Monday, February 27, 2012

Quoted in the Law Times on Bill 168

I've made several posts critiquing the OLRB's interpretation of Bill 168.  Today's Law Times ran an article about the matter, and has quoted me in some of my criticisms.  Perhaps not the most eloquent presentations of my point, but I think the gist is carried.

My argument, in essence, is that the absence of substantive harassment obligations either in the contents of the mandatory policy or in the employer's response to a complaint under the policy completely undermines any effect the new statutory language might have.  The only thing the employer needs to do is have a policy with certain minimalistic components.  However, there's no objective standard for what the policy needs to actually do, no requirement that the employer actually follow its own policy, and no requirement that employees have meaningful access to or redress through the complaint mechanism in the policy.  So long as there's a policy there, the employer has met its harassment obligations under the Occupational Health and Safety Act, according to the OLRB, even if it proceeds to completely disregard everything related to harassment thereafter.

"Buchanan says he disagrees with the board's very literal reading of the act but acknowledges that the amendments brought about by Bill 168 give it very little to go on."

That's a fair assessment of my position.  In the actual interview with the author, I went a step further to point out that I really do understand why the Board would want to take that position:  There's a "floodgates" concern.  If you opened up the door to complaints by people for being victimized by harassment or - worse - for reprisals based on harassment, then the OLRB could conceivably be inundated by complaints of tenuous merits, often arising from legitimate discipline or other legitimate and good faith employer actions.

Though, strangely, the Board's approach at present seems to be equivocating on that concern:  Some jurisprudence says 'We don't have jurisdiction to consider these complaints at all', but most of the cases actually say 'We might not have jurisdiction, but it doesn't matter because the facts in this case don't support the allegations of harassment/reprisal.'  In other words, despite not wanting to open up the floodgates for cases of tenuous merits, they're still considering how tenuous the merits of these cases are, and in fact discovering how easy it is to filter out most of the weak cases.

There's something of a counterpoint presented in the article by lawyer Blaine Donais, noting the total absence of definition of workplace harassment, which supports the floodgates concerns.  It's a legitimate point, and calls for some more discussion.

Harassment is very broadly defined, and on a literal interpretation would indeed seem to capture just about everything unwelcome that could go on in a workplace, from discipline to the assignment of duties that are well within an individual's job description.

But are those things really workplace harassment?  Are those really the kinds of things that the legislature intended to address when building language to protect workers against workplace harassment?  Likely not.  It's a small step of legal interpretation to take "vexatious comment or conduct" to exclude such legitimate exercises of employer authority.  Legitimate discipline, fairly applied, cannot reasonably be considered harassment.  On the other hand, bad faith discipline which is intended to vex the employee is another matter. Similarly, assigning menial tasks to an individual will usually not be harassment; on the other hand, routinely picking an individual for menial tasks for no better reason than personal animosity may be different.  Shades of grey?  Absolutely.  But the arbitral jurisprudence hasn't shied away from these kinds of contextual analyses in the past (consider the 2004 Stina grievance), and in fact the suggestion isn't new that 'harassment' can offend the Act's catch-all provisions about healthy work environments.

Indeed, even on the Board's limited interpretation of the harassment provisions, it still seems unimaginable to think that the employer's policy must or should define harassment as including legitimate discipline.  Giving an employee a complaint mechanism which is properly utilized because he's being asked to show up on time would be, in most cases, a joke.

Donais' comments suggest something of a trade-off, a legislative intention to limit employer obligations in order to protect them from the floodgates.  Perhaps.  On review of the Hansard, it appears that the NDP criticized the Bill for not going far enough.  But the debate doesn't go in that direction.  There's no suggestion in the Hansard that the obligations of employers are being intentionally restricted in that sense.  Rather, while the debate really did focus more on the violence provisions of the Bill, the Minister spoke of violence and harassment almost interchangeably when discussing the Bill's broad objectives of preventing violence and harassment.

I would have preferred that the legislature set out more expressly the limits of employer obligations.  But I don't think that its failure to do so is a bar on Courts and Tribunals interpreting a wider set of obligations, particularly in light of one important fact:

This is the Occupational Health and Safety Act, which is clearly intended to protect the health and safety of workers and workplaces.  It does have catch-all provisions to that effect.  And so the remaining question is whether or not harassment endangers health and safety within the meaning of the Act.  If it does, then employers are obligated to maintain an environment free from harassment.  If it does not, then employers are not so obligated.

...but if harassment is not related to health and safety, then the Legislature would not have included harassment language in the OHSA at all.  In light of Bill 168, it is incoherent to continue to read health and safety, in general terms, as not dealing with harassment concerns.


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.

Sunday, February 26, 2012

Roll up the Rim to Legal Disputes

A bit of a fun topic for today.

Many of us remember a widely-publicized dispute from 2006 regarding a winning "Roll up the Rim to Win" cup, winning an SUV valued around $30,000.  A 10-year-old in a Quebec school found a discarded cup, but couldn't roll up the rim herself so enlisted the help of a 12-year-old friend to do so.  It was a big winner.  The parents then got into a fight about who would claim the prize, and following the media attention the school janitor wandered into the dispute claiming the cup was his and that a DNA test was appropriate to prove that he was, in fact, the true owner of the winning cup.

The contest rules don't really spell out who the winner would be, but Tim Hortons ultimately took the position that the family of the 10-year-old girl should receive the vehicle.

Quebec has a different legal system from the other Provinces, but I'm fairly certain the conclusion would have been correct in common law jurisdictions.  "Finders keepers" isn't usually the law - for instance, if you find someone's purse left by mistake on a park bench, that doesn't make the contents yours; there still exists a "true owner", who has a claim to the property superior to yours.  However, where an object can be said to have been 'abandoned' - that is, where a person has taken some action with the intention of abandoning the item - there is no longer a "true owner"; the object falls into what we call the "Lockean commons", open to be claimed by whomever stumbles upon it.

So the key question in this context, in a common law jurisdiction, would be whether or not the janitor can be said to have truly abandoned the cup, and the answer to that, given the limited ostensible value of the discarded coffee cup, is likely yes.  Meaning that he's given up any claim to it.

The dispute between the girl who found it and the girl who rolled it up is likely more straightforward.  In the absence of some clear language in the contest rules which would make the roller the winner, it doesn't seem that there's any basis for the older girl to make a claim.  It's akin to me asking you to double-check the numbers on my winning lottery ticket, and you saying that the request amounted to a gift of the ticket.

This schoolyard dispute seems pretty far out in left field, but one can easily imagine other disputes.

Who Owns the Winning Tab?

Coffee is cheap.  People buy for each other all the time, so it is easy to imagine a scenario in which one person buys a winning coffee cup for another individual.  Last year, the Star ran a story contemplating such a scenario, noting that Tim Hortons essentially stays out of the issue and doesn't assist with 'safe group play' like OLG does.

In a one-off coffee purchase for another person, there's a compelling moral argument to be made that the purchaser should be able to lay claim to the prize.  After all, I paid for it.  On the other hand, if I hadn't paid for it, it's just as likely that you would have gone and bought it yourself.  So there's still a compelling causation argument to suggest that the person whose coffee it is should win.  And what happens if there's a rotation?  I buy the office coffees today; you buy tomorrow, and so on.  One can easily support a proposition that would suggest either way, that the inherent quid pro quo makes my coffee cup mine every day, or alternatively that all the day's coffee cups belong to the purchaser.

And nobody really thinks too much about it until there is a big winner.  If there's a small winner (coffee or doughnut), it's probably pretty common to assume that the person who drank the first coffee gets the second one.  Because, again, coffee is cheap, so who cares.  I'd probably rather pay for my own new coffee than have to handle the rim of the cup that you drank.

Maybe we can agree that the drinker gets to keep the small prizes, and that the buyer gets to keep or share in the big prizes?  Sure, one can reach a nice simple agreement along these lines easily enough...until you ponder that a small prize (i.e. a coffee) can go on to win a bigger prize.  So I buy you a coffee, you win a coffee, and that winning coffee gets you the car.  Do I have a claim?

It seems far easier and simpler to me to maintain a bright-line rule:  Whomever drinks the coffee keeps the rim.  If I'm being bought a coffee by anyone other than my significant other, I'll half-jokingly make that clear:  The Rim is mine.  If the buyer has a problem with that, they don't have to buy for me.  No problem, I'll pay for my own.  And that's what's so compelling about the bright-line rule; buying a coffee for someone is more often an act of convenience and good will than an act of any significant charity.

