Bill 168 Reprisals - A Door Still Open?

Last week, the Ontario Labour Relations Board released its decision in Walters v. PPL Aquatic, Fitness and Spa Group Inc., in which Mr. Walters alleged that he was fired as a reprisal for making a complaint of harassment.

I twice posted about this issue in November (links here and here), after similar complaints were dismissed.  In the first one, Conforti, Vice-Chair McLean found that there was no reprisal, but suggested that he did not believe that the OLRB has jurisdiction over such complaints, in any event:  The amendments to the Occupational Health and Safety Act require an employer to implement a harassment policy, but does not actually impose substantive obligations on the employer regarding accepting or dealing with complaints, and therefore a complaint is not protected against reprisals under the Act.

My second post followed the Harper decision, in which Vice-Chair Serena disposed of the case directly on the basis of Vice-Chair McLean's reasoning in Conforti:  The OLRB does not have jurisdiction.

Thus, I concluded that, until and unless the Divisional Court weighs in on this issue, the Board will stand by the decision in Harper.

In Walters, however, Vice-Chair Patrick Kelly implies that the matter may not be completely settled law, and declines to address the question because he finds as a matter of fact that there was no reprisal in the first place.

The Board has recently dealt with workplace harassment complaints under the new statutory provisions.  In the first case, the Board opined in obiter that it has no jurisdiction over an alleged reprisal for having complained of harassment.[1] More recently, the Board, relying upon the obiter from the Investia decision, determined categorically that it lacks that jurisdiction.[2]  In my view, it is unnecessary to decide the issue of jurisdiction in this case.  That is because, on a balance of probabilities, I conclude that PPL did not make any reprisal against Mr. Walters as a result of his having complained about harassment, or for any other unlawful reason.

He proceeds to make several findings of fact, including that Mr. Walters was fired (PPL had taken the position that he had resigned), which may be binding on the parties in subsequent proceedings.

This is all very strange.  The Board says that it does not need to decide whether or not it has jurisdiction, because on the facts the case the application must be dismissed anyways.  Of course, if the Board does not have jurisdiction, then where does its authority to make factual determinations originate?  Perhaps more importantly, McLean's logic in Conforti in large part turned on a floodgates argument, that the Board does not want to have to closely examine the facts in situations where the employee has alleged harassment and - for whatever reason - the relationship has continued to deteriorate afterwards.  Yet, in this case, instead of simply referring to Harper and Conforti and declining jurisdiction, the Board conducts a full assessment of the facts in order to avoid having to reach a conclusion on jurisdiction.

It is not uncommon for an adjudicator, faced with two questions, to look at the easy one first and the hard one only if it's still necessary.  This approach does not necessarily work well in theory where jurisdictional issues are involved, and so its use here definitely suggests that Vice-Chair Kelly regards the jurisdictional issue as a hard question.

So the very interesting question becomes this:  If Vice-Chair Kelly had, in fact, concluded that the dismissal was a reprisal, which way would he have come down on the jurisdictional issue?

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

Dorriesfield v. Domtar - A good test case for judicial review?

The Human Rights Tribunal of Ontario just released its decision in the Dorriesfield v. Domtar case, dismissing the application because it was not commenced within the mandatory one year period.

The legislation sets up a two-stage test for relief against the one year limitations period:  An application can only proceed if it can be shown that the delay was incurred in good faith, and that no substantial prejudice can be shown.

Ordinarily, administrative tribunals err on the side of hearing the merits of the case.  The HRTO has gone the other way, imposing a very strict standard for relief against the limitations period.  Dozens, perhaps hundreds, of applications have fallen to this problem since the HRTO became able to accept applications directly 3.5 years ago, and it is exceptionally rare that the Tribunal was satisfied that the delay was incurred in good faith.  (The only case I know of is Lutz v. Toronto, in which the Tribunal had a full hearing on the issue and required Mr. Lutz to lead medical evidence and significant viva voce evidence establishing essentially that he was medically unable to file the application sooner.)

There are also cases where the Tribunal raised the matter of its own initiative then backed off because it was not "plain and obvious" that the delay was not incurred in good faith, still leaving the door open to dismiss the application later after more thorough consideration of the issue, and one, Moffatt v. Northampton Group, where the one-year deadline was missed by only 3 days so the Tribunal decided to delay its consideration of the issue until after mediation.

