In every non-unionized employment relationship, the employer has an implied common law obligation to give the employee reasonable notice of its intention to terminate the employment relationship, unless there is just cause for termination. If the employer fails to give the employee reasonable notice of termination, the employer risks a wrongful dismissal action for breach […]read more
Employment & Labour – Top Ten Cases of 2020
In a year like no other, there have been steady developments in the landscape of employment & labour and human rights law. Some of these developments were long anticipated, including the effect of termination on bonus compensation and the legality of mandatory arbitration clauses in the gig economy. Perhaps the most interesting cases, however, are those that relate directly to the major issues of this past year including the COVID-19 pandemic and widespread movement for racial justice and equality.
Below, we provide a summary of the top 10 Canadian decisions we believe Atlantic Canadian employers should be aware of going into 2021.
- IBEW Local 1620 v Lower Churchill Transmission Construction Employers’ Assoc. Inc., 2020 NLCA 20 [IBEW]
Accommodating cannabis use in a safety-sensitive environment: Duty to accommodate requires employer to consider all possible options. Insufficient for an employer to show that only some of the possible accommodations are unreasonable.
The grievor, a construction labourer, suffered from Crohn’s disease and osteoarthritis. To manage the associated pain, he used medically prescribed cannabis. This pain management regimen was in place when, in 2016, he applied for a labourer position on a construction project. He was hired pending satisfactory drug and alcohol screening. The grievor tested positive for drug use. Upon learning of the underlying medical reasons, the employer made numerous requests for additional medical evidence regarding his capacity to perform work safely. In the end, the employer refused the grievor employment on the ground that his medicinal cannabis use created an unacceptable safety risk. The Union grieved the decision, alleging a failure to accommodate.
The arbitrator denied the grievance on the basis that that the grievor’s position was deemed to be “safety-sensitive”, meaning that any performance limitations due to substance use could result in significant injury. The Union brought an application for judicial review to the Supreme Court of Newfoundland and Labrador. The applications judge found that the arbitrator’s decision was within the range of reasonable outcomes. The Union then appealed to the Court of Appeal and the sole question on this appeal was whether the applications judge reasonably concluded that the employer could not accommodate the grievor without undue hardship. Central to the issue is the fact that current science is not capable of assessing a person’s individual level of impairment due to cannabis use, nor can it accurately determine how recently cannabis was taken given the fact that cannabis can be detected in a person’s body long after it has been consumed.
The Newfoundland and Labrador Court of Appeal held that it was insufficient for the employer to rely on the dearth of scientific tests for impairment to discharge their onus of accommodating the grievor. The employer did not, for example, consider alternatives to scientific or medical tests such as functional assessments of the employee. The court did not purport to say that such tests would be adequate, only that all reasonable options need be considered. The Court of Appeal found that the applications judge erred in concluding that the arbitrator’s decision was reasonable as the arbitrator did not complete the necessary analysis. The matter was remitted back to arbitration for a complete and holistic analysis of the employer’s duty to accommodate. It will be interesting to see whether the arbitrator determines that accommodation without undue hardship is possible in a safety-sensitive work environment on this broadened analysis.
- Uber Technologies Inc. v. Heller, 2020 SCC 16 [Heller]
When there is a pronounced power imbalance between parties to a standard form contract, forced arbitration clauses which prevent the weaker party from meaningfully pursuing disputes will be considered unconscionable.
We previously wrote about the Ontario Court of Appeal’s decision in Uber here.
The Supreme Court of Canada’s decision in Uber expands the role of the doctrine of unconscionability in standard form contracts, particularly with respect to arbitration agreements.
By way of background, to become a driver for Uber, drivers had to accept the terms of the service agreement, which specified that all disputes with Uber were required to go to mediation and then arbitration in the Netherlands. This process involved an upfront administrative cost- to be paid by the driver- of US$14,500, amounting to nearly a year’s salary and not inclusive of other costs and legal fees.
The Respondent, Heller, was the named plaintiff in a class action against Uber Technologies seeking a declaration that drivers are employees of Uber and, accordingly, entitled to the benefits of the Ontario’s Employment Standards Act, 2000 (“ESA”). He further sought a declaration that Uber violated the ESA. While the Ontario Superior Court of Justice stayed this action in favour of arbitration, the Ontario Court of Appeal found that the arbitration clause was unconscionable. As this was a preliminary motion, Justice Nordheimer (writing for the ONCA) assumed the drivers to be Uber employees as pleaded. On this view of the arrangement, the arbitration clause was invalid as it ousted provisions of the ESA (namely its complaints procedure) out of which employers cannot lawfully contract. Justice Nordheimer allowed the appeal on this basis, noting that he also would have set the arbitration clause aside for unconscionability in forcing drivers to pursue their claims in a foreign country. Uber appealed this decision to the Supreme Court of Canada.
