tag:blogger.com,1999:blog-85608943812986672672024-03-05T13:38:49.851-08:00The Buchanan Ontario Workplace Law BlogA general resource for employees and management alike, covering issues old and new in the law of Ontario employment relationships.Unknownnoreply@blogger.comBlogger387125tag:blogger.com,1999:blog-8560894381298667267.post-10615738537452724472016-09-15T10:31:00.001-07:002016-09-15T12:37:46.506-07:00Caskanette v. Bong-Keun Choi Dentistry Overturned on AppealLast year, I blogged about <a href="http://lawyerbuchanan.blogspot.ca/2015/06/small-claims-court-finds-duty-to-be.html">a decision at the Small Claims Court which I found to be troubling</a>. In the case of <i>Caskanette v. Bong-Keun Choi Dentistry Professional Corporation</i>, the Small Claims Court determined that <b>both</b> parties contributed to the breakdown of the employment relationship, no warnings or progressive discipline was issued, but the employer nonetheless had just cause to terminate. I considered the decision to have a number of problem areas, and considered the result to be likely attributable, at least in part, to the fact that Ms. Caskanette did not have the assistance of a lawyer.<br />
<br />
In a decision last week, unreported as of yet, the Divisional Court overturned the decision on appeal. This time, Ms. Caskanette had the assistance of counsel - Paul Brooks of Lerners' London office.<br />
<br />
In my earlier commentary, I raised several concerns with the decision: The trial judge's non-application of the 'duty to warn' referenced case law that was easily distinguishable; the employer's conduct in trying to 'set up' a case for case was deeply inappropriate; and the expectation that Ms. Caskanette apologize proactively for her part in the dispute was at odds with the fact that she was never given a meaningful opportunity to apologize.<br />
<br />
However, I noted that, while appellate review <i>might</i> be appropriate, it is a high test, as appellate courts tend to defer to trial courts on decisions of just cause.<br />
<br />
<div style="text-align: center;">
<b>The Decision</b></div>
<br />
Justice Mitchell of the Divisional Court overturned the trial decision primarily on the basis of the failure of the trial judge to apply the 'duty to warn'. As I argued in my blog, relief from that doctrine was not available on these facts. The employer should have warned.<br />
<br />
Justice Mitchell put it thusly:<br />
<blockquote class="tr_bq">
It is trite law that an employer has an obligation to communicate its concerns to its employee and provide the employee with an opportunity to redress the wrongs committed including provide an apology if the circumstances warrant one. While we can speculate what Ms. Caskanette may have done if provided with an opportunity to apologize, we will never know because that opportunity was not presented to her. The employer holds most, if not all, the high cards in the employer/employee relationship hand. It has long been recognized that there is an unequal bargaining power between an employer and its employee. The employer has a duty to warn the employee that his or her conduct is unacceptable and to provide an opportunity to correct the misconduct. The duty to warn and the duty to apply progressive discipline are inextricably interwoven and are imposed on an employer so as to minimize the power imbalance. [Citations omitted]</blockquote>
This is a <u>truly excellent</u> summary of the law of progressive discipline. I'll probably end up working it into my own submissions in the future. (If any lawyers want a copy of the decision...I kind of expect CanLII to report it in due course, but if it doesn't, feel free to email me for a pdf.)<br />
<br />
However, that didn't <b>entirely</b> get Ms. Caskanette to the finish line, because the Deputy Judge also appeared to find that the culminating incident immediately prior to the termination was, in and of itself, gross insubordination sufficient to ground a just cause argument. This is a finding calling for significant deference. Justice Mitchell recognized this (while questioning the evidence underlying the finding), but regarded it as highly dubious that the insubordination could be characterized as "gross", and noted:<br />
<blockquote class="tr_bq">
Even in circumstances of gross insubordination, an employer must provide the employee with an opportunity to atone.</blockquote>
Justice Mitchell may actually be going a step too far on this statement. Just cause requires a contextual approach, and so it's hard to say as a <i>universal</i> proposition that gross insubordination always deserves an opportunity to atone, but it's generally true. Given the Deputy Judge's failure to refer to the governing precedents setting out the contextual approach, I think Justice Mitchell's treatment of this as a reversible error is a safe one.<br />
<br />
Finally, on the topic of the culminating incident - when the employer demanded that Ms. Caskanette return to work, and she didn't - Justice Mitchell concluded that it was immaterial because the employer had already decided to terminate the employment relationship.<br />
<blockquote class="tr_bq">
It is difficult to conceive how Ms. Caskanette's failure to return to work for the purpose of presenting herself for termination could be construed as insubordination. It was not the intention of the Chois to demand her return to work so that she might perform her duties as a receptionist. As the trial judge found, the intention was to fire her.</blockquote>
I might respectfully disagree with Justice Mitchell on this point. Unless the intention to terminate had been in some way communicated to Ms. Caskanette - such that she knew that this would be the result of her return to work - I can't imagine how that intention could be relevant to the expectations upon the employee in the circumstances. If I ask an employee to come into a meeting during regular working hours, generally speaking, I'm entitled to expect that employee's presence. Whether that meeting is to discuss a file, or discuss the employee's remuneration, or to discipline the employee, or to terminate the employment relationship, that expectation remains unchanged.<br />
<br />
At law, the question is whether or not just cause exists. If it exists - if the employee engaged in such misconduct as to warrant termination for cause - the extent to which the misconduct factored into the employer's actual motivation to terminate is, in most cases, totally irrelevant. I've seen cases where a poor employee was initially terminated on relatively shaky performance grounds, but where significant misconduct (such as embezzlement, for instance) was discovered after the termination. An employer, in such a scenario, is perfectly entitled to rely on the after-acquired cause rationale to justify the termination, even though they weren't aware of it when the decision to terminate was made.<br />
<br />
(Mind you, my view continues to be that this was badly mishandled - that the expectation that she work on her historical day off should have been communicated to her well in advance - and I'm not sure it's insubordination, in most contexts, for an employee to reject a schedule change on the spot that has her come in immediately on her day off.)<br />
<div style="text-align: center;">
<b><br /></b></div>
<div style="text-align: center;">
<b>Additional Damages</b></div>
<br />
I like Justice Mitchell's commentary on punitive, aggravated, and exemplary damages here:<br />
<blockquote class="tr_bq">
The defendants' conduct, albeit misguided, unprofessional, misinformed and insensitive at times, does not meet the high-water mark necessary to justify a monetary award.</blockquote>
Pretty accurate statement of the law, under the circumstances. Many plaintiff-side lawyers take issue with the fact that it is almost unheard of to award any damages against an employer these days even for significant violations of the employer's duty of good faith and fair dealing - perhaps the "high-water mark" is <b>too</b> high - but Justice Mitchell is certainly right about the law as it stands.<br />
<br />
<div style="text-align: center;">
<b>Costs</b></div>
<br />
You may recall that Ms. Caskanette had a hefty costs award made against her - $5500 to the corporate defendant, and $1250 to each of two personal defendants, plus $325 in disbursements, plus HST.<br />
<br />
This was, in part, due to the fact that the two personal defendants should never have been named, and furthermore that she engaged in unnecessary pre-trial motions, etc., driving up costs.<br />
<br />
While Ms. Caskanette's success on the appeal against the corporate defendant obviously results in a reversal of that costs award, she did not appeal the dismissal as against the personal defendants (and rightly so). Her counsel asked the court to set aside that costs award nonetheless, and Justice Mitchell refused, finding that the trial judge had the discretion to make that award, and that it was appropriate under the circumstances.<br />
<br />
Personally, I wonder if there might be a better pitch to be made for a Sanderson Order (or a Bullock Order) - the Small Claims Court Rules on costs make costs payable by the unsuccessful party or parties to the successful party or parties. The reversal on the appeal means that Ms. Caskanette is no longer the unsuccessful party; rather, she is now the successful party, and the corporate defendant was the unsuccessful party. Accordingly, there's a fair argument that the success on the appeal makes the costs of the successful defendants <i>presumptively</i> payable by the unsuccessful defendant, instead of the plaintiff.<br />
<br />
Of course, there's still a very significant discretion on the court in costs-related matters, and under the circumstances, where the personal defendants should never have been named and costs were driven up unnecessarily by the plaintiff, it strikes me as unlikely that the court could have been moved off of the result here.<br />
<br />
<div style="text-align: center;">
<b>Conclusion</b></div>
<b><br /></b>
It bears remembering that this was a low dollar value case - the judgment she obtained was $7,575. (To Justice Mitchell's credit, she exercised her discretion to grant judgment in the face of the trial judge's errors, adopting the Deputy Judge's assessment of damages, rather than sending it back down to be re-heard. Certainly the right call.)<br />
<br />
But by succeeding in the appeal, Ms. Caskanette not only obtained that judgment, but also reversed a large part of the costs award ($5,850 plus tax), obtained her own disbursements from the trial (interestingly, the Justice Mitchell did not award her the costs to compensate her for her own inconvenience, typically capped at $500), and will presumably get a costs award in connection with the appeal.<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">.</span><br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-64329380643177909102016-07-15T21:32:00.001-07:002016-07-15T21:46:45.095-07:00Where the Wilson v. AECL Dissent Went Wrong<a href="http://lawyerbuchanan.blogspot.ca/2016/07/wilson-v-aecl-supreme-court-allows.html">I posted yesterday about the new SCC decision in <i>Wilson v. AECL</i></a>, finding in favour of the consensus interpretation of the <i>Canada Labour Code</i>, that Division XIV of Part III has the impact of making not-for-cause terminations impermissible in certain cases.<br />
<br />
As I explained yesterday, there was a three-judge dissent which found that the adjudicator's decision should be reviewed on the standard of correctness (which makes sense to me), and that the adjudicator's decision was, in fact, incorrect. This bears some deeper analysis.<br />
<br />
As a preliminary remark, I should highlight that the dissent frequently refers to the question as being whether Division XIV has the effect of "prohibiting all dismissals without cause". Respectfully, that's a drastic oversimplification of the question, which has an important impact on the reasoning. There is no question that, even for employees that fall within the Division XIV framework, the not-for-cause dismissal framework continues to apply for dismissals arising from a 'lack of work' or 'discontinuance of a function'.<br />
<br />
<div style="text-align: center;">
<b>What is Unjust Dismissal?</b></div>
<br />
This question is at the crux of the case. Non-lawyers will often confuse the term "unjust dismissal" with the similar-sounding term "wrongful dismissal". Yet whereas "wrongful dismissal" is well-defined at law, meaning a dismissal in contravention of the implied or express contractual terms surrounding dismissal, "unjust dismissal" is quite devoid of definition altogether. It's a construct that, to my knowledge, only exists under <a href="http://www.canlii.org/en/ca/laws/stat/rsc-1985-c-l-2/latest/rsc-1985-c-l-2.html#sec240_smooth">Division XIV of the <i>Canada Labour Code</i></a>.<br />
<br />
The language in the <i>Code</i> is fairly simple: A non-managerial non-union employee who has been dismissed, after at least 12 months of employment, is entitled to ask for a reason - this differs from the common law, where employers have no free-standing obligation to give a reason for dismissal (though one might argue about how the duty of good faith and fair dealing would apply to such an issue). If the employee feels that the dismissal is 'unjust', he or she may make a complaint. Following a brief investigation process, the matter may be referred to an adjudicator; if the adjudicator determines that the dismissal was 'unjust', there's a wide range of remedies available, including lost income damages and reinstatement.<br />
<br />
So what does it mean for a dismissal to be 'unjust'?<br />
<br />
That is, perhaps, less clear. There's a clear exclusion for employees dismissed due to lack of work. I think we can safely assume that a 'just cause' termination generally isn't going to be 'unjust'. But where exactly is the line to be drawn?<br />
<br />
<div style="text-align: center;">
<u>The Wakeling Interpretation</u></div>
<br />
Adjudicator Wakeling, now a Judge on Alberta's Court of Appeal, decided several cases on this issue, and essentially led the movement to the interpretation favoured by the dissent.<br />
<br />
In essence, it appears that he viewed Division XIV as creating a statutory <i>procedure</i> for redress, without modifying substantive rights. Bearing in mind that most employees are entitled to some form of contractual or common law notice, he regarded Division XIV as primarily being a means of redress for the failure to give such notice - thus, "unjust dismissal" is basically indistinguishable from "wrongful dismissal".<br />
<br />
As Associate Dean Ross of the University of Alberta put it in <i>Jalbert v. Westcan Bulk Transport Ltd.</i>:<br />
<blockquote class="tr_bq">
Adjudicator T. Wakeling determined [in Knopp v. Westcan Bulk
Transport Ltd.] that for a dismissal to be unjust, there must not only be a
lack of just cause, but also a failure to provide the employee with “the more
generous of the dismissal packages required by sections 230(1) and 235(1) of
the Code and at the common law”... . He was of the view that the Code’s
preservation of common law remedies, and its lack of an express provision
giving employees a “right to the job” meant that s. 240’s reference to “unjust”
dismissal should be interpreted in the manner consistent with common law
principles, and not in a manner that would create a “drastically different
legal order”.</blockquote>
<div class="MsoNormal">
<o:p></o:p></div>
The role of the reinstatement remedy, on the Wakeling interpretation, is less clear. It's clear that he neither viewed reinstatement as a right nor presumptive right, and he even periodically had his hand slapped on judicial review for not providing adequate reasons. He himself once owned criticisms from the opposing camp about some adjudicators denying reinstatement on "flimsy" grounds, acknowledging that despite having found many dismissals to be 'unjust', "I have never ordered a former employer to reinstate a former employee."<br />
<br />
<div style="text-align: center;">
<b>The Consensus Interpretation</b></div>
<br />
Wakeling, Ross, and a handful of others were among a small minority who viewed the <i>Code</i> in this light.<br />
<br />
Most adjudicators would find that, subject to the exceptions indicated above, most not-for-cause dismissals were 'unjust', and reinstatement was a presumptive remedy. When it went to court on judicial review (before the <i>Wilson</i> case, of course), while there was a great deal of deference to adjudicators, the courts tended to side against the Wakeling interpretation. For instance, in <i>AECL v. Sheikholeslami</i> in 1998, Justice Letourneau remarked:<br />
<blockquote class="tr_bq">
<span style="background-color: white;">It is true that reinstatement is not a right even after a finding of unjust dismissal, but, as I. Christie </span><i style="background-color: white;">et al</i><span style="background-color: white;">. properly point out, the exception to reinstatement should be applied very cautiously otherwise the risk exists that an unjustly dismissed employee will be penalized by losing his job.</span><span style="background-color: white;"> Indeed, a finding of unjust dismissal is a finding that the work relationship should not have been severed in the first place. In such cases, the presumption is, in my view, clearly in favour of reinstatement unless there is clear evidence to the contrary.</span></blockquote>
So there are a number of cases where reinstatement isn't ordered, sometimes because the relationships involved are just too strained to have a productive relationship moving forward, but it's available in many cases, and it's an onerous remedy to impose on employers.<br />
<br />
It has led to a number of interesting cases, where employers have tried to avail themselves of the Wakeling logic by providing a generous package in lieu of notice, to argue that this cures any 'unjust' nature of the dismissal, immunizing them against reinstatement. The argument usually failed.<br />
<br />
(This slightly reminds me of something my articling principal said in my first week of work, many years ago, that a dismissal can't contravene the <i>Human Rights Code</i> if it's accompanied by an offer of a generous package. That seemed strange to me at the time, and I have no hesitation now in saying that she was wrong. Practically speaking, that's something that happens often enough - employers dismissing employees for highly questionable reasons, but offering them enough money that the employee would rather just take the payout and sign the release rather than trying to litigate. Every release has its price. But that shouldn't be confused with saying that the package makes it legal.)<br />
<br />
<div style="text-align: center;">
<b>The Intellectual Basis for the Wakeling Interpretation</b></div>
<br />
In many ways, the Wakeling Interpretation is the more intellectually rigourous one. I respect the approach, even if I disagree with its conclusions. <br />
<br />
Essentially, the argument advanced by the <i>Wilson</i> dissent hinges significantly on the issue of 'concurrent jurisdiction': Division XIV expressly leaves intact the civil action in wrongful dismissal, giving employees the <i>option</i> of pursuing the issue through the statutory mechanism, or through the courts.<br />
<br />
But a civil action in wrongful dismissal is premised on a breach of contract, of the employer being required to give employees 'reasonable notice' of dismissal. If the <i>Code</i> has the effect of displacing the common law, to the extent that an employer simply cannot terminate on reasonable notice, then it is incoherent to say that the employee still has a civil action for a termination without reasonable notice.<br />
<br />
I very frequently have to explain to employee clients, "Yes, your employer is entitled to fire you without any reason at all; they just have to give you <i>notice</i>." That's the entire basis of the wrongful dismissal regime, and if the employer is <i>not</i> entitled to dismiss in the first place in certain Federal contexts, the intellectual basis for wrongful dismissal appears to fall apart.<br />
<div style="text-align: center;">
<b><br /></b></div>
<div style="text-align: center;">
<b>Why That's Wrong:</b></div>
<div style="text-align: center;">
<b>The Existence of a Reinstatement Regime Doesn't Preclude Contractual Notice Requirements</b></div>
<br />
The majority has a number of good reasons to infer a Parliamentary intention to create new substantive rights - for instance, the Hansard actually indicates an intention to protect employees against arbitrary dismissals - and the dissent's response to these, that the Hansard shows they didn't want to give <i>exactly</i> the same protections as to unionized employees, is unsatisfying.<br />
<br />
Similarly, the dissent argues that the provision directing the adjudicator to "consider" whether the dismissal was unjust seems to be at odds with a contention that all not-for-cause dismissals are inherently unjust. This is a particularly weak argument: One can fairly assume that, if the dismissal were legitimately for cause, the adjudicator would not 'consider' the dismissal to be unjust.<br />
<br />
But the 'concurrent jurisdiction' issue is trickier, more compelling on its face, so I'll focus on that.<br />
<br />
<div style="text-align: center;">
<u>The <i>Trites</i> Trap: Reading Employment Standards as Permissive</u></div>
<br />
To oversimplify the point a little, employment standards provisions don't so much <i>displace</i> the common law as get superimposed on top of it. When courts start referring to employment standards legislation as actually <i>displacing</i> the common law, we start getting whacky decisions like <i><a href="http://lawyerbuchanan.blogspot.ca/2016/06/superior-court-declines-to-follow.html">Trites v. Renin Corp</a>.</i> (Yes, that is, fundamentally, where the misinterpretation
started: "Renin relies on <i>Elsegood
</i>in support of the proposition that statutes enacted by the legislature displace
the common law.")<br />
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Yes, the language of 'displacement' is strictly correct, but
they don't purport to displace the common law in any comprehensive way. This is an important nuance, because the
common law has evolved in a way that gives employees a number of face-value
rights and protections in the first place, and employment standards laws
usually leave those protections in place, quite expressly, while creating
additional protections for employees that exist in parallel.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Employment standards laws typically create a bare minimum
entitlement to notice and/or termination pay and/or severance pay. Under Ontario's ESA, an employer can provide
notice or termination pay. At common
law, the default obligation is notice - and failure to give appropriate notice
is usually a breach of contract. These
aren't inconsistent. An employer can
comply with its statutory obligations, but still breach its contractual
obligations, and then be held liable for breaching its contractual
obligations. Or common law doctrines
might allow a 'just cause' dismissal without notice, under circumstances where
statutory termination pay is still required because the statutory test for such
misconduct is slightly different.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
These different regimes co-exist simultaneously.<o:p></o:p></div>
<br />
Part III of the <i>Canada Labour Code</i> is no different. Section 168(1) specifies that the Part doesn't affect any rights or benefits more favourable to the employee; section 261 specifies that no civil remedy of an employee is affected by the Part. This is the combination of factors that exists in every Canadian employment standards legislation I've read, that prevents us from ever reading an employment standard as being permissive on the employer - which is, in part, why <i>Trites v. Renin Corp</i> was so wrong, concluding that the <i>ESA</i> created a free-standing right for employers permitting them to implement temporary layoffs, regardless of what express or implied terms might be in the contract.<br />
<br />
When interpreting the provisions of the <i>Code</i> that guarantee minimum notice and severance, sections 230 and 235, the dissent falls into the <i>Trites</i> trap of reading the provisions as being permissive:<br />
<blockquote class="tr_bq">
<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify;">Therefore, as a baseline, Part III of the </span><i style="background-color: white; font-family: "Times New Roman", serif; font-size: 16px; text-align: justify;">Code</i><span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify;"> permits federally regulated employers to dismiss their employees without cause. To conclude otherwise would ignore the text of ss. 230 and 235 of the </span><i style="background-color: white; font-family: "Times New Roman", serif; font-size: 16px; text-align: justify;">Code</i><span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify;">.</span></blockquote>
Part III of the <i>Code</i> does no such thing. Period. It <i>presupposes</i> that there are circumstances where employees can be dismissed without cause (and nobody's saying there aren't), and guarantees minimum entitlements in such cases. It does not stand, on its own, as authority permitting a dismissal without cause in any particular class of cases.<br />
<br />
That is, perhaps, not a critical error in this case. But falling into the <i>Trites</i> trap appears to have led the dissent down the wrong path, in failing to appreciate the quintessentially typical interplay between reinstatement regimes and traditional wrongful dismissal remedies.<br />
<br />
<div style="text-align: center;">
<u>Reinstatement Regimes Coexisting with the Wrongful Dismissal Framework</u></div>
<br />
Many employment statutes, from many different Canadian jurisdictions, have express or implied reinstatement remedies. Ontario's <i>ESA</i> has its own reinstatement remedies, albeit expressly narrower than those in the <i>Canada Labour Code</i>: Section 104 of the <i>ESA</i> specifies that reinstatement is available where an employee was dismissed in contravention of the provisions dealing with employer reprisals, among other things. This, too, co-exists with the contractual requirement to give reasonable notice of dismissal.<br />
<br />
As do the provisions in the <i>Labour Relations Act</i>, <i>Human Rights Code</i>, and <i>Occupational Health and Safety Act</i>, which prohibit dismissal for certain reasons, and allow for reinstatement as a result of such terminations. (I refer to such dismissals as being 'unlawful' - prohibited by statute - as distinct from merely 'wrongful'.)<br />
<br />
These all impose <u>limitations</u> on the employer's contractual right to dismiss on notice, but none of them actually fully displace it. The right to dismiss on notice is residual: In circumstances where dismissal isn't unlawful, you may still dismiss on notice.<br />
<br />
<b>And it is NOT a defence to a wrongful dismissal action to say that the dismissal was, in fact, unlawful.</b><br />
<b><br /></b>
If, for example, a Federally regulated employer dismissed an employee for a reason which contravenes the <i>Canadian Human Rights Act</i>, and the employee sued in wrongful dismissal seeking pay in lieu of notice (NB: not human rights damages), the employer could not defend the action on the basis that the unlawful nature of the termination somehow undermined the employee's contractual entitlements that would have flowed from a lawful termination. That's simply not an argument that makes any sense whatsoever. Yet it's fundamentally the same logic that grounds the Wakeling Interpretation.<br />
<br />
And this is where we see the importance of the preliminary note I made earlier: The <i>Code</i> most certainly does not prohibit <b>all</b> dismissals without cause. On the consensus interpretation, it creates a much wider scope of 'unlawful' termination than exist in most statutory regimes, but it still leaves the traditional wrongful dismissal framework as having residual application in cases where, for example, the dismissal is due to a lack of work or discontinuance of a function.<br />
<br />
In other words, the consensus interpretation doesn't imply a right <i>not to be fired</i>, so as to be fundamentally inconsistent with an express or implied obligation to give notice of termination in the way argued by the dissent. An employee's job is still in jeopardy in circumstances of good faith restructuring, and in those cases the employee will be contractually entitled to notice, per the 'usual' case.<br />
<br />
<div style="text-align: center;">
<b>Other Problems with the Wakeling Interpretation</b></div>
<br />
There are, in my view, two key things that tell us that this isn't just a procedural option for enforcing existing common law rights. Firstly, at common law, reinstatement simply doesn't exist. A regime where employers are entitled to terminate is fundamentally inconsistent with a reinstatement regime.<br />
<br />
<div style="text-align: left;">
Secondly, the dissent's belief that the purpose of Division XIV is to "<span style="background-color: white; text-align: justify;"><span style="font-family: "times new roman" , serif;">provide a low cost, efficient, and effective procedural mechanism" is simply irreconcilable with the </span></span>differential treatment between 'lack of work' dismissals and other dismissals.</div>
<br />
<div style="text-align: center;">
<u>Reinstatement Does Not Exist At Common Law</u></div>
<br />
The fact that Adjudicator Wakeling admittedly never ordered reinstatement, and was sparse and 'flimsy' in his reasons for doing so, is telling, and is where the intellectual rigour of the approach fails. Any reasonable interpretation of Division XIV simply <b>must</b> include some circumstance in which reinstatement would be an appropriate remedy.<br />
<br />
The dissent argues, in what I believe is the only semi-cogent way of delineating such a test, that the reinstatement remedy is reserved for cases where the dismissal was "discriminatory or retaliatory" - and points to the fact that Provincial employment standards statutes do have reinstatement regimes in such cases. Yes, they do. Quite expressly, and very specifically and narrowly. It is rather self-defeating that the dissent tried to make this argument right after arguing that Nova Scotia and Quebec, in creating 'only just cause' regimes, did so "expressly".<br />
<br />
But let's be clear, we're still talking about the creation of a substantive right and remedy. For all the dissent's discussion of there needing to be an express intention to displace the common law, etc., there's no read possible read here which doesn't do so. <b>Reinstatement is only a viable remedy in the face of an 'unlawful' termination.</b> Full stop. The dissent's claim is simply that the <i>scope</i> of the unlawful terminations created and remedied by Division XIV is narrower than the consensus interpretation, limited only to cases where there's discrimination or retaliation. Or maybe certain bad faith cases?<br />
<br />
'Discriminatory' is tricky, because while labour adjudicators aren't "wholly without jurisdiction" to apply the <i>Canadian Human Rights Act</i>, <a href="http://www.canlii.org/en/ca/fct/doc/2010/2010fc556/2010fc556.html">that's not a simple analysis</a>. Creating a structure within the <i>Canada Labour Code</i> to address a wrong under the <i>CHRA</i> needs a bit more guidance than that.<br />
<br />
Furthermore, given the already restricted range of cases to which Division XIV applies in the first place (non-managerial, employed for 12 months or more, not dismissed for lack of work), it's strange that they would put the reinstatement remedy into <i>that</i> quasi-wrongful-dismissal process, instead of the other processes available to everyone...<br />
<br />
...except, to a very limited extent, <u>they actually did</u>.<br />
<br />
