Table of Contents

Introduction......................................................................................................................................3

Part 1: Conceptualizing the E R/ship..................................................................................................3

Part 2: Identifying Parties to the E Relationship.................................................................................3The Employment Relationship at CL...............................................................................................................................................3

Who is the EE?........................................................................................................................................................................................... 3Who is the ER?........................................................................................................................................................................................... 4

Employment Standards Act.................................................................................................................................................................5Who is an EE?............................................................................................................................................................................................. 5Who is an ER?............................................................................................................................................................................................ 5E Agencies.................................................................................................................................................................................................... 5

Problems Caused by the Sale of a Business..................................................................................................................................6Solution at CL: Novation....................................................................................................................................................................... 6Solution under the ESA.......................................................................................................................................................................... 7

Part 3: Formation of the Contract of E (Hiring)..................................................................................7Employment Contracts.......................................................................................................................................................................... 7

Advantages of written employment K’s.......................................................................................................................................... 7Disadvantages of written employment K’s.................................................................................................................................... 8Entering into an ENFORCEABLE Contract – Consideration..................................................................................................8Key K terms to consider......................................................................................................................................................................... 8

Part 4: BC Employment Standards Act...............................................................................................9What is the ESA and Why is it Important?.....................................................................................................................................9

B.C. Employment Standards Act........................................................................................................................................................ 9

Part 5: Human Rights In Employment..............................................................................................11Human Rights: Case Law and Legislation...................................................................................................................................11The B.C. Human Rights Code............................................................................................................................................................ 11

Enforcement............................................................................................................................................................................................. 11How The Legislation Works.............................................................................................................................................................. 12

SCC’s Approach to Discrimination................................................................................................................................................. 13Meiorin....................................................................................................................................................................................................... 13Martin:........................................................................................................................................................................................................ 13Duty to Accommodate Includes an Independent ER Duty of Investigation.................................................................14

TEST: Discrimination or Not?...........................................................................................................................................................15Mandatory Retirement........................................................................................................................................................................ 16

Part 6: CL and Statutory Obligations of the ER under the K of E.......................................................17Duty to Pay............................................................................................................................................................................................... 17

Statutory Regulation............................................................................................................................................................................ 17Duty to Pay an EE who is Temporarily Ill................................................................................................................................... 18

Duty to Provide Work..........................................................................................................................................................................19Statutory Leaves.................................................................................................................................................................................... 19

Part 7: CL Obligations of the EE under the K of E..............................................................................19The CL Duties on an EE....................................................................................................................................................................... 19

Discipline or Termination?................................................................................................................................................................ 19Duty of Good Faith - Honesty............................................................................................................................................................ 20Duty of Good Faith – Economic Interests.................................................................................................................................... 20

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Part 8: Terminating the E Relationship............................................................................................21Termination by the EE.........................................................................................................................................................................21

Resignation and Constructive Dismissal...................................................................................................................................... 21Constructive Dismissal........................................................................................................................................................................ 22

Termination by ER................................................................................................................................................................................ 23Cause........................................................................................................................................................................................................... 23Near Cause................................................................................................................................................................................................ 25

Part 9: Termination by Notice.........................................................................................................25Statutory Notice..................................................................................................................................................................................... 25Relationship between Statutory Notice, Reasonable Notice at CL and Express Notice Provisions..................25

Machtinger............................................................................................................................................................................................... 26Calculating Reasonable Notice.........................................................................................................................................................26

Assessment of Reasonable Notice Period and Status............................................................................................................. 28

Part 10: Calculating Damages..........................................................................................................29Damage Assessment in E Law Disputes.......................................................................................................................................29Exemplary, Punitive and Bad Faith Damages............................................................................................................................29

Wallace v. United Grain Growers.................................................................................................................................................... 29Keays v. Honda........................................................................................................................................................................................ 30

Mitigation.................................................................................................................................................................................................. 31Mifsud v. MacMillan Bathurst (1989)........................................................................................................................................... 32Evans v. Teamsters (2008)................................................................................................................................................................ 33

Reasonable Notice and other Statutory Benefits: Offsetting..............................................................................................34Determination of Damages in Wrongful Dismissal Cases where EE in Receipt of Benefits...................................34

Taxation of Damages for Wrongful Dismissal...........................................................................................................................34Releases..................................................................................................................................................................................................... 35

Enforcement – Common Law and Employment Standards Act.........................................................35Reinstatement......................................................................................................................................................................................... 35

Arbitration Agreements in the Employment K.........................................................................................................................35Class Actions............................................................................................................................................................................................ 36

Macaraeg v. E Care Contact Centers............................................................................................................................................. 36

Restrictive Covenants (RC)..............................................................................................................37Shafron....................................................................................................................................................................................................... 37

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Note:EE – EmployeeER – EmployerE – EmploymentIC – Independent Contractor

Introductiono For the most part provinces have jurisdiction over employment under property and civil rights (exceptions in

certain areas: banks, interprovincial trucking, etc.)o Equivalent to BC Employment Standards Act is Canada Labour Codeo Employment Obligations:

Express terms of a K (written/oral) Letter of offer

Implied terms of K Rationale: where parties have not addressed a matter (not in K), courts may be called upon to

determine whether parties would have agreed to something had they put their minds to it (gap filling) Most E K’s do not have express notice provision – so, CL implied reasonable notice of dismissal

Statutes Employment standard act (wage, overtime, vacation pay, holiday pay, leave) Workers Comp Labour Relations Act

Part 1: Conceptualizing the E R/shipHISTORICALLY, law held that the EE must obey all directions of “Master” o Ie. Being asked to clean the boardroom as a articling student)NOW, the law has qualified doctrine: direction must be lawful and reasonable, must be w/in scope of E o Economic Underpinnings (2 contrasting approaches):

Neoclassical (market model) – supply and demand – parties negotiate terms of K and it produces efficient result and ppl get what they deserve

Max Weber – freely negotiated K’s are not free at all – just legitimizing coercion (CP p.6) (not supply and demand)

o Presumed inequality of bargaining power – mistake in K construed by court against ER

McKinley v. BC Tel** Demonstrates how strict law of master and servant has been eroded**Facts: Employee dismissed after small lie about disability – dismissed for “cause” (or so they thought)Court held: Dishonesty is not always cause – must look at context (seriousness, nature of position, length of service, is conduct incompatible with ongoing conduct?)

Part 2: Identifying Parties to the E Relationship The Employment Relationship at CLWho is the EE? TESTS to determine whether person is an EE (vs. an IC/Consultant) (summarized in Sagaz Industries):o Control Test: Extent to which employer can instruct employee about manner to conduct work

Problem: apparent dependence on the exact terms in which the task in question is contracted for (CP p.25) Expansion of Control Test (Ready Mix Concrete): Control isn’t everything, the test has evolved

Power to decide thing to be done, way in which it shall be done, means to be employed in doing it, time in which in should be done, place it shall be done (CP p.10)

Ie. Building K – high degrees of control but still no E (Ready Mix)o The 4-fold/Entrepreneur Test (Montreal Locomotive, 1946)**most cited**

(1) Control(2) Ownership of tools

If tools supplied by the worker – indicates IC If tools supplied by the company who is paying the worker – indicates E

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(3) Chance of profit (4) Risk of loss

If yes, indicative of IC If No, indicative of E

HOWEVER, under the 4-fold test, some results indicate IC where in fact the relationship is one of EIe. Life insurance sales person: independence in way they sell policies, own vehicle for transport, paid on commission, usually don’t lose money. A strict reading of test = IC but might not meet the smell test

SO, IN RESPONSE, more tests were created…

o Organization/Integration Test: Is the individual’s work an integral part of business or is it an accessory to it (Cooperators Insurance)? K of service = E K for service = IC This test is a good test to apply to a salesperson case, where a lot of the factors point to independent

contractor, but they don’t really seem like an independent contractor because they’re so important. But this test has limits (Weib Door): they give the example of someone responsible for cleaning the premises.

They’re integral to the business, but this is usually contracted out to other businesses on their own account.o Enterprise Test: ER should bear responsibility of a tortuous act committed by EE in the course of E

Developed to deal with whether an ER should be vicariously liable for conduct of EEs Courts have said that ER’s should be vicariously liable b/c if act committed in the course of E b/c:

ER controls actions of EE ER is in a position (control) to reduce risk of loss to third parties ER benefits from the work of EE’s True cost of product/service should be born by ER

IMPORTANT Qualification conduct must have taken place in context of E

IN SAGAZ INDUSTRIES, the court reviewed the 4 existing TESTS and synthesized them into one approach: o Not one appropriate and universal test o Not all factors will be relevant all the time (except control) Sagaz/Market Investigation ApproachNo universal test, BUT a persuasive approach taken in Market Investigations: o Central question: whether person who has been engaged to perform the services is performing them as a

person In business on his own account. In making this determination, the level of control the ER has over the worker’s activities will always be a

FACTOR Other FACTORS you may consider, include (but is not limited to):

Whether worker provides his/her equipment; Whether the worker hires his/her own helpers; Degree of financial risk taken by the worker; Degree of responsibility for investment and management held by the worker; and The worker’s opportunity for profit in the performance of his/her tasks

o The weight applied to each factor will differ depending on fact pattern o Policy Rationales to consider when applying test(s):

Just and practical remedy for plaintiff’s harm Deterrence of future harms

Who is the ER? o An EE can have more than one ERo Courts may look at who the true employer is: who pays, who disciplines, who selects, how long have you been

employed there, etc.?

Downtown Eatery (Relying on Sinclair v. Dover (CP p.30))

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Facts: bartender managed a nightclub for many years. Dismissed w/out cause (severance was owed). Started claim for wrongful dismissal against the company whose name appears on pay cheque. Was successful at trial but the judgment not paid – sheriff retained to seize assets – assets seized only worth small fraction of what was owed. So the P then decides to go after sister companies (owner of liquor licence, owner of building, owner of trademark) and sues them all. Common Employer Test: do the group of companies “function as a single, integrated unit”? o Yes = all employers and all liablePolicy: Although an employer is entitled to establish complex corporate structures and relationships, a court must ensure this complexity does not result in injustice in realm of employment law.o Common Employer Test developed in statute (but now a CL test) and applied by labour relations boards to

remedy situations where ER’s could evade responsibilities to union EE’s by transferring responsibilities to another legal entity

o Contract is one factor to consider – not determinative b/c it would be too easy for ERs to evade their obligations to dismissed EEs by imposing employment K’s with shell companies with no assets

Sinclair v. Dovero Facts: Sinclair held himself out to be EE of Dover; however, paid by another company. He was wrongfully

dismissed and sued both companies. o Defendants argued: he could only have one employer. o Court held: he could have more than one employee – as long as there exists a sufficient r/ship b/w the ERs

Employment Standards Act **Outside of CL, there are also statutory protections**Who is an EE?S. 1 ESA "employee" includes:(a) a person, including a deceased person, receiving or entitled to wages for work performed for another,(b) a person an employer allows, directly or indirectly, to perform work normally performed by an employee,(c) a person being trained by an employer for the employer's business,(d) a person on leave from an employer, and(e) a person who has a right of recall;

S.1 ESREGS "manager" means:(a) a person whose principal employment responsibilities consist of supervising or directing, or both supervising and directing, human or other resources, or(b) a person employed in an executive capacity

S. 34 ESREGS Managers are excluded from minimum wage requirements under the act

Who is an ER?o ER’s free to organize their enterprises as they see fit; however, if the reason for a particular form of organization

is to avoid the statute, the arrangement has no legal effect

S. 95 ESA if the director considers that businesses, trades or undertakings are carried on by or through more than one corporation, individual, firm, syndicate or association, or any combination of them under common control or direction,(a) the director may treat the corporations, individuals, firms, syndicates or associations, or any combination of them, as one employer for the purposes of this Act, and(b) if so, they are jointly and separately liable for payment of the amount stated in a determination, a settlement agreement or an order of the tribunal, and this Act applies to the recovery of that amount from any or all of them.

E Agencieso The province regulates E agenciesS. 12 ESA:(1) A person must not operate an employment agency or a talent agency unless the person is licensed under this Act.(2) Subsection (1) does not apply to a person operating an employment agency for the sole purpose of hiring

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employees exclusively for one employer.o An employer, an employment agency, or any other person must not ask or require a person looking for a job to

pay for any services associated with finding a job, including (S. 10): giving them a job; helping them to get a job with someone else; or providing them with information about possible employment opportunities.

o ES Branch has ability to cancel or suspend a licence if in contravention of the Act (ESREGS S. 4)o Employment Standards Branch publishes the Interpretation Manual (interpreting various sections of the ESA) –

not legally binding but very valuable to practitioners

Problems Caused by the Sale of a BusinessWho will be responsible for existing obligations to EEs when an ER sells its business?

