Back To School Amid Covid-19? The Ontario Superior Court of Justice (ONSC) has recently, and in numerous instances, been called upon to decide the question as to whether children should be sent back to school amid the current Covid-19 pandemic. According to the Guide to reopening Ontario’s schools issued by the Ministry of Education, parents can choose between online schooling from home or in-person schooling for the next semester. However, when separated or divorced parents cannot agree on this, the courts are, often perhaps unnecessarily, asked to get involved. This Blog reports on four Endorsements released on this issue by the ONSC over the course of the last few weeks and comments on alternative strategies to resolve the back to school question in the best interest of the child and everyone involved. Home-schooling may only be ordered when a medical condition or the safety of a child’s inner circle requires it The two cases Chase v Chase and Wilson v Wilson come to different outcomes that can nevertheless be reconciled. In Chase, the ONSC ordered for the child to be registered for in-person schooling, whereas the court came to the opposite conclusion in Wilson. Factually, the two cases differ, because only in Wilson did the court find that there were underlying health concerns, namely asthma, that would put one of the Wilson children at disproportionate risk if they had to return to school in September. This important health factor is was weighted by the court and balanced against the child’s mental health, psychological, academic and social interests, as well as many parents’ need for childcare which usually speak in favour of attending school in-person. The ONSC’s approach to expert evidence on the safety of in-person schooling Notably, the ONSC in Chase pays deference to the government’s decision to reopen schools. The court holds that the government is better placed to decide upon the reopening than the courts are because the government is benefitting from extensive expert evidence and is conducting consultations with relevant stakeholders on this matter. As a consequence, the ONSC rejects to consider a recently released report by the Toronto Hospital for Sick Children that the parties, in this case, made reference to in the proceeding. Stating that there is evidence on both sides, the ONSC declines to be the adjudicator between differing expert opinions, leaving it to the government to evaluate the conflicting evidence. The court does, however, look to the particular facts of each case to determine whether there are individual risk factors that weigh in favour of making an exception from the general in-person attendance requirement set out in the respective provincial Education Act, i.e. in s. 21(1) of the Ontario Education Act, R.S.O. 1990, c. E.2 In its finding in Chase, the ONSC draws upon non-binding, yet persuasive arguments from two Quebec Superior Court decisions delivered on May 7, 2020: Droit de la famille – 20641, 2020 QCCS 1462 (CanLII) and Droit de la famille – 20682, 2020 QCCS 1547 (CanLII). The two decisions, too, come to different conclusions due to the fact that in only one of the two cases a family member suffers from a medical condition that puts the family at disproportionate risk, outweighing the child’s interest to return back to school. The approach by the ONSC taken in Chase following the Quebec decisions falls neatly in line with the principled division of powers between the executive branch and the judiciary. It is the responsibility of the government to establish general policies with broad application, whereas the judiciary has to focus on individual cases in order to ensure that the government’s policies in their application to actual people do not lead to unintended hardships. In Wilson, however, the ONSC takes a slightly different approach. Here, the court in fact considers the report of the Toronto Hospital for Sick Children, which recommends a return to in-person schooling. The court determines that it is unclear whether the in-person plan actually conforms with expert reports and that it appears to lack some of the recommended safeguards. The court concludes that it did not have any evidence to the contrary that returning to school was safe. To some degree, the ONSC in this case did evaluate the evidence and made a finding on its reliability in order to justify a decision that diverges from the recommendation of the Sick Children report. For this reason, it remains somewhat unclear whether reliance on expert reports will help a parent’s case to achieve the desired order. Conclusion from current case law In a third decision, Manabat v. Smith decided on September 2nd and involving one of DSF’s family lawyers, Katelyn Bell, the court affirmed a test previously set out in another very recent case, Zinati v. Spence, 2020 ONSC 5231. This test summarizes the factors determined in the (sparse) case law on the question of whether it is in the child’s best interest to be schooled at home or in person during the current pandemic: The risk of exposure to COVID-19 that the child will face if she or he is in school or not in school; Whether the child or a member of their family is at increased risk from COVID- 19 as a result of health conditions or other risk factors; The risk a child faces to their mental health, social development, academic development or psychological well being from learning online; Any proposed or planned measure to alleviate any of the risks noted above; The child’s wishes if they can be reasonably ascertained; and The ability of the parent or parents with whom the child will be residing during school days to support online learning, including competing demands of the parent’s work or caregiving responsibilities or other demands. Overall, the outcome of every