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Human Rights claims in the Ontario courts – Now What?

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

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

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

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

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

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Human Rights claims in the Ontario courts – Now What?

Receipt of Pornographic Material was not Just Cause for Dismissal: Appeal Court

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

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

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

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

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

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

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

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Receipt of Pornographic Material was not Just Cause for Dismissal: Appeal Court

HR Professionals: The Key to Smooth Corporate Acquisitions

Although human resources professionals are not always recognized for their efforts during a corporate acquisition, the work which they do behind the scenes can often make the difference between an acquisition succeeding or failing.  The following is a brief summary of key issues for HR professionals to stay on top of, long before an acquisition is ever contemplated, during the due diligence phase and right through to closing.

There are two types of transactions which can result in the purchase and sale of a business – a share purchase and an asset purchase.  In a share purchase, the corporate identity of the target company does not change and as a result, the employees remain employed by the same purchaser after closing.  Unless new employment agreements are negotiated with the purchaser, the employment terms and conditions of those employees will not change on closing.  In an asset purchase however, only certain assets of the target company are purchased and the employees are therefore generally terminated by the target company unless they agree to accept new employment with the purchaser.

Keeping Your House in Order:

All too often, proposed acquisitions fall through after the purchaser becomes aware of potential employee liabilities which it will have to assume in the event of an acquisition.  As an HR professional, you can assist with minimizing those liabilities long before an acquisition is being contemplated, by ensuring that: (i) well-drafted employment agreements are properly entered into; (ii) the company is protected with any necessary confidentiality, intellectual property and restrictive covenant agreements; (iii) there are no significant wages, vacation pay and overtime pay accruals; (iv) employee claims and complaints are kept to a minimum; and (v) mandatory statutory obligations are complied with (eg. WSIB registration; compliance with the Occupational Health and Safety Act; compliance with the Pay Equity Act).  When potential employment liabilities are kept to a minimum, it greatly reduces the risk of a purchaser walking away from a deal due to the added costs of correcting the liabilities.

Due Diligence:

HR professionals should be aware of the fact that even in an asset purchase, the Employment Standards Act, 2000 contains successor employer provisions.  In particular, section 9 of the ESA states that if a purchaser hires an employee of a vendor within 13 weeks of closing, the purchaser will be deemed to have taken on the employee with all of his or her prior years of service with the vendor.  Therefore, although the inclination may be to think that the purchaser in an asset deal can “fix” employment problems hand-in-hand with the hiring of employees on closing, sometimes employees will balk at going to a new employer if they are not being hired on similar or better terms to those which governed their employment with the vendor.  In this regard, it is often helpful for the vendor to work with the purchaser during the due diligence phase in order to determine who will be provided with offers of new employment and what the new and continuing terms of employment should be.

HR professionals in Ontario should also be aware of the fact that the Personal Information Protection and Electronic Documents Act (PIPEDA) does not yet have a business transaction exemption.  Although employee personal information is not generally caught under PIPEDA, it can be subject to PIPEDA when employee personal information is being collected, used or disclosed for commercial purposes such as an acquisition.  In order to ensure that there are no personal information breaches in connection with the acquisition of a company, if you work for the vendor it is wise to get the employees to sign a consent to the disclosure of their personal information at the time that they are first hired, as to do so in the midst of a transaction can tip employees off before the transaction becomes publicly known.  Whether or not the employees have signed consents at the time of hire, it is also wise for the vendor and the purchaser to enter into confidentiality agreements with respect to employee personal information which may be disclosed in relation to the transaction.

Closing:

As the closing of the transaction approaches, it is particularly important for HR professionals for both the vendor and the purchaser to try to work together to determine such issues as who will take responsibility for accrued vacation, whether releases will be sought from employees who are part of an asset purchase, whether and what type of new employment agreements will be offered to those employees who are remaining on, and ensuring that employees who are not remaining on are properly terminated at or prior to closing.  As well, there is often a need for certain key employees to remain on for a limited period to assist with transition work, and thought often needs to be given to whether those employees should be provided with a special retention bonus agreement or whether the expectation is that they will simply work out their notice of termination period doing transition work.

As always, it is important for HR professionals to obtain legal advice from an employment law specialist in conjunction with the above steps.  Together, they can make the difference between a difficult acquisition and a successful one.

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HR Professionals: The Key to Smooth Corporate Acquisitions

Ontario Jury Awards Ex-Employee $1.4 Million for Mistreatment by Former Manager

In a cautionary tale for employers, a jury in Windsor, Ontario awarded $1.4 million in damages to a former Wal-Mart employee who alleged that she had been constructively dismissed after being subjected to intentional infliction of mental suffering by her former manager.

