Terminated Employees with Incapacitations may Nonetheless Fulfill their Mitigation Obligations Employees who are terminated without cause are entitled to either reasonable notice or payment in lieu of reasonable notice. This is the “Notice Period” an amount of time, or a level of compensation, to assist a dismissed employee find comparable work. At common law, the Notice Period is “reasonable notice,” which varies with the circumstances of any particular case. (For a history of the development of the common law, see Machtinger v HOJ Industries Ltd).[1] The Notice Period is also a statutory entitlement pursuant to the Employment Standards Act, 2000.[2] This Notice Period entitlement is the “damages” experienced by the employee as a result of the wrongful termination. “Mitigation” is a limiting principle in damages, imported into the employment context from contract law.[3] In other words, when an employee has been terminated without cause, they have a legal duty and obligation to act reasonably by taking steps to replace their income. Read more: Employers Must Discharge Their Onus to Prove Failure to Mitigate When it comes to fulfilling mitigation obligations, terminated employees with incapacitations or other limitations face unique challenges. For some terminated employees with physical or mental health issues, it may seem daunting or even impossible to fulfill this duty. As a recent decision of the Ontario Court of Appeal illustrates, terminated employees with incapacitations may nonetheless fulfill their mitigation obligations — even with negligible attempts to find alternate employment. Krmpotic v Thunder Bay Electronics Limited, 2024 ONCA 332[4] In 1974, Drago Krmpotic commenced his employment with Thunder Bay Electronics Limited and Hill Street Financial Services. Mr. Krmpotic was a loyal employee who performed a broad range of physically demanding skilled tasks. After nearly thirty (30) years of devoted service, Mr. Krmpotic was terminated without cause. Immediately prior to his termination, Mr. Krmpotic had been on medical leave to recover from back surgery, a procedure which was necessitated as a direct result of four different back injuries he sustained at work. Nonetheless, Mr. Krmpotic was terminated by his employers only hours after he returned to work following his surgery. At the time, he was sixty-nine (69) years old. The manner of dismissal rose above the normal distress and hurt feelings caused by a dismissal. Consequentially, Mr. Krmpotic experienced anxiety, depression, fear, poor sleep, frustration, and feelings of helplessness and defeat. He also continued to suffer such physical ailments such as back pain and knee pain as a direct result of his workplace injuries. At trial, it was determined that Mr. Krmpotic was entitled to a notice period of twenty-four (24) months, together with aggravated damages owing to the manner of dismissal. See related reading: Notice Periods for Employees Terminated Without Cause May Exceed Twenty Four Months if the Circumstances are ‘Exceptional’ During the notice period, Mr. Krmpotic did not mitigate his damages — he was simply unable as a result of his incapacity. Mr. Krmpotic’s employers argued that this notice period should be reduced based on his failure to mitigate his damages. Indeed, the trial judge noted that his efforts to replace his income were “scant at best.” However, this fact was considered in context together with his age, the fact that he was recovering from back surgery related to his work, and that he was “significantly limited in his ability to perform the physical labour which his occupation demands on a daily basis.” Notably, the latter finding that Mr. Krmpotic was substantially physically hindered was not established through any expert medical evidence, but through the evidence of Mr. Krmpotic and his immediate family members. Specifically, the trial judge accepted the evidence of Mr. Krmpotic’s wife and son that he was unable to work during the applicable notice period. Crucially, the Court explicitly rejected the notion that physical incapacity can only be established by expert medical evidence. In fact, the Court found that the trial judge properly considered a medical report which described that while Mr. Krmpotic had some physical capacity, it was silent regarding his ability to carry on highly demanding physical labour. On appeal, the Court did not disturb the trial judge’s finding that Mr. Krmpotic was physically incapable of performing physically demanding work during the applicable notice period. Thus Mr. Krmpotic fulfilled (or obviated) his duty to mitigate his damages due to his incapacitation. The Court also did not disturb the award of aggravated damages, despite also being in the absence of expert medical evidence.[5] Conclusion This case sheds light on the unique challenges faced by terminated employees with incapacitations. Despite the daunting task of seeking alternate employment, particularly for those grappling with physical or mental health issues, the Ontario Court of Appeal’s decision in Krmpotic underscores that such employees may still meet their mitigation duties. Takeaways for employers: When dealing with employees, be candid, reasonable, honest and forthright, and refrain from engaging in conduct that is unfair or in bad faith by being untruthful, misleading or unduly insensitive. Acknowledge and accommodate the unique challenges faced by terminated employees, particularly those with incapacitations or other health issues. Understand that employees with limitations may face difficulties fulfilling mitigation duties and that these factors should be considered when assessing termination outcomes. Takeaways for employees: Understand your entitlements regarding reasonable notice or payment in lieu of notice in case of termination without cause. Keep records of medical reports, communications with your employer, and any evidence supporting your physical or mental limitations or incapacitations. Communicate openly with your employer about any limitations or health issues which may affect your ability to seek alternate employment. As employment law continues to evolve, cases such as this serve as important reminders of the importance of fairness, empathy, and equitable treatment in the workplace, especially during challenging transitions like terminations. “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 situations and needs.” [1] Machtinger v HOJ Industries Ltd, 1992 CanLII 102 (SCC). [2] Employment Standards Act, 2000, SO 2000, c 41. [3] Evans v Teamsters Local Union No 31, 2008 SCC 20 (CanLII) at para 97 [Evans], citing S M Waddams, The Law of Damages, loose‑leaf ed (Toronto: Canada Law Book, updated October 2004, release 13) at 15.70; see also: Darbishire v Warran, [1963] 1 WLR 1067 at para 1075, cited by Evans at para 97: “…it is important to appreciate the true nature of the so-called ‘duty to mitigate the loss’ or ‘duty to minimise the damage.’ The plaintiff is not under any actual obligation to adopt the cheaper method: if he wishes to adopt the more expensive method, he is at liberty to do so and by doing so he commits no wrong against the defendant or anyone else. The true meaning is that the plaintiff is not entitled to charge the defendant by way of damages with any greater sum than that which he reasonably needs to expend for the purpose of making good the loss.” [4] Krmpotic v Thunder Bay Electronics Limited, 2024 ONCA 332 (CanLII). [5] Specifically, the Court noted at para 34: “Mental distress is a broad concept. It includes a diagnosable psychological condition arising from the manner of dismissal but is not limited to that. There is a spectrum along which a person can suffer mental distress as a result of the manner of dismissal. At one end is the person who suffers the normal distress and hurt feelings resulting from dismissal, which are not compensable in damages. At the other end of the spectrum is the person who suffers from a diagnosable psychological condition as a result of the manner of dismissal. In between those two end points, there is a spectrum along which the manner of dismissal has caused mental distress that does not reach the level of a diagnosable psychological injury.” By AlyssaBlog, Employment LawJune 3, 2024May 22, 2024