case will really depend on the children and the family involved. Alternatives to an Application to Court A further comment made by the ONSC in Wilson deserves mentioning. The Honorable Justice Himel points out that bringing the issue of whether the child should return to school or not before a judge is not the most recommendable course of action. For one, the decision is likely going to be made on the written evidentiary record due to a lack of time and resources and a large number of emergency applications that need to be decided upon before school starts. This means that a judge who has never met the parties, let alone the child, will decide on what is in the best interest of the child and the family. A course of action that would empower the parties to make the decision and yet provide the benefit of professional advice and opinion is court-based mediation. This service is readily available and often free or subsidized. It has the further benefit of mitigating the tremendous burden on the family justice system that has arisen from the Covid-19 pandemic. If you have more questions about your education law matter for both private or public schools contact John Schuman at 416-446-5080 and john.schuman@devrylaw.ca or Katelyn Bell at 416-446-5837 and katelyn.bell@devrylaw.ca. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, COVID-19, Education Law, Family LawSeptember 17, 2020January 12, 2021
Temporary Layoffs During COVID-19 – “COVID-19 period” extended until January 2, 2021 On May 29, 2020, Ontario passed Regulation 228/20 under the Employment Standards Act (“ESA”). As a result of this new regulation, non-unionized workers who had their hours reduced or eliminated due to COVID-19 are deemed retroactively to be on Infectious Disease Emergency Leave, which is an unpaid, job-protected leave under the ESA. The regulation applies retroactively from March 1, 2020, and initially was set to expire on September 4, 2020, six (6) weeks after the state of emergency ended. This period of time is referred to in the Regulation as the “COVID-19 period”. Our initial blog, which explains the impact of the Regulation on employer and employee rights, can be found here. On September 3, 2020, the government of Ontario announced that the COVID-19 period would be extended until January 2, 2021. Impact of the Regulation and the Extension of the COVID-19 Period As a result of the Regulation and the government’s latest announcement, non-unionized employees who have been temporarily laid off between March 1, 2020, and January 2, 2021, for reasons related to COVID-19 would be deemed to be on Infectious Disease Emergency Leave. Under the ESA, an employee who has been laid off for more than 13 weeks in any period of 20 consecutive weeks (or for at least 35 weeks in any period of 52 weeks, if certain other conditions are met) will be deemed to have been dismissed from their employment. This constructive dismissal would then entitle the employee to statutory termination pay, as well as severance pay (if certain other criteria are met). The extension of the COVID-19 period to January 2, 2021, means that there will be no deemed terminations arising from temporary layoffs until after January 2, 2021, provided that the reason for the layoff was related to COVID-19. As noted by the government of Ontario, the Regulation can relieve employers from substantial payments to their employees, which can make a difference in times where the business is already struggling to survive the economic effects of the pandemic. Does the Regulation Alter the Common Law related to Temporary Layoffs and Constructive Dismissal? As set out above, an employer has a right to temporarily lay off employees under the ESA. However, it is well-established law that an employer does not have a common law right to temporarily lay off an employee, even if the employer complies with the provisions of the ESA. This would result in a constructive dismissal at common law. The common-law prohibition of temporary layoffs in Ontario can be altered if there is an express term in an employment contract that permits an employer to temporarily layoff employees in accordance with the ESA. In order for the common law to be altered by a statute, there would need to be express language in the statute to that effect, which is not the case here. In fact, the ESA expressly states that “no civil remedy of an employee against his or her employer is affected by this Act” and the Regulation does not contain any language which would modify this section of the ESA. In the event that the common law provides a greater right or benefit to an employee than their ESA entitlements, the common law will prevail. However, an employer can limit an employee’s entitlements by contract, as long as the contract ensures that the employee will not receive less than their minimum ESA entitlements. COVID-19 has resulted in unique and unprecedented circumstances for both employers and employees and how the courts will interpret and apply Regulation 228/20 (and the most recent amendment to the COVID-19 period) remains to be seen. The courts may still find that employees have been constructively dismissed at common law, but may award less generous severance package to employees. The specific facts which resulted in the temporary layoff or reduction in hours or wages will also be relevant. If the common law remains unaltered, many temporary layoffs due to COVID-19 would be unlawful and may result in the employee’s entitlement to a common law notice period and significant severance payouts for employers. Key Takeaway for Employees: Employees who have been temporarily laid off during the COVID-19 period and were waiting until after September 4, 2020, to claim statutory termination pay and severance pay from their employer