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Increase to the Alberta Minimum Wage

Alberta employers are reminded that the general minimum wage in Alberta will be increased on October 1, 2016 to $12.20 per hour, up from $11.20 per hour. Additionally, the current liquor server rate will be eliminated effective October 1, 2016 and these employees will also now earn the general minimum wage. Employers are reminded to update their employment contracts and practices to ensure they reflect the new minimum wage.

The minimum wage will increase a further $1.40 to $13.60 per hour on October 1, 2017, and by $1.40 to $15.00 per hour on October 1, 2018.

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Increase to the Alberta Minimum Wage

Trend continues in alberta for higher general damages in human rights awards

General damages awarded by human rights tribunals are intended to compensate for discrimination and to act as a deterrent.

The Alberta Human Rights Act provides no statutory limit on how much general damages can be awarded.  However, in the past general damages awarded by the Human Rights Tribunal of Alberta (the “Tribunal”) generally ranged from $3,000 to a top end “cap” of $10,000.

This has changed since the Alberta Court of Appeal decision in 2013 of Walsh v. Mobil Oil Canada.  In Walsh, the court stressed that inadequate damage awards undermined the mandate of human rights legislation to recognize and affirm that all persons are equal, and to protect against and compensate for discrimination.  The court concluded that low damage awards could actually perpetuate discriminatory conduct.

Beginning in 2015 there has been a notable trend towards higher general damages awards, and the Tribunal has issued a number of decisions awarding general damages in the range of $10,000 to $15,000.

In Amir and Nazar v. Webber Academy Foundation the Tribunal found that it was not undue hardship to allow Muslim students to pray during the school day in a secular private school, and awarded general damages of $12,000 and $14,000 to each complainant.

Similarly, in Andric v. 585105 Alberta Ltd. o/a Spasation Salon & Day Spa, the Tribunal found that the employer had unjustifiably changed the complainant’s position and work location of 10 years after she was assaulted by a co-worker. The Tribunal concluded that the shared religious beliefs between the co-worker who assaulted the complainant and the employer were a factor in the respondent’s decision to transfer the complainant.  The complainant was awarded general damages of $15,000 and lost wages for a 24 month period.

More recently, on July 5, 2016 the Tribunal issued its decision in Thu Hien Pham v. Vu’s Enterprise Ltd. o/a La Prep, which continued this trend of higher general damage awards.  The complainant, Ms. Pham was awarded $15,000 in general damages by the Tribunal, who found that Ms. Pham had been harassed by her former employer.  On awarding $15,000 in general damages, the Tribunal chair noted that “it was important to ensure that damages are not so low as to trivialize the protection of human rights”, and “[w]hile I may have been inclined to consider a greater amount…this was the amount requested by the Director and the complainant”.

Accordingly, employers can expect to see larger awards in the future for both general damages and loss of income, and should not discount the risks and exposure of a human rights complaint.

These decisions of the Human Rights Tribunal of Alberta can be found here:

  • Amir and Nazar v. Webber Academy Foundation, 2015 AHRC 8 (currently under appeal): http://www.canlii.org/en/ab/abhrc/doc/2015/2015ahrc8/2015ahrc8.html?resultIndex=1
  • Andric v. 585105 Alberta Ltd. o/a Spasation Salon & Day Spa, 2015 AHRC 14: http://www.canlii.org/en/ab/abhrc/doc/2015/2015ahrc14/2015ahrc14.html?resultIndex=1
  • Pham v. Vu’s Enterprises Ltd., 2016 AHRC 12: http://www.canlii.org/en/ab/abhrc/doc/2016/2016ahrc12/2016ahrc12.html?resultIndex=1

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Trend continues in alberta for higher general damages in human rights awards

Court finds termination clause purporting to limit a 17-year employee’s termination notice to the 8 week statutory minimum to be “clear, express and unambiguous”

An Alberta court recently had the opportunity to consider the question of whether a termination clause was effective to take away an employee’s entitlement to pay in lieu of notice of termination in excess of the minimum set out in the Alberta Employment Standards Code (“Code”). The Plaintiff in this case was a 17 year employee who was terminated without cause. The employer paid her the equivalent of 8 weeks salary, relying on a termination clause in the employment agreement which purported to limit her termination notice to the amount required under the Code. Given her length of service, the employee was entitled to the maximum of 8 weeks.

The Plaintiff sued for wrongful dismissal and applied for summary judgment. The sole issue for the summary judgment application was whether the termination clause barred the Plaintiff’s claim for damages beyond the 8 weeks. The clause in question stated:

In the event that [the employer] terminates your employment without cause, [the employer] will provide the notice or pay in lieu of notice required by the Alberta Employments Standard [sic] Code or other applicable legislation. You are not entitled to any other termination notice, pay in lieu of notice, or other benefits.

