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The Non-Working Worker: A Practical Guide for Dealing with Employee Absences – Seminar

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.

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The Non-Working Worker: A Practical Guide for Dealing with Employee Absences – Seminar

Employees who supervise or manage processes (vs. other employees) can be exempt from overtime pay: Ontario Labour Relations Board

Ontario’s Employment Standards Act, 2000 provides that employees are entitled to overtime pay for all hours worked in excess of 44 hours in a week. However, there are certain exemptions to this entitlement – one of which applies to employees whose work is “supervisory or managerial in character and who may perform non-supervisory or non-managerial tasks on an irregular or exceptional basis”.

Unsurprisingly, there have been a number of employment standards decisions over the years in which an employee has advanced a claim for overtime and the employer has defended the claim on the basis that the employee is a supervisor or manager and therefore exempt. A number of decisions involving employees who did not supervise or manage employees have found that those employees were not “supervisory”. Occasionally, however, employees who supervise or manage processes – but not employees – are found to be true “supervisors” and/or “managers” such that they are exempt from overtime pay.

The recent decision in Levert Personnel Resources Inc. v. Steven McNeil and Director of Employment Standards provides one such example. In this case, the Ontario Labour Relations Board was tasked with determining whether Steven McNeil, an Account Manager for Levert Personnel Resources Inc., a personnel resources company, was exempt from overtime pay. Mr. McNeil was the primary contact for Levert’s clients in the mining sector. He had total responsibility for negotiating and signing contracts with these clients on Levert’s behalf, and was specifically tasked with managing the clients’ personnel requirements. Although Mr. McNeil did not recruit, hire or supervise the work of employees he placed at client sites, he was required to ensure that the terms of the contract which he had signed with the clients were met. In order to do this, Mr. McNeil would visit client sites and review the trade certificates of Levert’s employees. If an employee did not have the requisite certification, Mr. McNeil would dismiss the employee from the client work site. Mr. McNeil also worked to prepare annual forecasts and strategized and executed sales plans, all of which had a direct impact on the profit margins and financial operations of Levert. Based on this evidence, and despite the fact that Mr. McNeil did not manage or supervise employees directly, the Ontario Labour Relations Board concluded that Mr. McNeil’s work was supervisory and managerial in character.

As a result of this case and others that have been decided along similar lines, it is important for employers to avoid automatically concluding that employees who perform supervisory or managerial functions in relation to machines or processes, rather than in relation to employees, are entitled to overtime pay.

See decisions here: http://www.canlii.org/en/on/onlrb/doc/2011/2011canlii63520/2011canlii63520.pdf, and here: http://www.canlii.org/en/on/onlrb/doc/2012/2012canlii4267/2012canlii4267.pdf

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Employees who supervise or manage processes (vs. other employees) can be exempt from overtime pay: Ontario Labour Relations Board

Employer’s Failure to Provide Consideration for Termination Provision Fatal to Defence of Wrongful Dismissal Case

Investments Hardware Ltd. engaged in verbal negotiations with Anthony Fasullo with respect to a sales position that Fasullo applied for with the Company.  The parties discussed salary, commissions and benefits for the sales position and reached an agreement on those terms in May 2007.  The parties shook hands on the oral agreement and Fasullo was scheduled to start work with the Company on June 18, 2007. 

After Fasullo started work, on June 20, 2007, the Company presented him with a written employment agreement to sign.  The written employment agreement largely reflected the substance of the parties’ oral agreement, but for one key aspect; the written agreement stated that if Fasullo’s employment was terminated without cause, his entitlements would be restricted to his minimum entitlements under the Employment Standards Act, 2000.  According to Fasullo, the issue of his entitlements on termination of employment had not been discussed back in May 2007 such that, in his view, this restriction was a “new” term of his employment.  The Company maintained that it had verbally explained Fasullo’s limited entitlements on termination without cause back in May 2007.  Notwithstanding this discrepancy, Fasullo signed the June 20, 2007 written employment agreement and continued working.  Fasullo’s terms and conditions of employment were amended in writing twice more during his employment with the Company – once in October 2007 and once in June 2008.  The October 2007 amendment referred back to Fasullo’s “existing offer of employment of June 20, 2007″ and the June 2008 amendment referred back to Fasullo’s “original offer of employment”. 

Fasullo’s employment with the Company was later terminated without cause on March 10, 2011 after approximately four years of employment with the Company.  He was provided with his entitlements under the Employment Standards Act, 2000, in accordance with his written employment agreement, but nothing further.  Fasullo sued the Company for wrongful dismissal and sought common law reasonable notice.  Fasullo alleged that his employment was governed by the May 2007 oral employment agreement, not the June 20, 2007 written employment agreement, because he was not provided with any consideration for the termination provision in the written employment agreement. 