Employment Contracts Could be Frustrated by a Third-Party’s Mandatory COVID-19 Vaccination Policy The COVID-19 pandemic severely impacted workplaces across Canada. Employers in Ontario have continued to grapple with the ongoing challenge of safeguarding their employees’ health while maintaining continuity of operations. Many employers imposed mandatory vaccination policies as a means of mitigating the spread of the virus within their organizations. Background: Caselaw Update: Reasonableness and Enforceability of Mandatory COVID-19 Vaccination Policies in the Workplace Further Background: Employees Must Disclose Vaccination Status where an Enforceable Vaccination Mandate Exists, but Employers are Cautioned to Protect Employee Privacy An employment contract may be frustrated by the mandatory vaccination policy of a third-party as a recent decision of the Ontario Court of Appeal illustrates. Frustration arises where unforeseen circumstances emerge which were not contemplated by the employment contract, causing the performance of the contract to become significantly different from what was originally agreed upon.[1] As a result, it has become impossible to perform the original contract.[2] In such a case, the employment contract is terminated on a “no fault” basis; releasing both the employer and the employee from any further obligation to perform.[3] Croke v VuPoint System Ltd, 2024 ONCA 354[4] VuPoint System Ltd. provides installation services for residential consumer television and internet services — almost entirely for Bell Canada. In fact, at the material time, VuPoint’s contracts with Bell Canada accounted for more than 99% of its business. Alan Croke was employed as a technician for VuPoint. In 2021, Bell implemented a mandatory vaccination policy requiring of VuPoint that all of its technicians working on Bell projects must be vaccinated against COVID-19. Thus, VuPoint instituted its own mandatory vaccination policy for its employees, including Mr. Croke. Mr. Croke refused to disclose his vaccination status to VuPoint. Consequentially, he was terminated by way of frustration of contract. Mr. Croke brought an action for wrongful dismissal against VuPoint, but the action was dismissed on summary judgment. On appeal, the Court upheld the motion judge’s finding that the contract was frustrated. The introduction by Bell of a mandatory vaccination policy amounted to the introduction of a new external requirement upon Mr. Croke which he did not satisfy; i.e., the new policy was the “supervening event.” As a result of the supervening event, performance of the employment contract became something radically different than what the parties had contracted for — given that Mr. Croke was no longer qualified to undertake the work for which he was hired. That change was not foreseeable when the contract was formed between Mr. Croke and VuPoint. The supervening event was something for which VuPoint had neither control nor advance warning. Although Mr. Croke argued that he was actually terminated for the cause of refusing to comply with the new requirement, the Court held that frustration did not turn on voluntariness. The Court specifically addressed and dismissed the notion that “a contract is not frustrated if the supervening event results from a voluntary act of one of the parties.”[5] While it is true that Mr. Croke voluntarily chose not to adhere to the mandatory vaccination policy, his decision did not constitute the supervening event itself. Instead, it was the implementation of the policy that served as the supervening event. Consequently, the contract was frustrated regardless of Mr. Croke’s subsequent actions in response to the policy. The termination by way of frustration was valid based on the unforeseeable radical alteration of the contract, and despite being well aware of the policy, Mr. Croke failed to disclose his vaccination status to VuPoint. Conclusion Croke v VuPoint System Ltd demonstrates that the unexpected imposition of a third party’s mandatory vaccination policy can significantly change the contractual obligations of the parties involved, justifying an employer’s termination of the employment contract due to frustration. Although in this case, it was VuPoint’s own mandatory vaccination policy that affected Mr. Croke, this requirement was implemented in response to a direct mandate from the client, which constituted the vast majority of its business. It remains to be seen how courts will decide cases where the employer itself has full control over the vaccination policies they introduce by their own sole intention and not as a result of some outside force. The legal landscape regarding mandatory COVID-19 vaccination policies in the workplace continues to evolve. Employers face the challenge of balancing employee health and safety with operational needs, often resorting to mandatory vaccination policies to mitigate the spread of the virus. Further takeaways: Employers and employees should understand the distinction between frustration of contract and termination with or without cause. Employers must ensure that mandatory vaccination policies comply with relevant laws, regulations, and contractual obligations, while respecting employees’ rights. Employers should communicate vaccination policies transparently, including the rationale behind them, consequences for non-compliance, and available avenues for seeking accommodations or alternatives. Employees should actively seek clarification on vaccination policies, understand their rights and options, and consider compliance with policy requirements to mitigate potential repercussions. By proactively addressing legal and ethical considerations, employers can foster a safe and inclusive work environment, while employees can make informed decisions to safeguard their well-being and rights in the workplace. “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 situations and needs.” [1] Naylor Group Inc v Ellis-Don Construction Ltd, 2001 SCC 58 (CanLII) at para 53, citing Peter Kiewit Sons’ Co v Eakins Construction Ltd., 1960 CanLII 37 (SCC) at 368, citing Davis Contractors Ltd v Fareham Urban District Council, [1956] AC 696 (HL), at 729. [2] GHL Fridman, The Law of Contract in Canada, 4th ed (Scarborough: Carswell, 1999) at 677. [3] John D McCamus, The Law of Contracts, 3rd ed (Toronto: Irwin Books, 2020) at 656. [4] Croke v VuPoint System Ltd, 2024 ONCA 354 (CanLII). [5] Fram Elgin Mills 90 Inc v Romandale Farms Limited, 2021 ONCA 201 (CanLII) at para 230. By AlyssaBlog, COVID-19, Employment LawMay 21, 2024June 24, 2024
