Supreme Court of Canada Addresses Costs at Canadian Human Rights Tribunal

I recently made a post addressing some of the challenges of the human rights system.  One of the observations I made is that, with many legitimate claims resulting in entitlements in the 4-digit range, forcing complainants to go to Court for their entitlements would be tragic because of the legal costs of doing so.

A recent decision of the Supreme Court of Canada, in Canada (Canadian Human Rights Commission) v. Canada (Attorney General) illustrates that the same tragedy can result at administrative tribunals where complainants are provided with inadequate systemic assistance and required to retain their own lawyers:  In 2003, the Canadian Human Rights Commission decided to restrict the advocacy assistance it provided to complainants.  As a consequence, it seems, Donna Mowat was required to incur her own legal fees in pursuing her complaint before the Canadian Human Rights Tribunal following sexual harassment and release from her employment with the Canadian Forces.

Following a six-week hearing in 2005, the Tribunal found that she had been sexually harassed and the CF's response had not been adequate, but dismissed the rest of her complaint.  Ms. Mowat was awarded $4000.  She asked for costs, noting that her legal fees were nearly $200,000.  (A six week hearing is exceptional, and speaks to the complexity of the matters in issue, and legal fees of that order do not seem unusual for such a protracted hearing, though the Tribunal was critical of the "lack of precision" in identifying the key issues, which is surprising for a represented litigant.)  Noting the concern that, without a costs order, her victory would be "pyrrhic", the Tribunal looked to its broad jurisdiction to compensate a victim and make her whole, and awarded $47,000 in costs.  The Supreme Court of Canada eventually (recently) concluded that the Tribunal had been wrong to interpret its powers thus, and found that the Canadian Human Rights Act did not empower the Tribunal to award costs:  Costs, in law, are treated differently from compensatory damages, and so the Tribunal's compensatory powers did not include the power to award costs.

While there's a certain controversy and imbalance to Ontario's new approach, having free legal assistance available to applicants, there is a good argument to be made that it is preferable to this alternative, where a human rights remedy is going to usually cost more to obtain than it is worth.

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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.

Back to Basics: A Practical Guide to Wrongful Dismissal Resolution

While there's a new wrongful dismissal case coming out of Ontario's Superior Court of Justice every few days or so, the truth is that the vast majority of dismissals get settled very quickly, often even before issuing a statement of claim.

This post isn't designed to help people see the process through themselves; both sides really do need lawyers, and for very compelling reasons.  I practice on both sides the fence, so I would encourage anyone finding themselves in this situation to contact me.  Rather, I want to give readers a sense of what to expect, to be more comfortable with the process.

Before Termination

Employers should consult a lawyer before terminating the employee in the first place.  (Indeed, you should consult a lawyer before even hiring, to get a good written contract in place.)  If you want to terminate for just cause, you need a legal opinion about it first.  Just cause is very difficult to make out, with risks of increased liabilities - sometimes significantly so - if you fail.  And, where there is no just cause, you need to know what your "notice" obligations may be.  (With a good written contract, drafted by a good employment lawyer and properly executed, these may be minimal.  Otherwise, you're looking at owing "reasonable" notice, which even a good employment lawyer will only be able to estimate and give you a range.)

Upon Termination

Employers:  There's a correct process for termination meetings.  Half of it is common sense (yet frequently not done), but a good portion of it might not occur to everyone in every case.  Have at least two people in the termination meeting, one taking notes.  Be professional.  Don't get dragged into an argument about the reasons for termination - have a script, preferably vetted by your lawyer, and refuse to be pulled off of it.  (In most cases, you won't even want to give any substantive reasons.)  Be discrete and sensitive.  There is a lot to be said about how to behave on terminations, and a lot of it depends on the nature of the workplace and the specific employee.  The termination meeting should be accompanied by the delivery of a termination letter, which will advise them about receipt of their last pay and statutory entitlements (which should be conditional on absolutely nothing), and requiring them to return all company property, reminding them of any ongoing confidentiality concerns, etc.  At the same time, there should be a second letter, marked "Without Prejudice", offering them something further in exchange for signing a full and final release.  (In the wake of Brito v. Canac Kitchens, there's a thought that more than the statutory minimums should be provided upon termination.  I don't think that's yet having any real impact on the standard practice, though.)

Employees:  When you are terminated, you will often receive an offer, conditional on you signing and returning it within x days.  At this stage, there are several things to note:

(1)  You are going to feel a range of negative emotions.  It's almost a grief response.  Anger, betrayal, despair, frustration...these are all perfectly normal.  It's one small part of the reason you will need a lawyer - it's going to be difficult for you to deal productively and professionally with your employer in light of these feelings.  (As a note to employers:  This is also the reason that working notice is seldom a good idea.)

(2)  Do not sign anything until you get legal advice.  Employers are seldom generous with their initial offers, and in the vast majority of cases there is some flexibility for movement on both monetary and non-monetary terms.  Sometimes, the entitlements are significantly more than what has been offered.  Even if you have a written contract limiting your entitlements, termination clauses are hard enough to enforce that it is often worth seeking advice on the enforceability of the contract.

(3)  Even if you have signed something without legal advice, it's still prudent to consult a lawyer.  I have seen some employers put a release to a dismissed employee in exchange for payment of the statutory minimum.  (In one case, the strict deadline was the day before stat minimums were due anyways.  I can't help but think that that was calculated.)  A release on such a basis will often be unenforceable.  The rule is that an employee should never assume, without proper legal advice, that the fact they signed something means they are bound to it.  (Of course, it is almost *never* a good idea to sign anything on the assumption that it will not be upheld by a court.)

(4)  If you can't meet with your lawyer until after the strict deadline is up, don't despair.  I've never seen an employer refuse to extend the timeframes of an offer upon request.  In most cases, they know that, if they get sued, they'll owe more than the contents of the offer anyways.  So they don't usually pull offers off the table.

(5)  In my years of experience, I have very seldom seen offers from employers that I could tell an employee was better than they would likely do in Court.  In the vast majority of cases, I respond with a demand letter for the client's full entitlements. (In the rare cases where an employer is being generous, unlike some lawyers, I do tell my client as much and try to respond reasonably.  If there's room for improvement with non-monetary terms, etc., I'll recommend the request, but an employer who is being generous knows that the offer is generous, and isn't going to move much on the monetary aspects of the settlement.)

(6)  If you haven't been asked to sign anything, it's often because you've only been given your statutory entitlements.  You likely still need to make a demand, and you'll need a lawyer to figure out what to demand.

Employer's Response to the Demand


There are myriad employer responses to a demand letter.  Know that most demand letters will frame the employee's entitlements generously.  Many employers will try to negotiate the demand down.  While there's not much certainty as to reasonable notice periods, there's enough clarity as to the appropriate ranges that both lawyers can tell their clients, "This is the range, and there's a good chance that the other lawyer is telling the other side the same thing."  So the employer tries to negotiate something at the low end of the range, the employee tries to negotiate something at the high end, and neither side really has much of a will to litigate when there are offers inside the range.

By contrast, many employers will completely reject demand letters at the outset.  Even large and sophisticated employers do so.  This is often strategic, and done with employees whose entitlements are fairly limited.  (Sadly, it often also factors in the employee's tolerance for stress.)  This approach is usually rationalized by the logic that, if you make the employee sue for his entitlements, some percentage of employees will simply not do so, and the increased costs and liabilities of dealing with the ones who do will be less than what is saved on the employees who walk away.  In these cases, an employee can often expect that the employer will come to the table promptly upon issuance of a statement of claim.  (Many prominent employer-side firms take the approach that, when served with a statement of claim, they immediately make a semi-reasonable offer to settle and ask for an indulgence so as not to be required to file a statement of defence while settlement discussions are ongoing.  If the offer to settle appears to be in good faith, then most employee-side counsel will recommend granting the indulgence, as they know that a settlement is imminent, and there's little to be gained through hardball at that point.)

The ones that go to trial, these days, usually have a fair bit of money at stake and a real fight about one of a handful of things, such as whether or not there is just cause, enforceability of the written contract, how to characterize one of the factors that defines the reasonable notice period, or a dispute about constructive dismissal.  Without some fundamental factual dispute underlying the calculation of the reasonable notice period or the entitlement to reasonable notice, the margins between what the employer might expect to have to pay and what the employee might expect to get are so small that the cost of litigation is prohibitive for both sides.  Even when there is a fairly fundamental dispute, if there isn't a lot of money at stake, both sides still know that the most cost-effective approach is through an early settlement.  What's a few months' notice for a minimum wage employee beside the amount of money it would cost to get to trial?

That being said, many employers will fight certain cases 'on principle':  Where there's a clear-cut case for cause, an employer isn't going to settle, because it sends the message to other employees that they can act badly then cash out.