Put simply, the Tribunal has set the bar extraordinarily high for these matters.  Judicial jurisprudence usually suggests that good faith requires that the person had no ulterior motive, and that if the delay was incurred because of ignorance to one's rights, there must have been no reason for the person to make inquiries about his or her rights.  It isn't always clear what the Tribunal is looking for when they find that good faith has not been established, but it is clear that the Tribunal very closely scrutinizes any reason given for delay, and will find any justification not to accept the legitimacy of the reason.

The Case


In Dorriesfield, the application was filed on April 27 2009, in respect of his discharge from employment on June 27 2007, 22 months after the fact.  One of the real exceptional aspects of the case was that it was filed by the Office of the Public Guardian and Trustee on behalf of Mr. Dorriesfield.  The OPGT became Mr. Dorriesfield's guardian on March 26, 2008.  It is estimated that the OPGT probably became aware of Mr. Dorriesfield's termination from employment in April 2008, and they discussed the matter with Dorriesfield's union in July 2008.  In September 2008, the OPGT tried to encourage the union to reopen the matter to grieve the discharge.

The OPGT spent the following months seeking more information about the dismissal and how Dorriesfield's disability may have been a factor in it, communicating with Dorriesfield's doctors and union counsel.  The union declined to pursue the matter any further in February 2009, following which the OPGT began its internal processes to get approval to apply to the HRTO.

The OPGT argued, among other things, that it was still obtaining medical evidence as late as December 2008, and in the mean time they were trying to pursue other avenues of resolving the issue, through asking the union to reopen the grievance and making other requests of the employer, and therefore the delay was incurred in good faith.

The Tribunal found that the "issue of the applicant's termination...was squarely in issue by April 2008."  (The consequences of that are uncertain; after all, depending on when in April this became true, it may well be that the application was filed within a year afterwards.  The Tribunal went on to consider alternatives, finding that, even if it was reasonable for them not to have acted until they became confident that there were still issues to be pursued in September/October, "the Application was not filed for approximately another seven months".)  The Tribunal disposed of the OPGT's argument regarding its obtaining medical evidence by pointing out that "the time lines...are not suspended while a party gathers evidence in support of their claim".  The Tribunal further noted that it "is settled law that pursuing other avenues of redress is not a good explanation for delay."

My Thoughts

I believe that this decision could be open to judicial review by the Divisional Court, for a couple of reasons:

(1)  As distinct from an individual applicant putting together their case in advance of making an application, when the OPGT is gathering medical evidence to substantiate a claim, it is because they don't have the same innate and internal understanding of the individual's disability that the individual must have.  The OPGT cannot be said to have known that there would have been grounds for an application until it reviewed medical evidence in light of knowing the reasons for termination.  The very nature of the OPGT's mandate precludes one from assuming that they will have a fulsome understanding of the issues from an interview with the individual involved, and it is prudent and reasonable to expect them to do their due diligence before assuming that there was a Code breach.

(2)  The Tribunal's treatment of the delay after the OPGT can be said to have been alive to the Code issues is questionable.  What is the relevance of the seven month delay from September/October (if one supposes that this was when it was reasonable for the OPGT to start considering an Application) to the actual filing of the Application?  Why is seven months too long, and what duration would not have been too long?

I pose a thought experiment:  I am dismissed on grounds which are discriminatory, and on my way home I am so distraught that I get into a car accident, and am comatose for 366 days before waking up.  Clearly, if I file an Application the next day, the delay is incurred in good faith.  But if, during my recovery, I move a little bit more slowly to pull together my recollection of the matters in issue, consult legal counsel, and [gasp] try to informally resolve matters with my employer, and don't file the application for several more months, at what point is the delay no longer incurred in good faith?  The Tribunal here seems to be suggesting a test akin to setting aside a default judgment, that you have to move as quickly as you possibly can once the one-year period is up.  But the results of this are not fair, just, reasonable, or good public policy:  It means that, because I was comatose, I am in a much worse position than somebody who had not suffered such a tragedy; I am not in a position to duly deliberate upon my options; I am not in a position to appropriately prioritize other matters; and furthermore I am forced into a position where I must commence litigation in respect of a matter which could quite conceivably be resolved informally without litigation.

The Tribunal seems to use the one-year limitation period as a way of trying to manage their immense case load.  They dismiss what they can at preliminary stages.  Yet if one really looks at the assortment of reasons they use in this case for finding that the delay was not incurred in good faith, they are essentially sending a message to the OPGT that it should have immediately taken steps to commence an application, without (a) satisfying itself that an application had a reasonable prospect of success or (b) attempting to determine whether or not the matter could be otherwise resolved or settled without formal Tribunal proceedings.  If the OPGT and others took this message to heart, the consequence would be the filing of large numbers of frivolous applications and applications which could otherwise have been settled.