Solution at CL: Novationo Under CL ER cannot assign the K of E to another w/out the EE’s consent

Selling business essentially results in constructive dismissal of EE’s Constructive dismissal – if ER fundamentally changes the terms of the K, the EE is entitled to resign and can

treat it as a dismissal (can seek damages for wrongful dismissal) However, if new ER agrees to keep EE’s on at same wage, recognizing years of service, same job title, same

desk, etc. and the EE turns it down, they will likely not be compensated for failure to mitigateo Should benefits and liabilities be tied to the E r/ship? (Fudge Article)

Not mandatory Most benefits are tied to status as EE

Major v. Philips Electronics Ltd. (2005 BCCA) Facts: Philips purchases company from Holly and agrees to employ EE’s (recognizing length of service) – After a short time, Plaintiff (Major) has falling out with new ER and he is dismissed. o Because new ER recognized length of service with previous ER, his notice was much longero Holly offers Major 17 weeks pay in lieu of notice and he settles and signs a release – but the release did not

release Phillips o Major then sues Phillips (former ER)o Note: b/c this is an asset sale – the fact that Phillips would no longer employ him resulted in a constructive

dismissal Novation = trilateral agmt by which an existing K is extinguished and a new one brought into being in its place (National Trust Co. v. Mead)o 3 part test for determining if novation has occurred (Polson v. Wulffsohn):

1. The new ER must assume the complete liability;2. The EE must accept the new ER; and3. The EE must accept the new K in full satisfaction and substitution for the old K For novation to be made out it must be very clear under the 3 part test or clear policy reason

o Rationale for novation: EE has little to no control/bargaining power when the company they work for sells business

o Onus is on the ER to prove novationo Unless otherwise stated, the purchaser inherits the length of term of service of EE’s (CL)

Phillips argued: b/c Major had the right to sue Holly, he was precluded from suing Phillips o Court rejects this argument and holds there are 2 causes of action against :

Constructive dismissal when purported to assign E K’s Dismissal by Holly – no notice and EE had right to considerable notice Therefore, can have claim against vendor and purchaser

o However, EE cannot have double recovery: Under ESA: makes purchaser of assets responsible for EE’s rights (rights against purchaser, not vendor)

(S.97) Under Labour Relations Code: If you have a unionized workplace and you sell everything to a buyer, it is

considered successorship and buyer steps into shoes of seller

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Under CL: avoid double recovery by arranging an explicit novation

Solution under the ESAS. 97 ESA If all or part of a business or a substantial part of the entire assets of a business is disposed of, the employment of an employee of the business is deemed, for the purposes of this Act, to be continuous and uninterrupted by the disposition

When an ER sells a business the new ER must treat the EE’s as though their E is continuous, and undisturbed by the sale. The purchaser assumes the role of ER and is required to honour the employee's past service with the seller and assume all of the seller's liabilities and obligations under the Act toward the EE’s (Interpretation Guidelines)o If EE are employed at the time the business is transferred and are subsequently terminated, the purchaser is

responsible for any compensation or termination pay, or notice in lieu, calculated from the date they were hired by the original seller, and any other outstanding wages including annual vacation pay.

o When the seller terminates an employee prior to the sale of the business , any outstanding wages or compensation pay is the seller's responsibility. The employee cannot obtain any outstanding wages or compensation from the purchaser.

o If the sale of a business results in alterations in conditions of employment for the employees that are substantial, and adverse, the director may determine that they constitute a termination and, as a result, the employee is entitled to compensation under s.66 of the Act. The purchaser would be responsible for paying any subsequent compensation (constructive dismissal)

o Employees are not entitled to: compensation or notice under s.63; as applicable termination pay, or notice under s.64; as applicableWhen EE’s choose not to go to work for the purchaser, and their conditions of employment have not substantially been changed as a result of the sale (Not Mitigating)

Why sue under ESA rather than CL?o Costs nothing to make a complaint to the Employment Standards Branch and they will handle your complaint for

you (no lawyer) Reduces costs, less time consumingo However, pursuing claim under ESA means forgoing right to CL severance (which is often more generous)

Part 3: Formation of the Contract of E (Hiring)o A number of issues, from HR’s to tort law arise at the hiring stageo Majority of E K’s are oral; however, increasingly ERs are relying on written K’s to specify the rights and

obligations in the E r/ship.

Employment ContractsWell drafted E K’s represent an opportunity for ERs to limit liability and avoid problems. Written E K’s have the effect of managing the expectations of individuals as the r/ship proceeds

Advantages of written employment K’so Certainty – ER knows what bargain has been achieved and lessens the incidents of lawsuits for (legal certainty

and psychological advantages) Hours of work Notice of dismissal/severance Probationary periods Bargaining (holidays, benefits, etc.)

o Limit liability – particularly for ERo Clarify expectations – compensation, notice, etc.o Building in flexibility

Ability to change terms of E through K in ways they may not otherwise be able to do Avoids constructive dismissal (unilateral change of the fundamental terms of the agmt)

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EE may have option of treating change as a dismissal and claim for wrongful dismissal (ie. Demotion; require EE to relocate) a written K could provide the ability for ER to change location of work to anywhere in Canada

o Fix duration of r/ship Most K’s are of ongoing duration – no set termination date (implied obligation of the ER to provide

reasonable notice or severance) With a written K, ER can specify end date (ie. When winter Olympics are over)

o Limitation of promises – practical clause of advantage to ER stating that the promises contained in the written K represent all of the promises made to the EE

o Post termination obligations Unless ER bargains for protection, normally EE is able to freely work for competitor without restriction

(however, in CL can never steal trade secrets) Can negotiate a non-competition agreement (not setting up/working for competitor in a limited geographic

area for a limited period of time) Non-solicitation agmt (less intrusive than non-comp agmt) – prevents ex-EE from actively soliciting EE’s or

clients of old ER for limited period of timeDisadvantages of written employment K’so Certainty

bound and accountable for the deal Contra Preferendum - any ambiguities construed against the drafter (almost always ER’s)

Example clause: “If you are dismissed w/out cause, the ER will pay you a bonus prorated to the termination of your E”

Ambiguity b/c it is not clear whether it happens on day you find out about termination, or after reasonable notice period court would likely read in “lawful termination of E” and would construe it to include the notice period

o May cause difficulties in hiring – when demand for EE’s outweighs supply, ER may not be in a position to bargain effectively. May wish to avoid written K.

o Cost of administration – written K’s must be dealt with in a consistent and organized manner which may result in added cost

o Enforceability (**see below**) Vulnerability when K not entered properly When minimum standards not adhered to, K will become vulnerable if not entirely unenforceable Adequate consideration – was term in E agmt obtained through adequate consideration No consideration if EE has already gotten job and started working when E agmt signed (can be addressed by

giving raise on the condition that they sign the agmt) ESA – sets out basic minimums below which no EE or ER may go

s.63 deal with right to notice of dismissal or termination pay – gives formula s.4 – cannot waive requirements under act If agmt specifies a notice period that does not comply with ESA minimums, court will almost certainly do

away with the clause entirely and you will be left with CL (much more time!) Even if you have well drafted provisions in some circumstances the courts will strive to construe provisions

narrowly (policy reasons) If someone with company for 25 years and the agmt meets requirements of the act and max out

severance at 8 weeks – the court might find the “sub-stratum” of the agmt are gone (job changed drastically)

Three types of severance: ESA, something provided in K, CL if parties have not addressed it

Entering into an ENFORCEABLE Contract – ConsiderationCritical Steps ER out to undertake in implementing an enforceable E K:o EE must see and have copy of K no later than offer dateo Explanation to EE about what K meanso Record that explanation has taken place, who, and what saido Offer opportunity to obtain independent legal adviceo Don’t minimize importance of Ko Ensure signature and date by EEo Give EE reasonable time to consider K

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o If K being implemented during the course of the E r/ship, fresh and valid consideration may need to be provided to EE

Key K terms to considero Termination provisionso Resignation – opportunity to fix requirement for advanced noticeo Return of property – electronic/copied documentation is returned in event of departure from Eo Confidentiality – o Restrictive covenants

Part 4: BC Employment Standards ActWhat is the ESA and Why is it Important?The History of Employment Standards Legislation – Article p.52: o First beginnings of this type of legislation do not date back that far (late 1800’s) largely due to pressure from

labour organizations, need to protect children, need to protect women workerso Legislation establishes a floor (basic min standard ER cannot go below and EE’s cannot waive)o EE’s who are governed by collective agmts (est. 40%) vs. CL protections for well-off/comfortable individuals vs.

working poor/low wage (no collective agreement and CL does not afford much protection) Low paid domestic nanny may be better suited to file complaint under ESA rather than take the CL

court/trial/lawyer route ESA very important for large segment of population (lower income) In BC, legal aid in only available in limited circumstances (no employment matters, minimum family law

issues, and criminal charges)B.C. Employment Standards ActOverview (p.58-60)o Part 1 – Introductory

S. 4: Minimums of Act cannot be waived even if expressly agreed to in an agmt – will not be enforcedo Part 2 – Hiring EEs

Prohibitions on: Misrepresentations relating to availability of work or conditions of E Receipt of a fee from EE for hiring them Hiring children

E agencies and farm labour contractors must be licensed Domestic live-in workers must be provided with a written doc setting out the duties and hours of work

o Part 3 – Wages, Special Clothing and Records Requires all ER’s to pay min wage which is set by regulation (cannot waive) Where the ER requires the EE to wear special clothing, the ER is responsible for the provision, cleaning and

maintenance of such clothingo Part 4 – Hours of Work and Overtime

After you’ve worked 8 hours/day or 40 hours/week you are entitled to receive overtime at 1.5 times your wage (after 11 hours it is double time) (if on an annual salary, you can file complaint w/ E Standards Branch and they will break down and calculate your wage)

Most common complaint is for overtimeo Part 5 – Statutory Holidays

Day off with pay and if required to work you are paid premium pay and given another day off with pay at another time

o Part 6 – leaves and jury duty (unpaid leaves) Entitled to leaves (not optional) and on conclusion of leave you must be put back into same/substantially

similar position as before you left, ER may not change substantial term of E when you are on your leave Maternity – up to 17 weeks Parental (mother/father)– up to 37 weeks Family responsibility Bereavement Jury duty

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o Part 7 – Vacation and vacation pay Formula: 2 weeks after 1 year, etc.

o Part 8 – Termination ** SEE PART 9: TERMINATION WITH NOTICE** S.64 – group termination pay

If w/in 60 days you terminate 50+ EE’s you must provide additional notice (and notice to minister of labour)

Policy: allows gov to step in and soften blow to community o Part 10 – Complaints, Investigations and Determinations

Prohibits ER from retaliating against EEs who make complaints under the Act

Coverage & Exclusions:o S. 4: The requirements of the Act and regulations are minimum requirements that cannot be waived by EEs

unless otherwise noted – Applicability of the Act to all EEs is subject to a number of legal qualificationso S. 3(1): The Act applies to all EEs, other than those excluded by regulation sweeping regulatory power to

excluded classes of persons from all/part of the Act mean that the Act can never be read in isolation from the REGS

o Several professions excluded from requirements of act: lawyers, articling students, doctors, dentists, accountants (S. 31 REGS)

o Selective exclusions from certain provisions: Managers excluded from Part 4 (overtime provisions) (look to managerial responsibilities to determine

whether someone qualifies or not) Certain classes of technical workers

Pure policy intervention – gov lobbied by org’s to have workers excluded (not vulnerable workers, on tight deadlines which require longer hours at times)

Changes in the Legislation (since 2002)The ES System has undergone a dramatic overhaul in recent years.o Shift in focus: protection should be on sectors where EEs may be more vulnerable to abuse or where business

operators need more educationo Specific changes:

Reduction of the limitation period for filing a complaint (2 years to 6 months) ER liability for unpaid wages reduced (2 years to 6 months) (S. 80):

o ER liability for unpaid wages is limited to the wages that became due 6 months prior to the earlier of the date of the complaint or the termination of the E if still employed when you file a complaint, the wages are due from 6 months prior to complaint – if

E terminated and you file complaint 3 months after termination, liability is limited to wages that became due 6 months before termination

Directors/officers or corporation no longer liable for wages if the corp goes bankrupt Request for pregnancy leave must now be 4 weeks before proposed date ERs no longer need to post notice of EE rights in work places Child labour: if child under 15, ER must obtain parents permission; if child under 12, ER must obtain

directors permission and abide by and conditions imposed (S.9 ESA) Overtime averaging agmts (S. 37)