It's always important to hire a lawyer who knows what they're doing, but that's especially important for low-value cases.  I've taken on clients whose cases I assessed at being mid four digits.  At a lawyer's hourly rate, it doesn't take long before that all gets eaten up in legal fees, so a lawyer on such a case really needs to be careful about how much time is being spent.  So far, in my practice I've been pretty good about being able to settle efficiently enough that my clients still get to keep most of their money.  On the other hand, I have seen lawyers (even boutique employment lawyers) go five digits into legal fees before even issuing a statement of claim, on files that were not high value.

That's why the choice in lawyers is important.  It is important to me to try to ensure that my client will be better off at the end of the day for having hired me, and if I don't think that's going to happen, I tell the client that.  I offer free consultations to dismissed employees in most cases (some exceptions apply), so I would encourage any dismissed employees to contact me immediately.

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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.

Stranger than Fiction, Volume III: The "Sovereign Man"

I had never heard of this concept before, until reading about it in a recent decision by Justice Brown.  Apparently, some folks have taken to believing that they can simply refuse to recognize the authority of the domestic government and live as a "sovereign man".  They claim that there's a legal logic to it, namely that they can separate into two separate entities - the "juristic person/strawman/legal entity", and the "flesh and blood living man" - and so while the state may have authority over the legal entity, the flesh and blood person can't be held to account for actions of the legal entity.  It sounds almost like a bizarre extrapolation of the corporate veil.  I don't fully understand the whole farce - I suspect because it doesn't actually make sense - but somehow the birth certificate is supposed to be integral to the creation of the legal person.

The recent decision was in MBNA Canada Bank v. Luciani, in which Luciani registered a financing statement under the PPSA purporting to secure a $28 million interest owed to him by the bank.  The bank demanded that he remove it, and he said that he would only if the bank advanced him and his wife a $125,000 line of credit.  "A good old-fashioned shakedown", as Justice Brown called it.  Suffice it to say that the PPSA registration was ordered discharge, with the rare measure of full indemnity costs being awarded to the bank.

The previous decision was in Mercedes-Benz Financial (DCFS Canada Corp) v. Kovacevic (sentencing decision here), and this case involved a fellow who had signed a contract with himself by which the legal himself took on all of the flesh and blood himself's debts, with the result that the flesh and blood self could continue to drive around a financed Mercedes notwithstanding the fact that the legal self hadn't bothered to pay for it.  Even after a Court ordered the return of the car.  Justice Brown found him in contempt of Court and sentenced him to five days in prison.  The car was returned.

It's a hoax, really, similar to the "income taxes are unconstitutional" argument that started in the States and spread to Canada, involving people who come together trying to find a way to justify their desire not to pay taxes, who come up with some constitutional interpretation they think is clever (usually ignoring significant parts of the constitution, and always ignoring the bulk of constitutional jurisprudence), and they enter into a cycle of self-affirmation, in which like-minded people will continue to tell each other that they're right, until they become so confident of the absolute and unchallengeable correctness of their position that they are puzzled and baffled and convinced that there is a conspiracy against them when the authorities, including the Courts, tell them that they're wrong.

I googled "sovereign man" and found a video of a man in a Guelph courtroom...as a first sidebar, note that videotaping court proceedings in Canada is a serious offence...being quite elusive as to his identity (not unlike what Justice Brown described in Kovacevic), nearly getting kicked out of the courtroom before he handed up his birth certificate.  The JP called for a short recess, and left the courtroom, whereupon the 'sovereign man' declared that, as the "judge" had abandoned the court, he was now in charge of the courtroom, and he purported to dismiss the case.  And left.  Further research indicates that he was charged with by-law violations as a consequence of parking his car on his lawn.  The trial continued without him and he was fined $260.  Not to mention the investigation into the video.  I'm surprised he didn't end up being held in contempt himself.

Yet, most of the references to this case on the internet are positive, applauding him and interpreting the video very strangely, suggesting that the JP's departure somehow implied that he had conquered the courtroom and won the day.

I don't expect any of my usual readers will need any such clarification, but let's be clear anyways:  The "Sovereign Man" scheme does not work in Canada.  It does not get people out of having to comply with the law, having to pay just debts, or having to be held to account for their actions.  The fact that anyone believes otherwise is a testament to the down side of the internet - it is an amazing tool for information, but equally powerful for spreading misinformation as well.

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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.

The First of the s.45.1 Cases

I have previously expressed concerns with the Human Rights Tribunal of Ontario's various applications of s.45.1 of the Human Rights Code.  This section allows the HRTO to dismiss an application if the subject matter of the application has been "appropriately dealt with" in another proceeding.  In the linked post, I noted a case in which the Human Rights Tribunal refused to dismiss an application on this ground because it disagreed with the analysis that Arbitrator Surdykowski used in reaching it.

The Divisional Court just released a decision in College of Nurses v. Trozzi on a similar issue.  Trozzi sought a nursing license from College of Nurses.  The College imposed conditions on the license on the basis of certain medical conditions she had, and she challenged the decision at the Health Professions Appeal and Review Board (HPARB).  She lost.

While waiting for the decision from the HPARB, she initiated a Human Rights Application, and the College sought dismissal under s.45.1.  The Tribunal found that the HPARB had failed to apply the correct analysis to the question.  The College sought judicial review.

That the Divisional Court even heard the application for judicial review at this stage is surprising - the Tribunal proceeding is ongoing, and normally this would be regarded as "premature".  But as it went to a "true" jurisdictional question, the Court refused to quash the application for judicial review.

The Divisional Court unanimously allowed the application for judicial review, but there were different sets of reasons.  The majority felt that the HRTO overstepped its bounds by attempting to sit in review of another statutory Tribunal with a "public protection mandate".  Justice Lederer, by contrast, felt that the distinction of "public protection mandate" is somewhat meaningless, and that the Tribunal overstepped its bounds simply by trying to sit in review of another statutory Tribunal at all.

I don't think that this is the last s.45.1 case we're going to see, but the Divisional Court appears to be putting the HRTO in its place pretty firmly.

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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.

The Dangers of Scapegoats

There are two stories in the Toronto Star today about allegations of criminal misconduct against employees.

The 'front page' on the online version is about Oshawa Hospital Foundation firing its CEO, Jim Szeman, and calling the police after a Star report prompted an investigation and "forensic accountants turned up serious money and charity management problems."

Reading the story, it seems like they've done their homework and they're pretty confident that there was mismanagement.  But I have enough experience with media to not take any of it at face value, and I'm particularly doubtful about the strength of the case when the only specific allegations in the story are...less than obvious misconduct.  There's an allegation of self-dealing, that the charity paid a company of his over three hundred thousand dollars...which seems like a lot of money until you realize that this was over a six year period and his annual salary with the charity is over two hundred grand...where it is "unclear" (to the Star) who else on the Board of Directors knew of the self-dealing arrangement.

Reading the news, I always assume that I'm not seeing all the facts.  So it could be that this fellow is a hardened fraudster and the employer's response is reasonable.  Or it could be that he was acting in a transparent manner, taking perks that the general public might not have much patience for in the wake of the e-Health scandal, and that the employer decided it would rather blame let Szeman take the fall than stand behind him.

If it's the latter, there could be real liability risk.

The second story is about a former low-level employee of Durham Region who was fired and charged with fraud.  More to the point, the story is about his acquittal.

Joel Nicholson was an employee with no legal training, in charge of collecting unpaid fines under the Provincial Offences Act.  Then, in 2002, his duties were expanded to include collecting from tenants in subsidized housing who owed rent arrears or money for damage caused.  And he built those debts into the same system he had for collecting other fines, seizing and garnishing assets and income.

Just one problem:  You can't do that.  There are certain actions that you have to take when dealing with residential tenants.  While they're in the rental unit, you need to go to the Landlord Tenant Board for an Order, which can then be converted into a Small Claims Court judgment, and enforced in the Small Claims enforcement process.  After they're out of the rental unit, such claims go directly to Small Claims Court.  The key is this:  You need to get a judgment before you can take enforcement action on a debt.

So Nicholson's actions in collecting these debts were deeply problematic, as was brought to light in 2009.  However, as the Court concluded, the mistakes were innocent on his part.  He didn't realize that he was doing anything wrong.  He didn't know that there was another process he had to use.  And it's not as if he was pocketing the proceeds.  And therefore, he was acquitted.

