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Jon Pinkus

Jon Pinkus

Upcoming Employment Standards Blitz – Precarious Employment

Beginning in May 2015, the Ontario Ministry of Labour will begin a province-wide employment standards workplace inspection blitz targeting the janitorial, security, business services, fitness and recreation centres, amusement, and recreation sectors. The Ministry of Labour has labeled the blitz’s focus as “precarious employment”, likely due to the high occurrence of part-time and other atypical forms of employment in these sectors. This blitz follows the release of the Ministry of Labour’s results on its vulnerable and temporary foreign workers employment standards blitz last fall.  Those inspections found 171 non-compliant employers, recovering over $175,000 for 1,406 employees.  As is typical, the most common violations included non-compliance with the public holiday pay, vacation pay, and overtime pay requirements of the ESA.

Employers should keep in mind that part-time employees are protected under the ESA.  As such, they are entitled to minimum wages (currently at $11 per hour in Ontario, but soon to increase), vacation pay, public holiday pay, and overtime pay. These employees will also have rights upon termination, including under both the ESA and to sue for wrongful dismissal at common law.

Any employer found to be non-compliant with the ESA can face a compliance order, an order to pay, a ticket with a fine, a notice of contravention, or prosecution. These penalties can bring significant financial consequences. In 2012, a Mississauga operator of 25 fitness clubs was fined $100,000 for violating the wage provisions of the ESA.  In addition, with the amendments brought by Bill 18 now in effect, wage claims may grow, as there is no longer a monetary cap on the wage amount that the Ministry of Labour can order an employer to pay per employee.

In addition to the sectors targeted by this blitz, employers across the province may face stricter regulations and increased enforcement, as the Ontario government undertakes a formal review of both the ESA and the Ontario Labour Relations Act to address the rise of precarious employment.

Upcoming Employment Standards Blitz – Precarious Employment

Supreme Court of Canada Explains Constitutional Right to Collective Bargaining

In a decision released January 16, 2015, the Supreme Court of Canada once again revisited how much constitutional protection is afforded to the collective bargaining process. In Mounted Police Association of Ontario v. Canada (Attorney General), 2015 SCC 1, the Court held that a special labour relations regime legislated for the RCMP infringed section 2(d) of the Charter of Rights and Freedoms (freedom of association) and could not be justified as a reasonable limit under section 1. The relevant provisions were struck down, but will remain in effect for the rest of 2015 so that the Government can enact a replacement regime.

Collective bargaining was historically denied to RCMP members on the basis that it was necessary to preserve the RCMP’s stability, reliability, and image of neutrality. Initially, the RCMP was excluded outright from any labour relations scheme. Then, beginning in the 1970s, a series of reforms gradually allowed for some degree of representation, while limiting employees’ rights to be represented in grievances or other proceedings. At the time the case was heard, this system had evolved into three entities, with the Staff Relations Representative Program, or SRRP, at its core. The SRRP involves representatives who act as a point of contact with RCMP management but work under the assumption that management has the final say. The case was brought by several associations that lobby on behalf of RCMP officers, although none has ever been recognized as a collective bargaining agent by management or the Government.

The majority of the Court decided that the SRRP was an unconstitutional deprivation of collective bargaining rights. In doing so, the majority clarified what section 2(d) protects:

(1) The right to join with others and form associations;
(2) The right to join with others in pursuit of other constitutional rights; and
(3) The right to join with others on equal terms the power and strength of other groups.

The Court held that in deciding whether section 2(d) of the Charter has been violated, the question is whether there has been substantial interference with the employee’s right to a “meaningful process” of collective bargaining. This “meaningful process” essentially boils down to employee choice and independence from management. The requirement of employee choice is satisfied by a process that allows employees to have effective input. Employees may do this through creating associations, dissolving existing ones, and choosing representatives who can be held accountable.

In the Court’s view, the SRRP failed because the system did not allow the employees to choose their own representative. In addition, the system was not designed to provide the employees with sufficient independence from management. As explained by the Court, “independence” means that employees have effective input into the proposals that are put forward, they are represented separate from management’s structure, and they control their own activities. The SRRP failed on this ground as well. The program was an internal scheme controlled by management, and its very raison d’être was to resist independent association and create an alternative to unionization.

While the decision represents a more generous interpretation of section 2(d) than previous decisions, it is equally important to recognize what the majority held the Charter does not protect. There is still no constitutional right to strike (though this could change when the Court releases its decision in Saskatchewan Federation of Labour v. Saskatchewan, which was heard last May), nor is there any requirement that the bargaining process be adversarial or that there be a particular labour relations scheme.

Elsewhere the Court has held that the Charter protects processes and activities, but does not guarantee outcomes. This principle was mentioned in the companion case Meredith v. Canada (Attorney General), 2015 SCC 2, where the Court found that a statute limiting wage increases for the RCMP was constitutionally valid. Generally speaking, as long as a labour relations scheme allows employees to bargain independently without substantial interference from management, it should be able to withstand a constitutional challenge.