DSF is Recognized in Best Lawyers 2024 Edition Devry Smith Frank LLP (DSF) is proud to announce that we have been recognized by Best Lawyers in Canada for the 2024 Edition with 7 of our lawyers ranked across various practice areas. The lawyers being recognized are listed below: David Lavkulik – Personal Injury Litigation Diana L. Solomon – Family Law George O. Frank – Personal Injury Litigation Jennifer K. Howard – Family Law Marc G. Spivak – Personal Injury Litigation Marty Rabinovitch – Labour and Employment Law – Recognized for the first time in 2024 edition of Best Lawyers Todd E. Slonim – Family Law We are grateful for this recognition and will continue to strive to provide the best service for our clients. Best Lawyers is the legal profession’s oldest peer-review publication and garners immense respect as the recognition signifies peer approval. Lists of outstanding lawyers arise from thorough evaluations where legal experts confidentially evaluate their colleagues. For over 40 years, this top peer-review publication acknowledges leading attorneys across more than 100 practice areas, chosen for outstanding feedback. “Lawyer of the Year” is awarded to one attorney in each practice area and metropolitan area, further amplifying its significance. Please visit their website for more details: www.bestlawyers.com By AlyssaBlog, Employment Law, Family Law, Labour Law, Personal Injury, UncategorizedAugust 25, 2023August 25, 2023
When can multiple entities be considered a single employer? O’Reilly v. ClearMRI Solutions Ltd., 2021 ONCA 385 (CanLII) Under the common law Doctrine of Common Employer, multiple entities can be considered a single employer under particular circumstances. The O’Reilly case is crucial for clarifying the “common employer” doctrine in Ontario employment law. Specifically, it articulates the need to show intent to create an employer/employee relationship between the employee and the alleged common employer(s). Overview In October of 2014, William O’Reilly commenced a claim for six months’ wages and twelve months vacation pay against his employer(s) via myriad defendants: ClearMRI Solutions Ltd. (“ClearMRI Canada”), ClearMRI Solutions, Inc (“ClearMRI US”), Tornado Medical Systems Inc. (“Tornado”), as well as against individual directors of these corporations.[1] All of the corporations were sued collectively as “common employers.” Tornado was the majority shareholder of ClearMRI Canada which itself had ClearMRI US as its own wholly owned subsidiary.[2] Although William did not have a written employment contract or position with Tornado, he alleged that Tornado—along with the other corporations—were all his common employers.[3] William obtained default judgment against the ClearMRI companies and successfully moved for summary judgment against the other defendants.[4] Tornado appealed.[5] The Ontario Court of Appeal allowed Tornado’s appeal, stating that the motion judge erred in the articulation and application of the common employer doctrine.[6] In doing so, the Court of Appeal confirmed that the motion judge made an extricable error of law in concluding that Tornado was a common employer.[7] The Lower Decision William served as the CEO of ClearMRI Canada.[8] In 2012, William signed an agreement with ClearMRI US confirming the terms of his employment which named ClearMRI US as the employer.[9] William did not hold any formal position with Tornado.[10] Although ClearMRI US was named as William’s employer in the written agreement, the motion judge found that William was also employed by Tornado.[11] The motion judge identified three factors that should be considered in determining whether there was a common employer: the employment agreement itself, where the effective control over the employee resides, and whether there was common control between the different legal entities.[12] Using these factors, the motion judge found that Tornado was a common employer of the plaintiff as Tornado exercised “a sufficient amount of control” over the plaintiff and found that there was common control between Tornado and the different legal entities.[13] Tornado appealed. Ontario Court of Appeal Decision On appeal, the Court of Appeal determined that Tornado was not liable as a common employer. A corporation is not held to be a common employer simply because it is owned, controlled, or was affiliated with another corporation that had a direct employment relationship with the employee.[14] Rather, a corporation will be found to be a common employer only where it can be shown that there was an intention to create an employer/employee relationship between the individual and the related corporation.[15] Where there is a written employment agreement with an entity other than the alleged common employer, the court must assess how such an agreement bears on whether there was an intention to create an employment agreement with the alleged common employer.[16] The Court of Appeal found that the motion judge failed to undertake the required analysis of the effect the written agreement had in determining whether there was intention that Tornado was a party to the employment agreement.[17] Further, the Court of Appeal found that none of the three factors that the motion judge relied on were enough to find that Tornado exercised control over the plaintiff as an employee. [18] Lastly, the Court of Appeal found that the motion judge failed to explain why the existence of a corporate relationship between Tornado and the ClearMRI companies provided an intention that Tornado was a party to the employment agreement with the plaintiff.[19] In all, the Court of Appeal found that there was no intention between the plaintiff and Tornado to contract with Tornado as a common employer. In the absence of evidence that would show an intention to have Tornado as a common employer, the Court of Appeal allowed the appeal and set aside the summary judgment against Tornado.[20] Analysis and Conclusion The Court of Appeal makes it clear that whether an entity is considered a common employer is dependent on the intention of the parties in addition to factors such as the existence of an employment agreement, control over the plaintiff, and existence of a corporate relationship between the entities. The courts will strictly interpret the application of the common employer doctrine to ensure that intercorporate relationships would not be conflated as evidence of a common employer relationship. Employees who provide services for multiple entities should seek legal advice as they may be able to seek recovery from multiple parties. Conversely, employers should be careful of having employees perform services for or take direction from other entities unless the intention is to create a common employer relationship. “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 situations and needs.” This blog was co-authored by student-at-law, Abby Leung [1] 2021 ONCA 385 at para 26. [2] Ibid at para 15. [3] Ibid at para 6. [4] Ibid at para 7. [5] Ibid at para 8. [6] Ibid at para 11. [7] Ibid. [8] Ibid at para 19. [9] Ibid at para 20. [10] Ibid at para 19. [11] Ibid at para 35. [12] Ibid at para 31. [13] Ibid at para 35. [14] Ibid at para 50. [15] Ibid. [16] Ibid at para 75 [17] Ibid at para 75. [18] Ibid at para 86. [19] Ibid at para 91. [20] Ibid at para 92. By Fauzan SiddiquiBlog, Employment LawDecember 29, 2022August 15, 2023
