO emphasizes the key responsibilities of pension plan administrators to comply with the federal investment regulations and the new requirements regarding environmental, social and governance factors with respect to the Statement of Investment Policies and Procedures.
  • Regulatory filings must be made electronically through the Pension Services Portal, including requests for an extension of a filing deadline.
  • As of January 1, 2015, administrators must provide statements of pension benefits to former members and retired members every two years.
  • The administrator is responsible for addressing inquiries and complaints from plan beneficiaries, or delegating the task to an agent if the administrator does not have the necessary knowledge.
  • FSCO emphasizes that the administrator must monitor and review delegated activities and that certain duties cannot be delegated. More information can be found in CAPSA Guideline No. 6.
  • The conflicts of interest section of the new policy has been expanded to reference CAPSA Guideline No. 4, while another section of the policy expounds on the “prudent person rule” as the fiduciary standard that applies to administrators.
  • Finally, the new policy sets out the need for prudent record-keeping practices, making reference to the relevant FSCO policy, and the administrator’s duty to make certain records available for inspection.

Ontario plan administrators will pay more to the regulator

On February 10, 2016, FSCO published its 2015-2016 preliminary pension assessment for the entire pension sector, and issued pension assessment invoices for all Ontario-registered pension plans. Primarily, these invoices set out the amount that must be paid for the year by each pension plan administrator to cover all estimated expenses and expenditures incurred by FSCO for the pension sector, along with a per member cost for their own plan.

This assessment is, however, simply an estimate of FSCO’s expenses and expenditures for this fiscal year. The actual cost will only be known by March of 2017. At that point, next year’s preliminary assessment will have been issued absorbing this year’s over or undervaluation of the actual cost of FSCO’s expenses.

The 2014-2015 total pension assessment for Ontario was approximately $15 million. The current (2015-2016) preliminary pension assessment is slightly higher.

New FSCO form for joint & survivor pension waiver

FSCO has issued a new Form 8 to be used by a former spouse to waive his/her right to a survivor benefit on the death of a retired member in the case of a marriage breakdown. It is essential that plan administrators use this new form.

Do not hesitate to contact any member of the Dentons Pension Group if you have any questions.

Out with the Old, In with the New: What’s New with the Ontario Pension Regulator

Bill 132 Update: Ontario’s Sexual Violence and Harassment Legislation to Become Law September 8, 2016

In a previous post, we reported on Ontario’s new sexual violence and harassment legislation, Bill 132, An Act to amend various statutes with respect to sexual violence, sexual harassment, domestic violence and related matters. On March 8, 2016, Bill 132 received Royal Assent.

To recap, Bill 132 amends various existing statutes with respect to sexual violence, sexual harassment and domestic violence. For employers, Bill 132 presents important workplace-related changes, by amending the Occupational Health and Safety Act (OHSA) to require employers to implement specific workplace harassment policies and programs and ensure that incidents and complaints of workplace harassment are appropriately investigated.

First, Bill 132 expands the OHSA’s definition of “workplace harassment” to include “workplace sexual harassment”, defined as:

  1. Engaging in a course of vexatious comment or conduct against a worker in a workplace because of sex, sexual orientation, gender identity or gender expression, where the course of comment or conduct is known or ought reasonably to be known to be unwelcome; or
  2. Making a sexual solicitation or advance where the person making the solicitation or advance is in a position to confer, grant or deny a benefit or advancement to the worker and the person knows or ought reasonably to know that the solicitation or advance is unwelcome.

Bill 132, however, also clarifies that a reasonable action taken by an employer or supervisor relating to the management and direction of its workplace is not workplace harassment.

The Bill, as passed, requires an employer, in consultation with a joint health and safety committee or a health and safety representative (if any), to develop, maintain, and review at least annually, a written program that implements the employer’s workplace harassment policy. Further, employers must provide workers with appropriate information and instruction on the contents of their workplace harassment policies and program. An employer’s written program must set out, among other requirements:

  • measures and procedures for workers to report incidents of workplace harassment to a person other than the employer or supervisor, if the employer or supervisor is the alleged harasser;
  • 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.