Maybe, as a lawyer, I'm overthinking this.   But to some extent, that's just what I do - consider the contingencies that don't necessarily occur to people in advance, and try to find proactive approaches to resolve disputes before they occur.  In many senses, that is the purpose of a contract, making clear the expectations of all parties in advance, so that you won't end up down the road with an argument arising from a scenario that nobody had really thought about beforehand.

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.

Thursday, February 23, 2012

Dismissing Long-Term Employees

I had someone find my blog recently through a search for how to get rid of long-term employees.  It's actually a good question, and calls to be addressed.  I've had a number of small employer clients come to me with such issues.

Long-service employees can have very significant entitlements.  Even at lower levels, this is true now - in the wake of the Court of Appeal's Di Tomaso case last year (discussion here), long-service clerical and unskilled labourers can now be entitled to notice periods up to two years (and possibly higher in exceptional circumstances).

These concerns can be avoided, with advance planning.  If you implemented a written contract with the employee at the point of hire with a good termination clause, then your liabilities might be limited to those in the termination clause.  In some cases, the issue arises for successor employers, where a business was purchased with the employment relationships intact - if this is a concern, make sure that the vendor severs the employment relationships involved first, and you'll need further legal advice if you intend to make new offers of employment to their employees, because such a severance may not work.  Whether it's an asset purchase or share purchase, if the purchaser just assumes the employment relationship without more, they'll be buying into potentially dysfunctional employment relationships with the prospect of significant liability.

But, without advance planning, sometimes you have to take the cards you end up with, and do the best you can.

The first thing to know is that there are ways of bringing in employment contracts even after the point of hire.  But you need legal advice to do so, and by the time you know you want to get rid of the person, it's probably too late to do so.

So let's look at how you can get rid of a long-term employee, while trying to avoid a hefty payment in lieu of notice:

(1)  Dismissal for Just Cause

It's an option, but usually not a good one.  If an employee has engaged in misconduct rising to a certain threshold, you are entitled to terminate summarily without notice.  (Depending on the nature of the misconduct, a trail of progressive discipline is often necessary.)

If the reason you want to be rid of the employee tracks to a singular (and recent) egregious episode, such as theft (which you can prove), then this may be prudent.  If there has been an ongoing series of more minor problems, with documented discipline, but the misconduct has continued, then this could be an option.

However, in most of these cases that I see, the employer's decision that they want to be rid of such an employee is based on a series of minor incidents which the employer accepted, permitted, and tolerated, but there's a recent "straw that broke the camel's back".  The employer now wants to be rid of the employee, and the employee doesn't realize he or she has done anything wrong in the first place.

In such cases, a dismissal for cause becomes a project, not an action, and one that's usually impractical.  The first thing that you need to do is clarify expectations for conduct and make sure that the employee knows that, moving forward, the various shenanigans which may have gone on in the past are not permissible.  (This needs to be done carefully, too.  Employers have a wide range of power in the workplace, but unilateral changes which go to the heart of the employment relationship may generate a constructive dismissal, triggering notice obligations - the very thing you're trying to avoid.  Also, there are times when, while implementing these changes, you need to bear in mind your human rights obligations.)  Then you need to start disciplining if the employee fails to meet these new standards of conduct.  At some point, maybe soon or maybe not, you may have built a case sufficient that a Court might find just cause.

If you've already decided that you want to be rid of the employee, this is not an easy approach.

(2)  Convince the Employee to Quit

This is one that I usually file away with "bad ideas".  Taking actions against an employee simply for the purpose of trying to get them to leave is almost constructive dismissal by definition.  But it's seldom that simple.  For instance, in the situation where the employer has lost control over the employee, the employer might just be able to hope that its legitimate efforts to get the employment relationship back under control might persuade the employee to look elsewhere.  It's unwise to count on this, though.

It's also possible to offer a voluntary separation package of less than an employee's full common law notice entitlements.  (Essentially, paying the employee to resign.)  The employee may or may not accept this, and trying to be too...persuasive...can amount to constructive dismissal.  (Indeed, you need a lawyer's assistance for this approach:  When you're implicitly telling an employee that you don't want him around anymore, you need to be careful with you do it.)

(3)  Dismissal on Actual Notice

This is unusual, and carries with it risks and problems, but in some scenarios can be effective.  Indeed, this is an employer's obligation when it wants to fire somebody without just cause.  (It doesn't usually happen; normally, an employer prefers to breach this obligation and provide pay in lieu of notice instead.)  But for an employer unable to afford to pay the departing employee *and* the departing employee's replacement, it's an option to consult a lawyer about.

One of the major practical difficulties with this is that you're then relying on an individual for a lengthy period of time who knows that they aren't going to be there long.  You run the risk of misconduct, whether intentional or through carelessness.  To that extent, you need to monitor the employee's performance to make sure they're still doing their job, and go down the 'discipline' road if necessary and appropriate.

(In some cases, statutory severance will still be owed at the end of the notice period.  This isn't usually true of smaller employers, however.)


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.

Wednesday, February 22, 2012

A La Carte: Myths and Reality

In law, there has recently been a push towards provision of "a la carte" legal services.  I've made some efforts to do so:  On some matters with low dollar values and/or cost sensitive clients, I've occasionally tried to facilitate them handling their own matter to the maximum extent possible to limit my own cost and involvement.

But it's difficult.  There's too much liability.  Even with good engagement letters, setting out exactly what I'm doing and what I'm not doing, in some ways there's going to be a higher burden on me to make sure that I'm properly communicating to the client what needs to be communicated, because of my limited involvement.  Further, it's much harder to ensure that I'm aware of all the relevant facts where my involvement on a file is limited.

To address these, I need to spend more time on the individual a la carte elements I'm providing than I would if I were more deeply involved in the file.

The classic example is employment policies.  There's a real debate among employment lawyers as to whether or not there's any real savings by having the client draft their own policies for legal review.  On the one hand, seeing what the employer has drafted will get me a pretty good sense of what they're trying to accomplish.  Yet for me to amend their drafts to actually accomplish such objectives could easily take just as much time as me tailoring my own policy precedents to the employer's specific needs.

Not to mention the difficulties in that litigation processes aren't really set up for lawyers to have limited involvement:  If I go "on record" as representing my client, then active steps are needed to get me back off the record, and in some cases that may not even be possible.

But in general, I wonder if these problems are true generally of "a la carte" billing.

The Myth

People offer "a la carte" pricing options to address the fact that not everybody wants the whole package, whatever the whole package may be.  Whether we're talking about cell phone contracts, TV subscriptions, meals, travel packages, or legal services, the pitch is always the same:  Pay only for what you want, and not for the other aspects of a package that might appeal to others but not you.

Packages are seen as being unfair to those who don't use all aspects of the package.  I recently read a story in the Star about GO Transit parking, in which it is observed that GO takes the position that parking is included in the fare, but that some argue that this "penalizes commuters who walk or bike to the station."  The logic makes sense on its face:  Owning and maintaining parking lots is a cost to the service provider, which must ultimately be passed onto the customer.  So does it get passed onto the customers generally?  Or just the customers who actually use the parking lots?  If it's the former, then non-drivers are paying for a service they don't use.

Persuasive reasoning.

Therefore, by turning it "a la carte", you save non-drivers money.

The Trouble with the Theory

"A la carte" costs more, item by item.  That's pretty easy to figure out just by looking at any fast food value meal:  The 'meal' is priced by looking at the total a la carte prices and knocking a modest sum off the top.  But for someone who really doesn't want fries, it saves money, right?

Sometimes.  Maybe.

Remember that you're getting less value for money altogether.  You may pay less for that particular meal, but if you're always buying all the food you eat a la carte, you're probably paying more generally than you would if you were purchasing it in 'combo' formats.  And possibly eating less, too.  Of course, when we're talking about fast food, that's not necessarily a bad thing, so let's move off of this reality to, say, cell phone contracts.

Most cell phone providers have gone a la carte, charging for each 'feature'.  Yes, features involve a cost to the provider, mostly infrastructural, like parking (and unlike fries).  So it has to get passed on to the customer.  I got a new personal cell phone plan last year, and found that most providers will charge extra even for call display and voicemail.  Some offer a discount if you get them both together, from $5 per month each to $4 per month each.

Is that reflective of the cost of providing them?  No, not at all.  This is not cost recovery; this is a premium price for what most consider a fairly basic aspect of the service.  If every subscriber got them, the required infrastructure would certainly not cost anywhere near the scale of $4 per person.  Most of those monthly fees would be swallowed as additional profit over and above the profits on the subscription itself.  Imagine, instead, that these services were included in the base subscription, with the actual cost built into the price with a modest markup.  This would amount to a very modest increase in price for everyone.  (Can anyone familiar with telecommunications put a number on this?  I'm inclined to guess that it wouldn't even be close to a dollar per person, but I can't substantiate that.)  But this means that even the people who don't want it have to pay.  That's not fair, is it?