After reviewing the evidence, Justice Sanderson found as a fact that the Company had not explained Fasullo’s entitlements on termination of employment in May 2007 when the oral employment agreement was reached, such that Fasullo was entitled to common law reasonable notice under this agreement.  Justice Sanderson further found that the June 20, 2007 written employment agreement – which  purported to unilaterally reduce Fasullo’s entitlements on termination without cause from common law reasonable notice to only his minimum statutory entitlements – was void for lack of consideration.  In other words, the Company had not provided Fasullo with additional compensation, or some other new benefit, in exchange for Fasullo agreeing to reduced entitlements in the event his employment was terminated without cause.  As such, Justice Sanderson concluded that the termination provision contained in the June 20, 2007 written employment agreement was unenforceable at law and Fasullo was entitled to common law reasonable notice.  Further, Justice Sanderson found that neither the October 2007 nor the June 2008 amendments to Fasullo’s terms and conditions of employment cured the issue.  Therefore, Justice Sanderson awarded Fasullo 3.9 months’ common law reasonable notice, less the amounts already provided to Fasullo by the Company.

This case serves as yet another cautionary reminder to employers to exercise care when orally negotiating employment agreements with prospective employees.   A good practice is to tell the prospective employee that any verbal agreements reached are conditional upon the prospective employee signing a written employment agreement that includes termination provisions, and that the employee have the time to review, consider and execute the written employment agreement before commencing employment.  This simple process can help employers avoid the unpalatable situation that occurred in this case.

Fasullo v. Investments Hardware Ltd., 2012 ONSC 2809 (CanLii):  http://canlii.org/en/on/onsc/doc/2012/2012onsc2809/2012onsc2809.pdf

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Employer’s Failure to Provide Consideration for Termination Provision Fatal to Defence of Wrongful Dismissal Case

Court Awards Employee the Balance of a Five Year Contract and Value of 15% Ownership Stake

Dawn Loyst commenced employment in 2003 with Chatten’s Better Hearing Service (“Chatten’s”) in the role of Office Manager.  When the business was purchased by Jim Maizis in 2006, Maizis entered into an agreement with Loyst whereby Loyst would continue her work as Office Manager for Chatten’s for a period of five years, at the conclusion of which Maizis would turn over 15% ownership in the business to Loyst and would work with Loyst to renegotiate her employment contract.  Loyst agreed.

Unfortunately, the business relationship between Loyst and Maizis began to sour.  In early March 2009, Loyst and Maizis had a tense phone call.  When they met a few days later to discuss the phone call, tensions once again escalated.  During this conversation, Maizis said he could no longer allow Loyst to be the Office Manager and that going forward, she was to have limited access to the business’ patients and she was to perform accounting services only.  He also told her that there would be no more bonus trips, or partnership meetings – which she had frequently attended in the past – as he did not want her representing the company.  Loyst responded that the proposed changes were unacceptable, to which Maizis replied that if she felt that way, she should pack up her desk.  Loyst did so later that day, left the office and did not speak to Maizis after that time.  Loyst then commenced a wrongful dismissal action against Chatten’s in the Ontario Superior Court of Justice.

At trial, Justice McEwen found that Chatten’s, by changing Loyst’s job description and her remuneration, had unilaterally altered fundamental terms of Loyst’s employment contract and that Loyst had expressly rejected the new terms.  Justice McEwen went on to state that since Chatten’s did not respond to the rejection by terminating Loyst with proper notice and offering to re-employ her on the new terms, it owed her what it had promsied to her under contract.

As a result, Justice McEwen ordered Chatten’s to pay Loyst her salary for the remaining 29 months and 13 days of her five year contract (less income she had earned during that period).  In addition, because Chatten’s agreement with Loyst stated that Maizis would turn over 15% ownership in the business to Loyst at the end of the five year period, the court ordered Chatten’s to pay Loyst the cash equivalent of 15% of the value of the business in addition to her salary over the remainder of the five year period.  As a result, Loyst was awarded approximately $257,000 in damages.

This case illustrates that employers need to proceed with caution when attempting to implement significant changes to an employee’s terms and conditions of employment – particularly where those changes are likely to be rejected by the employee.  The employer may need to resort, in many cases, to terminating the employee’s employment with proper notice and offering re-employment on the employer’s new terms.

Loyst v. Chatten’s Better Hearing Service, 2012 ONSC 1653:
http://www.canlii.org/en/on/onsc/doc/2012/2012onsc1653/2012onsc1653.pdf

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Court Awards Employee the Balance of a Five Year Contract and Value of 15% Ownership Stake