Further, employers must conduct appropriate investigations in response to incidents or complaints of workplace harassment. Following an investigation an employer must inform both the worker who has allegedly experienced harassment and the alleged harasser (if s/he is a worker of the employer) of the results and of any corrective action that has been, or will be, taken.

Notably, an inspector now has the power to order an employer to conduct an investigation by an impartial third party, and obtain a written report by that party, all at the employer’s expense. Bill 132, however, does not specify the circumstances in which an inspector can, or will, order an employer to conduct such an investigation.

The above-noted OHSA amendments come into force on September 8, 2016. In order to ensure compliance with the legislation, employers must take steps beforehand to update and implement policies and programs related to workplace harassment.

Bill 132 Update: Ontario’s Sexual Violence and Harassment Legislation to Become Law September 8, 2016

ORPP Update: Enrollment and Phase-in of Contributions Delayed

The Ontario and federal governments announced on February 16, 2016 that they have reached an agreement regarding the Ontario Retirement Pension Plan (ORPP) and improving pensions for Canadians.  With contributions originally set to begin next year, the Ontario government now proposes to phase-in the launch of the ORPP by starting enrollment in January 2017 and commencing collection of contributions in January 2018.

How will this affect businesses?

If applicable, the delay will give businesses more time to enroll in the ORPP, something that many organizations have been asking for.  Large employers who would have been required to start making contributions to the ORPP on January 1, 2017 will now have one additional year to prepare for the ORPP and consider whether changes should be made to their existing retirement and savings programs.

There was no mention of delaying enrollment or contributions for small and medium-sized employers in the Ontario government’s announcement. Based on the current enrollment schedule, small and medium-sized employers without a registered workplace pension plan will be required to contribute to the ORPP starting January 1, 2019 and January 1, 2018 respectively.

CPP enhancements and next steps

The delay will also provide more time for the federal government and other provinces to discuss and develop options for enhancing the Canada Pension Plan (CPP).  If provincial agreement on CPP enhancement is not reached, the Ontario government is committed to moving forward with the ORPP.  The federal government acknowledges this and has agreed to facilitate plan registration and data sharing agreements and help ensure that contributions are collected efficiently and cost-effectively.

To read the government bulletin on the announcement, click here.

ORPP Update: Enrollment and Phase-in of Contributions Delayed

The Final Word on Dependent Contractors

I wrote last year about the Ontario Superior Court of Justice’s decision in the case of Keenan v. Canac Kitchens (a link to same can be found here:  http://www.employmentandlabour.com/?s=Canac).   Last week the Ontario Court of Appeal upheld the Superior Court’s decision in Canac, and added some additional guidance with respect to the law surrounding dependent contractor relationships.

First, a quick reminder as to the facts of this particular case.  Lawrence and Marilyn Keenan were employed by Canac Kitchens beginning in 1976 and 1983 respectively.  In 1987, both were advised that their employment was coming to an end but that they could carry on as independent contractors.  An independent contractor agreement was signed by Marilyn and the Keenans carried on as before.  They continued working for Canac until the company closed its operations in 2009.  No notice of termination or pay in lieu of notice was provided.

While there were some factors in this case which suggested an independent contractor agreement, the lower court was particularly fixated on the fact that the Keenans worked exclusively for Canac until 2007.  Although they did some small amount of work for a competitor named Cartier between 2007 and 2009 due to a shortage of work at Canac, the judge accepted that Canac turned a blind eye to same.  In other words, for all intents and purposes the Keenans provided services only to Canac for almost the entire duration of the relationship.  Moreover, Canac had almost complete control of the work performed by the Keenans.

As a result, the Superior Court found that although the Keenans were contractors, they were in a dependent relationship to Canac and therefore entitled to notice of termination.  Due to the 32 and 25 years of service provided by Lawrence and Marilyn respectively (which resulted in an average length of service of 28.5 years between the two of them), the court found that a whopping 26 month notice period was reasonable.