A more cogent and reasonable way of approaching the question of whether or not delay is incurred in good faith is by examining the reasons for the delay at any given point in time, and stopping the one-year clock through any period in which a good faith delay is incurred.  Thus, after I wake up from my coma, I have one year.  If my one-year coma was commenced in the tenth month after the Code breach, then perhaps I should only have two months left after waking up and resuming my daily activities.  (Though, if one supposes that I woke up and remained incapable, then after an organization such as the OPGT picked up my affairs from scratch, it's fair to say that their clock shouldn't be started with 10 months elapsed.)

In other words, when the OPGT first became aware of the fundamental facts underlying the application, that should have started the one year clock; not put them on an "asap" schedule without the ability to investigate or negotiate the issues involved.  Understand the distinction I'm drawing:  There's a difference between saying "You shouldn't have missed the 12-month deadline just because you spent the whole year trying to muster your case and negotiate with the respondent" and saying "After missing the 12-month deadline for good reasons, you shouldn't have taken any time to muster your case or negotiate with the respondent."

The narrative of this case involves the OPGT taking reasonable steps forward at every stage, ultimately commencing an application approximately a year after they first became aware of the fact of the termination of employment, approximately seven months after they can be confidently said to have been aware that discrimination was a live issue, approximately four months after they obtained the medical evidence necessary to satisfy themselves that the application could be successful, and approximately two months after they reasonably concluded that an application was necessary.

If there's one thing that absolutely cannot be said to be missing in this timeline, it's "good faith".

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

Employment Disputes of Lawyers

I came across an interesting case some time ago involving two lawyers in a small firm, Dawn Bennett and Karen Cunningham.

Cunningham was called to the bar in 1996, and opened up her own practice in 1997 in several areas of law.  Bennett was called to the bar in 2001, and accepted a position as a junior litigation lawyer with Cunningham in July 2002.

The relationship broke down quickly, with Cunningham terminating it on January 10, 2003.  Despite the brief relationship, there are a number of interesting employment issues in it, including the distinction between employees and independent contractors and just cause.

Bennett's compensation was not salaried.  Rather, Bennett was to be paid a commission of 50% of all fees billed and collected.  She received advances on commission at a rate of $38,000 per year.  All office equipment and infrastructure was provided, and all files ultimately belonged to Cunningham, but Bennett was responsible for the payment of her own Law Society dues and professional insurance premiums, as well as employee deductions.

Bennett developed some concerns with the relationship fairly quickly.  In particular, though she was busy and working long hours, she was concerned that the office lacked the tools (technological in particular) for her to do her job.  She proposed a business plan to Cunningham to correct this, about a month in.  At the same time, she expressed concern about the fact that she had been required to sign a written employment agreement on the first day of work, though no written employment agreement had been discussed before then.  In response to these concerns, Cunningham invested in voicemail and a well-known piece of practice management software called Amicus Attorney, and also implemented some of Bennett's other file management suggestions.

A common practice among older lawyers (though growing less so with younger lawyers, including Bennett and Cunningham's generation) is to handwrite all time dockets for data entry by the receptionist.  This was the practice in Cunningham's office, at least until the introduction of the Amicus Attorney software.  The process was interrupted somewhat by the sudden departure of the receptionist in August 2002.

By November, Bennett was becoming concerned about the entry of her time dockets and collection of her accounts.  A subsequent comparison between her handwritten notes and computer records indicated that 42.8 hours of time had not been entered.  In addition, though her share of fees billed at that time was approximately $26,500, only 10% of that had been collected.  As December rolled along, Bennett became increasingly concerned; the gap between fees billed and collected was increasing, to the point that her advances exceeded her actual commission after only five months by about ten thousand dollars.

In December, Bennett reviewed some of the accounts rendered, and discovered something quite alarming:  There were a number of instances in which time she had docketed had been credited to Cunningham.  She met with Cunningham about it, and was advised that the errors would be corrected upon receipt of copies of accounts where such errors had occurred.

Just before Christmas, 2002, Bennett gave Cunningham a letter documenting 9 areas of concern.  In it, she was highly critical of Cunningham's systems for, among other things, file management and docketing.  On docketing, especially, she said the following:

Many of the dockets that were entered by hand were credited to your dockets instead of my dockets.  There has been no attempt on your part to reconcile these problems despite my repeated and numerous requests.  As my income depends solely on my billable hours docketed and collected, the monetary gain to you is both dishonest and negligent.  I have no control over the docketing system.  It is your system.  As a result of your flawed docketing system you have gained income that should be attributed to me.  I need an accurate reconciliation of the docketing system to reflect my dockets.