Notably, the Supreme Court of Canada declined to deal with the ESA argument, clarifying that the question before them was limited to who has the authority to decide whether an Uber driver is an employee- the courts of Ontario or an arbitrator in the Netherlands. On this point, the Supreme Court of Canada agreed with the Ontario Court of Appeal calling it a “classic case of unconscionability.” The Supreme Court of Canada found that both traditional elements of unconscionability were met: inequality of bargaining power and an improvident bargain. Arbitration is meant to be a cost-effective and efficient option for parties seeking to resolve their disputes, but when it is not realistically attainable by one of the parties, it “amounts to no dispute resolution mechanism at all”. This decision enables Mr. Heller to proceed with his class action against Uber.
- Lyft Canada Inc. v United Food and Commercial Workers International Union, Local 1518, 2020 BCLRB 35 [Lyft]
British Columbia Labour Review Board finds nothing prevents ride-sharing services Uber and Lyft from hiring their drivers as independent contractors; no violation of Labour Relations Code.
In a big year for ride-sharing service cases, both Uber Canada Inc. and Lyft Canada Inc. (together, the “App”) were named in an application to the British Columbia Labour Review Board (“BCLRB”) on behalf of their respective ride-share drivers, seeking a declaration that said drivers be characterized as employees of the services. This declaration is contrary to the relationship clause contained in the Lyft Terms of Service, which categorizes the drivers as independent contractors. A similar clause is contained in the Uber Terms of Service. The drivers, represented by the United Food and Commercial Workers International Union, Local 1518 (“Union”), claimed that they should be considered employees under the British Columbia Labour Relations Code (the “Code”) and that Uber and Lyft had breached their employee rights under the Code. In this respect, this case mirrors the Ontario class action pursued by Uber drivers in the Heller case discussed above.
In this matter, the BCLRB dismissed both arguments, finding that the Respondents had not disingenuously represented their business or their relationships with their drivers, at least not as far as the Union had shown. The drivers were required to agree that they were independent contractors before being able to accept riders through the service, and contractually cannot assert they are employees of the Respondents. In contrast to Heller, the BCLRB did not find that the Respondents had structured their businesses in a “disingenuous manner in order to frustrate any rights Drivers may have under the Code”. It is noteworthy that the BCLRB released their decision on Lyft three months before the Supreme Court of Canada released their decision in Heller. Had the BCLRB been informed by the Supreme Court’s finding that the power imbalance between the parties created an unconscionability issue in the contracts, their decision may have been different. It is likely that Canadian courts will see this issue arise again in light of the decision in Heller.
Employer’s duty to accommodate for alcohol use disorder is engaged despite employee’s failure to expressly acknowledge their alcohol use disorder.
The grievor was a full-time mine shaftsman at the time of his termination in September 2019. The employer, K+S Windsor Salt, terminated the grievor’s employment after he breached his Last Chance Agreement (“LCA”) put in place following a history of absenteeism. The grievor suffered from alcohol use disorder which contributed to his repeated failure to show up for scheduled shifts at the mine. He sought treatment on multiple occasions and his family physician was apprised of the situation and communicated with the employer, albeit never referring specifically to alcohol use disorder. Many of the grievor’s absences were addressed by his physician, but others went unexplained.
The employer’s substance use policy required that employees suffering from substance use disorders self-disclose in order to ensure that they benefit from the policy. The employer argued that the grievor failed to disclose his diagnosis as required by the policy. The employer further asserted that they followed proper disciplinary steps by implementing the LCA, and that the grievor’s failure to abide by the agreement justified his termination. The Union argued on behalf of the grievor that his failure to explicitly address his alcohol use disorder with the employer was a result of the stigma attached to such a diagnosis. They further submitted that the LCA failed to address the root cause of the problem. To support their argument, the employer referred to the Supreme Court of Canada’s approach to substance use in Stewart v. Elk Valley Coal Corp., 2017 SCC 30 (“Elk Valley“). In Elk Valley, the employer was held to have acted reasonably in terminating an employee with a substance use disorder due to their failure to abide by company policy.