As it happens, the anti-reprisal provisions in Part III are actually pretty thin. There's no guarantee of non-reprisal, but there's an offence designated for certain narrow classes of reprisal: If you dismiss somebody for testifying in an inquiry under Part III, or for giving information to the Minister or an inspector regarding wages, hours of work, annual vacation, or working conditions, then that's an offence under s.256, and s.258 requires that, on conviction, there will be an order to reinstate the employee in question.<br />
<br />
Ultimately, creating a reinstatement power, with zero direction as to how it is to be used, seems deeply inconsistent with a contention that it's only to be applied in a narrow range of cases, and it seems very weird to create a substantive anti-reprisal remedy and then only apply it to a portion of your employees.<br />
<br />
And perhaps most importantly, the Wakeling Interpretation simply provides no cogent reason for drawing the line <i>there</i>. Given that this point absolutely requires a concession that Division XIV creates substantive rights and remedies, you need some rational basis for assigning <i>which</i> circumstances will call for the reinstatement remedy. The consensus interpretation says, presumptively, <b>all</b> terminations of non-managerial employees with 12 months or more of service that aren't for cause or for lack of work or discontinuance of a work function. That's pretty well grounded on a face value reading of the statute. When you start moving away from that, and trying to add additional qualifiers on what makes a dismissal 'unjust'...well, then you're just making stuff up that Parliament didn't put in.<br />
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<div style="text-align: center;">
<u>The Effect of Exclusion on Interpretation</u></div>
<br />
The dissent ultimately concludes that Division XIV is really quite simple and minimalistic, creating a simpler and easier-access road to adjudication of wrongful dismissal disputes.<br />
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For some people.<br />
<br />
An administrative tribunal capable of determining common law dismissal entitlements is, arguably, a good idea. Professor David Doorey has argued that the processes under Ontario's <i>ESA</i> should be interpreted as including an adjudication of common law pay in lieu of notice. (To be clear, they aren't presently, and I disagree with his argument on the point.)<br />
<br />
But to <i>exclude</i> people dismissed, on a good faith basis, for lack of work or discontinuance of a function, from such a framework, would be completely nonsensical. All other things being equal, these cases are simpler and easier in every way (and more suitable to summary adjudication in an administrative tribunal context) by contrast to the 'lack of fit' or 'alleged cause' cases. To send <i>these</i> employees to the longer, more expensive, more drawn out court process to claim their entitlements flowing from dismissal, and to give a more accessible process to the employees with more complex claims, would be frankly bizarre and completely irrational.<br />
<br />
Likewise with the exclusion of employees who have not completed 12 months of service. Such employees will usually have entitlements, but, all other things being equal, they'll tend to be lower-value claims, more in need of a cost-effective accessible administrative process.<br />
<br />
If the dissent were right, that Parliament's intention was simply to create a process that improves access to justice, these exclusions would be roughly the <i>opposite</i> of what we would expect to see. Typically, an expeditious process with less rigourous procedural protections, relaxed rules of evidence, etc., is more suited to claims that are simpler and lower-value in nature, and less suited to high-value complex claims (such as long-service employees who have been dismissed for contentious reasons).<br />
<br />
On the other hand, if we're looking at creating substantive protections against not-for-cause termination, then this is <i>exactly</i> what we would expect to see: Something that gives greater protection to employees who have been there for longer, but which doesn't constrain employers against making legitimate and good faith changes to their business model.<br />
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<div style="text-align: center;">
<b>Conclusion</b></div>
<b><br /></b>
Ultimately, I continue to be of the view that the dissent got the 'standard of review' question 100% right: The standard should be correctness, for a question like this.<br />
<br />
But, at the end of the day, in my view, the consensus interpretation is the correct one. So, all things considered, I think the case was resolved correctly, if for the wrong reasons.<br />
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*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">.</span><br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-52560811002777211052016-07-14T14:53:00.002-07:002016-07-14T14:53:37.347-07:00Wilson v. AECL: Supreme Court Allows Appeal by Unjustly Dismissed EmployeeThis is a case that's been generating waves in the Labour and Employment bar across the country, and the Supreme Court just shot down what had been a bit of an earth-shattering decision by the Federal Court of Appeal.<br />
<br />
First off, some mandatory constitutional law for context: The vast majority of employment relationships in the country are regulated by the Provincial governments. So when you see me writing about Ontario's <i>Employment Standards Act</i>, that's why.<br />
<br />
However, organizations that fall under a Federal regulatory mandate, such as telecommunications, banking, and some finance, instead have their employment relationships governed by the Federal <i>Canada Labour Code</i>. This is a relatively comprehensive statute, covering matters such as employment standards, labour relations, occupational health and safety, and others.<br />
<br />
There are several differences between the <i>Code</i> and the various Provincial employment laws, but few differences are more stark than 'reinstatement' provisions in the <i>Code</i>.<br />
<br />
<div style="text-align: center;">
<b>Reinstatement Remedies versus the Entitlement to Fire</b></div>
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Outside of the non-union context, it's <i>exceptionally</i> rare that employees can get reinstatement remedies in Provincially regulated environments. As the Ontario Court of Appeal recently upheld in <i><a href="http://www.canlii.org/en/on/onca/doc/2016/2016onca421/2016onca421.html">Fair</a></i> (I haven't posted a commentary on that decision yet, but <a href="http://lawyerbuchanan.blogspot.ca/2014/10/divisional-court-upholds-reinstatement.html">I did when it came out of the Divisional Court</a>), the Human Rights Tribunal of Ontario can reinstate an employee dismissed for reasons which contravene the <i>Human Rights Code</i>. It's also well established that the Ontario Labour Relations Board can order reinstatement where employees were dismissed because of their union activities, and there are a handful of other 'statutory' reasons why termination is prohibited and reinstatement is available.<br />
<br />
But those are the exception. Outside of those few specific 'bad reasons' to fire an employee, at common law, you don't even <i>need</i> a reason to dismiss an employee. I could walk into my office one morning and say to my employees, "Leafs lost; that means that you have to draw straws to see which one of you gets fired." As an employer, I'm totally entitled to do that. If I don't give the employee adequate notice of dismissal, it becomes a "wrongful" dismissal, and I'll be liable to provide the employee with pay in lieu of notice, but that doesn't detract from the fact that I'm <i>entitled</i> to terminate the employment relationship.<br />
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In Federally regulated environments, however, there's an additional framework - that of "unjust" dismissal: The consensus view for a long time has been that, for non-managerial and non-union employers, termination by a Federally regulated employer must either be because of a lack of work or elimination of the position, or for 'cause' (which is similar, if not identical, to the high standard of 'just cause').<br />
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<b><br /></b></div>
<div style="text-align: center;">
<b>Procedural History</b></div>
<br />
Mr. Wilson was hired by Atomic Energy of Canada Limited (AECL) in 2005. He worked for over four years before he was dismissed, without cause, in 2009. He filed an Unjust Dismissal complaint, and when the Ministry investigated, the employer took the position that he had been offered a "generous dismissal package", and therefore its obligations under the <i>Code</i> were satisfied.<br />
<br />
Wilson also claimed that the dismissal was motivated by a reprisal - a whistleblower issue, of sorts. This is not material to the case as it's currently before the courts, as the matter proceeded on the preliminary issue as to whether or not a 'without cause' dismissal, accompanied by a severance package, could be a 'just' one.<br />
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Stanley Schiff, a Professor Emeritus from the University of Toronto's Faculty of Law, was appointed to hear and determine the preliminary issue, and he concluded that a severance package simply could not render just an otherwise unjust dismissal - this being the consensus position among labour arbitrators up to that point, having been upheld at times at the Federal Court.<br />
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The employer brought an Application for Judicial Review to the Federal Court. The Federal Court concluded that the adjudicator's decision was 'unreasonable', and the Federal Court of Appeal agreed.<br />
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<div style="text-align: center;">
<b><a href="http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16062/index.do">The Supreme Court Decision</a></b></div>
<b><br /></b>
With four sets of reasons (one of which, by Justices Moldaver, Cote, and Brown, dissented in the result), this turns out to be a complicated case, more about certain principles of administrative law than about substantive labour and employment law.<br />
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The case turns out to be about 'standard of review': Should adjudicators such as Professor Schiff be afforded deference so long as their decisions are 'reasonable'? Or, for decisions of this nature, must he be held to a standard of correctness?<br />
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Put more simply, is it enough to warrant judicial intervention that a judge might <i>disagree</i> with his conclusion, or must the conclusion be unreasonable on its face?<br />
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The dissenting judges regard the 'unjust dismissal' provisions of the <i>Code</i> as <i>only</i> creating a procedural option, without changing the substantive rights or obligations of the parties to the employment relationship. I could spend a great deal of time parsing this argument, and examining its consequences, starting with the question of <i>what</i> rights it would protect, if we regarded it in those terms.<br />
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The standard of review, according to the dissent, should be correctness: The question appears to be strictly one of <i>law</i>, of interpretation of the terms of the <i>Canada Labour Code</i>, and the dissent is deeply concerned about a trend toward deference to administrative decision-makers when interpreting their own governing statutes, undermining the principles of certainty and predictability - because adjudicators are left to their own devices in interpreting the <i>Code</i>, Federally regulated employers can't really know their own substantive rights and obligations, because it kind of depends on what adjudicator they draw...<br />
<br />
There's a certain appeal to the dissent's viewpoint on the 'standard of review' question. Yet I think they're overstating the uncertainty, to an extent. There was a consensus viewpoint. Yes, certain adjudicators might go another way, but they're a small minority - a tiny handful of adjudicators that have disagreed with the consensus over the course of decades.<br />
<br />
The other six judges, however, considered the appropriate standard of review to be 'reasonableness' - and they considered the adjudicator's decision to be reasonable. They reviewed the legislative history of the provisions in question, and Parliament's Hansard, showing clear indicia that the provisions were intended to bring in job security protections comparable (though not identical) to those of unionized employees.<br />
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The tendency of labour arbitrators to apply union-esque philosophies, in a modified way, is therefore consistent with Parliament's intention, and not unreasonable.<br />
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However, there's another split. Justice Abella proposed that the 'correctness' standard be done away with altogether - that the standard of 'reasonableness' be applied in all cases, with due regard to the circumstances of the decision.<br />
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Justice Cromwell, while agreeing with Justice Abella's disposition of the case, rejected this approach. He argued that the existing framework is fundamentally sound and simply needs some fine-tuning, rather than a full overhaul.<br />
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All the other judges - both in the concurring and dissenting reasons - said they "appreciate" Justice Abella's efforts to stimulate a discussion on the point, but consider unnecessary to redefine standard of review in the context of this particular case.<br />
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<div style="text-align: center;">
<b>Commentary</b></div>
<br />
The takeaway here is actually fairly simple: The consensus view, limiting Federal not-for-cause terminations, has been endorsed as reasonable by a majority of the Supreme Court of Canada, so Federally regulated employers should proceed <i>very</i> cautiously with not-for-cause dismissals moving forward. Period.<br />
<br />
But as to the finer legal points, there's more to be said. There's a superficial appeal to Justice Abella's proposal to eliminate the 'correctness' standard. Put all 'deference' issues on the sliding scale of reasonableness.<br />
<br />
But, superficial appeal aside, I would have significant reservations about that approach. I'm something of a legal intellectual purist: I believe that all strictly legal questions should have <i>one</i> correct answer, based on consistent sets of common law principles and statutory interpretation principles. Facts quickly muddy up the waters of any such discussions, but the <i>law</i> itself should be objective.<br />
<br />
And this is what the 'correctness' standard is typically reserved for: Questions of pure law.<br />
<br />
Accordingly, I think the dissenting 'standard of review' analysis is solid: The question "Does the <i>Code</i> prevent terminations on a without cause basis" is one that should have a fixed answer. It's a legal question, a question of statutory interpretation, and there should be a <i>right</i> answer to it. Not "It depends on which adjudicator you get". Mind you, I'm not sure I agree with their substantive answer - I find it difficult to reconcile the availability of a reinstatement remedy with an unconstrained management right to fire - but I think that it's a question that the court can and should answer determinatively, rather than kicking it over to administrative decision-makers.<br />
<br />
On a personal note, congratulations to my friend and colleague <a href="http://glgmlaw.com/our-people/lauren-wihak/">Lauren Wihak</a>, whose 2014 paper "Whither the Correctness Standard of Review" was cited by both Justice Abella and the dissent.<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-56939230387575901952016-07-04T23:20:00.001-07:002016-07-05T09:21:10.713-07:00Fact-Check: Did Maternity Leave Really Arise Out Of A Postal Strike?With the prospect of a postal strike on the horizon, I've been seeing increasing amounts of propaganda on social media, including this graphic (which appears to have been proliferated in connection with the 2011 strike):<br />
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<a href="https://supportpostalworkers.files.wordpress.com/2011/05/maternity_spw.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://supportpostalworkers.files.wordpress.com/2011/05/maternity_spw.jpg" width="247" /></a></div>
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Seems to make sense, no? I mean, we're well accustomed to the idea that certain benefits, like <a href="http://www.politifact.com/truth-o-meter/statements/2015/sep/09/viral-image/does-8-hour-day-and-40-hour-come-henry-ford-or-lab/">the five-day work week</a> and occupational health and safety protections, are the result of pressures by trade unions, so there's nothing unbelievable about the idea that mat leave might have arisen from labour disputes.</div>
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<br /></div>
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Except that this particular claim is totally and completely false.</div>
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<div>
Let's parse the post for a moment: If you read all the fine print (you might have to zoom in a little), then it looks like the claim here is that the 1981 postal strike started the move toward what we now know as EI maternity/parental benefits.</div>
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<br /></div>
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It didn't. In fact, <a href="http://www.statcan.gc.ca/pub/75-001-x/00303/6490-eng.html">EI first introduced maternity benefits in 1971</a>, offering 15 weeks of benefits to qualifying mothers. In 1990, additional parental benefits (available to fathers or mothers) were added, and expanded in 2000.</div>
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<br /></div>
<div>
The union's push in 1981 didn't have anything to do with any of that. The relevant issue, for our purposes, was that the EI (well, UI, at the time) benefits weren't enough: Only 55% of insurable earnings. So they negotiated a supplementary benefit from the employer (who in this case happens to be a Crown corporation) - getting more money <i>over top</i> of the EI benefit.</div>
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<br /></div>
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Okay, so the literal reading of this graphic's claim...isn't what happened. But maybe the postal workers started a movement to improve the scale of EI benefits? Nope, 35 years later, they're basically unchanged.</div>
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<br /></div>
<div>
Or maybe they can take credit for starting a trend of employer-paid supplementary benefits, that might have percolated down to the general public? No, not really that either. As of 2008, <a href="http://www.theglobeandmail.com/report-on-business/employer-maternity-leave-top-ups-rare/article4307868/">only about 20% of new mothers were entitled to supplementary employer-paid maternity benefits</a>. Most of those were in the public sector, with about half of new mothers in the public sector being entitled to supplementary benefits for, on average, about 22 weeks. In the private sector, it's quite rare to get any such benefits, and it's for a much shorter period of time. (It's not even true that the postal workers were the first to get such benefits, but it clearly isn't something that's translated into the wider workplace like the five day work week.)</div>
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<br /></div>
<div>
In other words, if you're one of the 20% of women who get some form of supplementary maternity benefit from your employer, then you can look at the 1981 strike as at least pushing on that issue a little. If you're <i>not</i> such a person, however, then none of your mat leave rights trace back to the 1981 strike in any way.</div>
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I first saw the graphic because it was shared by a labour lawyer friend of mine...and so I feel that the occasion calls for this:</div>
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<a href="https://cdn.meme.am/instances/500x/64746834.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://cdn.meme.am/instances/500x/64746834.jpg" width="320" /></a></div>
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*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">.</span><br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-10392461702612813342016-06-27T15:49:00.003-07:002016-06-27T15:49:28.792-07:00What's the Minimum Reasonable Notice Period?Throughout English-speaking Canada, if you don't have a valid express contractual clause setting out your entitlements on termination in non-union environments, the usual result is that you're entitled to "reasonable notice".<br />
<br />
Much of the job of an employment lawyer is figuring out what's "reasonable" in a given scenario, based on factors like length of service, age, character of employment, and availability of replacement employment.<br />
<br />
In Ontario, at least, it's pretty well-established that there's <a href="http://www.canlii.org/en/on/onca/doc/2006/2006canlii14/2006canlii14.html">a soft ceiling of 24 months</a>. There are exceptional cases, but you rarely see more than 24 months.<br />
<br />
But what's the minimum?<br />
<br />
There's no question that assessing the notice periods for short service employees can be <a href="http://lawyerbuchanan.blogspot.ca/2014/04/1-year-employee-entitled-to-four-months.html">a relatively difficult task</a>, so the entitlements of 'new employees' are hotly debated. There's long been an attitude among employers that 'reasonable notice' should never really be much more than about a month per year of service. In the 1990s, respected employment lawyer and mediator Barry Fisher used a comprehensive database he developed to prove that this "rule of thumb" didn't really track the outcome of cases, especially for particularly short-service and particularly long-service employees. In 1999, in the case of <i><a href="http://canlii.ca/t/1f97d">Minott v. O'Shanter</a></i>, the Ontario Court of Appeal expressly rejected the "rule of thumb", finding that it placed an undue emphasis on length of service, to the detriment of the other factors.<br />
<br />
Accordingly, while it's always surprising to people outside of employment law, it's not at all uncommon to see employees with less than a year of service getting notice periods of 3 months or more, or to see employees with just three years of service getting upwards of 6 months. For managers in particular, it's not at all unusual to see someone with 3 or 4 years of service obtaining a reasonable notice period approaching one year.<br />
<br />
A few years back, I watched a presentation by Justice Sproat, a well-respected employment law judge, where he asserted that any 'real job' can be expected to take no less than 3 months to replace. I've had similar conversations with experienced employment law mediators, including one recent mediation for a very short-service employee where the mediator suggested that anything outside the 3-6 month range was very improbable. This is in line with much of the case law. It's fairly rare to see notice periods assessed at much less than 3 months, and this tends to be the understanding in the employment law bar in general.<br />
<br />
Yet there's very little case law actually talking about <i>general propositions</i> for short-service employees. Is there a floor, or even a soft floor, for reasonable notice periods? A number that you won't get below, barring exceptional circumstances? It would actually be <i>very</i> helpful to have such a figure. As employee counsel arguing my client's position, or employer counsel advising my client, to have a judicial decision setting a rough minimum for notice periods. (It's not unusual to see an employer offering 6-8 weeks of notice, or sometimes even less, which is usually a pretty aggressive posture.)<br />
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However, in recent years, there have been some cases out of the west coast talking a bit about low-end notice periods - a couple of decisions from the British Columbia Court of Appeal <i><a href="http://canlii.ca/t/gjqvg">Hall</a></i> and <i><a href="http://canlii.ca/t/2267c">Saalfeld</a></i>, culminating in a recent decision from the Yukon Court of Appeal, in the case of <i><a href="http://canlii.ca/t/gppgg">Cabott v. Urban Systems</a></i>, where the Court referred to a range of "two to three months" as being "a useful starting place" for a short-term employee. The Court concluded that, because of Cabott's level of responsibility, the range should be bumped up to four months (but not to six months, as found by the trial judge).<br />
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On the facts, the Court's treatment of Ms. Cabott is, perhaps, rather questionable: The Court refers to the the <i>Hall</i> and <i>Saalfeld</i> decisions as being essentially a baseline, and places Cabott's circumstances slightly above them.<br />
<blockquote class="tr_bq">
<span style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">On the other hand, there is some force to the submission that Ms. Cabott’s position in Whitehorse, described by the judge as senior and supervisory management, involved somewhat greater responsibility than the positions discussed in </span><i style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">Saalfeld </i><span style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">and </span><i style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">Hall</i><span style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">. Accepting the description of the range of notice for specialized employees in short term positions as two to three months as observed in </span><i style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">Saalfeld </i><span style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">and </span><i style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">Hall, </i><span style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">the character of this employment would justify an award modestly beyond that range.</span></blockquote>
While it's certainly true that Cabott, at age 53, was older than Hall (42) and Saalfeld (35), and likewise true that the trial judge considered her role to be "senior and supervisory", unlike Hall and Saalfeld, there remains one minor hitch with the Court's reasoning here: The British Columbia Court of Appeal had upheld a <b>five</b> month notice period for Saalfeld. They had felt it was at the high end, but not so outrageous as to warrant appellate intervention. The trial judge awarded Cabott, with a more senior role, a significantly higher age, and even a longer period of service, a modest <i>one</i> month improvement over what the BCCA had upheld for Saalfeld.<br />
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There's a bit of revisionism here: The BCCA was clearly of the view that 2-3 months would have been <i>more</i> appropriate for Saalfeld, but 5 wasn't totally outrageous. Yet, in the <i>Cabott</i> decision, one would think that going much beyond the three months for a short service employee requires executive-level and/or retirement age employee.<br />
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What's more, I might resist the idea that Cabott's age and character of employment should move the notice period so very little. It seems to put far too high a degree of importance on 'length of service'.<br />
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Indeed, the very language of a 'starting position' for short-service employees, to be bumped up depending on other factors, looks a little too similar to the "rule of thumb" language the Ontario Court of Appeal rightly rejected in <i>Minott</i>.<br />
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If we read the "starting place" language as creating a floor, assuming all <i>Bardal</i> factors to be toward the low end, then that would make sense.<br />
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Yet the Yukon Court of Appeal's reasoning appears instead not to do this, ultimately asserting 2-3 months not so much as a floor, but rather as a soft ceiling based on one of the <i>Bardal</i> factors. This reasoning is reminiscent of the Ontario Court of Appeal's reasoning in <i>Cronk</i> in 1995 - a decision which was dismantled piece by piece, starting with <i>Minott</i> in 1999.<br />
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Notwithstanding a questionable application, however, I expect that, across the country, <i>Cabott</i> will be routinely cited for this simple proposition: "<span style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">For a short term employee the useful starting place in discussing range is the two to three months spoken of in </span><i style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">Saalfeld </i><span style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">and </span><i style="background-color: white; font-family: "Arial (W1)", sans-serif; font-size: 16px;">Hall.</i>"<br />
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And I suspect that this will make many wrongful dismissal cases far easier to settle.<br />
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*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-8560894381298667267.post-13862776771054796002016-06-17T13:07:00.000-07:002017-09-18T09:04:40.417-07:00Superior Court Declines to Follow Trites v. Renin CorpThree years ago, the Superior Court of Justice released its decision in the case of <i>Trites v. Renin Corp</i>, where an employee claimed to have been dismissed or constructively dismissed by the imposition of a temporary layoff.<br />
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In a statement which made the entire employment law bar do a collective double-take, Justice Moore held that:</div>
<blockquote class="tr_bq">
<b style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;">there is no room remaining at law for a common law finding of constructive dismissal in circumstances where a temporary layoff has been rolled out in accordance with the terms of the <i>ESA</i>.</b></blockquote>
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I have come to refer to this proposition as the "<i>Trites</i> proposition". I <a href="http://lawyerbuchanan.blogspot.ca/2013/05/courts-obiter-takes-new-twist-on.html">argued at the time</a> that the <i>Trites</i> proposition is wrong, and will not largely be followed, because it's <i>obiter</i> (in that Justice Moore concluded in any event that the temporary layoff had not been rolled out in accordance with the <i>ESA</i>), inconsistent with established and binding jurisprudence, and fundamentally rooted in a misinterpretation of the <i>Employment Standards Act</i>. The widely-accepted status quo, before <i>Trites</i>, was that a temporary layoff would constitute a constructive dismissal unless the employer could demonstrate an express or implied term in the employment contract authorizing such a layoff.</div>
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I've had to argue about <i>Trites</i> in court since then: I argued a motion for summary judgment on such a case last year. I think the judge, who generally sits in the family court, was happy to be able to conclude that there was a constructive dismissal without needing to resolve the <i>Trites</i> question, in an unreported decision this past January.</div>
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But I'm not the only one who's been arguing about it. In 2014, Deputy Judge Hagan declined to follow it in the case of <i>Wiens v. Davert Tools</i> (my commentary <a href="http://lawyerbuchanan.blogspot.ca/2014/08/small-claims-court-declines-to-follow.html">here</a>). As a Small Claims Court decision, it has little precedent value, but nonetheless it was striking that the Small Claims Court declined to follow an ostensibly binding precedent: To do so, Deputy Judge Hagan concluded (as I had previously argued) that the <i>Trites</i> proposition is <i>obiter</i>, and therefore not binding, and inconsistent with the rulings of higher courts.</div>