Employers Must Exercise Fair and Reasonable Discretion in Awarding Discretionary Bonuses By David Heppenstall and Abby Leung Bowen v. JC Clark Ltd., 2022 ONCA 614 (CanLII) If an employee is terminated without cause, are they entitled to discretionary bonuses? In Bowen v JC Clark Ltd,[1] two portfolio managers at JC Clark were terminated on a without-cause basis and were each given two weeks’ salary plus $577 in lieu of notice. The managers commenced a wrongful termination action against JC Clark, claiming that they were owed $1.3 million in performance fees. The managers argued that this was a term of their employment for the portion of 2014 that they worked prior to their termination. The trial judge dismissed their claim, determining that they were not entitled to be paid performance fees by JC Clark. The portfolio managers appealed the trial decision. The Ontario Court of Appeal allowed the appeal in part. While the Court of Appeal rejected the appellants’ submissions in relation to their entitlement to performance fees, the Court of Appeal found that the trial judge erred in preventing the appellants from arguing their entitlement to a discretionary bonus. In determining what would be considered fair and reasonable calculation of bonuses given the factual context of the case, the Ontario Court of Appeal awarded each appellant $115,000. In making this decision, the Court of Appeal held that employers should exercise their discretion reasonably and in good faith and that the discretionary nature of performance bonuses does not bring with it unfettered discretion. Background The portfolio managers were first hired by a senior investment professional to manage a hedge fund that he created. The fund was sold to JC Clark in 2012 and as part of the sale, the senior investment professional agreed to allow JC Clark to hire the managers to manage the day-to-day activities of the fund. The investment professional entered into an agreement with JC Clark which provided that for four years after the fund’s sale, the investment professional would receive a share of the management and performance fees earned by the fund. The investment professional then entered into side agreements with the managers where he intended to share 50% of his management fees and 100% of his performance fees with them. Subsequently, the managers entered into employment agreements with JC Clark which provided that “at the total discretion of the Company, you may be eligible for a bonus at the end of each fiscal year depending on factors that include your personal performance and the profitability of the Company.”[2] The fund performed exceptionally well during the first half of 2014 under the managers’ supervision—which was when JC Clark terminated their employment without cause. At trial, the judge dismissed the managers’ claim, finding that the investment professional had paid them the performance fees that they were entitled to for the portion of the year they worked in 2014 and that they were not entitled to the share of performance fees directly from JC Clark. In possessing this knowledge, the trial judge determined that the managers signed employment agreements which did not provide for any performance fees that would be paid by JC Clark. The managers appealed. Ontario Court of Appeal’s Decision The Ontario Court of Appeal allowed the appeal in part. In reviewing the employment agreements, the Court of Appeal dismissed JC Clark’s argument that the discretionary nature of the bonus provision in the employment agreements meant that the employer was entirely unconstrained as to how discretion should be exercised. If an employment agreement provides for a discretionary bonus, the employment agreement contains an implied term that discretion will be exercised in a fair and reasonable manner.[3] The Court of Appeal held that what constitutes a fair and reasonable exercise of discretion is dependent on the factual context of the case. The managers argued that their discretionary bonus should be calculated in comparison to two similar portfolio managers employed at JC Clark, whose fund did not perform as well as the appellants but received a greater portion of discretionary bonuses in 2014. The portfolio managers provided further evidence that in December of each calendar year, the employer considered the allocation of discretionary bonuses from a pool of funds set aside for that purpose. Distribution of discretionary bonuses was determined by a variety of factors including corporate performance, individual performance, attitude, teamwork, seniority, position within the company, and their length of employment at the company.[4] Taking these factors into account, the Ontario Court of Appeal concluded that a fair and reasonable calculation of bonuses would involve the fund’s performance and bonuses rewarded to other portfolio managers at the time. Ultimately, the Court of Appeal held that the portfolio managers were entitled to a discretionary bonus and awarded each portfolio manager $115,000 in damages. Conclusion This case serves as a reminder for employers that discretion should be exercised in a fair and reasonable manner, taking into account all of the factual context and objective criteria. In doing so, employers are strongly encouraged not to take an unconstrained approach that is inconsistent with exercising discretion in a fair and reasonable manner. In determining how to distribute discretionary bonuses, employers are encouraged to consider objective criteria, including individual performance, position within the company, and whether discretionary bonuses will or were awarded to similarly situated employees. “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 situations and needs.” This blog was co-authored by student-at-law, Abby Leung [1] 2022 ONCA 614. [2] 2022 ONCA 614 at para 9. [3] Ibid at para 35. [4] Ibid at para 41. By Fauzan SiddiquiBlog, Employment LawOctober 19, 2022September 26, 2023
My Employer Wants me to Return to Work In-Person. Can I refuse? Probably not. (But There are Exceptions) The end of the COVID-19 pandemic is in sight. Ontario has lifted many public health mandates and restrictions. Many Ontarians are resuming their pre-pandemic lives—including returning to work in-person. Some have welcomed the transition from working-from-home to returning to the office, while others worry about the loss of the advantages of remote work. Remote work offers the possibility of a better work-life balance, flexibility for childcare, and the time and money saved on commuting. As such, many question whether employers have a right to demand continuing to work remotely, and whether employees may have a basis for refusal. In most cases, employers do have the right to demand their employees return to the office, and employees, generally, do not have a right to refuse.[1] However, this principle may not apply to all employment situations as there are a number of factors that must be considered to determine the rights and obligations of both parties to an employment agreement. These factors include the terms of the employment contract, human rights laws, and occupational and health regulations. Employment contract Specific attention should be paid to the express and implied terms of the employment contract. Express terms are those are the clearly outlined in the agreement itself. Examples might include the wage amount, or the starting date of employment. Implied terms are not expressly stated in the agreement, but are implied by law. Thus, implied terms will largely depend on the province in which the employment takes place. An example might be where the employment contract does not provide for a termination notice period, in which case, the minimum standards as set out in employment standards legislation, would be implied into the contract.