Thoughts from a Management Lawyer

Supreme Court of Canada Considers Random Alcohol Testing

Check out our Labour and Employment Law Alert that reviews the Supreme Court of Canada judgment in Communications, Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp Paper, Ltd. released on July 14, 2013 in which the Court considers random alcohol testing under a comprehensive Alcohol and Drug Use Policy.  

The Duty to Mitigate Can Have Harsh Consequences

In my last post I discussed the employee's duty to mitigate in highly unusual case.

The duty to mitigate is an important issue in most wrongful dismissal cases.   The issue was recently discussed by the Supreme Court of British Columbia in Koenig v. Brandt Tractor Ltd.,2013 BCSC 920. 

In this case, the employee was employed by the defendant as its Parts Manager at its Vernon branch. This is a position he held since 2004.  He had been employed since 1987.  The employee was given notice of termination on January 9, 2009.  He was given 9 ½ months of working notice.  Mr. Koenig found secured comparable alternate employment on April 26, 2010.

The plaintiff claimed that his employer failed to provide him with reasonable notice of termination.  

The employer took the position that the plaintiff failed to mitigate when he refused to consider a possible offer of employment.  According to the Court:

Mr. Jones thought that Mr. Koenig would be “ideal”.  He contacted Mr. Koenig in June or July 2009 to ask if he was interested in the position of Parts Manager at Freightliner.  He believes that he described the compensation and benefits to Mr. Koenig.  He told Mr. Koenig that Freightliner was very interested in hiring him.

Mr. Koenig expressed no interest.  Mr. Jones deposed that if the plaintiff had shown interest, he would have offered him the job.  He had authority to do so.  No interview process or reference checks would be necessary because Mr. Jones knew Mr. Koenig. 

It would seem that the plaintiff declined to pursue the opportunity because of concerns he had with certain practices that he suggests he reported.  However, the individual to whom he allegedly reported the concerns explained that when he asked for information and particulars about the concerns he did not provide any.  

The Court summarized the law relating to the duty to mitigate:

The onus is on the defendant to establish a failure to mitigate: Red Deer College v. Michaels (1975), 57 D.L.R. (3d) 386.  The nature of the duty was described in Smith v. Aker Kvaerner Canada Inc. and Kvaerner Power Inc., 2005 BCSC 117 at para. 31:

In seeking and accepting alternative employment, the plaintiff has a duty to act reasonably and to take such steps as a reasonable person in the plaintiff’s position would take in his own interest to maintain his income and his position in his industry, trade or profession.  The duty involves a constant and assiduous application for alternative employment, an exploration of what is available through all means ....

While the law does not "require" (to use the words of the court) the plaintiff to pursue any particular employment, there may be implications on a damages claim where the terminated employee fails to do so.   In this case, the plaintiff raised "reservations" in pursuing the employment opportunity in question. This was found to be unreasonable in the circumstances and resulted in an adverse finding to the employee. 

According to the Court "if he had taken the job, as he reasonably should have, then he would have suffered no loss of income".  

The claim was dismissed.

While the defendant bears the onus of establishing that the plaintiff failed to mitigate, and while it is a heavy onus, it is not one that is insurmountable.  Employers should compile a variety of evidence of comparable employment opportunities to assist in demonstrating that the employee failed to mitigate. The  Koenig case is an excellent example of how a dilligent and thorough investigation can meet the onus.

 

 

When is a Dismissal a Dismissal?

The BC Court of Appeal in  Allen v. Ainsworth Lumber Co. Ltd., 2013 BCCA 271 recently affirmed a trial judgement that found that an employee who was advised that he was relieved of his duties, and to "go home" while the employee paid him had been dismissed and was not required to mitigate his damages.  

When he found work, during the 15 month period, at remuneration greater than that which he made in his former employment, his former employer ceased payments to him.  He sued.  The central issue was whether the employee was terminated when he was "relieved of his duties" or whether he was "constructively dismissed" and obliged to mitigate.  The Court summarized the argument as follows:

[The employer] submits those findings cannot support a conclusion that its withdrawal of [the employee’s] duties on October 14, 2009 represented a clear and unequivocal termination of his employment contract that day. Instead, [the employer] says that letter placed [the employee] on working notice for 15 months. It accepts that the concurrent removal of his employment duties constituted a repudiation of his employment agreement, but says this alone did not terminate that agreement. The consequences of the repudiation depended on [the employee's] response to it. If he did not accept it, he could claim he was constructively dismissed and sue for wrongful dismissal in accord with the principles affirmed by the Supreme Court in Farber v. Royal Trust Co., [1997] 1 S.C.R. 846

The Court of Appeal found that, in the circumstances, the employee was dismissed on October 14, 2009 when he was relieved of his duties, and that he was entitled to 15 months salary and benefits in lieu of notice.  