Canac contended that the trial judge erred: (i) in finding that the Keenans were in an exclusive relationship with Canac; and (ii) in awarding 26 months of notice.  The Ontario Court of Appeal determined that while the Keenans performed some work for Cartier, the substantial majority of their work was for Canac.  More specifically, of the approximately 32 and 25 years of service which Lawrence and Marilyn gave to Canac, all but two were exclusively in the service of Canac.  The court further stated that the full history of the working relationship between the parties must be examined, and not just a snapshot at the time of termination.

In addition, the Court found that because of the age and length of service of the Keenans, the fact that for over a generation they were Canac’s public face to the outside world, and the fact that their income had come from Canac during the entirety of their working lives, an award in excess of 24 months was justified and the trial judge’s finding for a 26 month notice period was reasonable.

A copy of the Court of Appeal’s decision in Keenan v. Canac Kitchens may be found here:  http://www.ontariocourts.ca/decisions/2016/2016ONCA0079.htm.

The Final Word on Dependent Contractors

ORPP: Additional Design Details Released

On January 26, 2016, additional design details of the Ontario Retirement Pension Plan (ORPP) were released by the Ontario government.  The government reconfirmed its commitment to implement the ORPP beginning January 1, 2017, ensuring that by 2020, every eligible employee in Ontario will be part of the ORPP or a comparable workplace pension plan.

The following is a summary of the additional design details.  Stay tuned for further postings which will put the details into context and discuss the implications for employers.

What employers should know: 

  • Contributions: ORPP contributions will be based on an employee’s pensionable earnings between $3,500 and $90,000, and will include cash and non-cash earnings and amounts beyond base salary such as bonuses and commissions.   
  • Definition of employment in Ontario: A person will be considered employed in Ontario for ORPP membership purposes if he or she:
    • is required to report to work at an establishment of the employer in Ontario, or
    • is not required to report to work at an employer’s Ontario establishment but is paid by the employing establishment in Ontario.
  • Comparability test:  Employers and employees in Ontario will be required to participate in the ORPP unless they participate in a comparable pension plan, subject to certain exceptions.  For information on the comparability tests, please see our August 12, 2015 posting.  The government has since released the following additional details relating to the comparability test:
    • Subset level: For pension plans with more than one group of employees (e.g. full- and part-time, union and non-union, etc.) and different benefit formulas for groups or “subsets” of employees, the comparability test will apply at the group or “subset” level.
    • Voluntary contributions: Voluntary contributions to a defined contribution pension plan will not be taken into account when determining if the plan is comparable to the ORPP.  Contributions to a defined contribution pension plan must be mandatory in order for them to be included in the comparability test.
    • Multi-Employer Pension Plans (MEPPs): The comparability test for a MEPP will be applied separately for each participating employer based on the employer’s collective bargaining agreements or employee agreements at the subset level, as defined by plan governing documents.  Employers will have the option to assess comparability using the defined benefit accrual or defined contribution rate threshold.
  • Waiting periods: Employees waiting to join their employer’s comparable pension plan will be required to participate in the ORPP during the waiting period.
  • Employer opt-in: Employers with a “comparable workplace pension plan” can opt-in to the ORPP on or after January 1, 2020.
  • Non-resident workers: Non-resident workers (for tax purposes) earning income over $3,500 that is subject to Canadian and Ontario income tax will be included in the ORPP.  However, if a non-resident worker is exempt from tax under an applicable tax treaty between Canada and another country, they will be exempt from participating in the ORPP.
  • Other workers: Individuals in receipt of ORPP benefits may opt-in to the ORPP if they return to eligible employment.  There will also be religious exemptions for certain workers, similar to the Canada Pension Plan (CPP).