The jury award included $1.2 million in punitive damages and damages for mental distress against the employer, and an additional $250,000.00 in punitive damages and damages for mental distress against the manager. The former employee established that the manager had punched her on the arm on two occasions, and had subjected her to profane and insulting mental abuse. Those allegations were that the manager had called the employee “a [expletive] idiot” in front of her co-workers, and that the manager had made the former employee count skids in front of co-workers in order to prove to him that she could accurately count.

A link to the Windsor Star article on the court decision is attached: http://blogs.windsorstar.com/2012/10/10/walmart-must-pay-1-4-million-for-mistreating-employee/

The employer has already appealed the jury’s verdict to the Ontario Court of Appeal, calling the award “…wholly disproportionate and/or shockingly unreasonable.” This is not surprising, given that this award would set a new high-water mark for punitive damages in a wrongful dismissal case. (It appears that the jury may have based its award roughly on the amount that the former employee, who is currently 42 years of age, would have earned had she remained employed in her position until age 65. This figure had been raised by the former employee’s counsel in his closing submissions, although the trial judge had specifically instructed the jury not to consider that figure.)

Although, in our view, it is likely that the jury award will be set aside or reduced on appeal, this decision does underscore how important it is for employers to have a clear policy against incidents of workplace violence and harassment and to take prompt action to address such incidents when potential allegations of this nature come to light.

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Ontario Jury Awards Ex-Employee $1.4 Million for Mistreatment by Former Manager

Terminated Employee who signed Release Still Entitled to Accumulated Sick Leave Benefits

Employers are often concerned about whether terminated employees can claim entitlement to accumulated sick leave credits. This case shows how important it is to scrutinize every word in termination agreements; unclear language can come back to haunt the employer.

The employee had been employed for 29 years with the County of Haldimand and its predecessor municipalities. He was presented with and accepted a severance package. He signed a Release and in essence retired.

The severance agreement was incorporated into the Release and allowed for a claim for “usual retiree benefits.” The employee relied on that language to claim payment of accumulated sick leave pursuant to a section of the employer’s Policy Manual which stated:

“An employee hired prior March 12, 1981 and who has a minimum of five (5) years of continuous service will be entitled to a payment equal to the value of one-half (.5) of the balance of the employee’s accumulated sick leave credits to a maximum of one hundred thirty (130) days pay at current salary, upon termination of employment for any reason.”

At trial, judgment was awarded to the plaintiff for payment of accumulated sick leave credits. The employer appealed and argued that the severance agreement did not specifically give entitlement to sick leave credits, and the Release barred the employee’s lawsuit.

The court decided that the only “retiree benefit” that the employee had was the payment of accumulated sick leave pursuant to the Policy Manual. As such, the severance agreement’s reference to “retiree benefits” must mean the accumulated sick leave credits.

The court also held that the Release did not bar the claim because the severance agreement was incorporated into the Release.

Lastly, the court rejected the employer’s argument that the two-year limitation period started when the employee signed the severance agreement. Instead, because sick leave credits are part of retiree benefits, the court decided that the limitation period should begin May 31, 2008, the day when he “retired”.

Daniel John Burgener v. Corporation of Haldimand County, 2012 ONSC 5230

The author gratefully acknowledges the assistance of Simmy Yu in the writing of this article.

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Terminated Employee who signed Release Still Entitled to Accumulated Sick Leave Benefits

The Return of Large Punitive Damages Awards in Wrongful Dismissal Cases?

Are large punitive damages awards in wrongful dismissal coming back?  Looking at the trial court’s decision in the case of Pate v. Galway-Cavendish and Harvey (Townships), which is currently under appeal, one wonders.

Mr. Pate was a 9+ year employee at the Townships, who was terminated for cause due to his alleged non-remittance of building permit fees.  When he refused to resign (after being given no details of the allegations against him), he was dismissed and the matter was reported to the police.  In part due to the allegations against him and the ensuing criminal trial, Mr. Pate’s marriage and his side business with his wife both failed.  In addition, he was unable to re-establish a career as a municipal official.

Mr. Pate was subsequently acquitted, and it was determined by the trial judge that the employer had failed to disclose key information to the Crown which would have resulted in no charges having been laid in the first place.  The trial judge felt that the employer’s conduct merited relief in the form of a punitive damages award, due to the fact that damages for wrongful dismissal could not adequately address the fact that Mr. Pate’s career was effectively destroyed due to the allegations.  However due to the principle of proportionality, the trial judge awarded Mr. Pate only $25,000 in punitive damages.  The Ontario Court of Appeal subsequently overturned that decision and ordered that a new trial be conducted with respect to the quantum of punitive damages and another issue.