The arbitrator distinguished the finding in Elk Valley on the basis that in that case, the employer was not aware of the substance use disorder prior to the LCA, and in this instance the employer either knew or strongly suspected that the grievor suffered from an alcohol use disorder. The grievor communicated with the employer, either directly or through his family physician, that he was attending “programs” and on at least one occasion referred to the Springhill detox program. The facts also indicate that the Union president was aware of the nature of the problem and informed the employer of that before the LCA was signed.
The arbitrator therefore found that even if an employer only suspects there could be a substance or alcohol use disorder at play, they have a duty to address that suspicion with the employee before taking any action. Despite finding there is a strong presumption in favour of enforcing LCAs, the arbitrator agreed with the Union that the LCA in question was designed to deal with the grievor’s absenteeism, but did not address the cause of the absenteeism and therefore was insufficient in the circumstances. The arbitrator found that the grievor “was doomed to breach the LCA because it made no attempt to accommodate the disability that was causing the absenteeism that so rightly concerned the employer”. As such, the employer could not reasonably expect that the grievor would be able to meet the terms of the LCA. The employer’s duty to accommodate was engaged before it entered into the LCA despite the lack of disclosure on the grievor’s behalf.
- Abrams v. RTO Asset Management, 2020 NBCA 57
Employers must be clear in their communication with terminated employees as to the cause of termination, or lack thereof.
We previously wrote about Abrams here.
Mr. Abrams was dismissed from his position as Regional Manager of a furniture and appliance leasing business in May 2017. He had commenced work with the employer nearly 30 years prior, although there was some disagreement as to continuity as Mr. Abrams had taken multiple leaves and changed positions several times during his employ. The most recent employment contract between the parties set the notice period for termination without cause to four weeks, which is the minimum under the New Brunswick Employment Standards Act (“ESA”). Mr. Abrams brought a wrongful dismissal action seeking reasonable notice under common law.
The employer argued that there was just cause for dismissal as Abrams had entered into a romantic relationship with one of his subordinates, provided her with confidential information, and had promoted her without disclosing their relationship to the employer. However, Mr. Abrams’ termination letter and Record of Employment both indicated that he was terminated “on a without cause basis”. Furthermore, he was provided four weeks’ pay in lieu of notice (in accordance with the terms of his Employment Contract and the ESA) and at his final meeting with the employer he was informed that he was being terminated without cause. Mr. Abrams argued that the employer had clearly communicated that his termination was without cause.
At trial, the motion judge found that his relationship with a subordinate would have constituted just cause for termination and therefore the employee was not entitled to reasonable notice of termination. Mr. Abrams appealed, and the New Brunswick Court of Appeal determined that the motion judge erred in finding that he was dismissed with cause when the employer had been very clear in their communications with Mr. Abrams that they were dismissing him without cause.
The court went on to consider the enforceability of the without cause termination of Mr. Abrams’s contract, and held that it was void for attempting to contract out of the benefits provided under the ESA. Since the most recent contract also did not contain a clause precluding consideration of previous years of service, the Court of Appeal found it reasonable to consider all of Mr. Abrams’ nearly thirty years of service across his various positions and awarded damages for 24 months’ notice.
This case should serve as a cautionary example for employers to take care when drafting termination letters and contractual provisions. In the meantime, leave for appeal has been filed with the Supreme Court of Canada. Stay tuned for further updates.
- Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26 [Matthews]
Employers should revisit their incentive clauses and plans, including employee stock ownership plans (ESOP), following the Supreme Court of Canadas (SCC) determination that common language is not sufficient to preclude employee entitlements under these plans over a common law notice period.
We previously wrote about Matthews here.
In short, Matthews was a senior employee at Ocean Nutrition Canada who eventually left the company, due to mistreatment by the COO. The company was sold thirteen months later, which, had he still been employed, would have triggered a payout under the employee Long-term Incentive Plan (“LTIP”). The Nova Scotia Supreme Court determined that Matthews was constructively dismissed from his senior management position and was entitled to damages equal to fifteen months’ notice, but the question was whether he was also entitled to the LTIP payout given that the sale occurred during what would have been Matthew’s notice period. The wording of the LTIP specifically excluded employees who were not employed full-time on the date that the LTIP came into effect, including those that had resigned or had been terminated. While the Nova Scotia Court of Appeal found that this language was sufficient to oust Matthews’ entitlement to the LTIP payout during the notice period, the Supreme Court of Canada disagreed.
The Supreme Court found that whether damages for breach of employment contract should include compensation for loss of the LTIP entitlement is a two-step process:
- Would the employee have been entitled to the bonus or benefit as part of their compensation during the reasonable notice period?
- If so, do the terms of the employment contract or bonus plan unambiguously take away or limit that common law right?
