2018 Year in Review: Sex, Drugs and…Termination Clauses?

employment law review

2018 Year In Review

“The more things seem to change, the more they stay the same”.

At first blush, that might seem to be a particularly apt description of Canadian Employment Law. While 2017 brought about sweeping changes to the Employment Standards Act, 2000, 2018…brought about sweeping changes to the Employment Standards Act, 2000. While 2017 brought about employer panic and confusion over the legalization of cannabis, 2018… continued to do much the same. For yet another year, we were treated to several judicial assessments of the enforceability of termination clauses, and we continued to see the quantums of human rights and other damages increase. In a sense, everything old is new again.

At the same time, things have changed significantly. Cannabis legalization has not resulted in workplaces going ‘up in smoke,’ but it did bring about an increased awareness of the importance of workplace drug and alcohol policies. And while 2017 may have been the year of the #metoo movement, 2018 brought some sober consideration of how those accused should be treated, as well as what to when the harassers return to the workforce.

2018 may go down as one of the more memorable years in employment law, provided those memories do not vanish in a smoky haze. Yet despite the near-constant focus on cannabis, there were a number of other issues stemming from legal or societal developments which warranted attention.

So, without further ado, let us take a closer look at some of the biggest employment law stories of 2018.

The Grass Is Always Greener? Recreational cannabis comes to pass

Pot in the Workplace

 

It is fair to say that Canada changed forever on October 17, 2018, when we became only the second country in the world to legalize recreational cannabis. The move had been in the works for years, and was a campaign promise of Prime Minister Trudeau when he was first elected in 2018. In October, Canada’s Cannabis Act came together, and finally came into force.

The buildup to legalized cannabis was fraught with uncertainty and fear amongst employers. Would employers have to allow their workers to come to work stoned, or go out on their break and smoke up? Would recreational users, who were previously clandestine, start trying to light up at their desks? Would productivity plummet because most of the office could only concentrate on their munchies?

In reality, very little seems to have changed. There was far more hype about the impact of legalization than there was actual change. While recreational cannabis may be legal, it is not permissible to smoke indoors outside of a private residence, which means that lighting up at work is prohibited unless it is for medical accommodation purposes only. Furthermore, the legislation gave many employers the cue to implement or brush up on their workplace drugs and alcohol policy, where they can easily prohibit and penalize impairment. Additionally, medicinal cannabis had been legal for years, and so much remains unchanged when it comes to accommodation.

That said, the attention paid to recreational and medicinal cannabis was a great reminder to employers that they should have a strong and realistic drug and alcohol policy.

Termination Clauses – Stop Looking for Ambiguity

Termination Agreements

 

The past few years have seen extensive litigation over the enforceability of termination clauses. Often, tens or even hundreds of thousands of dollars can be at stake and, unfortunately, the outcomes have been less than predictable. In many cases, courts seemingly went out of their way to help individuals avoid the consequences of the contracts they had signed.

The law is clear: by default, an employee is entitled to reasonable notice of dismissal pursuant to common law. In order to displace that right, there must be an enforceable contract (many fail due to lack of consideration) and clear wording designed to displace the common law. Further, the termination clause cannot actually or theoretically breach the applicable employment standards legislation. The law has flip-flopped between employee-friendly approaches that invalidate clauses due to the slightest shortcomings and employer-friendly decisions that seek to hold employees to a  bargain they may not have understood.

Since the courts have consistently stated that a termination clause must clearly oust the common law in order to  be enforceable, even questionable ambiguities have been used to “help” employees in some cases. Occasionally, it seemed that an employment contract would be unenforceable if it did not contain precise and specific wording. Conversely, some decisions have sought to give effect to the clear intention of the parties despite minor flaws in the wording. As the Court of Appeal confirmed this year in Amberber v. IBM Canada, contracts must be read as a whole, and ambiguity should not be chased after where it simply does not exist.

Noah Amberber, a former IBM employee, claimed that the termination clause in his 16-year-old contract did not apply, and as such he should be eligible for notice at common law. IBM brought a motion for summary judgment to uphold the contract; however the Court sided with Amberber, saying that the termination clause was ambiguous and did not limit the employee’s entitlements.

IBM appealed, and the Court of Appeal ruled in their favour. The Court found that the motions judge had incorrectly divided the termination clause into sub-portions in order to rule that it did not make sense. For example, it found that the final sentence in the clause, which served as a ‘failsafe’ provision intended to uphold the legislative minimums, applied to the whole clause and not just the sentence that preceded it. The Court was critical of the motions judge for trying to find ambiguity. On the whole the case was a win for employers, providing clarity to the topsy-turvy world of termination clauses and ensuring that ambiguity should not be read in if it was never there to begin with.