This letter became a major factor in the litigation, when Bennett sued for unpaid commissions and wrongful dismissal, because Cunningham took the position that it created just cause for termination.  Bennett's defence to that hinged on the closing language of the letter:  "I would like to work together to resolve these issues.  Kindly contact me so that we may work together to make this arrangement a successful one for both of us."  When the case went to trial in 2006 (decision found here), the trial judge described it thusly:

The overall tone of the letter was anything but courteous.  It was critical. It was accusatory. It was disrespectful. The letter suggested that Ms. Cunningham was disorganized, incompetent, dishonest and negligent.

The Issues


(1)  Contractor versus Employee


Cunningham took the position that Bennett was an independent contractor, and therefore not entitled to reasonable notice of termination.

Cunningham noted, in support of this argument, that Bennett was paid on a commission basis; that she submitted periodic invoices for professional services rendered; that Bennett was responsible for her own income taxes/payroll deductions and professional dues and insurance; and that the intention of the parties was that Bennett would be an independent contractor.

The trial judge, however, noted that it was for the Court, and not the parties, to determine whether or not Bennett was an independent contractor.  The intention of the parties is not determinative.  The trial judge found that she was either an employee or a member of the "intermediary category", which meant that in the absence of just cause she would be entitled to reasonable notice of termination.

The factors reviewed in the trial judge's reasons included that Bennett was expected to be in Cunningham's office 9-6 Monday to Friday; that the clients and their files belonged to Cunningham; that Bennett did not provide any of her own office equipment; that Bennett did not hire any employees at her expense nor did she pay rent for her office; that Bennett took some financial risk in the commission structure (this was the sole factor leaning towards a finding that she was not an employee); but Bennett did not have any opportunity for profit beyond the 50% commission structure.

(2)  Just Cause

The letter was the crux of the "just cause" argument.  The trial judge notes that a single incident of insolence (defined as "derisive, contemptuous or abusive language or conduct directed by an employee at his/her employer") can be sufficient to justify summary dismissal if the employee and employer are no longer capable of maintaining a working relationship.

Finding that "[t]he relationship between lawyers practising in the same law office is fundamentally based on confidence, respect and trust", the trial judge concluded that the insolence undermined the relationship and that Cunningham's conclusion that the relationship could no longer be sustained was reasonable.  Therefore, there was just cause for termination, and no pay in lieu of notice was required.

The Divisional Court, however, reversed the finding of just cause on appeal in 2011.  (Decision found here.)  The Divisional Court concluded that the only passage which could reasonably be seen as insolent was the phrase "dishonest and negligent", and that all of this should have been read in light of the invitation at the end of the letter to resolve the existing issues; thus, the letter could not be seen as making the continuation of the employment relationship impossible.  (Further, Bennett's employment was not immediately terminated, which did not amount to condonation but did provide a contextual factor supporting the conclusion that the employment relationship was possible to continue despite the letter.)

Lessons to Learn


Firstly, just because you have a contract saying that somebody is an independent contractor does not prevent a Court from going underneath that characterization and finding otherwise, depending on the actual circumstances of the relationship.

Secondly, this case gives some guidance to employees who find themselves having increasing issues with their employer.  There's a lot of wisdom in the "If you can't say anything nice..." saying.  While I'm a big advocate of 'setting the record straight', Courts do tend to understand that employees don't necessarily feel empowered to contradict the employer or seek to change conditions which are intolerable.

However, the Divisional Court's decision in this case sends a clear message to employees that they are allowed to object to employer actions that they find intolerable, and do not have to do so in a manner which is overly cowed or deferential.  Provided that the overall message of the objection is "These are the issues; let's work on fixing them", and there is nothing that clearly crosses the line into the inappropriate in the letter, it will not be regarded as just cause for dismissal.  (However, when one starts getting into swearing, name-calling, gratuitous strong language, sarcasm, etc., it gets more risky.)

Likewise, this case is a caution to employers not to overreact to such letters from employees.  When an employee is expressing concerns, an employer should consider the employee's concerns.  Ideally, if a concern has merit, an employer ought to address that concern with the employee, and seek a solution.  On the other hand, employees often over-estimate their own power in the employment relationship, and so will sometimes make demands that are unreasonable, in which case an employer can go to varying levels of effort to explain to the employee why his demands are unreasonable.  Ignoring a critical letter from an employee is never a good idea.