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Until recently, however, <i>Trites</i> hadn't been expressly considered by any other Superior Court judges. Which brings us to the recent case of <i><a href="http://canlii.ca/t/gpjdf">Michalski v. CIMA Canada</a></i>, in which Justice James expressly rejected the <i>Trites</i> proposition.</div>
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Justice James reviewed the <i>Stolze</i> and <i>Chen</i> cases (see my first linked entry above), as well as <i><a href="http://lawyerbuchanan.blogspot.ca/2011/12/layoffs-in-non-union-contexts.html">McLean v. The Raywal Limited Partnership</a></i>, as well as the text "Employment Law in Canada", and concluded that these were out of step with <i>Trites</i>.</div>
<blockquote class="tr_bq">
<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;">To the extent that the decision of Moore J. in </span><span class="term0 g14 lmrp h lexumSolrTransition lexumSolrHiDisabled" id="g14-0" style="background-color: white; border-radius: 3px; font-family: "times new roman" , serif; font-size: 16px; padding-left: 2px; padding-right: 2px; text-align: justify; text-indent: -47.2667px; transition: all 0.2s ease 0s;">Trites</span><span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;"> stands for the proposition that the common law conditions precedent to a lawful layoff have been completely displaced by the </span><i style="background-color: white; font-family: "Times New Roman", serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;"><a class="reflex2-link" concatenated-id="124-current-1" href="http://www.canlii.org/en/on/laws/stat/rso-1990-c-e14/latest/rso-1990-c-e14.html" style="color: #027abb; text-decoration: none;">ESA</a></i><span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;">, I respectfully disagree.</span></blockquote>
<div style="text-align: center;">
<b>Commentary</b></div>
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<b><br /></b></div>
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While this can't be said to finally resolve the question for once and for all, I would suggest that the results in <i>Michalski</i> and <i>Wiens</i> bring into focus my earlier caution that employers should not place reliance upon the <i>Trites</i> decision.</div>
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When I was arguing against following <i>Trites</i> in court last year, it was a tricky argument. A contention that a recent decision of the Superior Court was wrongly decided on the law is not a submission to make lightly. I needed to make the argument, with significant and detailed appeal to the authorities with which <i>Trites</i> was inconsistent, and an indepth examination of the intellectual framework of the <i>Employment Standards Act</i>. Even then, I was happy to be able to add to my factum the corroborating viewpoint of Deputy Judge Hagan, as an example of an independent judicial officer coming to the same conclusions about <i>Trites</i> that I was making on behalf of my client.</div>
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Now, that will be even easier. With a Superior Court decision that expressly rejects <i>Trites</i>, providing authorities for the position, I expect that it will be much easier to deliver future arguments that <i>Trites</i> was bad law, to the point that I expect most employer counsel will advise their clients that the <i>Trites</i> argument is a long shot - making many such files much easier to settle.</div>
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So the lesson to employers is simple: If you want the right to temporarily lay off your employees, <u>put it in the written contract</u>.</div>
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<div style="text-align: center;">
<b>Other Issues Surrounding Temporary Layoffs</b></div>
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There's another tidbit of useful commentary in the <i>Michalski</i> decision, as well. Quite often, employers facing a temporary layoff constructive dismissal allegation are taken by surprise, as some employers (including large national employers) have been routinely using layoffs to control costs for a lengthy period of time: "I've been doing this for decades, and this employee knew it!"</div>
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Quite often, in these cases, I see employers attempting to rely on the long-standing practice as supporting a contention that the ability to lay off becomes an implied term of the employment contract. (There are contexts in which this is the case. The onsite construction industry comes to mind.) In dealing with such an argument, Justice James noted: "<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;">Standing alone, it is difficult to see how the layoff of one worker can result in a unilateral amendment of the employment contracts of other workers." Only in cases where the right to layoff is "notorious, even obvious, from the facts of a particular situation" will it be found to be an implied term.</span></div>
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<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;"><br /></span></div>
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<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;">Of course, this doesn't head on address the other variation of that argument we sometimes see, of acquiescence to temporary layoffs: there are scenarios where an employer may have temporarily laid off an employee in the past, and the employee did not raise an objection at that time, and then takes a constructive dismissal position in response to a subsequent temporary layoff. (</span><span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;">Personally, I regard this as a difficult argument, most of the time, requiring a fairly particular factual matrix, for a number of reasons.)</span></div>
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<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;"><br /></span></div>
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<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;">There's also another variation in cases where an employee takes a constructive dismissal position after a lengthy layoff, or even after being recalled. Andrew Monkhouse recently litigated such a case, <i><a href="http://canlii.ca/t/gs15g">Kurt v. Idera</a></i>, at the Divisional Court, and it was sent back down to the motions court. The employee in that case responded to a recall notice, over six months after the layoff, with a letter indicating that he took the position he had been constructively dismissed.</span></div>
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<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;"><br /></span></div>
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<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;">I find this variation to be challenging, as well: On the more fundamental principles of constructive dismissal law, the employee has the option (or sometimes the obligation) of 'trying out' the changed terms and conditions of employment for a reasonable period of time. If your employer changes your employment conditions, and you try it out for just long enough to conclude, "You know, this really doesn't work for me", then you're not blocked from taking a constructive dismissal position. On the other hand, if you continue with the changed employment conditions for a much longer period of time, you'll be said to have accepted the change. This is the root of the acquiescence argument here.</span></div>
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<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;"><br /></span></div>
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<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;">Yet it's difficult to apply this concept to temporary layoffs at all, and moreso to a single continuous temporary layoff: The image of acquiescence is that the employee is going into work and doing his job under the modified conditions. Even with multiple temporary layoffs, that's a tough pitch, because when the employee <i>does</i> report back to work, it's presumably under the same terms and conditions as before. But with a single lengthy temporary layoff, and particularly for one of an indeterminate length, it seems inherently difficult to suggest that the employee has to make that assessment before knowing just how long the temporary layoff will be. Maybe I'm prepared to acquiesce to a one week layoff, but not to a 12-week layoff. Seems reasonable that I might hit a point where I say, "Hey, this isn't right" and want to seek recourse for an <i>ongoing</i> breach of contract. Yet the longer the temporary layoff has gone on, the less likely it is to be a constructive dismissal? Seems a little off.</span></div>
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<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;">*****</span></div>
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<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify; text-indent: -47.2667px;"><br /></span></div>
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<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">.</span><br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-76585820231824142582016-05-27T12:40:00.001-07:002016-05-27T12:43:02.516-07:00Employer's Failure to Pay Settlement Funds Does Not Repudiate SettlementThe vast majority of employment law settlements get paid out without much difficulty. Most of the time, the employer has the funds to pay the settlement, and would rather get it done and over with. In many of my settlements with '30 day payment' clauses, the cheque still comes in within a week, just to get the file closed.<br />
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But every so often, you run into a file where a struggling employer can't make the payment. And that puts a plaintiff in a position of asking "What do I do now?"<br />
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Such was the case for Mr. Ball, following his dismissal from employment: He was dismissed from employment on June 13, 2013, and quickly entered into a settlement (as of June 21, 2013) contemplating payment of three months' wages over six months, by way of 12 bi-weekly payments. There were other aspects of the settlement, too, including the forgiveness of a large loan. The settlement was ultimately very different from the termination entitlements set out in Ball's contract, which entitled him to 12 months' notice or pay in lieu.<br />
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After the first six payments, the employer stopped. There was some email correspondence through 2014, with the employer basically saying "We don't have the money right now, but we're working on it."<br />
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In late 2014 and early 2015, Mr. Ball's counsel wrote to the employer, but received no response, so they commenced litigation in April 2015. The employer didn't defend, so the plaintiff sought default judgment on the basis of the terms of his employment agreement - as opposed to merely enforcing the settlement terms.<br />
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The story is similar for Mr. Clark, who worked for the same employer, except that his settlement did not include forgiveness of a large loan - it was strictly a 'salary continuance' plus benefits type arrangement.<br />
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In two recent decisions (<a href="http://canlii.ca/t/grpzl">here</a> and <a href="http://canlii.ca/t/grpzk">here</a>), Justice Rasaiah awarded judgment to both plaintiffs based only on the settlement terms. Ball was not entitled to treat the settlement agreement as never having been reached: No material misrepresentations induced him to enter into the agreement, there was no 'fundamental breach', and the employer had not *actually* repudiated the agreement., because they always expressed an intention to honour the agreement.<br />
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In the alternative, Justice Rasaiah indicated that even had the agreement been repudiated, she still wouldn't have awarded additional damages, because there wasn't evidence of damages. (This, based on the limited description of the employment agreements, appears to be a very problematic conclusion, failing to consider the consequences of <i><a href="http://lawyerbuchanan.blogspot.ca/2012/06/bowes-v-goss-power-reversed-by-court-of.html">Bowes v. Goss Power</a></i> and <i><a href="http://lawyerbuchanan.blogspot.ca/2016/04/court-of-appeal-extends-goss-doctrine.html">Howard v. Benson Group</a></i>.)<br />
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<div style="text-align: center;">
<b>Commentary</b></div>
<b><br /></b>
In the course of litigation, a breached settlement has consequences which are fairly clearly set out in the Rules: The non-breaching party can bring a motion to enforce the settlement, or alternatively the non-breaching party can continue the litigation as if no settlement had been reached.<br />
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Outside of litigation, it gets a little bit more complicated, but the practice is similar: When a settlement is fundamentally breached, the non-party has two options:<br />
<blockquote class="tr_bq">
<span style="background-color: white;"><a href="http://canlii.ca/t/fm3x9">It could have elected to affirm the settlement and hold the appellants to the performance of their contractual obligations. Or, it could have elected to accept the breach as a repudiation of the contract and proceed with the action.</a></span></blockquote>
Here's how it works: When a party, by words or conduct, fundamentally breaches a contract and/or evinces an intention not to be bound by the terms of an agreement, the other party can elect to 'accept' the repudiation, releasing both sides from performance of the agreement, or alternatively the other party can seek to enforce the terms of the agreement.<br />
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Normally, your damages following repudiation of a contract are to put you in the position you would have occupied had the contract been complied with. However, in the context of settlements, there's an additional hitch: Because an accepted repudiation releases both parties from performance of obligations under the contract, the non-breaching party is no longer precluded *by* the settlement from pursuing the entitlements that the settlement was intended to resolve.<br />
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So, in practice, it is a very similar 'election' process to the in-litigation settlement breach options. As a non-breaching plaintiff, I can seek to enforce the settlement, or I can irrevocably say, "Fine, you don't want to honour the settlement, I'm seeking my full entitlements."<br />
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And, what's more, from a policy perspective, <b>this makes sense</b>: I entered into a settlement with the intention of achieving a final resolution to the original dispute. If I compromised my original position at all in reaching that settlement (which is the case in pretty much every settlement), and I were held to that compromise <i>even though the other side didn't honour the settlement</i>, then I'm put in the position of <i>still</i> having to litigate to enforce my compromised position - exactly the thing I was trying to avoid having to do by compromising in the first place.<br />
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Suffice it to say that I have my concerns about the outcome here.<br />
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In both cases, the judge focused significantly on the requirement that fundamental breach deprive the non-breaching party of "substantially the whole benefit of the contract". In Mr. Ball's case, this allowed her to look at the very substantial benefits he received in the form of a forgiven loan, as well as having received more than half of the financial settlement, and conclude that he received "substantially what he bargained for".<br />
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In Mr. Clark's case, the judge found that simply providing approximately 60% of the amount of the settlement amount constituted "substantial performance of the obligations in the settlement agreement". (This "substantial performance" language is interesting. The phrase is not typically used in this context, but has a very particular meaning in construction lien law: A contract is deemed to be substantially performed when the improvement being made or a substantial part thereof is ready for use, and any outstanding work is only worth a certain percentage of the contract price - the formula caps at 3%.)<br />
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Normally, when we're arguing about 'fundamental breach', it's because of an arguably technical breach, or because one party, in the course of completing its obligations, got a detail wrong. It's pretty unusual that an <i>ongoing</i> non-payment of financial obligations under a contract was the subject of such a debate.<br />
<br />
But perhaps that's because of the other side of the repudiation test: Because, typically, when you aren't paying your bills, that's said to evince an intention not to be bound by the terms of the contract.<br />
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Justice Rasaiah got around that issue by pointing out that the employer never said they weren't going to pay...it was just taking a while.<br />
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She considered it a total non-starter that their breach required them to engage a lawyer and pursue legal action. This, according to Justice Rasaiah, is not a factor when assessing whether or not the parties got what they bargained for.<br />
<br />
A lot of settlements don't have a fixed timetable for payment. In that case, you might argue about at what point a 'breach' has even occurred, much less a fundamental breach. But in these two cases, where they stalled for several months, and then totally ignored a lawyer's letters with the outstanding settlement amounts more than a year in arrears, with no payment forthcoming approaching three years after the settlement was reached, it's really difficult for me to see how such conduct does <i>not</i> evince an intention not to be bound.<br />
<br />
My concern about this is that it undermines an already-dubious element of dispute resolution: <i>The Payment Plan</i>. When you have a party who is in a difficult financial position, and you agree to settle the claim based on paying a reduced sum over an extended period of time - because you'd rather get paid something than nothing - then Justice Rasaiah's reasoning really leaves zero incentive for the payor not to breach the payment plan after a little while: As long as you still got *something* that isn't insignificant out of the payment plan, and the payor keeps feeding you "The cheque's in the mail" types of responses, all you can do is try to enforce the settlement as you made it in the first place, and the defendant can say "Tell you what, I'll give you half of <i>that</i>, and save you the trouble of having to litigate." (Believe it or not, I've seen this happen.)<br />
<br />
In particular, there are many such cases where there is really not much controversy about how much the plaintiff is owed. I might have a more-or-less airtight case for x, but enter into a settlement for 2/3 of x, paid over several months, for the <b>sole reason</b> that it's better than having to pursue formal legal action and obtain and enforce a judgment. Yes, in that case, by being required to take it to court, I <i>have</i> been denied substantially the entire benefit of the agreement that I was to obtain by entering into it, and I think that Justice Rasaiah is likely giving the 'legal fees' issue too short of shrift by dismissing it in such a manner: I've contracted for finality, for the bird in hand, and I don't have the bird in hand.<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">.</span><br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-7282527855657881882016-05-11T14:32:00.000-07:002016-05-11T14:32:02.963-07:00Small Claims Court Can Order Production of DocumentsIn the recent case of <i><a href="http://canlii.ca/t/gp3b7">Burke v. Lauzon Sound and Automation Inc.</a></i>, the plaintiff sought an order for production of documents from the defendant.<br />
<br />
The defendant, by contrast, took the position that the Small Claims Court has no power to order production of documents, outside of a settlement conference. There were a couple of earlier Small Claims Court decisions reaching that conclusion, including a decision by Deputy Judge Winny finding that motions for production of documents would "import a discovery process that is neither contemplated by nor intended under the <i>Small Claims Court Rules</i>."<br />
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However, Deputy Judge Lepsoe in <i>Burke</i> declined to follow those cases.<br />
<br />
On a careful summary of the applicable Rules, and specifically the broad 'catch-all' language giving the Small Claims Court powers analogous to the Superior Court as to matters not specifically touched upon in the Small Claims Court, the Deputy Judge concluded that he <i>did</i> have power to order production, and proceeded to do so.<br />
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<b>Commentary</b><br />
<b><br /></b>
This issue does arise from time to time.<br />
<br />
Unlike the Superior Court, which as part of its ordinary process requires production of all documents that are arguably "relevant" to the matters in issue, the Small Claims Court only requires that parties disclose the documents upon which they intend to "rely". If I have a document that will help you, there's nothing automatic in the Small Claims Court rules that requires me to produce it to you.<br />
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When I was an articling student (quite some time ago - before either of the cases relied upon by the defendant were decided), I was carrying a wrongful dismissal file at Small Claims Court, where the employer alleged cause, based on pretty technical allegations of breach of policy. I put together a lengthy demand for productions - on the whole, it looked pretty excessive for the Small Claims Court, but the reality is that all the documents I was insisting upon were justifiable as being important to the matters in issue - because of the nature of the allegations the employer was making, it was hard to see how we could get a fair trial <i>without</i> having the opportunity to explore these records.<br />
<br />
Opposing counsel argued that there was no mechanism for discovery of documents, but I reviewed the Small Claims Court Rules at the time and came to the same conclusions as Deputy Judge Lepsoe: It didn't make sense that the Small Claims Court didn't have <i>any</i> jurisdiction to order production of documents, but it probably would make sense that the scope of such production should be limited to bear in mind the mandate of the Small Claims Court itself. (Eventually, the matter settled, and we never needed to argue the issue of the proper scope of discovery.)<br />
<br />
Particularly with the Small Claims Court jurisdiction at $25,000 these days, procedural protections become more important: Maybe we don't want to order voluminous productions in a case that's only worth a couple thousand dollars, but when we're arguing over $25,000, <i>some</i> requirement for productions is certainly appropriate.<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: arial, tahoma, helvetica, freesans, sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-72282925644732986792016-04-22T11:28:00.002-07:002016-04-22T11:30:33.592-07:00Court of Appeal Extends Goss Doctrine to Fixed Term ContractsHere's a head-scratcher for you.<br />
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Remember <i><a href="http://lawyerbuchanan.blogspot.ca/2012/06/bowes-v-goss-power-reversed-by-court-of.html">Bowes v. Goss Power Products Ltd.</a></i>? I posted about it a few times - it was an odd one, because Bowes was making an argument that seemed to me to be <i>unlikely</i> to succeed, even though I felt that, on first principles, it probably <i>should</i>.</div>
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<i>Bowes</i> dealt with an issue where a contract provided a fixed amount of notice or pay in lieu thereof: Bowes was fired without notice, got a new job quickly, and then nonetheless pursued his full pay in lieu of notice from the old employer. The 'old' case law suggested that he had mitigated his losses, and was entitled to essentially nothing.</div>
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However, I argued in my blog entries, and the Court of Appeal eventually concluded, that the language entitling him to pay in lieu of notice gave him a monetary entitlement not subject to the duty to mitigate. So he won.</div>
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However, in my commentary on the Court of Appeal's decision, I asked whether or not it went "too far", because the Court's commentary suggested that simply the act of fixing termination entitlements, at all, without an express obligation to mitigate included in the contract, relieves the employee of the obligation to mitigate.</div>
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<span style="background-color: white; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13.2px; line-height: 18.48px;"></span></div>
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There's a new decision from the Ontario Court of Appeal which clarifies that not only is this the case, but it applies to the termination of fixed term contracts as well.</div>
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<div style="text-align: center;">
<b><i>Howard v. Benson Group Inc.</i>: Background and Procedural History</b></div>
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Mr. Benson worked as a manager at an automotive service centre in Bowmanville. He was hired in September 2012 on a five-year fixed term contract, and dismissed 23 months later.</div>
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The contract also included an 'early termination clause': "<span style="background-color: white; font-family: "arial" , sans-serif; font-size: 17.3333px; text-align: justify;">Employment may be terminated at any time by the Employer and any amounts paid to the Employee shall be in accordance with the</span><em style="background-color: white; font-family: Arial, sans-serif; font-size: 17.3333px; text-align: justify;"> <a class="reflex2-link" concatenated-id="124-current-1" href="http://www.canlii.org/en/on/laws/stat/rso-1990-c-e14/latest/rso-1990-c-e14.html" style="color: #027abb; text-decoration: none;">Employment Standards Act</a> of Ontario</em><span style="background-color: white; font-family: "arial" , sans-serif; font-size: 17.3333px; text-align: justify;">."</span></div>
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The effect and enforceability of this kind of language is often arguable. The employer's intention would be to limit the employee's entitlements on termation - in this case to two weeks' pay in lieu of notice - but enforceable language to do so can be challenging.</div>
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This is certainly not the best termination language I've seen, but I could probably find good authorities on both sides of this argument. On motion for summary judgment, this language was found to be ambiguous and therefore unenforceable. I could go into detail on this, but <a href="http://www.ottawaemploymentlaw.com/2015/05/any-amounts-paid-deemed-ambiguous.html#more">Sean Bawden posted a good commentary</a> at the time, and ultimately this finding <b>was not appealed</b>, so the Court of Appeal didn't assess whether or not the issue was rightly decided.</div>
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That being the case, we are left with a five-year fixed-term contract with no enforceable termination language, and a termination less than two years in. This is naturally a dangerous situation for an employer - consider, for example, <a href="http://lawyerbuchanan.blogspot.ca/2012/05/further-difficulties-with-fixed-term.html">the similar <i>Loyst</i> case, where a fixed term contract led to liability on the basis of 30 months</a>.</div>
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However, the motions judge found that damages should be assessed on the basis of common law 'reasonable notice', subject to the duty to mitigate.</div>
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The plaintiff appealed on both points, arguing that he should be entitled to the <i>full</i> balance of the outstanding remuneration on the fixed term contract, and that there should be <i>no</i> requirement to mitigate.</div>
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<b>The Court of Appeal Decision</b></div>
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Earlier this month, <a href="http://canlii.ca/t/gp8v7">the Court of Appeal released its decision on these issues</a>: The plaintiff was successful on both.</div>
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<u><br /></u></div>
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<u>Common Law Damages versus Wages for the Unexpired Term</u></div>
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A fixed term contract is created only by clear and unambiguous language...and where that is the case, the contract expires at the end of its term without the need for notice by the employer. Thus, language that expressly creates a fixed term contract actually has the effect of <i>displacing</i> the implied term requiring reasonable notice of termination.</div>
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It is possible for parties to a fixed term contract to contemplate early termination, but with the unappealed removal of the early termination clause, there was no basis to do so - and accordingly there was nothing in the contract that expressly or impliedly conferred a right on the employer to terminate the employment contract prior to the expiration of its term.</div>
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As a result, the Court of Appeal concluded that damages must be assessed on the basis of the remainder of the five-year term.</div>
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<u>Duty to Mitigate</u></div>
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The Court of Appeal spent some time analyzing the <i>Bowes</i> decision, and its rationales, summarizing the policy concerns at issue as being, firstly, a concern about fairness in allowing the employer to "opt for certainty" in terms of its termination liabilities, and then nonetheless reduce that amount by requiring the employee to mitigate its losses where mitigation is not addressed in the employment agreement; and, secondly, "it would be inconsistent for parties to contract for certainty, and yet leave mitigation as a live issue with its uncertainties and risk of future litigation."</div>
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The Court acknowledged that the contract in <i>Bowes</i> was different in two respects: "<span style="background-color: white; font-family: "arial" , sans-serif; font-size: 17.3333px; text-align: justify;">(1) it was not a fixed term contract; and (2), more significantly, it contained an express clause stipulating a fixed quantum of damages for early termination of the contract</span>".</div>
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However, the Court was nonetheless persuaded that the importance of 'certainty' translates well from the <i>Bowes</i> contract to the <i>Howard</i> contract, and therefore that the same legal considerations should be applied.</div>