Employment Standards are far from standard

bill 47 coming soon

 

Ontario was the only province to dramatically change its Employment Standards legislation twice, but other jurisdictions did make significant changes as well.

Bill 148 Bill 47 (Ontario changes the ESA again)

For most of the past two decades, the Employment Standards Act, 2000 (the “ESA”) has been akin to ‘the furniture’ of employment law – it’s there, it’s solid, and it more or less serves its intended purpose. But if the ESA was like the furniture, then the past 2 years have been a floor-shattering earthquake, jostling everything in the room from side to side.

In 2017, Ontario’s Liberal government brought in the Fair Workplaces, Better Jobs Act, also known as Bill 148, which was the most significant overhaul of the ESA in decades and added a significant enhancement of employee rights in key areas. While a $15 minimum wage got the most media attention, Bill 148 also brought in new rules about scheduling, ten days of Personal Emergency Leave (including two paid days), a movement to ensure equal pay for equal work, and a host of other measures to protect employees.

However, where a Liberal government giveth, a Conservative government often taketh away. Only months after becoming Premier, Doug Ford’s government introduced the Making Ontario Open For Business Act, otherwise known as Bill 47. While the new Act kept some of the previous changes, including increased vacation allowances and a new leave for victims of domestic violence, the minimum wage will remain at $14, and the paid sick days, scheduling protections, and stiffer penalties for ESA violations were all repealed.

Alberta

In Alberta, the Ministry of Labour made broad changes to their Employment Standards Code, including: greater allowances for leaves, overtime calculated at 1.5x for all overtime hours worked, longer rest periods, a prohibition against paying disabled employees less than the minimum wage, and a 6% vacation pay entitlement.

British Columbia

British Columbia also amended its Employment Standards Act, augmenting pregnancy and parental leave, compassionate care leave, the leave respecting the disappearance of a child, and the leave respecting death of child.

Quebec

Even Quebec, which is based on an entirely different legal system, recently revised their laws to implement increased wage and scheduling protections, increased vacation allowances and holiday pay, lengthier leave allowances, and prohibitions against psychological harassment.

Singer’s Sweet Encore – The latest word on post-termination bonuses

bonus entitlement

 

The law on an employee’s post-termination entitlement to their bonus has called the definition of bonuses themselves into question. What is the purpose of a bonus – is it to reward and incentivize an employee’s performance while they are in the role? Or is it a key element of their compensation that should survive after they are no longer in the workplace?

In 2018, the Court of Appeal ruled on the case of Singer v. Nordstrong Equipment Limited, where a high-level employee argued that they were entitled to their bonus throughout a 17-month notice period after their termination without cause. At trial, the Court ruled that the purpose of the bonus was “to maximize efforts to generate profits,” and so the employee was not entitled to the bonus when he was not actively employed, as he could not fulfill its purpose.

The Court of Appeal disagreed. In upholding the employee’s entitlement to a bonus throughout his entire notice period, the Court reinforced their two part test to determine bonus eligibility:

  1. was the bonus an integral part of the employee’s compensation, and
  2. is there any clear language in the bonus plan that would restrict their entitlement?

The bottom line, at least at this juncture, seems to be that bonus entitlement will be assumed to continue during the notice period unless there is clear and unambiguous agreement to the contrary which the employee was aware of and explicitly or implicitly agreed to.

Don’t Call It A Comeback – Where the #MeToo movement goes next

metoo

 

2018 was, without question, the year of the #MeToo movement. As more and more individuals began to share their stories of workplace harassment, once-powerful men from all industries were quickly knocked from their perch as their misdeeds, both moral and even criminal, were loudly made public. While the movement made the most ground in the United States, Canada was not isolated as celebrities, politicians, athletes and CEOs quickly fell from grace.

While what goes up inevitably come down, the same is sometimes true in reverse, and the #metoo accused perpetrators are no exception. The headlines began in late August, when disgraced comedian Louis CK began performing stand-up again after his self-imposed exile with little to no mention of his actions. Weeks later, former CBC host Jian Ghomeshi penned a widely-read essay that was part mea culpa, but also part pity party. In the recent Ontario municipal elections, former PC leader Patrick Brown, who was taken down by scandal at the start of this year, became the newly-elected Mayor of Barrie.

At the same time, many less famous individuals have had to try to recover from losing their jobs due to sexual harassment allegations. We have seen more and more people either return to their previous jobs after lengthy periods away, or try to reenter the workforce and find new employment. Employers have struggled with how to treat such individuals, especially when the reason for their current unemployment is known.