The SCC concluded that the language in the LTIP was insufficient to rebut the common law presumption, and held that Matthews was entitled to the LTIP payment. In order to rebut the common law presumption, contractual language must be “absolutely clear and unambiguous.” Unfortunately, the Supreme Court did not provide examples of such clear and unambiguous language but it does put employers on notice that they will be held to a high standard in clarity of language should they wish to exclude incentive entitlements over a reasonable notice period.
A global pandemic does not discharge employers from their duty to accommodate.
COVID-19 has left no area of law untouched, and employment law is no exception. United Steel involved an employee of a steel manufacturing plant in Sault Ste. Marie impacted by the mandatory quarantine order. The grievor is a dual citizen of Canada and the United States, and a single father to two children, both living in the United States. Although the grievor was exempt from the federally mandated self-isolation period as an essential worker, the employer implemented its own 14 day self-isolation policy independent of the one implemented under the Quarantine Act. The employer’s policy was implemented under the authority of the Ontario Health and Safety Act, which stipulates that employers must take every reasonable precaution to protect their employees.
The grievor therefore had to choose between either continuing to attend work or maintaining access to his children during a global pandemic. The Ontario arbitrator weighed the grievor’s argument that the policy was unreasonable and violated his right to equal treatment on the basis of family status against the employer’s argument that the policy was reasonable in the circumstances, given the high infection rates in the United States.
The arbitrator determined that, on the evidence, the employer’s COVID-19 policy was arbitrarily applied. The evidence revealed that some employees had spouses who worked in the United States but otherwise lived in the same home, and these employees were not subject to the self-isolation requirement despite having the same exposure risk. The arbitrator found that the employer had failed to reasonably accommodate the grievor, and could have found alternative work arrangements to limit contact with other co-workers. The arbitrator also determined that as part of the agreement to allow the grievor to continue to work without isolating, it would be reasonable to limit the grievor from travelling within the United States to any COVID-19 “hot spots”. Facing an unprecedented modern health crisis, the arbitrator in this decision was able to find a balance between individual employee family-status rights and the health and safety of the workplace.
Consent to sexual activity is vitiated when one party uses their position of power, such as a supervisory position, over the other party in order to convince them to give consent.
The Applicant, known as NK, was a Direct Care Worker at two group homes for people with disabilities owned by Alan Stewart Homes Limited (“Alan Stewart Homes”). Over the course of her employment, the Applicant alleged that she was sexually harassed, propositioned, and assaulted by the Respondent who was also her supervisor at her first group home, violating her right to equal treatment without discrimination based on sex, right to freedom from harassment in the workplace based on sex, and right to be free from sexual solicitation. The Applicant reached an agreement with Alan Stewart Homes with respect to the matter and withdrew her claim against them. The Respondent, Botuik, never responded to the application and therefore forfeited his right to notice and participation.
The Applicant was a single mother who had a history of abuse by older men and substance use disorder, the latter of which she had worked hard to overcome. She was pleased to have secured employment with Alan Stewart Homes but immediately found herself subject to unwanted attention from her supervisor, the Respondent Botuik. He made it clear to her that important decisions related to her position, such as scheduling, fell to him alone. The Applicant testified that the Respondent initiated sexual contact with her, with increasing intensity, over the course of her employment, always ignoring her objections and reminding her that he was a very important part of the company and had a lot of power. Once her three-month probationary period ended, the Applicant immediately applied for a position at a different group home and was transferred. When she finally attempted to tell the Respondent that she was ending their relationship, he became violent and sexually assaulted her in her home, then left her and filed a police report against her for assault.
Shockingly, NK was subsequently terminated from her employment following an investigation done by an external lawyer. The lawyer found that NK and Boutik each engaged in inappropriate conduct in the workplace and that the employer behaved appropriately at all points. The report did not find any violation of a harassment or workplace safety policy as it concluded the relationship between NK and the Respondent was consensual. Despite being directly referenced in a letter NK wrote to Alan Stewart Homes, there was no mention of the sexual assault in the investigative report. The matter with Alan Stewart Homes was settled ahead of the hearing so, unfortunately, we will not know the extent of liability that may have been found, if any.
However, the Human Rights Tribunal of Ontario found several clear violations of the Ontario Human Rights Code by the Respondent Botuik. The Respondent’s wielding of his position with the company in order to force the Applicant into a sexual relationship with him vitiated any consent that the Applicant may have appeared to give. Despite the fact that the (final) assault did not occur at the workplace, it was still a consequence of the forced relationship that resulted from the Respondent leveraging his position over the Applicant.