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Accordingly, the Court of Appeal concluded that Mr. Howard is entitled to remuneration for the <i>entire</i> remainder of the term, <b>without deduction for any mitigation earnings</b>.</div>
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<b>Impact</b></div>
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<b><br /></b></div>
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In my view, the actual direct practical impact of this decision is small. I have long been of the view that fixed term contracts, in most circumstances, are a terrible idea for employers, and that most employer objectives are better served by an indefinite term contract with a good termination clause.</div>
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This case drives in the point, but from the perspective of employer risk is not really <u>new</u>: I pointed to <i>Loyst</i> as authority for the proposition that a five-year fixed-term contract could leave an employer on the hook for <u>years</u> of lost wages. The difference in <i>Howard</i> is that some of the partial defences that the employer might have faintly hoped to rely upon are totally extinguished.</div>
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It will be interesting to see if the courts apply the same reasoning to constructive dismissal cases dealing with fixed term contracts: That's an area where mitigation proves to be a much more difficult concept for plaintiffs.</div>
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<b>Concerns with the Decision</b></div>
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Make no mistake: At present, the decision in <i>Howard</i> is law in Ontario, binding on lower courts. It's possible that it could be appealed, or that the Court of Appeal could rethink it in the future, but until or unless this happens, expect <i>Howard</i> to be followed in similar cases.</div>
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And as a lawyer who does a significant amount of plaintiff-side work, I'll acknowledge that the 'certainty' argument resonates. Of course, all the contracts we've been seeing since <i>Bowes</i>, trying to build in mitigation clauses...well, they're tricky, and complicated, and weird, and difficult for an employee to understand, and that's going to develop into a whole new area of contract interpretation in employment law, with new dimensions of uncertainty.</div>
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But if I boil this down to a "first principles" perspective - the same one that I used when analyzing <i>Bowes</i> before the Court of Appeal decided it - I find the decision troubling, a case of the pendulum swinging <i>way</i> too far in one direction.</div>
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Indeed, I would argue that it's impossible to reconcile <i>Howard</i> with the first principles of contract damages.</div>
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<u>Contracts 101: The Compensation and Mitigation Principles</u></div>
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<u><br /></u></div>
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In Canada, "breach of contract" is not a swear term. It's not considered to be morally outrageous, that somebody might not do what they've promised. The law will generally permit people to breach contracts, but then expect and require them to pay 'damages' to the other parties to the contract.</div>
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And the quantum of those damages is governed by two of the oldest principles in the common law - compensation and mitigation.</div>
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The compensation principle states that the non-breaching party is entitled to be put into the position he would have occupied had the contract been honoured, to the extent that this can be done by the payment of money. The mitigation principle states, however, that avoidable loss or avoided loss is not compensable.</div>
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But the mitigation principle gets applied only to income that you were able to earn as a result of the breach. In wrongful dismissal contexts, this is usually straightforward: I fire you without notice, in breach of an implied term of your contract, and you now have time during the notice period to use to earn more money...so when you get a new job, that's mitigation.</div>
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Where Mr. Bowes' case differed was that he wasn't contractually entitled to notice of termination. He was contractually entitled to notice <b>or pay in lieu</b>, which means that the termination without notice, in and of itself, didn't actually breach his contract. Rather, Goss Power breached Bowes' contract only when they - having terminated him without notice - failed to provide the pay in lieu. His ability to take another job, therefore, can't be said to flow from the breach.</div>
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That can't be said of Mr. Howard. Mr. Howard was entitled to work the full five years, for his full remuneration package. Benson Group breached his contract by terminating his employment during the term, which directly freed him up to seek new employment.</div>
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Unlike Bowes' contract, with actual contractual language that entitled him to a contractual sum on termination without notice, there is absolutely nothing comparable in Howard's contract. His entitlement to a payout arises only as a function of the compensation principle - which, with <i>very</i> few exceptions (see, for example, <i><a href="http://lawyerbuchanan.blogspot.ca/2013/12/waterman-v-ibm-majority-of-scc.html">Waterman v. IBM</a></i>), must be subject to the mitigation principle.</div>
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Within the employment context, there's no cogent way around this analytical problem, and especially not in a 'fixed term contract' case: It requires one to regard the compensation and mitigation principles as being, themselves, implied terms of the contract - which is a difficult proposition to justify, because then you could never really talk about 'breach of contract' coherently (because by providing compensation, you'd actually be complying with your full contractual obligations). The further difficulty is that the compensation and mitigation principles actually transcend contract law, and exist in an essentially identical way in tort law.</div>
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Furthermore, the rationale for setting aside the obligation to mitigate, in fixed term contract cases, is based on propositions which is ubiquitous within contract law: The mitigation principle, by definition, results in uncertainty, because its very function is to modify liabilities flowing from breach, based on events after the breach which are not necessarily within the control of the parties. Likewise, the very act of entering into a contract is an attempt to achieve certainty. Nobody <b>ever</b> deliberately contracts for uncertainty. To say that parties who "contract for certainty" should never apply the mitigation principle...would basically eliminate the mitigation principle as a proposition of law <b>altogether</b>.</div>
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For illustration purposes, consider a fixed term tenancy: If I enter into a one year tenancy, and then terminate the tenancy after two months, it is trite law that the landlord has an obligation to take reasonable steps to re-rent the place, and then account for new rental income. If he re-rents it for the same amount two months after I leave, my liability is two months. Yet you would say that we "contracted for certainty" in exactly the same way that Howard and Benson Group did, so why should I benefit from the mitigation principle?</div>
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As I said, <i>Howard</i> is now the law in Ontario. And frankly I'm not all that worried about how that plays out, in practice. But on a theoretical level, I believe that it take the <i>Bowes</i> proposition further than it can rationally bear.</div>
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*****</div>
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<br /></div>
<div>
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">.</span><br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span></div>
Unknownnoreply@blogger.com4tag:blogger.com,1999:blog-8560894381298667267.post-46991111384568259742016-03-07T09:09:00.001-08:002016-03-07T09:17:44.661-08:00Costs and Pre-Litigation Offers to SettleThere have recently been a couple of interesting decisions in the case of <i>Borrelli v. Dynamic Tire Corp.</i>: One deals with tax deductions from a judgment, which is interesting and useful, but in this entry I want to talk about the costs appeal <a href="http://canlii.ca/t/gnln7">recently decided by the Divisional Court</a>.<br />
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<div style="text-align: center;">
<b>Background</b></div>
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Mr. Borrelli was dismissed without cause. It appears that he was initially offered 16 months' pay in lieu of notice, with a 50% clawback in the event of successful mitigation. In the course of negotiations, the employer did offer more (it isn't clear exactly how much), but Borrelli didn't accept, instead choosing to litigate.<br />
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Early in the litigation, the employer made a formal offer to settle which would have been the equivalent of 12 months' pay in lieu. (One assumes that the logic was that this was going to be a lump sum, without a mitigation clawback - so without the potential to benefit from a mitigation clawback, they discounted the scale of their settlement position.) Ultimately, on a summary judgment motion, the judge awarded 16 months' pay in lieu of notice, and denied the plaintiff's claims for bad faith damages, etc.<br />
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<div style="text-align: center;">
<b>The Costs Decision</b></div>
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After the summary judgment motion, both sides sought costs. The plaintiff wanted substantial indemnity costs of about $29,000, or partial indemnity costs of about $20,000; the defendant wanted substantial indemnity costs of about $36,000 or partial indemnity costs of about $28,000.<br />
<br />
Justice Mullins was critical of the plaintiff's failure and refusal to accept the pre-litigation offers, calling the defendant's positions "reasonable, exemplary even", and referring to the plaintiff's action as "ill-conceived". She considered the pre-litigation offers to be 'relevant' to costs. Still, the Plaintiff was awarded modest costs, of $6000, representing costs of the motion and not of the action more generally.<br />
<div style="text-align: center;">
<b><br /></b></div>
<div style="text-align: center;">
<b>The Appeal</b></div>
<br />
The employer appealed to the Divisional Court. (This is an unusual process, requiring 'leave', which was obtained.) It would appear that they regarded themselves as having been the 'successful party', having held the plaintiff to basically the same amount they put on the table at the very beginning.<br />
<br />
The Divisional Court dismissed the appeal, making four observations:<br />
<br />
<br />
<ol>
<li>The Defendant didn't beat its own "Rule 49" offers <i>in</i> the course of litigation. Had they, then they presumptively would have been entitled to costs...but because their in-litigation offers were a little on the cheaper side than their pre-litigation offers, the Rule wasn't triggered.</li>
<li>Awarding costs of the motion made sense: By the time the motion was commenced, the plaintiff's alternative - of accepting the Rule 49 offer on the table - would have gotten the plaintiff a lesser remedy than when he ultimately received. Accordingly, it's fair to say that the plaintiff won the motion.</li>
<li>The plaintiff acted unreasonably by not accepting the pre-litigation offers. "This is a factor that, in my view, reasonably results in a significant reduction in the amount of costs that should be awarded to the plaintiff."</li>
<li>Ultimately, awarding the plaintiff only $6000, when he was seeking over $20,000 on a partial indemnity basis, reflects an appropriate balancing.</li>
</ol>
<br />
<br />
<div style="text-align: center;">
<b>Lessons Learned</b></div>
<br />
The importance of a Rule 49 Offer can't be overstated. Fundamentally, these are what define the parties' positions when it comes to the costs award - they're what defines who 'won' and who 'lost'.<br />
<br />
By scaling back to a 12 month offer in the Rule 49 Offer, having had 16 months on the table before, this was going to be a tough one to settle once litigation started. Having taken that position through litigation, it's completely right to deny them costs.<br />
<br />
On the flip side, this is an unusual case where pre-litigation offers became important. It's quite rare for an employer to <i>beat</i> its pre-litigation offers in this context. This unambiguous statement from both the motions judge and from the Divisional Court expressing the importance of the pre-litigation offers will stand as a caution to plaintiffs: If your employer is making reasonable offers, don't get greedy. (To be absolutely clear, I am <b>not</b> saying to just accept an offer if it looks okay. Quite the contrary, if anything, this makes it <i>more</i> important to get legal advice on an offer, to know whether or not the offers are, in fact, reasonable.)<br />
<br />
However, I'm not entirely convinced that this proposition has a particularly widespread application.<br />
<br />
<div style="text-align: center;">
<b>Limits: The LTD Problem, and Other Uncertainties</b></div>
<div style="text-align: center;">
<br /></div>
It isn't clear to me if this employee had a benefits package including, say, long term disability.<br />
<br />
However, many insurers simply <i>will not</i> continue LTD benefits through a non-working notice period, and those that will charge a very hefty premium for it. As a result, <i>most</i> of the negotiated settlements I've seen have an exclusion for LTD. An employer's offer, no matter how generous it is in other respects, will basically never include LTD.<br />
<br />
In the right fact pattern (or, perhaps more accurately, the worst possible fact pattern), the discontinuation of LTD can result in a claim that is <b>well</b> in excess of any other 'reasonable notice' types of claims. (See my discussion from <i><a href="http://lawyerbuchanan.blogspot.ca/2012/02/brito-v-canac-kitchens-appealed.html">Brito v. Canac Kitchens</a></i> for details.)<br />
<br />
Which makes every early-stage settlement a bit of a gamble on the employee's part: I'm betting that I'm going to stay healthy. If I accept a 'generous' offer from my employer, that's almost certainly going to require me to sign a release of any LTD claims that might arise, and if something happens to me during the notional notice period, that means that I've lost very substantial entitlements by signing the release.<br />
<br />
Maybe the package is reasonable in other regards, but I'm worried about losing LTD benefits. Is that unreasonable? It'd be a stretch for a costs doctrine to send a message that employees should sign away their LTD rights willy-nilly.<br />
<br />
<u>Mitigation Clawbacks</u><br />
<br />
Even in this case, the mitigation clawback itself raises its own uncertainties. The 'standard' form of these clauses is roughly this: You'll be paid a salary continuance, and as soon as you get a new job, you need to let us know, and we'll stop your salary continuance and instead pay a lump sum equal to half the outstanding continuance payments.<br />
<br />
In other words, if I have a 16 month salary continuance, and get a new job after 6 months, then my employer will just pay me an additional five months - giving me a total pay in lieu of notice equivalent to 11 months - and we're done. But this <i>doesn't</i> mean that I've gotten a five-month windfall. It's possible that my new job doesn't pay me as much, firstly. (I usually include language, on the employee side, to prevent the clause from being triggered by nominalistic income, but they never require the new job to be at 100% of prior income levels.)<br />
<br />
And more importantly, what happens if I lose that job during a 3 month probationary period? So I got the new job after six months, worked at it for two months, earning 80% what I was making before, and was dismissed because of poor fit. End result? Within my 16 month notice period, I got six months of salary continuance, a five month lump sum, and the equivalent of 1.6 months' wages in mitigation earnings: the 'generous' employer offer, which looked like it gave me 16 months of income security and the potential for a sizeable windfall, actually left me short by 4.4 months' wages.<br />
<br />
These are the kinds of uncertainties that can create challenges for early-stage settlement. And while most employees would probably rather have a deal in place now and see what comes, it's not totally unreasonable for an employee to prefer to take a 'wait and see' approach to see what his claims are <i>actually</i> worth.<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">.</span><br />
<span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: "arial" , "tahoma" , "helvetica" , "freesans" , sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-8560894381298667267.post-68886941020239072352016-03-05T22:37:00.001-08:002016-03-05T22:37:22.753-08:00The Rule Against Assignment of Employment ContractsThere's an old doctrine in the common law that an employment contract cannot be assigned without consent - i.e. an employer can't tell you, "From now on, you work for that guy."<br />
<div>
<br /></div>
<div>
It is actually quite a complicated doctrine, particularly in the modern world of complex corporate structures. The legal personality of the employer is often a flexible concept, and moreover isn't generally significant to the employee: The identity of the person to whom my boss reports is of little or no importance to me. As long as the employer respects the core terms of the employment contract (for instance, relating to compensation, working conditions, and duties), the employee doesn't care what name is on his pay cheques.</div>
<div>
<br /></div>
<div>
The underlying policy rationale is that workers should not be treated as chattel, to be bought, sold, or traded between employers.</div>
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<br /></div>
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Further, the courts have regularly held that the purpose of the rule is to protect employees from unilateral changes to their employment contracts.</div>
<div>
<br /></div>
<div>
The trouble is that it doesn't provide much meaningful protection in that way, and in fact has the potential to yield counter-productive results. Moreover, its purpose has been largely subsumed by other doctrines.</div>
<div>
<br /></div>
<div>
<div style="text-align: center;">
<b>Asset Purchase versus Share Purchase</b></div>
</div>
<div>
<b><br /></b></div>
<div>
There are a couple of different types of ways that businesses get bought. One is by way of 'asset purchase', involving a different business purchasing all the assets (equipment, inventory, receivables, intellectual property, good will, etc.) of an existing business.</div>
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<br /></div>
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The other is by way of 'share purchase', involving the new business buying the corporate shares from the existing shareholders.</div>
<div>
<br /></div>
<div>
In a share purchase, the original employer is left intact. It remains a party to all the contracts, including employment contracts, it previously entered into. The 'buyer' is just a shareholder; the 'employer' remains the same corporate entity. In an asset purchase, on the other hand, existing contracts must be assigned, or new contracts entered into, because the buyer <i>is</i> the new employer, and isn't a party to any of those existing contracts. (So if I sell the assets of my business, the buyer will need to either get an assignment of my commercial lease, or alternatively will need to enter into a new lease.)</div>
<div>
<br /></div>
<div>
Thus, in a share purchase, while ownership of the employer has shifted, the identity of the employer - that is, the corporation - has not changed. Thus, the employees remain with the existing employer, subject to the same terms and conditions as before. From a legal perspective, there has been no change in their employment contract.</div>
<div>
<br /></div>
<div>
By contrast, in an asset purchase, if the purchaser wants to retain the existing employees, the purchaser must offer them new contracts of employment. <b>NB:</b> This needs to be done with <u>competent legal advice</u>. By operation of the <i>Employment Standards Act, 2000</i>, the employees will typically be deemed to have their service with the previous employer factor into certain entitlements. Likewise, the buyer will typically be regarded as a 'successor employer' at common law, with all the results that entails.</div>
<div>
<br /></div>
<div>
But this doesn't always happen. In many asset transactions, the employees are left out of the loop. They don't necessarily know what's going on, and don't really care - they come to work day after day, do the same job, the front-line employees report to the same managers, etc. They may be aware that there's some high-level restructuring going on, but as long as they don't get told "Don't come into work tomorrow", they'll continue to come into work, and expect to get paid, and as long as that happens, they're satisfied.</div>
<div>
<br /></div>
<div>
At law, the implication of the rule against assignments of employment contracts is that the old employment contract will be terminated, and an unwritten employment contract will have formed between the employee and the new employer.</div>
<div>
<br /></div>
<div>
And, again, 19 times out of 20, the employee won't care. It's a fairly rare case to begin with where a buyer who <i>doesn't</i> use employment contracts will buy a business from an employer who <i>has</i> integrated written employment contracts with express terms beyond the most fundamental (like compensation, nature of the work, etc.), and most of the time, other express terms in a written contract are to the disadvantage of the employee. So an incidental voiding of existing written terms doesn't hurt the employee.</div>
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<br /></div>
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But, perhaps more importantly, <i>the employee will not even </i><b style="font-style: italic;">know</b>. The only visible change to the employee in such a case will often be that there's a different name on the pay cheque, and that doesn't necessarily mean anything: Even without an asset transaction, and quite often following a share transaction, there are frequently high-level corporate restructures which result in a different corporate entity processing the payroll. The '<a href="http://lawyerbuchanan.blogspot.ca/2011/10/corporate-veil-and-identity-of-employer.html">common employer</a>' doctrine being what it is, that doesn't actually signify any change in the employee's status. (The case law on point suggests that the rule against assignment doesn't apply to transitions between 'common employers': See, for example, <i><a href="http://canlii.ca/t/1mxmf">Yellow Pages Group v. Anderson</a></i>.)</div>
<div>
<br /></div>
<div>
There <i>are</i>, however, rare cases where a written employment contract contains unusual perks to the employee's advantage - for instance, a golden parachute clause which grants the employee more significant termination entitlements than usual. In such cases, a 'deemed termination' of the original contract, where the employee is not even aware of the facts giving rise to this deemed termination, ostensibly for the purpose of 'protecting an employee against changes in his employment contract'...makes no sense at all.</div>
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<br /></div>
<div>
<div style="text-align: center;">
<b>The Purpose is Largely Obsolete</b></div>
<b><br /></b>
In recent decades, we have developed a very elaborate doctrine to protect employees from substantial and unilateral changes in the terms and conditions of employment: Constructive dismissal.<br />
<br />
If my employer 'sells' me to another employer, who insists on changing the terms of my employment relationship in fundamental ways, then - without resorting to my old employer's inability to sell me, without treating my old employer as having terminated my contract, I can claim to have been constructively dismissed <i>simply by virtue of the changes themselves</i>. This is true whether the transition was an asset transaction, a share transaction, or the exact same management making structural changes to the workplace.<br />
<br />
The mitigation doctrine also factors importantly into the common law analysis of the rule against assignment as it presently stands: Suppose in an asset transaction, my old employer terminates my employment, and the purchaser offers me a new position. Could I turn down the new offer, and sue my old employer for wrongful dismissal? Maybe, but in practice, 'mitigation' will often be a significant obstacle to such an approach. If the new position is on similar terms and conditions to my previous employment, then in most circumstances a Court would regard my refusal of the new offer as a 'failure to mitigate'.<br />
<br />
Thus, in most such transactions, caution is (or should be) used by the employers to ensure that the new offer of employment is closely aligned with the existing terms and conditions of employment, to put the employees into a position where they basically <i>have to</i> take the new position.<br />
<br />
In light of the constructive dismissal doctrine, we don't <i>need</i> the rule against assignments to protect employees against changes in their employment relationship. In light of the mitigation doctrine, it doesn't effectively protect against the 'trading' of employees anyways.<br />
<br />
<div style="text-align: center;">
<b>Case in Point: <i>Dundee Securities Ltd.</i></b></div>
<br />
In December, the Rule arose in the context of a procedural decision in the case of <i><a href="http://canlii.ca/t/gmqv3">Dundee Securities Ltd. v. Atul (Al) Verma</a></i>, following a motion by Verma to require the plaintiff to answer certain questions.<br />
<br />
Mr. Verma was hired as an investment advisor by Macquarie Canada Services Ltd. Under the terms of the contract, Macquarie provided Verma with the sum of $505,000, apparently repayable upon resignation - Verma says that this was a signing bonus, structured as a 'forgivable loan' for tax purposes, not to be repaid if Verma was terminated without cause.<br />
<br />
Three months later, Macquarie was acquired by Richardson GMP.<br />
<br />
Shortly thereafter, Richardson GMP entered into an arrangement with Dundee to assign certain agreements (including Verma's) to Dundee...and the way they structured it was a little complicated: Richardson GMP incorporated a numbered holding company, and then transferred the shares to Dundee. which then amalgamated with the numbered company. (Immediately thereafter, Verma left, claiming that his contract was effectively terminated by the change. Dundee is suing on the 'loan'; Verma is counterclaiming in constructive dismissal, among other things.)<br />
<br />
Remember what I said earlier about the Rule against assignment not applying to common employers? This whole structure looks like an end run around the Rule. Technically, it's actually kind of clean: The numbered holding company was a wholly owned subsidiary of Richardson GMP when it became the nominal employer - thus, it was a permissible assignment under the common employer doctrine. Then because the transition to Dundee was accomplished by way of a share transfer, the Rule is still not triggered.<br />
<br />
In the real world of employment law, that kind of technicality tends not to carry the day, and there would be compelling policy reasons to treat a share transfer of a wholly-owned subsidiary as an asset purchase, for the purposes of the Rule.<br />
<br />
On the other hand, it's a very technical rule to begin with. Which is, in large measure, my point: It's absurd to treat Verma's employment status as substantively different because the corporate lawyers wagged their fingers in a particular way as opposed to another means of attaining the same goal.<br />
<br />
Likewise, one can certainly imagine scenarios where an individual in Verma's shoes might reasonably feel that they've been wronged by having their employment relationship shifted in such a way. And other scenarios where that feeling would be unreasonable. And the reasonableness of Verma's perception has <i>nothing</i> to do with the corporate prestidigitation that occurred behind the scenes.<br />
<br />
In other words, whether or not Verma should be regarded as having resigned or as having been terminated should be a contextual question of fact within the constructive dismissal framework - was it reasonable for him to regard the transition to Dundee as a fundamental change to the terms and conditions of employment?<br />
<br />
<div style="text-align: center;">
<b>The Future of the Rule</b></div>
<br />
There's little question that the Rule is, in broad terms, still good law, even though it comes up very seldom.<br />
<br />
As is much of employment law, the Rule is asymmetrical in its purpose: It seeks to protect employees. As a result, one can expect that it will probably be applied in the rare case where a successor employer tries to rely on a termination clause in the original employment contract, etc., but that it will probably <i>not</i> be applied where an employee is seeking to enforce a term of the original employment contract against a successor employer following an asset sale.<br />
<br />
And there are certainly important questions that arise following a transition of an employer, in terms of the substantive rights and remedies of employees. But I think we seriously need to question whether "Was it an asset transaction or a share transaction?" should really be one of them.<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span></div>
Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-8560894381298667267.post-16109316049215950022016-01-29T08:00:00.002-08:002016-01-29T08:00:41.820-08:00Police Suspension With Pay: A Middle GroundThere is significant controversy right now about Ontario's <i>Police Services Act</i>, regarding the suspension of officers, with pay, when they are subject to disciplinary proceedings or criminal charges.<br />
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Because of the time involved in these proceedings, it's a reality which can legitimately be infuriating - in hindsight: These processes can take multiple years, and then at the end, if it is determined that the police officer did indeed engage in serious misconduct, we scratch our heads and ask "So why did we pay him to stay home for the last x years?"<br />
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I would urge moderation. At the outset of any process, we don't necessarily know how it will resolve. And suspensions without pay can also render significant injustice.<br />
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<div style="text-align: center;">
<b>The Private Sector Analogy</b></div>
<b><br /></b>
The closest private sector analogy to this issue would be discharge grievances in unionized environments.<br />
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If I'm a unionized employer, and I believe that an employee is guilty of significant misconduct, I might go ahead and discharge him. His union may grieve, and eventually send the matter to arbitration.<br />
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In the mean time, the individual is out of the workplace, and not being paid.<br />