In 2019, we will continue to see sexual harassment allegations and investigations, and we also expect to see more and more accused returning, or attempting to return, to the workforce.

When Disability Becomes Truly Frustrating – Roskaft v. RONA

Frustration of Contract

 

Having an employee on long term disability can be a struggle for employers. Employers want the employee to return to the workplace, and are often left in limbo, trying to fill the gap but unsure how long it will exist. And, of course, it can be challenging to find good candidates when they have no idea how long employment will last – it might be weeks, months, or years. Often, we are asked “how long do we have to wait before the contract is frustrated?” Or, phrased another way, “how long do we have to keep the job open for them?”

In 2018, the Superior Court of Justice heard the case of an employee who had been out of the workplace since 2012, first on Short Term Disability and then on Long Term Disability. In 2014, his insurer informed his employer that his disability was permanent, and he was unlikely to be able to return to the workplace. The employer determined, based on that letter, that the employment relationship had been frustrated and ended the employment relationship. The employee then sued for wrongful termination.

The Court ruled that the employer’s decision was reasonable. The employer had relied on the insurer’s determination that the disability was permanent, along with the fact that the employee continued to accept disability benefits. The Court allowed RONA to include evidence from 2016 and 2017 which, even though it came after the employee’s termination, spoke about his health at the time of his termination. The employee claimed that the employer had not asked enough questions, and he was in fact starting to feel better, but the Court ruled that the evidence did not support his assertions.

Broadly speaking, a contract of employment is frustrated when there is no reasonable likelihood that the employee will return to work in the foreseeable future. It does not matter how much time has passed. While the case provided some guidance for employers, there is simply no hard and fast rule as to when an employer can terminate an employee that is off work on disability.

Higher and Higher – Ontario’s Human Rights Tribunal cracks the ceiling on damages

human rights complaint

 

No amount of money can properly compensate an employee for repeated sexual assault. When an employee views their employment as an opportunity for a better life, taking advantage of that very need in order to manipulate them and threaten their safety is among the most deplorable employer conduct. While it is impossible to put a dollar figure on such behavior, the Human Rights Tribunal of Ontario recently attempted to with an unprecedented damages award.

In the case of A.B. vs. Joe Singer Shoes Ltd., the employee had come from Thailand to Canada to work for the employer’s father. She lived above the business, and the owner’s son, who took over the business, repeatedly sexually assaulted and degraded the employee in her home and in the workplace, threatening the safety and security of both her (a single mother) and her disabled son.

The Human Rights Tribunal found the Complainant to be credible and held that the owner’s son deliberately took advantage of the Complainant’s vulnerable position. The Tribunal awarded her $200k, recognizing both the objective seriousness of the employer’s conduct as well as the impact that it had on her. The case serves as a reminder for employers that in the #metoo era, sexual harassment will result in more costly  penalties than in the past, particularly where the facts are egregious, as in this case.

The Runners-Up

The Runners-Up

Of course, there were some deserving cases and developments that ended up on the editing room floor. Honourable mentions go to:

  • The Police Record Checks Reform Act, which limited the scope of police background checks to prohibit disclosure of mental health records as well as non-conviction records, except in limited circumstances;
  • Haseeb v. Imperial Oil Limited, which re-affirmed that an employee cannot be discriminated against based on their citizenship;
  • Ruston v. Keddco Mfg. (2011), which reminded employers that bad faith allegations of just cause for dismissal lead to stiff penalties;
  • Aitchison v. L & L Painting and Decorating Ltd., which confirmed that while medical marijuana does require accommodation, it does not mean allowing that employees in safety-sensitive positions are allowed to work while high; and  
  • Talos v. Grand Erie District School Board, which showed employers that despite the abolition of mandatory retirement over a decade ago, it is discriminatory to offer lesser benefits to employees over the age of 65.

Moving Forward

We will undoubtedly see more change in 2019. Legislative developments, case law (in fact, Ontario’s Court of Appeal has already released one important decision), and social and societal developments will keep us on our toes. If you have any suggestions for items to be included in next year’s Review, please email us.

Always Happy To Assist

Always Happy To Assist

For employers and employees who have difficulty navigating the ever-changing legal landscape, we are always happy to assist.

Our team are experts at breaking down complex legal issues, making them easy to understand and simple to resolve. If any of the above issues struck a chord, call us today to book a meeting with one of our lawyers. We can help you to nip any issue in the bud or, better yet, work with you to strategically prevent the issues from arising in the first place.

If you have not already done so, it is time for an HR Checkup, to ensure that your contracts, policies and procedures are strong enough to protect you in 2019.

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