An employer’s financial circumstances do not affect the reasonable notice period

Should an employer’s financial circumstances be relevant when considering the period of reasonable notice to which a wrongfully dismissed employee is entitled? This question was raised on appeal in Michela v St. Thomas of Villanova Catholic School, 2015 ONCA 801.

As calculating the appropriate notice period is fact-specific, the argument that an employer’s financial circumstances should be considered in the notice calculation is an intriguing one. Previously, the recognized relevant factors in determining notice periods focused on the circumstances of the employee rather than the employer. These include the character of the employment, length of service, age, experience, training, qualifications, and availability of similar employment. The motion judge in this case had considered the employer’s financial circumstances to be part of the “character of the employment”.

The ONCA determined that the motion judge had erred and that previous case history does not support this interpretation. An employer’s poor economic circumstances do not justify a reduction of an employee’s notice period. This decision has been broadened in the recent decision Nielsen v Sheridan Chevrolet Cadillac Ltd., 2016 ONSC 1843 which states that even where there is evidence that the employer’s financial difficulties are widely known and employees were aware of intended workplace closures, the employer’s economic circumstances should not be considered in calculating the length of notice that an employee is entitled to.

Proposed new Victorian OHS Regulations released for consultation

Victoria’s Occupational Health and Safety Regulations 2007 (OHS Regulations) and the Equipment (Public Safety) Regulations 2007 are due to expire on 19 June 2017.

WorkSafe has today released proposed new OHS Regulations to replace the current OHS Regulations.

WorkSafe has invited public submissions and comment on the proposed new OHS Regulations as part of the consultation and review process. Submissions are due by the close of business on Friday 9 September 2016.

Continue reading

Continuing Effects of Workplace Policies aren’t New Incidents or Series of Incidents under the Ontario Human Rights Code

Section 34 offers certainty and protection to employers by imposing time limits on claims brought under the Ontario Human Rights Code (“the Code”). Recently, in Meiri v York Region District School Board, the Human Rights Tribunal of Ontario (“the Tribunal”) affirmed the application of these time restrictions to employer policies with continuing effects. Such policies do not constitute new incidents, or a series of incidents, that reset the one-year time limit for bringing claims.

In general, employees seeking to bring a claim under the Code must do so within the timeframe provided by section 34: within one year of the impugned incident or the last incident in an impugned series of incidents. However, the Tribunal retains discretion to grant extensions to the one-year limitations period where the delay was incurred in good faith and no substantial prejudice will result to any person affected by the delay.

In Meiri, the Applicant made an application to the Tribunal  in October 2015 related to her employer’s refusal to provide a written reference letter. The Applicant first made her request upon the completion of her contract in June 2006, then again in October 2014 following unsuccessful attempts to find other teaching positions. Each time, the employer refused to provide a written reference letter in accordance with its policy. The Tribunal held, citing Visic v Ontario Human Rights Commission, that the continuing effect of an employer policy does not constitute a new incident or series of incidents, and noted that holding otherwise would effectively remove any time limit on filing an application. Therefore, the Application filed in October 2015 was barred because the filing deadline was June 2007, i.e. one year after the date of the initial refusal in June 2006, not the last refusal in October 2014. The Applicant also had nothing preventing her from pursuing her Application within the required timeframe and did not satisfy the test for delay incurred in good faith. Accordingly, the Tribunal dismissed the Application.

Written with the assistance of Kassandra Shortt, summer student.

Post-Election 2016 Briefing: Likely Amendments to the Fair Work Act

Prime Minister Malcolm Turnbull has claimed victory in the federal election, as the Coalition achieved the slim majority in Australia’s federal parliament.