The Court pointed out, and this comes from the trial judgment, that "the parties revised his employment contract to improve the severance provisions in his favour: in the event of termination without cause, [the employee] would receive either 15 months’ salary and benefits, or “pay in lieu”." 

The Court of Appeal observed:

[The employee's] employment agreement did not impose a duty to mitigate, and the trial judge properly found he was therefore entitled to the balance owing for 15 months’ salary and benefits in lieu of notice as damages for breach of contract

This is consistent with the recent decision of the The Ontario Court of Appeal in Bowes v. Goss Power Products Ltd., (2012) ONCA 425 (CanLII).  

The case is interesting and highlights the need for clarity at the point of termination and in employment contracts.  While there are a great many reasons for relieving someone of their continued obligations to attend at work, it is important to deal with "what happens" if the employee secures employment during the severance period and not leave that to legal argument.  Furthermore, careful drafting at the front end, at the time of hiring when good will is at its highest, can often avoid costly litigation.  That said, in this case, as the trial judge pointed out, the amendment to the employment agreement described above, was negotiated in the context of "the company’s uncertain future and the consequent risk to [the employee's] continued employment", and that context is important on a practical level in understanding the contract.  

Hat tip to Greg Gowe for alerting me to this case.  

 

Reprisals Under the Employment Standards Act, 2000

This is the second in a (broken) series of posts about reprisals.  This time, reprisals under section 74 of the Employment Standards Act, 2000 which reads as follows:

No employer or person acting on behalf of an employer shall intimidate, dismiss or otherwise penalize an employee or threaten to do so, 

(a)  because the employee,

(i) asks the employer to comply with this Act and the regulations,

(ii) makes inquiries about his or her rights under this Act,

(iii) files a complaint with the Ministry under this Act,

(iv) exercises or attempts to exercise a right under this Act,

(v) gives information to an employment standards officer,

(vi) testifies or is required to testify or otherwise participates or is going to participate in a proceeding under this Act,

(vii) participates in proceedings respecting a by-law or proposed by-law under section 4 of the Retail Business Holidays Act,

(viii) is or will become eligible to take a leave, intends to take a leave or takes a leave under Part XIV; or

(b) because the employer is or may be required, because of a court order or garnishment, to pay to a third party an amount owing by the employer to the employee.

The onus rests on the employer to demonstrate that it did not contravene the Act. 

The purpose of these provisions is to ensure that employees can pursue their statutory rights without fear of adverse employment consequences.

The Ontario Labour Relations Board (the “Board) recently considered the reprisal provisions in Mucollari v 1196811 Ontario Limited (Il Gabbiano Ristorante), 2013 CanLII 21009 (ON LRB). 

A long-term employee claimed that his employer had terminated his employment as a reprisal for having exercised certain rights, including filing a complaint, under the ESA.  The employer denied that there was a reprisal. 

The Employment Standards Officer (the “Officer”) held that a termination had taken place and awarded termination pay to the employee under the Act calculated on the basis of the complainant’s earnings in the 12-week period immediately preceding the termination, but declined to find a reprisal in the circumstances.

The background to the case is not complicated.

On April 8, 2011, there was a heated argument between the owner of the restaurant and the applicant in which the owner acknowledged using inappropriate language.  On April 9, 2011 the owner informed the applicant that his hours were being reduced by 50% for one week as discipline for not following his direction.

The complainant informed the owner on April 13, 2011 that he had filed a human rights complaint and a complaint under the Act with the Ministry of Labour in respect of payment of overtime. 

The complainant testified that:

…. the following week, until the termination of his employment his schedule was reduced from working three evening shifts to working two shorter dinner shifts.  [the applicant] provided copies of the restaurant’s schedule which corroborated his testimony. [the applicant] testified that he supplemented his hours by picking up additional shifts from other members of the staff.