arising from a deemed termination of their employment will now have to wait until after January 2, 2021. However, assuming that there was no lay-off provision in their employment contract, employees in this situation should consider taking the position that the lay-off was in contravention of the common law, their employment was constructively dismissed, and that they are therefore entitled to a common law notice period. Key Takeaway for Employers: Employers will not be obligated to pay out hefty sums for severance pay and termination pay under the ESA until after January 2, 2021, with respect to employees who have been temporarily laid off due to COVID-19, and may therefore wish to consider extending temporary layoffs until January 2, 2021. However, the Regulation does not bar employees from pursuing an action in common law and it is unclear at this stage how courts will interpret and apply this Regulation. If you have more questions about how this new Regulation will affect you as either an employer or employee, contact employment lawyer Marty Rabinovitch at 416-446-5826 or at marty.rabinovitch@devrylaw.ca to discuss your rights and options. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, COVID-19, Employment LawSeptember 15, 2020September 29, 2020
Indigenous Consultation and the Aggregate Licensing Process The duty to consult and to accommodate indigenous peoples can arise at any time in the aggregate licensing process. The failure to properly address the duty will not only cost time and money, but it will also damage relationships with indigenous communities, lead to a rejected licence application or the loss of an already-issued licence in circumstances in which the court finds that the duty has not been fulfilled (Saugeen First Nation v Ontario (MNRF), 2017 ONSC 3456). Its Source and Scope The duty to consult and to accommodate is part of the fundamental law of Canada, imposed by s.35 (l) the Constitution. It overrides federal as well as provincial law and affects private rights in the property, including land on which pits and quarries operate or on which they are intended to be operated. The duty arises “when the Crown has the knowledge, real or constructive, of the potential existence of the aboriginal right or title and contemplates conduct that might adversely affect it.”[1] The threshold is relatively low; a credible claim suffices. Once triggered, the scope of the duty is on a spectrum and depends on the nature and strength of the rights in question and the seriousness of the potential impact on them. On the low end, the duty may include notice to the affected communities and information about the pit or quarry in question. At the higher end, the communities could be part of the decision-making process. What It Means There is no duty to come to an agreement nor do indigenous communities have a veto. That said, the Crown must act honourably and consultation must be meaningful, not simply perfunctory. Technically, the duty is not imposed on aggregate operators although, practically speaking, the Crown can delegate “procedural” aspects of it to others. In this respect, an operator may be required to deal directly with the relevant communities to notify them of the proposed project, provide them with information, fund some aspect of their participation in consultation, and modify the project to accommodate any concerns. It is, however, the Crown, not the operator, which has the duty and must assess whether it has been fulfilled, subject, of course, to a constitutional review by a court, if challenged. What happens if the consultation is insufficient? Everything can go wrong: a proposed project can be derailed, delayed, and, in some cases, effectively be stopped in its tracks. Dealing with it properly is, effectively, not only the right thing to do, but it is the cost of doing business. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Planning and Development LawSeptember 10, 2020April 15, 2024
Enforceability of Termination Clauses and the Latest Blow to Employers – Waksdale v. Swegon North America Inc. (2020 ONCA 391) Termination clauses are often relied upon by employers to define an employee’s severance entitlement when an employee is terminated without cause. These clauses are often drafted to limit an employee’s entitlement to their statutory minimums, which are significantly less than the employee’s entitlement at common law. If an employment contract contains no termination clause or an unenforceable termination clause, then the common law will apply. The courts generally dislike termination clauses that seek to limit the employee’s entitlement upon termination to their minimum entitlements under employment standards legislation. Courts have consistently found that the employee’s statutory notice and severance entitlements will usually not ensure that they will continue to receive their salary and benefits until such time as they are able to find a new comparable job. If a termination provision is ambiguous or provides the employee with a lesser right or benefit than their entitlements under employment standards legislation, then the clause will be unenforceable and the employee is entitled to reasonable notice at common law. In June 2020, the Court of Appeal for Ontario in the decision of Waksdale v. Swegon North America Inc. determined that if any part of the employer’s termination scheme is unenforceable, then the entire termination scheme will be void and the common law will apply. Previously, the courts had held only the offending part(s) would be unenforceable, while the other provisions would remain in effect (see the 2018 decision of Khashaba v. Procom Consultants Group Ltd.) In Waksdale, the parties agreed that the termination provisions were unenforceable. An employee who is terminated