[2] If the employment contract expressly and unconditionally permits the employee to work from home, then the employer would not have the legal basis to require this employee to return to into-person work, and the employee, in turn, would have a legitimate ground to refuse this demand. Human Rights Laws Human rights laws may also provide employees with a basis of refusal, but it must be on a prohibited ground of discrimination.[3] In Ontario, the Human Right Code lists the following grounds: race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, age, marital status, family status or disability.[4] Employers cannot force an employee to return to work, if it would be discriminatory to do so. For example, if an employee cannot return to in-person work due to a disability (which is a prohibited ground of discrimination), the employer has a duty to accommodate, and this accommodation may be allowing for continued remote employment. Occupational Health and Safety Regulations Employers have a statutory duty to safeguard the health and safety of their employees pursuant to the Occupational Health and Safety Act (OHSA).[5] By law, an employer must take every reasonable precaution to maintain a safe working environment.[6] These steps include following any remaining COVID-19 public health guidance in good faith. Employees generally have a right to refuse work which they have a “reasonable basis” to believe is unsafe or a danger to their health.[7] This being said, the reasonableness of this belief is ultimately decided by a government inspector, who would be called to evaluate the working conditions should the employer and employee be unable to address and redress such concern before-hand, and on their own.[8] The standard of review for such decision is that of correctness, and based on the conditions at the time the work was refused.[9] The following situations are examples of unsafe working conditions granting a right to refuse work: driving a vehicle, which by certain characteristics, is not safe to operate;[10] or failure to provide roofing employees with anchoring technique/guard in case of fall.[11] Courts have not tested whether simply attending a physical workplace during a pandemic qualifies as an unsafe working condition. Arguably, a workplace could be unsafe where the employer does not follow public health official guidelines, mandates, or restrictions. However, this alone may not necessarily be sufficient to refuse to attend the workplace. Every situation and workplace is different. It is important for employers to carefully strategize through their return-to-work plans and ensure they are aware of each and every one of their various obligations. It is also important for employees to be aware of their rights to refuse unsafe work — despite the uncertainty as to what that could mean during a global pandemic. Conclusion Employers do have the right to demand their employees return to the office, and employees, generally, do not have a right to refuse. However, the employment contract, human rights legislation, and occupational health and safety regulations, each prove an added layer of complexity to that statement. If an employment contract expressly and unconditionally permits the employee to work from home, then the employee would have a legitimate ground to refuse an employer demand to return to the workplace. Additionally, employers cannot force an employee to return to work, if it would be discriminatory and a violation of human rights to do so. Finally, employees have the right to refuse unsafe work — but there remains uncertainty as to what qualifies as an unsafe workplace during the pandemic. “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 situations and needs.” [1] Geoff Nixon, “Why your options may be limited if your employer wants you back in the workplace”, CBC News, 4 July 2022, online: https://www.cbc.ca/news/business/canada-employers-wfh-office-return-1.6507545 [2] Employment Standards Act, 2000, S.O. 2000, c. 41, ss 57-58. [3] Ontario, Human Rights Commission, COVID-19 and Ontario’s Human Rights Code – Questions and Answers, (News Report), 18 March 2020, online: https://www.ohrc.on.ca/en/news_centre/covid-19-and-ontario%E2%80%99s-human-rights-code-%E2%80%93-questions-and-answers [4] RSO 1990, c H.19, s 2. [5] RSO 1990, c O.1 [OHSA]. [6] Ibid, s 25(2)(h). [7] Ibid, at s. 43(3). [8] Government of Ontario, Part V: Right to refuse or to stop work where health and safety in danger retrieved from: https://www.ontario.ca/document/guide-occupational-health-and-safety-act/part-v-right-refuse-or-stop-work-where-health-and-safety-danger [9] Fletcher v Canada (Treasury Board – Solicitor General Correction Service), 2002 FCA 424. [10] Morey v CAT, 2022 ONSC 4621. [11] Ontario Ministry of Labour) v Vixman Construction Ltd, 2019 ONCJ 955. By Fauzan SiddiquiBlog, Employment LawOctober 11, 2022July 5, 2023
When Volunteers are Actually Employees: Ontario Court Sets a New Precedent and Approves Settlement Reclassifying Volunteers as Employees Montaque v. Handa Travel Student Trip Ltd., 2020 ONSC 3821 In 2017, several college-age students thought they were signing up for a “job of a lifetime” as trip leaders with S-Trip to travel and assist with executing activities, excursions and parties.[1] While the students were told to expect 14-hour workdays, evening shifts, and long hours, trip leaders did not receive a paycheque and were called “volunteers” in internal documents. S-Trip would only pay the students a small honorarium — well below the province’s minimum wage. A class action lawsuit was launched against S-Trip and its affiliates with the suit alleging that the trip leaders were wrongfully classified as volunteers while doing the work of an employee. It was contested whether the students were entitled to receive benefits for employees as specified under the Employment Standards Act (“ESA”)[2]. An Ontario court has approved the settlement between the former trip leaders and the organization with the firm’s Toronto-based parent company, I Love Travel. The court has agreed to a $450,000 settlement and reclassifying staff on future trips as employees rather than volunteers.[3] This case is the first volunteer misclassification class action in Canada.[4] In addition to setting a new precedent, the case has the potential to significantly impact employment law moving forward. Background Despite the fact that S-Trip advertised full-time salaried positions on their job board, S-Trip trip leaders were required to sign contracts specifying that they were volunteers providing services to the company and that no employment relationship was established between the trip leader and the company.[5] Trip leaders were responsible for performing various tasks related to pre-trip planning and procedure, travel organization, airport and flight procedures, briefing sessions, and return trip organization and procedures.[6] While staff were granted an honorarium, it was calculated by the number of trips they completed and differentiates based on position.