The story also notes that he is suing the employer in wrongful dismissal.  Likely a solid case, if this Court decision is any indicator.  (It isn't binding.  The burden of proof is different.  In order to convict him, the Crown needs to prove guilt "beyond a reasonable doubt".  To prove that he engaged in misconduct for the purpose of a wrongful dismissal suit, the employer only needs to establish it on a "balance of probabilities".  Accordingly, the fact that he was acquitted doesn't necessarily bar a Court from finding that he engaged in misconduct in a subsequent civil proceeding.)  The judge in the criminal proceeding seemed critical of the Region's managers for not spotting the "flagrant legal problems" in Nicholson's approach, and for failing to consult the Region's legal department.  If these criticisms were picked up by a judge in a wrongful dismissal case, then that could be very bad for the employer.

Where an employer makes allegations of cause which don't pan out, that usually amounts to a breach of the duty of good faith and fair dealing.  (Not always.  There is some case law suggesting that, if the allegations themselves are true and simply don't quite meet the threshold for cause, then there's no reason to think there's bad faith.  Similarly, one can easily imagine a circumstance in which an employer, having diligently investigated allegations of wrongdoing and reasonably, if incorrectly, concluding that the employee is guilty, might not have breached the duty of good faith and fair dealing.)  The more serious the allegations, the more serious the breach of the duty of good faith.  If they bring in the police and an unsuccessful criminal prosecution results, the employer's motives for calling the police will be closely scrutinized, as will their actions in making the police report.  Claims for malicious prosecution, negligent investigation, including aggravated and punitive damages, are easy to imagine in such contexts.

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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.

The Challenges of Human Rights

I've tried to write a policy-oriented human-rights entry a couple of times, and abandoned the attempts before.  The challenge is that I really am a centrist in this area.  Unlike many on the right, I believe in human rights.  I think that they are important to a fair and democratic society, and that their growth is a very positive thing for Canada.  However, unlike many on the left, I do understand the objections to an overly broad approach to human rights.  So I'm trying to strike a delicate balance.

The "Human Rights Have Gone Too Far" Camp

On the one hand, let's look at the far-right, such as polemicist Ezra Levant, who argues that the 'human rights commissions' are out of control.  It's difficult to completely ignore the imprecision and overbreadth in Levant's language:  He generalizes human rights on the national stage based on his experience with the Alberta Human Rights Commission, and there are some very significant differences between systems, relevant to his objections.    He argues that Human Rights Commissions and Tribunals are "kangaroo courts", with unqualified adjudicators appointed by the government.  He also uses criminal language - referring to the initiation of the proceeding as being a 'charge', referring to the proceedings as 'prosecutions', findings of Code breaches as 'convictions', and awards of compensatory damages as 'fines' - all of which is incorrect and misleading, in an attempt to set up an argument that the government should bow out of these essentially civil disputes and let the Courts handle it.

There are no fewer than four massive problems with Levant's position that the Human Rights Commissions and Tribunals are unqualified bureaucrats expanding the interpretation of human rights unduly beyond what it can reasonably bear.

(1)  These are administrative tribunals.  I've blogged about administrative tribunals on several prior occasions, and the key thing here is that they are *everywhere*.  There are literally hundreds of them across the country, of different shapes and sizes, specifically designed to address certain types of disputes.  The point is to take the strain off of Courts, and provide a - hopefully - expedient avenue of recourse for these disputes.  Not to suggest that these processes are perfect - far from it - but neither are the Courts, and in specific contexts the flaws of administrative tribunals are preferable to the flaws of the Courts.  Many lawyers dislike administrative tribunals generally.  The objections Levant raises are common to many of these tribunals, but he treats the human rights processes as being uniquely appalling, and even has a prominent link on his web site seeking "donations" for his ongoing campaign against "the HRC".  And Levant's solution of handing off human rights disputes to the Courts would be catastrophic:  The vast majority of legitimate human rights complaints result in awards in the four-digit range or the low five-digit range.  The existence of such civil claims often create a tragic hole in the 'access to justice' coverage, because even a plaintiff who can afford to pay a lawyer to bring such a claim...won't and shouldn't, because they'll pay more to the lawyer than the claim is worth.

(2)  Human rights proceedings are almost always civil disputes between private parties.  The implication of 'prosecution' is that the 'bureaucrats' are starting these proceedings of their own initiative.  That is very seldom the case.  In most cases, the proceedings are initiated by people who feel that their rights under the Code have been violated; the mandate of the Human Rights Tribunals is to adjudicate these disputes.  This is not unlike the Landlord Tenant Board, adjudicating disputes between residential tenants and landlords.

(3)  Human Rights Tribunals are subject to judicial oversight.  If the Tribunal committed a reviewable error, including misinterpretation of the Code, then judicial review can be sought.  All Tribunals and Courts make mistakes from time to time, and so, outside of the Supreme Court of Canada, no judicial or quasi-judicial body is completely immune from appellate/judicial review.  (Some would argue that the expense of this is prohibitive.  Yes, Court is expensive.  That's a big reason we have the Tribunal in the first place.  Moreover, once you get to that level, one of Levant's key objections to the tribunal process, being the unavailability of cost sanctions, dissolves.)

(4)  Human rights do not exist at common law.  The judges I've talked to about the topic don't want jurisdiction to handle human rights disputes.  At the ground level, these are tricky issues, requiring expertise in terms of how the relationships triggering human rights disputes work.  This is why we don't use judges to adjudicate these decisions, but lawyers and other professionals experienced in labour relations and other Code-related areas.  Indeed, the Commissions and Tribunals simply interpret what the government enacts.  The government is free, subject to constitutional constraints, to change the language if they feel the intention behind it hasn't been correctly interpreted.

Many of Levant's criticisms are anecdotal in nature, taking examples which are on the fringe.  For example, he wrote in November 2010 of a pastor who had been "fined" - not so, it was a compensatory award to a complainant - for writing a letter to the editor "criticizing gay marriage" (which is a *very* mild way of characterizing the letter's contents).  Levant neglected to mention that the Tribunal's decision had, in fact, been reversed on judicial review, highlighting that it was, in fact, a borderline case.

That being said, I don't necessarily disagree with all of Levant's objections.  One of his most persuasive pitches is the one he makes against the anti-hate speech provisions contained in some - that's right, not all - of the human rights statutes in Canada.  That doesn't exist in Ontario, so it's not something I've developed a strong feeling about.  While I understand the policy motivations behind such a provision, I also understand Levant's objections on the basis of free speech, and I'm inclined to think that such a provision is unworkable.  There are clear lines that shouldn't be crossed in criminal legislation, and I think we can leave it there.

It's a shame that this message gets lost when Levant muddies the water with his polemicist rhetoric, crusading with equal vigour against the human rights processes generally and other applications of substantive human rights.

To give a lay perspective, let's look at my father.  My father is a retired police officer, and pretty far right, and we have some interesting conversations.  I've had clients whose workplaces had pretty flagrant human rights breaches...for example, a woman obligated to wear dresses - not pants - even when men performing similar job functions were fine in ripped jeans...and my dad's viewpoint on these cases is that, if these employees knew about the job conditions before going in, and agree to it, they shouldn't really complain about it afterward.  I respond with the question, "Okay, what if somebody agreed to work for $2/hour?  Should they not be able to complain about it afterwards?"  His response was, "Well, we have minimum wage laws, so that would be illegal."  He didn't recognize that human rights and employment standards are similar in the way they legislate over the freedom to contract.

There *are* legitimate human rights issues out there, major issues that the majority of Canadians would agree should be addressed. (Mind you, there are still surprising numbers of people who think that an employer should be able to fire an employee who gets pregnant, judging from public reaction to the Jessica Maciel case.)  There are also more marginal issues, that perhaps don't have the same clear-cut answers, such as Bill Cosby's right not to be harassed on the basis of race by Chris Rock at a comedy club.  And there are trickier questions as well where human rights obligations may conflict with other legal obligations such as occupational health and safety.  (See, for example, the recent decision in Loomba v. Home Depot.)

The Other Side:  Human Rights Breaches are Everywhere


I've mentioned Professor David Doorey before, as having a workplace law blog I follow and sometimes comment on.  He made a post a while back about the Starbucks employment application breaching the Human Rights Code by asking what high school the applicant attended and whether or not the applicant is available to work overtime.

Let's be clear:  There are certain questions which are clearly illegal.  Do you have kids?  How old are you?  Are you married?  What are your religious beliefs?  You can't ask these of a job applicant.  But these questions don't seem so inherently unreasonable.

Ontario Human Rights Commission literature backs him up on the 'high school' question.  And the logic seems to be that asking what school a person went to can reveal a great deal about their religious background, racial background, place of origin, etc.  The overtime question is seen as troublesome because people who have families are far less likely to be able to work overtime.