without cause has entitlements pursuant to the Employment Standards Act, 2000 and the common law. In order to deprive an employee of their termination entitlements under the Employment Standards Act, 2000, the employer must prove that the employee was “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.” This standard is higher than the “just cause” standard at common law. Since there are two different standards, there could be scenarios in which an employee would have no entitlement at common law if the “just cause” standard was met, but would have an entitlement under the Employment Standards Act, 2000 if the “wilful misconduct” standard was not met. Accordingly, termination provisions which state that the employee would have no severance entitlement whatsoever in the event that their employment was terminated for just cause would be unenforceable, since they do not take into account the possibility than an employee who was terminated for just cause could have an entitlement under the Employment Standards Act, 2000. Although the specific termination for just cause language in question was not set out in Waksdale, it was likely for this reason that the parties agreed that these provisions were unenforceable. In Waksdale, the court determined that if the employer’s termination for just cause provisions are found to be unenforceable, then the termination without cause provisions would also be unenforceable – even if they otherwise would have been enforceable on their own – and even if the employer chooses to terminate the employee without cause. The court further concluded that the result would be the same, even if the employment contract contained a severability provision. Usually, a severability provision would ensure that the remainder of a contract would remain enforceable, in the event that a particular provision was determined to be of no force and effect. However, the court found that a severability provision could not be relied upon by the employer to uphold its termination scheme in this case. As a result, the employee was entitled to reasonable notice at common law. It is therefore very important for employers to consult with a lawyer to determine whether their current termination language should be amended to ensure that it is compliant with the Waksdale decision. Employers should also have their employment lawyers review their termination provisions at least once per year to ensure that they continue to remain enforceable. If you are an employer with additional concerns relating to employment contracts and the enforceability of termination clauses, please contact Marty Rabinovitch at Devry Smith Frank LLP to discuss your rights and options. *This blog was co-authored by Law Student Amar Gill* “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Employment LawAugust 26, 2020September 2, 2021
Four things you need to know about “Time shall be of the essence” in real estate transactions (especially in a pandemic!) A contract of sale for a piece of real estate property will almost always expressly provide that time is of the essence. This clause means that you and the other parties in the agreement must be punctual and fulfill their obligations promptly. Otherwise, if you fail to perform in a timely fashion, the contract may end and you may be liable for damages. For example, if you change your mind about purchasing the property or cannot attain suitable funding in time for the closing date, you may be in breach and liable to the other parties. In other words, the deadlines are very important; missing them could cost you. You may need to pay for the other parties. Here are four things you need to know: Proceed diligently and in good faith Stay true to your word, secure funding, fulfil your obligations with diligence. Complete your obligations faithfully and do not interfere with the other party’s ability to fulfil their responsibilities. If you are uncertain about your obligations, obtain legal advice. How to rely on the clause If you want to rely on the clause to accuse another party of failing to live up to their obligations, you must demonstrate that you are ready, willing, and able to complete the agreement. In other words, if both parties are not ready to close on a real estate transaction, neither party can rely on the clause to bring an action for specific performance, damages, or termination of the contract. When the clause is negated By waiver. For example, if both parties agree to extend the closing date by two days then there is a waiver. In general, if one party in a contract takes action(s) to make it clear that the strict contractual provisions will not be enforced, the clause is waived in that instance. By-election: For example, if the buyer does not have the requisite financing completed on the closing date, the seller could agree to extend the closing date. In general, when one party breaches the contract and the other parties’ consent, the clause is negated by-election. How the clause is impacted by the Coronavirus pandemic (COVID-19) COVID-19 has disrupted the economy and caused some aspects of the institutions which help real estate transactions move along have temporarily scaled back or suspended their operations. Further, COVID-19 has caused financial hardships which also have the potential to delay real estate transactions. Delays may cause deadlines to be missed, and you do not want to be on the hook due to a delay caused by COVID-19. To ensure that your real estate deal is not held up by the pandemic, obtain legal advice to ensure you either: enter into agreements properly drafted with COVID-19 in mind, or that your existing agreement completes without delays caused by COVID-19. For more information or any other questions regarding real estate transactions, please contact our real estate lawyers today. Don’t delay, time is of the essence. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, COVID-19, Real EstateAugust 18, 2020June 4, 2021
