Employment and Labour Law

SEMINARS | 2015

Top Ten Developments in

Employment, Labour and Human Rights

Law

Presented by: Jennifer Emmans

with special thanks to Laura Morrison

1. McConaghie v. Systemgroup Consulting Inc. 2015 ONSC 2213

• IT company sponsored customer appreciation ski day for men only.

• Event pamphlet:

• “Men’s Day 2012”

• “A day for Men without Women and Children” & “Bring your friends, bring your

acquaintances, just don’t bring your wife!”

• Activities included: “massage” and “Hooters Girls”

• Applicant was female Director, Business Development – her (male)

clients were invited, she was not.

• Applicant raised her concerns about the event with her superior

and the CEO. Neither found the event inappropriate.

• After complaint, Applicant was excluded from meetings and

networking opportunities and was eventually terminated.

3

The Decision

The HRTO found Discrimination:

• “Men’s Day” discriminated against the Applicant on the basis of sex

• Deprived Applicant of an equal opportunity to develop client

relationships

• Compounded the disadvantage she faced in what was already a male-

dominated industry

• Also found Reprisal:

• Respondent argued that Applicant’s termination was for performance

reasons

• HRTO found that Applicant’s termination, and her treatment leading

up to termination, constituted reprisal for complaining about Men’s

Day

4

The Decision

The Human Rights Tribunal Awarded:

• $150 for the lost value of attending “Men’s Day” (value of ticket to

attend);

• Lost wages from her termination date until she found alternate

employment (~ 7 months);

• $18,000 as compensation for injury to dignity, feelings and self-

respect, including

• $3,000 for being excluded from event, and

• $15,000 for reprisal

5

The Appeal

• The employer appealed the wage award of 7 months arguing that

her employment agreement limited her to 4 weeks’ notice.

• The Divisional Court found that the HRTO has broad remedial

powers not limited to common law claims, and upheld the award.

Why it Matters

Employers should be careful about sponsoring or running events.

• Be cautious about events that are limited to groups identified on

protected grounds (race, sex, religion etc.) and that may not be

accessible to persons with disabilities.

Employers should keep good detailed records of employee

performance.

• Without data, it can be difficult to prove that a termination decision

was justified based on performance.

Remember that the HRTO has the power to impose all sorts of

remedies, and are not limited by the common law.

7

2. Wilson v. Atomic Energy 2015 FCA 17

Context:

• Section 240 of Canada Labour Code (“CLC”) provides terminated

employees with right to make unjust dismissal complaint.

• Section 242 provides remedies for unjust dismissal, including

compensation or reinstatement.

• Prior to this case, some decisions took the position that all

dismissals under the CLC were “unjust” if they were not “for

cause”.

• This left employers who terminated “without cause” vulnerable to a

potential order to reinstate terminated employees (with back pay!).

8

2. Wilson v. Atomic Energy 2015 FCA 17

• In Wilson, a “procurement supervisor” was terminated with 6

months’ severance pay after 4.5 years of employment. His statutory

entitlements would have been 18 days.

• Question arising out of adjudicator and Federal Court decisions

was:

Are all terminations without cause under CLC “unjust” and subject

to section 242 remedies, or can employers to terminate employees

properly without cause?

9

The Decision

• Federal Court of Appeal: without cause dismissals are not

automatically “unjust” pursuant to the CLC.

• There is no “right to a job in the sense that any dismissal without

cause is automatically unjust”.

• The CLC dismissal provisions can co-exist with the common law

doctrine of reasonable notice.

• Adjudicators must examine the specific facts of each case to

determine whether dismissal was unjust in the circumstances.

10

Why it Matters

• After Wilson, the CLC does provide allowance for “without cause”

terminations.

• Not all “without cause” dismissals will necessarily be “unjust

dismissals” under CLC with risk of reinstatement upon complaint.

• However, the CLC unjust dismissal provisions still stand, so to

protect against unjust dismissal claims, employers should (for

without cause dismissals):

• Provide adequate notice based on common law/employment agreement; and

• Treat employees fairly throughout dismissal process.

11

3. Thompson v. Cardel Homes Limited Partnership 2014 ABCA 242

• The employee and employer entered into a fixed term employment

agreement. Termination options included:

• That the term would expire with no renewal and no further pay owing to the

employee; or

• That the agreement could be terminated early by the employer if they

provided the employee with 12 months pay in lieu of notice.