Where the line is crossed into insolence, however, appropriate discipline should be imposed, regardless of whether or not the employee's concerns in the letter are justified.  So one can imagine a circumstance in which an employee writes a letter which has insolent tones and contents, but which seeks, for example reasonable accommodation of a medical condition.  The employer then needs to address the request for accommodation through its ordinary accommodation policies, but should *also* consider disciplinary action for the impropriety in the letter itself, making it clear that the substance of the request for accommodation has absolutely nothing to do with the imposition of discipline.

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

Pregnancy and Accommodation

The Globe published a story today, "Should pregnancy be considered a disability?"  It addresses a live issue in the U.S., where pregnancy does not incur entitlements to accommodation, with appalling results.  Professor Cox, of the University of Dayton, argues that pregnancy should be included in the Americans with Disabilities Act.

Prof. Cox found examples of women who lost their jobs because employers failed to offer special treatment, including a retail worker who drank water while working and thus violated store policy, and a police officer whose department would not allow her to perform lighter duties.

In Ontario, we don't have the same legal regime.  Not the same issues, and not really the same question.  Ontario law treats discrimination on the basis of pregnancy as sex discrimination.  This approach makes sense in a certain light.  After all, when you discriminate on the basis of pregnancy, you create hurdles that only women will ever have to deal with.  But the consequences get awkward, meaning that light duties are for people with physical injuries, physical disabilities...and women.  How exactly does an employer ask for a doctor's note proving that one has entitlement to accommodation on the basis of sex?  "Please confirm that your patient is, in fact, a woman."

To be clear, pregnancy-related limitations do result in an entitlement to accommodation under Ontario law, but it's awkward, and the awkwardness really seems, in my mind, to arise from the fact that pregnancy-related limitations really are akin to disability.  I've seen an argument about 'temporary disability'.  I think I buy it, though this is awkward, too.  Filling out typical disability forms asking when the accident occurred or symptoms first manifested seems not to fit with the framework of a pregnancy.  Furthermore, quite often the limitations are not related to a physical inability to do something, or a risk of injury to oneself, but because performing certain duties might create risks for the foetus.

So...maybe the appropriate ground of comparison is family status?

The above is fairly academic.  Ontario law is reasonably set that pregnancy-related limitations do trigger the accommodation provisions in the Human Rights Code.  But not all employers know that, it seems.  I have seen cases in which employers have raised every hurdle possible to pregnant women seeking accommodations, from telling them that there's no entitlement to accommodations, to ignoring requests for accommodations, to playing hardball on the implementation of accommodation measures.  "That doctor's note isn't sufficient."  "That [common sense] limitation isn't expressly set out in the FAF."  So on, so forth.

I had a friend who got pregnant shortly after starting work at a clothing store.  (Women's apparel - female manager, all female staff, all female customers.)  As the pregnancy progressed, she began to have difficulty getting stock from the top shelves, and working long shifts without breaks.  Her manager's response was essentially to suck it up.  "I worked through my pregnancy."  When she came in with a doctor's note saying that she needed reduced shifts, with several weeks left to go, her manager put her on unpaid sick leave and told her to apply for EI sick benefits.

Hard to believe that an employer - especially that employer - could be so insensitive, in breach of its Human Rights Code obligations.  But if you read through the comments on the Globe's story, you'll see that a lot of the commenters share that same kind of insensitivity to human rights.  It's shocking.

I wonder if having statutory provisions more expressly dealing with pregnancy might not only give pregnant women a more appropriate legal framework, but also promote a better awareness among employers of their own obligations.

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

Company not advised of employee's concerns; OLRB concludes no constructive dismissal

I very frequently get calls from people who think they see the 'writing on the wall', so to speak, worried that they are about to get fired.  There are various reasons that these concerns arise, ranging from disciplinary measures to reorganization of job functions or reassignment of duties.  Regardless of the reason, it is very stressful on employees to go into work every day feeling like, to borrow a comparison from the late Justice Echlin, the sword of Damocles is hanging over their heads, and there is often a real temptation to pre-empt the termination by quitting.

I generally advise against that.  If the core of an employee's concern is that they are worried that they will be fired, then I often say "Let them fire you, then."  Don't give them a reason, of course - you don't want to be dismissed for just cause - but the truth is that it usually isn't all that hard to not give them just cause.

If you're fired for just cause, the employer has to prove that they had just cause, and this is a high threshold.  If you're fired without cause, then the only question is how much money you're entitled to.  If you quit, however, the onus is upon you to establish that you were constructively dismissed, and this often puts an employee into a weaker bargaining position.