[7] Income tax, employment insurance, and Canadian pension plan deductions were not deducted from the honorarium.[8] The Class Members argued that the following factors established an employment relationship: The Class Members are the main point of contact between the customers and S-Trip; S-Trip’s operations along with the duties performed by the Class Members serve no civic, religious or charitable purpose; S-Trip is a for-profit company; Class Members are subject to a six-step interview process, which includes a Garda Pre-Employment Background Check; Class Members are provided with extensive guidelines and manuals; Class Members are assigned mandatory duties and working schedules; The duties assigned to Class Members are obligatory and not voluntary; Class Members are compensated for their work – e., the honorarium; and The compensation provided to Class Members increases with seniority.[9] Settlement Approval The Ontario Superior Court of Justice approved the proposed settlement in the all-inclusive amount of $450,000. Justice Morgan first reviewed the principles in which the court must take into account in assessing the reasonableness of a settlement including the likelihood of success, the presence of good faith, and the future expense and likely duration of litigation.[10] In applying these principles to the settlement, Justice Morgan found that the settlement proposal was reasonable and provided several benefits including that it avoided delays associated with trial and appeals, provided for pro-rata payments based on the length of the trips taken by class members, and it achieved behaviour modification as the defendants agreed to reclassify class members as employees for future trips.[11] Justice Morgan further noted that the settlement struck a balance between individual compensation of class members and an efficient and expeditious overall distribution.[12] The court concluded by noting that the settlement achieved was a good one as it will put money in the pocket of class members that they would not likely be able to achieve on their own.[13] Conclusion As Justice Morgan noted, this is the first volunteer misclassification class action in Canada and will have a significant impact in labour and employment law moving forward. The case is significant for employers in particular as it reflects what type of resolution in class proceedings would fall within the “zone of reasonableness” required by the Class Proceedings Act, 1992.[14] While a settlement is not a binding precedent in law, the Court’s approval of the settlement provides a cautionary tale for employers. For example, employers would be well-advised to carefully consider if the volunteers in their organization may actually be considered employees by law. Further, class actions are becoming a more effective method for employees to seek claims against employers as it provides class members with a less expensive and more efficient litigation vehicle to pursue their claims. “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 situations and needs.” This blog was co-authored by student-at-law, Abby Leung [1] Lauren Pelley, “S-Trip accused of exploiting volunteer ‘trip leaders’ who work long hours” CBC August 24, 2017: https://www.cbc.ca/news/canada/toronto/s-trip-employees-1.4246725 [CBC]. [2] SO 2000, c. 41 [3] 2020 ONSC 3821 at para 6 [Montaque]. [4] Ibid at para 13. [5] CBC, supra note 1. [6] Montaque, supra note 3 at para 3. [7] CBC, supra note 1. [8] Ibid. [9] 2020 ONSC 3821 [Statement of Claim, Plaintiff at para 40]. [10] Montaque, supra note 3 at para 5. [11] Ibid at para 6. [12] Ibid at para 8. [13] Ibid at para 13. [14] S.O. 1992, c.6. By Fauzan SiddiquiBlog, Employment LawSeptember 27, 2022June 10, 2023
Waksdale Prevails: Ontario Court of Appeal Overturns Enforceability of Illegal Termination Provisions in Rahman In Rahman v Cannon Design Architecture Inc, 2022 ONCA 451, the Ontario Court of Appeal recently overturned a lower court decision which upheld an otherwise illegal termination provision because the employee sought legal advice prior to signing her employment contract. A divergent approach to the one taken in Waksdale v Swegon North America Inc, 2020 ONCA 391. The Waksdale Decision On June 17, 2020, the Ontario Court of Appeal in Waksdale ruled that a contract’s termination provisions must be read as a whole, to the effect that if any aspect of the termination clause is found to contravene the Employment Standards Act, 2000 (“ESA”), the entire clause will be rendered null and void for all purposes, despite the existence of a severability clause. The Case of Rahman Facts Farah Rahman was employed by Cannon Design Architecture Inc. (“CDAI”) as a Senior Architect, Principal and Office Practice Leader for over four years. She was given four weeks of base salary when her employment was terminated, without notice or cause. Prior to the commencement of her employment, Rahman sought independent legal advice and negotiated the terms of her employment agreement, including the termination provisions. With the help of legal counsel, Rahman negotiated “material improvements” to the terms of her severance package under her contract. Rahman signed two employment contracts with distinct termination provisions. The first was an “Offer Letter” asking Ms. Rahman to join CannonDesign, a subsidiary company wholly owned by CDAI, as a “Principal”. The second was an “Officer Agreement” between The Cannon Corporation (a corporate entity separate from CannonDesign and CDAI) and Ms. Rahman, to become Cannon Corporation’s Senior Vice President and Principal Officer. The Offer Letter referred to the Officer Agreement, stating that the latter also formed the basis of her employment. It provided that in the event of a conflict between it and the Officer Agreement, the Offer Letter would govern. After her dismissal, Rahman brought an action for wrongful dismissal. She argued that, in accordance with the decision in Waksdale, the termination provisions of the employment agreement were not enforceable because the “just cause” provision would allow for termination without notice in situations in which the ESA still required notice to terminate an employment contract. The termination provision: “CannonDesign maintains the right to terminate your employment at any time and without notice or payment in lieu thereof if you engage in conduct that constitutes just cause for summary dismissal.” Rahman argued that according to Ontario Regulation 288/01, an employee can be terminated without notice only where they have been “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer”— a standard Rahman argued was higher than “just cause” at common law. In addition, Rahman argued that the provisions of the initial “Officer’s Agreement” that had been sent to her before the employment agreement violated the ESA. The Officer’s Agreement and the employment agreement contained different termination provisions, and Rahman had not negotiated the Officer’s Agreement’s provisions. Ontario Superior Court of Justice The motion judge found that the contractual provision in the employment agreement which denied entitlements upon termination for just cause did not amount to an attempt to contract out of the Employment Standards Act, 2000 because the employer and employee had equal bargaining power in negotiating the employment agreement. The basis for the motion judge’s decision was that he found Rahman to be “reasonably