12

3. Thompson v. Cardel Homes Limited Partnership 2014 ABCA 242

• Employer chose not to renew the agreement and provided one

month’s notice to the employee.

• At the time the notice was provided, employer also asked employee

not to return to work and to return all company property.

• Employer reassigned employee’s duties, advised others outside the

company that employee was no longer with the company, removed

email access, but assured him he would be paid for the final month

of the agreement.

• Employee argued this amounted to early termination of agreement

and that he was entitled to the 12 month payment.

13

The Decision

• Employer’s actions constituted a termination:

• Employee not permitted to continue employment;

• Not permitted to discharge duties or exercise powers;

• Duties and powers assumed by another;

• Not allowed to come to the office.

• The notice was more than a message of non-renewal.

• Facts supported finding of constructive dismissal.

• Contracts of employment are mutual contracts – both parties must

agree to a change in terms.

14

Why it Matters

This Appeal level decision reminds us that:

• Employers should be careful with fixed-term agreements:

• Risks associated with obligations to pay duration of fixed-term

upon early termination;

• Risks associated with keeping someone on during advance

notice of non-renewal, but also with sending them home.

• Reminder that unilateral changes to an employment

agreement can result in finding of constructive

dismissal/termination.

15

4. Paquette v. Quadraspec Inc. [2014] 121 OR 3d 765 (ONSC)

• Employee of approximately 23 years was dismissed without cause.

In addition to his salary, he earned benefits and commissions.

• He had worked at company’s Ontario location.

• Employment agreement provided for pay in lieu of notice of base

salary only, and did not reference benefits or commissions.

• At the time of termination, the Ontario payroll of the company was

$1.5M. Quebec payroll was over $3M.

16

4. Paquette v. Quadraspec Inc. [2014] 121 OR 3d 765 (ONSC)

Employee raised two issues:

1) Is employment agreement void due to termination provision failing

to provide for benefits and commissions; and

2) Was he entitled to severance under section 64 of the Employment

Standards Act, 2000 since the employer had a payroll over $2.5M

Canada-wide? Or is severance calculated on Ontario-wide payroll

only?

17

The Decision

1) Employment agreement termination provision found to be void as

it did not provide for benefits or commissions, contrary to the

ESA.

2) Employer must pay severance under section 64 of ESA – payroll

over $2.5M in Canada.

18

Why it Matters

• Termination provisions must be drafted properly and cannot violate

(or be silent on) ESA obligations.

• Unless we hear otherwise from the courts, Ontario employers must

consider entire payroll in determining whether they must pay

severance under section 64 of ESA, not just Ontario payroll.

19

5. Arnone v. Best Theratronics 2015 ONCA 63

• An employee of 31 years (engineering supervisor, 53) was

terminated and provided with 14.4 weeks of statutory minimum

notice.

• 16.8 months from his termination date, he would have been eligible

for his pension.

• Employee brought action under Summary Judgment Rules for

wrongful termination.

20

5. Arnone v. Best Theratronics 2015 ONCA 63

Summary Judgment Motions Judge awarded:

• 16.8 months to get Arnone to the vesting of his pension;

• $65,000 for the present value of loss of pension benefits between actual

termination date and reasonable notice period;

• $55,000 for a retirement allowance (in accordance with company policy);

and,

• Costs in the amount of $52,280.

Motions Judge mentioned that had there been no pension in issue, the

appropriate amount of reasonable notice would have been 22

months.

Employer appealed, Arnone cross-appealed.

21

The Decision

Court of Appeal decided:

• Summary Judgment was appropriate and no need for trial – there

was enough evidence before the Motions Judge to make the

findings that were made.

• Following Hyrniak v. Mauldin, 2014 SCC 7

• Arnone was entitled to 22 months reasonable notice – the

reasonable notice period should not have been circumscribed

based on the pension, Arnone entitled to both.

• Costs to be remitted to Motions Judge – Arnone had made a Rule

49 Offer to Settle for 18 months, and had “beat” it, so was entitled

to additional costs.