Well, there are two points to consider:  First of all, even people who may not choose to pay extra for it would have it, and most of them would make use sufficient to justify the additional marginal cost (if perhaps not the premium prices currently charged).  Secondly, there are savings in simplicity.  In many respects it requires less staff and resources to give the same thing to everybody, or to have a fixed set of options, than to have a comprehensive opt-in/opt-out system.

I frequently attend junior athletic tournaments with my partner, who is a coach.  Many of the tournament organizers order pizza (perhaps not the meal choice of champions, but whatever).  They simply order a stack of pepperoni pizza, vegetarian pizza, maybe some Hawaiian and meat lovers.  Those are the options for folks who want pizza.  Take it or leave it.  What they absolutely do not do is canvass those present to ask "What toppings do you want?" and then order x pepperoni pizzas, y with pepperoni and mushrooms, z with just mushrooms, a with pepperoni and green peppers, etc.  Why not?  Because it would be absurdly complicated, and a waste of time and energy to put it all together.  Sure, this way they're just guessing at the number of pizzas they need, and errors might create cost, but the value of the time saved by this simple approach is incalculable.

The point is that specialization comes at a cost.  This is the truth of "a la carte". If I go asking for a specialized pizza, or a specialized phone plan, it can, should, and will cost more than if I just take what everyone else is getting.  When the specializing is in the form of reductions (fewer toppings?), then there might be cost savings based on the reduction, but in many cases that will be offset by my needing to be treated differently.  So no, I don't think it's unfair if marginal costs of extras are built into the base price so that the extras can be forced on everyone.

A properly-priced all-in package should be attractive to people even if they don't plan to use all the features, even for consumption-based purchases, in part because of the fact that not everyone will use all the features, and in part because the volume of consumption expected will permit bulk discounts for the purchase.  So "all-inclusive" resort packages are relatively affordable, and attractive to people even if they may not want to have all the cheap rum they can get, because they're drawn by other attractive and valuable components of the package.  (Of course, I have seen some packages with large numbers of components priced on the basis of an assumption that every purchaser will take maximum advantage of all components.  That can be a different matter.)

Starbucks has cinnamon, chocolate powder, sugar, and nutmeg available to its customers.  Depending on what drink I get, I may use some of those, but never all.  I don't feel that, just because I don't put nutmeg in my hot chocolate, I'm somehow not getting my money's worth.

Even Worse, the Reality

Remember when Mulroney brought in the GST?  That came in together with the elimination of a series of manufacturer taxes and import tariffs.  Notionally, it was revenue neutral for the government, intended to streamline taxation as a VAT to be uniformly applied to everything and therefore easily accord with NAFTA.

The government at the time predicted that there would not actually be an increase in what end users paid for most products.  The theory ran thus:  Right now, the shelf prices build in manufacturer taxes and tariffs, and are thus inflated.  We're tacking an extra 7% (at the time) onto the shelf price, but the shelf price should come down to offset the difference.

Of course, the theory was wrong, for reasons which should have been easily foreseen:  Prices are sticky downward.  The ratchet effect applies to prices:  They will increase as a result of certain pressures, but the increase will not necessarily go away when the pressure is removed.  So the shelf price no longer needs to build in the hidden taxes, but when the hidden tax vanishes, it takes highly competitive market pressures to push the manufacturers and retailers to pass the savings along to the consumer.  Even if the consumer is paying a new tax altogether.

Fair?  No.  Real?  Yes.

Shifts to "a la carte" billing often have similar features, turning into a premium surcharge for previously-included features.  Air Canada recently changed its checked baggage policy to charge for the first bag on flights to and from the U.S.  Most airlines have gone this way, true.  And, as is the case with other airlines, the base fares were not otherwise adjusted downwards to reflect the fact that a previously-included feature has now been removed.  So rather than a shift in the price away from those who don't have checked baggage, this amounts to a rate hike only, for those who check baggage.  Which is, I believe, most travellers.


There are few things that irk me more than agreeing to pay a substantial amount of money for an object, and then being told by the salesperson, "But you'll need this, too."  (Extended warranties are the worst offenders:  So you're asking me to pay a thousand dollars for a piece of electronics, but you're telling me that these devices are unreliable enough that I should really pay an extra three hundred dollars to extend the one year warranty to three years.  Sorry, why am I paying a thousand dollars for unreliable equipment?  This rant is kind of off-topic, but kind of not.  Manufacturers should stand behind their products without needing you to pay extra for it.)

Should Tim Hortons start charging for sugar and cream?  (After all, why should the cost of these things be passed on to people who drink their coffee black?)  Should pay toilets be implemented in restaurants and airplanes?  (After all, the cost of maintaining septic systems and cleaning toilets has to get passed on to the customers, so why not do it on a pay-per-use basis rather than charging people who don't use them?)  Napkins and straws?  Plastic bags at grocery stores?  (Oh, wait...)

Yes, there are certain things for which a premium should be charged.  And there are situations in which people who know what they want should be able to opt out of meaningfully-costly aspects of a basic package.  But in general, the move to 'a la carte' has seemed to mean 'charging more for low-cost items that used to come standard'.


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.

Tuesday, February 21, 2012

Lawyers Failed to Establish Prima Facie Case of Discrimination

In December 2010, the HRTO released its decision in Pieters v. Peel Law Association, finding that the Association's administrator/librarian, Melissa Firth, discriminated against two racialized lawyers, Pieters and Noble, because of their race.

Essentially, there was a heated argument in May 2008 which followed from Firth asking Pieters and Noble for identification in the lawyer's lounge.  She explained that she frequently questions people that she doesn't recognize.  The Tribunal noted that there were several people in the lounge at the time that she wouldn't have known, and inferred from this that the decision to stop Pieters and Noble was based on their race.  The Tribunal felt that Firth's non-discriminatory explanations did not overcome this inference, and that it was likely that the decision to question them was at least partly based on race.

"Racial profiling" is a very difficult issue in human rights, involving legitimate and legal scrutiny applied in unfair measure to one group.  When a police officer questions one individual but not another, detains one individual but not another, tickets one individual but not another, these are all ostensibly permissible exercises of police discretion...yet if the discretion is used in whole or in part because of race, it will violate the Human Rights Code.

This case is in some ways similar, though the Divisional Court downplayed the similarities when it recently allowed an Application for judicial review, on the basis that the Tribunal erred in its assessment of whether or not there was a prima facie case.  Where a distinction has been made, it falls to the person asserting discrimination to establish the link between the treatment and a prohibited ground of discrimination.  The Divisional Court felt that the Tribunal reversed this burden of proof by inferring the link from the absence of non-discriminatory explanation.

In any event, the Divisional Court found, there were findings of fact that were inconsistent with the findings that Firth lacked a credible non-discriminatory explanation.

I think the nuances are close here, but the lesson is clear:  A member of a protected group who receives unfavourable treatment cannot expect the Tribunal to presume that the treatment was a result of membership in the group.


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.

Friday, February 17, 2012

Back to Basics: What is discrimination?

In the literal sense, discrimination refers to any unfavourable treatment directed at a particular person or group but not at others.  Imagine, for example, that I own a store, and I post a sign saying that I will refuse service to anyone wearing American Eagle.  That is clearly a discriminatory policy - I'm discriminating against people based on their choice of fashion and attire.

But is that illegal?  Almost certainly not.

It's common to think of the Human Rights Code as prohibiting 'discrimination', simpliciter.  It doesn't.

It's common to think of the Human Rights Tribunal as a forum for addressing all manner of hurt feelings and unfair treatment.  It isn't.

The Human Rights Code prohibits discrimination and harassment based on certain grounds in certain contexts.  It is not a forum for addressing general claims of unfairness.

Social Areas of Prohibited Discrimination and Harassment

Let's start by looking at the contexts affected by the Human Rights Code, or what are referred to as "social areas".  There are a few of them:  Employment; Provision of Services, Goods and Facilities; Accommodation (i.e. residence); Contracts; and Vocational Associations.

Most commercial dealings will be covered by the Code, but outside of commercial relationships the Code has limited application.  So if I refuse to socialize, generally speaking, with anyone outside of my racial or religious group, that may well be discriminatory on the basis of what would be considered a prohibited ground, but it's not usually going to be illegal.  (However, inside a workplace, such exclusionary conduct could be a breach of the Code.)  Consider romantic relationships generally.  Most people require that their romantic partners be of a specific gender and age range, and it is very common for religion, race, colour, and place of origin to play a major factor in the selection of romantic partners.  None of this is unlawful, because it doesn't fall within one of the applicable social areas.