ORPP benefits for employees:

  • Benefit formula: ORPP benefits will accrue at a rate of 0.375% of annual earnings per year and will be calculated using members’ average earnings over their career.  The ORPP is designed to provide a 15% income replacement rate to members who participate for over 40 years.
  • Payment of benefits: The ORPP will begin paying benefits starting in 2022.  Members will be eligible for retirement under the ORPP as early as age 60, and may postpone retirement until age 71.
  • Indexation: Benefits will be indexed according to average growth of wages and salaries as outlined by Statistics Canada pre-retirement, and indexed according to the Consumer Price Index post-retirement.
  • Pre-retirement survivor benefits: If a member dies before retirement, a lump sum based on the actuarial equivalent value of his/her pension will be paid to an eligible spouse, the member’s beneficiary or estate.
  • Post-retirement survivor benefits: If a member dies after retirement with an eligible spouse, the spouse will receive a survivor benefit equal to 60% of the member’s actuarially adjusted pension.  If the spouse waives his or her right to a survivor pension prior to the member’s retirement, or the member retires without an eligible spouse, the member would receive his or her full retirement pension with a 10-year guarantee period.  If the member dies within that guarantee period, the remaining value of his/her full retirement pension will be paid to his/her spouse, beneficiary or estate as an actuarially equivalent lump sum.

Other details:

  • Plan sustainability: A funding policy has been established for the ORPP to ensure that the plan is sustainable over the long-term.  In addition, the government will establish an Office of the Chief Actuary to conduct triennial valuations of the ORPP and to provide advice and analysis.
  • Plan review and changes: The ORPP will be reviewed five years after its full implementation and subsequent reviews will occur every ten years.  Fundamental changes to the ORPP that would substantially impact member benefits and are not resulting from funding policy adjustments would require the consent of at least 60% of ORPP members.

The Ontario government will set out these and other details about the ORPP in forthcoming legislation.

To read the Ontario government’s technical bulletin regarding these details, click here.  To read our previous ORPP postings, click the links below:

ORPP: Additional Design Details Released

Terminating for Financial Reasons? Don’t Expect the Courts to Help You Out

Employers who undertake reductions in force due to financial difficulties should not count on employee notice periods being reduced as a result of the financial troubles.  This point was recently emphasized by the Ontario Court of Appeal in the decision of Michela v. St. Thomas of Villanova Catholic School.

Michela, Gomes and Carnovale were long-term teachers at St. Thomas of Villanova Catholic School, with 11, 13 and 8 years of service respectively.  All worked under a series of one-year contracts.  In May of 2013, the employer advised each of them in writing that they would not receive a contract renewal for the coming year because enrolment was expected to be lower.  Subsequently, in June of 2013 each of them was provided with a termination letter and advised that notice was not owed because they were employed pursuant to fixed-term contracts.

The claims were dealt with by summary judgment, and the motions judge determined that due to the succession of fixed-term contracts, the employees were really indefinite term employees and entitled to common law notice of termination.  However in determining that the reasonable notice period for each employee should be 6 months rather than the 12 months which was claimed, the judge made reference to the employer’s poor financial position.
In overturning the decision, the Court of Appeal made reference to the Bardal factors used to calculate reasonable notice at common law: the employee’s character of employment, length of service, age, and availability of similar employment having regard to experience, training and qualifications.  The Court found that the motions judge had mistakenly viewed “character of employment” through the lens of the employer rather than the employees, and stated that the financial position of the employer does not factor into the calculation of reasonable notice.  The court confirmed that while an employer’s financial position may be the reason for a termination without cause, the financial position of the employer does not justify a reduction in the notice period in bad times nor an increase when times are good.

For employers considering reductions in force during difficult times, it may be best to consider other options such as a temporary layoffs, ensuring that proper termination provisions are in place which provide only statutory minimums in the event of termination, or the provision of working notice.  While legal advice should be sought in order to ensure the best plan of action, it is clear at the very least that employers should not count on a reduced notice period due to a difficult financial position.

The decision in Michela v. St. Thomas of Villanova Catholic School can be read here:  http://www.ontariocourts.ca/decisions/2015/2015ONCA0801.htm.

Terminating for Financial Reasons? Don’t Expect the Courts to Help You Out