Enables ERs to avoid overtime obligations Normal rule: ER must pay overtime of time and a half for all hours worked in excess of 8/day NEW RULE: with consent of EE, ER may average an EEs hours of work over a period of one, two, three or

four weeks for the purposes of overtime entitlement (so long as daily hours do not exceed 23 hours and total weekly hours do not exceed 40

Enforcement o Headed by Director of Employment Standards and ES Tribunalo Branch is empowered to mediate and settle disputeso To initiate the complaint process, the EE must complete the ES Self-help Kit and present a copy to their ER

before a complaint will be accepted Time limitations – EE must file complaint w/in 6 months of termination

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o When a complaint is received, an ES Officer, acting as delegate of the Director of ES, will be assigned to review and investigate the complaint Officer has express discretion to refuel to investigate (or continue to investigate) in certain circs (p. 62)

o Director has wide-ranging investigative powers o Director has broad statutory powers to enforce compliance and provide a remedyo Determinations may be appealed to the ES Tribunal on grounds of an error in law (30 day limitation period)

Decisions of the Tribunal are final and convulsive and not open to further appeal to a court JR will be available in accordance with admin law principles

o Multiplicity of proceedings against ER (S. 82) Once a determination is made under the Act requiring the payment of wages, an EE may only commence

another proceeding if the Director consents (if proceeding for payment of wages, cannot then pursue action for wrongful dismissal)

Have ESA and the CL – if an EE was wrongfully dismissed the EE has choice to proceed under one or other (must make a choice and cannot proceed on both avenues) Director can cancel determination and then you could proceed under CL (rarely, if ever done) Statutory protections under act that don’t exist under CL – requirement to pay OT is uniquely statutory

(have to K into OT to have it enforced under CL) Courts do not have jurisdiction to enforce statutory rights where there are already enforcement options

(branch)

Part 5: Human Rights In EmploymentHuman Rights: Case Law and Legislationo Shifts in mechanisms used to enforce HR:

No statutes, just CL – no enforcement of HR effectively happened Administrative tribunals Uneasy relationship between tribunals and court – who should be doing what – role of legislature

o History of domestic HR law Relatively recent Came about after WWII – idea that genocide could develop about discriminatory views about groups of

people Ratification of international treaties resulted in enacting domestic laws

Federal Human Rights Act – 1977 All jurisdictions followed – all had similar form

Protection from discrimination on the ground of race, sex, religion, creed, national/ethnic origin ... other grounds followed

Quasi-criminal law – HR commissions formed whose role was like prosecutors – assisted in filing complaints

Stigma re: claim of discrimination because before this time there was no legal protection – conceived of as private matter

Early HR’s codes (70s/80s/90s) – individual remedies were insignificant – main wrong was seen as that against society as a whole

Seneca College (1981) – perception of HR as publicFacts: Ms. Bedoria (East Indian) applies to Seneca College for a job – finds out that those with lower qualifications are being hired (happens 10 times).o At Trial: she argues that there should be recognized a cause of action in civil law/ CL for the violation of the HR

Code or that there is a tort of discrimination Pursues through court because she could receive more money than if pursued through HR commission Invoking tort law, claims that what was done was a private, personal wrong against her

o Ont. CA agrees o SCC disagrees:

Even though we might want the CL to evolve, it hasn’t – the legislature has spoken and has relegated these issues to administrative law and HRs codes/tribunals/commissions

Underlying concern that not explicitly claimed - clogging up the court system if HR’s codes allowed to be heard in courts instead of by tribunals/commissions

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The B.C. Human Rights Code Enforcemento Historically: HRCode was enforced by the Commissioner of Investigation and Mediation of the BC HR

Commission Complaints where filed with the Commissioner who would then appoint a HR officer to investigate and

submit a report. In some cases the Commissioner would dispose of the complaint without investigation Upon completion of the investigation, the Commissioner, based on the report, would dismiss the complaint

of refer it to the BC HR Tribunal for hearing Costs would be awarded only for improper conduct in the course of investigation or the hearing itself Under this old system, commissions were not resourced well – were slow and bogged down

Cases would take years (approx. 2 years) Both sides thought the commission system was biased

o Now: eradication of the commission, go straight to the tribunal (in 2002) Institutionalized change towards the privatization of HRs claim Complainant now files complaint directly with HR Tribunal which is granted many of the same powers

previously held by the Commissioner Tribunal may refuse to accept a complaint or combine complaints Time limit for filing a complaint is 6 months (guidelines for extensions tightened)

No longer Officers to help with/investigate claims Complainants solely responsible for all case preparation Costs are awarded against any party for improper conduct as well as a settlement agreement may be file

with the SC and enforced as if it were an order of that court Complainants are entitled to free legal assistance Lots of people are requesting assistance but few places offer it (1 place in Vancouver)

Criteria for assistance based on financial and importance of claim

How The Legislation Works o S. 2: No intention necessary – discrimination is discrimination

Used to be that you had to prove that an employer purposely didn’t hire you based on some discriminatory ground

Focus on effect, not intent

Direct discrimination: point to the bad conduct that links the adverse treatment to the ground of discrimination o Realized there were ways around this – less direct ways of excluding people you don’t want to hire Adverse effect discrimination: if it has an adversely effects someone its discriminatoryo O’Malley (couldn’t work on Saturdays due to religion)o Simpson v. Searso Binder – legitimate rule (hard hat requirement) – but need to look into accommodating them without undue

hardship when they cannot follow the rule for a legitimate reason

o S. 3: The purposes of this Code are as follows:(a) to foster a society in British Columbia in which there are no impediments to full and free participation in the economic, social, political and cultural life of British Columbia;(b) to promote a climate of understanding and mutual respect where all are equal in dignity and rights;(c) to prevent discrimination prohibited by this Code;(d) to identify/eliminate persistent patterns of inequality associated w/ discrimination prohibited by this Code;(e) to provide a means of redress for those persons who are discriminated against contrary to this Code;

o S. 4: The code prevails over all other legislation Described as quasi-constitutional

o 3 areas of private life that the code regulates: Tenancy Employment Service, Accommodation, Facility

Employment related provisions (S. 11, 12, 13):o S. 11 – employment advertisements

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Not used very often – obvious that you can’t say in a help wanted ad that you only want certain people to apply

o S. 12 – discrimination in wages Only ground protected in this provision is sex Not a pay equity provision* Protects against discrimination when men and women are performing the same, or substantially the same,

work o S. 13 – discrimination in employment

You cannot refuse to employ or refuse to continue to employ a person or discriminate against a person regarding employment or any term or condition of employment based on one of the listed grounds

Doesn’t need to be an employment relationship – volunteers are protected by this section – any relationships that look like an employment relationship are covered

o S. 21 – anyone can make a complaint Doesn’t have to be the one personally affected by the discrimination (i.e. can make a complaint on someone’s

behalf) Can make group complaints

o S. 22.1 – Interveners A member or panel may, at any time after the complaint is filed and on the terms specified by the member or

panel, allow any person or group of persons to intervene in the complaint, whether or not that person or group would be affected by an order made by the member or panel

SCC’s Approach to DiscriminationMeiorinFacts: Meiorin was a female forest fire fighter and was required to pass the Government’s Bona Fide Occupational Fitness Tests. Meiorin could not pass the aerobic aspect of the test. It was found that most women could not pass the test, while most men could. There was no evidence of connection between performing well on the test and being a good forest fire fighter.SCC Decision: Development of a NEW unified approach to the application of HR legislation in the workplace

TEST for determining whether a prima facie discriminatory standard is a BFOR:

FIRST, the complainant bears the ultimate and evidentiary burden to prove whether the standard is prima facie discriminatory.NEXT, ER must justify the impugned standard by establishing on a BOP:

51% more likely than not that discrimination occurred – if it is really hard to tell, the complainant will not succeed

1. ER established the standard for a reason rationally connected to the job Purpose most often cited: ability to work safely and efficiently ER must demonstrate that that there is a rational connection b/w the general purpose and the objective

requirements of the job Focus is on the validity of the general purpose (no of the standard)

2. ER adopted the standard in an honest and good faith belief it was necessary for the fulfillment of the job Subjective element – not essential to the finding that the standard is not a BFOR, but one basis on which the

standard may be struck down3. Standard is reasonably necessary for the accomplishment of the legitimate work related purpose

ER must show it is impossible to accommodate EE’s sharing the characteristics of the EE w/o placing undue hardship on the ER (undue hardship means that some hardship is fine)

“undue” infers that some hardship is acceptable Factors to consider: financial cost, relative interchangeability of workforce and facilities, and prospect of

substantial interference (Central Alberta Dairy Pool) Considerations should be applied with common sense and flexibility (Chambly) In considering accommodation measures, ERs much have regard to the characteristics and circs of the

individual EE rather than those of the group or category to which the EE belongs

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Martin:o Discrimination on the basis of disability based on hip condition (made her unable to meet quota – couldn’t cross

the car lot fast enough) o Prima facie discrimination: to prove this, must show a connection between the adverse treatment was related to

the prohibited ground o No positive duty to accommodate o Must show something bad happened before you are entitled to the accommodation o Burden on proving the adverse effect is on the plaintiffo Doesn’t have to show that her disability was the only reason she was let go, or that it was the primary reason –

just has to be reasonable to infer on the evidence that it was a factor (low bar) o Couldn’t meet sales quota because having trouble with her hip – enough evidence to show that there was a link o ER knew enough that it should have at least inquired o Amount of damages awarded: $1000 for injury to dignity and 1 month’s wages

Duty to Accommodate Includes an Independent ER Duty of InvestigationThere is a line of authority that holds that on obligation to accommodate (short of undue hardship) prompts a related but separate duty to investigate the nature of an EEs disability before making decisions with respect to the possibility of accommodation and that the failure to do so is, in and of itself, a breach of the Code.

Clark (CP p.91)Facts: Nanny hired to take care of kids, becomes pregnant, has difficulty doing her job and is fired.o Was pregnancy a factor in the termination?

Couldn’t do job because of pregnancy, so clearly a factoro Was the discrimination justified?

Reasonably related to performance of the work? Yes Imposed in good faith? Yes ER accommodated or demonstrated it was impossible to accommodate the pregnancy w/o undue hardship?

No – didn’t do anything to try to accommodate o Decision: she should have and could have made some effort or inquiry into alternatives before firing her

Oak Bay MarinaFacts: EE, Mr. Gordy, is a fishing guide for Oak Bay Marina. He is bipolar – acts inappropriately at work – psychiatrist says ok to work after a while but ER refuses to employ him again for safety concerns.o Tribunal Held: ER not justified in letting him go – should have made more inquiries into his condition and taken

him back o Trial/BCCA Held: justified in not hiring him back

No failure to investigate – don’t need to embark on extensive inquiries because they knew he wasn’t able to do the job

Small ER – not able to investigate as fully as larger ER’s o Sent back to tribunal

ER has a duty to obtain all relevant info about EE’s disability where it is readily available Psychiatrist offered to meet with ER ER cannot be considered an already informed ER if they rely on outdate medical info or based on a

previously unsuccessful attempt (just because they tried to bring them back once is not enough)

McGill (REALLY IMPORTANT!!)Facts: (Union setting) Alice Brady was medical receptionist at McGill Hospital – she had a nervous breakdown and was absent from work for over 2 years. Her second attempt to return to work was scheduled and then she was in a car accident, which prevented her again from returning to work. The ER then terminated her E (there is a 3 year termination clause in the E K).