With reference to the damage caused to Mr. Pate as well as the fact that both the criminal proceedings and the wrongful dismissal trial took years to be dealt with, on the second time around the trial judge took full advantage of the Court of Appeal’s open invitation to punish the employer for its conduct, and increased the punitive damages award from $25,000 to $550,000.

While the matter is under appeal once again and it may be that the $550,000 was excessive, the Court of Appeal’s unusual invitation to the trial judge to reassess punitive damages at a higher amount makes it clear that our province’s highest court is not averse to punishing employers whose conduct is deserving of signficant punishment.

Pate Estate v. Galway-Cavendish and Harvey (Townships), 2011 ONSC 6620 (CanLII)

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The Return of Large Punitive Damages Awards in Wrongful Dismissal Cases?

Denunciation, Deterrence and Retribution: Jury Awards Dismissed Employee $573,000 in Punitive Damages

The Vancouver Sun has reported that a British Columbia jury recently awarded employee Larry Higginson over half a million dollars in punitive damages, on top of a $236,000 award for wrongful dismissal, taking damages flowing from a wrongful dismissal to new heights in Higginson v. Babine Forest Products Ltd. and Hampton Lumber Mills Inc.

The Jury decision is not reported, however according to reports, Mr. Higginson had been employed for 34 years with the Defendant, Babine Forest Products Ltd., until he was dismissed on October 14, 2009, apparently for just cause. The employer alleged that Mr. Higginson failed to perform his duties as a manager. In response, Mr. Higginson alleged that cause had not been established and that the employer had set him up for termination of employment, had made his working environment miserable and had alleged cause to avoid the obligation to pay notice of termination of employment to long-term employees.

The Prince George B.C. jury found that the employer did not have cause to terminate his employment, and awarded damages in excess of $800,000 as a result of the wrongful dismissal.

Such a large punitive damages award has not been seen since the 2008 Ontario Superior Court of Justice awarded $500,000 to a wrongfully dismissed employee in Keays v. Honda Canada Inc.  However, in Keays, the Supreme Court of Canada (2008 SCC 39) overturned the punitive damages award on appeal.

A Notice of Appeal was filed in Higginson on July 18, 2012.

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Denunciation, Deterrence and Retribution: Jury Awards Dismissed Employee $573,000 in Punitive Damages

Being Kicked in the Behind is No Laughing Matter: Employee’s Exaggerated Account of Workplace Altercation not Grounds for Summary Dismissal

Teresa Scholer was a fifty-five year old employee working in an entry-level position with the defendant employer. At the time of the termination of her employment, she had been working with the employer for approximately nine or ten months. In early 2010, Ms. Scholer was attending to her duties when she had an exchange with a co-worker. Inexplicably, after the exchange, her co-worker kicked Ms. Scholer in the buttocks. This event was captured by the employer’s video surveillance. The video surveillance also captured Ms. Scholer attempting to return the kick.

It was not clear from the video whether this was horseplay or something more aggressive. However, Ms. Scholer’s position was that she had been assaulted, and she complained to the employer that she was considering seeking criminal charges against her co-worker. She also complained about an earlier incident involving the same co-worker and about the fact that the co-worker had been scheduled for more shifts.

The employer viewed the surveillance, and considered that Ms. Scholer had not been honest about the incident, and had exaggerated it. Ms. Scholer was informed of the employer’s view of her description of events, but before Ms. Scholer was given an opportunity to review the surveillance, the employer terminated her employment, allegedly because she was difficult. Ms. Scholer was paid statutory notice of termination of employment, but the employer nevertheless insisted at trial that the termination had been for just cause.

The B.C. Provincial Court found that the employer had not established just cause. In particular, the Court found the employer’s focus on Ms. Scholer’s description of the incident, rather than the fact that she had been kicked in the buttocks, perplexing.  In all, the Court found that Ms. Scholer’s inaccurate description of the incident was neither in and of itself just cause for dismissal, nor was it a culminating incident that would justify the termination of her employment. There was no evidence that prior to her termination Ms. Scholer was aware that her job was in jeopardy. Finding that she was wrongfully dismissed, the Court assessed a notice period of four weeks given her particular circumstances including her short service.

Scholer v. Hart Drug Mart Ltd., 2012 BCPC 220 (CanLII)

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Being Kicked in the Behind is No Laughing Matter: Employee’s Exaggerated Account of Workplace Altercation not Grounds for Summary Dismissal

Termination For Cause: Another Case of “Employer Beware”

A termination for good business reasons does not always equate to a termination for just cause.  In the recent decision of the Ontario Superior Court in Barton v. Rona Ontario Inc., Mr. Justice Lauwers stated that even if an employee’s serious misconduct was such that the employer concluded that it needed to dismiss him to make an example of him, the misconduct might not necessarily be sufficient to warrant a termination without notice.