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At the end of the arbitration, the arbitrator is called upon to determine if the discharge was an appropriate action. If the employer <i>fails to prove the misconduct</i>, then the employee will usually be reinstated with <i>full back pay</i>.<br />
<br />
When the employee has been off work for two years, that's a large amount of money. But on the flip side, that's two years without a steady income to provide for one's family - that's a lot of hardship for the employee and his family, on unproven allegations.<br />
<br />
There's a secondary question, too. Even if the employer proves misconduct, then the question becomes whether or not it was serious enough to justify discharge. In many cases, an arbitrator will substitute a different penalty - for instance, reinstating the employee, but substituting an unpaid suspension for a period of time - often significantly less than the amount of time the employee was actually off, meaning that the employee is still entitled to significant back pay.<br />
<br />
This model has its advantages, certainly, but it isn't perfect, and sometimes puts employees to very substantial hardship because of false or trivial allegations of misconduct.<br />
<br />
<div style="text-align: center;">
<b>Putting the Punishment Before the Process</b></div>
<br />
We need to bear in mind that not every case is clear cut. In some cases, it isn't clear that there was misconduct. In others, it isn't clear that the misconduct will warrant the discharge of the officer. Recall the discharged police officer <a href="http://news.nationalpost.com/news/canada/ex-police-officer-who-wrote-mocking-email-about-paid-suspension-says-hes-a-scapegoat">who last year made the news because he sent a mocking letter thanking the police chief for his three year paid vacation</a>?<br />
<br />
His misconduct was at the margins: He sent 'confidential' information about a person in custody to a mutual friend, for seemingly good intentions. It was information that had the potential to interfere with an ongoing investigation, but ultimately there was no impact from the disclosure, and the officer took full responsibility for the action from the outset. This was certainly a close case, and in the private sector I suspect that the conclusion would have been that a discharge was <i>not</i> warranted.<br />
<br />
So consider where we stood at the outset of that 3 year process? We know it's going to be a long time; we don't know how it will turn out; it's entirely plausible that he will receive a slap on the wrist or a short suspension, and be put back on the job. Is it fair to impose 3 years of financial hardship on him <b>before</b> that process has run its course?<br />
<br />
No. That seems straightforward. Punishing somebody in such a way, before it is found that they deserve it, is deeply unfair.<br />
<br />
<div style="text-align: center;">
<b>The Middle Ground</b></div>
<br />
Either extreme, in my view, is likely to render injustice on a frequent basis. On the one hand, suspensions with pay allow officers guilty of severe misconduct to continue drawing a salary so long as they can drag out the legal processes. On the other hand, suspensions without pay have the potential to put innocent officers into dire financial situations.<br />
<br />
My suggestion would be that the <i>Police Services Act</i> create an expeditious process for interim remedies: If the Police Services Board is confident that the officer will be found guilty of conduct deserving of discharge, then it can go to an adjudicator for an order authorizing a suspension without pay until the disciplinary/criminal proceedings are complete.<br />
<br />
The specific onus could be the subject of discussion: I would propose a threshold of a 'strong <i>prima facie</i> case' for discharge - i.e. that the evidence is very strong that the misconduct occurred, and that the misconduct clearly calls for discharge.<br />
<br />
This way, in the clearest cases, wrongdoers can be denied of this lengthy paid vacation...but in the less clear cases, we continue to give the accused the benefit of the doubt.<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-22683281830547936482016-01-26T14:45:00.000-08:002016-01-26T14:45:07.269-08:00The "Suitability" Test: Wrongful Dismissal from Probationary EmploymentMany employers insist on a period of 'probation' in their employment contracts.<div>
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Sometimes it's clear on the face of the contract what that means - usually, that the employee can be dismissed without notice and without cause during the probation period. Sometimes, it's less clear, with a verbal or written reference to a 'probation' period of a particular length of time.</div>
<div>
<br /></div>
<div>
The case law, in the non-union context, has tended toward a fact-based interpretation of the word 'probation'. In a 2001 case, <i>Easton</i>, Justice Lederman concluded that the 'probationary' language in the contract suggested only that a raise at the end of the probationary period was contingent on satisfactory performance - and did not manifest in a right to terminate summarily without cause. Thus, employment lawyers such as myself have encouraged employers to include very clear contractual language about <i>what probation means</i>.</div>
<div>
<br /></div>
<div>
Even probationary language, however, doesn't give the employer to dismiss, <i>carte blanche</i>, without any reason. The courts have also consistently held that probationary employees are entitled to good faith evaluation of their work - that the employer cannot use a probationary clause to terminate for reasons unrelated to performance or fit in the workplace. In practice, it turns into something of a "just cause lite" analysis.</div>
<div>
<br /></div>
<div>
Yesterday, the Divisional Court released its decision in <i><a href="http://canlii.ca/t/gn241">Nagribianko v. Select Wine Merchants Ltd.</a></i>, a case where an employee was dismissed without notice toward the end of a six month probation period.</div>
<div>
<br /></div>
<div style="text-align: center;">
<b>The Trial Decision</b></div>
<div>
<br /></div>
<div>
Nagribianko sued in Small Claims Court. The Deputy Judge accepted that the meaning of the word 'probation' was not defined within the employment contract. (It was defined in the employee handbook, but the evidence was that the handbook was not provided at the time the contract was signed, and thus not effectively incorporated into the contract.)</div>
<div>
<br /></div>
<div>
Accordingly, the Deputy Judge awarded four months' pay in lieu of notice.</div>
<div>
<br /></div>
<div style="text-align: center;">
<b>The Appeal</b></div>
<div>
<b><br /></b></div>
<div>
The employer argued, and the Divisional Court accepted, that the word 'probation' has an established meaning in law, and that probationary employment can be terminated in accordance with the "suitability test" - a good faith analysis of whether or not the employee is suitable to the workplace. This meaning existed without requiring a reference to the employee handbook.</div>
<div>
<br /></div>
<div>
As the employer had engaged in such a good faith analysis, the Divisional Court allowed the appeal and dismissed the action.</div>
<div>
<br /></div>
<div style="text-align: center;">
<b>Commentary</b></div>
<div>
<b><br /></b></div>
<div>
The "suitability test", <i>per se</i>, arises from the unionized labour law context: In cases of discharged probationary employees in union contexts, that is a very frequently applied test.</div>
<div>
<br /></div>
<div>
And there's no question that, where an employment contract purports to give the employer a right to dismiss probationary employees without notice, the courts will apply a <i>similar</i> test.</div>
<div>
<br /></div>
<div>
But there's a danger in directly importing labour (unionized) principles into employment (non-unionized) contexts: In the union context, these matters are governed by collective agreements, with specific and detailed language, often derived from certain boilerplates. And collective agreements will include language, even on a near-universal basis, which are not always present (or sometimes very seldom present) in a non-union employment contract.</div>
<div>
<br /></div>
<div>
So caution must be exercised when importing such labour principles, deriving from a collective agreement, into employment contexts, where the contract may well set out markedly different terms. Thus, a term may have been consistently defined in a way in the labour law regime, but that does not result in a conclusion that the term has a settled definition at law in a broader way.</div>
<div>
<br /></div>
<div>
In particular, the question here is one that basically never arises in the labour context: Does the contract effectively give the employer a right to terminate summarily without just cause? If it does, then something akin to the suitability test would certainly be applicable. But the Deputy Judge concluded that the language - which is different from that found in collective agreements - did not create such a right.</div>
<div>
<br /></div>
<div>
And there's a more fundamental problem with the Divisional Court's analysis, in the context of the facts described in the case: A six-month probationary period, allowing termination without notice on the basis of the "suitability test", <b>cannot withstand scrutiny under the <i>Employment Standards Act</i>.</b></div>
<div>
<b><br /></b></div>
<div style="text-align: center;">
<b><i>ESA </i>Entitlements</b></div>
<div>
<br /></div>
<div>
Under the <i>ESA</i>, most employees are entitled to at least one week notice of termination or termination pay, if they've worked for the employer for a period from 3 months to 12 months. There are a number of exemptions, including for an employee who "has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer."</div>
<div>
<br /></div>
<div>
It's a high test - generally even harder to satisfy than the common law test for 'just cause'.</div>
<div>
<br /></div>
<div>
Thus, dismissing an employee with nearly six months of service, on the basis of the suitability test could <b>absolutely</b> not disentitle an employee to statutory notice or termination pay, and any probationary language that purports to do so, expressly or impliedly, would be void.</div>
<div>
<br /></div>
<div>
It would be impracticable, and inconsistent with well-established legal principles, to interpret vague probationary language as automatically excluding common law 'reasonable notice' but not statutory notice or termination pay. Thus, a good employment contract with a longer-than-3-month probation period will typically have <i>ESA</i> saving language, specifying that the <b>meaning</b> of the probation language is to allow termination on provision of <i>ESA</i> minimums only. (In fact, the employee handbook in this case had such language, but the Divisional Court did not disturb the finding that this was not integrated into the contract.) Whereas a non-extendable probation period of less than 3 months might not have the same issue, defining itself as permitting termination without <b>any</b> notice whatsoever.</div>
<div>
<br /></div>
<div style="text-align: center;">
<b>Impact</b></div>
<div>
<br /></div>
<div>
The clear articulation of the suitability test is useful, in general terms. This is consistent with the long history of judicial findings that a probationary termination isn't completely beyond judicial scrutiny.</div>
<div>
<br /></div>
<div>
But the <i>ESA</i> issue does not appear to have been considered by the Divisional Court. In order for this result to be consistent with the <i>ESA</i>, one would have to read the mere word 'probation' as integrating a right to terminate, subject to the suitability test, upon the minimum notice set forth in the <i>Employment Standards Act</i>. I do not take the Divisional Court as actually proposing this, nor would it be likely to stand as a proposition of law if it did.</div>
<div>
<br /></div>
<div style="text-align: center;">
<b>One Last Headscratcher</b></div>
<div>
<b><br /></b></div>
<div>
This is something that's slightly perplexed me about the 'probation' doctrine for a long time: Since probation can't reduce an employee's entitlements to less than the minimum entitlement under the <i>ESA</i>, and a probation clause can't be triggered for straight economic reasons or otherwise arbitrarily...what's the point of probationary language?</div>
<div>
<br /></div>
<div>
An employer who dismisses a 'probationary' employee is going to be called upon to prove that it gave the employee a meaningful opportunity to establish suitability, and considered the employee's suitability in good faith.</div>
<div>
<br /></div>
<div>
By contrast, an employer who relies on an <i>ESA</i>-minimum termination clause (when enforceable) is not called upon to justify the termination in any manner whatsoever (except to the extent, perhaps, of excluding illegal reasons for termination). If that's within the first three months, the employee is entitled to nothing. If it's after the first three months, entitlements remain quite nominal.</div>
<div>
<br /></div>
<div>
The only advantage I can see to the probation language is that it's less likely to be disregarded by the courts. But, even then, many of the problems that exist with termination clauses also arise for probationary language.</div>
<div>
<br /></div>
<div>
*****</div>
<div>
<br /></div>
<div>
<span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-71877566102139559902016-01-21T11:06:00.004-08:002016-01-21T11:06:45.871-08:00Antunes v. Limen Structures Ltd.: Court of Appeal Lifts StayYou may recall the exciting case of <i><a href="http://lawyerbuchanan.blogspot.ca/2015/06/five-month-employee-receives-8-months.html">Antunes v. Limen Structures Ltd.</a></i> from a few months back, where a five-month employee received 8 months pay in lieu of notice (over $105,000), plus an additional half million dollars in damages, and costs and interest totalling over $40,000.<br />
<br />
Limen filed a notice of appeal in respect of the additional half million, but did not initially appeal the other aspects of the judgment. Filing the notice of appeal has the impact of generating an automatic 'stay' of the judgment, preventing the plaintiff from trying to enforce the judgment until the appeal has run its course. This applies, by default, to the whole judgment - even the $145,000 of the judgment debt not being appealed.<br />
<br />
Antunes brought a motion to lift the stay, in relation to all but the half million dollar award, to allow him to collect the uncontested part of the judgment. Limen's response was to file a supplementary notice of appeal, appealing the rest, too.<br />
<br />
The stay is rather concerning to Antunes, because Limen claims to be insolvent - and as time passes, recovery of the debt will likely become increasingly difficult. Antunes continued the motion, arguing that the Court of Appeal should exercise its discretion to lift the stay, because the supplementary notice of appeal was a tenuous appeal solely for the purpose of delaying payment.<br />
<br />
The Court recognized Limen's claim to be unability to pay the judgment, but appeared to doubt the <i>bona fides</i> of that claim:<br />
<blockquote class="tr_bq">
The appellant has managed its affairs in such a way as to minimize its exposure to Mr. Antunes. I accept that businesses can find themselves in financial difficulty for many reasons having nothing to do with the wrongful dismissal claim of a former employee. But I take into account the "scorched earth" trial and appeal tactics taken by the appellant.</blockquote>
Limen contended that, if it paid the judgment and then won on the appeal, Antunes likely wouldn't be able to repay the employer. Antunes' response was that he would be satisfied to have the funds held by his lawyer in trust pending disposition of the appeal - a fair resolution to concerns of uncertainty.<br />
<br />
<a href="http://www.canlii.org/en/on/onca/doc/2016/2016onca61/2016onca61.html">The Court lifted the stay, and didn't order any such trust</a>: The appeal itself (as it related to the wrongful dismissal) was weak on its face, and Antunes' financial hardship made it desirable for the Court to exercise its discretion.<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.47px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.47px;"></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is <a href="http://lawyerbuchanan.ca/" style="color: #888888; text-decoration: none;">a lawyer practicing in Newmarket</a>, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-83540805792519363002016-01-15T12:13:00.002-08:002016-01-15T12:13:31.278-08:00Summary Judgment and Creative SolutionsOne of the consequences of the Supreme Court's decision in <i><a href="http://lawyerbuchanan.blogspot.ca/2014/01/the-supreme-courts-culture-shift-is.html">Hryniak</a></i> is that, even beyond the <b>significant</b> expansion of the availability of summary judgment generally, the courts are allowed to exercise their discretion in designing fair and expeditious processes to determine issues that may <b>not</b> be otherwise amenable to summary judgment.<div>
<br /></div>
<div>
In the case of <i><a href="http://canlii.ca/t/gmx31">Bevilacqua v. Gracious Living Corporation</a></i>, Justice Dunphy felt it necessary to craft such a process.</div>
<div>
<br /></div>
<div>
<b>The Facts</b></div>
<div>
<b><br /></b></div>
<div>
Mr. Bevilacqua worked for Gracious Living for about 16 years, but was given a lay-off notice in September 2014. Bevilacqua commenced litigation in October 2014, apparently claiming constructive dismissal. <a href="http://lawyerbuchanan.blogspot.ca/2014/08/small-claims-court-declines-to-follow.html">This is a topic I've touched on several times</a>: Suffice it to say that, despite one outlier case decided in 2014, my view is that the current law in Ontario continues to be that a temporary layoff, in the absence of a contractual right upon the employer to do so, constitutes a constructive dismissal.</div>
<div>
<br /></div>
<div>
Gracious Living, shortly after receiving the claim, offered Bevilacqua his job back, on the same terms and conditions before. Sound familiar? <a href="http://lawyerbuchanan.blogspot.ca/2013/09/chevalier-v-active-tire-appeal-dismissed.html">Perhaps because it sounds much like the case of Mr. Chevalier</a>, who ultimately had to pay a very substantial costs award to his former employer because he turned down the job under similar circumstances and continued to sue for wrongful dismissal.</div>
<div>
<br /></div>
<div>
Bevilacqua turned down the job, and he claims that it was a bad faith offer - that they had put him on 'temporary layoff' as a way of trying to get him out permanently, and the offer to return him to his job was not made in good faith.</div>
<div>
<br /></div>
<div>
That appears to be the only major factual issue in contention, though.</div>
<div>
<br /></div>
<div>
<b>Justice Dunphy's Decision</b></div>
<div>
<b><br /></b></div>
<div>
Justice Dunphy concluded that, because of the narrowness of the issues that might benefit from <i>viva voce</i> evidence, it was appropriate to fashion a summary manner of dealing with the case.</div>
<blockquote class="tr_bq">
Whether it be characterized as a motion for summary judgment with some viva voce evidence, a "mini-trial", or a modified hearing under Rule 76, I have the jurisdiction necessary to order a common-sense procedure for resolving these issues that satisfies the overriding principles of justice, proportionality, and access to justice.</blockquote>
<div>
The process is expedited, but specific and detailed, with a fixed timeline. In the hearing, witness testimony time is to be quite limited. Before the hearing, of the other witnesses, out-of-court cross-examinations can be conducted beforehand. (As a Rule 76 motion, this is interesting: The default is that no cross-examinations on affidavits is permissible in a Rule 76 motion. <a href="http://lawyerbuchanan.blogspot.ca/2013/07/no-need-for-discoveries-before-summary.html">That sometimes creates a tension with the new summary judgment rules.</a>)</div>
<div>
<br /></div>
<div>
Rather than requiring a "full factum", Justice Dunphy called for concise written argument directed at the four core issues in dispute.</div>
<div>
<br /></div>
<div>
Justice Dunphy was particularly firm on one point: "This hearing will NOT exceed one day."</div>
<div>
<br /></div>
<div>
<b>Commentary</b></div>
<div>
<b><br /></b></div>
<div>
There's certainly value in Justice Dunphy's approach: It will achieve a result expeditiously, while giving the court a reasonable opportunity to hear directly from the critical witnesses.</div>
<div>
<br /></div>
<div>
Still, since the release of <i>Hryniak</i>, I have seen plenty of summary judgment decisions (including my own) with more significant factual disputes than what appear to be the case here.</div>
<div>
<br /></div>
<div>
So what's the principled distinction to be made here? In what cases will a factual dispute require a process of this nature, versus being decided by way of a normal summary judgment motion?</div>
<div>
<br /></div>
<div>
*****</div>
<div>
<br /></div>
<div>
<span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;"></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-50241843318774710662016-01-08T12:53:00.001-08:002016-01-08T12:53:32.746-08:00Employees Drinking at LunchHat tip to <a href="http://lawofwork.ca/?p=8451">Professor Doorey</a> for finding this interesting case.<br />
<br />
Last week, Justice Nightingale decided the case of <a href="http://canlii.ca/t/gmpss"><i>Volchoff v. Wright Auto Sales Inc</i>.</a>, a wrongful dismissal case by a car sales manager, who was dismissed allegedly for cause.<br />
<br />
Just cause is a high threshold, and it's relatively rare to see dismissals for cause. It's even rarer to see the 'just cause' defence succeed at trial. This is not one of those cases.<br />
<br />
The allegation against Mr. Volchoff was that he attended at work while under the influence of alcohol, including driving company vehicles. However, at trial, the employer's evidence was pretty thin, establishing only that, on one or two occasions, he had the smell of alcohol on his breath. Mr. Volchoff readily admitted to having the occasional glass of wine at lunch at a local restaurant, usually before Manager's Meetings on Wednesdays. (The employer held two meetings with Volchoff about that, and there's a dispute as to what happened in them. Volchoff insists that there was no mention of a 'zero tolerance policy' at the first meeting, and that no other issues were raised despite him continuing to have his lunchtime wine before the weekly management meetings, and that the zero tolerance policy was first mentioned at the second meeting, following which Volchoff's evidence is that he stopped drinking wine at lunch.)<br />
<br />
There were later and more serious allegations, arising in June 2014, including that he drove the employer's vehicles while impaired, but the evidence in support of these claims was extremely vague and non-specific - little in the way of times and dates when he was allegedly impaired, little in the way of evidence of actual impairedness (as opposed to evidence that his cheeks were red, for instance, which didn't trouble the judge in light of observing that Volchoff "displayed a natural rosy cheek complexion"). Some of the employees who expressed concern testified that they had raised their concerns many months before the issues in question arose in the first place.<br />
<br />
Only one witness' evidence had any real specifics capable of sustaining the more serious allegations: One Mr. Knaud testified that, after Volchoff returned from Manager's Meetings, he observed Volchoff to "have rosy cheeks, glazed eyes, slurred speech and the smell of alcohol", including while dealing with customers. However, the plaintiff's counsel successfully challenged this evidence on cross-examination, and his credibility was further damaged by testimony that the judge characterized as "intentionally vague and not truthful", claiming not to recall anything pertaining to another complaint he made about Volchoff in June 2014: He (and other employees) had objected to changes Volchoff had made in how internet-generated leads were treated<br />
<br />
The employer claimed to have a 'zero-tolerance' policy for alcohol during working hours. This would be reasonable for such an employer, but Mr. Volchoff claimed that this policy was never brought to his attention, even after he advised the employer that he occasionally had wine at lunch.<br />
<br />
The judge believed Volchoff's evidence on the point.<br />
<br />
If the employer had a zero-tolerance policy, it was never formalized and not brought to Volchoff's attention, and in any event there was no trail of progressive discipline, nor sufficient evidence that Volchoff was expressly advised that his employment was in jeopardy. (The employer's evidence, again, included some evidence that he was told at the first meeting that there would be 'repercussions' if he continued to drink during working hours; however, the evidence was not corroborated by other employer witnesses who were present.) There was no evidence to substantiate the more serious allegations against Volchoff, and no evidence that he was drinking during working hours when he had been told not to.<br />
<br />
Thus, the just cause defence failed, and Volchoff was entitled to damages for pay in lieu of reasonable notice.<br />
<br />
<div style="text-align: center;">
<b>The Suspension <i>Obiter</i></b></div>
<br />
Justice Nightingale made reference to an investigative suspension, and highlighted the absence of other progressive discipline.<br />
<blockquote class="tr_bq">
<span style="background-color: white; font-family: 'Times New Roman', serif; font-size: 16px; text-align: justify; text-indent: -48px;">He was placed on a suspension with pay for one week pending investigation of his conduct. An imposition of continued discipline including a further suspension, with or without pay, for a reasonable period of time, including a specific warning that any further violation would result in his termination, would have been appropriate to bring home to Mr. Volchoff his employer’s serious concerns, if it had them, with his conduct and make him realize his job was now in jeopardy if he continued. Progressive discipline, short of termination of employment, was clearly more appropriate in this case.</span></blockquote>
Professor Doorey, in his blog entry on the subject, finds this commentary to be very strange, for two reasons. Firstly, there's no suggestion in the description of the evidence that there was a contractual basis for a disciplinary unpaid suspension, and it's fairly widely accepted that, in the absence of a contractual entitlement to do so, <a href="http://lawyerbuchanan.blogspot.ca/2011/10/back-to-basics-constructive-dismissal.html">an unpaid suspension constitutes a constructive dismissal</a>, unless the misconduct rises to the level of just cause for termination anyways. (See Justice Echlin's decision in <i>Carscallen v. FRI</i>.)<br />
<br />
Secondly, Justice Nightingale seems to conclude that the employee didn't actually do anything wrong: There was no evidence to establish that he ever attended at work in a state that rendered him unable to properly carry out his duties; the evidence Justice Nightingale accepted led to the conclusion that he never violated employer directions; etc. So why would a suspension have been appropriate?<br />
<br />
To be charitable to Justice Nightingale, I read this less as a <i>finding</i> that a suspension "would have been appropriate", and more of a suggestion - made in slightly too specific terms - that, "if" the employer "had serious concerns", it had other options to drive them home with the employee before leaping to termination. Which is fair, but for the 'constructive dismissal' issue from <i>Carscallen</i>, which would likely have made an unpaid suspension unavailable to the employer. That being said, while there's no express reference to a contractual right to suspend, there's also nothing in the decision or described evidence that would foreclose such a possibility: Thus, it would be very hard to read this <i>obiter</i> as conflicting with <i>Carscallen</i> in any serious way.<br />
<br />
<div style="text-align: center;">
<b>Contractual Integration of Policies</b></div>
<br />
All things considered, particularly given Justice Nightingale's findings of fact, the result seems pretty straightforward, but there are two elements of the analysis which I find slightly troubling.<br />
<br />
Firstly, Justice Nightingale was clearly looking for integration of the "zero tolerance policy" into the employment contract itself.<br />
<blockquote class="tr_bq" style="text-align: left;">
<span style="background-color: white; font-family: 'Times New Roman', serif; font-size: 16px; text-align: justify; text-indent: -48px;">I am not satisfied that the zero-tolerance policy of the Defendant, whatever it was, was a term of the employment contract between the Plaintiff and the Defendant when he was first hired or, because of the lack of consideration, became one after he was hired.</span></blockquote>
<span style="background-color: white; font-family: 'Times New Roman', serif; font-size: 16px; text-align: justify; text-indent: -48px;">This conflates the applicable legal principles. Yes, contractual rights must be agreed upon by the parties, with consideration. But the right to set a zero-tolerance policy may well be within an employer's implied contractual rights.</span><br />
<span style="background-color: white; font-family: 'Times New Roman', serif; font-size: 16px; text-align: justify; text-indent: -48px;"><br /></span>
<span style="background-color: white; font-family: 'Times New Roman', serif; font-size: 16px; text-align: justify; text-indent: -48px;">In any employment contract, the employer retains certain management rights. An employee's duties of loyalty and fidelity require an employee to comply with management directions, generally. (Of course, this isn't without exception. If I tell my employees to do something illegal, they'll be entitled and obligated to refuse. If I set a requirement that I am prohibited by statute from requiring, then that will likewise be unenforceable. If I issue an order that conflicts - either expressly or impliedly - with the employee's existing contractual rights, then this may constitute a constructive dismissal.)</span><br />
<span style="background-color: white; font-family: 'Times New Roman', serif; font-size: 16px; text-align: justify; text-indent: -48px;"><br /></span>
<span style="background-color: white; font-family: 'Times New Roman', serif; font-size: 16px; text-align: justify; text-indent: -48px;">Many employment contracts do expressly integrate a policy manual or employee handbook, and reserve upon management the right to modify the policies from time to time. This is probably <i>not</i> necessary (generally speaking) in order for management to <i>have</i> the right to set such policies, within reasonable limits, on a unilateral basis and without obtaining contractually binding assent of the employees.</span><br />
<br />
<b>IF</b> the employer told Mr. Volchoff that he was not permitted to have <i>any</i> alcohol in his system while working, and Mr. Volchoff <b>then</b> continued to return to work after drinking wine at lunch, then the analysis doesn't stop with "It wasn't integrated into his contract." Go on to "Did the employer have the contractual right to require this of Mr. Volchoff?" The answer to that is probably 'yes'. (Would they have the right to say "Don't drink cranberry juice at lunch"? Likely not. But setting reasonable requirements for the state in which Volchoff must be upon his return to work is very likely justifiable.) <b>Next</b>, we would go on to determine whether or not the conduct rises to the level of just cause: If there were reliable evidence of significant impairedness, and/or damage or injury from a collision, then there might be a worthwhile argument for cause. But formal breaches of the zero-tolerance policy, in the sense of showing up to work with a low BAC from a glass of wine at lunch, would almost certainly require progressive discipline.<br />
<br />