The company paid the overtime claim in July 2011 and appears to have had some discussion with the Officer about terminating the complainant’s employment and the timing of a termination.  Following the resolution of the overtime claim, the complainant kept threatening “that he would make further claims against the restaurant”.

The incident that ultimately gave rise to the case was summarized by the Board as follows:

[The appliant] planned to take vacation time during the first week of August 2011.  [The appliant] testified that he followed the restaurant’s usual practice of requesting vacation by leaving a note on the schedule for the manager ....  Following his vacation when [the appliant] called the restaurant to inquire what his schedule was for the following week, he was told that [the owner] had erased [the appliant's] name from the schedule.  [The appliant] was provided with an undated letter which stated “Your services at Il Gabbiano are no longer need (sic) with us.”.

The employer took the position that the complainant was terminated for having taken vacation after the request had been denied.

Following the termination, the complainant testified that he found other employment between August 2011 and December 2011 and then collected employment insurance until August 2012. 

The complainant appealed the Officer’s decision to the Board.  There were two (2) issues before the Board:

1. Had the employer engaged in a reprisal contrary to section 74 of the Act; and
2. Should the award of termination pay be increased since it was based on the fact that the complainant’s hours had been decreased in the 12 weeks prior to the termination.

 Reprisal

As noted above, the Act specifically places the onus on the employer of establishing that the conduct complained of was not a reprisal.

The employer’s position was that the 50% reduction in shifts following the April 2011 altercation was a disciplinary response and that the ongoing reduction in shifts and the termination of the complainant’s employment was due to a decline in business.

However, the Board was concerned as the employer had also testified that the complainant’s employment was terminated because he went on vacation without permission and, further, that he had discussed with the Officer the possibility and timing of a termination. 

The complainant noted that he had followed the usual procedure regarding the taking of vacation and that he never spoke with the owner and, of course, the employer never denied his request to go on vacation. 

In addition, the timing of the decision (possibly more than anything else) was of concern to the Board:

[The appliant's] employment was terminated approximately two weeks after the employer settled [The appliant's] initial MOL claim for overtime pay.  [The owner] testified that the [Officer] had told him that [The appliant's] employment could not be terminated until the MOL had concluded its investigation.

 In assessing whether the conduct amounted to a reprisal, the Board confirmed that if any part of a decision “was made as a result of the employee engaging in a protected activity, then the decision is tainted and a violation of the Act will be found”.  

While the Board did not discuss this, the Ministry of Labour Policy and Interpretation Manual has adopted a four-part test for determining if a reprisal has taken place:

Step 1. Is the person alleged to have committed a reprisal the employee's employer or a person acting on behalf of the employee's employer?

Step 2. Did the employer or person acting on behalf of the employer intimidate, dismiss or otherwise penalize or threaten to intimidate, dismiss or otherwise penalize the employee?

Step 3. Did the employee engage in any of the protected activities set out in clause 74(1)(a) or was the employer required by a court order or garnishment to pay an amount owing to the employee over to a third party as described in clause 74(1)(b)?

Step 4. Did the employer or person acting on behalf of the employer intimidate, dismiss or otherwise penalize or threaten to intimidate, dismiss or otherwise penalize the employee because he or she engaged in the protected activities described in clause 74(1)(a) or because of a situation described in clause 74(1)(b)?

The Board found that the employer had engaged in a reprisal and awarded damages for the period between the complainant’s termination and the date on which he secured other employment.  However, since the applicant found work immediately after his termination, he suffered no loss and no damages were awarded. 

The Board awarded the complainant $3,248.50 representing compensation for “loss of opportunity of continued employment”. 

The Board declined to award any damages for out-of-pocket expenses and emotional pain and suffering because of a lack of evidence. 

Termination Pay

The Officer awarded termination pay calculated based on the complainant’s earnings in the 12 weeks prior to the date of termination.  The earnings had been reduced by reason of the cut in hours. 

The Board held that “ Mr. Mucollari’s termination pay should be based on his schedule prior to the reduction in his hours.  The employer should not be allowed to benefit from his reprisal by illegally reducing Mr. Mucollari’s hours and then having termination pay calculated on those hours.”

The applicant should have received $2,702.76 representing termination pay and vacation pay thereon.  From this was deducted what he had already been paid and the Board found that he was entitled to a further $1,320.47.