22

Why it Matters

• Continuing trend of wrongful dismissal cases being decided by way

of Summary Judgment

• Another example of the importance of having enforceable

employment agreements (and procedures)

• Reasonable behaviour in deciding whether to pursue a matter in

litigation and when to consider a settlement offer will save you

money!

23

6. Fernandes v. Peel Educational & Tutorial Services 2014 ONSC 6506

• Fernandes was teacher of 10 years. One year, he reported falsified

marks, provided late marks, allowed students to have overdue

assignments, and did not keep record of accurate marks.

• Fernandes was approached about issues with marks on several

occasions by school.

• Fernandes lied to his school about how marks were calculated, how

students were marked, and then admitted to falsifying marks on

students’ records (academic fraud).

• School terminated Fernandes for just cause.

24

6. Fernandes v. Peel Educational & Tutorial Services 2014 ONSC 6506

• In addition, Fernandes became disabled days after his termination

(depression, PTSD, hypertension, anxiety, IBS, allergies).

• His condition was caused by the distress of these events,

according to his doctor.

• Fernandes had long term disability coverage until he was

terminated.

25

The Decision

• Fernandes was wrongfully dismissed – “the punishment outweighs

the seriousness of the infraction”.

• Court relied on:

• Fernandes’ positive history with the school leading up to these events,

• The inconsistent testimony of some witnesses regarding fine points related to

the incidents;

• The fact that the fabricated marks were for presentations that were “only part

of the course”, and

• The fact that Fernandes admitted his conduct (although belatedly).

• The defendants could have provided warnings first, especially

given abrupt change in Fernandes’ behaviour.

• Found as a fact that Fernandes was disabled pursuant to the terms

of the disability benefits he would have had as a teacher.

26

The Decision

• Fernandes was 56 when he was terminated, and 62 at the time of

trial.

• Court awarded:

• One year’s salary as reasonable notice;

• Disability benefits until the age of 65, to be determined after submissions by

counsel

• Court declined to award mental distress damages

27

Why it Matters

• “Just cause” terminations are very difficult (impossible?) to argue

successfully, even on egregious facts.

• Courts want to see repeated egregious behaviour patterns, multiple

warnings and chances, and clear communication of consequences

of repeated behaviour.

• Employers should consider terminating without cause in most

circumstances.

• The risks of “getting it wrong” could have costly consequences

where benefit coverage is terminated.

28

7. Diamantopoulos v. KPMG LLP 2014 ONSC 1038

• Employee worked for company for 10 years.

• Had been off on STD leave, awaiting LTD decision for stress and

anxiety issues.

• STD benefits expired but KPMG continued to pay her until her LTD

claim was denied.

• She was due to return to work but did not come in or meet with

KPMG. KPMG provided her with a termination letter offering 41

weeks.

29

7. Diamantopoulos v. KPMG LLP 2014 ONSC 1038

• Unbeknownst to KPMG, Plaintiff diagnosed/treated for breast

cancer just prior to termination.

• Upon learning this, KPMG changed the severance package offer

and provided STD benefits for additional 3 months, when the

Plaintiff qualified for LTD.

• Plaintiff sued for wrongful termination.

• KPMG argued that the STD and LTD benefits should be deducted

from any reasonable notice awarded.

30

The Decision

• The Court found that the Plaintiff was entitled to 10 months of

reasonable notice.

• The STD benefits (approximately 3 months) were deducted from the

reasonable notice:

• These were fully paid by KPMG, not insured;

• The employee did not make contributions to these benefits.

• The LTD benefits were not deducted from the reasonable notice:

• More similar to private insurance;

• Employee made contributions towards these benefits;

• LTD policy provided that benefits are offset against any employment income.

• There was no duty to mitigate given the Plaintiff’s health.

• No aggravated or punitive damages, which were claimed.

31

Why it Matters

• Self-insured income replacement benefits may be deductible from

reasonable notice awards, but insured benefits will not (especially

where employee contributes to premiums).

• An example of an employer being fair and reasonable, resulting in

no award for additional damages to the Plaintiff despite her medical

problems.

32

8. Scaduto v. Insurance Search Bureau 2014 HRTO 250

• Employee terminated without cause due to ongoing performance

issues.

• At the termination meeting, employee stated the he felt his

performance was scrutinized and he was treated differently

because he was gay.

• Employer did not investigate the allegations given that employee

had already been terminated.