I have a hard time accepting such a broad interpretation of the Human Rights Code.  The high school question...well, if the fact that a question may reveal factors with a probable connection to a prohibited ground made the question itself illegal, then the result would be that just about any question would be illegal. Heck, the "name" field would likely be illegal.  These questions are clearly not proxies to pick up information to classify people on discriminatory grounds.  And if Microsoft were unable to distinguish between a Computer Science degree received from the University of Waterloo versus some less prestigious institution, that would strike me as being a commercially absurd result, extended the prohibited grounds to covering "where did you get your education"?  (And if an employer wants to see a transcript...well, you can just about forget that, no?)

The overtime question...is trickier.  Yes, people with kids are less likely to be able to work overtime.  Yes, that ends up being a discriminatory result if people are going to be treated differently on the basis of a "no" answer.  Yet the similar extension of this principle would be that it would be illegal to advertise positions for full-time only, or for certain hours.  Or to ask how much travel a potential employee is willing to do.  Again, where it doesn't seem to me that hours of availability are a clear proxy for a prohibited ground, I think that the commercial absurdity of the result is hard to justify.

Problems of Perception


One further difficulty is that people don't really understand what "human rights" means.  Even some very sophisticated people don't understand that it isn't just a venue for dealing with general unfairness.  It addresses unfairness on some very specific bases.  So people think "If I'm treated unfairly, it's a human rights matter", leading to frivolous and vexatious proceedings, leading to others criticizing the Tribunals for hearing such frivolous matters.

Let's be clear.  *Most* human rights applications seem to fall into one of three categories:

(1)  Not in the Tribunal's jurisdiction.  Whether because not based on a prohibited ground, not in an applicable social category, or because of some other jurisdictional bar, the proceeding gets shut down early because the Tribunal can't hear it.

(2)  A case with substantial personal importance and a bona fide human rights-based objection.  For instance, consider the mandatory retirement cases.  Clearly, there are some circumstances in which mandatory retirement might be justified.  That cannot be carte blanche for people to discriminate against the elderly.  Thus, a person facing mandatory retirement, win or lose, can't be faulted for arguing the case before the Human Rights Tribunal.

(3)  A case with deeply unacceptable conduct by the respondent, if perhaps not a great deal of direct personal importance.  A good friend of mine and law school classmate is visually impaired, and uses a service animal.  (The dog has quite the character, too. Very quiet, never made much noise or disrupt classes, but would occasionally snore or snort at times that were very appropriate to the lecture material.)  I noticed a case a while back in the Tribunal's jurisprudence involving her being excluded from a store because of a "no animals" policy.  I doubt my friend was put to great hardship by the exclusion - no doubt she took her business somewhere else.  Yet I don't think she's seeking a big payout - really, if you look at the value of her time on an hourly basis, the award she'll probably get from the Tribunal at the end of the process will be less for her time than she could have billed on client matters.  It's the principle of the thing, and it's an important principle.  Most establishments permit service animals simply because it is a well-known law that they are obligated to.  If we didn't hold people to this obligation, then they would stop, and that *would* generate hardship.

While imperfect, as are all things human, the Human Rights Tribunals serve important policy objectives.  We need to scrutinize them, and decide carefully the form and substance of our human rights, but abandoning them would be a tragic mistake.

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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.

Dismissed CEO Wins Awkward Partial Summary Judgment Motion

There is a recent judgment in the Hinke v. Thermal Energy International Inc. case, by Justice Ray, on a motion for partial summary judgment.

Put briefly, Hinke founded TEI in 1991 and was its principal until he brought it public in 1994, and continued on as its President and CEO.  In 2004, he recruited Timothy Angus into a senior position, and while conducting his due diligence prior to accepting the position, Angus discovered a letter from the TSX-V asking to review certain transactions, which had been received a few weeks earlier but not produced to the Board of Directors. Angus produced the letter to the Board, Hinke resigned as President in February 2005, and Angus became President and CEO.

Hinke's position with the company at this point seems unclear.  His existing contract was set to expire on June 25, 2005, which would have triggered certain severance entitlements, etc.  On June 5, 2005, Hinke and TEI agreed to enter a new employment agreement, and then they went about discussing some of its terms.  It had not yet been finalized when Hinke's employment was terminated, allegedly for cause, on June 23, 2005.

Hinke then sued for wrongful dismissal, among other things, and TEI counterclaimed alleging oppression, breach of fiduciary duties, and negligence.

It should be a simple matter of two arguments about the same facts.  If the facts underlying TEI's claim are warranted, then that probably constitutes just cause, right?  Well, maybe not.  Simply put, while there were disciplinary letters leading up to June, including some threatening termination, the Court concluded that entering a new agreement on June 5 was inconsistent with an intention to terminate Hinke's employment for cause.  In effect, by entering into a new agreement, TEI undermined any case for just cause it was attempting to build.

The Court therefore held TEI to proving just cause based on conduct after June 5, which is a tall order considering how little time had passed since then.

This motion related only to the wrongful dismissal elements of the claim, and was successful.  The remainder of the claim, however, along with the full counterclaim remain outstanding.  (This judgment, however, has been stayed pending disposition of the other issues.)

My Thoughts

The dimensions of an eventual trial have been shifted.  This is a brilliant tactical move, because it shifts the stakes significantly.  The defence is no longer able to challenge the wrongful dismissal allegations, but its allegations of misconduct are limited to proving its own counterclaim now (and damages are often difficult to establish) and the consequences of failing could potentially have brutal consequences in terms of moral damages for breaching the duty of good faith and fair dealing.  This could press a settlement of the other issues.

However, if they don't settle, then think about the trial that results.  Among other things, Hinke is likely to make the same pitch that succeeded here - if his actions were really oppressive and breached his fiduciary duties, then the company would not have entered into the June 5 agreement.  It may not be as strong a pitch, in context, but if it fails, and if the counterclaim does succeed, then we will be left with the Courts saying that the employer was entitled to hold him to account for all that misconduct, but they were not entitled to fire him on a for cause basis.  There's an inconsistency there.

Here's where the inconsistency becomes worse:  In employment law, there is a doctrine referred to as "after-acquired cause".  (See the Lake Ontario Portland Cement case.)  In a nutshell, when an employee is terminated on a for cause basis, and the employer later discovers the full breadth of the misconduct - or even entirely new areas of misconduct - the employer is entitled to rely on those in support of allegations of just cause.  And condonation falls off the rails in these cases, too:  An employer can't be said to have condoned what they didn't know about.  So the possible trouble with the Court's finding that the employer was limited to relying on misconduct from June 5 to June 23 is this:  The employer is also entitled to rely on any misconduct, regardless of when it occurred, that they discovered after June 5, and even after June 23.  (Note:  For all I know, it is entirely possible that the employer may have known the full particulars of the misconduct alleged prior to June 5, in which case this issue wouldn't arise.  While it seems unlikely, that very possibility may justify the Court's decision if it wasn't disposed of in the employer's evidence:  There's an obligation in summary judgment motions to "lead trump or risk losing".  It may be a defect with the employer's case, or it may be a defect in how the employer led its case.)

One other interesting point:  The Court notes that the employer's defence did not claim setoff - i.e. they're counterclaiming for damages, but they didn't lead those same allegations in the defence as a way of saying "Even if the plaintiff's claim is legitimate, we still don't owe him money because he owes us all this".  It's understandable to do so in such a case, because of the natural inclination to think that the success of the claim and counterclaim, on the facts, would be mutually exclusive.  However, such a pleading of setoff likely would have blocked a partial summary judgment motion with such a limited scope as this one.

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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.

Back to Basics: Constructive Dismissal

I frequently refer to constructive dismissal, such as in my recent post about McMillan v. Selectrucks.  I often talk about it in a fairly cursory way, but I feel it's important to occasional address more basic questions.

What is Constructive Dismissal?

Constructive dismissal is a term that most people have heard of, a general idea that, if the employer does something wrong, they can quit and still demand a package.  It's a term that's thrown about pretty casually in some contexts, yet people are rightly reluctant to give up secure employment on the basis of some simplistic sense of an abstract legal principle.  The result is that I, and lawyers like me, get lots of calls from employees saying, "My employer did x, have I been constructively dismissed?"

The essence of constructive dismissal, and part of what makes the doctrine very weak in many cases, is that it is an extension of wrongful dismissal.  Wrongful dismissal damages are not a windfall.  You don't get rich by suing in wrongful dismissal.  Indeed, in many cases the entitlements are quite limited, and so it seems a poor trade to lose one's job in exchange for wrongful dismissal damages.  The appeal of constructive dismissal, of getting paid to walk away, quickly loses its glamour in light of the bleak future of unemployment in an uncertain economy.

So, if you have been constructively dismissed, you are entitled to treat yourself as having been terminated by the employer.  Sort of.  There are all sorts of exceptions and qualifications to address, but let's look to the legal definition first:  A constructive dismissal results when the employer unilaterally makes a fundamental or substantial change to the terms of an employee's contract.