Likewise, if I'm walking down the street and shout a racial epithet at a random member of the public, that may be highly inappropriate, but it probably isn't a violation of the Human Rights Code.

The three common ones are employment, services, and accommodation.  In employment, I'm entitled to not be discriminated against on the basis of certain prohibited grounds.  So an employer can't refuse to hire because of race, can't assign specific menial duties based on religion, can't fire somebody because of a disability, etc.  Moreover, there's also a measure of protection from one's co-workers:  If I'm being harassed by co-workers on the basis of a prohibited ground, then I may have a remedy against that co-worker, and also against my employer if my employer fails to take reasonable steps to protect me.

In terms of services, it's easiest to think of retail environments.  Refusing to serve somebody because of their race is illegal.  So too, in most contexts, is refusing to serve a disabled person with a service animal.  But services are really much broader than that.  Even policing has been seen as falling within this social area.

Accommodation is much narrower, referring specifically to residential tenancies.  It's also more nuanced:  A woman living alone and looking to rent out her extra room is not necessarily going to be bound to afford equal opportunities to prospective male tenants.

Prohibited Grounds

Surprisingly enough, the list of prohibited grounds is lengthy, and not uniform across different social areas.

In general, we're talking about grounds such as race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, record of offences, marital status, family status, and disability. In accommodation, there's also a prohibition on discrimination on the basis of receipt of social assistance - in other words, you can't refuse to rent to somebody just because they're on Ontario Works.

These are pretty broad.  In general, we're looking at characteristics that are either beyond the control of the individual, or which are relatively immutable values/lifestyle choices.  (Marital and family status, for example, isn't exactly outside of an individual's control, but it isn't something you can turn on or off.  Same with citizenship, and religion.  These are things which can be changed, but we don't and shouldn't expect somebody to change them to conform with some sort of commercial expectation.)

They don't generally protect people from discrimination on the basis of more flexible decisions - fashion, hairstyle, etc (except to the extent that these may be proxies for prohibited grounds) - and moreover, aside from the protection of social assistance recipients for accommodations, there is no provision for economic rights in the Human Rights Code.

Business owners don't always grasp that distinction.  I once had a very successful businessperson argue that the requirement to accommodate disabilities is a violation of his human rights, as an often-arbitrary measure which impairs his ability to do business (he pointed out that he has had to install wheelchair-accessible washrooms in all his various businesses over the years, and not once has anyone with a wheelchair ever required them...which perhaps is unsurprising, given that his current venture at least is an athletic facility specializing in activities with relatively limited para-athletic interest); I had to explain to him that his view of "human rights" was not consistent with Ontario law.  Similarly, I have had employer clients asking "But what about our rights" when I explain their obligation to accommodate up to the point of undue hardship.

The Human Rights Code is not completely oblivious to the viability of a business.  There is the "undue hardship" qualifier on the obligation to accommodate.  But the Code, all in all, isn't designed to protect economic rights.  Nor does the Canadian Charter of Rights and Freedoms offer protection of economic rights at all.  (The United States Declaration of Independence spoke of "life, liberty, and the pursuit of happiness", but their XIV Amendment protects life, liberty, and property; by contrast, s.7 of the Canadian Charter of Rights and Freedoms guarantees the right to "life, liberty, and security of the person".)


These rights aren't absolute.  There are exceptions and limitations.  For example, the right to equal treatment in employment on the basis of disability can be denied where the employer cannot reasonably accommodate without undue hardship.  There are categories of exemptions, such as religious or philanthropic organizations whose mandates include service of particular groups identified by prohibited grounds.  There are certain provisions allowing preferential treatment in some circumstances - for example, preferential treatment of those over 65 is permissible.  Age discrimination protection usually doesn't extend to people under 18 in the first place, except in narrowly-defined circumstances.

Age discrimination is actually an interesting phenomenon.  A senior's discount is permissible as preferential treatment for those over 65, but service providers who set the senior's threshold elsewhere - i.e. age 60 - may be violating the Code.  Alternatively, because there are certain legal thresholds for tobacco and alcohol above age 18, service providers sometimes feel that they're erring on the side of caution by broadening the scope of services they won't offer to those under 19...but unless they're actually legally prohibited from offering such services (for example, sale of tobacco products), that would be unlawful discrimination.

Once, when I was in law school, I was in an "As Seen On TV"-type store with a number of friends, one of whom was 18 years old at the time.  There was exercise equipment there, and a sign saying that children "18 and under" were not permitted to use it.  That sign would be lawful if it said "under 18", but when it extended the prohibition to 18-year-olds, it probably crossed the line into illegality.  I joked with my 18-year-old friend that she should make a human rights complaint.

At the same time, the same level of scrutiny isn't necessarily applied to age discrimination as other prohibited grounds, because it is the one prohibited ground in which nearly all of us will experience or have experienced each and every state.  All adults were 18 years old at one point, and all of us expect that someday we will be older than 65.  Thus, mandatory retirement provisions are given a bit more flexibility, perhaps, because of the fact that they still ostensibly apply to everyone, and arguably aren't actually discriminatory in the most literal sense.


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.

Wednesday, February 15, 2012

Differences between Employees and Contractors

Theoretically speaking, there's a world of difference between an employee and a contractor.

Why Does It Matter?

Let's start by looking at the legal consequences of the distinction, before we start looking at the legal differences between them.

An employee, unlike an independent contractor, gets protection of various statutes like the Employment Standards Act.  Minimum vacation entitlements, minimum wage, limitations on hours of work, mandatory breaks, etc.

An employment relationship also requires the employer to withhold and remit income taxes to the CRA on the employee's behalf, as well as EI and CPP contributions.  (Employers are also required to make EI and CPP contributions of their own in respect of employees.)  By contrast, an independent contractor has to make his own CPP contributions (in the full amount, including what would otherwise be the employer portion), doesn't get EI, and collects the full amount of his bill plus HST, with no obligation on the payor to withhold and/or remit taxes to the CRA.

The independent contractor, unlike the employee, is seen as a business owner, and is therefore able to write off  business expenses for tax purposes.  

Thus, all other things being equal, there are advantages and disadvantages to workers of being employees versus independent contractors.  (Contractors don't get protection of employment standards nor EI, and the framework on termination is often less favourable, and there's also more personal administrative responsibility for accounting and payment of taxes, etc.; on the other hand, there are often tax savings to being an independent contractor.)

For businesses, it's generally better to have contractors than employees.  Yes, I may pay 13% HST for the services I'm buying, but I get that back through credits based on the HST I'm collecting from my own customers.  In the mean time, I'm saving on EI, CPP, and potentially on other things like overtime costs, public holiday pay, vacation pay, etc.

So many payors want to structure their contracts as contracts for service (i.e. independent contractors) as opposed to contracts of service (i.e. employment contracts).  To do so, they put terms expressly saying that the worker is an independent contractor, not an employee, and will be responsible for their own CRA remittances, and will provide accounts to the payor for services rendered, with HST, etc.  (At least, the more elaborate ones go down that road.)

And workers will agree to this, partly because of an imbalance in bargaining power, but also partly because there's something attractive about being able to write off expenses as business expenses like a wealthy business-owner does.  Particularly on the termination of the relationship, though, a contractor may be in a much worse position than an employee.

The Legal Test

I know many experienced and sophisticated businesspeople, some of whom are extremely successful, and among them there seems to be a belief to the effect that the contract is God.  They are often quite surprised when I tell them otherwise.  (I recently had a dinner conversation with such an individual where he was quite surprised to learn that the minimum statutory notice cannot be contracted out of.  He doesn't like this reality, because of the prospect that a sophisticated employee could take advantage of an employer by negotiating terms he knows are unenforceable.  This is possible, but I would never recommend an employee do that for reasons of poor predictability, and it's certainly the minority case for employment contracts that a sophisticated employee is able to pull the wool over the eyes of a less sophisticated employer.)

The contractual terms aren't irrelevant.  How the parties have chosen to characterize the relationship is not completely devoid of legal meaning, but nor is it determinative - it is one among several factors that Courts will look at to determine whether an arrangement is a contract of service or a contract for service.

There are other factors, too:

(1)  Control:  To what extent is the worker directed by the payor?  Does the payor control the hours of work?  How and when the work will be performed?  Is the payor able to discipline the worker?

(2)  Ownership of tools:  Who actually owns the tools and other devices necessary for the work to be completed?  If I actually had to invest in my own business by purchasing the tools of my trade, then it's much more likely that I'm a bona fide business owner.  If I rely on my client to have the tools of my own trade for me to use, then...less so.