We briefly outline the likely key amendments to the Fair Work Act, as promised by the Coalition Government prior to the election, and other possible amendments to the workplace relations legislative framework. Continue reading

Wilson v. AECL – Generosity is Not Enough: Federally Regulated Employers Must Have Cause to Dismiss Non-Unionized Employees

At common law, a non-unionized employee can be dismissed without reasons if he or she is given reasonable notice or pay in lieu.  Today, a majority of the Supreme Court of Canada ruled that this common law rule does not apply to federally regulated employers.  The Court ruled that federally regulated employers must always provide reasons for the termination of their employees. Furthermore, if the reasons for dismissal do not meet the standard for “just cause” as that term is understood in the collective bargaining context, an employee who has twelve months of continuous service may complain under section 240 of the Canada Labour Code, and may be reinstated, with or without back pay and damages, or compensated with pay in lieu of reinstatement plus damages.

In justifying its decision, the majority stated that when Parliament amended Part III of the Canada Labour Code in 1978 to include section 240, it intended “to conceptually align the protections from unjust dismissals for non-unionized federal employees with those available to unionized employees”.  Generally speaking, this means that employers must follow a course of progressive discipline prior to dismissing an employee unless there has been an egregious violation of the employment contract such that immediate termination without prior warning is warranted.  The onus on employers to justify terminations with cause is extremely heavy, with the result that discharge complaints/grievances are notoriously difficult to defend.

In a strongly worded dissent, Justices Moldaver, Cote and Brown held that the common law rule regarding without cause dismissal was not ousted by the introduction of section 240 of the Canada Labour Code. In the dissenting judges’ opinion, there is nothing in section 240 or the surrounding sections of the Code which guarantees lifelong job tenure to employees of federally regulated businesses, provided such employees do not give their employers just cause for dismissal.

The majority decision in this case makes it impossible for federally regulated employers to dismiss non-unionized employees without cause. The significance of this ruling cannot be overstated.  It is abundantly clear now that all federally regulated employers must engage in well-documented progressive discipline of employees whose employment they may wish eventually to terminate; rarely, if ever, will federally regulated employers be permitted to terminate employment for a single act of misconduct, or for misconduct that has gone unpunished.

Damages to the Reputation: A Serious Motive for Termination?

What constitutes a serious motive to terminate an employee under a fixed-term employment contract? Recent events in Quebec raise this question as the province’s former deputy premier Nathalie Normandeau was dismissed by her employer, a Quebec City radio station, even though her contract expired in August 2019. This occurred after the deposition of seven criminal charges against the former politician by the Permanent Anticorruption Unit (“UPAC”), including corruption, fraud toward the government, conspiracy, breach of trust and use of forged documents. These accusations are part of the investigations conducted by UPAC in Quebec regarding political financing in exchange of public sector contracts.

Following her termination, the former cabinet member applied to the Superior Court seeking $722,500 for loss of salary as well as punitive and moral damages. The court recently rejected the former politician’s motion to obtain an order to protect her rights to a salary in view of the financial consequences of her criminal trial (click here to read the decision). The Court considered the usual criteria, i.e. emergency, appearance of right, presence of an irreparable prejudice and balance of convenience. Although the upcoming criminal trial was considered to be too remote to fulfill the criterion of emergency, the Court summarized the relevant sequence of events to decide of the appearance of right issue. The judgment on the merits is still to come but the Court did not find that the plaintiff’s right was apparent in light of the law.

This case raises the issue of what is sufficient to be considered a “serious reason” for dismissal according to the Civil Code of Quebec, which allows the employer to unilaterally terminate an employee without notice in such circumstances. It is generally accepted that the object of the employer’s motive must be an act attributable to the employee that is objectively “serious” and related to the obligations part of the employment contract. This analysis is highly contextual. The burden belongs to the employer to prove the presence of a serious reason.

Here, the employer’s counsel evokes the “serious motive” clause in the employment contract, which provided that a declaration or accusations affecting the employee or the company’s reputation could constitute a motive for termination. According to the defendant, the accusations of fraud and corruption deposed against Normandeau significantly affect the radio station’s credibility. The court is therefore likely to consider the terms agreed upon by the parties at the creation of the contract in its evaluation.

Moreover, the court will have to determine – on the merits – to which extent an accusation, rather than a conviction, can affect a company’s reputation given that Canadian citizens benefit from the presumption of innocence. In the case of an employment suspension related to criminal accusations, the Supreme Court of Canada has considered, amongst other criteria, the necessity of the suspension to protect the enterprise’s legitimate interests, the employer’s duty to act fairly and the nature of the infraction committed. A similar balancing of interests will allow the court to determine if the charges deposed against Normandeau constitute a serious motive for termination.