Ontario Stone, Sand & Gravel Association Expresses Support For Aggregate Approval Process The Ontario Stone, Sand & Gravel Association (“OSSGA”) has recently written to the Honourable Doug Ford, premier of Ontario, to state that the Premier should not interfere in the licensing and approval process for pits and quarries in the Province [1]. OSSGA did so in response to alarming comments made by the premier about preventing, at any cost, the licensing of a quarry in the Milton area. Comments here. The aggregate industry is vital to Ontario. The stone, sand and gravel which it supplies are used to build homes, schools, libraries, colleges, universities, hospitals, fire and police stations, as well as to construct roads, highways, water and sewer infrastructure, public transportation systems, workplaces, recreational and social centres, arenas and stadiums. We all contribute to the need for aggregates and we all benefit from the activities of the industry which extracts them. Aggregates are to be extracted as close to market as possible to ensure an economical supply of material with shorter truck trips. This also significantly lowers overall emissions. The industry creates jobs, generates vital revenue for local governments and operates under strict regulations. To balance the interests of all stakeholders and to protect the public, the licensing and operation of pits and quarries are subject to the requirements of the Aggregate Resources Act, the Planning Act and 23 other pieces of legislation and hundreds of regulations. The process also involves consultation with First Nations, the scrutiny of provincial government ministries, the review of local planning authorities and governments, the examination of the community, and, often, a hearing in front of the Local Planning Appeal Tribunal. The process is a careful, deliberative, and rigorous one. It takes years and a wide array of technical and expert reports, including environmental studies, to complete. At the end of the life of a pit or quarry, the land must be rehabilitated, which adds green space to the Province. The aggregate licensing system in Ontario represents a solid, safe and sustainable approach to bringing vital material to the market. It should not be undermined by political considerations. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Construction Law, Planning and Development LawAugust 10, 2020July 5, 2023
Small Business Evictions Banned in Ontario On March 19, 2020, two days after announcing a state of emergency due to the coronavirus pandemic, Ontario moved to temporarily protect residential tenants from eviction. The Landlord and Tenant Board suspended all eviction application hearings and the Superior Court of Justice ordered that no eviction orders shall be enforced. With 2.2 million Ontario workers directly affected by either job losses or reduced hours, this action provided Ontario renters—many of whom living paycheque to paycheque—with critical relief. However, by May 15, the Ontario government continued to resist calls to extend the same protection to small business tenants. In lieu of providing legal protection, the province instead encouraged “cooperation” and called on commercial landlords of small businesses to be fair, flexible, and leverage the Canada Emergency Commercial Rent Assistance (CECRA) program which would open for applications on May 25. CECRA provides eligible commercial landlords with unsecured, forgivable loans to supplement lost rental income from their small business tenants. Commercial landlords are eligible if their small business tenant(s) pay no more than $50,000 in monthly gross rent per location, generate no more than $20 million in gross annual revenues, and have experienced at least a 70% decline in revenue. To qualify, the commercial landlord must agree to reduce their small business tenants’ rent by at least 75% and agree to a moratorium on the eviction. As a result of the structure of CECRA, the relief is provided to commercial landlords—should they choose to apply—without direct protections for small business tenants. However, as of June 5, there were only 7,000 applications out of the province’s 418,000 small businesses. This figure, in combination with calls from advocacy groups to extend legal protections, resulted in the passage of the Protecting Small Business Act. The Act suspends evictions by commercial landlords who are not applying for the CECRA program despite their tenants being eligible for the program. Tenants and landlords can learn more about eligibility and the application process at ontario.ca/rentassistance. Applications are being accepted until August 31, 2020. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Commercial Litigation, COVID-19August 5, 2020September 29, 2020