Underlying Tension: E objectives (K, what is necessary to operate workplace) VS. anti-discrim objectives (post-Meiorin ER should do everything to make it work)

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Majority vs. concurrence (all agree in ultimate decision):o Deschamps (majority): “This appeal concerns the interaction between labour law and the right of a person to be

absent from work owing to an illness or disability.  More specifically, what is in issue is the role of a collective agreement in the assessment of an employer’s duty to accommodate an employee who is absent for an indeterminate period owing to personal health problems”

o Abella (concurrence): “An employer has a duty to provide a discrimination-free workplace.  It is important, therefore, to be clear about what discrimination is — and what it is not — so that employers know their duties and employees know their rights… The central issue is whether Ms. Brady has established prima facie discrimination, shifting the onus to the employer to justify its workplace standard or conduct. ”

Majority:o Prima facie discrim assumed in disability cases – skip right to second step weird b/c concurrent judgment is

on that very issue…whether there was prima facie discrimination (see Para.9)o Really about duty to accommodate and can parties agree in advance to accommodation duties current HR

thinking says you cannot do this b/c each EE is an individualized assessmento Majority says that if there is a pre-K accommodation period, it is one consideration, but there still must be an

individual assessmento “It has long been recognized that the parties to a contract cannot agree to limit a person’s fundamental rights…  

The importance of the individualized nature of the accommodation process cannot be minimized.  The scope of the duty to accommodate varies according to the characteristics of each enterprise, the specific needs of each employee and the specific circumstances in which the decision is to be made” (para.19, 22) Must ask whether ER accommodated to point of undue hardship As ER, must not rely on clause, must assess each individually

o Union was arguing that duty to accommodate did not kick in at all until she had been absent for 3 years in this case the termination on 3 yrs + 1 day would be totally unreasonable Majority said must look at everything holistically from day 1 (union excessive dmd to rely only on HR’s)

o Result: termination upheld, not b/c of termination clause, but at the date of the hearing before arbitrator, there was no evidence she would ever be able to return to work (absent for 3 years and no prospect of return in the foreseeable future) Problem: if she was expected to be able to return in a certain time frame, would decision be different? No

certainty for EEs or ERs. Concurrence (LAW NOW in BC)o Result: no discrimination (don’t even make it to duty to accommodate) – just saying you have a disability doesn’t

mean you pass the first step Claimant has not proven “that she has been disadvantaged by the employer’s conduct based on stereotypical

or arbitrary assumptions about persons with disabilities, thereby shifting the onus to the employer to justify the conduct.” (para.53)

Applies not just to disability caseso Upheld in Gooding: Gooding was an alcoholic liquor store manager stealing booze – pre-mediated repeated theft

warrants termination and is reasonable (no arbitrary/stereotypes)o POLICY: “designating such clauses as presumptively discriminatory removes the incentive to negotiate

mutually acceptable absences.  It suggests that, regardless of the reasonableness of the duration of the protection (*which 3 years arguably is*), an employee can still, by bringing a grievance, render the clause’s term meaningless, shifting the burden to the employer to explain why it was reasonable to terminate a particular employee. This would leave disabled employees without the lengthy guarantee of job and seniority protection such clauses offer.  …true that they are finite, and therefore, in a technical sense, arbitrary. But they are not arbitrary in …

human rights context, that is, they do not unfairly disadvantage disabled employees because of stereotypical attributions of their ability.  Instead, these clauses acknowledge that employees should not be at unpredictable risk of losing their jobs when they are absent from work due to disability.” (paras.55-56)

o “ At the heart of these definitions is the understanding that a workplace practice, standard, or requirement cannot disadvantage an individual by attributing stereotypical or arbitrary characteristics.  The goal of preventing discriminatory barriers is inclusion.  It is achieved by preventing the exclusion of individuals from opportunities and amenities that are based not on their actual abilities, but on attributed ones.  The essence of discrimination is in the arbitrariness of its negative impact, that is, the arbitrariness of the barriers imposed, whether intentionally or unwittingly. What flows from this is that there is a difference between discrimination and a distinction.  Not every distinction is discriminatory.  It is not enough to impugn an employer’s conduct on the basis that what was done had a negative impact on an individual in a protected group.   (*has previously been

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the test*) Such membership alone does not, without more, guarantee access to a human rights remedy.  It is the link between that group membership and the arbitrariness of the disadvantaging criterion or conduct, either on its face or in its impact, that triggers the possibility of a remedy.  And it is the claimant who bears this threshold burden. (paras.48-50)”

Changing prima facie discrim test – not enough to show 3 elements – must be element of stereotyping or arbitrariness

TEST: Discrimination or Not?FIRST, the complainant bears the ultimate and evidentiary burden to prove whether the standard is prima facie discriminatory.A. Can complainant invoke a protected ground (sex, religion, disability, etc.)

They must actually have a disability if they claim on that ground – much litigation over what is considered disability (ie. Stress, overweight, etc.)

B. Has the complainant received adverse treatment in relation to their E Employment is very broad What is adverse? It is a comparative term – are you treated worse than the proper comparator/other

employees in organization (cannot compare to employees at organization next door) Employer can be as horrible as he wants as long as he is abiding by laws – cannot claim discrimination if

other ERs at other firms don’t treat EEs that wayC. Is it reasonable to infer that the protected ground (ie. sex) was a factor in the adverse treatment

Just must be one factor – does need to be the main one Tough for an ER to prove that something did not take part of a decision – low threshold for proving

discrimination EE can try to tie behaviour to disability (ie. Drug abuse (considered a disability) led to depression which led

to punching boss)D. MUST ALSO SHOW that you have been disadvantaged by the employer’s conduct based on stereotypical

or arbitrary assumptions about persons with disabilities (From McGill) It is not enough to impugn an employer’s conduct on the basis that what was done had a negative impact on

an individual in a protected group. 

THEN the ER must justify the impugned standard by establishing on a BOP: 51% more likely than not that discrimination occurred – if it is really hard to tell, the complainant will not

succeed4. ER established the standard for a reason rationally connected to the job

Purpose most often cited: ability to work safely and efficiently ER must demonstrate that that there is a rational connection b/w the general purpose and the objective

requirements of the job Focus is on the validity of the general purpose (no of the standard)

5. ER adopted the standard in an honest and good faith belief it was necessary for the fulfillment of the job Subjective element – not essential to the finding that the standard is not a BFOR, but one basis on which the

standard may be struck down6. Standard is reasonably necessary for the accomplishment of the legitimate work related purpose

ER must show it is impossible to accommodate EE’s sharing the characteristics of the EE w/o placing undue hardship on the ER (undue hardship means that some hardship is fine)

o “undue” infers that some hardship is acceptableo Factors to consider: financial cost, relative interchangeability of workforce and facilities, and

prospect of substantial interference (Central Alberta Dairy Pool) Test for undue hardship is not total unfitness for work in the foreseeable future if the characteristics of

an illness are such that the proper operation of the business is hampered excessively or if an EE remains unable to work for the reasonably foreseeable future, even though the ER has tried to accommodate, the ER will have satisfied the test

Considerations should be applied with common sense and flexibility (Chambly) In considering accommodation measures, ERs much have regard to the characteristics and circs of the

individual EE rather than those of the group or category to which the EE belongs

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Mandatory Retiremento We used to have mandatory retirement (MR) and did not consider this discrimination based on age

Due to economics and demographics, younger workers need jobs so we pushed out older workers with MR Now, we need older workers due to a lack of younger workers, so MR has been abolished Abolishment of MR, not really b/c of HR law Research shows most workers want to retire around age 62, but most find they cannot – more and more

older workers really crabby b/c they have to work (sickness due to stress, depression, etc.)o SCC in McKinney held that MR was not discriminatory but requiredo Now protection from discrimination for ppl 19+ years (not just 19-65)o Didn’t change saving provision in s.13(3) of HR Code – age discrimination does not include seniority schemes,

bona fide group insurance plans, etc.o Anthony Sheppard Article (P.102)

4 things that are left in the code: age <19; bona fide occupational requirement (ie. Pilots) Continuing to exclude from protection, people who are under 19:

He believes this is good to encourage kids to stay in school – encourages you ppl to pursue education and training

Part 6: CL and Statutory Obligations of the ER under the K of EDuty to PayStatutory RegulationEmployment standards legislation imposes minimum wages, requires periodic payment, and limits the extent to which ERs can make deductions from EEs wages; however, there are may exclusions to the minimum wage.

Part 3 ESA deals primarily with the payment of wageso S. 16 – requires ER to pay min wage that is set by regulation

S. 15 REGS sets min wage at $8.00/hour Exception: starter wage - $6/hour applies to those with less than 500 hours of paid employment or those

with no E since Nov 15, 2001 gives ER’s flexibility to hire EE’s with little/no experience and not be expected to pay the full min wage

o S.21(1) – ER must not deduct, withhold, or require payment from EE’s To prevent ER’s from self help procedures of trying to recoup money they say EE’s owe them (ie. Loans) ER essentially acting as judge and jury – EE might disagree to repayment

o S.21(2) – prevents deduction of business expenses from EE’s Arguably a business expense to require EE’s to all wear black (restaurants)

CL and Civil Law Duty to Pay an EE who is Suspended (p.126)Cabiakman Facts: Cabiakman was a sales manager at an insurance company. He was accused of extorting money from his securities broker. The ER suspended the EEs K without pay until the final decision of the courts because of the connection between the nature of the charges and the duties of his position.  EE commenced an action against the ER for dismissal without good and sufficient cause in which he sought damages for lost income together with moral and punitive damages.  At his criminal trial, the respondent was acquitted was reinstates in his position shortly thereafter (suspended for approx. 2 years).o Decided under Quebec Civil law – but concepts described would be very influential in CL courtsCourt noted: E r/ship is one of subordination Rule: the power to suspend for administrative reasons does not entail, as a corollary, the right to suspend payo Power to suspend for admin reasons in an integral part of any K of E, but must be exercised in accordance with

the following requirements:1. Action taken must be necessary to protect legitimate bus interests;2. ER must be guided by good faith and the duty to act fairly in deciding to impose suspension;3. Suspension must be imposed for a relative short period; and4. The suspension must, other than in exceptional circumstances, be with pay

o Basically a balancing of interests – ER’s right to take preventative action to protect business vs. recognition that E is an essential component of a persons sense of identity, self-worth and emotional well-being

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o Factors developed to assist in the decision of whether ER was justified in temporarily suspending EE (against whom criminal charges were laid) – essentially relate to legitimate business interests and the ER’s good faith For example, courts may consider the following factors:

Sufficient connection b/w act charged and kind of E; Nature of the charges; Whether reasonable grounds exist for believing that maintaining the E r/ship would be prejudicial

to the business; and Whether there is immediate and significant adverse effects that cannot practically be counteracted

by other measures (assigning EE to another position)o ER has burden of showing decision is fair and reasonableo Suspension without pay = constructive dismissal (EE can bring action for damages for breach of K)o It may make a difference to judge if the ER is a society providing a service to community rather than a huge

corporation (however, in theory in the law, it shouldn’t make a difference)Held: Accepted that there was a r/ship b/w alleged crime and nature of the job and suspension is in order – but do you have to pay?o No obligation on ER to conduct your own investigation, but you can – this decision partly rested on fact that ER

did not conduct investigationo Consider just firing EE w/out cause and pay severance (however, it is discriminatory under HR codes to dismiss

on unrelated criminal conviction)

Duty to Pay an EE who is Temporarily IllDartmouth Ferry (1904 SCC) (leading CL Case – Still referred to in area of temp illness and frustration)Facts: captain of commuter ferry (Dartmouth-Halifax) – illness quickly became debilitating and he could not work (permanently ill) – ER did not pay him past his last day of work (not time he was ill before death) – executrix brought action for those 7 months he was illHeld: o One cannot simply suspend without payo However, it was clear from the day he left that he was not returning and frustration had occurredo Employers obligation during a temporary illness vs. frustration (permanent)

Law permits temp illness on ground of common humanity (entitled to wages while away) all subject to K ER will have obligation to pay EE who is temporarily ill

A permanent disablement determines and ends the K The consideration that moved the ER to pay wages is gone Cannot sue the EE for non-performance A permanently disabled EE is released from damages for non-performance of his K. This does not

permit him to recover wages without doing work.

Potential consequences – having to pay an EE without them being at work b/c doctor says there is a chance of recovery

Insurance available to ER o Short term disability: pay to sick EE for up to 119 dayso Long term disability: income replacement up to age of 65 o Workers comp – no fault system (EE suffers injury in course of E, workers comp will provide you with a income)

Wightman Estate (overtaken Dartmouth Ferry in BC in terms of usefulness)Facts: W started with ER in 1975 under an oral agmt (implied term of reasonable notice of dismissal). Significant health problems develop. E terminated when company sold but he continued to receive long-term disability benefits. ER defended wrongful dismissal claim in that they did not owe notice b/c illness resulted in frustration of K and so no notice was requiredTJ: Referred to English case Marshal v. Harland (CP p.153):o Guidelines for determining whether incapacity due to sickness brings an end to a K of E for an indefinite period

terminable by noticeA tribunal must ask: was the EEs incapacity, looked at before the purported dismissal, of such a nature, or did it appear likely to continue for such a period, that further performance of is obligations in the future would either

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be impossible or would be a thing radically different from that undertaken by him and agreed to be accepted by the ER under the agreed terms of his E?Next – in considering the answer, the tribunal should take account of…1. The terms of the K, including the provisions as to sickness pay – If sick pay is in the terms of K and the EE is

likely to return to work before sick pay time runs out, the K is not likely to be frustrated Includes banking of sick pay Just b/c sick pay is expired does not necessarily lead to frustration

2. How long the E was likely to last in the absence of sickness – Ie. Fixed term E – will sickness outlive the life of the K

3. The nature of the E – importance of the job Ie. CEO, president of organization – easier to find frustration here than in position where several other

EE’s could fill your position4. The nature of the illness or injury and how long it has already continued and the prospects of recovery***

The greater the degree of incapacity and the longer the period over which it has persisted, the more likely it is that the r/ship has been destroyed.