Of course, Justice Nightingale did not find that Volchoff continued to drink after being told not to, so this whole analysis is entirely hypothetical.<br />
<br />
<div style="text-align: center;">
<b>What is or isn't Discipline?</b></div>
<br />
I am also slightly troubled by the phrase "continued discipline", in the suspension <i>obiter</i> remarks, which implies that the investigative suspension was disciplinary in nature. This is an important distinction. It is common, particularly in larger organizations, for the subject of serious allegations of misconduct to be suspended, with pay, pending the results of the investigation. This is <b>not</b> disciplinary, and should not be regarded as so. It does not imply any finding of fault, and is not intended to be punitive or corrective in any way.<br />
<br />
Disciplinary suspensions, where they are appropriate, are different in nature.<br />
<br />
There's also room to discuss 'early stage' discipline: Let's suppose that I have a policy against swearing in the workplace, but I've never informed you of it or enforced it, and a culture of swearing has developed - which I have condoned. I can't simply tally up all your swears for several months, say nothing to you about it, and then fire you one day because of the cumulative impact of them. Rather, I need to start the ball rolling of 'progressive discipline'.<br />
<br />
Yet my condonation of the act, and your lack of awareness of the policy, means that, in any objective sense, you're not doing anything 'wrong' at all. So how can I discipline you for something that isn't wrong?<br />
<br />
The initial stage is going to <i>have</i> to be an informal (but still clearly documented) caution: We might argue about whether or not it's properly characterized as discipline. I define discipline as being corrective in nature: Bringing to your attention my expectations, and the way in which I expect you to modify your behaviour moving forward, is certainly discipline. If you regard discipline as fundamentally punitive, then you might take a different philosophy. (Simply, I don't regard a punitive model of discipline as being appropriate in an employment relations context.)<br />
<b><br /></b>
<br />
<div style="text-align: center;">
<b>Employer Practices</b></div>
<br />
I'm prepared to give the employer the benefit of the doubt in terms of how this termination came about. It certainly sounds like some of the complaining employees had an axe to grind with Volchoff, but their complaints left the employer with the good faith impression that Volchoff had a long-standing and continuing drinking problem. In light of the safety-sensitive nature of some of his work, it's difficult to ignore that impression, even if you can't prove it - particularly when Volchoff himself admitted to a <i>little</i> bit of drinking. (It's widely viewed that people underestimate their own alcohol consumption.)<br />
<br />
So they dismissed him. And then he sued, and they wanted to allege cause, and their lawyer explained to them what would be necessary to prove cause, such as - likely - evidence of progressive discipline and clear indication that his continued employment was in jeopardy if he continued to drink. The evidence of one of the people in a meeting that she's sure she told Volchoff that there would be "repercussions" sounds like the classic case of an employer looking to fit the contents of the meeting to the 'form' of a case for just cause, on an <i>ex post facto</i> basis.<br />
<br />
But, even on this generous assessment, I don't have much sympathy for the employer. For two reasons: Firstly, they botched the process significantly. If they actually had a zero-tolerance policy, they failed to properly implement it. If they actually told Volchoff not to drink, period, then they should have maintained better written records of that direction. If they actually cautioned Volchoff that his employment was in jeopardy, again, they should have done so clearly and in writing.<br />
<br />
There's a way to go about these things.<br />
<br />
And with the judge characterizing the defence evidence as being largely vague and unspecific, it almost sounds like the defence strategy was to paint the plaintiff as a lush - which would be a very poor strategy, in general, for a few reasons. Firstly, if he really did have a serious drinking problem which frequently manifested at work, then issues should have arisen sooner, and it should have been much easier for the defence to point to specific work-related failings that resulted. Secondly, smear tactics are generally frowned upon for employers in wrongful dismissal proceedings. Thirdly, if he was an alcoholic, then that raises the spectre of human rights issues and the duty to accommodate.<br />
<br />
So yes, I can understand the employer having concerns about continuing to employ somebody under those circumstances, but you need to investigate thoroughly, come to justifiable factual conclusions as to what the actual state of affairs is, and then come up with a strategy for addressing the issue - with competent legal advice, preferably.<br />
<br />
<div style="text-align: center;">
<b>Alcohol in General</b></div>
<b><br /></b>
This isn't the first 'drinking on the job' case I've posted about. In 2013, I discussed the <i><a href="http://lawyerbuchanan.blogspot.ca/2013/09/court-of-appeal-drunk-driving-can.html">Dziecielski</a></i> case, involving an individual who stopped for lunch on his way back to the office from a customer visit, had a few beers with lunch, then wrecked the employer's vehicle and was charged with impaired driving. 9 years earlier, he had signed off that he had reviewed the employee handbook, which specified that drinking during working hours was a "major" violation.<br />
<br />
In that case, the employer was found to have established just cause, which was the right result in the circumstances, but I pondered some counterfactuals: What if it was only one drink? What if there had been no collision? Would violation of the 'no drinking' rule still have warranted summary termination without a trail of progressive discipline?<br />
<br />
These two cases certainly illustrate the importance of context. In <i>Dziecielski</i>, we have an egregious scenario with significant drinking, a BAC of over 80, criminal charges, a collision in the employer's vehicle, and a policy which expressly prohibits drinking at all. In <i>Volchoff</i>, we have an individual who was proven to have the occasional glass of wine with lunch, but with no criminal charges, no evidence of significant impairment or performance concerns, no collisions, and inadequate evidence of a formal policy.<br />
<br />
Many employers take a dim view of drinking - at all - during working hours. This isn't unusual. Some don't. As I noted in my discussion of <i>Dziecielski</i>, I used to frequently go to lunch with my old firm's partners (i.e. my bosses at the time) and have a pint or a glass of wine. (At that time, I practiced in the same town as now-Justice Nightingale, and one or more of his partners would occasionally join us as well, incidentally. What can I say: There's certainly a <i>charm</i> to small-town law.) Obviously, they didn't object to it - from time to time, they even bought. But if I'd drank to excess, certainly that would have changed their view.<br />
<br />
Either way, scale and context are important, and that's what the <i>Volchoff</i> case ultimately establishes.<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;"></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-92123514449273691032015-12-16T16:45:00.000-08:002015-12-16T16:45:27.207-08:00Another Chapter in the Mehedi v. Job Success SagaMore than a year ago, <a href="http://lawyerbuchanan.blogspot.ca/2014/08/admitting-fresh-evidence-after-losing.html">I posted about the case of <i>Mehedi v. 2052761</i></a>, involving an individual suing a company called "Job Success" for fraud - basically alleging that he paid them a lot of money for them to find a job, with guaranteed results which never materialized.<br />
<br />
A brief overview of the procedural background: It went to trial in 2011, and the judge accepted the defence evidence that there were no specific guarantees made. Mehedi appealed, and in January 2012 the appeal was dismissed. In February 2012, CBC ran a "Marketplace" segment about a related company to Job Success, going undercover with hidden cameras, and caught the <i>same people who testified in the 2011 trial</i> making <i>exactly</i> the kinds of guarantees which they had testified they don't make.<br />
<br />
Ever call a telecom company and end up getting bounced from department to department, repeatedly, sometimes back to one you've already talked to, having to wait on hold for hours each time? Imagine that you're on hold for <i>months</i>, and that's basically what happened next to Mehedi.<br />
<br />
Self-represented, he brought a motion for judgment in March 2012. This was the wrong move; the motion judge concluded that he needed to have the trial judgment set aside first, and suggested he obtain legal advice. He obtained legal advice recommending that he try to file a motion to lead new evidence before the same trial judge, so he wrote to the judge. He then received a letter advising that it was inappropriate to communicate with the judge directly, directing him to schedule the motion through the Court Registry. The scheduling office told him that they didn't know the specific judges' schedules, and suggested that he obtain dates directly from the trial judge's office. He went back to a lawyer at this point, who contacted the trial judge's assistant in late November 2012 to obtain dates - but unfortunately the trial judge was not sitting in civil court in the foreseeable future. The assistant suggested bringing a motion to the Superior Court (before a judge to be assigned) to introduce new evidence.<br />
<br />
So Mehedi brought a motion in March 2013, which was adjourned twice, eventually being heard in May 2014. The Superior Court's answer? Because the matter had gone to the Court of Appeal, the motion should be made at the Court of Appeal level.<br />
<br />
So Mehedi followed that direction, and brought a similar motion at the Court of Appeal - heard in July 2014. The Court's conclusion: "Regretting the inconvenience Mr. Mehedi has encountered, I conclude that his motion to introduce new evidence should be brought in the Superior Court before a motions judge in the ordinary way." Again.<br />
<br />
The new development is that Mr. Mehedi brought his motion, which was heard by Justice Whitaker in November 2014. Justice Whitaker dismissed the motion with very brief reasons, finding that he wasn't convinced that the new evidence would have made a difference in the overall disposition of the case.<br />
<br />
So...back to the Court of Appeal, which released a new decision in October 2015, <a href="http://canlii.ca/t/glgfd">allowing the appeal</a>.<br />
<br />
While there's some interesting (from a lawyer's perspective) discussion of the appropriate test, the Court of Appeal was of the view that the test was satisfied either way (and that Justice Whitaker's reasons on the issue were not adequate). The Court of Appeal re-opened the trial and remitted the matter back to the trial judge for consideration of the admissibility and impact of the new evidence.<br />
<br />
<div style="text-align: center;">
<b>Discussion</b></div>
<br />
Reopening a trial after a decision has been rendered is highly exceptional: There's a significant interest in finality, so the courts don't do it lightly.<br />
<br />
But this factual situation is very unusual.<br />
<br />
On the appeal, there was some debate as to the appropriate test to be applied. It looks, though, like the Court downplayed the differences between the tests.<br />
<br />
The <i>Baetz</i> test looks at whether the new evidence could reasonably have been obtained for trial, along with various other factors such as whether or not the moving party delayed in bringing the motion and the overall fairness to the parties and those who have acted in reliance on the judgment, in the circumstances.<br />
<br />
The <i>Sagaz </i>test is often formulated with two questions:<br />
(1) Could the evidence have reasonably been obtained for use at trial?<br />
(2) Could the evidence reasonably have affected the outcome of the trial?<br />
<br />
However, there are other comments in the <i>Sagaz</i> decision which allude to general fairness principles, as well as specific concerns about reliability of the evidence. The Court of Appeal appears to question how much of a difference there really is between the two tests at all.<br />
<br />
And, either way, it does indeed seem that the test is made out: The new evidence was released by a third party after the hearing of the appeal, so it certainly wasn't available to Mehedi. It certainly could have affected the outcome of the trial, which hinged in large part on the trial judge regarding it as "unrealistic and unreasonable" that the defendants might have made the promises which they were alleged to make; the trial judge would have had cause to rethink that conclusion if he saw this video evidence of them making similar representations to others.<br />
<br />
And in terms of the general fairness issues, the delays were not Mehedi's fault; he began seeking this relief immediately when the evidence became available, and a very short period of time after the original appeal.<br />
<br />
Interestingly, the Court of Appeal referred to the <i>Irving Shipbuilding Inc. v. Schmidt</i> case (where the employer improperly obtained an Anton Pillar Order against an employee, and proceeded to ransack the employee's home) as a precedent for the test. If you'll recall <a href="http://lawyerbuchanan.blogspot.ca/2014/09/employer-who-ransacked-employees-home.html">my commentary on the motion to introduce fresh evidence in <i>Schmidt</i></a>, I referred to the <i>Mehedi</i> fact pattern as an "excellent example" of a case where the evidence couldn't have been available at the hearing.<br />
<br />
<div style="text-align: center;">
<b>Lessons Learned</b></div>
<br />
I have a great deal of sympathy for the ordeal that the system put Mr. Mehedi through. It's hard to excuse the different courts disagreeing as to the correct procedure; with increasing numbers of self-represented litigants trying to access the legal process, it's hard to excuse a process so complicated that the courts themselves can't parse it.<br />
<br />
That being said, it may have been much smoother had Mr. Mehedi had the assistance of counsel throughout. More thorough legal submissions to Justice Whitaker <i>may</i> have made a difference, eliminating the need for this appeal. A lawyer might have been better-positioned to convince the Superior Court, on the first attempt at the motion, that it had jurisdiction to hear the motion notwithstanding the earlier appeal. (Whenever you're seeking unusual relief at court, you're likely to hear the question, "Where do I draw the jurisdiction to grant the relief you're seeking?" If you can't answer that question - and sometimes it's a very legally sophisticated question - then you're in trouble.)<br />
<br />
Better advice, earlier, would certainly have prevented him from bringing the doomed motion for judgment without first moving to admit the new evidence.<br />
<br />
There <i>are</i> times when lawyers and judges can legitimately disagree amongst themselves as to how an issue should move forward. If lawyers always agreed on everything, we wouldn't need judges. If judges always agreed on everything, we wouldn't need appeals. As a lawyer, sometimes I have to make a decision on process, and then I have to <i>defend</i> that choice. In the absence of a cogent justification for a procedural decision, it's easier for an adjudicator to say "You chose...poorly" and dismiss the proceeding than it is for the adjudicator to find a way to grant the relief.<br />
<br />
Consider my recent post about <i><a href="http://lawyerbuchanan.blogspot.ca/2015/08/where-can-landlord-recover-unpaid.html">Finney v. Cepovski</a></i>, where the Landlord Tenant Board said (to paraphrase) "We can't award damages for utilities", so the landlord went to the Small Claims Court instead, which said "They were wrong; that process was the right one, and so the court can't help you." At the LTB, I would have strenuously argued about jurisdiction, and may well have caused the adjudicator to think twice about declining to award damages. Coming out of the unsuccessful LTB hearing, I would have suggested judicial review at the Divisional Court instead of a Small Claims Court action (which would have been the better avenue). But even at the Small Claims Court, I'd have had arguments up my sleeve to try to convince the Deputy Judge to take jurisdiction <i>anyways</i>.<br />
<br />
Sometimes, even with a lawyer, you still get locked out. But it's less likely. You're more likely to choose an <i>available</i> course of action in the first place with good legal advice, and more likely to be able to convince the applicable adjudicator that, in fact, the course you have chosen is the correct one.<br />
<br />
*****<br />
<br />
<span style="color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;">contact a lawyer</span><span style="color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;"></span><span style="color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-9656171161970346172015-12-15T14:12:00.001-08:002015-12-15T14:12:10.124-08:00Long-Service Employee Signs Fixed Term Contract - And Regrets ItBrent Riskie worked for Sony Canada since 1989 - he was presumably around 19 or 20 when he started. As of earlier this year, he had a Toronto-based management position.<br />
<br />
Last year, he wanted to move to Ottawa for family reasons, and asked the employer to accommodate such a move, that he would largely work from his new home and travel to Toronto on an as-needed basis.<br />
<br />
The employer was reluctant. Riskie, and his immediate supervisor, pressed the matter. Eventually, Sony agreed to do so, but only on a trial basis, and insisted that he sign a fixed-term contract in order to do so. While negotiations were still ongoing, he completed his move. The contract was signed July 28, 2014, with an expiration date of March 31, 2015.<br />
<br />
His department went through a restructure in early 2015, and on February 18, 2015, he was advised that his contract would not be renewed. He received statutory minimum notice and severance payments - approximately 7 months.<br />
<br />
It sounds like he likely would have been restructured out regardless of the move, and probably would have been entitled to somewhere close to two years of pay in lieu of notice. Instead...<br />
<br />
Recently, <a href="http://canlii.ca/t/gl894">Justice Dunphy upheld the fixed term contract, and denied him further recovery</a>.<br />
<br />
<div style="text-align: center;">
<b>The Issues</b></div>
<br />
The problem was obvious: The employer was ostensibly entitled to just...<i>not renew</i> the contract. So Riskie had to find a way around that, argue that the fixed term provision was of no force and effect.<br />
<br />
To that end, he made a few arguments. One was 'duress' - the framework is interesting, but this doesn't look like a close case for it. The fact that he might have felt obligated by his personal circumstances to move and accept whatever terms were put to him...doesn't affect Sony's entitlement to insist on those terms.<br />
<br />
Two other arguments were stronger, though. One was that the contract was unenforceable for lack of consideration, and the other was an <i>ESA</i> compliance issue.<br />
<br />
<div style="text-align: center;">
<u>Lack of Consideration</u></div>
<u><br /></u>
As I've noted <i>many</i> times before on this blog, an employment contract needs to give an employee something 'new'. If you hire me, and then ask me to sign a contract after you've hired me, then the question is 'what am I getting out of this contract that I don't already have'? In the absence of 'fresh consideration', the contract fails the test for enforceable promises at common law.<br />
<br />
So the interesting quirk here is that he actually moved <i>before</i> the new contract was signed. So it looks an awful lot like the 'fresh consideration' cases: He's doing the job from Ottawa, and now he's signing a contract which...ahem...entitles him to work from Ottawa.<br />
<br />
It's a compelling argument, at face value.<br />
<br />
On the other hand, there's a very strong moral argument going the other way: He knew, when he made the move, that he was going to be required to sign such a contract, and that the employer wasn't acquiescing to the move without terms on it.<br />
<br />
Justice Dunphy focuses on that, and characterizes the 'fresh consideration' argument as "a technical argument devoid from any real-world substance". (That's true of a <i>lot</i> of consideration-based arguments. It's a very technical legal concept.)<br />
<br />
At law, it is a fairly straightforward reality that none of that actually matters, if the employer actually <b>did</b> acquiesce to his terms and allow him to move notwithstanding the absence of a signed contract.<br />
<br />
The saving grace in Justice Dunphy's reasoning on the point is this: "<span style="background-color: white; font-family: "times new roman" , serif; font-size: 16px; text-align: justify;">it was a case of “take it or return to Toronto”</span>".<br />
<br />
It there's the evidence to substantiate that understanding, that Sony permitting him to work from Ottawa while negotiations were ongoing was <i>without prejudice</i>, and that they reserved the right to recall him to Toronto if negotiations failed, then Justice Dunphy's conclusion is right. And I don't know what evidence was before the court - but I don't think that you can take such a reservation as implied from the fact of ongoing negotiations. <br />
<br />
<div style="text-align: center;">
<u>ESA Compliance</u></div>
<br />
Here's another interesting one. There's an early termination clause in the language of the contract, in the same paragraph setting out the term of the agreement, allowing the employer to terminate it on 30 days' notice.<br />
<br />
On its face, that was deeply problematic: A termination clause cannot contract out of the statutory minimums, and for a 26 year employee, there's a minimum notice period of 8 weeks. (Not to mention statutory severance.) So this early termination clause was clearly void.<br />
<br />
This raises the question of 'severability' - when the court finds that a given provision is void by operation of law, how does that affect the rest of the contract?<br />
<br />
There's a conceptual challenge with writing out a small part of a contract: A contract is agreed to between the parties <i>as a whole</i>. It has long been said that a court will not rewrite a contract between the parties.<br />
<br />
On the other hand, it's fairly compelling to remove the illegal portions of a contract and leave in place the legal portions.<br />
<br />
There have been a variety of legal doctrines employed to resolve this tension, which are either limited or controversial. The "blue pencil" approach has often been used to determine whether or not it is possible to sever language, and how to do so: Can a fair and coherent contract be left between the parties merely by striking out the problematic language? By contrast, there's 'notional severance', which allows the court to controversially <i>insert</i> language in order to remove the illegal effect from the contract.<br />
<br />
I've <i>very seldom</i> seen the 'blue pencil' approach openly discussed in employment law cases: It is clear from the seminal <i>Machtinger</i> case from the Supreme Court of Canada that, at minimum, an unenforceable termination clause must be struck in its entirety. It is incumbent upon an employer to ensure the legality of its contractual language, and the employer cannot turn to the courts to try to fix the contract after the fact.<br />
<br />
And the question seldom arises as to how far <i>beyond</i> that unenforceable language we need to do. Where it has arisen, the cases sometimes involve clear 'severability clauses' guiding the court's interpretation. For example, in the recent decision in <i><a href="http://canlii.ca/t/g88fs">Miller v. Convergys CMG Canada Limited Partnership</a></i>, the British Columbia Court of Appeal enforced a severability clause which spelled out that the different numbered paragraphs in the agreement were separate promises, and if one was unenforceable, the rest should be left intact.<br />
<br />
In the <i>absence</i> of a clear severability clause, the question can be much more difficult. But it seems to me <i>fairly unusual</i> to do what Justice Dunphy did with Mr. Riskie's contract, striking out the 'early termination' language while leaving the rest of the <i>same paragraph</i> intact. Was it a separate promise? Consider for a moment that, had the same severability language from <i>Miller</i> been present in this contract, it would have clearly required the whole paragraph to be struck.<br />
<br />
Also consider that a fixed-term contract <i>without</i> an early termination clause can be <a href="http://lawyerbuchanan.blogspot.ca/2012/05/further-difficulties-with-fixed-term.html">exceedingly onerous for the parties</a>. In general terms, and in the context of a 26-year relationship, there are compelling reasons to think that one might have to read a 'fixed term' promise together with a corresponding 'early termination' promise.<br />
<br />
Nonetheless, Justice Dunphy regarded them as being "logically and textually independent of each other", and found that they "are not a package that must stand or fall together." Accordingly, despite the flaws in the early termination language, the fixed term was enforceable.<br />
<br />
<div style="text-align: center;">
<b>Lessons to be Learned</b></div>
<br />
There are some very interesting legal issues in this case, dealing with severability and consideration, but the more significant issue is likely practical: Be careful what you sign.<br />
<br />
It's possible that the relocation to Ottawa was so important to Riskie that he would have done it even knowing the consequences. Maybe he even sought legal advice on the terms, and no doubt would have been advised (a) that the early termination clause was probably not enforceable but (b) that changing from an indefinite-term contract to a fixed-term contract could have an immense impact on his existing rights upon termination.<br />
<br />
What Riskie probably <i>didn't</i> anticipate was a restructure unrelated to his own circumstances. Likely, he was confident that Sony would see that the new arrangement was viable, and that he would be able to continue to carry out his duties effectively. "I'm not worried about getting fired, because I'm a great employee." But when a restructure occurred for other reasons, his circumstances - and his contract - put him squarely in the line of fire.<br />
<br />
This is why and how I encourage pushback on clauses limiting termination entitlements, particularly for employees in senior roles: It's not about trying to get that golden parachute; it's about job security, making the employer think twice before deciding to get rid of you as a cost-cutting measure.<br />
<br />
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*****</div>
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<span style="color: #222222; font-size: 13px; line-height: 18px;">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, </span><span style="color: #222222; font-size: 13px; line-height: 18.48px;">contact a lawyer</span><span style="color: #222222; font-size: 13px; line-height: 18px;">.</span><br style="font-size: 13.2px; line-height: 18.48px;" /><span style="color: #222222; font-size: 13px; line-height: 18px;"><br /></span><span style="color: #222222; font-size: 13px; line-height: 18.48px;"></span><span style="color: #222222; font-size: 13px; line-height: 18px;">The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-54612726783448867612015-12-02T10:55:00.002-08:002015-12-02T10:55:54.276-08:00Using a Cell Phone in a Drive ThroughThere's a recent news story about a fellow who received a nearly $300 ticket for texting while in line at a Tim Hortons drive-through.<br />
<br />
It's important to note that this took place in Beaumont, Alberta. This is relevant. While most traffic offences generally apply only to 'highways', Alberta's <i>Traffic Safety Act</i> expressly defines 'highways' as including private property like drive-throughs and parking lots generally used by the public. Ontario's <i>Highway Traffic Act</i> does not, and the courts have consistently held that such properties are not 'highways'. (Don't get fooled by the language, though. We may casually use the term 'highway' as being distinct from 'city streets', but city streets are definitely highways within the definition of the <i>HTA</i>.)<br />
<br />
So that wouldn't happen here in Ontario.<br />
<br />
But it's not all that different from the 'texting at a red light' scenario. Or, as the case may be, <a href="http://www.canlii.org/en/on/onca/doc/2013/2013onca585/2013onca585.html">retrieving your phone from the floor at a red light</a>. Any use or handling of an electronic device, at any time you're on the road (unless legally parked), is an offence. And it's an offence with a hefty fine. A set fine of $490, with a maximum fine of $1000, plus three demerit points. In terms of demerits, that's about on par with driving on the wrong side of the road.<br />
<br />
There's a good reason to treat distracted driving so seriously: It is a <i>deadly</i> problem on our roads.<br />
<br />
But, perhaps, less so at red lights or in Tim Hortons drive-throughs.<br />
<br />
I argue that the existing legislation is, in different respects, both <i>overbroad</i> and <i>underinclusive</i>.<br />
<br />
<div style="text-align: center;">
<b>The Legislation is Overbroad</b></div>
<br />
This is an easy argument to make. The law is premised on safety - steep penalties to discourage people from engaging in <i>mortally dangerous</i> behaviour.<br />
<br />
Yet so many of the charges are laid in connection with cell phone use at red lights.<br />
<br />
This is, in some ways, a practical enforcement issue: It's easier to identify people using cell phones when they're stationary. But part of that is because people are <i>justifiably less concerned</i> about the safe operation of their vehicle when they're stopped at a red light, and will be more likely to stare down at their phone for several seconds. (Driving instructors will tell you that this is still unsafe: Even when stopped at a red light, you need to be cognizant of your surroundings, to be prepared to respond to hazards that arise against you. Part of defensive driving. But that's really not what we're talking about when discussing the deadly hazards of distracted driving. Driving defensively can certainly save lives, but it's rather disingenuous to ever attribute a fatality to a failure to drive defensively.)<br />
<br />
So the message the law sends is "Just put away the phone." This, on its face, doesn't seem so unreasonable - almost elegant in its simplicity. Yet it isn't limited to telecommunications functions, either. Changing the track on your iPod while stopped at a red light is an offence - and not just a minor offence, but a $490-$1000 fine. Arguably, this takes less attention than changing the radio station on a built-in stereo - which will generally be <i>legal</i>.<br />
<br />
I understand and agree with the need to seriously address the issue of distracted driving, because it's a safety issue. But, frankly, somebody momentarily using a phone at a red light is simply <i>not</i> a safety issue in the same way, and imposing the same hefty fines to the person changing the song on their iPod at a red light, as to the person sending an email on the 401, makes no sense to me.<br />
<br />
That being said, if somebody is holding up traffic because they haven't noticed that the light is green, there probably are (or should be) other lesser charges to cover that scenario. I also wouldn't necessarily object to a lower 'distracted driving' offence covering red light scenarios; my argument is ultimately that it's rather absurd to treat all 'distracted driving' scenarios the same way.<br />