Conclusion

Timing can really swing the decision-making pendulum in one direction or another.  The Board, in the recent case of Frances Eleanor Elie v. Rainone Construction (2007) Limited and Director of Employment Standards, (2013) CanLII 14073 (ON LRB) put it this way:

A termination that follows shortly after an employee’s engagement in a protected activity under the Act raises suspicions. 

No question that timing and optics are critically important here as elsewhere in employment law.  That being said, timing is not determinative and the suspicion can be rebutted through clear evidence that the decision to, for example, terminate, had nothing to do with the section 74 elements. 

In any termination or discipline case the employer should be able to answer the following questions:

1. Why are we terminating?
2. Why this employee?
3. Why now?

Objectively, dispassionately and honestly answering these questions before implementing the decision, can help avoid some heartache if challenged.  

Employers are always advised to proceed with care and thought when dealing with any employment situation, but especially where there are factual complexities present.  While the damages awarded in Mucollari might seem small, that was because the applicant found work almost immediately after being terminated. There is broad remedial authority under the reprisal provisions that can be significant.  

 

 

 

 

 

 

 

 

 

A Milestone Blog Anniversary That, Not Surprisingly, I Missed

I just realized that I've been writing this blog for 10 years.  While I honestly don't pay all that much attention to these sorts of things, I can't believe where the time has gone.    

I have tried to resist the temptation to take a walk down what has proven to be a long memory lane, but I will make a brief comment.  When I started this blog on May 1, 2003 (and I vividly remember agonizing about hitting the "Post" button) legal blogging was in its infancy. We viewed blogging as an end in itself, rather than a means to an end.  We collaborated, we shared ideas, we gave credit, we made mistakes and we learned from them and from each other.  It was, to quote my kids "good times".  

None of us really understood it, at least I didn't, nor did we think of all the rewards (personal and professional) that would come from blogging.  Those just came in the fullness of time and when they did it provided some encouragement to continue (and all of the "old timers" as Mike Fox has called us, have no doubt thought of "hanging it up" especially as legal blogs proliferated and the space became crowded).  

When I started this blog, there were less than a handful of labour and employment blogs (Jottings By An Employer's Lawyer was the inspiration for this blog, and George’s Employment Blawg as well as Ross' Employment Law Blog).  Now, everyone seems to write or contribute to a blog.  This is the natural evolution of things, I suppose, and we are the beneficiaries of a tremendous amount of information and knowledge that is freely given. I certainly have learned an awful lot from other lawyer blogs, and will continue to do so.   

I recall being asked, in those early days, by many, many incredulous people (including journalists and other lawyers) whether I thought blogs were a "fad".   I found this question to be odd.  I had no idea if blogs were a "fad", but really I didn't care because I was doing it for me and so long as I enjoyed it, I'd continue.  If I stopped enjoying it, that would be the end of it, and I'd move onto something else.  If others found something interesting or of value in what I wrote, that was great and I was pleased. Clearly, with the benefit of hindsight, legal blogs are  not a "fad".    To the contrary.

While I don't post as often as I once did, it's not for lack of interest or things to write about, but for lack of time.  I really do hope to be able to continue this blog for many years to come and would like to thank all those who wander by for their patronage over the years.  It is much appreciated and though I truly do write this for my own benefit, I am grateful when, from time to time, I hear that others have found some of the information here of use to them.

 

Ministry of Labour Releases OHS Supervisor Workbook and Employer Guide

The Occupational Health and Safety Act is built upon the Internal Responsibility System.  Put colloquially, health and safety in the workplace is everyone's business.  

Supervisor have a key role and responsibility under the legislation and the Ontario Ministry of Labour has just released the “Supervisor Health and Safety Awareness in 5 Steps” Workbook and Employer Guide”.  

The Workbook and An Employer Guide to Supervisor Health and Safety Awareness in 5 Steps (the link to the PDF version is inactive at the time of writing) provide some useful resources for employers in meeting their obligations under the Act. 

According to the Ministry of Labour:

Supervisor Health and Safety Awareness in 5 Steps is a component of a suite of products that is being developed by the Ministry of Labour to meet our commitment on mandatory health and safety awareness training in the workplace. The other components include an awareness poster, the Worker Health and Safety Awareness in 4 Steps workbook and employer guide, and e-learning modules.

These are important tools for employers and the Ministry is to be commended for making them available.