5. The period of past E – long term position vs. short history o Implied term – over long period of service, the parties must be assumed to have contemplated a longer

period of sicknesso TJ HELD: K frustrated – no reasonable possibility W would return to work

CA: did not expressly accept or deny these guidelines but likely accept them as helpful (decision upheld)o Ground 1: K was not frustrated (while someone has LTD plan in place, the K of E can never be frustrated)

Practice of purchasing LTD insurance should be encouraged – and if there is never frustration even when EE will never return to work, it may discourage purchasing it in the first place

o Ground 2: s. 13 HR Code prevents discrimination against those w/ disabilities (so cannot find K frustrated due to disability/LTD)

o NOTE: Cannot give reasonable notice while EE is permanently ill – court says must be reasonable “working” notice so EE is arguably entitle to severance

Duty to Provide WorkStatutory Leaveso ESA provides for certain unpaid leaves (SS. 50-56)

ER must give the EE the leave to which they are entitled (S. 54) If EE takes one of these leave the ER must not change their E (S. 54(2)) and as soon as the leave ends the ER

must put that EE back in the position of a comparable position (S. 54(3)) Pregnancy and parental leave – protections provided – from ER’s point of view it puts you in a delicate

position if you were contemplating letting that person go anyhow – must have compelling evidence that pregnancy had no bearing on the decision to dismiss

Part 7: CL Obligations of the EE under the K of EThe CL Duties on an EEDiscipline or Termination?Haldane v. Shelbar Facts: H said to have acted insubordinately (swore at boss in workplace) – disciplined by requiring written apologies to staff and suspended without pay for 3 days. H proposes instead of discipline of 3 days with no pay, he takes 3 days out of holiday pay. This is not reasonable to ER, so H is terminated.o ER said she was not willing to comply with a reasonable punishment so she quit – H said the ER knew she would

not accept 3 days w/out pay and set her up to be fired/quitOntario Divisional Court: originally dismissed claim but before order entered more research was done and concluded that in the absence of express/implied term in K that permits such discipline (suspension without pay), such discipline is not open to ER Ont CA: o Insolence (lack of respect) may be a ground for dismissal, but that threshold not reached here

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o The ER wanted her to be dismissed the whole time, and that is the reason it made such unreasonable terms of discipline and would not accept her compromise

o The only way an ER can discipline an EE through unpaid suspension is if it is contractually provided for It may flow from an implied term of the employment K – terms may be implied into a K based on custom and

usage or presumed intent of parties Terms are implied when they are “necessary in a practical sense to the fair functioning of the agreement”

o Court seems to be saying an implied term for suspension would be helpful BUT implying reasonable discipline into E K’s would raise complex questions concerning the procedural and

substantive scope Decided that the issue should wait until it was fully argued (which was not done here)

o This was 10 years ago, and still no case in Canada has said that an ER is entitled to implement an unpaid suspension as a form of discipline

Note: Progressive Discipline – to prevent surprise on part of EE – start with smaller punishment and work their way up to a more severe punishment (warning – 1 day suspension – 2 day – 10 day …)Note: McKinnley v. BC Tel caseo There are lesser forms of disciplineo Para 52 (obiter) there are lesser sanctions for less serious conduct that don’t amount to cause – EXAMPLE an ER may

be justified in docking an EE’s pay for any loss incurred by a minor misuse of company property

Duty of Good Faith - Honesty

Duty of Good Faith = situations where a party has to take into consideration the interests of another, but does not have to act in the interests of that othero Duty of good faith implied into every E Ko Usually most often to find a non-fiduciary EE liable for damages if he has competed with the ER during the

currency of the E r/ship, or has made improper use of confidential informationo Three key elements to consider wrt this duty – (1) the type of EE (fiduciary or not), (2) the type of information,

and (3) when the EE is alleged to have breached

A fiduciary has a higher obligation of good faith than other EE’s o EE’s who exercise a broad and independent discretion in handling the critical elements of an ER’s

business and the ER’s business interests are vulnerable to the fiduciary (see test)o Canadian Aero Service held that a senior employee is much more likely to be found to owe fiduciary duties

towards his employero Fiduciary duties do not arise from an EEs title, but from their actual authority/control over the ERs operation

BMO v. Kuet Leong Ng Civil law Quebec case so of limited use (launching pad for fiduciary r/ship discussion)Facts: Kuet employed by BMO as chief securities trader and authorized to commit the bank to up to $40,000,000/day in foreign exchange transactions – he carried out activities that allowed him to recognize profits of over $600,000 himself (w/out loss to BMO) o Court reviewed obligations in good faith in E K’s (CP p. 173 para. 23):

The perpetrator of a wrongful act should not profit from it as that would encourage wrong doing Canadian Aero Services v. O’Malley illustrates the extent of the obligation: does not matter if EEs were

properly appointed as directors or whether they did/did not act as directors. If acting as president/vice president, the good faith duty owed is large, similar to that owed by directors.

o Fiduciary (roots in equity) obligations and the associated remedies for ER are greater A finding of a court that an EE is a fiduciary has practical and legal implications for that EE (enhanced EE

obligations) (Can Aero is a great example) Fiduciaries are precluded from obtaining for themselves any business advantage (w/out permission

from ER) Limit to go into competition for a certain length of time upon resigning

o CL test for fiduciary status (leading case is Frame v. Smith 187, SCC): the fiduciary has the scope for exercise of some discretion or power on behalf of the ER/beneficiary the fiduciary can unilaterally exercise that power with discretion so as to impact the beneficiaries legal and

practical interests

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beneficiary is peculiarly vulnerable/at the mercy of the fiduciary that holds the discretion/power

Wallaceo ER’s also owe their EEs a duty of good faith in the manner of dismissal o More on this later…

Duty of Good Faith – Economic InterestsRBC v. Merrill Lynch (CP p.175)o Landmark decision in area of permissible EE competition with former ER’s (post-E competition)Facts: Nov 2000 virtually all investment advisors (and client lists) at RBC moved to Merrill – orchestrated by branch manager – RBC suffered virtual collapse and started litigation – sue former IA and branch manager for breach of fid duty (enhanced duties, RBC particularly vulnerable to them), breach of implied K term not to compete unfairly (SCC found there is no such duty), breach of providing reasonable notice of resignation, and action for misuse of confidential information, also conspiracy for conversion of client recordsTrial court:o Allegation that IA were fiduciaries was dismissed quickly – evidence that branch manager was fiduciary looked

at discretionary powers and duties (only 30% time went to running branch, rest was selling securities) and determined branch manager was not a fiduciary EE (CA agreed)

o No non-compete agreements – under CL, fiduciaries have some restrictions but otherwise EE’s can do whatever – no basis for trial court to award damages for non-competing

o Did award damages for conversion of client listso Biggest award for finding that Branch manager breached duty of good faith in not trying to retain IA’s (implied

term of K to be responsible for retaining RBC EE’s under his supervision) – rather than attempt to retain EE’s, he encouraged them and orchestrated their departure

CA: Appeal by Merrill that there was a breach of duty of good faith (decision upheld)SCC: Order of TJ reinstated (w/ exception of the unfair competition award against the IA arising out of the conduct during the notice period)o Two critical rulings:

Non-fiduciary managers who facilitate the mass exodus of subordinate EEs are in breach of their implied duty of good faith to their ER, and may be held personally liable for that ER's damages including lost profits.

Non-fiduciary EEs who fail to give notice of termination are not subject to an implied duty not to compete against their former ER during the period that is deemed to constitute reasonable notice of their departure.

o Court confirmed: EEs have an implied obligation to provide reasonable notice of termination ER confined to damages for failure to give reasonable notice or for specific wrongs during the notice period

(improper use of confidential info) No duty not to compete

Strong dissent (Abella) on the issue of whether Delamont owed RBC an implied good faith duty not to orchestrate the mass exodus of its employees:o It is an implied term of every E K that EE’s owe a duty of good faith to their ER’s (para. 37)o An EE is generally free to enter into competition with former ER as soon as E ends – can modify this by

negotiating a reasonable restrictive covenanto Courts should not be reading restrictive terms into E Ks that could have been negotiated prioro Necessary corollary to EEs undisputed right to compete following termination is the right to plan for future E

opportunities while still employed – not a breach of implied duty of good faith to search for alternative jobs, negotiate with a competitor, or talk to co-workers about intentions

o Majority concluded that Branch Manager’s duty of good faith included obligation to protect the ER’s business interests by attempting to retain EEs Dissent sees no reason to impose such a duty on an EE – it represents a significant reformulation/extension

of how the courts have interpreted a non-fiduciaries EE’s duty of good faith essentially creating a quasi-fiduciary duty

Part 8: Terminating the E Relationship

Dismissals litigated more than any other matter: o Most serious consequence for EE (losing your job)

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o Money involved (b/c of requirement to provide reasonable notice or pay in lieu of notice)Courts loath to deny EE’s severance if dismissed o will require clear evidence of misconduct or resignation if ER attempts to get out of paying severanceReference re: Public Servants Employee Relations Act Passage regularly quoted when one is looking at dismissal of EE:

“Work is one of the most fundamental aspects in a person’s life, providing individual with means of financial support and as importantly a contributory role in society. A persons E is an essential component of their identity, self worth, and emotional well-being”

Termination by the EEResignation and Constructive Dismissalo Although resignation and CD are distinct, they are often dealt with togethero Resignation = basically, EE quits

ER need not give notice or pay severance b/c initiated by EEo CD = takes place where ER unilaterally alters fundamental condition of E

EE has option of resigning E but treating themselves as dismissed

Danroth v. Farrow HoldingsFacts: P employed as carpet cleaner for 7 years. P worked a lot of overtime of the years. Towards the end of E the P became unhappy about reduction of overtime hours (given to more junior EE). Just before xmas break the EE went into work to pick up paycheque and discovered he had not been paid. ER responded that EE had not been paid b/c he had not filled out required worksheets. P never returned to work. Evidence:

EE said to ER that the failure to pay (1) constituted a CD; and (2) ER owed him 7 weeks severance ER believed that P had quit Claim for CD withdrawn

Issue/TEST: given circumstances, would a reasonable person (objective test) understand, based on the EE’s comments, that he had just resigned?

Held: EE had resigned Court noted that you don’t have to use words “I quit/resign” for resignation to be established objective

Hypothetical:If EE tells ER to shove it on a Friday and throws down security pass and shows up for work on Monday retracting resignation – can ER treat that as resignation and not take EE back?o Chances are court would find in favor or EE What if EE does not come back for an entire week?o ER may wait to see if EE contacts again and then send correspondence stating they are treating it as a

resignation o ER may also write letter to EE shortly after resignation – layout what has happened and express you are

considering it a resignation unless heard from by a certain date (Prudent way to go)o If the ER wants the EE back they can actively pursue by telephone to receive answer

NOTE: At CL EE does have obligation to give reasonable notice to ER upon resignation; E K may also stipulate how much notice; ESA says nothing about an EE having to give notice

Constructive DismissalNOTE: Law suit on CD is risky – if you win you will get payment, but if you lose you will likely to be held to have resigned and will not get anythingo More difficult now due to Evans v. Teamsters – in some circumstances, even if you are wrongfully/CD, you may

have to stay on with ER to mitigate damages

Farber v. Royal Trust

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Facts: P started with Royal Trust as real estate agent. Promoted several times until a regional manager for western Quebec. In that capacity he supervised 21 offices with 400 agents with a base pay of $150,000 and benefits. Royal Trust engaged in restructuring which eliminated 11 of 12 regional mgmt positions including the P’s. After eliminating positions, D offered P the manager position at a branch with compensation based on commissions only. NB: He had been a branch manager 8 years and several positions earlier. This particular branch has been the least profitable and problematic branches.Claim: P suing D company for CDo SC noted this was a civil law claim in Quebec but that CL principles of CD are very similarTEST: Where one party to a K demonstrates an intention no longer to be bound by it, that party is committing a fundamental breach of the K that results in its termination (CP p. 199 Para. 33)o Application to the E context : where an ER unilaterally makes a fundamental change to an EE’s E K, the ER is

committing a fundamental breach of the K that results in its termination and entitles the EE to consider him/herself constructively dismissed. The EE can then claim damages in lieu of reasonable notice (para.33).