Whether or not the change is unilateral is pretty straightforward:  If you agree to the change, it isn't unilateral.  Whether a change can be characterized as fundamental or substantial...is trickier.

In the jurisprudence, there are really two different types of constructive dismissal.  There's the constructive dismissal where the employer actually changes the employee's duties, functions, title, compensation, or some other aspect of the terms of employment (the "demotion" cases), and then there are the Shah-type cases, where an employee quit to escape harassment or an otherwise poisoned work environment.

It is largely a matter of scale.  The employer is entitled to make certain changes to the terms of an employee's contract, and that includes reductions in pay...to a certain extent.  When the change is large enough to be said to be a 'fundamental' change, then it can be characterized as constructive dismissal.  Where an employee is demoted, with a loss of prestige, that too can be a constructive dismissal, depending on the significance of the change.

The McMillan case shows how even the Shah-type cases are a matter of scale:  Even if you can show that you have been treated unfairly by the employer, and this led you to leave, that will not necessarily make out a case for constructive dismissal.

There are also the 'discipline' cases, which can be a hybrid of the two types.  Sometimes, it's discipline being imposed as part of a campaign of harassment, making it a Shah-type case.  Other times, the discipline itself can exceed employer authority.

This is a mistake I've seen unionized employers make with their non-union staff members, applying the same disciplinary process to them, including unpaid suspensions.  The way the jurisprudence sits on unpaid suspensions was set out by the late Justice Echlin in Carscallen v. FRI Corporation, upheld by the Court of Appeal:  Unless there is an express contractual right to do so (as there usually is in collective agreements, but seldom in individual contracts of employment), an employer has no inherent right to impose unpaid suspensions in disciplinary matters, unless the misconduct rises to the level of "just cause".  In other words, if the employer would be justified in firing the employee without notice, then it can forbear and instead issue an unpaid suspension instead.  Otherwise, it will be a breach of contract, and possibly generate a constructive dismissal.

The Difficulty of Mitigation

When your employment is terminated and you want pay in lieu of notice, you're obligated to try to mitigate your loss by seeking replacement employment.  There is a line of cases dealing with demotions or pay cuts establishing that, where the demotion isn't the result of a soured relationship, an employee can be expected to accept the new position with the same employer in mitigation of the loss generated by the constructive dismissal.

In other words, you might be entitled to treat yourself as having been dismissed by your employer, yet your employer may still be entitled to expect you to stay in the job nonetheless.  (In a previous blog, I wrote of this disconnect and called it "Unconstructive Dismissal".  Just to clarify terminology, there's not actually such a thing called "unconstructive dismissal"...that was just ironic wordplay on my part.)  So there have been cases where the Court has found that a constructive dismissal had occurred, and yet the Court also found that the employee should have stayed in the job as mitigation while seeking a new job, with the result that the employee had few if any entitlements.

(In a case that turns around the same concept, an employee whose pay was cut significantly actually stayed in the job and sued the employer for the salary to be topped up through what would have been the notice period.)

There was one case that went to the Supreme Court, Evans v. Teamsters, which was similar, though not strictly a constructive dismissal case:  The employee had actually been dismissed, and was offered another position on a contract basis through the notice period when he came back with a lawyer's letter.  The Court felt that refusing the job was a failure to mitigate.

I feel that this doctrine needs to be refined, for two reasons.  Firstly, mitigation is usually fairly employee-friendly:  Employees are not generally required to take the first job that comes along, but are entitled to hold out for a job that is close to being as good as the old job.  Outside of these "employment with the same employer" cases, I know of no other case that holds that an employee should accept another position on a temporary basis while seeking replacement employment.

Secondly, this disconnect is the result of having two different standards for what should essentially be the same thing.  In my view, if the changes in the employment relationship are not so significant as to make the resulting job 'not equivalent' for the purposes of mitigation, then it can't be constructive dismissal.  Conversely, if the changes are significant enough to constitute constructive dismissal, then the job can't be close enough to expect the employee to accept it in mitigation.  Still, that's my own view, and does not reflect the current state of the law.

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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.

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 contact him for information on available services and billing.

Stranger than Fiction, Volume II

Here's a fun little case that was released earlier this year, about a fellow suing OLG because he didn't win enough:  Tal v. Ontario Lottery Corporation.

Now, to be clear, this is not the class-action suit that was attempted on behalf of problem gamblers alleging a failure to take appropriate measures to exclude them from casinos.  That issue is not one to be treated with levity.  The Tal case, on the other hand...well, it could be argued that it wasn't treated with enough levity.

In a nutshell, here's what happened:  Mr. Tal bought a ticket for Lotto 6/49, and matched four of six numbers.  This case was about how much that entitled him to.

Smaller winners have prizes in fixed amounts:  People who match 2/6 + Bonus would get $5.  3/6 got $10.  However, beyond that, prizes were defined with reference to the total prize pool.  They create a "Pools Fund", and 9% of it is allocated to 4/6 winners, to be divided up amongst all the people who matched 4/6.

In the particular draw that Mr. Tal matched 4/6, 9% of the prize pool was just over 1.3 million dollars.  Not bad, but the trouble is that there were more than 20,000 tickets that matched 4/6, with whom Mr. Tal had to share the 1.3 million, with the result that he was paid $66.90.

Mr. Tal, unhappy with his winnings, argued that he shouldn't have to share, but should get the entire 9% of the Pools Fund.

And yes, he actually sued OLG, taking that position.  OLG brought a motion for summary judgment, and the result decision by Justice Stinson, linked above, is perhaps the longest and detailed way of saying "That's absurd" that I've ever seen.

Other Cases Involving the Same Plaintiff

Mr. Tal, not surprisingly, was self-represented in this proceeding.  Figuring that this couldn't have been his first introduction to the Courts, I checked my legal databases for decisions involving him.  And found quite a lot.  The only other one on CanLII is Tal v. Koor, relating to Mr. Tal fighting against the setting aside of a default judgment.  Said Justice Campbell:

 Mr. Tal remains of the view that he is entitled to utilize to his advantage those specifics of the Rules of Civil Procedure that he chooses, without regard to the other obligations on a party mandated by the Rules.
...
 It is indeed unfortunate that some self-represented litigants think that by reading the Rules of Civil Procedure, they can achieve a result that ignores the overall purpose of the Rules as set out in Rule 1.04, and the discretion that will likely be exercised by judges and masters to achieve that end.

In another database, I found another case, in fact more recent than the OLG case (though one week before the Court hit him with a costs order in excess of $17,000 in the OLG case), in which he tried to sue the OMB for denying him standing to participate in a hearing.  Also summarily dismissed.

Then there's last year's decision in Tal v. Usher (appears related to the Koor case), relating to an eviction of Mr. Tal in 2007.  His action was dismissed as frivolous and vexatious.

Indeed, there is case law online about this same individual going back to 1983 (Re Silver Elms Holdings, relating to a corporation owned by Mr. Tal), in which the Court notes the following:

Although a stranger to the action in the strict sense of the term, Tal was at all material times the president, the sole director and the governing mind of Silver Elm and he had, from the vantage point of the practical immunity of an insolvent company from the discipline of costs, made a practice of defending actions where he had no real defence, of launching appeals and, as illustrated in this hearing, of greatly lengthening trials without ultimately producing a case with any merit.

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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.

Bank Manager not really a "Manager"

The majority of my blog entries revolve around Provincially-regulated matters.  You often see me discussing the effects of Ontario employment statutes.  Yet that isn't the only legal regime at work in Ontario.  A handful of industries are Federally regulated instead, such as banking, telecommunications, and interprovincial transportation.  (Federal government employees are also, naturally, Federally regulated, but they fall into a different framework from most private sector employees as well.  I have enough experience with Federally regulated employees - both private and public sector - to be comfortable with the frameworks, but they are quite complicated.)

The Canada Labour Code is a rather massive labour/employment statute in the Federal sphere, covering similar subject matter to several Ontario statutes (such as employment standards, labour relations, and occupational health and safety).

But there is one rather unique feature of the Canada Labour Code, found in Division XIV (Unjust Dismissal):  With certain limitations, non-unionized employees can seek reinstatement to their positions when unfairly dismissed.  There is no Provincial equivalent.  (Rather, reinstatement in the Provincial non-union context is a remedy restricted to very select circumstances to illegal - not just unfair - reasons for terminations.)

Division XIV has its own complaint process, that people can use instead of Court.  (Court proceedings are still available to non-union employees, and the same common law principles apply as in the Provincial context.  But you can't get reinstatement that way.)