Notably, NK sought compensation of $100,000 but was awarded $170,000 due in large part to the uniquely egregious nature of the harassment and culminating assault.
In assessing defenses to an injunction based on defamatory statements against an employer alleging racism, the experiences of racialized peoples should be given appropriate consideration.
Sole Cleaning pertains to the ability of employees to publicly criticize their former employers. The employer brought a motion for an injunction against a terminated employee who had accused them of racist acts by posting on her social media accounts. Ms. Chu was one of eight employees at the shoe and handbag cleaning business owned by the employer, and her employment was terminated in June 2020. The employer claims Ms. Chu was terminated for her hostile attitude and damage done to a customer’s shoes, but Ms. Chu claims her termination stemmed from her support of the Black Lives Matter (“BLM”) movement.
Following the start of the global BLM protests in May, Ms. Chu alleged that she encouraged her employer to make a statement in support of the movement. Although the employer agreed to do so, Ms. Chu argued that they were largely dismissive of the issues and that their actions were performative at best. Ms. Chu argued that not only were all of the employees of the business “BIPOC” (Black, Indigenous, and/or People of Colour) as opposed to the two owners who were both white, but that the majority of Sole Cleaning’s customers were BIPOC with the employer relying heavily on the business of their BIPOC customers.
Following her termination, Ms. Chu posted a number of statements on her Instagram and Twitter accounts. The statements alleged that she had been unjustly terminated from her employment for supporting the BLM movement, that the employers were racists and had used racist epithets, that the employers did not care about Black people and only wanted to profit off of Black culture, and that they treated their BIPOC employees poorly. In response to these social media posts, most of the other employees quit, and the business was subject to negative attention in the media. Sole Cleaning sought injunctive relief to stop Ms. Chu’s statements that alleged racist behaviour.
The Ontario Superior Court Justice noted that only five cases across Canada were cited as granting injunctive relief in similar situations, making it a rarely acceptable remedy. In contemplation of Ms. Chu’s defence of justification and fair comment, the judge elected to consider all of the evidence as a whole, including a number of hearsay statements included in Ms. Chu’s affidavit, as part of a contextual approach. The judge highlighted the duty of the court to consider “the experiences of racialized persons and how their experiences can be seen through a lens that differs from those of us who are not members of racialized communities”. On the defence of fair comment, the legal test is whether any person could honestly express the same opinion on those facts, and the court found that the lived experience of BIPOC cannot be ignored when assessing the objectivity component of the fair comment test, especially when dealing with allegations of racism. While the employer’s argument could succeed at trial, the judge could not find that the defences raised by Ms. Chu would inevitably fail and therefore the injunction was not granted and the motion was dismissed.
This case will be one to follow as the defamation case proceeds to trial. In the meantime, it serves as a cautionary example to employers considering similar action.
Ontario Court of Appeal holds that employment contracts, and especially termination clauses, are to be read as a whole, therefore if one clause is statutorily invalid, all are invalid, regardless of which clause was actually applied.
In Waksdale, a short term employee was terminated on a without cause basis. Pursuant to his employment contract – which contained the standard with and without cause termination provisions, he was provided two weeks’ pay in lieu of notice.
Following the termination, the employee commenced a wrongful dismissal action against the employer. In response, the employer argued that the employee was terminated pursuant to the without cause provision. The employee argued that while the “without cause” provision was valid, the “for cause” provision was not, as it attempted to contract out of the ESA. The employee submitted that the two provisions must be read as a whole, rendering both provisions unenforceable. The Ontario Superior Court of Justice agreed with the employer that the without cause provision was valid and could stand on its own.
On appeal, the Ontario Court of Appeal found that the motion judge had erred in interpreting the employment contract, and that individual termination provisions should be read together rather than on a piecemeal basis. If one termination provision is in violation of the ESA, then the whole employment contract is void regardless of whether the termination was effected under the enforceable provision. The fact that the employee was terminated under the enforceable provision was of no consequence to the court – the only relevant question was the enforceability of provisions at the time the agreement was executed. In their decision, the Ontario Court of Appeal also considered the power imbalance inherent in the employee/employer relationship, declining to avail themselves of the severability clause for a provision that attempted to contract out of the ESA.
The employer sought leave to appeal to the Supreme Court of Canada. While employers should stay tuned for further developments, those who intend to limit employee rights on termination without cause should be careful in ensuring all of the termination provisions of the employment contract are compliant with applicable legislation.
This article was written with assistance from Erin Mitchell, an Articled Clerk in Cox & Palmer’s Halifax office.