Employers Must Discharge Their Onus to Prove Failure to Mitigate A recent 2020 decision of the British Columbia Supreme Court, Virk v. Satnam Education Society of B.C., was a reminder that in wrongful dismissal litigation, the employer has the burden to prove an employee’s failure to mitigate. When an employee has been wrongfully dismissed, they are obligated to act reasonably by taking steps to replace their income by applying for alternative positions. This involves applying for new jobs on a “constant and assiduous” basis. However, it is ultimately the employer’s responsibility to prove that the employee failed to take adequate steps to mitigate their losses, and had the employee made adequate mitigation efforts, they would likely have found a new job. If the employer is successful in proving that the employee has failed to mitigate, the employee would be entitled to a reduced notice period at common law. In this case, Mr. Virk was a vice-principal of a Sikh private school. He was terminated in June, 2010. Afterwards, he applied to teaching positions at four schools, tutorial academies and to a learning disabilities society. Mr. Virk then applied to freelance journalist positions at newspapers and radio stations. Since Mr. Virk had a class 1 driver’s license, he then applied to jobs in the trucking industry. He eventually obtained a position at BC Transit approximately one year after his termination. The court found Mr. Virk’s efforts to mitigate his losses were inadequate since he had only applied for a few positions and there was no evidence that he had applied for any positions after October 2010. However, the court pointed out the following inadequacies of the employer’s evidence, in particular: The number and types of teaching jobs available in 2009/2010 and when they were available The hiring timelines for the school year How easy or difficult it is to transfer from teaching at private to public schools The number and types of jobs in the newspaper industry that year The number and types of jobs in the transport industry that year In the absence of such evidence, the employer failed to establish that Mr. Virk did not take adequate steps to mitigate and had he done so he would have found employment (para 109). Key Takeaway for Employers: Keep abreast of the labour market trends for your industry but also what other industries the former employee is applying to. Provide job postings, reports, articles or other data to demonstrate how easy or difficult it is to obtain work in a particular field. By taking these steps, employers can increase their likelihood that an adjudicator will find their duty to prove an employee’s failure to adequately mitigate was discharged. However, keep in mind that due to COVID-19, market trends have been severely impacted. As a result, it will likely be more difficult for employers to prove that employees would have found work if they took adequate mitigation steps since the pandemic has significantly affected employment opportunities in numerous industries. If you have more questions about an employer’s obligations after a dismissal contact employment lawyer Marty Rabinovitch at 416-446-5826 or at marty.rabinovitch@devrylaw.ca. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Employment LawJuly 20, 2020June 24, 2024
Are You Still Eligible For The CERB? THE CERB & RETURNING TO WORK Amidst the economic challenges of COVID-19, a number of Canadians have relied on financial assistance in the form of the Canadian Emergency Response Benefit (the “CERB”). As businesses now slowly prepare to reopen in a phased approach, individuals must consider if they are still eligible to receive the CERB benefit if they are recalled to work. In doing so, they should keep in mind the potential consequences of receiving the CERB if no longer eligible. With continued relief being provided by both the Federal and Provincial governments, through measures such as the 75 percent Canada Emergency Wage Subsidy, employers have slowly begun to recall their workforces as they prepare to reopen. What this means for individuals receiving CERB is that, if re-employed, they may be ineligible for future CERB benefit payments. ARE YOU STILL ELIGIBLE? One cannot receive a salary in excess of $1,000 during a CERB payment period while also receiving the CERB benefit. Failure to comply with this can result in penalties and fines. As things begin to normalize, the CRA will begin reviewing all CERB applications and will flag any erroneous, ineligible and fraudulent claims. This will result in correcting and collecting any benefit payments paid out in error. While mistakes can happen, it is always better to err on the side of caution, and if applicable, individuals should self-disclose to the CRA in the event of their receipt of a benefit payment to which they were not entitled. THREE THINGS TO CONSIDER BEFORE REAPPLYING FOR THE CERB Things to consider in the coming days and weeks as it relates to reapplying for the CERB benefit: 1. Individuals who believe they will be recalled to work in the coming weeks may prefer to hold off on reapplying until the next CERB benefit period. If their employment salary exceeds the permitted $1,000.00 cap during the CERB benefit period, they will likely be deemed to have been ineligible for the CERB and will be obliged to repay the benefits received for the relevant period. 2. Remember that the CERB is repayable by a recipient who failed to meet the eligibility requirements for the relevant four-week period. 3. Individuals who received a benefit payment to which they were not entitled should repay the funds. • The CRA’s website sets out steps to help individuals repay benefits received in error. Those who fail to do so will be flagged, and risk the imposition of fines and penalties. If you have additional questions about returning to work and/or about receiving the CERB, feel free to contact the lawyers at Devry Smith Frank LLP to discuss your rights and options. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, COVID-19, TaxJuly 7, 2020September 29, 2020