The Court considered the termination clause to be “clear, express and unambiguous” and stated that it was “difficult to think of wording that might make the employer’s intention any clearer”. The Court therefore dismissed the Plaintiff’s application, finding that the employer’s defence that the claim was barred by the termination clause had merit, and accordingly the matter should proceed to trial, absent an application by the employer for summary dismissal.

This decision provides helpful guidance to employers, although it is important to note that there is also a significant body of case law invalidating termination provisions. As recognized by the Court in this case, in order for an agreement to exclude an employee’s common law notice, it must be clear and unambiguous. Because section 3 of the Code preserves an employee’s common law rights, merely referring to the notice required under the Code has, in other cases, not been considered sufficient to limit an employee to the minimum notice requirements under the Code. Absent a reference to the specific termination notice sections of the Code (sections 56 and 57) or wording such as “the minimum requirements under the Code”, some decisions have found that similarly-worded termination clauses did not take away the employee’s common law right to reasonable notice, although each case needs to be decided on its individual facts.

This case emphasizes the importance of careful drafting of termination provisions, and shows that if done correctly, an employer can significantly reduce its liability on a termination without cause.

Stangenberg v Bellamy Software, 2016 ABQB 160

http://www.canlii.org/en/ab/abqb/doc/2016/2016abqb160/2016abqb160.pdf

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Court finds termination clause purporting to limit a 17-year employee’s termination notice to the 8 week statutory minimum to be “clear, express and unambiguous”

Alberta Court of Appeal reverses the burden of proof for employee theft

by Jordan R.M. Deering and Byron Reynolds

The Alberta Court of Appeal recently considered and clarified the nature of the relationship between employers and the employees they entrust with handling funds. As a result of the decision in 581257 Alberta Ltd. v Aujla, 2013 ABCA 16, employers may more easily recover assets stolen, converted or misappropriated by dishonest employees using a civil cause of action. The Alberta Court of Appeal found that, in cases of theft, an employee owes fiduciary obligations to its employer. In addition, the Court overturned the lower court’s decision that the plaintiff employer was responsible not only for demonstrating that a fraud or theft had occurred, but also for showing that all of the discovered loss was a result of the employee’s theft or fraudulent acts.

According to the Alberta Court of Appeal, where an employer gives an employee the responsibility for handling the employer’s funds, that employee has fiduciary obligations with respect to those funds. Employers have a strong argument that a similar fiduciary relationship exists where:

• Employees handle inventory or valuable assets.

• Employees handle cheques or transfers and have signing authority.

The fiduciary obligation does not impose obligations of non-competition or fidelity, but it shifts the evidentiary burden respecting dealings with those funds.

The Court of Appeal held that once the employer proves fraud or breach of fiduciary duty, the employer only needs to establish reasonable efforts to determine the amount taken by the thieving employee. At that point, the evidentiary burden shifts to the employee to disprove the amount and the cause of the loss. This shifting burden of proof enforces the policy that an employer should not be precluded from recovery where the employee has covered his tracks and compromised the ability of the employer to prove the quantum of loss.

In Aujla, the defendants were cashiers and shelf stockers at the plaintiff’s liquor store. The plaintiffs became suspicious that funds were going missing, but did not have sufficient evidence because their inventory system was unsophisticated and their surveillance was inadequate. The employer later installed a hidden camera, which showed the employees stealing some money from the till. This evidence established fraudulent behavior and breach of fiduciary obligations, but only proved a small quantum of thefts. However, the employee’s bank records disclosed $116,000 in funds that were not accounted for.

The shifting burden of proof of quantum of losses for breach of fiduciary or fraud dramatically reduces the difficulty faced by employers, who can only prove a few incidences of theft, but fairly believe this theft represents part of a larger pattern. Employers may be able to rely on the employee’s lifestyle, habits (such as gambling or shopping), or bank records to prove the loss.

While employers previously considered recovery impossible because of insufficient proof of the full quantum of the loss, the Alberta Court of Appeal has now leveled the playing field and provided significant recourse for employers.

Please feel free to contact Jordan Deering of our Fraud Corruption & Asset Recovery Group directly if you would like to discuss the application of this decision to your particular circumstances.

581257 Alberta Ltd v Aujla, 2013 ABCA 16

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Alberta Court of Appeal reverses the burden of proof for employee theft

Oilfield Employee Free to Compete with Former Employer

The recent Alberta decision of ADM Measurements Ltd. v. Bullet Electric Ltd. provides a useful summary of post-employment obligations and the extent to which ex-employees may compete with their former employer.

