Monday, November 7, 2011

Employment Standards: The Cost of Reviewing Orders to Pay

I recall the first time I carried my own OLRB proceeding:  An employer came to me after receiving a couple of Orders to Pay from an Employment Standards Officer, to the tune of about $13,000.

It was a small employer - essentially, he had purchased a franchise and had one employee so that he didn't have to spend all his time on front-line tasks - and his margins were very small.  He was a fairly recent immigrant, with absolutely no grasp of employment standards.  I have often wondered if franchisors target these demographics for exploitation:  Immigrants who are entrepreneurial and hard-working, who don't realize the cost of doing business in Ontario, and will sign a franchise agreement thinking that it will let them make a lot of money if they work hard enough.

There were two aspects of the Orders that prompted him to come to me:  The first was that he didn't think he should be liable.  The second was that, in any event, he didn't have the operating funds to pay.  So he wanted my help to fight them.

The liability issue was tricky.  It was difficult to avoid the conclusion that he owed at least a couple thousand dollars.  I was able to put together some technical legal arguments to the contrary, but they were a stretch, and I told him so.  As for the was a factual dispute.  If his version of the facts were accepted, then he wouldn't owe the money.  If the employee was believed, he would, subject to some argument about the quantum.

But the really hard part was the lack of operating funds:  In order to apply for Review of Orders to Pay, an employer must remit the full amounts of the Orders (with a cap for certain types of Orders) to the Director of Employment Standards in trust.  If you don't have the money to pay the Orders, you can't apply for review.

(If you really can't pull together the money, then there's case law that suggests that you can go for judicial review instead...but given the expense of doing so, this is something that only has practical value where the Orders are truly massive, such as in the millions of dollars.)

So if you can't pay - and the application can't be processed without payment, and there are strict timelines which will block your application if you don't make the payment in time - then you're pretty much stuck.

My client was appalled by the seeming injustice of this, as he had never heard of anything like it before - you have to pay the money first before you can seek adjudication on whether or not you owe it?  I explained to him that the law doesn't permit the OLRB to process an application without payment.  A further challenge was generated by an ambiguity on the Board's application form itself:  Payment was required for an application by the employer, but my client noticed that the form contemplates an objection by a director of the corporation, which doesn't require such payment.  The client wanted to try it that way.  Put simply, it's not novel for employers to try to get around paying that way, and it doesn't work.  The OLRB has handled these applications two ways:  Usually, they will dismiss the application outright unless there's been an Order for the director of the corporation to pay directly, though I've also seen cases in which they permitted the application to proceed, but only in relation to the director's personal liability - so the director, proceeding as a director, could not challenge the Order against the corporation itself.

With no other choice, the client was able to scrape together enough borrowed money to make the necessary payment, and we eventually negotiated a settlement of less than a third the total amounts of the Orders.  Even after taking into account legal fees, the deal still saved him thousands of dollars.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

No comments:

Post a Comment