(3)  Chance of profit:  In general, most employees will have the bulk of their remuneration calculated by a pre-established formula based on a salary or hourly wage.  Contractors, on the other hand, tend to get paid by the job, and while hourly billing isn't unheard of, especially in certain industries, there's certainly a per value element to the calculation.

(4)  Risk of loss:  Most employees pay virtually nothing out of their own pockets.  If a job goes south, an employee loses income, but hasn't usually invested much more than time into it.  On the other hand, a contractor may have incurred out-of-pocket expenses, wages for other employees, and other overhead costs, meaning that if the job ends up taking longer or more resources to complete than anticipated, or the payor doesn't end up paying, the contractor has potentially suffered a loss of more than just time.

At its core, factors such as these are designed to flesh out the essential question, posed by Lord Wright in 1947:  Whose business is it?

Then What Happens?

There are a few contexts in which these disputes get fleshed out.  Sometimes, the CRA lifts up the rug on a 'contractor' relationship and reassesses the parties on that basis.

More often, the worker comes back at the payor after the end of the relationship wanting entitlements based on an employment relationship - EI remittances, pay in lieu of reasonable notice, unpaid overtime or holiday pay.

Even though the parties may have governed their relationship as a contract for service for an indefinite period of time, it remains open to the Courts - at the instance of the CRA or either party - to re-evaluate it.

One should note that, where termination of the relationship is involved, there's also what sometimes gets referred to as the intermediate category, or "dependent contractors", who are not employees yet still get employee-style rights such as reasonable notice of termination.


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.

Tuesday, February 14, 2012

Justice Molloy Refuses Mandatory Minimums

In a case that's getting a lot of media coverage nationwide, Justice Molloy ignored a mandatory minimum sentence for a gun possession offence.  Okay, it isn't correct to say that she ignored it.  She addressed it head on, and determined that the correct decision was to disregard it.

I haven't been able to review the decision itself, but from the news coverage I'm inferring that the offence was against s.95 of the Criminal Code, which prohibits possessing a loaded prohibited firearm, or a prohibited firearm with ammunition readily accessible, unless the person has a licence/authorization to possess the firearm and holds the firearm's registration certificate.

This is a "Crown election" offence.  That means that the Crown can choose to proceed by way of summary conviction proceedings, with is an expedited process with no jury right, and for this particular offence would mean a maximum sentence of 1 year in prison.  Alternatively, the Crown can choose to proceed by indictment, in which case this particular offence carries a maximum sentence of 10 years in prison, and a minimum penalty of 3 years in prison.

The defendant in this case was Leroy Smickle, who apparently was holding the weapon to strike a "cool" pose when the police burst into the apartment in search of another person.  Smickle, age 30, had no prior criminal record.

Deciding that a sentence of 3 years in prison for an individual under such circumstances would be so disproportionate as to shock the community, Justice Molloy decided to impose a sentence of one year house arrest.  Appeals are nigh-inevitable.  But Justice Molloy is a well-respected judge, and much of the judiciary will share her view about the inappropriateness of mandatory minimums.

What do you think?  Is 3 years in jail for Mr. Smickle too harsh?

The controversy about mandatory minimums is two-sided.  Its proponents - including the current conservative government - argue essentially that judges impose too lenient of sentences for serious offences, and therefore their discretion needs to be limited.

Opponents of mandatory minimums, on the other hand, argue that every case is unique on its facts, and that tying the judge`s hands will necessarily create injustice in some cases.

One relatively straightforward example of a mandatory minimum sentence is the sentence for murder.  For second degree murder, the minimum sentence is life, with no chance of parole for upwards of 10 years.  For first degree murder, the minimum sentence is life, with no chance of parole for 25 years (subject to the 'faint hope' clause).  Relatively uncontroversial, yet even that has its detractors:  Consider, for example, euthanasia.  Should it be legal under certain circumstances?  That's a controversial enough point.  But with it being illegal, with euthanasia falling into the same framework as murder, does it seem right that a person who administers a fatal drug to a person already dying of ALS (and agonizingly so) should be treated exactly the same as the person who shoots and kills a police officer in the commission of a robbery?  Likewise, think of Robert Latimer, who was convicted of second-degree murder after killing his daughter who suffered from cerebral palsy, to end her suffering.  Should it have been criminal?  I think so, yes.  But the intent and the act seem somehow less blameworthy than a 'normal' murder, and it does seem inappropriate to treat him the same as any other murderer.

In Latimer's case, the trial judge came to similar conclusions to Justice Molloy, finding that the mandatory minimum was too harsh, instead sentencing him to 2 years less a day.  However, the Supreme Court of Canada rejected that finding in 2001, concluding that the lengthy sentence would not be "cruel and unusual" and that the judge was wrong not to impose the mandatory minimum.

Mandatory minimums are a particularly touchy topic right now, with Bill C-10 before the Senate, which imposes a much broader range of mandatory minimums.  If Justice Molloy is right, then the Charter will likely play a much larger role than in the past in informing sentencing principles, and Parliament will be unable to legislate around principles such as 'proportionality'.

My Thoughts

I consider myself to be in the camp of opposing mandatory minimums.  There is a certain persuasiveness to the notion that some people get off too lightly, but this can be dealt with through sentencing reform less invasive and sweeping than mandatory minimums.  The existing sentencing provisions in the Criminal Code put a strong emphasis on restraint, on not imposing custodial sentences unless they're necessary under the circumstances.  That principle could be modified in such a way as to dial up the sentences for serious offences.


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.

Monday, February 13, 2012

Stranger than Fiction: Warning Shots in Defence of Property

Criminal law isn't my primary expertise, but I still pay attention to the developments in it - it sometimes impacts the rights and responsibilities of employers.

So I've just read Bill C-26, after seeing a CBC story noting that Rob Nicholson argued that the bill justifies the firing of warning shots in response to property crimes.

Citizen's Arrest Amendments

Bill C-26 tracks back to a high-profile case in 2009 relating to a store owner, David Chen, who was charged after detaining a shoplifter who had earlier stolen an object then returned to strike again.  He was eventually acquitted, but there was a concern that the existing citizen's arrest laws, essentially requiring that the arrest be made at the time of the offence, were too restrictive.

Personally, I think there's an elegant simplicity to the existing law on the point:  In order to justify a citizen's arrest, you need to see the person commit a certain type of crime in specific circumstances, and make the arrest immediately.  These requirements ensure a very high level of confidence in both the criminality of the act alleged and the identity of the person alleged to have committed it, before you start justifying private citizens in instigating potentially-violent confrontations with others.  When you break that immediacy, you end up potentially legitimizing a broader range of vigilante activities, increasing the risk of mistaken identity, violent misunderstandings, etc.

I also tend to think that David Chen's acquittal is evidence of the sufficiency of the existing laws.  Changing a law because someone who we don't think did anything wrong was charged but acquitted...seems like bad policy to me.

But now we're changing it so that an arrest can be effected "within a reasonable time", where no police officer is available.  This concerns me somewhat.

If I am a store owner, and somebody steals something and I catch them on the spot and detain them, then the police will come and I can hand them over.  As I said, a high level of confidence.  On the other hand, if somebody steals something and gets away from me, and I call the police, the police will likely just take a report.  (I read another editorial in the Globe recently complaining that the police never actually attended to investigate a series of break-ins that the author experienced.  They're 'too busy' attending to life-threatening situations and traffic tickets to investigate low-value property crimes.)  Thus, the unavailability of police will probably be routinely met for these cases.  So in a case where the offender comes back (or somebody I think is the offender - as I noted, a lower level of confidence), I can then detain them, if it's within a 'reasonable time', whatever that means.  But the language goes beyond that, because it doesn't require the offender to return:

I can go out looking for the thief.

That's right, I can get a good old-fashioned posse together to hunt down the shoplifter, provided only that the police aren't immediately available and it's within a reasonable period of time.  I find somebody who I reasonably believe is the thief, and I can forcefully detain the person.

But the Bill goes further than just changing the doctrine of citizen's arrest.  It also changes the doctrine of self-defence, quite significantly.


The existing language that gets replaced is actually pretty arcane and probably needs amendment, but it specifies certain actions which are justified under certain situations.  If you're being assaulted, you're justified in using necessary reasonable force to repel it, short of force intended to cause death or grievous bodily harm, unless you reasonably apprehend that you are at risk of death or grievous bodily harm and don't have any other avenue of preserving yourself.