The recent OLRB case of Webster v. Securitas Canada Limited is a cautionary tale about quitting in advance of an expected termination, and may be a significant comfort to employers concerned about an employee quitting out of the blue and then claiming constructive dismissal.

Ms. Webster was a non-union office worker with the employer for several years.  She quit her job in July 2010, and brought a proceeding at the OLRB seeking statutory termination pay on the basis that of a claimed constructive dismissal.  The OLRB rejected the claim.

There were four alleged bases for the claim:

(1)  Change in Compensation

This strikes me as something that was likely thrown in to try to bolster the claim on other grounds.  She was removed from the bonus plan at the start of 2010, but was given a raise to make up for it reflecting the average bonus for the previous 3 years, and she signed off on the change.  The OLRB found that this change was not significant enough to constitute a constructive dismissal, and in any event she did not resign in response to this change, particular given her acceptance of it at the time, and even if she had it was not within a reasonable time.

Personally, I question the OLRB's way of reaching this conclusion.  It has broken down the bases of alleged constructive dismissal into discrete areas, which raises concerns for me.  Bear in mind that the statutory test for termination pay on constructive dismissal is threefold:  The employee must have been constructively dismissed; the employee must have resigned in response to the constructive dismissal; the resignation must be within a reasonable time.

The trouble with using discrete analyses for separate changes to an employment relationship is that it can ignore the cumulative effect of the changes.  There is no reason why a series of changes over a modest period of time could not, taken together, constitute a constructive dismissal even where a single change could not.  If I resign because of the constructive dismissal generated by a series of events, one cannot look to the first event in the series and say "He didn't quit because of that", nor can one reasonably say that the clock on the "reasonable time" starts at the time of the first event.

The Board member is aware of this argument, and does address it towards the end of the decision, acknowledging that it must be determined whether or not the changes to the employment relationship cumulatively constitute a constructive dismissal.  My concern is that, for all of the detailed reasons which go into the Board's rejection of each of the four grounds individually, the cumulative analysis is quite cursory.  I would argue not only that the cumulative analysis is more important, but that the individual analysis is actually quite unimportant, bordering on irrelevant.

However, this ground may have had another fatal flaw.  That she signed off on the change should have only one, if any, effect on the test:  If her agreement was legally binding (i.e. amended the contract at law) then the change was not unilateral by the employer, and therefore cannot form a constructive dismissal.

(2)  Change in Reporting Structure

Prior to her resignation, her direct supervisor changed.  She had been reporting to the IT manager and the Human Resources manager; the new supervisor was a Human Resources professional who was not a manager.  She didn't have a problem with the new supervisor, but alleged that it reduced her status.

The OLRB finds that there are a couple of problems with this argument:  Firstly, "this concern was never raised with the employer prior to the resignation", and secondly she appeared not to have been aware that her new supervisor was not a manager until after starting the complaint process.

(3)  Change in Duties

The IT manager, noted above, was terminated when the IT function was moved to the United States in early 2010.  Thus, her IT-related duties disappeared.

However, the work she continued to do was similar in kind to the duties she did beforehand.

(4)  Lack of Work

This seems likely to be where the crux of the issue was.  After her IT-related duties were eliminated, she no longer had enough work to keep her busy.  She felt "unsatisfied, unneeded, and unwanted".  In essence, she thought it was just a matter of time before she was laid off because she was no longer needed there.

The Board rejects this argument, too, finding that the company was in transition, and she was obligated to "give the employer time to work through the transition, or if she was very concerned, raise the concerns with the employer."

My Thoughts

I touched on the issue of the cumulative effect above, and I think the Board's analysis somewhat ignores the totality of the narrative:  First they take away my bonus, then they remove my IT functions and lay off my manager, and relieve my other manager of the burden of me reporting to her, then they don't give me any new work.  They took away everything about my job except my salary, and were essentially just paying me to twiddle my thumbs.

This issue doesn't frequently arise in the jurisprudence, because employers don't generally like to pay employees to do nothing, but there's a pretty decent argument to be made that an employee does have a contractual right to their duties - not just the salary, but also to the actual job, for two reasons.  Firstly, experience is important.  Many jobs are stepping stones on a career path, that you take for the experience of the position and not just for the salary.  Secondly, it has long been accepted in the jurisprudence that a person's job is integral to their sense of self-worth.  That's a reflection of the duties, about the satisfaction of doing one's job, and not just about taking home the pay cheque at the end of the day.

I'm not saying I think the Board's decision is wrong.  Assuming that she did have an obligation to put the employer on notice of her concerns, the Board is almost certainly right.