In sum, this situation raises interesting questions about the interaction between the public sphere and the private employment relationship. Situations where employees jeopardize their employer’s reputation by their actions are current in the area of labour and employment and extend to more than criminal accusations, as they can simply be an inappropriate behavior online for example. In an era controlled by social media, employers will have to be careful to respect their employees’ rights while ensuring that they are made aware of their obligations of loyalty to the enterprise.

Written with the assistance of Sandrine Raquepas, summer student.

Liberal Government Preserves Favourable Treatment of Stock Options

At the outset of any business endeavour, generating funding and determining how to compensate employees often go hand in hand. There are generally three options available  to compensate employees and attract investors: stock options, profit sharing, and debt financing. A stock option is a right to buy a share at a particular price on specific terms. If the value of the company increases above the exercise price (that is, the price at which the option shares can be purchased), the option-holder benefits. Stock options are often the most common form of equity used in employee compensation packages and receive favourable tax treatment under the Income Tax Act.

In October 2015, the new Liberal government had pledged to increase taxation of stock options on gains exceeding $100,000 as part of their overarching objective to increase tax on wealthy Canadians:

[…] The Department of Finance estimates that 8,000 very high-income Canadians deduct an average of $400,000 from their taxable incomes via stock options. This represents three quarters of the fiscal impact of this deduction, which in total cost $750 million in 2014. Stock options are a useful compensation tool for start-up companies, and we would ensure that employees with up to $100,000 in annual stock option gains will be unaffected by any new cap.

Canadian start-ups argued that such a tax would stifle recruitment in the start-up sector where employees often accept lower salaries in return for stock options. Fortunately, stock options will continue to receive favourable tax treatment under the Income Tax Act.  Finance Minister, Bill Morneau, told reporters the cap would be omitted from the budget with no plans on instating it in the near future. This news was welcomed in the start-up space.

Written with the assistance of Saam Pousht-Mashhad, summer student.

Uber and its drivers in Quebec: Who are they?

The saga opposing the multinational Uber to taxi drivers has been raging in the province of Quebec for nearly two years. We have witnessed a multiplication of public interventions coming from both camps in order to rally to their respective cause both the government and the majority of the population.

Taxi drivers, represented by a strong lobby, mainly argue that all taxi-like drivers should be submitted to the same rules such as holding a class 4C driver’s licence and being part of a professional association subjecting them to precise rules and norms of conduct. At the opposite end of the spectrum, Uber argues that forcing its drivers to comply with the existing requirements involving, for instance, holding a permit, would not be a viable option. Rather, they propose to formally be recognized as a provider of ride-sharing services and to be imposed proper taxes to generate around $3 million yearly. As for the government, it has had to face many critics, stemming from the population and from the members of its own party (Liberal Party of Quebec), due to its lack of regulations or rather its slowness in taking concrete action. In response to these critics, the government recently adopted Bill 100 (click here to access the text) which imposes the payment of taxes on all drivers and gives a 90-day stay period for Uber to propose a pilot project for the regulation of their activities.

One of the issues that remains unresolved is the determination of the category of workers under which Uber drivers fall, i.e. whether Uber drivers are independent contractors or employees. In Quebec, the legislation and case law have set out various factors to be considered when classifying a worker as an employee, including: compensation, performance of the work, whether there is subordination in the performance of the work, ownership of tools and uniforms, and health and social benefits offered to the workers. On the other hand, a contract for services will mainly consist in completing tasks or supplying services for a pre-determined price. Hence, the most relevant criterion is subordination and in its absence, the worker is deemed to be an independent contractor. That is mainly what Uber is trying to argue by putting the emphasis on the fact that the drivers work wherever, whenever and for however long they choose. Succeeding in making such an argument would necessarily have implications both on a legal and fiscal standpoint. It would affect the possibility, for both parties, to enter into negotiations for the establishment of a collective agreement in the workplace, the scope of labour protection for the drivers and any indemnity relative to industrial accidents and occupational diseases to be paid by Uber if need be.