Reprisals under the Human Rights Code

The next two posts will deal with reprisals under statutes (specifically the Human Rights Code and the Employment Standards Act, 2000).   

The cases I will discuss are recent and were decided in favour of the complainant.  They provide important lessons for employers.  

The first case arises under the Human Rights Code.  The Tribunal in Morgan v. Herman Miller Canada Inc., (2013) HRTO 650 (CanLII) considered, among other things, the reprisal provisions in the Code.  The case related to claims of alleged discrimination and harassment with respect to employment because of colour and reprisal.

The Applicant worked for the Respondent for approximately 2.5 years as a Installation Scheduler.  He named, as a respondent, the President of Workplace Resource a division of Herman Miller.

The Tribunal summarized the allegations as follows:

1.    That the applicant was assigned tasks outside of his job description (the “discriminatory allocation of tasks”), including:

• • That the applicant was routinely required to work outside regular business hours, including having to respond to emails and his pager; and
  • That he was assigned menial tasks and that as a black man “Mr. Fermo believed that it was the applicant’s duty to act like a janitor or a moving man” and as a “servant”.

2.    That the applicant was unfairly put on probation because of an incident that occurred in May 2008 and that thereafter he was ignored and treated in an adverse manner by [the individual respondent] because he was a “black man”. The applicant further alleges that he was alienated by the entire management team (the “probationary incident”);

3.    That the applicant raised a human rights issue in the winter of 2008 with respect to an email that was sent about an installation team that stated that the team looked like they were “picked up off a street corner”. The applicant alleges that this was a discriminatory comment because the installation team was “all black” (the “email incident”); and

4.    That when the applicant complained about the “mistreatment instead of passively accepting the demeaning role that they wanted me to take”, no one at Herman Miller got back to him and then his employment was terminated as a reprisal.

The Tribunal reviewed the evidence, in detail with respect to each allegation and concluded that there was no breach of the Code whatsoever in respect of the matters found at (1) to (3) above.  There was no basis to find in favour of the Applicant on those points. 

The Tribunal then examined the evidence regarding the termination of the Applicant's employment and the various “version of events”.  In the end, the Tribunal found that:

... the decision to terminate the applicant’s employment was made as a reprisal because the applicant claimed his Code rights by raising issues of harassment and discrimination in his workplace.  I also find that the respondents failed to adequately address, or take any steps in response to, the applicant’s allegations of discrimination and harassment.

With respect to the issue of adequately responding to complaints under the Code the Tribunal referenced its earlier decision in Laskowska v. Marineland of Canada Inc. 2005 HRTO 30.  In this case, the Tribunal affirmed, citing Moffatt v. Kinark Child and Family Services, [1998] O.H.R.B.I.D. No. 19:

Human rights jurisprudence has established that an employer is under a duty to take reasonable steps to address allegations of discrimination in the workplace, and that a failure to do so will itself result in liability under the Code: Dhillon v. F.W. Woolworth Company (1982), 3 C.H.R.R. D/743; Olarte v. DeFilippis and Commodore Business Machines Ltd. (1982), 3 C.H.R.R. D/1705; Persaud v. Consumer’s Distributing Ltd. (1990), 14 C.H.R.R. D/23.

 .... The duty to investigate is a “means” by which the employer ensures that it is achieving the Code-mandated “ends” of operating in a discrimination-free environment and providing its employees with a safe work environment. 

Once the Code is engaged, the employer owes a duty to “reasonably and adequately respond to the alleged incident”.  But what does this mean?  The Tribunal in Laskowska  distilled the obligation down to three criteria:

1. Awareness of issues of discrimination/harassment, Policy, Complaint Mechanism and Training: Was there an awareness of issues of discrimination and harassment in the workplace at the time of the incident? Was there a suitable anti-discrimination/harassment policy?  Was there a proper complaint mechanism in place?  Was adequate training given to management and employees;
2. Post-Complaint: Seriousness, Promptness, Taking Care of its Employee, Investigation and Action:  Once an internal complaint was made, did the employer treat it seriously?  Did it deal with the matter promptly and sensitively?  Did it reasonably investigate and act; and
3. Resolution of the Complaint (including providing the Complainant with a Healthy Work Environment) and Communication:  Did the employer provide a reasonable resolution in the circumstances? If the complainant chose to return to work, could the employer provide her/him with a healthy, discrimination-free work environment?  Did it communicate its findings and actions to the complainant?