o Examples of what constitutes CD (some from case (para.36), others Crawford developed):o Demotion

if you have to report to someone you used to be in charge of it is almost always a CD although not necessary ingredient

o Salary reduction 5 % may not qualify but 10% may get you there

o Change in manner of calculating compensation esp. in sales person cases when going from secure salary to commission based; also if sales persons

jurisdiction is narrowed and commission structure has not changedo Geographic relocation

Ie. Hired by company to be regional manager in Vancouver but company wants to move operation to Calgary (esp. if EE has family)

There are jobs where relocation should be expected – implied acceptanceo Series of small changes that accumulate over time

Case-law establishes that a series of small changes may cumulatively amount to CD EE must act w/in reasonable period of time and not just accept the changes and continue on giving ER

impression you are fine with changesHeld: CD took place due to unilateral changes that fundamentally altered the E K o Serious demotion, make up of salary was considerably altered (shift from base salary, commission and benefits

to commission only)o These factors in and of themselves could have constituted CD but here there is a number of them and it was a no

brainer for the courto Court rejected argument that one can look at ex post facto evidence – it is only admissible where relevant to

the caseo What is relevant is what was know by EE at the time of the offer and what ought to have been foreseen by a

reasonable person in the same situation

ALSO SEE MISFUD: Discussion on CD (p. 31)

Termination by ERReference re: Public Servants Employee Relations Act : “Work is one of the most fundamental aspects in a person’s life, providing individual with means of financial support and as importantly a contributory role in society. A persons E is an essential component of their identity, self worth, and emotional well-being”

Courts recognize imbalance of power both at the time of formation of E K and particularly at the time of dismissal when EE’s are vulnerable

CauseWhat amounts to just cause for dismissal? Port Arthurs Ship Building says: “if EE has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties or prejudicial to ER’s business, or if he has been guilty of willful

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disobedience to the ER’s orders in a matter of substance, the law recognizes the ER’s right, summarily, to dismiss the delinquent EE”o What amounts to serious misconduct etc. is determined on case-by-case (Includes fraud, theft, etc.)o Neglect of duty = repeated failure to perform duties at requests of ERo Incompetence/performance issues are difficult to establish – For ER to dismiss EE the ER must establish

(TEST):1. ER has set reasonable objectives for position;2. EE failed to meet the reasonable objectives;3. EE was warned that if he was not able to meet standards he could be terminated;4. ER gave EE reasonable opportunity after warning to meet standards (assistance often required); AND5. Despite all that, EE still not able to meet standards

o Conduct incompatible with duties = could be inside or outside workplace (ie. school teacher convicted of public indecency or sexual relations with student)

o Willful disobedience = often relates to failure to carry out lawful and reasonable request of ER

McKinley v. BC Telo Most important case on cause for dismissal – established that there were no hard and fast rules for what

constitutes cause (case-by-case approach) – overruled previous law that certain things were clear cause for dismissal

Facts: P worked for BC Tel. He began to experience hypertension and took leave of absence. When on leave BC Tel dismissed him. BC Tel’s reasons for dismissal changed numerous times (indicated problems):A. Statement of defence stated D was offered severance package. B. D amended stmt to allege that P’s illness amounted to frustration of K. C. At trial D amends stmt again to allege cause for dismissal. Allegation of cause was dishonesty (alleged P was dishonest about medical condition and treatments for it) (p.221). Evidence suggested that doctor said P could return to previous position and treat hypertension with Beta Blockers. Evidence also suggested that P told ER that he should be given new (less stressful) job and did not mention beta blocker option to ER. Court found that there was evidence at trial that P believed that beta blockers should only be used as a last resort

Trial:o Jury trial, so the TJ charged the jury with accurate stmt of applicable law: “conduct must be such as to undermine

and seriously impair the trust and confidence the ER is entitled to place in the EE in the circumstances of their particular r/ship…in the case of dishonesty it must be of a degree incompatible w/ the E r/ship”

o Held: Just cause not established and awarded damages

Appeal:o BC Tel appealed o Relied on (what was then) a the leading case Phillips which said dishonesty is always cause for dismissal o Appeal on the grounds that Judge did not charge this to the jury so judge mislead juryo Held: New trial ordered

P appealed decision to SCC

SCC:o Court Review 2 lines of Cases:

1. Context must be considered when looking at just cause for dismissal In Port Arthurs decision referred to “serious” dishonesty which connotes context is important

2. Dishonesty is always cause for dismissal in and of itself regardless of circumstances and degree Boston Deep Sea Fishing (para.42) seems to exclude any contextual approach Federal Supply and Cold Storage adopted a similar view as Boston – mere fact of dishonesty reveals

character and is always cause for dismissalo In reviewing cases in second line the court found that the dishonesty alleged in those cases was much more

serious than what was alleged in this case (bordered on theft, misappropriation, forgery, or a fraudulent sham)o Court adopted first line of authority: whether an ER is justified in dismissing an EE on the grounds of

dishonesty is a question that requires an assessment of the context of the alleged misconduct.

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Specifically, the TEST is whether the EEs dishonesty gave rise to a breakdown in the E relationship, OR (TEST can be expressed in a # of ways) (CP p.217 Para.48):o Does dishonesty violate essential term of E K?o Breaches faith inherent to the work r/ship?o Is conduct fundamentally or directly inconsistent with the EE’s obligations to his or her ER?

o Contextual approach may still lead to direct cause in certain circumstances (fraud, theft, etc.) – but nonetheless a contextual approach still required

o Held: Judges charge to jury correct; degree of dishonesty compatible with E r/ship; enough evidence put to jury to conclude that although not full disclosure by P, that failure was not dishonesty incompatible with E

o OBITER: ER’s (especially in union context) are expected to employ a progressive discipline approach. There can be lesser sanctions for less serious types of misconduct. Not firmly established in CL, but Crawford says it is coming)o Underlying the approach is proportionality – effective balance must be struck b/w severity of EE’s

misconduct and the sanction imposed (para.53)

Just Cause Hypothetical:Hypo 1: EE is sales person and is out at a bar. The company’s client and spouse are also at the bar. The EE makes a pass at clients spouse. Client leaves company and ER dismisses EE. Consider:o How big was client?o Did EE know that it was the client’s wife?o Long/clean service record?o Likely reoccurrence?o Out of work place – is part of the job socializing with clients outside of work?o Court is likely to be influenced by above factors and may consider that it was bad judgment and should not

irreparably harm E r/ship – perhaps written letter of warning is more appropriateHypo 2: EE is supervisor in manufacturing plant. EE is told by manager that she has to work on assembly line for the day due to worker shortage. The EE says to manager “F you” and walks away. The next morning the manager dismisses the EE for insubordination. The EE has 10 years experience and not disciplinary record.o First and only time, perhaps cause established if it happens again.o If EE’s attention brought to policy that foul language is not tolerated, it may be considered cause.Hypo 2 altered: next day, manager tells supervisor cannot disregard orders and you cannot swear at me in front of others. The EE then says that she believes she was justified.o Would likely find that subordination and inability to recognize problem justifies causeHypo 3: EE is bank teller. Customer comes into make withdrawals of several hundred thousand dollars. EE takes many precautions, brings supervisor in to approve. It takes a day to process. EE realizes that one form was not signed and instead of bring customer back in, the EE signs for the customer. No harm done to bank. Supervisor discovers forged signature. No previous disciplinary record.o Illegal acto Suggests attitude disregarding rules/law – goes to charactero Likely court would find just cause

Near Causeo Near cause applied so that where ER’s couldn’t quite meet standard of cause, the court could consider that in the

amount of damages to awardo Prior to Dowling v. Halifax, doctrine of near cause did exist in some jurisdictions but not widely acceptedo After Dowling, it is an all or nothing approach – ABOLISHED near causeo If you cannot prove cause as an ER, context is not taken into account when issuing damages o However, Crawford says there are cases out there where judges seem to take a near cause approach and issue

damages and lower end of the range

Part 9: Termination by NoticeWhere cause for dismissal is not alleged – some form of notice is to be required or severance in lieu of noticeo Subject to qualifier that some E K’s can be for a fixed term.

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o Absent a fixed term K, E K’s are considered to be of indefinite duration and can only be terminated lawfully wither if you have cause or provide reasonable notice of dismissal

o Most ER’s do not provide working notice (90-95%) – why? Productivity/morale issues Sabotage/craziness ER may not know far enough in advance that they need to dismiss EE (restructuring, etc.)

o In these cases, severance is paid instead.o At a minimum (subject to exceptions), ER’s have to provide minimum notice set of in ESA (S. 63) cannot K

out of (any attempt to K out of minimums is void – s.4)

Statutory NoticeSS. 62-68; 71 ESA:o S. 63 – liabilities resulting from length of service (compensation, min. notice, calculation of compensation)o S. 64 – Group termination provisions – additional notice/pay requiredo S. 65 – Exceptions to ss. 63 and 64o S. 66 - If a condition of employment is substantially altered, the director may determine that the employment of

an employee has been terminated.o S. 67 – Rules about noticeo S. 68 – Rules about paymento S. 71 – Minister may require ER to establish an adjustment committee

Relationship between Statutory Notice, Reasonable Notice at CL and Express Notice Provisions3 potential sources of notice period: o S. 63 ESA– escalating formula capping out at 8 weeks notice (obligation to provide written notice or wages in

lieu of written notice)o Contractual notice in the E K o Reasonable notice implied at CL absent provision in E agmt (0-24 months)

Machtingero Deals with interplay of all 3 notice period sources Specific question: what is the notice period where parties have K for notice period, which falls below the minimum requirements of the Ont. ESA? Takes place in Ontario – but in BC there are provisions of ESA that say that provisions cannot be waivedFacts: Machtinger and co-P Lefebrve both worked for car dealership and dismissed on same day. ER did not allege cause for dismissal so notice was owed. Both P’s had E agmts and had been recently amended, both on pre-printed forms. Mach’s K said 0 notice and Lef’s K said 2 weeks notice. o All EE’s and ER’s have contract at outset (oral, written, both). If severence not addressed, it is implied that notice

and severence will be reasonable under the CLo Commonplace that after E had begun, ER will put into place an agmt with notice and severence provisions – held

that without reasonable consideration, an ER cannot put a new agmt in place This case did not consider consideration so presumably there was consideration

Prov. Court: provisions not valid b/c in violation of Ont. ESAo What is the notice period then? Minimums of ESA or CL? held it was CLCA: Reversed decisiono The provisions of original agmt null and void but what we can take is that there was intention by the parties to

provide lesser amount of severance and one can infer minimum of ESA appropriate

SCC: o At CL: E K’s for an indefinite period require the ER, absent express contractual language to the contrary, to give

reasonable notice of intention to terminate the K if the dismissal is without cause (since 1936) Unless the K of E clearly specifies some other period of notice (expressly/impliedly), CL applies (Rebuttable

presumption)

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o Provisions of ESA: set out minimum notice periods and do not displace presumptions at CL (floors, not ceilings) S.4 of ESA – requirements of the act are min requirements

Effect of s. 4 ESA is that attempts to K out of statutory minimums are null and voido So, the portions of the P’s employment Ks that give smaller amounts of notice are null

Further, the terms of the K can’t be looked at as evidence of intention of the parties re termination – the term is null and void for all purposes (policy = floodgates concern)

So the appropriate minimums in this case are those of the CL S.118 ESA – nothing in act or regulations affects persons rights to commence and maintain action that, but

for the act, the person would have had the right to commence and maintain o Held: Minimums at CL appropriate (restored TJ decision)

POLICY Reasons given by SCC:o Important question b/c “work is fundamental to individual’s identity…” (CP p.238 para.30)o Objective of Empl Standards is to require ER’s to comply with standards in order to protect interests of EEso Act seeks to remedy unequal bargaining power between EE and ERo Many EEs don’t know what their statutory rights areo If punishment for ER’s failure to comply with the Act is simply to make them minimally comply, little incentive to

make K’s with their EEs that complyo An approach that is more consistent with the Act is that is the employment K fails to comply with the minimums

in the Act, then the CL presumption is NOT rebuttedo This approach protects EEs but doesn’t unfairly burden ERs, who can easily just K for the right minimums

Calculating Reasonable NoticeAnsari – Leading case in BC (leading case in Ontario is Bardal v. Globe & Mail)Background & Facts: 1984 Canada was in depression – BC Hydro terminated a # of graduate engineers. Hydro used a formula for determining severance and a number of EE’s disagreed and brought actions. Ansari and 3 others came before court in summary trial (procedure where one can have trial w/out actual witnesses in witness box – done on affidavit evidence).