Defence of property has a long list of provisions describing what you're entitled to do in certain circumstances.  For example, if you're in "peaceable possession of a dwelling-house" and somebody tries to break in, you're entitled to use reasonable force to keep the person out.  In general, this is the key:  These provisions create a positive entitlement to use reasonable force under certain circumstances.  And specific language limiting the types of force available in certain circumstances.

The amendments are drastic.

First of all, rather than creating limited positive entitlements, the new language creates a sweeping defence for any "act" at all which would otherwise be an offence, which is reasonable under the circumstances, and which is used to protect oneself from a reasonably perceived threat.  Pretty general language.

As for defence to property...again, rather than pigeonhole exemptions regarding use of force in specific situations, the draft language uses the same sweeping defence language for any "act" which is reasonable for preventing or stopping a trespass or theft, where you reasonably believe you're in peaceable possession of the property and where you reasonably believe that a person is about to, is currently, or has just committed a trespass or theft.  (Note all the "reasonably believe" qualifiers.)

What's "reasonable" in the circumstances will, no doubt, be the subject of significant litigation if this Bill passes.  Warning shots are just the tip of the iceberg.  In my view, a warning shot is inherently reckless and irresponsible.  Stray bullets create a hazard to the public, and a warning shot, by definition, is a stray bullet.  I hope and expect that the Courts will take a relatively conservative view of what is "reasonable".  Shooting people engaged in minor property offences will probably be seen as unreasonable.  The 'reasonableness' catch-all is, perhaps, a saving grace for the Bill by preventing people from taking defence of property to anarchist levels, but it also hurts the predictability of the law.  It's going to have to be tested - there will have to be cases where somebody has gone marginally too far under the circumstances, not knowing that they were crossing the line.

Oh, here's another big change.  Existing self-defence provisions include the language "unlawfully assaulted" - meaning that if someone is lawfully arresting you, you don't get the benefit of it.  Defence of property provisions use the term 'trespasser', which means that, for example, you can't use them to justify force against a police officer executing a search warrant.  The language of Bill C-26 creates an exception for such circumstances, but there's an exception to the exception:  Where you believe on reasonable grounds that the person is acting unlawfully, you're still justified in using force.

It's always been true that, if you're *right* that the person is acting unlawfully, the self-defence doctrine applies.  But a person should be loathe to rely on that without significant confidence in their conclusion:  If the police are trying to arrest me, and I think that they lack reasonable and probable grounds to do so, and I resists...well, if I'm right, then I'm justified.  If I'm wrong, then I'm guilty of another offence.  With the proposed amendments, it will be a defence to a charge of assaulting a police officer and resisting lawful arrest that a person 'reasonably believed' that the police officer lacked reasonable and probable grounds to make the arrest.

This goes deeper if you combine it with the new citizen's arrest doctrine:  Imagine that I find somebody whom I reasonably believe just stole something from me.  I detain this person, using necessary force to do so.  I am justified in doing this.  However, suppose that this person reasonably believes that I am acting unlawfully (perhaps I'm wrong, and the person is innocent).  This person will then be justified in any reasonable act to defend himself from my lawful arrest.  In other words, it could easily escalate to deadly proportions, and neither one of us will have committed any offence.


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.

Friday, February 10, 2012

Wrongful Dismissal and Restrictive Covenants

Here's an interesting decision from the Alberta Court of Appeal, released last August:  Globex Foreign Exchange Corporation v. Kelcher, which discusses, among other things, the effects of wrongful dismissal upon restrictive covenants.  So suppose I sign an agreement that I will not solicit clients of my employer within two years after the end of my employment, and then my employer eventually fires me without cause and without notice.  What happens to that non-solicitation agreement?

I think it's important to highlight, at the outset, the definition of "wrongful dismissal":  You've seen me refer to Love v. Acuity Investments on a couple of occasions before to note that an employer's actual obligation on termination is to provide actual notice, and that firing without notice but providing pay in lieu is still a breach of contract; the pay in lieu is an attempt to compensate the employee for the breach.

The Alberta Court of Appeal similarly references Love v. Acuity Investments, with the result that we can safely understand that, when they're talking about "wrongful dismissal", they're talking about just about any termination without actual notice.

The conclusion the Court comes to is this:  An employer who wrongfully dismisses an employee is not entitled to rely on restrictive covenants.  They have repudiated the contract, and are not entitled to continue to hold the employee to his obligations thereunder.

There doesn't appear to be much jurisprudence on the point.  A similar, but not quite the same, argument has been raised in respect of termination clauses:  Some have argued that a failure by the employer to honour its contractual obligations means that it cannot rely on contractual language limiting pay in lieu of notice.  The general conclusion is that this argument must fail:  When you're fired without notice, but you're only entitled to a certain amount of notice, your employer's liability is still going to be limited to the notice that they should have provided you if they had complied with the contract.

But restrictive covenants are different.  Termination clauses are about obligations of the employer (even though they usually work to the employer's benefit by contrast to common law), whereas restrictive covenants relate to obligations of the employee.  So the jurisprudence on termination clauses essentially says:  Employer, you breached the contract, so now you have to compensate the other party on the basis of what your contractual obligations were.  For this restrictive covenant case, the logic runs much differently:  Employer, you repudiated the contract, so now you are not entitled to expect the employee to continue to perform his obligations under it.

Pretty simple when you think about it that way.

The Alberta Court of Appeal relied on a rather old British case - General Billposting v. Atkinson - from 1909, which involved an employer trying to rely on a restrictive covenant after firing an employee with insufficient notice.  The House of Lords concluded that the employee was relieved of obligations under the restrictive covenant by the breach of the contract.  The case has been cited favourably by the Supreme Court of Canada in the past, but not in a restrictive covenant context.

The logic underlying this case isn't automatic, however:  Not every breach of contract will relieve the other party of ongoing responsibilities, nor are all collateral covenant terminated even by a fundamental breach.  There is a strong dissent in this case, pointing out that some covenants are clearly indicated to survive the end of an agreement, and that the body of Canadian case law suggests that - notwithstanding a breach of other contractual duties - these will survive.  (The dissenting judge, Justice Slatter, points out that the employee is not relieved either of other obligations - for example, it's probably uncontroversial that it would still be wrong for him to misuse confidential information of the employer.)

My Thoughts

This is a close one.  Justice Slatter has some very good points - it's hard to deny his logic.  (He is also quite critical of some Ontario law jurisprudence on "fresh consideration", and as much as I think the fresh consideration doctrine in Ontario is useful law, his criticisms of it as being "artificial" are not unfounded.)

The majority points out several good reasons why an employer who dismisses without notice should not be entitled to rely on the restrictive covenant, yet they aren't necessarily persuasive on a closer look.  The first two are from other British jurisprudence; the third is an addition of their own.

(1)  Otherwise an employer could hire a potential competitor and dismiss them shortly thereafter just for the benefit of the restrictive covenant.  This is true, and concerning, but not solved by the majority's approach here.  The unfairness is not caused by the wrongfulness of the termination.  Particularly if the employer used a well-drafted employment agreement with a good termination clause, the employment could be terminated shortly thereafter with very minimal responsibilities, without actually breaching the contract.  Thus, the majority's solution...isn't a solution.  Justice Slatter argues that enforcing a restrictive covenant in such a case would be unconscionable, which seems like a cleaner way of dealing with the problem.

(2)  Enforcing a restrictive covenant in the face of a wrongful termination negates the consideration for the acceptance of the restrictive covenant.  This one doesn't seem right:  If I accepted a job with a restrictive covenant attached, the consideration was "the job", not "continued employment".  If I performed services and received remuneration under the contract of employment, it's hard to say that, just because it's terminated without appropriate notice, the original contract is now devoid of consideration.  The principle is framed separately as suggesting that the premature termination of the contract will deny the employee the "extra amount of remuneration" for having agreed to the restrictive covenant.  Still seems wrong.  Contracts are whole entities.  You don't need separate consideration for each and every covenant in a contract.  If there were, it isn't necessarily true that the employee would be denied it.  ("Okay, I'll agree to the restrictive covenant, but in that case I'll want a premium on my wage rate throughout the employment.")  Even if the consideration were tied to the termination of employment...well, let's run with this for a second.

Let's clear out the rest of the contractual terms, and discuss only contractual notice of termination and the restrictive covenant.  Suppose I have a contract that entitles me to 3 months notice of termination, with no restrictive covenants.  You're my employer, and you ask me to agree to a non-competition agreement for one year after the end of my employment.  I answer, "Well, it will be harder for me to find a new job in a different field.  I'll tell you what, I'll agree to the non-comp if you extend my contractual notice period to 9 months."  We agree on those terms, and you later fire me without actual notice.