The Tribunal in Morgan concluded that the Respondent failed to “act reasonably in addressing the applicant’s allegations of Code-related harassment and discrimination in an adequate and appropriate manner.”

On the issue of reprisal, the Tribunal accepted, relying on Noble v. York University, 2010 HRTO 878 that the following elements had to be established to make out the claim:

1. An action taken against, or threat made to, the complainant;
2. The alleged action or threat is related to the complainant having claimed, or attempted to enforce a right under the Code; and
3. An intention on the part of the respondent to retaliate for the claim or attempt to enforce the right.

In addition, the following principles are relevant:

1. There is no strict requirement that the complainant has filed a complaint or application under the Code, and
2. There is no requirement that the Tribunal find the respondent did in fact violate the complainant’s substantive rights to be free from discrimination.

Following an assessment of the evidence, including the credibility of the witnesses, the Tribunal found that the Applicant’s employment was terminated as a reprisal “ because the applicant claimed his Code rights by raising issues of harassment and discrimination in his workplace”  

The Tribunal ordered:

1. Compensation for Lost Wages and Benefits in the amount of $55,799.70, less deductions.  There appears to have been no evidence called with respect to the Applicant’s benefits loss and such claim was denied.
2. Compensation for injury to dignity, feelings and self-respect in the amount of $15,000 were awarded.  The Tribunal considered the objective seriousness of the conduct and the effect on the particular applicant who experienced discrimination in arriving at this amount.  
3. Future compliance remedies were also awarded in this case.  Specifically, the tTribunal ordered the employer to “retain an expert in human rights, of its choosing, to review its human rights policies and to train all of its current employees holding the rank of manager or higher and those employed in human resources who perform work in Ontario with respect to the revised human rights policy, the Code and how to respond to allegations of harassment and discrimination.”
4. The individual Respondent was no longer employer by the Corporate Respondent and was ordered to complete the Human Rights 101 eLearning Module prepared by the Ontario Human Rights Commission.

This is a significant case and one that demonstrates that employers who become aware of possible human rights issues must act with diligence and dispatch and, to use the words of the Tribunal “reasonably and adequately".  Furthermore, reprisal complaints can be costly.

 

 

Should I Stay or Should I Go? The BCCA Weighs In

While easy to express, the test for determining whether a particular change in the terms of employment amounts to a constructive dismissal is practically complicated.  Furthermore, under what circumstances is an employee required to remain at work under the altered employment terms in mitigation of his or her damages arising from a constructive dismissal?

These issues were very recently considered by the British Columbia Court of Appeal in Piron v. Dominion Masonry Ltd., 2013 BCCA 184 (CanLII).  The trial judgment is found here.

The plaintiff alleged that he had been constructively dismissed when his remuneration was reduced by his employer during the course of the last two projects he was assigned to work on. Dominion argued that Mr. Piron was not constructively dismissed, resigned his employment and, in any event, failed to mitigate his damages by continuing his employment with the Dominion at the level of remuneration offered at the time he left the company.

The Trial judge held in favour of Mr. Piron.  Specifically, the court found that Mr. Piron had been constructively dismissed, that he was entitled to a common law reasonable notice period of 15 months and was awarded damages based on his base wages.   The trial judge refused to award damages in respect of unpaid bonuses in the period leading up to the constructive dismissal and during the notice period.

Dominion appealed and Mr. Piron cross-appealed.

The Court of Appeal reversed the Trial Judgment on the awarding of the bonus issue, but dismissed Dominion’s appeal.

In doing so, the Court reviewed the law of constructive dismissal and the applicable test found in the Supreme Court of Canada judgment of Farber v. Royal Trust Co. [1997] 1 S.C.R. 846:

[I]t has been established in a number of Canadian common law decisions that where an employer unilaterally makes a fundamental or substantial change to an employee’s contract of employment – a change that violates the contract’s terms – the employer is committing a fundamental breach of the contract that results in its termination and entitles the employee to consider himself or herself constructively dismissed.

The Court of Appeal distilled this as follows:

As I see the matter, a unilateral fundamental or substantial change to an employment contract is a fundamental breach which is tantamount, when viewed objectively, to the employer evincing an intention not to be bound by the contract.