The Facts:

Barton was employed by the defendant for over 10 years and at the time of termination he was an assistant store manager.  Under his watch, an order picker truck was used to lift a wheelchair-bound employee from the ground floor to a second floor training centre and back again, for computer training (due to the fact that the only training office in the store was on the second floor and not otherwise accessible to wheelchairs).  This incident was contrary to the defendant’s safety expectations as set out in the Employee Handbook, the Health and Safety National Manual and the Occupational Health and Safety Act.  While Barton indicated his discomfort with the planned incident to both the operator of the order picker truck and the disabled employee, he was aware that the disabled employee wanted to attend the training and he did nothing to stop the employees from proceeding with their plan.  The incident turned out to be even more dangerous than might otherwise have been the case, as the wheelchair was not secured to the skid during the descent to the ground floor, and as the area around the order picker truck was not secured and someone walked under it during the lift. Fortunately for all, nobody was hurt during the incident.

Several employees were disciplined due to their part in the incident, but Barton’s employment was terminated for cause due to the fact that he was held to a higher standard than the non-managerial employees.

The Decision:

Mr. Justice Lauwers referenced Mr. Justice Echlin’s statement that just cause is “the capital punishment of employment law”.  He also referenced the contextual approach set out in the leading case of McKinley v. B.C. Tel and stated that although Barton’s misconduct was serious, his performance appraisals were good, he had no disciplinary record and he did not give permission for the lift or descent (although neither did he stop them).  By applying the principle of proportionality set out in McKinley, he found that Barton’s actions were not sufficient to warrant a with-cause termination.  He found that while there may have been good business reasons for Rona to terminate Barton’s employment and make an example of him in order to ensure that this sort of incident did not happen again, those reasons were not sufficient to elevate the termination to one without notice.  As a result, Barton was awarded 10 months of damages due to wrongful dismissal.

Barton v. Rona Ontario Inc., http://canlii.ca/t/fs8n7

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Termination For Cause: Another Case of “Employer Beware”

Employee Denied Damages for Failure to Return to Work When Called Back

Earl Chevalier was employed by Active Green + Ross for 33 years and was a service centre manager for 18 of those years. On October 28, 2008, he was notified that he was being temporarily laid off from his job at the end of the month. When Mr. Chevalier later commenced an action for wrongful dismissal, his employer called back stating that it had acted under the mistaken belief that it could lay off Mr. Chevalier. Mr. Chevalier however refused to return to work and decided to continue with this litigation.

The Ontario Superior Court of Justice held that Mr. Chevalier was constructively dismissed when he was laid off by Active Green + Ross on October 28, 2008. Accordingly, he was entitled to notice in the range of 18 to 24 months. However, the Court found that Mr. Chevalier failed to mitigate his damages when he refused to return to work.

Where the employer offers the employee a chance to mitigate damages by returning to work for him or her, the central issue is whether a reasonable person would accept the offer to return to work. However, the employee would not be obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation.

Mr. Chevalier claimed that management had engaged in conduct intended to “make his life miserable” in order to cause him to leave his employment. The conduct alleged by Mr. Chevalier included unfair criticism of his work, treating him in a demeaning fashion and ignoring his contractual rights by requiring him to work in Toronto more the 50 kilometres from home.

The Court found that Mr. Chevalier appeared to be very bitter about his experience and as a result the significance of various incidents covered in his evidence became magnified and distorted in his mind over time.

Mr. Chevalier was failing to meet performance goals and comply with company policies particularly on customer service. As a result, more senior managers frequently provided him training and assistance in order to improve. It was also clear from Mr. Chevalier’s employment agreement that he would be expected to travel as part of his job. Mr. Chevalier was reassigned because of the poor performance of his branch to another location where management hoped that Mr. Chevalier would be more effective. He would be working at a busier location with another manager who was considered to have been successful in carrying out the company’s operating procedures.

The Court held that the employer’s conduct was directed toward making Mr. Chevalier a more effective contributor as an employee of Active Green + Ross rather than making his life miserable so that he would leave the company. The Court concluded that a reasonable person would have returned to work and therefore Mr. Chevalier had acted unreasonably when he refused to return to work. As such, he had failed to mitigate his damages, and was thus not entitled to any damages.

For a copy of decision in Chevalier v. Active Tire & Auto Centre Inc., 2012 ONSC 4309, please visit: http://canlii.ca/t/fs4p6

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Employee Denied Damages for Failure to Return to Work When Called Back