Okay, so I've lost the benefit of the extension of the notice period, right?  No, still wrong.  Because in fact, I am still entitled to a remedy for that breach, now being three times what it would have been but for my agreement to the restrictive covenant.  That still smells like consideration to me.

(3)  Mitigation.  This is actually a good point, and the first thought that came into my head.  The duty to mitigate by finding new employment, triggered by the wrongful dismissal, is in conflict with a restrictive covenant which limits the prospects of new employment.  To wipe restrictive covenants off the plate where the duty to mitigate is triggered...well, it's a nice clean solution.

But it isn't the only solution.  Indeed, where an employee is prevented from working in his/her field for a period of time, it would make more sense to argue that the duty to mitigate should be largely lifted through the running of the restrictive covenant.

Let's put these beside some of the legitimate concerns raised by Justice Slatter, namely that an employer can, without blameworthy conduct, fail to provide the necessary notice - for example, in a scenario where the notice provided falls slightly short of the notice period a court finds, or where the assessment at the time of "just cause" falls slightly short of the threshold at trial.  It does indeed seem unjust to deny an employer of the benefit of such a clause under such circumstances.


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.

Thursday, February 9, 2012

Bowes v. Goss Power Products Ltd. update

Last August, I posted about the decision in Bowes v. Goss Power Products Ltd., in which Mr. Bowes was terminated from his position as Vice-President.  Under the terms of his contract, he was entitled to 6 months' notice or pay in lieu thereof.  He found a new job with equivalent income 12 days after his termination.  Essentially, he was trying to enforce the contractual term requiring the employer to pay him the 6 months' notice anyways.

The Court said No, because he had mitigated his loss based on the loss of employment.

I noticed recently that an appeal is scheduled to be heard next month.  Should be interesting to see.

Bowes is definitely the underdog here.  He lost his job, suffered no loss, presumably already received a modest windfall in the form of his statutory minimum notice, so he's suing for damages he hasn't really incurred in any meaningful sense.  The body of employment law jurisprudence is against him.

But, on more basic principles of contract, I'm not so sure that he's actually wrong.

When I'm rooting for the employee here, it isn't because of a pro-employee bias.  I think of myself as being fairly balanced.  I fight vigourously for the interests of my clients, be they employee or employer, in specific files.  But outside of my files, I'm on the side of law which makes sense.

Wrongful Dismissal:  The Usual Case

Normally, at common law, an employer is entitled to dismiss an employee on reasonable notice.  Contractual language can define the reasonable notice period, or change the reasonable notice period, within limits.  Notionally, an employer is entitled to say to an employee:  "Your employment will end on date x, which is y months out."  Then the employee would keep working until date x, looking for a new job for afterwards.

In practice, this never happens.  Most employers send home a dismissed employee immediately, preferring instead to provide "pay in lieu of notice".

However, under the common law default, an employer is not contractually entitled to fire without notice notwithstanding a payment in lieu.  As much as we might tend to conflate reasonable notice, notional notice periods, and pay in lieu of notice, the actual default obligation is to provide actual notice.  The Court of Appeal made this clear recently in Love v. Acuity Investments.  When an employer fires without notice (and without just cause), this is a breach of contract, and pay in lieu is "an attempt at compensation for the breach."  Pay in lieu is, in essence, damages.

This is important to understand, because then we start to understand why the mitigation principle applies.

There are two very fundamental principles in damages for breach of contract.  The first is the compensation principle, that the non-breaching party should be put in the position it would have been in had the contract been honoured (i.e. had actual notice been provided), to whatever extent this can be achieved by the payment of money.

The second is the mitigation principle, that a loss which is avoidable cannot be recovered.  This principle essentially creates an obligation on a fired employee to seek new work.

These are principles of damages, not of contractual interpretation.  They presuppose that a party has been wronged and suffered damage as a result.

If I get fired on actual working notice which is reasonable, then the contract hasn't been breached.  These principles don't apply.  I keep working, and once the notice period runs its course we go our separate ways.  There's no obligation to look for a new job during working notice - though it's just good sense to do so.

If I get sent home, however, without notice, then my contract has been breached.  I'm entitled to continue to be paid as I would have been had notice been given (compensation principle), but that doesn't mean that I'm entitled to sit at home and watch soap operas for y months.  I need to get out there and take reasonable steps to find another job.  If I don't do so, then my entitlements get reduced accordingly.

If I actually find a new job, with new income, then my income through the new job gets deducted from my entitlements from my old employer, because that goes partway to putting me back into the position I would have been in but for the breach.  This is what we're talking about when we describe "mitigation income".

Put into this framework, Bowes clearly shouldn't recover much:  After all, he earned mitigation income sufficient to put him back into the position he would have been but for the breach...but wait...what breach?

How this Case is Different

Goss Power Products was entitled by the employment contract to dismiss on provision of pay in lieu of notice.  Therefore, by terminating him without actual notice, there was no breach of contract.

No breach of contract, no duty to mitigate.  No duty to mitigate, no need to account for mitigation earnings.

Essentially, the language in the contract appears to have been quite simple:  We can fire you without notice, and we'll pay you this much for it.  In fact, this type of contractual language is not uncommon.  Which is why there will be an impact if Bowes wins.

Bowes' position is almost elegant for its simplicity.  The contract says the employer should pay, so the employer should pay.

The Superior Court's response was quite complex, actually, finding that the contractual language was not intended to displace the obligation to mitigate that exists in the usual case, and therefore does not do so.  But that seems not to be quite right, either:  Obligation to mitigate what?  If one supposes that Bowes had not obtained new employment, and the pay continuance had continued through the notional notice period, there would have been no breach of any contract at all, such that an obligation to mitigate is triggered.  In other words, the contract on its face suggests that Bowes could have spent six months watching soap operas, and the employer couldn't say anything about it.

To sum up:  Unlike the usual case, in which the termination without notice is a breach of contract requiring the employee to mitigate his loss, Bowes' termination without notice was not a breach of contract, meaning that he suffered no loss thereby which he could be required to mitigate.

Indeed, in order to get to the Superior Court's conclusion, one would have to actually read mitigation into the contract as an obligation of Bowes' in his performance of the contract.  That is problematic:  In a contract drafted by the employer, and put to relatively unsophisticated employees for their signature, it is extremely undesirable to start reading in obligations based on arcane legal principles such as the duty to mitigate.

At the end of the day, I would argue that Bowes has a point:  If an employer wants a contract to include a right to provide pay in lieu of notice while still preserving the employee's duty to mitigate, it should expressly include that in the contract language.


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.

Tuesday, February 7, 2012

The Right to Strike

The lines are drawn for the next great battle of contemporary labour law.

For all of the issues that have arisen in recent labour disputes in Ontario and in the Federal sphere, including the Province designating the TTC as an essential service and the Feds legislatively interfering labour disputes involving Air Canada and Canada Post, this case has arisen in Saskatchewan, and has provided - at the trial level - an answer to a question whose spectre was raised 11 years ago by the Supreme Court in the Dunmore decision:  Does s.2(d) of the Charter of Rights and Freedoms guarantee a right to strike?

The History

In the early Charter jurisprudence, the Supreme Court pretty thoroughly rejected the notion that s.2(d) (freedom of association) protected union-related rights.  However, in Dunmore the Supreme Court overturned those earlier cases, accepting that the freedom of association included the freedom to join unions.

Dunmore was important for a few reasons.  It also has become a precedent for the Charter requiring what is characterized as 'positive government action'.  Traditionally, Charter rights only restricted what a government could do.  Freedom of expression prevents someone from being silenced, but does not require anyone to provide a soapbox.  It means that the government can't force my blog to be shut down (without good reasons), but doesn't require the government to provide hosting for my blog, or to force Blogger to continue to host it.

So how does that apply to a right to join a trade union?  Under a traditional Charter analysis, it would mean that the government can't make it illegal for a group to join a union.  Early in the labour movement, but in days long past, this was the case.  But with most groups these days have statutory rights to join unions, the question took on different dimensions:  Dunmore was about the exclusion of agricultural workers from the labour relations regime, about saying to society at large, "Everyone can join unions...except these guys."  The Court in Dunmore concluded that this had a chilling effect, that the exclusion of one group in itself sent a message to employers that agricultural unionization efforts would be illegitimate, and by doing so the government was interfering with such unionization efforts.  In response, the legislature enacted a law, the AEPA, giving agricultural workers the right to join unions and make representations to employers.  We'll come back to that in a minute.