So far, this issue has never been raised in front of the Quebec judicial system. We can expect it most likely will, sooner rather than later. In California, a driver was recognized by the California Labor Commission as an employee of Uber for the purposes of accomplishing work that is at the core of Uber’s regular business and for using the tools imposed by Uber in order to provide the said transportation services  (Barbara Ann Berwick vs. Uber Technologies, Inc., a Delaware corporation, and Rasier – CA LLC, a Delaware limited liability company, case no. 11-46739 EK). Uber has appealed this decision, which we will follow with great interest. We note that the California Unemployment Insurance Appeals Board and the Bureau of Labor and Industries of the State of Oregon have both issued decisions to the same effect, classifying Uber drivers as employees. Moreover, a motion for a class-action against Uber, also stemming from the judicial district of California, was recently granted  (Douglas O’Connor, et al., v. Uber Technologies, Inc., No. C-13-3826 EMC). In this case, the judge found that the plaintiffs (three Uber drivers) raised several important legal questions, most importantly the one regarding the classification of the drivers either as employees or independent contractors. These two decisions may well be a window to the legal future that awaits Uber in other regions of the world. The question raises serious debates not only in the United States, but also in Europe and, closer to home, in Quebec. Answering this question will most likely have an impact on the new concept of a sharing economy.

Written with the assistance of Michèle Giguère, summer student.

DOL issues sex discrimination final rule

On June 14, 2016, the United States Department of Labor (DOL) Office of Federal Contract Compliance Programs (OFCCP) issued a Final Rule to revise its sex discrimination policies, updating its guidelines to provide additional guidance on what constitutes discrimination based on sex. The updated guidelines define “sex” to include gender identity, transgender status, pregnancy, and sex stereotyping.  OFCCP also clarified some aspects of the old rule, including which parts contractors are subject to, whether a contractor’s good-faith efforts to expand employment opportunities for women could result in a violation of the Rule, and whether contractors may seek exemptions under the Religious Freedom Restoration Act (RFRA).

The guidelines implementing Executive Order 11246 date back to the 1960s, but have remained largely unchanged since 1970. The Final Rule brings OFCCP’s regulations into alignment with Title VII as interpreted by courts and the EEOC.  Since most federal contractors covered by the Final Rule are already subject to Title VII or similar state laws, many are likely already required to be in compliance with many of the provisions of the Final Rule.

The largest change in the new Rule is the expansion of the definition of sex discrimination to include discrimination based on gender identity, transgender status, pregnancy, or sex stereotyping. The Rule offers protections to transgender workers by requiring that contractors allow workers to use bathrooms, changing rooms, showers, etc. consistent with the gender with which they identify.  The Rule further protects transgender workers by prohibiting employers from categorically excluding coverage for health care services related to gender dysphoria or gender transition.  Employers should be sure that their health plans do not contain any of these categorical exclusions, which are facially discriminatory under the new Rule.

Since the definition of “sex” has been expanded to cover sex stereotypes as well, the updated guidelines now prevent contractors from making employment decisions on the basis of stereotypes. Employers should also be careful not to treat employees differently due to stereotypical expectations related to an employee’s gender—for example, a contractor may not deny an opportunity to mothers that is available to fathers based on an assumption that a mother’s childcare responsibilities will conflict with her job performance while a father’s will not.

The new guidelines also contain a section on discrimination on the basis of pregnancy, which was only briefly addressed in the old rule. It incorporates the language of Title VII as amended by the Pregnancy Discrimination Act and requires that contractors provide workplace accommodations—such as light duty assignments or extra bathroom breaks—to any employee who needs them due to pregnancy, childbirth, or related medical conditions in circumstances in which the contractor provides comparable accommodations to other workers (such as those with disabilities or workplace injuries).

The new Rule adds in a section that sets forth obligations to contractors to offer employees protections from harassment and hostile work environments. The courts, EEOC, and the OFCCP had recognized for years that sex-based harassment can be a violation of Title VII and E.O. 11246—the guidelines now expressly state this.