ADM is an instrumentation business for oilfield companies. As the business grew, ADM decided to hire Gregory Young, through Young’s company Bullet Electric Ltd., to help manage the business. The relationship between the parties eventually broke down and Young and a business partner formed a new competing company, Bullet Energy (Canada) Inc.  Bullet Energy became more and more successful and ADM faltered. ADM commenced an action against Bullet Electric and Young for breach of fiduciary duty.  ADM further made a claim against Bullet Energy, Young and his business partner for unjust enrichment and unfairly interfering with ADM’s contractual relations with its customers and employees.

In reaching its decision to dismiss ADM’s claim, the Court considered a number of issues, as discussed below.

Existence of an Employment Relationship

The first issue considered was whether Young was an employee of ADM.  Young clearly provided services to ADM through Bullet Electric; however, the Court found that Young was an employee of ADM, rather than an independent contractor, based on the following factors:

• Young’s management activities were clearly subject to ADM’s direct control;

• Young assigned work to and supervised other ADM employees and independent contractors, suggesting integration into the business of ADM;

• Young used ADM’s office infrastructure and supplies rather than supply his own;

• Young contracted for his services alone, no subcontractors were used to provide services to ADM; and

• Young received a fixed monthly salary from ADM without any associated risk of expenses.

Post-Employment Obligations

Once it was determined that Young was an employee of ADM, the Court considered whether Young owed any post-employment obligations to ADM and if so, whether he breached those obligations.  The Court found no evidence of any contract prohibiting Young from opening a competing business.  The Court also held that Young was not a fiduciary of ADM: Young did not possess the necessary control over ADM typical of a key employee. Finally, the Court held that ADM had constructively dismissed Young, and that even if Young had contractual non-competition obligations or fiduciary obligations, the wrongful termination ended those obligations.

Interference with Contractual Relations & Causation

The Court went on to consider whether any damages could be awarded against Young, Warnock and Bullet Energy for interference with contractual relations, as a result of former customers and employees of ADM moving to Bullet Energy. Firstly, the Court determined that there was no interference with contractual relationships between ADM and its customers given the precarious nature of the customer relationships in the industry.  Contracts were made for individual “piece-work” tasks and any long-term interaction was informal and not contractual. Young and his business partner, through Bullet Energy, were simply willing to compete with ADM and did so in an aggressive manner. The Court further accepted that while a new employer may be liable for damages caused by interfering with an employee/employer relationship of a competitor, such liability would not be found without extensive evidence. More must be proven than employee migration from the old company to the new one; instead, the old company must prove that the employee migration was due to inappropriate solicitation of former employees. ADM failed to supply any evidence to support such an argument.

The Court further dismissed ADM’s argument that ADM’s shrinking revenues were directly caused by Bullet Energy taking its business. Rather, the Court found that while ADM’s revenue was clearly shrinking, Bullet Energy’s success was most likely caused by Bullet Energy “out hustling” ADM rather than “stealing work” from ADM.

In the result, Young and his new company, Bullet Energy, were entitled to freely compete with ADM.

ADM Measurements Ltd. v. Bullet Electric Ltd.: http://canlii.ca/t/fqhgj

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Oilfield Employee Free to Compete with Former Employer

Court Disqualifies Plaintiff’s Wrongful Dismissal Lawyer who Previously Represented Defendant

In Robert Day v. Norwood Foundry Limited (2012 ABQB 186), the plaintiff sued his former employer, Norwood, for wrongful dismissal. Norwood brought an application seeking to prohibit the plaintiff’s lawyer from representing him, since that lawyer had previously represented Norwood in a similar action involving another former employee.

The Court held that the lawyer could be disqualified from representing the plaintiff if: (a) he received confidential information which would be relevant to the current action while he was in a solicitor-client relationship with Norwood because of the previous action; and (b) such information would be used to the prejudice of Norwood.  The lawyer argued that any information provided in the previous matter was not confidential as the plaintiff was the chief instructing officer for Norwood in the previous matter. Thus any information held by the lawyer would be equally held by the plaintiff and there would be no privilege attaching to the plaintiff’s information.

The court rejected this argument as it was impossible to say that the plaintiff would have known all of the material information held by the lawyer regarding the previous action. Accordingly, the Court found that the lawyer did possess confidential information, such as Norwood’s preferred approach to litigation and settlement. Regarding whether this confidential information would be used to the prejudice of Norwood, the Court held that where the same lawyer who acted for a client, later acts against them, disqualification is automatic. Therefore, whether or not the information would prejudice Norwood was irrelevant because a lawyer “cannot compartmentalize his or her mind”.  As a result, the lawyer was disqualified and the dismissed employee was forced to seek new counsel.

Robert Day v. Norwood Foundry Limited, http://canlii.ca/t/fqq5v

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Court Disqualifies Plaintiff’s Wrongful Dismissal Lawyer who Previously Represented Defendant