There are several prerequisites to getting into the Division XIV adjudication:

(1)  You work for a Federally regulated undertaking;

(2)  You are not a member of a bargaining unit (i.e. unionized);

(3)  You have been terminated after more than 12 months of service;

(4)  There is not another recourse mechanism in another Act of Parliament (as there would be for, say, public sector employees);

(5)  The termination was for reasons other than a shortage of work or discontinuance of the job function; and

(6)  You are not a "manager".

The first five are pretty straightforward, but the sixth is trickier, for several reasons.  Firstly, the exception isn't built into Division XIV, but is in a different part of the Code.  (To put this in context, Division XIV starts at s.240; the managerial exception is buried in s.167.)  This makes it easily missed by people who are not familiar with the Code.  Another difficulty is that "manager" is not actually defined in the Code.

This brings us to a recent decision in Roda v. Bank of Montreal, by Referee John Stout, in a matter referred to adjudication under Division XIV.  Mr. Roda was a branch manager at a BMO branch, and was dismissed.  He brought a complaint under Division XIV, and BMO argued that, as a manager, Division XIV recourse was not available to him.  So Referee Stout had to decide whether or not he had jurisdiction to hear the case on its merits, determining whether or not Mr. Roda was a "manager" within the meaning of the Canada Labour Code.  In a detailed analysis, he concluded that Mr. Roda's decision-making powers and any discretion he had were very limited, and he was kept on a tight leash by the bank, and accordingly was not really a "manager" despite his title.

If this decision holds up, it is likely to have repercussions across the banking industry.  There are a number of prominent judicial decisions involving dismissal of bank managers, and in my own practice I have dealt with dismissed bank managers from time to time as well.  From my observations, there doesn't seem to be a great deal of variation in how the big banks treat their managers, neither in the length of the leash nor the tendency to hold the branch manager accountable for anything that goes wrong nonetheless.  Accordingly, most (though not all) terminations of branch managers are based on allegations of cause, which occasionally get upheld in Court.  In most cases, the worst case scenario for the bank is that it may be required to provide pay in lieu of notice.  However, this decision could curtail the bank's right to terminate managers on a not-for-cause basis, with the result that most dismissed branch managers will be entitled to seek a reinstatement remedy.

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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.

Truck Salesman was not Constructively Dismissed

The Court recently released its decision in McMillan v. Selectrucks.  Mr. McMillan worked for Selectrucks as a salesman from 2004 to 2007, at which point he gave two weeks' notice.  Selectrucks sent him home immediately and paid him out the two weeks' notice he had given.  (This is a common practice for many employers.)  Mr. McMillan started another job within two weeks.

McMillan developed a strong customer base and was successful in his role.  Then, a fellow salesman (Mr. Kenny) was promoted to a managerial role over him.  It is not uncommon that such a change in reporting structure can foment such conflict as to make the continued employment relationship untenable, generating a constructive dismissal.  Mr. McMillan contended, unsuccessfully, that this is what happened in this instance.

His arguments included several factors:

(1)  Mr. Kenny breached company policy by permitting alcohol consumption in the workplace, and this made Mr. McMillan uncomfortable because he has had alcoholics in his family.  The Court did not accept that such conduct by Mr. Kenny would really affect the contractual relationship with Mr. McMillan.

(2)  Mr. Kenny gave preferential treatment to another employee by assisting him to develop a client base, thus hurting Mr. McMillan's earning potential.  Perhaps true, yet in context it was evident that Mr. Kenny usually assisted new salespeople (and this other employee was new to the sales role) - and that had included Mr. McMillan when he started - to develop a client base.  Ultimately, given that Mr. McMillan's earnings were still increasing, it was pretty clear that Mr. Kenny wasn't seriously undercutting Mr. McMillan's earnings, even if he was perhaps showing favouritism to this other employee.

(3)  Mr. McMillan accused Mr. Kenny of abusive and improper treatment.  The Court dealt with most of these as being symptomatic of a difference in style - Mr. McMillan was accustomed to a more civil atmosphere in car dealerships, and was unaccustomed to the 'macho' atmosphere in a commercial truck dealership:  The Court ultimately seems pretty accepting of Mr. Kenny's "rough" management style in context.

I also note that the employer made an argument that Mr. McMillan's failure to complain should bar allegations of constructive dismissal, whereas Mr. McMillan explained that he was afraid of reprisals if he had gone over Mr. Kenny's head.  The Court embarks on a thorough analysis of that issue: The fear of reprisals is understandable, and it is a matter of common sense that an employee should not complain lightly about their manager.  That being said, if Mr. Kenny's conduct was already making the employment relationship intolerable, there was little to be lost by doing so.  (I have had occasions to give employee clients exactly the same advice.  While employees are often more afraid to complain than they are to simply quit, if the alternative is quitting then there is absolutely nothing to be lost by pursuing a complaint first.  If they get recourse, then that is great.  If not, then they're in the same position, except with perhaps a somewhat stronger constructive dismissal argument).

However, in the full context of a small work environment in which Mr. McMillan was an outsider, the Court concluded that it was understandable that he hadn't complained, and this wasn't a full bar to a constructive dismissal claim.  I note that these events all took place prior to Bill 168, and I wonder how that Bill would change the analysis.

There was more serious misconduct.  Mr. Kenny brushed off Mr. McMillan's concerns about not getting proper statutory holiday pay, and then was upset when Mr. McMillan did go over Mr. Kenny's head.  However, with no evidence of actual reprisal (perhaps just a souring of the relationship), it was hard to say that it constituted constructive dismissal.

Worse, Mr. Kenny once took Mr. McMillan in "a bearhug or a headlock", after Mr. McMillan understandably said something unflattering about the Habs.  It was horseplay, but unwelcome horseplay, and therefore an assault.  The Court is highly critical of this behaviour:  "it is hard to imagine a professional work environment where that would be appropriate.  These people were not adolescent boys in the schoolyard."

Yet, given the full context, including the fact that it was not close to the time of Mr. McMillan's resignation, and that Mr. McMillan could not be said to fear further violence, this assault did not create a constructive dismissal despite its seriousness.

None of the conduct could be said to go to the heart of the employment contract, so there was no constructive dismissal.  While the relationship may have soured, giving rise to Mr. McMillan's decision to find employment elsewhere, none of Mr. Kenny's conduct repudiated the contract.

My Thoughts

I very much like Justice Corbett's analysis in this case.  The one aspect that cause me concern is that there is, perhaps, too much casual acceptance of otherwise inappropriate conduct as being acceptable machismo in the context of the specific work environment.  Where an employer dismisses an employee for just cause, it is a defence for the employee to respond that the alleged misconduct was "condoned" by the employer, that it was common practice within the workplace.  So if there's a culture that condones profanity, it's hard to fire an employee for swearing.  Yet this decision seems to apply the principle in reverse:  It was acceptable to treat Mr. McMillan in harsh and unprofessional ways because it was common in the culture of the workplace?  The subtext is that an employer can expect its employees to grow thicker skins, depending on the culture of the workplace.  Especially in light of Bill 168, that is clearly not true now, but I don't really think it was true then, either.

Yet, at the end of the day, the conclusion that Mr. McMillan was nonetheless very successful in his position, and that the overall tension between him and his manager did not amount to a constructive dismissal, appears to be well-supported on the facts.

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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.

Is Your Workplace in Compliance with Bill 168?

In June 2010, amendments to Ontario's Occupational Health and Safety Act became effective, requiring most employers to implement policies and programs dealing with harassment in the workplace and violence in the workplace.  It was big news in the HR field and employment law field at the time, and most large employers amended their policy manual to bring themselves into compliance.  Yet many workplaces did not.

Many employers don't make much use of policies.  I strongly recommend the implementation of a good policy manual for just about any workplace - and I can assist in the development of such - but one of the striking aspects of Bill 168 is that it made certain policies legally mandatory.  Not just a good idea.

Especially in light of the mandatory requirement, there are a lot of risks associated with not having them.  First, it's a quasi-criminal offence:  An employer can be charged for breaching the Occupational Health and Safety Act.  When injuries occur due to such breaches, fines typically run upwards of five digits, and it isn't at all uncommon to see fines in excess of $100,000.  Earlier this year, Metro Ontario was fined $350,000 (plus, as always, a 25% victims surcharge) after a young worker was killed at a Mississauga store.

Even beyond those liabilities, however, there's the additional risk that liability could be incurred in respect of employees.  If an employee is the victim of harassment or violence in the workplace, it will be much easier for an employee to make out a case for constructive dismissal, possibly seeking aggravated damages in addition to all else, if the employer has neglected its statutory obligation to provide a recourse mechanism.

On the flip side, while this hasn't worked its way through into the jurisprudence yet, I expect that it will be much harder than before for an employee to make out a constructive dismissal case on the basis of harassment where they haven't taken advantage of recourse made available to them in a properly-implemented policy.