sophisticated” as she received independent legal advice prior to entering into the contract. The Court found the termination provision to be valid and enforceable. The Court of Appeal On Appeal, the question before the Court was whether the motion judge erred in concluding that the termination provisions of the employment contracts govern the termination of her employment. Justice Gilese reasoned: [24] In my view, the motion judge erred in law when he allowed considerations of Ms. Rahman’s sophistication and access to independent legal advice, coupled with the parties’ subjective intention to not contravene the ESA, to override the plain language in the termination provisions in the Employment Contracts. By allowing subjective considerations to distort and override the wording of those provisions, the motion judge committed an extricable error of law reviewable on a correctness standard: Amberber v. IBM Canada Ltd., 2018 ONCA 571, 424 D.L.R. (4th) 169, at para. 65. It is the wording of a termination provision which determines whether it contravenes the ESA – even compliance with ESA obligations on termination does not have the effect of saving a termination provision that violates the ESA: Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, 134 O.R. (3d) 481, at paras. 43-44. [28] The wilful misconduct standard requires evidence that the employee was “being bad on purpose”: Render v. ThyssenKrupp Elevator (Canada) Limited, 2022 ONCA 310, at para. 79, citing Plester v. Polyone Canada Inc., 2011 ONSC 6068, 2012 C.L.L.C. 210-022, aff’d 2013 ONCA 47, 2013 C.L.L.C. 210-015. For example, in Oosterbosch v. FAG Aerospace Inc., 2011 ONSC 1538, 2011 C.L.L.C. 210-019, the court awarded damages for ESA notice and severance after holding that the employer had just cause to terminate the employee for persistent carelessness that did not meet the wilful misconduct standard. [29] There is nothing in the Operative Just Cause Provision that limits its scope to just cause terminations for wilful misconduct. In its plain wording, the Operative Just Cause Provision gives CannonDesign the right to terminate Ms. Rahman’s employment without notice or payment, for conduct that constitutes just cause alone. That means the Operative Just Clause Provision contravenes the ESA and s. 5 renders it void. Section 5 provides that no employer shall contract out of an employment standard and any such contracting out is void. The Court of Appeal found that the plain wording of the termination provision ran afoul of the ESA and was therefore void and unenforceable. The Court of Appeal ruled that the motion judge erred at law in considering the former employee’s “sophistication and access to independent legal advice” and used those factors, among others, to “override the plain language” in the termination provisions. Key Takeaways When the Rahman decision was released last year, it was found to be a major win in favour of employers. By reversing the decision, the Court of Appeal has upheld the Waksdale decision. It reinforces that termination provisions should be read together, in their plain wording, when assessing their validity and enforceability. The ever-changing legal landscape of employment law in Ontario should encourage employers to have their employment contracts regularly reviewed by a lawyer to ensure they are compliant with statutory requirements for enforceability purposes and to avoid expensive litigation. To incentivize employees to sign the new agreements with updated termination provisions, employers may provide consideration to employees in the form of a signing bonus, salary increase, or other incentives. If you have any questions regarding termination provisions and updating employment contracts, please contact one of our employment lawyers or email info@devrylaw.ca to book a consultation. “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 situations and needs.” This blog was co-authored by Owais Hashmi* Sources [1] Rahman v Cannon Design Architecture Inc, 2022 ONCA 451 [2] Waksdale v Swegon North America Inc, 2020 ONCA 391. By Fauzan SiddiquiBlog, Employment Law, Labour LawJuly 19, 2022October 27, 2023
Can An Employer Still Enforce a Mandatory Masking Policy? Ontario’s public health laws in response to COVID-19 continue to evolve. DSF has previously discussed the enforceability of mandatory vaccination policies in the workplace. This blog addresses the enforceability of mandatory masking policies introduced by employers now that Ontario law no longer requires masking in most settings. Evolution of the Ontario Mask Mandate On June 11, 2022, the Ontario mandatory masking requirement was lifted in public transit[1] and most health care settings. The province’s masking mandate has been gradually adjusted since the onset of the COVID-19 pandemic, becoming more relaxed as the volume of infections in Ontario has decreased. The significant changes to the mandate enacted on June 11 were perceived by many as the end of the mask mandate. However, individuals are still required to wear a mask in certain circumstances, such as in long-term care and retirement homes. Hospitals, while no longer obligated by the province to require masking, may nonetheless elect to require masks to be worn in their facilities. Indeed, many hospitals, such as Toronto’s University Health Network, have continued to require masking. Masking Policies in the Workplace Similar to hospitals, although not mandatory, private businesses may choose to have a masking policy in effect. Under the Occupational Health and Safety Act (“OHSA”), employers are required to take every precaution reasonable in the circumstances for the protection of a worker. This includes protection from “occupational illnesses”, such as COVID-19. To ensure compliance with the OHSA, it continues to be prudent for employers to have a masking policy. One possibility would be to require employees to wear a mask when walking through the common areas of the workplace but be permitted to remove their masks when working alone in their office. Individuals who wish to continue masking are permitted to do so, even if their employer does not require it. Employees who refuse to comply with their employer’s masking policy may be subjected to discipline. Is Refusal to Abide by an Employer’s Masking Policy Just Cause for Termination? Employers may terminate an employee at any time without cause, as long as they provide the terminated employee with all payments and entitlements in accordance with the Employment Standards Act, 2000, their employment contract and the common law. If an employee can show that they cannot wear a mask for medical or religious reasons, they would be entitled to accommodation under the Ontario Human Rights Code or the Accessibility for Ontarians with Disabilities Act. In these instances, employers would have a duty to accommodate the employee up to the point of undue hardship, with regard to cost and health and safety issues. However, to date, qualifying for such as accommodation has proved to be extremely difficult and this is likely to continue to be the case. In Beaudin v Zale Canada Co. o/a Peoples Jewellers, 2021 AHRC 155, the Human Rights Tribunal of Alberta (“HRTA”) determined that a store’s choice to refuse service to a customer who refused to comply with its masking policy, even though at the time there was no public health requirement to wear a mask, did not amount to discrimination. In this instance, it was not disputed that the patron had a disability which prevented him from wearing a mask, but because the store offered alternatives such as shopping online (with free delivery) and curbside pick-up, and since the employer had good faith and legitimate health and safety reasons for introducing the policy, the HRTA dismissed the complaint. There are other cases in which human rights tribunals have decided against individuals who refused to follow the mask policies of private businesses.