Supreme Court of Canada Explains Constitutional Right to Collective Bargaining

An Offer They Can’t Refuse – The Dangers of Recruiting High Level Employees

An employer is paying the price for dismissing an employee who was recruited with an attractive job offer.

Bruce Rodgers had been the president of a transportation company for 11 years when CEVA Freight Canada Corporation approached him with a job opportunity. After being flown twice to Houston, attending 7 interviews, and meeting the CEO of the global parent company, Rodgers was offered a position as CEVA’s Country Manager. He turned it down, and was given a second offer with a higher salary and a signing bonus, which he accepted. Rodgers was also told that he was required to invest in the company to demonstrate his commitment, so he borrowed $102,000 to purchase CEVA’s shares.

A little less than 3 years later, Rodgers was dismissed by CEVA without cause. He was paid 2 weeks’ salary, along with severance of just under one additional week and outstanding vacation pay. His employment agreement had a termination provision that stated: “[y]our employment may also be terminated by our providing you notice, pay in lieu of notice, or a combination of both, at our option, based on your length of service and applicable legal requirements.” CEVA argued that while Rodgers was entitled to some damages, they should be limited by the fact that this provision highlighted length of service and Rodgers was there for less than 3 years.

The Court disagreed, finding that a reasonable notice period for Rodgers would have been 14 months. In the end, CEVA was ordered to pay Rodgers $345,985.

While the Court acknowledged that Rodgers’ short length of service was a relevant factor, it found that it did not deserve any particular weight because the employment agreement was not clear that his length of service would outweigh all other considerations. Instead, the Court turned its focus to the way Rodgers was recruited to the position.

The case serves as an important reminder that even where job security is not explicitly promised, or even discussed, the method of recruitment can be viewed by the Court as an implicit promise of job security. Here, the Court noted the “attractive” financial package Rodgers was offered, and that this was an improvement over the original offer that he declined. The Court was also persuaded by the fact that Rodgers was forced to make an investment in the company, giving him the impression that he could expect above average job security. As such, Rodgers was “induced” to join CEVA, and deserved a longer notice period.

Since inducement tends to be considered alongside other factors, it is difficult to gauge how it will affect the Court’s assessment of the notice period. In this case, there were other issues at play, including the employee’s age, his high level of responsibility, and the difficulty in finding a replacement position. However, the Court was clear that CEVA’s recruitment of Rodgers from a secure position of employment contributed to the long notice period awarded.

Employers should be aware of the unspoken commitments they make when recruiting employees who are already employed in secure positions. An employer’s efforts to convince someone to leave employment to join its organization may commit that employer to more than it had ever intended on termination. In these cases, it is particularly important to consider termination at the point of hiring, and to give serious thought to whether an appropriately drafted termination provision should be included as part of the employment contract, to avoid disputes as to entitlements on termination of employment.

Rodgers v. CEVA, 2014 ONSC 6583 (CanLII)

 

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An Offer They Can’t Refuse – The Dangers of Recruiting High Level Employees

Unpaid Internships Receive Poor Report Card from Ontario Ministry of Labour

Recently, the Ontario Ministry of Labour released the results of its recent internship inspection blitz, revealing that many internship programs violated the Employment Standards Act, 2000 (the “ESA”).  In this blitz, the Ministry targeted the advertising, public relations, computer systems design, consulting services and information services industries, among others. The Ministry found 31 employers with internship programs, of which 13 were violating the ESA.

The most common violations included:

•   failure to pay employees the minimum wage

•   failure to pay vacation pay

•   failure to pay public holiday pay

Altogether, the Ministry issued 37 orders, including a total of $48,543 in back pay for those interns who the Ministry deemed were “employees” under the ESA.

These results point to the need for employers to carefully consider whether their “interns” will actually be viewed as “employees” under the ESA.  As the Ministry warned in a 2011 publication, just because someone is labeled an “intern” does not mean that an employer can hire that person without compensating him/her like any other employee. Last April, Jeff Mitchell and Virginie Dandurand wrote a post explaining the limited scenarios in which an employer can hire someone to perform work without providing the minimum standards of compensation required by the (Ontario) ESA and the Québec Act respecting Labour Standards.

Employment standards are not the only area where unpaid interns are receiving attention in Ontario. Bill 18 (a.k.a. the Stronger Workplaces for a Stronger Economy Act), which would give interns in Ontario protection under the Occupational Health and Safety Act, is already in the process of being passed by the Ontario government. As well, one private member’s bill has proposed requiring that employers post their interns’ rights as employees and creating a new complaints system. So far, there is no legislation being tabled in Ontario to modify or repeal the existing statutory exception that legalizes certain unpaid internships. Nevertheless, the results of this blitz demonstrate that employers offering unpaid internships would be well advised to ensure that they meet the narrow criteria established by the province.

Unpaid Internships Receive Poor Report Card from Ontario Ministry of Labour