• Employee filed complaint to Human Rights Tribunal alleging:

• He had been discriminated against on the grounds of sexual orientation, and

• The employer had failed to investigate his allegations.

33

The Decision

• No discrimination in the workplace.

• No discrimination upon termination.

• Failure to Investigate is not a violation in these circumstances.

• Where no discrimination found, the failure of the employer to

conduct an investigation is not, in and of itself, a breach of the

Human Rights Code.

• Applicant’s right to be free from discrimination in his workplace not

infringed by failure to investigate in this case, because he was no

longer there.

34

Why it Matters

• The Tribunal said that employers are well-advised to investigate

human rights complaints as the failure to do so can cause or

exacerbate the harm of discrimination in the workplace – the failure

to do so is at their peril.

• However, a failure to investigate in and of itself will not lead to a

finding of discrimination.

35

9. Bhasin v. Hrynew 2014 SCC 71

• Bhasin and Hrynew had agencies under contract with Can-Am

Financial Corp.

• Hrynew wanted to take over Bhasin’s market and had asked Can-

Am to pressure Bhasin in this regard – Bhasin refused offers to

merge with Hrynew.

• Can-Am then repeatedly misled Bhasin and went around him,

eventually appointing Hrynew to monitor agencies for compliance

with securities laws.

36

9. Bhasin v. Hrynew 2014 SCC 71

• Hrynew then had authority and responsibility to audit agencies,

including Bhasin’s – Bhasin refused access to his business

records.

• Can-Am gave notice of non-renewal of their contract with Bhasin for

non-compliance.

• Basin lost the value in his business – majority of sales agents

solicited to work for Hrynew at the end of his contract term.

37

The Decision

• Good Faith in contractual performance, as a general organizing

principle of contract law.

• Parties must perform contractual duties honestly and reasonably.

• Not a new cause of action, but a doctrine that already exists, underpinning

legal doctrines. May be given different weight in different situations.

• New common law duty: Honesty in Contractual Performance.

• Applies to all types of contracts.

• Parties must be honest with each other regarding the performance of

contractual obligations.

• Breach will result in breach of contract and damages.

• Court preserved right and freedom to pursue individual self-

interest.

38

Why it Matters

• Decision impacts employment, contractor relationships: new duty

of honesty in contractual performance.

• New decisions will continue to define this new common law

obligation – impacts remain to be seen.

• Employers should be wary of withholding information from

employees in some cases: terminations, performance issues,

business reorganizations, and ?

• Also risks associated with disclosing information to employees.

39

10. Potter v. New Brunswick 2015 SCC 10

• Potter was Executive Director of Legal Aid program on a 7 year

appointment.

• 4 years in, employment relationship became strained, Potter went

on medical leave during buy-out discussions.

• One week before Potter was to return to work, placed on paid

suspension “until further direction” while Board recommended to

Minister of Justice that he be terminated for cause.

• 8 weeks into suspension, Potter claimed for constructive dismissal.

Legal Aid argued he resigned upon issuing the claim.

40

The Decision

Supreme Court clarified test for constructive dismissal:

1) Whether employer’s unilateral conduct breached the contract in a

manner that substantially altered the essential terms of the

contract:

A) Did the employer unilaterally breach an express or implied term of the

contract?

B) If so, did the breach substantially alter an essential term of the contract?

2) Did the employer’s conduct evince an intention to no longer be

bound by the contract, from the perspective of a reasonable

person?

Potter found to have been constructively dismissed

41

The Decision

Court also said that employers must follow good faith requirements

that we saw in Bhasin:

• Maintain a basic level of honest and forthright communication with

employees that are being suspended;

• Refrain from acting in secret and stonewalling employees; and

• Demonstrate that a non-disciplinary suspension is reasonable and

justified.

42

Why it Matters

• Employers should not place employees on paid, non-disciplinary

suspension without justification or communication.

• Employers should keep a basic line of communication open with

suspended employees and act in good faith: have legitimate

business reasons for suspensions.

• May want to draft employment agreements that include implied or

express authority to place employees on suspension.

43

Thank You

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Jennifer Emmans

Gowling Lafleur Henderson LLP

Barristers & Solicitors

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Ottawa, ON K1P 1C3

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Email: jennifer.emmans@gowlings.com