The Court agreed with the Trial judge in concluding that, in the circumstances, Mr. Piron had been constructively dismissed.

On the issue of mitigation, and specifically remaining with the employer in the altered position, the Court considered the Supreme Court of Canada judgment in Evans v. Teamsters Local Union No. 31[2008] 1 S.C.R. 661:

Where the employer offers the employee a chance to mitigate damages by returning to work for him or her, the central issue is whether a reasonable person would accept such an opportunity.  In 1989, the Ontario Court of Appeal held that a reasonable person should be expected to do so  “[w]here the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships involved are not acrimonious” (Mifsud v. MacMillan Bathurst Inc. 1989 CanLII 260 (ON CA), (1989), 70 O.R. (2d) 701, at p. 710).  In Cox, the British Columbia Court of Appeal held that other relevant factors include the history and nature of the employment, whether or not the employee has commenced litigation, and whether the offer of re-employment was made while the employee was still working for the employer or only after he or she had already left (paras. 12-18).  In my view, the foregoing elements all underline the importance of a multi-factored and contextual analysis.  The critical element is that an employee “not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation” (Farquhar, at p. 94), and it is that factor which must be at the forefront of the inquiry into what is reasonable.  Thus, although an objective standard must be used to evaluate whether a reasonable person in the employee’s position would have accepted the employer’s offer (Reibl v. Hughes, 1980 CanLII 23 (SCC), [1980] 2 S.C.R. 880), it is extremely important that the non-tangible elements of the situation — including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment, the tangible elements — be included in the evaluation.

Although the Court of Appeal found Dominion’s arguments “attractive”, it was bound by appeal principles and specifically, that it would only overturn a trial judgment where the judge made an extricable legal error (also expressed as a “palpable and overriding error”).

On that point, the Court of Appeal relied upon the following:

1. The judge found Dominion to be unresponsive to Mr. Piron’s concerns.
2. He found it more instructive to consider the company’s actions at the time of the constructive dismissal than after the matter had been put in the hands of counsel.
3. His conclusion that the constructive dismissal involved a loss of status within the company by returning Mr. Piron to a position he had occupied many years earlier shortly after he joined the company.
4. The trial judge commented adversely on some aspects of the evidence given by the Company's witnesses.

The Court of Appeal refused to interfere with the trial judgment.

In terms of the bonus, the Court of Appeal found that the trial judge erred in failing to award unpaid bonuses prior to the constructive dismissal and through the 15 month notice period.  The Court awarded $20,000 in respect of unpaid bonuses and increase the damages for the notice period by $12,500.

 

Wilful misconduct, disobedience or wilful neglect of duty under the ESA

The Employment Standards Act, 2000 provides that an employee who is terminated for wilful misconduct, disobedience or wilful neglect of duty is not entitled to be paid statutory termination pay and, if applicable, severance pay.

The Ontario Labour Relations Board in Hallmark Housekeeping Services Inc. 2013 CanLII 14638 (ON LRB) decided on March 18, 2013 considers what an employer must establish to prove that the employee engaged in conduct that met the statutory test.

In this case an Employment Standards Officer issued an Order to Pay in the amount of $1,166.88 against the employer.  The employer applied to review this decision.  The employer attended at the hearing and the former employer did not and the hearing proceeded in his absence.

The Board reviewed a number of disciplinary notices issued to the employee for a number of performance related issues arising, in part, out of customer complaints.  Ultimately, in the course of a meeting to confront the employee about a variety of inconsistencies in the tracking and reporting documents, the employee “became hostile, confrontational and told King and Melo that they were violating several labour laws.”  His employment was terminated on March 19, 2010.  

The employer argued that the employee had been terminated for wilful misconduct, disobedience or wilful neglect and therefore was not entitled to receive termination pay under the ESA.  According to the Board:

To deny an employee termination pay the employer must establish on the balance of probabilities that the employee engaged in behaviour that constitutes wilful misconduct, disobedience or wilful neglect of duty that was not trivial and not condoned by the employer.

In VME Equipment of Canada Ltd. (Re), [1992] O.E.S.A.D. No. 230, the Referee stated:

[…] There are two general categories of serious misconduct.  There will be single acts: insubordination, theft and dishonesty, and physical violence against other employees, for instance, which may, standing on their own, meet that standard of seriousness.  As well, there will be less serious repetitive forms of misconduct, which if handled properly by the employer, will also meet this standard of seriousness.  The employer, in this scenario, must have explained to the employee after each occurrence that the conduct in question was not acceptable and that if continued would result in termination and there must be, subsequent to these warnings, a culminating incident.