[2] In each of these cases, the tribunals concluded that the complainant was not entitled to an exemption from wearing a mask under the applicable human rights legislation. Employers may consider providing alternatives, such as permitting employees to work remotely to avoid human rights complaints about the enforcement of a masking policy. However, as the British Columbia Human Rights Tribunal concluded in The Customer v The Store, 2021 BCHRT 39, “[t]he Code does not protect people who refuse to wear a mask as a matter of personal preference”.[3] The above cases suggest that an employer will likely have a strong case if they choose to terminate an employee for cause and wilful misconduct for failure to comply with a masking policy. However, if COVID-19 becomes less of a public health and workplace safety concern and case counts decrease, it will become more difficult for an employer to establish just cause and wilful misconduct when terminating an employee for failure to comply with a masking policy. On the other hand, if a new variant and wave of the virus emerge and case counts increase, the employer’s case for cause and wilful misconduct, if an employee does not comply with its masking policy, will become strong again. Ultimately, masking disputes in the workplace will depend on the facts and circumstances of each case and whether the masking policy is reasonable in the circumstances. If you have any questions about mask mandates in the workplace or employment law generally, please contact Marty Rabinovitch at (416)-446-5826 or 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 situations and needs.” This blog was co-authored by Chloe Carr* [1] With the exception of the TTC’s “Wheel-Trans” Service. [2] See also: Szeles v Costco Wholesale Canada Ltd., 2021 AHRC 154; Rael v Cartwright Jewelers and another, 2021 BCHRT 106; Coelho v Lululemon Athletica Canada Inc., 2021 BCHRT 156; Ratchford v Creatures Pet Store, 2021 BCHRT 157. [3] The Customer v The Store, 2021 BCHRT 39 at para 14. By Fauzan SiddiquiBlog, COVID-19, Employment LawJuly 1, 2022March 27, 2024
Court of Appeal Declines to Decide whether IDEL Constitutes Common Law Constructive Dismissal Following the introduction of Infectious Disease Emergency Leave (“IDEL”) in Regulation 228/20 (the “Regulation”) passed May 29, 2020, pursuant to the Employment Standards Act, 2000 (“ESA”), the common law of constructive dismissal has been uncertain as a result of conflicting Ontario court decisions. Background The Regulation states that non-unionized employees who had their hours reduced or eliminated due to COVID-19 are deemed retroactively to be on IDEL. As reflected in section 50.1 of the ESA, a temporary reduction or elimination of an employee’s work hours and/or wages due to COVID-19 does not constitute constructive dismissal during the “COVID-19 period”, which began (retroactively) on March 3, 2020, and is currently set to expire on July 30, 2022. The Regulation has resulted in some confusion, since it prevents employees on IDEL from advancing a claim for constructive dismissal under the ESA, contrary to the well-established principle that an employer does not have an inherent common law right to temporarily lay off an employee – even if the employer complied with the layoff provisions of the ESA (the employer would need to include a lay-off provision in the employment contract). Normally, in order for the common law to be altered by statute, there would need to be express language in the statute to that effect. As stated expressly at section 8(1) of the ESA, “no civil remedy of an employee against his or her employer is affected by this Act”. The Regulation does not contain any language which would modify this section of the ESA, leaving many to wonder how the courts would interpret and apply the Regulation. In earlier blog posts, which can be found here and here, we too at DSF contemplated this uncertainty. Coutinho v Ocular Health Centre Ltd., 2021 ONSC 3076 (CanLII) (“Coutinho”) The question of whether the Regulation prevented an employee from advancing a claim for constructive dismissal at common law was first put before the court in Coutinho. The court ruled that while the Regulation prevented the employee from pursuing damages under the ESA, it did not prevent them from pursuing a claim for constructive dismissal at common law. Thus the court determined that the Regulation did not impact an employee’s common law right to assert that a reduction in hours of work and/or wages constitutes a constructive dismissal, which would entitle the employee to wrongful dismissal damages. For a more thorough discussion of this decision, please see our previous blog post here. Taylor v Hanley Hospitality Inc., 2021 ONSC 3135 (“Taylor”) The “certainty” provided by the court in Coutinho did not last long, however, following the conflicting decision of the Ontario Superior Court in Taylor. In contrast to the decision in Coutinho, the Court determined that an employee on IDEL under the Regulation had no right to claim constructive dismissal claim at common law. Please see our previous blog post here for more details on this decision, and our blog post here to see our first analysis of the conflicting judgments. Taylor v Hanley Hospitality Inc., 2022 ONCA 376 As anticipated, the Superior Court’s decision was appealed due to the inconsistencies between the rulings in Coutinho and Taylor. The Court of Appeal decision was expected to clarify the law in this regard, however, the decision released on May 12, 2022, ultimately did not do so. The Court of Appeal overturned the trial judge’s decision on other, unrelated grounds related to an erroneous granting of a Rule 21 motion under the Rules of Civil Procedure. Thus no determination was made on whether section 50.1 of the ESA overrides an employee’s common law right to assert constructive dismissal. The case and this question of law were sent back to the Superior Court to be re-adjudicated. Current State of the Law: Employers Beware For the time being, Coutinho and Fogelman v IFG, 2021 ONSC 4042 are the governing authorities. In both decisions, the Superior Court has found that section 50.1 and the Regulation do not displace an employee’s common law right to assert constructive dismissal. Although the law is by no means certain, employers should be aware that according to these decisions, many temporary layoffs due to COVID-19 could be considered unlawful and may entitle employees to wrongful dismissal damages. Our employment law team at Devry Smith Frank LLP will continue to monitor the state of the law closely. If you have any questions regarding the IDEL, or any other labour or employment law issues, we would be happy to assist you. “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 situations and needs.” This blog was co-authored by Chloe Carr* By Fauzan SiddiquiBlog, COVID-19, Employment LawJune 14, 2022August 15, 2022