Proposition: absent provision in K, ER who terminates must give reasonable notice and upon doing so is not required to compensate EE in any way. If no reasonable notice provided, the ER must compensate an award of damages that puts EE in position he would have been in had he received proper notice.o Side note: can often get damages for lost pension contributions, loss of LTD if injured during notice period,

bonuses that would have been received during notice period, share options b/c most ER’s don’t give working notice, it has to be valued at the outset

Leading passage from Bardal: "There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant." o Judge here refines Bardal factors:

Character of E and level of responsibility The more senior you are or the more responsibility you have, the greater the notice period to which you

are entitled We don’t have concept of near cause or take into account how well the EE performed – some judges will

apply near cause w/out saying that is what they are doing Here: Not useful to attempt distinctions b/w comparative E functions of the 4 P EE’s – all 4 were highly

skilled graduate engineers and that alone entitles them to reasonable notice **See Cronk below for discussion on status**

Length of Service Law requires a longer notice period for a long-term employee even though discharged employees of the

same age, skill and responsibility suffering under the same economic factors must be assumed to require an equal period to obtain equivalent employment. The reasons for this anomaly may be that a long-term employee has a moral claim, which has matured into a legal entitlement to a longer notice period.

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Age of servant Advancing years are an important because age bears so importantly upon the prospects for other

similar employment. Here: Prospects for older engineers extremely limited (in mid 40’s) IF EEs in 50’s then age becomes more significant factor

Availability of equivalent/alternate E (Economic Factor) Take into consideration the type of the position as well as income Length of notice not equivalent to length of time it takes to find another job If you didn’t have obligation to mitigate, there would be no incentive to find another job until the very

end Can take into account the depressed economy but must not receive undue emphasis

o Whether cause is alleged or not – in every case, submissions on what proper notice should be with severance determined based on that – various computer data bases identifying comparable cases

o Court noted rough upper limit for notice is 18-24 months

Duty to Mitigate (discussed further below p.31)o Under general law of K there is a general rule to mitigate o In E context, must try to find other work (Red Deer College v. Micheals – p.330)o If reasonable opportunities of E are offered it should be accepted to mitigate damageso If find lesser paying job – the damages might be the difference b/w your old wage and your new wageo Obligation on EE is not to accept any old job (high end car sales person might not be obligated to take job selling

Toyotas)o BUT it is a high burden for an ER to show that you failed to mitigate – the court will often require proof that

an ER would have hired that EE had they applied (who can convince an ER to come to court as a witness and say that! Rarely Done)

o What if you find a new job during the notice period? NO REQUIREMENT IN BC TO PAY ANY OF IT BACK Examples:

1. During trial, you find new job after 4 months. At trial, you will probably be awarded 4 months notice 2. You don’t find anything until after trial. You get awarded 12 months but have a job after nine. No need

to pay back those 3 months. SUCKERS!Assessment of Reasonable Notice Period and StatusCronk v. Canadian General Insurance Facts: Employed for 29 years (treated as continuously even though some gaps) as administrative assistant. Comparable cases received 20-24 months notice (except they were executives).

TRIAL COURT:Issue 1: Whether EE’s position in the hierarchy of a company should be taken into account when considered in determining notice. o Citing Ansari/Bardal factors:

Age 55 years old is a vulnerable age Too young to contemplate retirement yet too only to retrain

Availability of other E She was not qualified for any other job other than a clerical position in insurance company She doesn’t drive so limited to looking for work w/in Hamilton Fired because no job for her (suggests finding another might not be easy)

Length of service 29 years (6 years alleged gap when she left to raise children but continued to work on part-time basis) Leaving to raise children is a good reason and it would be perverse to penalize someone for raising their

children (so considered continuous employment) Long and loyal service

-- These 3 factors seem to suggest a reasonably long notice period (upper limit 24 mos.)-- Character of E

ER contends that the upper limits of reasonable notice are reserved for senior EEs with high salaries and major responsibilities

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In theory, the higher the rank the fewer similar positions available vs. less specialized jobs, the higher number of similar jobs available

Court did own research – 6 cases cited where management level EEs fired and Bardal factors considered. Lengthy notice periods given; however, secured new EE sooner than Ms. Cronk

Court states that reality is that the more education you have, the better chance of obtaining EE – rationale that it takes upper mgmt longer to find new jobs so they are entitled to longer notice is unwarranted.

Court did own sociological research to support its findings – person with more education is better position than clerical EE to find alternative E

o Held: 20 months severanceIssue 2 – Should the notice period determined in issue 1 be reduced because of the P’s failure to mitigate her damages by searching diligently for new employment?o An EE has a duty to mitigate in wrongful dismissal claimso She has been looking – has visited the employment centre twice a weeko Has no drivers license, is reasonably searching only what is publicly accessible o She was fired for ECONOMIC, not performance reasons – Ontario was in a recessiono She has mitigated as best she can

COURT OF APPEALo 3 separate judgments – all upholding appeal for diff reasonsIssue 1: weight to be given to character of Eo Court held that TJ erred in taking into account the sociological studies researched by the court w/out providing

counsel opportunity to comment on studies – beyond proper scope of judicial noticeIssue 2: if TJ departs from generally accepted principle that clerical E is not entitled to as much notice as senior EE, is that an error of law?o Court erred in departing from the accepted principleo “While the character of her employment will restrict her to the level of a clerical, non-managerial EE, the

respondent’s age and lengthy faithful service for the appellant properly qualify her for the maximum notice in her category”

Held: o Other 2 judges ultimately agreed that TJ erred in collapsing the Bardal factors – character of E into re-

employabilityo Notice = 12 months (upper end for non-managerial workers due to age and lengthy service)o NB: Not universally accepted that higher rank EE’s take longer to find work – just a factor to be considered

among other 3 – while TJ did collapse the two, Crawford doesn’t see it as a valid reason to overturn decision If character is considered on its own and not considered with re-employability, is it not just status? Should

status be considered at all?

Part 10: Calculating Damages An ER can dismiss an EE with no notice and no severance if there is just cause. If ER doesn’t have cause, EE can only dismiss with reasonable notice (Bardal factors) or severance in lieu of notice If no working notice provided, severance must be provided (remuneration you would have earned during working period) Action for wrongful dismissal based on implied obligation in the E K to give reasonable notice of an intention to terminate the r/ship (in absence of just cause) Law entitles both the ER and EE to terminate the E r/ship w/out cause. A wrong arises only if the ER fails to give reasonable notice (severance) Subject to terms in E K

Damage Assessment in E Law Disputeso If reasonable working notice is not given when an EE is terminated, there is a breach of K and damage flows

from that breach Damages = the wages EE would have earned had she been given proper notice (strives to put EE in

position they would have been in)

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EEs may be receiving statutory and contractual benefits during the period that the reasonable notice is intended to conver and these may be deducted from the damaged award

Onus is on the wrongfully dismissed EE to establish damages owing EEs are also under a duty to mitigate (duty on ER to establish failure to mitigate)

o Complications b/c salary is not limited just to wages: Situations where EE is paid on commission and salary varies over time – how does one predict going

forward what someone would have earned in commission given notice period? Courts look at running average (last 3 completed years) Court will make adjustments for a weak/strong economy

Bonuses – based as well on historical patterns and court may factor a bonus into damages Share and share options – if issuance of share had become a common practice, the court may calculate the

value of the shares and add that to damages Vesting period encourages EE’s to stay in organization

Vesting of share options (rather than granting outright shares, this grants EE’s the option to purchase shares at a given price regardless of the market price at that time)

Pensions – may have a defined contribution plan where ER matches EE’s contributions Benefits – to claim damages for lost benefits you must prove to court you have had to spend money to

replace benefits Long-term disability benefits – court may approximate what EE would have received from LTD plan and

order lump sum payment to EE who has been injured

Exemplary, Punitive and Bad Faith Damageso **Once you have already figured out what general damages would be**o An EE MAY be entitled to “bad faith” damages – when ER behaved high-handedlyo In very rare cases, punitive and exemplary damageso Wallace established idea of mental distress damages

Situation where bad facts bad law Set right in Honda v. Keays – got rid of the Wallace bump up

Wallace v. United Grain GrowersCreates the Wallace Bump Up – when ER acts in bad faith in the manner of dismissal that causes some kind of harm – in this case, mental distress – then get extra months added to reasonable notice in recognition

Facts: EE/Wallace worked for Public Press for 14 years. He was dismissed immediately by manager with no explanation and no notice. Week after dismissal he received a letter stating that his performance was unsatisfactory (however, a week before he met with managers and they had complimented him on his work). EE brought a claim for wrongful dismissal. ER then claimed cause for dismissal in statement of defence (ultimately withdrawn just before trial). This caused problems for Wallace (sought psychiatric help, job hunt unsuccessful).TRIAL: o Accepted evidence as fact that ER intended to play “hardball” with Wallace, that it did not have any good reason

to dismiss him, and claim of poor performance was not true. o Noted late withdrawal of allegation of cause. o Awarded 24-month notice period and severance. o Awarded aggravating damages for mental distress.APPEAL: reduced general damages to 15 months, overturned award of aggravated damages.o NOTE: question of whether Wallace, as undischarged bankrupt, can sue in his own name for wrongful dismissal.SCC:o Wallace argued he could sue his ER in contract or tort for “bad faith discharge” – imply term into K or develop a

tort such that an EE could not be fired except for cause or “legitimate business reasons” Rejected argument – CL long recognized right of ER and EE to terminate E K at any time provided there are

no express provisions to the contrary Too much ambiguity over what a “legitimate business reason” would be Accepted that damages could be awarded for bad faith conduct in the manner of dismissal

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First reviewed Bardal factors and identified they are not exhaustive (ie. inducement – if competitor convincing you to leave secure E to come work for them you may get severance based on E at former ER as well)

BF conduct in manner of dismissal compensated by way of extension of the notice period Need to give recognition to the unique situation in the E context: Work is one of the defining features of

our lives. The point at which the r/ship ruptures is the time when the EE is most vulnerable and in need of protection. To ensure EEs receive adequate protection, ERs out to be held to an obligation of good faith and fair dealing in the manner of dismissal, the breach of which will be compensated for by adding to the length of notce (Para. 95)

Obligation of good faith and fair dealing – no precise meaning. At a minimum, in the course of dismissal, ERs out to be candid, reasonable, honest, and forthright with EEs and refrain form engaging in conduct that is unfair or is in bad faith

o Subsequently held to mean – must tell EE if dismissal is for cause and what that cause is Not intended to be an automatic claim with every wrongful dismissal claim however, this is

exactly what happened (resulted in lengthier trials)o Court distinguished MD from manner of dismissal FROM MD just b/c of normal anguish from dismissal

No entitlement to damages from mental distress that result from the fact of dismissal (Addis) However, if mental distress results form the manner of dismissal then this is compensable

o HELD: upheld 24 mos. NOTE: Canada Labour Code’s Unjust Dismissal Provisions if you have 12 mos. or more consecutive service the ER cannot dismiss you unless it has cause or if no cause, there has to be the elimination of a function or a reduction in available work (applies to federally regulated ER’s) – similar restrictions in union context CL still allows dismissal without cause as long as adequate notice given

Criticisms of Wallace o If clerical worker and top exec both fired, the exec would receive 10 times the value for the mental distress they

sufferedo If you are employed by a fixed term K and you are fired 6 mos before fixed end date, could Wallace damages

extend beyond that end date?

Keays v. HondaFacts: Keays worked for Honda for 14 years. Diagnosed with chronic fatigue syndrome (CFS) and went on LTD benefits and stopped working. The Insurance company determined that he was no longer eligible and cancelled benefits and Keays returned to work but continued to have absences. Placed in Honda’s disability program which had objective to accommodate EE’s and manage absences. Absences became more frequent that diagnosing physician had anticipated. He was required to provide doctors notes justifying each of the absences and as time went on they became more “cryptic” in tone. Honda asked Keays to meet with independent doc of their choosing in order to determine how disability could be accommodated (controversial finding of fact – this is what SCC found). Keays initially agreed but then, on advice of counsel later said he would not without further information. Keays did not show up for a week so Honda sent a letter stating that if he did not return to work and see doc he would be terminated. He didn’t and was.