<br />
<div style="text-align: center;">
<b>The Legislation Fails to Address Actual Distractions</b></div>
<br />
Earlier this year, <a href="http://www.yorkregion.com/news-story/5695667-york-regional-police-urges-drivers-to-take-no-cellphone-pledge/">York Regional Police kicked off a 'no cellphone pledge' campaign with a press conference</a>, where the Regional Chairperson indicated that, on his way to the conference, he saw "four people talking on their hand-held cell phones, a woman putting on makeup, a man tying his tie, and numerous drivers juggling their breakfasts."<br />
<br />
Distracted driving is dangerous. Nobody disputes that. Yet we've imposed a serious fine for holding a cell phone in your hand, while not directly addressing other common distractions <i>at all</i>. Tying your tie? Applying makeup? Shaving? Eating? Drinking? Smoking? Reading? I recall an occasion taking the GO bus downtown, and looking over into the vehicle next to us on the Gardiner and seeing a woman engrossed in a report she was reading. While driving. <a href="http://www.cbc.ca/news/canada/toronto/busy-rob-ford-admits-to-reading-while-driving-1.1278580">I wasn't so surprised when Rob Ford was caught doing the same thing</a>.<br />
<br />
Fundamentally, we have a major problem of people <b>not giving driving the attention it deserves and requires</b>. It's far bigger than just cell phones.<br />
<br />
And far bigger than hand-held cell phones, particularly.<br />
<br />
There are plenty of statistics to support the proposition that talking on your cell phone significantly increases the odds of a serious collision. <a href="http://www.tc.gc.ca/eng/motorvehiclesafety/tp-tp15145-1201.htm">And the existing research suggests that it is <b>basically irrelevant</b> whether or not you're on hands free</a>. The distraction of a phone conversation while driving isn't the result of the phone in your hand; it's the mental effort you're putting into the conversation that you should be putting into driving.<br />
<br />
I'll admit that I make 'hands-free' calls in my car from time to time. I don't generally like to do so, mainly because I find I'm a terrible conversationalist while doing so. When the road calls for my attention, I pay attention to the road, and often lose my train of thought or miss what the other person is saying. It's a matter of prioritization, which it seems many people don't do. (It has also struck me, too, that there's a big difference between calling somebody to give an ETA in good driving conditions, as opposed to carrying on a heated argument during a blizzard. There are gradations of distractions.)<br />
<br />
There's a problem on the road, yes. But the existing legislative regimes focus too much on what the hands are doing and too little on what the brain is doing - by obsessing about handsets and not caring at all about actual mental distractions.<br />
<br />
And I think we can all agree that ticketing somebody in a Tim Hortons' drive through does not even <i>come close</i> to addressing the dangers posed by distracted driving.<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;"></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-19748397949053415732015-10-20T13:27:00.003-07:002015-12-04T08:27:26.719-08:00How Harper's Electioneering BackfiredIn the days, months, and years to come, we'll hear a lot about yesterday's election - what each party did right and wrong to end up where they were.<br />
<br />
How the Liberals came back from their catastrophic defeats in 2008 and 2011 to earn more seats than any Liberal government since Louis St-Laurent, getting more votes cast for them of any political party in Canadian history. (That's 'raw numbers' of votes, not percentage of popular vote. But seeing as this particular record was held by Mulroney from 1984, and survived 8 general elections over the past 30 years, that's still striking.)<br />
<br />
How the NDP, rising to historic highs and official opposition status under Jack Layton in 2011, leading in the polls during the early campaign, only to collapse back to their earlier 'third party' status, being reduced to 44 seats, with only 8 in Ontario, and none in Toronto.<br />
<br />
And how the governing Conservatives were finally returned to opposition status, after nearly ten years in power in a series of minority and majority governments.<br />
<br />
There are countless complex dynamics explaining these events. There's a lot to debate and discuss, and no single factor was determinative.<br />
<br />
But I propose to narrowly discuss one factor, which I believe may have made the difference between a Liberal minority and a Liberal majority, likely having lost several seats for the Conservatives and NDP: <b>Per-vote subsidies</b>.<br />
<br />
<div style="text-align: center;">
<b><u>History</u></b></div>
<b><u><br /></u></b>
In 2004, Jean Chretien ended corporate contributions to political campaigns, and replaced that with direct government subsidies, based on the votes the party received in the previous general election - an annual payment of $1.75 per year for each vote. This ultimately came to account for over a third of overall political financing in Canada. But it's less significant to the Conservatives, who are far more effective at private fundraising than the opposition.<br />
<br />
In 2008, immediately after winning his second minority government, Harper introduced a mini-budget to address the financial crisis...and tacked on a provision scrapping the per-vote subsidy. It was sly. The Liberals were in shambles. They had just had their most significant defeat ever, had their war chest totally drained by 3 elections in 4 years...and if they could be kept broke, they wouldn't be able to afford to be able to bring down the government. It was truly Machiavellian politics - kicking the opposition, hard, when they were already down.<br />
<br />
This prompted the 2008 'coalition' crisis which forced Harper to prorogue Parliament to save his job. The mini-budget was killed, and the subsidy remained intact. For a time.<br />
<br />
After he won a majority government in 2011, however, Harper phased out the subsidy. So in this election, there was, for the first time, no subsidy. The opposition needed the money, and wasn't getting it. Advantage: Tories, right? Maybe not.<br />
<br />
<div style="text-align: center;">
<b><u>How the Subsidy Helped the CPC</u></b></div>
<b><u><br /></u></b>
The per vote subsidy, while not a significant amount of money per vote, turned out to be a significant driver <i>against</i> strategic voting.<br />
<br />
I've always had mixed feelings about strategic voting. It always seemed to me that strategic voting tends toward a two-party system, limiting the range of discourse in the body politic, and preventing new and different voices from being heard. Anywhere outside Saanich-Gulf Islands, a vote for the Greens is really wasted, so people who vote strategically won't vote Green...and the actual grassroots support for the Greens will be understated, and they'll never be seen as a real alternative. Self-fulfilling prophecy.<br />
<br />
But the truth is that the problem isn't strategic voting. It's the concept of a 'wasted' vote. (To be clear, I don't really believe that votes are ever totally 'wasted', but that's another matter.) In our First-Past-the-Post system, each seat is winner-takes-all on a plurality basis. If 3/4 of a demographic is left-leaning, then it's natural for the left to develop a broader range of philosophies on the left. So maybe you'll have a few candidates with slightly different approaches, but fundamentally similar political philosophies. Then you get one right-wing candidate with *very* different philosophies, who wins because his limited support base isn't split.<br />
<br />
That is the problem with FPP democracy.<br />
<br />
Strategic voting is driven by the desire to make your vote count for something - to not be wasted.<br />
<br />
And the subsidy gave votes a significance that was not limited to the First-Past-the-Post electoral consequences. If you vote Green, even if the local Greens don't have a chance of winning the riding, you're giving that party money. Not much, surely, but a little. And strategic voting means that that cash goes to a party you don't like as much.<br />
<br />
This was a persuasive moral argument: The Greens aren't going to win seats this election, but getting a million dollars per year in subsidies means that they might have better resources to take seats in the next one. It's about the long game.<br />
<br />
So strategic voting was something of a bad word: Voting for someone other than your preferred party was really a betrayal of your party and your values - sacrificing your party's long-term prospects in the interests of getting a less-harmful option elected today. And since strategic voting, on a fundamental level, is about reducing split votes, this state of affairs was bad for the 'left' parties with their votes split, and more favourable to the CPC.<br />
<br />
Not that people didn't try to find ways around it. In previous elections, social media campaigns popped up for 'vote exchanges' - an NDP supporter votes Liberal in a Blue/Red battleground, and in exchange a Liberal supporter agrees to support the NDP in a Blue/Orange battleground...we both win, we both get to use our votes more usefully, and it's sum-zero on the subsidy. This had a number of problems, not the least of which is that our ballots are inherently anonymous - you cannot take pictures of your ballot; you cannot make an identifying mark on your ballot; etc. It was too open to abuse to be useful.<br />
<br />
With the subsidy gone, that persuasive moral argument against strategic voting...no longer exists. And for the first time, the discussion of strategic voting was unfettered. In the early campaign, even NDP supporters were encouraging strategic voting - thinking that they'd generally be the beneficiaries of it. The "Anything But Conservative" discussion took on new life, with nothing holding it back. No need for a vote exchange: We all win by voting 'against' the party we're trying to defeat, even without the need for a <i>quid pro quo</i>.<br />
<br />
There were quite a lot of ridings won by relatively small margins. It is likely that strategic voting made a significant difference to the outcome of various ridings and to the overall election result.<br />
<br />
It was a serious electioneering misstep by Mr. Harper: He recognized that his party had a fundraising advantage, and thought that he would strengthen his party's advantage by starving the opposition of public cash. Yet, instead, he compromised his party's ability to count on the split votes of the opposition.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-74831570702952432822015-09-23T11:49:00.002-07:002015-09-23T11:49:40.016-07:00Another Court Applies 'Trust and Accounting' MethodThere are an increasing number of wrongful dismissal cases going to a summary judgment motion before the expiration of the notice period, which raises the question: How do we address 'mitigation' for the period yet to pass?<br />
<br />
I've addressed the issue a number of times before, most recently <a href="http://lawyerbuchanan.blogspot.ca/2015/07/duty-to-mitigate-and-summary-judgment.html">this past July</a>.<br />
<br />
There's a bit of a schism in the law. <a href="http://lawyerbuchanan.blogspot.ca/2013/07/dismissed-employee-wins-summary.html">A couple years ago</a>, in <i>Bernier v. Nygard</i>, Justice Morgan awarded pay in lieu of 18 months of notice to an employee, only 7 months after the dismissal, but impressed the award with a trust, meaning that if Bernier got a new job, he would owe money back to Nygard. (The Court of Appeal upheld the approach as being open to the motions judge.)<br />
<br />
Earlier this year, Justice Pollak ruled in <i>Markoulakis v. SNC-Lavalin</i> that the employee was entitled to 27 months of notice, but only 9 months had passed since the dismissal. Justice Pollak opted for the 'partial summary judgment' approach, awarding damages only based on the time that had already passed at the summary judgment date (which were basically nil, given the initial package the plaintiff had received).<br />
<br />
Shortly thereafter, Justice Perell decided the case of <i>Paquette v. TeraGo</i>. Mr. Paquette's reasonable notice period was 17 months, and there were 10 months left to go at the summary judgment date. Justice Perell applied the 'trust and accounting' approach as in <i>Bernier</i>, but went a step further, categorically rejecting Justice Pollak's 'partial summary judgment' approach as "cynical, patronizing, unfair, and expensive." (I would add 'wrong' to the list of adjectives. More below.)<br />
<br />
<div style="text-align: center;">
<i><b><a href="http://canlii.ca/t/gl6k4">Zoldowski v. Strongco</a></b></i></div>
<i><br /></i>
Last week, Justice Hood, a very recent appointment to the bench, decided a similar issue. A 39-year-old 'parts administrator' with 17 years of service was dismissed, because technology made her position redundant. On the facts, Justice Hood awarded a notice period of 14 months - very close to what the plaintiff sought.<br />
<br />
It's always interesting to look at a new judge's first impressions of employment law. Justice Hood, as a lawyer, was a civil litigator with a focus on corporate/commercial litigation, and appears to have had relatively little exposure to employment law principles in his practice. When there were stacks of case law supporting different positions on the notice period put before him, he felt the need to remark upon it.<br />
<blockquote class="tr_bq">
[12] As pointed out in <i>Paquette </i>at para. 25, the determination of a reasonable notice period is an art not a science. As a result most cases yield a range of reasonableness.</blockquote>
<blockquote class="tr_bq">
[13] This is apparent from the cases relied upon by both the plaintiff and defendant and the charts put together by each party in their respective factums. The plaintiff refers to 10 cases with what she argues are employees with similar positions, length of employment, age and salary as her where a range of 13 to 18 months was awarded. She submits therefore that 15 months is appropriate. The defendant refers to 4 cases, with what it argues are similar factors as the plaintiff’s situation, where 10 months was awarded. It submits therefore that 10 months is appropriate. I expect the defendant could have found an equal number of cases as the plaintiff if pressed. I do not consider the number of cases presented as relevant to the determination.</blockquote>
He went through a detailed analysis of the applicable principles, and it's a good analysis.<br />
<div>
<br /></div>
<div>
He referred to the Court of Appeal's statement in <i>DiTomaso</i> that <a href="http://lawyerbuchanan.blogspot.ca/2011/06/how-much-notice-of-termination-should.html">the character of employment is of 'declining importance'</a>, and highlights that on the facts of this case, that the plaintiff's skill set has been made obsolete by technology actually makes her <i>more</i> vulnerable, and potentially makes it more difficult for her to find employment. Makes perfect sense to me.</div>
<div>
<br /></div>
<div>
Her relative youth should improve her employability, but her long period of service tends toward a longer notice period. As well, she led evidence that she made "numerous" job applications, but only received one interview, which Justice Hood felt indicated "there is a limited availability of similar employment."</div>
<div>
<br /></div>
<div>
And Justice Hood also followed Justice Perell's remarks about the relevance of an economic downturn. "I believe I can take judicial notice of the general economic downturn in the GTA and Southern Ontario for the first half of 2015."</div>
<div>
<br /></div>
<div>
This served as a factor extending the notice period. It's not a unique or unusual treatment these days, but it brings into focus just how much employment law has shifted over recent decades - there was a time when courts regarded a weak economy as <i>not</i> being a reason to increase the notice period, while poor financial circumstances of the employer <i>was</i> a reason to decrease the notice period. (Not to say that this doctrine is <i>totally</i> dead: Justice Lederer recently remarked that "<a href="http://www.canlii.org/en/on/onsc/doc/2015/2015onsc15/2015onsc15.html">the law does not ignore the dilemma of the employer</a>". But I find the context and decision he made on that point to be strange. A commentary for another time, perhaps.)</div>
<div>
<br /></div>
<div style="text-align: center;">
<b>Mitigation</b></div>
<div>
<br /></div>
<div>
Having decided on a notice period of 14 months, and with the motion being heard only 6 months after the dismissal, the mitigation approach needed to be considered.</div>
<div>
<br /></div>
<div>
The defendant argued that the 'trust and accounting' approach would disincent the plaintiff, who had a sick stepmother and three children, from seeking new employment for the remainder of the notice period.</div>
<div>
<br /></div>
<div>
Yes, they argued that. We should leave her without any means of providing for her family or ailing stepmother for another several months, to encourage her to take a new job. Justice Hood didn't call them out on it. I will. Later.</div>
<div>
<br /></div>
<div>
Justice Hood considered a few factors, including her mitigation diligence to date and the existence of other incentives to get back into the workforce. In light of the fact that her salary wasn't high and the amount of the notice period left outstanding is just a few months, it would be unduly expensive to apply the 'partial summary judgment' approach. While not repeating Justice Perell's condemnation of that approach, he nonetheless closely followed Justice Perell's approach, clearly expressing that there is a court-imposed constructive trust upon any mitigatory earnings made during the notice period. (Note: Not on the damages themselves.)</div>
<div>
<br /></div>
<div style="text-align: center;">
<b>Commentary: No Room for the Partial Summary Judgment Approach</b></div>
<div>
<b><br /></b></div>
<div>
This is a very good decision, on the law. If I'm correct that Justice Hood had relatively little exposure to employment law before, he certainly paid attention to the applicable legal principles in coming to this decision.</div>
<div>
<br /></div>
<div>
But I've alluded before to my belief that the partial summary judgment approach is simply incorrect at law, and I'll take this opportunity to elaborate on that.</div>
<div>
<br /></div>
<div>
I don't pretend that the 'trust and accounting' approach is perfect. It does have the impact of removing the incentive on employees to mitigate. But that's seldom enough a successful issue at a trial for an employer, and it's probably something that one can reasonably anticipate at the summary judgment stage. I predicted in my <i>Bernier</i> commentary that adequacy of mitigation efforts to date will be a factor in deciding the approach, and Justice Hood appears to have regarded it as such. (I might suggest that the question is properly considered in context of the 'issue requiring a trial' analysis. Which is complex, and not important to my core point here.)</div>
<div>
<br /></div>
<div>
Trust and accounting is a good, but imperfect, solution to a very difficult problem.</div>
<div>
<br /></div>
<div>
Whereas partial summary judgment is fundamentally premised on a misapprehension of the role of mitigation in wrongful dismissal law.</div>
<div>
<br /></div>
<div style="text-align: center;">
<u>Damages Are Assessed at the Dismissal Date</u></div>
<div>
<b><br /></b></div>
<div>
Assume for a moment that I am an employee who is entitled to reasonable notice of dismissal, for the sake of argument, in the amount of 12 months.</div>
<div>
<br /></div>
<div>
To comply with the contract, the employer is supposed to give me 12 months of <i>actual</i> notice, giving me a notice to inform me that, effective 12 months from today, I will no longer be employed. No need for a payout (well, not always), and no room for a mitigation analysis.</div>
<div>
<br /></div>
<div>
If I am dismissed without notice today, and without just cause, then that is a breach of contract. And my damages are generally going to be immediately calculable - the value of what I would have received had I worked through the reasonable notice period. (There are exceptions, where a value can't be calculated immediately. Stock options, formulaic bonuses based on the employer's year end numbers, disability claims which may arise after benefits are discontinued, etc. But in general, the numbers are pretty close to fixed on the date of the dismissal itself.)</div>
<div>
<br />
Remember, pay in lieu of notice is not really a 'thing'. It's shorthand for damages said to be suffered by reason of the termination without notice.<br />
<br /></div>
<div>
I am <i>presumed</i>, at law, to have suffered these damages. If one supposes that I actually became unable to work the next day for medical reasons, and would have actually spent the year on an unpaid sick leave, then <a href="http://canlii.ca/t/1fr0g">that doesn't matter</a>. Interest on the <i>whole amount</i> usually starts to accrue immediately. I don't need to worry until my statutory minimum payment runs out before I can commence an action. Based on the fact of dismissal alone, I can prove breach of contract, and I can prove damages.</div>
<div>
<br /></div>
<div>
But, and this is very important, <b>I do not need to prove mitigation efforts</b> to be entitled to recover damages. Proving failure to make reasonable mitigation efforts, or proving actual mitigation, is the burden of the defendant employer. (<a href="http://lawyerbuchanan.blogspot.ca/2014/06/does-plaintiff-need-to-prove.html">I fleshed this analysis out a bit more in discussing the <i>Garcia</i> case last year.</a>)</div>
<div>
<br /></div>
<div>
To say "damages aren't proven until the plaintiff can show he didn't get a job through the notice period" would fundamentally alter the nature of wrongful dismissal damages, and of contractual expectation-based damages in general. In essence, it turns mitigation into part of the cause of action, which would lead to all sorts of weird effects - causation issues (was it really the termination the deprived me of income, or just poor economic circumstances, or my own obsolete skill set?); a shift in the burden of proof (I'd need to prove not only that I didn't get a job, but also that I reasonably couldn't have - a burden which currently rests on the employer in the inverse, and is a heavy burden at that); etc.</div>
<div>
<br /></div>
<div>
In the correct analytical framework, the Court is called upon to determine whether or not the plaintiff has satisfied its burdens to establish breach and damages, and assesses damages accordingly, and <b>then</b> inquires into whether or not those damages should be reduced as an effect of mitigation.<br />
<br />
Justice Perell was cognizant of these principles - hence why he clarified that the trust applied <i>not</i> to the award of damages, but rather to any mitigatory earnings. It isn't that mitigation <i>reduces</i> damages; mitigation earnings are <i>applied against</i> damages.<br />
<br />
Hence, if I hypothetically got into court the day after a wrongful dismissal, I would be immediately able to prove damages through the <i>entire</i> notice period. There is no principled reason for a judge to grant summary judgment only in respect of the portion of the notice that has passed, as is entailed in the partial summary judgment approach.<br />
<br />
<div style="text-align: center;">
<u>The Partial Summary Judgment Approach Misapprehends the Nature of Summary Judgment</u></div>
<br />
The point of the summary judgment process is simply this: If an issue doesn't need a trial, it should be resolved without a trial.<br />
<br />
If the evidentiary record is incomplete, or reveals disputes that a trial is necessary to resolve, then motions court will order a trial of the issue.<br />
<br />
But refusing judgment in favour of a "wait and see" approach? It is inconsistent with the objectives of the Summary Judgment rule.<br />
<br />
What if we weren't talking about summary judgment motions? What if a case moved with unusual speed, and ended up in a full trial before the end of the reasonable notice period? (It's improbable, but not impossible. It could happen.) You couldn't grant 'partial judgment'; you couldn't order "wait and see"; the court would need to fully and finally adjudicate the issues in dispute.<br />
<br />
There would be only two avenues open to a trial judge, faced with such a quandary: Trust and accounting, or contingency reduction (more below).<br />
<br />
Thus, in the absence of a material dispute requiring a trial for resolution, there's no basis for a court to <i>not</i> grant full and final judgment.<br />
<br />
<div style="text-align: center;">
<u>Partial Summary Judgment Renders Injustice</u></div>
<br />
In this case, the plaintiff had young children, and a sick step-mother. The employer thought that these were disincentives for the plaintiff to find work if she got income replacement damages anyways.<br />
<br />
She had possible commitments on her time (which arguably might have actually justified a 'failure' to mitigate, in light of the statutory provisions for family medical leave). And, probably, significant financial obligations.<br />
<br />
It is one of the core injustices of wrongful dismissal law that the non-breaching party - the plaintiff employee dismissed without notice - is very often in financial dire straits as a result of the termination, and thus in a weakened bargaining position, forced to accept a small bird in hand rather than pursue the two in the bush to which she is entitled. The cost of litigation is often an impediment to pursuing one's rights, but the "law's delay" (one of Hamlet's many grievances) creates problems for dismissed employees, many of whom live hand-to-mouth, and require income continuity in order to satisfy their various financial obligations.<br />
<br />
I have seen desperate employees take new jobs of far less prestige and income than that from which they were dismissed, because they have bills to pay. The employer had no right to expect the employee to take that job in mitigation, but <i>is</i> entitled to count the earnings as 'mitigation earnings'. Meaning that the employer benefits significantly from the employee's desperation.<br />
<br />
The plaintiff in this case <i>ought</i> to have received continuous income over a 14 month period. That was her contractual entitlement. And then the employer - the party which breached her contract in the first place - proceeds to argue that, she should be forced to actually live without the income to which she is entitled...to keep her motivated. The inhumanity of it is striking.<br />
<br />
The employer is entitled to expect her to act as a <i>reasonable</i> person would, in her search for replacement employment. Not as a <i>desperate</i> person would.<br />
<br />
And the facts here are not particularly exceptional. It is generally true that a dismissed employee will be in a more difficult financial position than the employer which dismissed her. Given that, and given that it was the employer in the first place who committed the breach of contract, it makes little sense that the employee should be the one expected to bear the hardship of unnecessary delay.<br />
<br />
<div style="text-align: center;">
<u>The Problems of Disincentives are Small</u></div>
<br />
While I have acknowledged the problem - even in my discussion of <i>Bernier</i> two years ago - that the trust and accounting method effectively relieves the employee of the obligation and incentive to mitigate, the problem is not large.<br />
<br />
Employers are relatively seldom successful in proving 'failure to mitigate', and even when they do, it's not usually a large discount. It isn't a high standard for the employee in the first place. If an employee can walk into court after several months and show a strong record of mitigation efforts, then that record can often be considered on its own merits. An employee who attacks the job hunt in good faith will still have incentives to get back into the job market asap, in most cases, and it's unlikely that they will stop altogether because of a judgment. With a strong mitigation record for the earlier months, and even a weak mitigation record in the later months, it would be unlikely that an employer would achieve a meaningful discount to the award.<br />
<br />
In the closer cases, where the employee's mitigation record is more questionable, there may be reasons to take other approaches. One option, in truly borderline cases, is for the judge to determine that the evidence on the record doesn't provide a full appreciation of the mitigation issue, and therefore that a trial of the issue is needed. The other approach, which Justice Pollak acknowledged as a possibility but which neither counsel argued for, is the contingency reduction approach.<br />
<br />
And I think the contingency reduction approach needs to get a little more consideration than it has in the last couple of years. I'm not aware of any wrongful dismissal cases in Ontario where it has been taken, but it isn't altogether unheard of in Canadian employment law.<br />
<br />
But they're ubiquitous in personal injury law. Suppose that the expectation is that you'll never work again, so you get a lifetime of income replacement damages...except that there's a chance you might recover more than anticipated, so there's a fairly arbitrary discount applied to your damages on that basis.<br />
<br />
Courts in other Provinces have contemplated contingency reductions in wrongful dismissal cases on a not-so-irregular basis, but such awards are, in fact, very rare, and usually quite modest. And there are reasons for that.<br />
<br />
Firstly, the reasonable notice period actually integrates relevant considerations to the contingency reduction: Essentially, when asking what the reasonable notice period is, we're asking 'how hard will it be to obtain replacement employment?' or 'how long will it take to find replacement employment?' While there certainly are cases where employees obtain new employment within the reasonable notice period, the reality is that the assessment of the notice period itself actually builds in an assessment of the probabilities.<br />
<br />
Secondly, a reduction would tend to be a low percentage of what's <i>left</i> in the notice period. In this case, with 7 months left in the reasonable notice period, a 10% reduction (for the sake of argument) would amount to about $2800, on a notice period worth about $56,000 altogether. The assessment of the reasonable notice period itself is an imprecise science, and such a modest difference falls well within reasonable margins of error. It's a <i>de minimis</i> issue in such cases, and considering its inherent arbitrariness, it would be a relatively rare case where it became important to assess such a reduction.<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;"></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span></div>
Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-8560894381298667267.post-49114284017024672992015-09-21T11:24:00.003-07:002015-09-21T11:24:30.000-07:00Elizabeth May should be in the Munk DebateA few more political posts than usual here, but hey, 'tis the season.<br />
<br />
Allow me to preface by saying that I will not be voting Green in this election. Having said that, I do hold a certain respect for the party, its platform, and its leader, Elizabeth May, who - prior to the dissolution of Parliament - was the Member of Parliament for Saanich-Gulf Islands.<br />
<br />
First, a bit of a background on the Greens and their leadership.<br />
<br />
<div style="text-align: center;">
<b>Recent History of the Greens</b></div>
<br />
Prior to 2004, the Greens were regarded as a fringe party in Canada. In the 2000 election, they reached what was then a high watermark of public support, with 0.8% of the popular vote (compared to 0.24% in 1993 and 0.43% in 1997). But under leader Jim Harris, they achieved a much better showing in 2004, with 4.29% of the popular vote. He repeated the performance in 2006, with 4.48% of the popular vote - over 650,000 votes cast in favour of Green candidates across the country.<br />