The guidelines also address some concerns that contractors have had about their liability under the updated Rule. The Rule clarifies that contractors are subject to all the relevant parts related to the implementation of E.O.11246 (the 1970 guidelines stated that the interpretations were to be read in connection with part 60-1, which raised the question of whether contractors were subject only to that section).  The new guidelines also assure contractors that a good-faith effort to comply with affirmative action requirements of the rule—which obligate employers to expand employment opportunities for women—will not be considered a violation.  Furthermore, the updated Rule points out that employers may invoke RFRA as a basis for an exemption from E.O. 11246  and that such exemption requests will be considered on the facts of the individual case.  It clarifies that any application of the Rule that would violate RFRA is not required.  The Rule also makes it clear that religiously-affiliated contractors are permitted, when making employment decisions, to favor individuals of a particular religion.

The Rule also contains an appendix of suggested best practices for contractors. While contractors are not required to comply with this section, the DOL recommends that they consider implementing such practices. The appendix includes, among other things, avoiding the use of gender-specific job titles (such as “foreman”), designating single user restrooms, changing rooms, etc. as sex-neutral, providing appropriate time off and flexible workplace policies for men and women, and fostering an environment in which all employees feel that they are safe, welcome, and treated fairly.

 

What are the latest developments on whistleblowing in the workplace?

The legislation relating to whistleblowing in the workplace can involve claims for labor harassment, crimes in the work place, corruption, non – fulfilment of regulations relating to outsourcing, hiring of foreign employees, the Health Committee responsible for supervising health and safety matters, amongst others.

 

Article 23 of the National Constitution, Article 24 of the Administrative Code and Law 1755, 2015 regulate the right of petition in respect of a general or particular interest and the right to obtain prompt and complete resolution. In accordance with this legislation, everybody has the right to present inquiries, complaints and to whistle blow in relation to any situation that has taken place inside or outside the workplace.

 

The Labor Code establishes in Article 58 No. 2 the duty of the employees in denouncing criminal offenses or the breach of labor contract or labor legal provisions before the competent authorities.

 

According to the legislation governing anti – corruption for Public Servants, tax auditors have to denounce within 6 months following any irregularity and all public servants have the duty of  denouncing crimes and disciplinary offences and are responsible in case of any omission of such obligation.

 

Additionally, according to the opportunity principle as a mechanism through which individuals, such as employees, that have been indicted for committing a crime, may obtain an amnesty consisting of penalty reductions or even the overturning of a prosecution if they cooperate with prosecutors in whistleblowing other parties involved in the crime. Under this scenario, retaliation of a public servant against another public servant who has denounced illegal practices is a serious misconduct.

 

Colombian Criminal Procedure Code allows for the filing of anonymous criminal complaints. In this sense, employees can present criminal complaints in the workplace avoiding any possible concerns in relation to retaliation.

 

Considering the above, employees can whistle blow irregular conduct in the workplace before the competent authorities, such us criminal authorities, inside the company, Ministry of Labor, National Prosecutor between other competent authorities.

 

For this purpose, according to labor law, companies must have a Labor Environment Committee. This Committee receives and processes the complaints related to labor harassment conduct. It also provides recommendations to the Company and helps in resolving conflicts between the employees.

 

Companies can also have ethics policies, compliance departments and hotlines which establish the procedures and characteristics of a whistleblowing scheme relating to any topic in respect of the company such as corruption, harassment, anti-ethical conduct and crimes, amongst others.  According to the anti – corruption legislation, all public entities must have a space on their main website for citizens to file complaints and allegations of corruption made by employees of the entity. In this sense the web page can be used by any person regardless of his/her position as an employee.

 

We are concerned about the fact that in some cases, employees prefer not to whistle blow within the company to avoid retaliation actions, such us losing their jobs or having conflicts with other employees. Also because there are companies that identify crimes or corruption in the workplace usually in the commercial area or tender area but prefer not to denounce the crime before the competent authorities, if the employee  involved in the situation whistle blows on another employee and the complete situation inside the company.

LexBlog