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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.

Summary Judgment Motion Fails Against HBC

Aileen Thorne worked for HBC for about 37.5 years before she was terminated without cause on February 1, 2011 at age 59.  At the time of her termination, she was making just under $40,000 per year and was an "allocation associate", whatever that means.

It turns out that the meaning of "allocation associate" is pretty contentious.

She has sued in wrongful dismissal, seeking pay in lieu of reasonable notice.  The usual factors are length of employment, age of the employee, availability of replacement employment, and character of employment.  Length of employment and age of the employee are usually pretty uncontroversial (though occasionally there's a fight about the former), and availability of replacement employment is not often closely analysed.  But character of employment...that is more difficult:  Front-line employees with no significant responsibility don't get much; skilled labourers and managers get more.  So there's often a fight about what the employee's duties actually entailed.

The facts of this case are like looking into a file of my own from last year, that settled this winter.  Similar employer, comparable length of service, and the most significant fight being over the level of responsibility exercised by the employee.

Let me explain that, on files such as these, the margins are often very small for a plaintiff.  For old employees with such incredible lengths of service, you can probably expect a notice period at a minimum of 12 months, ranging up as high as 24 months (seldom higher), depending on level of responsibility and other factors - so $40,000 to $80,000, right?

Wrong.  For an employee with such long service in an employer as large as HBC, the statutory minimum entitlements max out both termination pay and severance requirements, being a total of 32 weeks pay on termination.  8 months, roughly.  So if you walk away with 12 months at the end of the day, that actually only means an additional 4 months, which would mean $13,000 in this case.  Minus taxes.  Minus any EI overpayments that might be generated.  Minus any mitigation earnings.  Minus legal fees.

I've occasionally used contingency fee retainers for employee-side files, but I don't like to, for a couple of reasons.  Between EI and taxes, an employee's take-home entitlements on additional pay in lieu of notice is fairly modest.  If the lawyer then takes a percentage of the gross, then the employee often doesn't get anything - or occasionally actually still comes out behind.

In the Thorne case, Ms. Thorne brought a motion for summary judgment, presumably to try to deal with the matter expeditiously and save on legal fees.  And recently, the Rules of Civil Procedure expanded the scope of motions for summary judgment, allowing motions judges to assess factual disputes in limited ways.  In this case, however, the motions judge found that this was not an appropriate case in which to do so.

However, the judge reserved costs to the trial judge (rather than awarding them to HBC, the successful party on the motion), which is a real mercy to a plaintiff under such circumstances.  As well, HBC's affidavits had suggested that, since it wasn't taking the position that the notice period would be less than 12 months, they were contemplating a further voluntary payment to the plaintiff, which the judge suggested that this was something that should be "carefully considered by a fair and compassionate employer".  Shades of Brito v. Canac Kitchens, no?


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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.

The Corporate Veil and the Identity of the Employer

Corporate Law 101:  A corporation is a legal person, and can enter into contracts, and (subject to personal guarantees, etc.) is the only one responsible for its own contractual obligations...unless one of about a hundred exceptions applies.

But that's what the 'corporate veil' is all about.  If I own a corporation, and the corporation incurs liabilities, then unless the plaintiff can convince a Court to ignore the corporate veil, the plaintiff can only enforce a judgment against the corporation's assets, and not against my personal assets.

When you get into employment law, this principle occasionally triggers the question of "who is the employer?"

The Superior Court recently decided the Asselin v. Gazarek et al. case, which dealt with a complex scenario involving interrelated corporations with common owners.

Let's set up the cast of characters.  There are three corporations, being Sheridan Chevrolet Cadillac Ltd. ("Sheridan"), the Pickering Auto Mall Ltd. (a "Saturn" dealership), and Gazarek Realty Holdings Ltd.

Gazarek Realty Holdings Ltd. is a real estate holding corporation and was, in essence, the landlord for Sheridan and Saturn.  But it was a little bit more than that:  Gazarek Realty Holdings Ltd. is solely owned by Gerald Gazarek, who also owned Sheridan, and whose daughter Leslie owned Saturn.  So it's all a family affair.  Operationally, there was also an unusual connection:  For tax reasons, the holding corporation paid the salaries of managers at the dealerships, and was reimbursed for these payments by the dealerships.

Mr. Asselin started working for Saturn in 2006, and was 'transferred' to Sheridan (terminated and rehired?) in 2008, but was terminated in 2009.  Both dealerships closed in 2009 and have no assets.  The holding corporation continues to have assets, however.  So the main question became whether or not the holding corporation was a common employer.  (The length of the notice period and applicability of punitive damages were also in question, but they were all secondary to the question of whether or not the holding corporation was liable.)  The Court concluded that the holding company was not liable.

In 2001, the Ontario Court of Appeal considered the question of 'what makes a common employer' in the Downtown Eatery (1993) Ltd. v. Ontario case, in which there was a "highly integrated or seamless group of companies" operating a nightclub together.  The Court of Appeal succinctly drew the test of a common employer as "where effective control of the employee resides".

In this case, the Court raised three problems with Asselin's position:

Firstly, Asselin was not a manager, so his salary was paid by the dealerships, not the holding company.  The Court acknowledges that the result might have been different otherwise, but the fact that he was paid by the dealerships distinguished it from case law (such as Sinclair v. Dover Engineering Ltd.) in which the employee worked for one company but was paid by another.

Secondly, the holding company didn't assert any control over Asselin's employment.  One could easily imagine a scenario where payment of the managers would give the holding company effective control, but the fact that it was a purely technical arrangement for which the corporation was fully reimbursed suggested that there was not effective control.

Thirdly, the evidence did not support a contention of interrelation as in the Downtown Eatery case; rather, the dealerships carried on their own business with minimal interaction with the holding company.

Accordingly, the holding company is not liable, and the judgment for reasonable notice was only against the dealerships...which have no assets.  Does that mean that Asselin is completely out of luck?  Maybe.  It might depend on what assets were in the corporation previously and what happened to them; there are "oppression" remedies that could be available.

As an interesting side note, the employer had initially alleged cause and only paid the statutory minimums, so Asselin tried to rely on the Brito v. Canac Kitchens case (which I discussed in this post, which is arguably inconsistent with established case law) seeking punitive damages, but the judge dismissed this claim fairly summarily.

My Thoughts

I have concerns about this decision.

On the point that the holding company was paying his managers but not him, I understand the distinction and I'm less inclined to question it, but from a policy perspective I wonder it Justice Conway's disposition of it is too summary.  In a footnote, he notes that the nature of the tax advantage sought wasn't discussed at trial.  The fact that it wasn't Asselin's salary is important, yet the holding company was still managing a portion of the dealerships' payroll expenses in an arrangement which clearly was not arms-length.  Part of the reason (from the plaintiff's perspective, the entire reason) for the common employer doctrine is to prevent employers from structuring their affairs so as to protect their assets from claims by employees, and a non-arms-length delegation of payroll to a third-party corporation should definitely raise alarm bells that the Court should at least peek behind the corporate veil to see what's going on there.

On the second point, the test is "effective control", and the Court points out that the holding company exercised no control over the managers.  However, that would seem to gloss over the fact that the holding company and one of the dealerships had the same directing mind, which was also non-arms-length with the directing mind of the other dealership.  To suggest that the holding company had no "effective control" is basically saying that "When Gerald told the managers what to do, he wasn't acting in relation to his role in the holding company."  Did he put on a different hat?

It has to be more nuanced than that, and it is very difficult to draw a meaningful distinction of 'effective control' when both corporations are controlled by the same person.

On the third point, the finding that there was not sufficient integration between the companies glosses over a number of facts.  Firstly:  They use common professionals to assist them.  I wouldn't suggest that we should use the fact that they retained only one lawyer in this proceeding against them (though one would expect a conflict of interest for a lawyer representing all three parties if they were at arms length), but they clearly got the same accounting advice as well.  The fact that they both engaged the same non-arms-length management payroll structure tends to work against an allegation that they were all independently run.

Secondly:  The dynamics of the 'transfer' to Sheridan are also quite unlike anything you might see in companies that are not related.  The Court did not explore the dynamics in much detail, because the defence conceded that nothing turned on whether or not Sheridan and Saturn were both liable (a brilliant concession, perhaps?).  Leslie's evidence was that he was terminated because they were having problems with him, but she 'inquired' to see if there was a place for him at Sheridan.  ("Hey Dad, I've got this problem employee I want to get rid of; want to take him off my hands?")