<br />
In a proportional representation system, that would have translated to 13 seats. In our system, that translated to zero seats. But the 'per vote' subsidies being what they were, it got the Greens some funding.<br />
<br />
In 2006, Elizabeth May took over the party. She got off to a good start, running in a by-election in London North Centre, and achieving a second-place finish. (The Liberal candidate won with 35% of the popular vote; May achieved 26% of the popular vote; the Tory candidate only got 24% of the popular vote. As losses go, it was a big win for May.)<br />
<br />
But the bigger win came when Blair Wilson, elected in 2006 as a Liberal, joined the Greens, officially giving the Greens their first seat in Parliament.<br />
<br />
In the 2008 election, May ran in her home riding of Central Nova. This was Peter Mackay's riding, and widely regarded as a Conservative stronghold (and, probably, a bad idea for May to run there). But the Liberals opted not to field a candidate in that riding, and she took on the uphill battle. She had a strong showing, but ultimately still lost. Nationally, the Greens had their strongest showing ever, with nearly a million votes - 6.78% of the popular vote. No seats to show for it, though, and Blair Wilson lost his seat.<br />
<br />
And 2008 was really where 'participation in the debate' became a big deal. Elizabeth May actively sought an invite from the media consortium, and the media consortium turned to the other leaders to get their thoughts on the topic. Stephen Harper and Jack Layton replied that they wouldn't attend if May was invited. Stephane Dion said that he didn't have a problem with May going, but it wouldn't be worth attending if Harper wasn't there. And Gilles Duceppe didn't care. So the consortium decided not to invite May.<br />
<br />
But after a fairly significant public backlash, people started to change their tunes, and ultimately Elizabeth May was included in the 2008 televised election debate.<br />
<br />
In 2011, the consortium actually did exclude May - the best arrow in her quiver in 2008, being a party with Parliamentary representation, simply no longer existed in 2011.<br />
<br />
However, in 2011, the Greens changed their strategy: Rather than running a scattershot national campaign, and pitting their best against Conservative Cabinet Ministers, they would run a concentrated campaign on ridings they could win. As a result of this shift in strategy, their national percentage of the popular vote fell significantly...but May won her seat in Saanich-Gulf Islands. Later, NDP MP Bruce Hyer crossed the floor to the Greens.<br />
<br />
<div style="text-align: center;">
<b>This Year's Debates</b></div>
<br />
The debates have become very unusual in this election. Harper boycotted the traditional 'consortium' debate altogether, instead agreeing to a series of debates hosted by independent parties. And the other leaders, wanting to debate Harper, go where he goes. It's somewhat concerning, because it really exploits the power of incumbency, to get to decide the venues (and, in a roundabout way, the format) of the debates. I've argued before that the televised debate should be regulated under the <i>Canada Elections Act</i>, with clear rules regarding participation and format, It's an important institution to Canadian democracy.<br />
<br />
The Macleans debate, in August, included Elizabeth May. The more recent Globe and Mail debate, citing the need for a 'focused debate', elected to exclude her. Likewise, the organizers of the upcoming Munk debate felt that the format would be unduly hindered by inviting all six parties represented in the House of Commons. (In addition to the 'big three' and the Greens, the collapsed Bloc Quebecois still held two seats, and there's another breakoff Quebec Party with seats, Forces et Democratie [Strength in Democracy], which formed last year when a Bloc member and and NDP member decided to start their own party.)<br />
<br />
And one might reasonably ask if it makes sense to include regionalist parties like the SD or the BQ, particularly when they're at the fringe. Nobody ever really thought that the Bloc had any place in the English language debates, but being a major party in Parliament, they were entitled to be there. (Okay, personally, I found that Gilles Duceppe made the English language debates far more interesting.) And few Canadians have even <i>heard</i> of the SD party.<br />
<br />
So, in order to draw a principled line to keep the numbers down, the new buzz phrase is 'official party status'. If you were following politics back in 93, you may heard the phrase used then, talking about how the Progressive Conservatives were reduced below the 'official party status' threshold. The impact of official status is on certain Parliamentary privileges, like the right to ask questions during Question Period.<br />
<br />
But the truth is that, constitutionally speaking, the impact of party status is quite limited. We vote for individual Members of Parliament, and then they get together as a group in Ottawa and decide who will be Prime Minister, etc.<br />
<br />
<div style="text-align: center;">
<b>Representation in the House of Commons Should Be the Standard</b></div>
<br />
The consortium has never excluded party leaders on the basis of a lack of 'official party status'. With the almost-exception of 2008, representation in the House of Commons has always been the standard.<br />
<br />
<b>And yes, there are examples</b>: In 1993, Preston Manning of the Reform Party was invited to participate in the debate, on the basis of having one MP who won a by-election in 1989. This created a debate with a then-unprecedented <i>five</i> leaders. In 1997, despite having been reduced to two seats, Jean Charest of the Progressive Conservatives was invited to participate.<br />
<br />
This makes sense. If, as a party, you have enough support to represent us in our elected assembly, and to participate in the various debates on legislative initiatives the define government policy, then surely that's enough support to warrant participation in an election debate watched by millions of Canadians.<br />
<br />
The nature of Canadian Parliament is changing. More grassroots parties, both regional and national, are popping up, and earning some degree of public support. It is not despite those parties, but <i>because of them</i>, that we must continue to respect this representation tradition. Three of the last four Federal elections resulted in minority Parliaments. It is very likely that the next one will be, as well. And in minority Parliaments, 'fringe' parties can have a greater significance - it is conceivable that Federal policies could be made or broken by the votes of 'fringe' parties.<br />
<br />
And so we need to hear from them. It's crucial for our democracy.<br />
<br />
As a footnote, I might be persuaded that parties created on the floor of the House of Commons, as the Greens arguably were in 2008 and as the SD is now, might be an exception. (The Greens had a strong support base before then, though, whereas the SD can't show <i>any</i> level of grassroots support whatsoever from election results.) Otherwise a hard-and-fast 'representation' rule could be open to abuse, with every independent deciding to form his or her own party. (Don't get me wrong, I like Brent Rathgeber, a Conservative-turned-Independent MP from Alberta, and I think people would be well-advised to listen to him, but I wouldn't support him entering a leaders' debate.)<br />
<br />
<div style="text-align: center;">
<b>Elizabeth May is Worth Including</b></div>
<b><br /></b>
Those of you who have watched both debates, as I did, noticed a few stark differences between them. Firstly, the Macleans format was just all-around better. Paul Wells was an effective moderator, guiding the debate well but staying out of it, whereas the Globe debate was marked by various free-for-alls of all three talking over each other.<br />
<br />
But the biggest difference was Elizabeth May. On most policy areas, she absolutely <i>shone</i> in the Macleans debate. While the other leaders were largely sticking to talking points, she looked unscripted, but was rapidly firing off various accurate and important facts, and checking the other leaders' facts on the spot. She was sharp, and looked like the one with the best grasp of the issues, all around. She was the only one who showed up looking to have an adult conversation about the issues facing Canada, and the debate was immeasurably better for her participation.<br />
<br />
I particularly liked her zinger that whomever advised Harper that his moratorium on Senate appointments is constitutional 'needs to go back to law school'. Because it's almost certainly true.<br />
<br />
Her perspective was sorely missing at the Globe and Mail debate. And while she was 'live-tweeting' her responses to the various questions...well, firstly, it isn't the same. In a debate, she's putting a fact to Mr. Harper and asking him to respond to it; when live-tweeting, it's more like fact-checking. Secondly, if you were trying to follow the bedlam of the debate itself, it was pretty much impossible to watch May's video clips at the same time.<br />
<br />
So, organizers of the Munk debate, invite Elizabeth May. She was elected to Parliament under the Green banner, as leader of a national party, with a wide support base across the country.<br />
<br />
If you can't fit the leader of such a party into your debate format (whether or not that means you have to invite other leaders as well), then you have <b>no business</b> running a televised election debate in the first place.Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-8560894381298667267.post-34632617488409896242015-09-17T14:33:00.001-07:002015-09-17T14:33:04.647-07:00Conservatives Charge "Tour Media" $12,500 per Week - Is That Legal?At the outset, let me say that I'm not an expert on electoral law, and so the question posed in the title of this entry is a real question, from my perspective. I should also highlight that, while there has been media coverage of the CPC practices in this regard, I don't know how long this is going on, and for all I know the other parties might engage in similar practices.<br />
<br />
I'd welcome input from more authoritative sources.<br />
<br />
Last month, a couple of independent media sources wrote pieces venting about how they're being shut out from the Conservative campaign by the high cost of being 'tour media'.<br />
<br />
My attention was caught by <a href="http://www.vice.com/en_ca/read/if-we-want-to-ask-stephen-harper-questions-we-have-to-give-his-party-78000">this Vice.com piece</a>, which explains the CPC's cost breakdown in detail: $3000 per day, or $12,500 for a full week, or $78,000 for the whole campaign. The week prior, <a href="http://thetyee.ca/Mediacheck/2015/08/17/New-Media-Election-Approach/">the Tyee wrote a similar article</a>, which oversimplified the billing structure, but the essence of the story was the media's changing role in election coverage.<br />
<br />
Vice was upset because, even if they attend Harper's campaign events, they don't get to ask questions: Harper only takes five questions per appearance: four from 'tour media' and one from 'local media'. Even where there wasn't a fifth question lined up, Vice still got snubbed.<br />
<br />
And one might reasonably be concerned about the approach: In order to have the right to ask questions of a sitting Prime Minister, a media source needs to shell out <i>big</i> bucks to the party itself. That seems troubling, from a democratic perspective.<br />
<br />
But my concern is somewhat narrower: I question whether or not this sizeable fee constitutes an impermissible campaign contribution under the <i>Canada Elections Act</i>.<br />
<br />
<div style="text-align: center;">
<b>Elections Canada Weighs In</b></div>
<br />
In general, in Canada, corporations are not permitted to make political contributions. But the <i>Act</i> overall is quite complex, and it was hard for me, as a non-expert in the area of law, to come to any conclusive questions.<br />
<br />
So I asked Elections Canada.<br />
<br />
And, after a surprising delay, they responded:<br />
<blockquote class="tr_bq">
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ansi-language: EN-CA; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">...i</span><span lang="EN-US" style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ansi-language: EN-US; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;">f media are charged for
participation on a leader’s tour or other candidate event, the amount charged
must not exceed the commercial value of any tangible benefits received by the
media person (such as meals, flights, lodging). Any excess amount would
constitute a contribution by the media corporation to the party and thus be impermissible
under the <i>Canada Elections Act</i>.</span></blockquote>
It doesn't <i>really</i> answer the question conclusively, but I never really expected more than this - an explanation of the framework itself.<br />
<br />
It still has to be taken with a grain of salt, though, because I'm not entirely sure where the interpretation arises: For instance, nowhere in the <i>Canada Elections Act</i> does the word "tangible" occur at all.<br />
<br />
Of course, there's s.377, which addresses 'ticketed fundraising' events - you know, those $500/plate fundraising dinners for a $50 dinner? In such events, the difference between the ticket cost and the "fair market value of what the ticket entitles the bearer to obtain" is the contribution. But that doesn't speak to this, because - inherently - selling tickets to corporate media <b>cannot</b> be a fundraising activity.<br />
<br />
So, having looked through the various treatments of 'contributions', I can't find anything that would permit a large cheque from a corporation to a campaign, even if it <i>is</i> the fair market value for goods received. Perhaps there's a 'flow-through' aspect to such money, that it's not regarded as going to the campaign in the first place (and such that the expenditure also would count against spending limits). I can only speculate, but that's my best guess here.<br />
<br />
Regardless, EC's interpretation is quite sensible, certainly in keeping with the spirit of the <i>Act</i>. You can require a media source to cover its own share of the costs of touring with you, but you can't go beyond that.<br />
<br />
<div style="text-align: center;">
<b>How do we determine "commercial value"?</b></div>
<b><br /></b>
Happily, the <i>Act</i> does contain a useful definition of "commercial value":<br />
<blockquote class="tr_bq" style="margin-bottom: 0.5em; margin-left: 1.5em; margin-top: 0.7em;">
<span class="DefinedTerm">“commercial value”</span>, in relation to property or a service, means the lowest amount charged at the time that it was provided for the same kind and quantity of property or service or for the same usage of property or money, by<br />(<em>a</em>) the person who provided it, if the person is in the business of providing that property or service; or<br />(<em>b</em>) another person who provides that property or service on a commercial basis in the area where it was provided, if the person who provided the property or service is not in that business.</blockquote>
In other words, you can't get around contribution rules by setting arbitrarily high values on services provided directly by the campaign. It's about fair market value.<br />
<br />
<div style="text-align: center;">
<b>So What's the Answer: Are the Tories Breaking the Law?</b></div>
<br />
I'm not in a position to answer this conclusively, even assuming that Elections Canada's answer is correct. I have no idea what 'tangible benefits' the media personnel receive while touring with the CPC.<br />
<br />
But it is <i>really</i> hard for me to see how they could possibly add up to $3000 per day. Even if we're talking about really nice meals, really nice hotel rooms, and a really nice seat on a really nice bus...that's a tough sell.<br />
<br />
And there are other tell-tale signs that something fishy is going on here: If the 'commercial value' of tangible benefits warrants a $3000 per day fee, then how is it that it's <i>significantly less</i> if you buy in bulk? While there are sometimes rational explanations for bulk discounts, this doesn't seem to be one of those scenarios.<br />
<br />
Likewise, if the money is entirely about cost recovery, <i>why</i> would the party actively incentivize media sources to become tour media, to the detriment of non-tour media?<br />
<br />
I would invite commentary from those more familiar than I with campaign practices and campaign laws: Is this sort of thing normal, and only making headlines now because of the wide dislike for Mr. Harper's media practices? Or is this generally unheard of? Or somewhere in between? Is this something for which there's a clear (or even arguable) legal basis? Is it somehow conceivable that media personnel might actually receive $12,500 per week in tangible benefits while touring with the Tories?<br />
<br />
*****<br />
<br />
<span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.2px; line-height: 18.48px;" /><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.48px;"></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-77115477127130246262015-08-24T08:58:00.002-07:002015-08-24T08:58:59.015-07:00Which Doctrine to Apply: Common Employer or Successor Employer?A recent case out of the Superior Court of Justice, <i><a href="http://www.canlii.org/en/on/onsc/doc/2015/2015onsc5094/2015onsc5094.html">Dear v. Glamour Designs Ltd.</a></i>, highlights an interesting nuance in the law surrounding transitions between employers.<br />
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The defendant in this case was one corporation within a family-owned group of businesses: Special Occasional Sales Ltd., Glamour Designs Limited, and International Fashion Group, all of which were operated by members of the Maccarone family: Vince Maccarone is president of IFG; his daughter Michelle is president of GDL, and there's a Katherine Maccarone listed as president of SOS.<br />
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Mr. Dear began working for SOS as a sales representative in March 2005. There were a number of temporary layoffs in the tail-end of his employment period - one wonders whether or not these may, in and of themselves, constituted a constructive dismissal - and he was finally dismissed effective December 2014.<br />
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The hitch here is that SOS itself discontinued its operations in August 2013, and his employment thereafter was with GDL. Dear claimed that they constitute 'common employers', and therefore that GDL is liable for employment-related liabilities of SOS.<br />
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Dear claimed that Vince told the employees in or around August 2013 that they would continue in their jobs but be compensated by GDL. The defendant denied that, claiming that SOS had actually terminated the employment relationship by way of a notice given in March 2013 (which they could not produce). GDL argued that, after the employment relationship between SOS and Dear was terminated, GDL stepped in and hired Dear.<br />
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<div style="text-align: center;">
<b>Common Employers</b></div>
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At common law, the concept of 'employer' is a little bit flexible. You're not strictly limited to claiming against the corporation that signs your payroll cheques; the case law has looked at a lot of different scenarios where a single business might have its affairs ordered into various corporations (for legitimate reasons, no less), but there are compelling public policy reasons not to arbitrarily limit the employees from being able to claim against any of those corporations. As the Court of Appeal found in 2001 (citing a British Columbia decision):<br />
<blockquote class="tr_bq">
<span style="background-color: white;">As long as there exists a sufficient degree of relationship between the different legal entities who apparently compete for the role of employer, there is no reason in law or in equity why they ought not all to be regarded as one for the purpose of determining liability for obligations owed to those employees who, in effect, have served all without regard for any precise notion of to whom they were bound in contract. What will constitute a sufficient degree of relationship will depend, in each case, on the details of such relationship, including such factors as individual shareholdings, corporate shareholdings, and interlocking directorships. The essence of that relationship will be the element of common control.</span></blockquote>
On the other hand, there are plenty of scenarios where one person might have a substantial ownership stake in multiple discrete businesses, and there are good reasons why an employee of one such business should <i>not</i> be able to claim across the corporate veil in such cases.<br />
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So there's a fairly significant amount of case law now looking at the factors to earmark common employers, including the degree of integration of the businesses and the common control of the corporations.<br />
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The judge accepted Dear's position that GDL and SOS were common employers. It's a little thin on some of the facts: I don't know what SOS' business was, nor what GDL's business was. It would be surprising if a new business could pick up a dissolving business' sales staff seamlessly if there wasn't some degree of integration between the businesses, or if NewCo wasn't actually absorbing OldCo's business line, but the bottom line for us is that we're looking at a fairly finite selection of facts in the decision:<br />
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<ol>
<li>That the companies were all owned by relatives of each other;</li>
<li>That the companies had adjacent offices;</li>
<li>That Vince, at least at times, controlled or was at least involved in both corporations, issuing Records of Employment for both.</li>
</ol>
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The judge then finds that the corporations "could easily have operated as one", and therefore was a single business. That is, essentially, the test, but without knowing the business models of the different businesses, it's hard to know if there are additional facts underpinning this conclusion. And that uncertainty is concerning: On a face value read of the decision, it appears to be a precedent supporting a notion that businesses owned by close relatives will <i>generally</i> be responsible for each other's employment liabilities. A difficult proposition to justify.</div>
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The important result of the finding, of course, is that Dear's employment was nearly a decade (as opposed to a little over a year) which has dramatic effect on his notice entitlements. Accordingly, the judge awarded him judgment on the basis of nearly a decade of service.</div>
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<div style="text-align: center;">
<b>Commentary</b></div>
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It's not clear to whether or not the 'common employer' finding was truly warranted. It seems plausible, but I'm not sure what other facts were on the record.</div>
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However, on my read of the decision, I can't help but question if a 'common employer' analysis was even necessary. It seems to me that the issue could likely been resolved on the basis of a 'successor employer' analysis.</div>
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It appears to be common ground that the transition from SOS to GDL occurred in or around August 2013 - presumably, Dear was on SOS' payroll one day, then GDL's the next. (Not only did none of his layoffs cover that period, but it actually wouldn't matter to the successor employer doctrine if one of them had.) If his duties didn't change significantly in that transition, then the only cogent explanation for the transition would be that, for employment relations purposes, GDL had acquired at least part of SOS' business.</div>
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This isn't a high standard - it doesn't require a formal purchase and sale of a business. Transfers - even informal transfers - of office equipment, inventory, leases, good will, or other parts of the business - will often meet this test. As I pointed out in <a href="http://lawyerbuchanan.blogspot.ca/2014/03/the-corporate-veil-which-company-is.html">another borderline common employer case</a>, I have <i>very</i> seldom seen true 'successions of convenience' where one business winds up its business, and then a second and <i>totally unrelated one</i> opens up a similar business in the same location, without any dealings between the two.</div>
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Indeed, the very question of 'common employers' seems likely to be the wrong one in the context. There's no question that GDL employed Dear, nor that GDL dismissed Dear. We're not trying to pierce the corporate veil <i>at all</i> here, which is what the 'common employer' doctrine is typically about. Rather, we're trying to determine whether or not Dear's notice period from GDL should bear in mind his prior years of service with a different organization.</div>
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If GDL's and SOS' businesses were closely related enough to possibly warrant a common employer finding, it seems essentially impossible that GDL could <i>not</i> have been a successor employer.</div>
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*****</div>
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<br /></div>
<div>
<span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.4799995422363px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.1999998092651px; line-height: 18.4799995422363px;" /><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.4799995422363px;"></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-8560894381298667267.post-85695168641049895372015-08-20T10:22:00.004-07:002015-08-20T10:22:44.615-07:00Where Can A Landlord Recover Unpaid Utilities?Deputy Judge Winny recently decided <a href="http://canlii.ca/t/gkl15">a Small Claims Court case</a> dealing with a residential tenancy matter, which he said highlights the "imperfect intersection" between the jurisdictions of the Small Claims Court and the Landlord Tenant Board.<div>
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The Landlord had gone to the LTB to seek arrears of rent, including several hundred dollars for unpaid utility bills. The adjudicator orally stated that the utilities were outside the Board's jurisdiction, and declined to award such damages, instead just awarding the 'rent' component of the arrears.</div>
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The Board's formal order made no reference to utilities.</div>
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Deputy Judge Winny disagreed with the adjudicator, finding, "<span style="background-color: white; font-family: 'Times New Roman', serif; font-size: 16px; text-align: justify; text-indent: -48px;">In my view the board had jurisdiction over the claim for unpaid utilities.</span>" Because the Board had jurisdiction, the Small Claims Court didn't.</div>
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This is immensely frustrating for a litigant, where you have a claim, but every venue to pursue it tells you, "This isn't our department." The legal system can sound a bit like a telecom company, passing you from department to department. (Kind of reminds me of the <i><a href="http://lawyerbuchanan.blogspot.ca/2014/08/admitting-fresh-evidence-after-losing.html">Mehedi</a></i> case, where Mehedi kept getting bounced between the Court of Appeal and the Superior Court for a motion to set aside a judgment. The difference is that, notwithstanding ridiculous delays, Mehedi probably will eventually have his case heard.)</div>
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Deputy Judge Winny expressed concern that the Board hadn't referenced the utilities in its formal order, but essentially suggested that the Landlord should have appealed the order under the <i>Act</i>, instead of pursuing the claim at Small Claims Court.</div>
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<div style="text-align: center;">
<b>Commentary</b></div>
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For the most part, I agree with Deputy Judge Winny's analysis: Utilities are within the jurisdiction of the Landlord Tenant Board, and the LTB was probably wrong to find otherwise, and the ideal avenue for the Landlord would have been to seek reconsideration or to appeal the decision.</div>
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However, I don't agree that the Deputy Judge should have embarked upon an analysis of the Board's jurisdiction in the first place.</div>
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Here's the thing: The Board's process is quite informal. In an ideal world, we'd see written reasons as to why the Board dismissed the claim for utilities, but ultimately, oral reasons (even without a transcript) are probably going to end up being sufficient, within the context of the Board's process.</div>
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On the facts of this case, the Deputy Judge had a formal order from the Board that did not dispose of the utility claim, but an uncontested accounting of oral reasons that the claim was dismissed for jurisdictional reasons.</div>
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If the Deputy Judge was able to regard the Board as having dismissed the claim as being outside of the Board's jurisdiction, and I would argue that the basis was there to so conclude, then this would most likely result in what we call "issue estoppel", or "<i>res judicata</i>". The Board, being a body of competent jurisdiction, had decided finally and specifically the question of the Board's own jurisdiction over utility claims, in a proceeding between the same parties. Simply, it is not open to the Small Claims Court to re-open the question, even if it disagrees with the answer the Board gave.</div>
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By treating the question as being subject to <i>res judicata</i>, the Deputy Judge could have proceeded to consider the merits of the claim and award damages if appropriate, without even opining about the jurisdictional question (or perhaps expressing his doubts about it in <i>obiter</i>), and without creating a precedent as to the Small Claims Court's jurisdiction. A messy solution in certain conceptual ways, but it would have gotten at the justice of the case.</div>
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*****</div>
<div>
<br /></div>
<div>
<span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">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, </span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.4799995422363px;">contact a lawyer</span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">.</span><br style="background-color: white; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13.1999998092651px; line-height: 18.4799995422363px;" /><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;"><br /></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18.4799995422363px;"></span><span style="background-color: white; color: #222222; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 13px; line-height: 18px;">The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please <a href="http://www.lawyerbuchanan.ca/LawyerBuchananContact.html" style="color: #888888; text-decoration: none;">contact him</a> for information on available services and billing.</span></div>
Unknownnoreply@blogger.com0