In addition to proving that the misconduct is serious, the employer must demonstrate, and this is the aspect of the standard which distinguishes it from 'just cause', that the conduct complained of is 'wilful'. Careless, thoughtless, heedless, or inadvertent conduct, no matter how serious, does not meet the standard. Rather, the employer must show that the misconduct was intentional or deliberate.  The employer must show that the employee purposefully engaged in conduct that he or she knew to be serious misconduct.  It is, to put it colloquially, being bad on purpose.

The Board found that, given the un-contradicted evidence occasioned by the employees’ failure to attend at the hearing, it had to accept the employer’s evidence.  Based on that evidence, the Board concluded that the employee “engaged in a pattern of wilful misconduct despite the clear warnings to cease such behaviour.”  The Board revoked the order to pay.

This case provides a recent, albeit brief, review of the wilful misconduct exception under the ESA.  You might also be interested in Just Cause... Yes ... But ... , Oosterbosch v. FAG Aerospace Inc., 2011 ONSC 1538 (CanLII) and the more extensive discussion in Wal-Mart Canada Corp. v. Gray, 2002 CanLII 31452 (ON LRB).

Does the Court Have Jurisdiction? A Common Question in Labour Relations

Where do you go for a remedy?  This is a question I get asked frequently by my students and clients.  It is one that is sometimes difficult to answer, but with increased clarity, courts and administrative tribunals have carved out their turf and the rules that will be applied to determine whether they, or another body, hav jurisdiction to deal with the substance of the complaint.

The most recent case, is Cumming v. Peterborough Police Association, 2013 ONSC 1544 (CanLII) released on March 13, 2013.  The Police Association brought an motion to dismiss the applicant’s claim on the basis that this court has no jurisdiction over the subject matter of the action.  

The Court reviewed the statement of claim and concluded that the plaintiff “asserts, in essence, a breach of the Police Association’s Duty of Fair Representation”.  

The Peterborough-Lakefield Community Police Services Board and the Association are parties to a collective agreement which applies to the plaintiff, and the Association is recognized as the “exclusive bargaining agent” for certain employees, including the plaintiff.

Following the Supreme Court of Canada decision in Weber v. Ontario Hydro, [1995] S.C.J. No. 59 (S.C.C.), the Court nicely summarized the questions it had to determine:

The question to be determined is whether the dispute in its “essential character” arises from the interpretation, application, administration or violation of the Collective Agreement and or the legislation the Collective Agreement incorporates as part of the Collective Agreement.

In order to determine the “essential character”, reference must be made to the wording set out in the pleadings, which in this case is the Statement of Claim.

If the “essential character” of the dispute arises explicitly or implicitly, from the interpretation, application, administration or violation of the Collective Agreement, the dispute is within the sole jurisdiction of an arbitrator to decide.

This analysis must proceed on the basis of the facts surrounding the dispute between the parties and not necessarily on the basis of the way the legal issues may be framed or pled. Whether an arbitrator can hear the dispute and grant the remedies as claimed by the plaintiff, the appropriate form is for the matter to proceed by way of arbitration.

Following an analysis, the Court concluded that “the damages and relief sought by the plaintiff relate to his allegation that the defendant Police Association did not fully discharge their duty to provide him with fair representation” and the exclusive jurisdiction rested with the arbitrator.  The allegations “relate to his employment” where:

The essential character of the dispute ultimately concerns an interpretation, application, administration or alleged violation of the provisions of the Collective Agreement, and in particular the duty which [the plaintiff] claims was owed to him, to represent him in a proper and complete and fair manner.

The Court dismissed the action, in its entirety, on the basis that the Court lacked jurisdiction.

Courts will assume jurisdiction in limited circumstances where the issues arise out of the employment of a unionized employee.  They have taken an expansive, though reasoned, approach to the “essential character” analysis and have dismissed a variety of claims brought by unionized employees.  That is not to say that there are “no” claims over which the court will assume jurisdiction where a unionized employee is the plaintiff, just that there is a developed body of cases that discuss the approach they will take in deciding the jurisdictional issue.