I'm not sure where that obligation originates, though.  It seems a reasonable expectation of the employer, of course, to be able to correct this sort of thing before liabilities are incurred, and yet at the same time I have concerns about the consequences of such a doctrine.  Constructive dismissal is often about the straw that broke the camel's back.  I have concerns about this, that, and the other thing.  I don't want to make a stink, because I don't want to risk conflict with my manager.  But these push me to the breaking point.  Then the employer crosses the line one last time, so I quit.

Yes, it's a healthier working environment when an employee is comfortable approaching his or her manager with concerns, and where the manager can process and address concerns.  But in reality, many (most?) workplaces don't work that way.  The employees do what they're told, the managers expect nothing less, and both employer and employee often expects that if an employee doesn't like how the employer does business, the employee can leave.  That is what constructive dismissal is.  It isn't about the employer refusing to reasonably address employee concerns, it's about the employer unilaterally changing the relationship in a fundamental way.  To argue that the employee is obligated to go back to the employer and say "Change it back or I'm out" before a constructive dismissal can be said to have occurred in effect gives the employers an unlimited right to make changes to the employment relationship and an obligation only to negotiate about these changes after the fact.  That's not what the law does.

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

How do CEOs get so much money?

The Canadian Centre for Policy Alternatives has released a new report on income inequality in Canada:  Canada's CEO Elite 100.

For those readers who don't know, the CCPA is a left-wing think tank.  On its website, it calls itself a "non-partisan research institute", but there's a clear left-wing skew, probably about equivalent to the Fraser Institute's right-wing skew.

I don't say that to be pejorative.  I read articles of the FI and of the CCPA, and glean important and interesting information from both.  But it's always important to consider the source of information when evaluating its reliability.  There's an abundance of garbage on the internet these days, and a lot of it even appears to be well-sourced.  When in doubt, check the source data.  Both the FI and the CCPA tend to be pretty good with their facts, but they still have their biases.

This report is the kind of thing we've seen a lot of lately.  It's the fuel of the Occupy movement, seeing that CEOs - the same people who drove a market crash - are making absolutely mind-boggling amounts of money. But, when we're talking about publicly-traded corporations, the argument goes that salary decisions for executives are ultimately accountable to the shareholders - if the shareholders didn't think the CEO was worth a boatload of money, they wouldn't pay it.

Now, that all seems fictional.  There's something unsatisfying about the explanation, when we're talking about such astronomical dollar figures, and the CCPA report captures a part of the reason.  CEO salaries are set within a closed system, by people within the system, and the only point of reference is to what other CEOs are getting paid.  "Joe is the CEO for this other company, and is getting x million, and he's doing a much worse job than our CEO."  If one company's Board of Directors actually decided to reduce executive compensation to a more reasonable level (which is unlikely because the high-pay system benefits these same individuals), the CCPA argues, it would put that company to a competitive disadvantage.

But it goes deeper than that.

Here's how it works:  The shareholders hold an annual general meeting to elect a Board of Directors, and the Directors hire the CEO and set his compensation.  So, in theory, if the shareholders aren't happy with executive compensation, they need to hold the Board of Directors accountable.  But when you start looking at how the AGM works, that doesn't look so easy.

The usual nomination process is that the CEO distributes a "proxy circular" to all shareholders, which nominates the Directors.  The only way for another person to get on the ballot is to have a dissident proxy circular distributed, and these are rare and expensive.  Goodmans LLP released this report last April which examined the success rate of dissident proxy circulars, and reported that their success rate was actually quite high, based on a review of all 44 of the dissident proxy circulars which had been undertaken in 2008 and 2009.  That's right, all 44 of them, across the country, in a 2 year period.  So their success rates may not be terrible, but they are extraordinarily rare.  Why?

Because you need an immense level of investment in the corporation in the first place to justify going to the expense and challenge of trying to fight the Board of Directors.  Given significant levels of voter apathy, that immense investment will, in and of itself, give the dissident proxy a fighting chance - Goodman's noted that much greater success rates were achieved on dissident proxies launched by shareholders owning more than 10% of the company.

The vast majority of investors vote with their feet.  That is how our stock market works.  There isn't widespread shareholder involvement in the operations of the company.  If you don't like how a company is doing, overall, you sell.  If there's a broad consensus that the company isn't doing well, the stock price will drop.  Then, after lots of people have already lost huge amounts of money on the company, you might see hostile takeovers, or single companies obtaining a large enough portion of the shares to replace some or all of the Board of Directors, but because these takeovers are always by other corporate entities, their directing minds are never going to have executive pay reform on their minds as a priority.