Thirdly:  When Sheridan terminated him after three months, he received ROEs from parts of his statutory notice from Sheridan and from Saturn.  While Leslie testified that the failure to provide the same upon his termination from Saturn was an oversight, which was corrected when she was told he was fired from Sheridan, the fact alone that she was so promptly told of his termination from Sheridan is also indicative of operational integration.  (And, if they weren't related, arguably a breach of Sheridan's duty of good faith and fair dealing.)

Most of those facts I'm pointing to deal with integration between the dealerships (and not necessarily the holding company).  Ultimately, the defence didn't fight much about whether or not the dealerships were integrated, and so they are jointly and severally liable.  But the fact of integration between the dealerships suggests against these being autonomous and independent operations, as the Court found, and - with the involvement of the holding company in their affairs - it is difficult to see how, if the two dealerships were common employers, the holding company would not be a part of that integrated group.

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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 to Get Rid of a Union in Ontario

I recently involved myself in a debate on Professor David Doorey's blog about 'democracy' in labour relations.  I've followed his blog for some time, and I respect (though I often disagree with) his views, which are typically 'pro-union'.  My own view on unions is quite nuanced:  Unlike many lawyers who represent management, I don't oppose unions on principle.  I've seen employers who remind me of the reason why unions exist.  But I have had many occasions to question the activities of specific unions in specific contexts.

I believe that there are major problems with the current structure of our labour relations regime in Ontario, mainly because I believe that "labour" itself has become an entity with its own interests, and a powerful one at that.  Rather than, as I believe should be the case, an advocacy mechanism for workers.  The end result is that there are times when a union puts its own interests above those of individuals it represents, or even above entire bargaining units under its care.

So we frequently see cases in the jurisprudence involving employees trying to sidestep the union to deal with their employer (almost always unsuccessful, except in the Human Rights arena, where it *can* work), or taking on the union directly in a Duty of Fair Representation application (almost always unsuccessful, because there's a high threshold for it), and I have had plenty of employees call me directly because they aren't happy with the way that their unions are representing their interests.  (Think about how big a deal that is:  You've already paid union dues.  You're not getting them back.  Included in union dues is representation as against your employer.  How dissatisfied would you have to be before you would hire your own lawyer at your own expense, paying hundreds of dollars per hour, to do something you've already paid somebody else to do?)  The trouble is that there is seldom much to be done; under the statute, the union has the exclusive mandate to represent them, and they can't opt out of this.

Professor Doorey sees it thus:  The bargaining unit, if displeased with the union, can get rid of the union.  This is true.  But it seldom happens, because bargaining unit members usually don't have the sophistication or resources to successfully decertify a union, and any employer involvement or assistance will usually be fatal to the effort.  The rules governing decertification are actually fairly complicated.

So, for those employees who want to decertify a union, here's a general guide as to how.  Remember that every case is unique in its own way, and the best way to move forward, if you can afford to, is to hire a qualified lawyer to assist you.  The below is not legal advice, and does not cover every scenario.  Especially note that the process is different for construction industry matters.

Step 1:  Determine if you can bring the Application

The general rule is that you have to be a member of the bargaining unit in order to apply for termination of bargaining rights, and that any member of the bargaining unit can do so.  However, the application can't be tainted by management influence, and there have been cases in which unions have argued that the person making the application was too closely connected to the managerial team.

Step 2:  Find the Window

The Labour Relations Act sets out a variety of different circumstances in which you cannot make an application to terminate your union's bargaining rights.

The Application can be made under the following circumstances:

1. If more than a year has passed since the union was certified, and no collective agreement has been reached;
2. If a collective agreement exists and has a term of three years or less, then after the start of the last three months of its operation (and before a new collective agreement commences or a renewal of the agreement is effective);
3. If a collective agreement exists and has a term of more than three years, then between the start of the 34th month and the start of the 37th month of its operation, then for the last three months of each year of its operation thereafter (and for the last three months of its operation before it expires).

It really looks more complex than it is.  Let's use a few examples.

Let's say that my union and employer commenced a collective agreement with a 24-month term, starting May 1st 2011 and ending April 30th 2013.  If I want to decertify the union, the window opens on February 1st, 2013 (three months before the end), and closes when a new collective agreement becomes effective.  So if the employer and union are able to negotiate a new agreement to start for May 1st, 2013, I need to have my application in before then.

Or suppose my union and employer negotiate a long-term collective agreement, going from September 1st 2011 to August 31st 2016 (five years).  I would then have three month windows at the end of the third, fourth, and fifth years of operation.  (Window from June 1st to August 31st of 2014 and 2015, and then a window opening June 1st 2016 that ends when a new collective agreement becomes effective.)

One of many important things to remember is that, if the bargaining unit ratifies a new collective agreement, you're probably s.o.l. for a long time if you want to get the union out.  When most employees treat a new collective agreement as being inevitable, and a question of how long it will take and what actions (i.e. strikes) may be required to get a better deal, that's a problem; people are likely to vote in favour of a tentative agreement so long as it is tolerable, and this is especially true of those who would rather be without a union in any event.

But there are also bars to initiating an application, even within those windows.  There's a conciliation process available to the parties:  The union or the employer can ask the Minister to appoint a conciliation officer or mediator, which triggers a bar for a period which essentially allows that process to run its course.  In practice, this ends up being a way for the union to extend its protection.  So it has one year to get a first collective agreement, and if it fails to do so, it asks the Minister to appoint a conciliation officer or mediator.  Then, once that process runs its course, the bar is extended for a certain period of time beyond.  Similar principles apply when subsequently renegotiating expiring collective agreements - conciliation bars an application after the expiration of the existing collective agreement.

If a strike or lock-out begins, that also creates a bar - essentially, if the bargaining unit gives the union the go-ahead for a strike, they have to give the union at least 6 months to try to accomplish its objectives.

One of the major practical challenges for an employee trying to decertify a union surrounds the whole 'conciliation' concept.  How do you find out if the union has sought conciliation without asking questions that would tip off the union to your impending application?  Ultimately, the best bet for decertifying unions is by making sure the application gets started within those three-month windows, and not waiting for existing collective agreements to expire.

Step 3:  Get your "Evidence" together

In order to make an application to terminate bargaining rights, there are going to be two substantive requirements.  First, you're going to have to show 'evidence' that at least 40% of the bargaining unit no longer wants to be represented by a union, and then later when a vote occurs at least 50% plus one of the bargaining unit has to vote on your side.

But first things first, so let's look at the evidence.  It's best to think of it like a petition.  Every page has to show what they're signing, and each name should have the printed name, signature, and date of signature.  You also need to provide the OLRB with an alphabetical list of employees corresponding with the evidence filed, and a declaration verifying the evidence (OLRB Form A-80).

Step 4:  Serve the Union and Employer and File the Application

Well, first you need to complete all the below documents.  That's a given.  After you find them all on the OLRB website.  Which isn't quite as simple as it should be, but I've tried to simplify it with links to the PDF versions of everything.  There are Word versions available, too.

You need to serve a termination package on the union, including the following:

1. OLRB Form C-3, completed with the union's name and the date in the appropriate fields (the full name of the form is Notice to Union of Application for Termination of Bargaining Rights Under Section 63 of the Act...don't you love pithy names?);
2. A completed copy of Form A-6 (Application for Termination of Bargaining Rights Under Section 63 of the  Act);
3. A blank copy of Form A-7 (Response to Application for Termination of Bargaining Rights Under Section 63 of the Act);
4. A copy of Information Bulletin 2 (which is where this list is found, incidentally);
5. A copy of Information Bulletin 3;
6. A copy of Information Bulletin 5; and
7. A copy of Part III of the Board's Rules of Procedure.

And, on the employer, the following:

1. Form C-4;
2. The same Form A-6 as above;
3. A blank Form A-8;
4. A blank Schedule C (List of Employees)
5. A copy of Information Bulletin 2 (which is where this list is found, incidentally);
6. A copy of Information Bulletin 3;
7. A copy of Information Bulletin 5; and
8. A copy of Part III of the Board's Rules of Procedure.

Then, within two days, you need to file (by any means except email, fax, or registered mail) with the OLRB the following:

1. A signed original and a completed copy of Form A-6;
2. The evidence that the employees don't wish to be represented by a union;
3. The above-noted list of employees corresponding with the evidence;
4. Form A-80

See?  Couldn't be simpler.

Step 5:  Win the Vote

There are limits to what you are allowed to do in campaigning.  Threatening, intimidation, etc., these tactics aren't kosher.  But as a member of the bargaining unit, your speech isn't nearly as restricted as the employer's speech in terms of trying to persuade your fellow workers that the union isn't in their best interests.  Remember that this is your campaign; the employer is barely more than a bystander, and can't do much to help you.  And if they offer assistance, you should say no, or risk compromising the application.

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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.

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 contact him for information on available services and billing.