The next question was what was included with this right to join a union.  Can the employer proceed to ignore  the union anyways, in the absence of a statutory regime telling them otherwise?  Does s.2(d) include not just a right to join a union, but also a right to collective bargaining?  And if so, does that impose a positive obligation on government to protect such a right?

The second case was B.C. Health Services in 2007, and the answer to the question was Yes.  The British Columbia government had legislatively overridden several public sector collective agreements, and the Supreme Court found that this interfered with the associational rights of the individuals involved - a meaningful right to associate means protection of the objectives for which people associate, including collective bargaining.  The case reinforced Dunmore and referenced the discussion from that case of 'underinclusive legislation'.  I've tended to argue that the discussion of positive government action in B.C. Health Services is somewhat misplaced, since we are talking about a case involving the government actually legislatively undermining collective agreements, but I (though I'm probably alone in this) really don't read Health Services as meaningfully expanding the "positive obligations" scope from the extremely limited doctrine set forth in Dunmore.

Then, there was the third case, Fraser, dealing with the AEPA in Ontario.  The objection was that the AEPA didn't obligate employers to actually negotiate in good faith when receiving representations from the union.  The Supreme Court's response, in a remarkable feat of legislative interpretation (see my commentary here), was "Yes it does", finding that good faith obligations could be read into the statute, and that s.2(d) may guarantee a meaningful right of collective bargaining but does not guarantee any particular mode or structure for that collective bargaining.

I am somewhat disturbed by how far Fraser comes from Dunmore's 'the government can't substantially interfere with the right to organize' to 'the government is obligated to enact statutes imposing good faith obligations on employers'.  But that's not for today.

What Now?

Yesterday, the Saskatchewan Court of Queen's Bench released a decision finding that s.2(d) constitutionally guarantees the right to strike.  The facts involve a statute enacted which essentially imposes a wide-spread 'essential service' model, stripping public sector employees of the right to strike.

The Court noted the role of the strike in labour relations.  In the private sector, a strike imposes economic pressure on both sides - the employees aren't making money, but the employer isn't getting labour.  In the public sector, the pressure on the employer is different, usually being political in nature.

It's a lengthy decision, but I will deal with it in very brief terms for now, at the risk of oversimplifying:  The Court views the strike as being a keystone of collective action - without the right to strike, to exert collective pressure against the employer, the right to collectively bargain is meaningless.  Thus, s.2(d) must extend to the right to strike.

Further, Canada's international obligations and participation in ILO conventions tend toward the recognition of a right to strike.

My Thoughts

I'm not an expert in international law.  There are people far smarter than me who have argued either way on this point in the wake of B.C. Health Services, but I dislike the invocation of international law in this context.  It is difficult to accept that an international treaty, which governments can enter into or rescind, can inform the interpretation of the Canadian constitution.

In any event, even if my distaste for the Supreme Court's approach in Health Services is unsubstantiated, the Court in this case takes it further.  You see, the right to strike is not expressly set out in the applicable ILO convention, but rather has been read in by the ILO over time.  Namely, in 1971, the ILO appointed a Committee to inquire into a complaint against Greece, which concluded that the right to strike was implicitly protected by convention 87.  The Saskatchewan Court here pointed out that Canada ratified the treaty in 1972, after that decision made it clear that the Committee on Freedom of Association was taking that position, and therefore it informs the contents of our international obligations, which in turn (following B.C. Health Services) inform the content of our Charter rights.

Okay, let's parse this for a second:  We have freedom of association.  Because, in 1972, we ratified a convention agreeing to protect collective bargaining, that gets lumped in with freedom of association.  And because, in 1971, an international organization concluded that the right to strike was implicitly protected by a right to collectively bargain, that means our constitution must therefore guarantee a right to strike.  Even if I were to put aside the heavy deference on an international organization's interpretation which was not at all informed by Canadian legal principles, this is starting to get a little disturbing for other reasons, but I'll get to that in a second.

The Court also refers to the presumption of conformity with international law, which is a principle of statutory interpretation suggesting that, in the absence of an irresistably clear intention not to comply with international obligations, a law should be read as being consistent with international obligations.

This is true.  I'm quite fond of that principle, actually.  I like international cooperation and multi-lateralism, and I'm fond of the fact that a government is unable to subtly legislate around its international obligations - it can do so, and should be able to do so, but has to admit openly that that's what it is doing.

But it's a rebuttable presumption, premised on the notion that "If the government really wanted to ignore its international obligations, it could have said so expressly."  Moreover, if that's really what the government wanted to do, they can just go and amend the law to do so.  When we're talking about Charter interpretation, that notion no longer exists.  The Charter is there.  It has been there since 1982, and it's nigh-impossible to amend.  If we were talking about international obligations that post-date the Charter, I'd be deeply worried about the Court saying "Well, if they didn't want us to interpret the Charter to include this international obligation, they should have put that in the fine print of the Charter."  Such a conclusion would be absurd.

In this case, of course, the international obligations predate the Charter, but if that's the deciding factor then that worries me for different reasons:  Unlike that of our southern neighbours, the Canadian constitution is a "living tree".  It grows and changes as the society it protects grows and changes.  The intended meaning upon drafting isn't completely irrelevant, but nor is it determinative.  American constitutional interpretation today is rather muddied by the fact that they feel beholden to the ideals, values, and intentions of those who drafted the document, well over two centuries ago.  Two hundred years from now, when our society (and economy and workforce) has grown and evolved in ways that we can't necessarily imagine now, are we going to have to interpret our ongoing constitutional rights and obligations based on what a group of non-Canadians said about a conflict in Greece in 1971?

The answer, almost certainly, is No.  That would be anathema to the entire history of Canadian constitutional jurisprudence.  We leave it to our Courts to interpret and determine the contents of the Charter, and we trust them to consider these questions in meaningful and thoughtful ways.  They cannot defer on questions of constitutional interpretation, and even if you grant that Canada's role in the international community may have some interpretive value, it simply cannot be the case that the Courts' hands can or will be tied in context of constitutional interpretation by the conclusions of an international organization.  Canada can decide for itself whether or not meaningful freedom of association requires a right to strike.  If our Courts find that it does not, that will not abrogate from the government's international obligations to recognize a right to strike anyways...but that's kind of my whole point:  It is an *international* obligation, one that we have taken on and which is subject to our own sovereign statehood.  That alone ought not to make it a constitutional obligation.

Furthermore, I'm not certain that I agree with the conclusion that a strike is necessary for meaningful collective bargaining.  There are alternative models, including interest arbitration, for resolving irreconcilable disputes in bargaining.

There are problems with such arbitration, of course.  Firstly, defining the mandate of the arbitrator can be difficult, directing them in what factors they should consider in coming to a decision.  Secondly, widespread arbitration can result in a disconnect from free market pressures and bargaining power, resulting in wages which are either inordinately high or low with regard to market conditions, because arbitrated results tend to focus strongly on "What are other people getting?".  (That being said, negotiated results often have that dimension, too.)  Arbitration also tends to resist innovation - an arbitrator doesn't want to adjudicate something new between the parties that doesn't exist elsewhere.

Yet I'm not sure that any of these problems are such that they can be said to interfere with meaningful association by definition.  While a statute that puts economic concerns of the employer at the forefront of an arbitrator's mandate would likely do so, a balanced formulation of the mandate is not impossible.  As for the prospect of a break from market conditions, this could be built into the mandate to some extent.  Not a perfect solution, but it's hard to imagine wages skyrocketing out of control, or unionized employees suddenly becoming drastically underpaid.  And the issue of stagnation is troubling, but nor is it one-sided.  If a party wants something new and different, they can still bargain for it, and bargaining may require compromise, on both sides.  A no-strike model would likely have prevented Ford from bullying CUPE into compromising its job security provisions.

In light of Fraser, noting that no specific labour relations model is necessary, I think that the existence of no-strike alternative models which have been effectively used in some contexts will make it difficult for this decision to survive its appeals.

What next?

This will be appealed, likely all the way to the Supreme Court in time.  If it holds up, the consequences will be widespread.  Many of the current Federal government's actions will be seen as ultra vires (outside of their power), interfering with collective bargaining processes.  Back-to-work legislation in general will become presumptively unconstitutional, unless it can be justified under section 1 of the Charter.  Essential services legislation will be the same - most likely, the TTC's essential services designation will be done away with.

I don't like the approach taken by the Federal government to labour issues.  I do think that, where the government is going to step in, a fair alternative is necessary, and that has not been happening.  But, with fair alternatives available, I dislike the notion of an outright prohibition of government interference in labour disputes.  Labour disruptions can and often do have major impacts on the public interest, and I'm not laissez-faire enough to say that we should always just leave it to market pressures to decide who's right.


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.