Separation Calculation of a Defined Benefit Plan A pension can be a great way to plan for retirement. However, they can cause difficulties in separation and divorce. Deciding how much a pension is worth, how it should be divided and what discounts may apply can all be complex issues. Before a spouse retires and starts collecting a pension, the pension is “property” (like a house or RRPS or other assets) that is divided as part of property equalization pursuant to Part 1 of Ontario’s Family Law Act. (Note common-law couples do not equalize their assets on separation and so they have no claims to each other’s pensions under the Family Law Act). Pensions are very valuable assets. Their value is not what the spouse paid into the pension, but the total present value of what the spouse will receive on retirement from the part pension that accrued during the marriage. A spouse will be getting payments of just $2000 per month could have a pension worth half a million dollars! So, prior to changes to the Family Law Act in 2009, where one spouse earned his or her pension during the marriage, it was common for that spouse to get the pension and the other to get the house, which could make life financially difficult for the spouse with the pension. Since 2009, the most common way that people have dealt with pensions is to divide them “at source.” That means the portion of the pension that has to be transferred to the other spouse’s pension or LIRA (locked-in retirement account). That decreased the pension payments for one spouse while increasing the money paid to the other spouse on retirement. However, no payments are immediately necessary to deal with the pensions when equalizing property on divorce. To divide a pension at source after separation, spouses with a provincially regulated pension go to their HR departments, fill out some paperwork, pay a fee (usually $600 per pension) and the pension board calculates how much should be transferred to “equalize” the part of the pension or pensions that accrued during the marriage. Federally regulated pensions can also be divided at source, but the process is a little different. This takes the pensions out of the equalization calculation and all the other property is divided as if there was no pension. That avoids one spouse getting the pension and the other spouse getting everything else. But sometimes the best long-term financial decision is not to divide the pension at source. Financial advisors helping a separating spouse may advise that the spouse with the pension will be better off in the end if they keep the full pension and get all the full pension payments on retirement. So, one or both spouses may prefer that the pension be included in the equalization calculation and be reflected in the cash that changes hands immediately. If the parties cannot agree on which way to divide the pension, sections 10.1(4) and (5) of the Family Law Act have the effect of making division at the source the preferred way to divide a pension and only allow a judge to order the cash payment in limited circumstances. Where spouses are going to include the pension in the equalization calculation so as to leave the pension intact, the spouses use the calculations that they got back from the pension board after filing the forms through HR. The pension board gives the value of pension accrued during the marriage, so that is the number to plug into the equalization calculation for the value of the pension. However, that calculation contemplates that the pension will be transferred to another pension or to a LIRA, which means the person who receives the transfer will pay the tax when receiving the payments after retirement. When the pension is not being divided at source, the spouse who is keeping the pension will have to pay all the taxes on the pension benefit payments. So, the tax debt associated with the pension also has to be included in the property equalization calculations. Essentially that means that the total value of the pension is reduced by the liability. So instead of sharing 100% of the calculated total value of the pension in equalization calculations, only 85%, 75%, 60% or some other amount is shared between the spouses. The reduction takes into account the taxes that have to be paid on the pension benefits payments. The amount of tax that a person will ultimately have to pay on pension benefit payments is influenced by several factors, such as: the size of the pension benefits payments what other income the person will be declaring and what impact that has on the marginal tax rate applied to the pension earnings what credits or deductions can be applied to reduce the tax on the pension benefit payments when the pension benefit payments will start what other assets the person may be using during retirement There is no way to know what the tax liability will be without consulting an accountant or other tax professional. Even then, the liability can change with other changes in a person’s life. For that reason, the value of the liability is often “discounted” to take into account uncertainty and the fact that liability will not be incurred for some time. Rather than hire an accountant to do more precise calculations, many people just want to use an educated guess as to what the tax liability will be. For most pensions, the benefit payments will pay the recipient between $44,000 and $50,000 per year, which puts there tax rate at a little over 24%. For income over $48,353 but less than $78,783, the marginal tax rate is just under 30%. So many people just assume that the tax liability will be around 25% of the pension payments. The 25% reduction is not set out in the law. It is an assumption. The factors above could make it too high or too low. For a person with a modest pension and no other retirement income, or who is a long way from retirement, 25% will too much of a reduction. For people with good pensions, or who have other money for retirement, 25% may be too low. Getting the number right is something that you should really speak to a lawyer about to make sure the pension is shared at the correct value. Since pensions can be worth a lot of money, the discount can also be worth a lot of money. Speaking to a lawyer to get the numbers right can save you money. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Family LawJuly 6, 2020September 29, 2020