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

Court of Appeal discusses ESA Layoff Provisions

I recently posted this entry about temporary layoffs and dismissals in a non-union context, noting that they are quite rare and that "in the absence of a contractual basis for layoff, the device of layoff does not exist at common law and any purported layoff will be, in fact, a dismissal".

The Court of Appeal recently heard another case where this was an issue.  A very unusual case, and quite odd in many respects.  Elsegood v. Cambridge Spring Service (2001) Ltd. involved a non-union technician with seven years of service.  There was no written contract.  He was first laid off on April 4, 2009, and then recalled on June 9, 2009.  He was laid off again on July 28, 2009.

The Employment Standards Act has provisions regarding temporary layoffs, essentially imposing limits on them:  Under the ESA, a temporary layoff that exceeds 35 weeks in any 52 week period has the effect of triggering a termination of employment, entitling the employee to applicable statutory notice and/or severance payments.

Mr. Elsegood was not recalled as of January 22, 2010, at which point he had been laid off for 35 weeks in a 52 week period, and he brought a Small Claims Court action seeking pay in lieu of reasonable notice.  He was successful, and was awarded six months pay in lieu of notice.

The employer appealed, however, arguing that the ESA's layoff provisions result only in liabilities for statutory notice and severance, and not common law notice.  It is an interesting position, but rife with problems.

Problem Number One:  Defining the Contractual Terms

The employer's position was premised on an assertion that there was a contractual term entitling it to implement indefinite layoffs.  With no written contract, how does one get there?  The argument is that the employee's acceptance of the first layoff and recall, together with the employee having regarded himself as still being an employee up to the end of the 35 weeks, resulted in the layoff being an implied contractual term.  The Court doesn't decide what precise scope of any such contractual term was, but if it did, I expect that the employer would have had a difficult time convincing a Court to find that it was entitled to implement an indefinite layoff at common law, simply because of the employee's acceptance of a previous layoff of a relatively short term.

Problem Number Two:  Justifying the Contractual Terms

The Court observes that even an express contractual term entitling the employer to layoff for a longer period than 35 weeks out of 52 would be null and void by operation of the ESA:  It would, in effect, be an attempt to contract out of ESA protection.

Well, maybe not quite.  The employer's argument is, in essence, that the longer layoff triggered a specific and defined liability within the ESA, which would have no impact on common law rights and obligations.  However, that's a difficult argument as well, and one which the Court also rejects (see below).  Of course, if there were express contractual terms limiting the employer's liability on a statutory layoff to the statutory minimums, that would of course be permissible...yet without a written contract, there's really no way of getting there.

Problem Number Three:  The Termination of Employment is a Factual Issue, and not a Legal Construct

Here's the crux of the issue, and what makes this case more broadly interesting:  Does termination of employment for the purposes of the Employment Standards Act mean termination of employment for all purposes?  The Court's answer is Yes.

The strict language of the ESA provisions defining termination are 'for the purpose of' the provisions requiring payment of termination pay.  The employer's argument, in essence, is that it is therefore possible to engage the statutory definition of termination without actually terminating the employment relationship at common law.  It is an interesting and nuanced argument, but the Court sees through it:

The employer proposes the scenario where the employee would actually be on a prolonged indefinite layoff, but terminated for the purposes of the statute. I find it telling that the employer offers no date when a prolonged indefinite layoff would become a termination. It is telling because in the employer’s scenario, there is no date when the employer becomes responsible for termination pay in lieu of notice.

The employer's argument actually appears persuasive, at a glance, but there are a couple of reasons why it really had to fail.  Firstly, bifurcating the notion of statutory termination from common law termination would be confusing.  The ESA does not displace the common law, but is instead an overlay.  So we really can't put ourselves in the position of having to distinguish between an employment relationship at common law and an employment relationship under the ESA.  The question "Is Mr. Elsegood an employee of the company?" is a question which should have a yes or no answer.

Secondly, the employer is trying to turn an arguable right to layoff into a right to effectively cease to employ an individual without ever incurring the liabilities associated with common law notice.  Parties *can* contract out of common law notice, and I always recommend that employers should do so, and terminations of employment under such provisions are clear, certain, and final - both parties know that the relationship is at an end, and they know the employee's entitlements.  On the contrary, what the employer in this case is suggesting is that an employer could limit its own liabilities by stringing along the employee, saying "We may recall you at some point in the future", even where the employer knows that this is not going to happen.  This position is bad public policy, bad employment relations, and is anathema to the employer's duty of good faith and fair dealing.


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