TRIAL: Found Keays entitled to 15 mos notice. Increased to 24 mos after applying Wallace for manner of dismissal and $500,000 punitive damages.o Relied on the following findings of fact:

In letter, Honda deliberately misrepresented the views of its doctors Honda said its doctors were of the view that he wasn’t suffering from CFS but this was not a fair summary of

what the doc said Keays was being set up when he was asked to see honda’s doc Keays’ condition had worsened after the dismissal – developed depression and an adjustment disorder Honda decided to cancel the accommodation of Keays as a form of reprisal for seeking legal advice

APPEAL: upheld TJ decision (but reduced punitive damages to $100,000)SCC:o Overturns TJ’s findings of fact (regardless of high standard of overriding and palpable error - Bastarache found

this error)o Reconfigured law on breach of duty of good faith and fair dealing:

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Previous state of law: no damages are available for distress caused by loss of job (Addis, Peso Silver Mines) Vorvis held that there must be independent actionable wrong Vorvis no longer law in Canada based on other SCC cases – Fiddler held you do not need independent

actionable wrong before damages for MD can be awarded for breach of K The duty of good faith in manner of dismissal (from Wallace) is still in operation but the court has said

that in respect of assessing damages for that breach, they are subsumed under the principle of Hadley v. Baxendale: What was in the reasonable contemplation of parties/foreseeable ( Hadley )? Damages are recoverable for K breach if the damages are such as may fairly and reasonably be

considered either arising naturally from such breach of K itself, of such as may reasonably be supposed to have been in the contemplation of both parties

E Context: Parties to E K bargain for a state of mental soundness in respect of the manner of dismissal and a breach of the duty of GF and fair dealing can cause damages that were in the contemplation of the parties psychological damages from mere fact of dismissal is a obvious possibility and so not recoverable as damages

BUT parties do not contemplate the ER being unduly sensitive, playing hardball in manner of dismissal… SO damages resulting from the manner of dismissal are recoverable if conduct is such as was described in Wallace

Where the ER engages in conduct during the course of dismissal that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive”

Damages assessed the same way all other moral damages are assessed – assessed as actual damages suffered (NOT as an extension of the notice period)o If found that ER acted in bad faith in manner of dismissal, but that conduct did not result in actual

damages from MD, then no extra damages for EE o Law does still retain option to issue punitive damages even if EE cannot prove

An EE alleging breach has to prove breach as well as actual damages suffered (MD will likely require expert evidence)

o Punitive damages Should receive most careful consideration and caution should be taken Conduct must be harsh, vindictive, reprehensible, malicious and extreme in nature

Mitigationo ** SEE ALSO P. 27**o Employment K is just a variation of a normal Ko Therefore, obligation of party to mitigate is thereo The leading decision on general duty to mitigate damages by a wrongfully dismissed EE is Red Deer College v.

Michaels (1975, SCC)o TEST used by court to determine if EE has failed to mitigate following wrongful or constructive dismissal

1. EE has failed to take reasonable efforts to secure reasonable E2. Had reasonable efforts been made, the EE would have secured alternate employment

ER pretty much has to bring forward another ER that will act as a witness saying “Yah, I would hire him” The chances of this happening are slim So, court rarely finds EE has failed to mitigate

o If EE mitigates, amount is deducted from damages during reasonable notice period o What happens if right after severance notice is paid out and then, within the reasonable notice period the EE

finds work – does it credit the ER? NO! Once funds paid out, that’s that

Mifsud v. MacMillan Bathurst (1989)(Leave to appeal to SCC denied)Deals with issue of when an EE may have an obligation to mitigate damages by returning to work for a dismissing ERFacts: Mifsud continuously employed by MB for 18 years when his employment ceased Sept, 1984. During spring/summer 1984, plant manager had sent around memos expressing dissatisfaction w/ the plant and its EE’s – including Misfud. By Aug, no doubt they were not happy with M’s performance, they transferred him to different plant and demoted him one position down, though his salary and benefits remained the same (his job did change a bit – less responsibility). He didn’t want the job – had meeting with GM who told him to take 1 wk vacation to think

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about it. Wrote him a letter that explained their position, said if you don’t come back to work on Sept 2nd we will assume you have quit. Misfud didn’t go back.TRIAL: Misfud awarded money by TJ for constructive dismissal from his job at MB (notice period of 10 months)

APPEAL:Issue One: Was Misfud constructively dismissed by MB?Issue Two: If he was, was the dismissal for just cause?Issue Three: Did Misfud take reasonable efforts to mitigate his damages?

o Constructive Dismissal = unilaterally making a fundamental change to essential terms in employment K. EE has the option of resigning, but treating it as a dismissal. You CAN unilaterally change a term in an employment K as an ER without repudiating the K, it happens all

the time – so long as its not fundamental To make a determination of constructive dismissal, you have to determine which terms of the K are

fundamental and what the nature of the breach is The manner in which E is changed and length of E are NOT important to determining whether there was CD

– Only matters for mental distress damages and reasonable notice period He was being changed from 2-shift to 3-shift work – this IS a factor in determining if he was demoted, and

whether that demotion was a fundamental change in the E K that amounted to CD Court satisfied he was demoted – change in title, change in shift work, less people under his supervision,

etc – but that does not necessarily = CD Question becomes = was there an implied term of the employment K that if at any time the company validly

considered Misfud’s performance to be unsatisfactory, it could, without his concurrence, demote him to a position of lesser responsibility but equal pay? Court said yes, had they considered it, they would have agreed that the company could demote him Note – this is obiter, because the decision rested on failure to mitigate, and BC courts have not followed

Misfud to hold that this sort of an implied term in employment K’s regarding demotion exists His refusal to accept the alternative position = failure to mitigate so the result is the same either way

o Mitigation In wrongful dismissal claims, if EE leaves immediately, he is required to take reasonable steps to mitigate his

loss and (barring agreement of the parties to the contrary) moneys earned in mitigation must be credited against his damages

The fact that transfer to new position = constructive dismissal does not eliminate obligation of EE to look at the new position as a means of mitigating

Where working conditions are not substantially different, the salary is the same, work is not demeaning, personal relationships not acrimonious, not unreasonable to expect an EE to return to the ER until find new employment or until the end of the reasonable notice period

Held: reasonable to expect EE to take position during reasonable notice period (mitigate)

NOTE: In a few years prior to Misfud, BC released a very similar decision in Farquhar – “where returning to work with same ER wouldn’t amount to working in embarrassing humiliating or hostile workplace there will be situations where you will be expected to return to work for an ER who has constructively dismissed you”.

So these were around for several years before Evans came from the SCC

Evans v. Teamsters (2008)Extended analysis from constructive dismissal to WRONGFUL dismissal – no reason to distinguish between the twoFacts: o Evans worked for T for 23 yearso Dismissed after election of new union executive, Hennessy

During election campaign, Evans supported his oppositiono Hennessy faxed Evans a letter of “termination”, called him to begin “discussions” to negotiate an end to the

employment Ko Evans’ legal counsel wrote Hennessy a letter saying Evans was entitled to reasonable notice and that Evans

would take 24 monthso He left the officeo Counsel for H wrote letter that said that E must return to work on June 1, 2003 to serve out the balance of the 24

months (which started in January with the letter and discussions and he had been paid since) to end work on December, 2004

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Letter also stated that if he refuses, then that will be just cause to terminate employment without notice and will be taken as failure to mitigate

o He doesn’t go back to work, claims that the letter never started his notice period, but if they rescind termination he will come back to work and the notice period could start then

o Bunch of other shit happens – ends w/ letter on June 2, 2003 saying that the union would be pleading Evans failed to mitigate by declining to return to work

SCC Decision:o Majority didn’t find the letter of January 2nd to be a letter of terminationo Previous cases , had been suggested that if wrongfully dismissed, not required to mitigate damages by going back

to ER that fired you However, in Farquhar, the BCCA stated that even a wrongfully dismissed EE could be required to mitigate by

going back on a temporary basis Cox case – the BCCA had accepted that even a wrongfully dismissed EE in the right circs have an obligation

to return to work w/ the same ER to mitigateo RE mitigation : don’t distinguish wrongful dismissal from constructive dismissal cases

Key element is that in both situation the ER has ended the K w/o notice Consistent with the notion that damages are meant to compensate for lack of notice NOT to penalize the ER

for the dismissal itselfo When ER offers EE chance to mitigate, the central issue is WHETHER A REASONABLE PERSON WOULD

ACCEPT SUCH AN OPPORTUNITY – assessed on an objective standard (case-by-case) Reasonable person expected to do so where working conditions are not substantially different, the salary

is the same, work is not demeaning, personal relationships not acrimonious (Misfud) Other relevant factors that underlie the contextual approach: history and nature of E, whether or not EE

has commenced litigation, and whether the offer of re-E was made while the EE was still working for the ER or only after he already left (Cox)

Critical element: EE is not obliged to work in atmosphere of hostility, embarrassment or humiliation (Farquhar)

Be sure to consider both non-tangible (work atmosphere, stigma, loss of dignity) AND tangible elements (nature and conditions of E)

ER bears the burden of proving reasonable person would have returned to worko HELD: Court finds he failed to mitigate – no evidence to support he had a poor relationship w/ the compan

SCC DISSENT – STRONGLY worded by Abella:o No obligation to return to work in light of the facts as she found themo She would have found Evans was terminated in Jan, there was never mention of a notice period

On fair reading of the evidence, she was probably righto Litigation commenced between the parties and that is a factor for applying Farquhar to give evidence of the

relationship between the partieso She also noted that in March, there was an audit on the office run by Evans (he wasn’t at work at that point)

Evans felt they were trying to find something to hang him witho There was also evidence that if he had returned to work he would not have had the respect of the community

given that they knew of his termination

Reasonable Notice and other Statutory Benefits: OffsettingIn addition to reasonable notice damages, wrongfully dismissed EEs may be entitled to a range of other statutory or contractual benefits during the period that reasonable notice damages is intended to cover (workers comp, EI, statutory notice, contractual benefits such as LTD Insurance)

Determination of Damages in Wrongful Dismissal Cases where EE in Receipt of BenefitsDisability BenefitsPrevious State of the Law:o Benefits SHOULD be deducted from awards of damages o Sylvester held that a K did not provide for the EE to receive both disability benefits and damages for wrongful

dismissal and no such intention could be inferred – came to this conclusion for 2 reasons: LTD benefits intended to be substitute for EE’s regular salary

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Payment of disability benefits and damages for wrongful dismissal have different purposes – made no sense to pay both

NB: the EEs entitlement to payment is premised either on ability or inability to work – makes no sense to pay damages based on assumption that he would have worked in addition to disability benefits which arise solely because he cannot work.

o May be different in cases where an EE is seeking benefits in addition to damages for wrongful dismissal on basis that disability benefits are akin to benefits from a private insurance plan for which EE has provided consideration. Or, where it is a group LTD plan provided through the ER but in fact the premiums entirely paid by the EE (LOOPHOLE)

Current State of the Law:o Benefits are NOT deducted from awards of damageso 2 recent cases from Ontario – McNamara v, Alexander Centre and Sills v. Children’s Aid Society got around

Sylvester through the loopholes on EE contributions: In McNamara, they said, he contributed to the LTD by accepting a lower salary as compensation In Sills, the court created a fiction that there was consideration paid at the outside even though no evidence

supported it So there seems to be considerable resistance to apply Sylvester

o What should ERs do? PUT AN EXPRESS TERM IN THE EMPLOYMENT K/DISABILITY AGREEMENT

Statutory Benefitso BC law suggests statutory benefits (Ie. Workers Compensation) WILL be deducted from damages

Reasoning is similar to Sylvester – they are entirely ER funded insurance scheme, the EE doesn’t pay the premiums

Taxation of Damages for Wrongful Dismissalo Generally speaking, damages are treated as income from employmento The courts will require payment of taxes o ER’s are actually required to withhold tax from the settlements and pay it directly to the Canada Revenue Agency

– moves in tiers from 10-30% depending on the amount of the settlemento Some flexibility – it is possible to structure the settlement in a way that will attribute portions of the settlement

of the amount to other categories If a wrongfully dismissed EE has retained legal counsel to pursue the claim and payment is ultimately made,

permissible to characterize portion for legal expenses Wont be taxed for that

Could attribute some to a “Retiring allowance” = payment made to EE on termination of employment for long service If payment made directly by the ER into the EE’s RRSP, then it wont be taxed

o Also possible to stretch the payment over a couple of years to lessen the tax burden

Releaseso Commonly usedo Trade payment for the EE signing the release so that they are foreclosed from pursuing any further claims

against the ERo Be careful: employing high pressure tactics

If ER makes offer that is high pressure court will frown on ito Be careful: ensuring compliance with the ESA

Enforcement – Common Law and Employment Standards Act

Common Law

Reinstatemento Very unlikely measure under the common lawo Courts very reluctant to enforce K’s of personal service

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o Much more common in the union context – happens frequently Is an available remedy under the Canada Labor Code

National Ballet of Canada v. Glasco (Ont SC, 2000)o Rare case where reinstatement on interim basis was orderedFacts: G is principal dancer for NBC. Canadian Actors Equity Association has a collective agreement with NBC that states certain minimum conditions if NBC decides not to renew a dancer’s K: must give 6 months notice plus severance pay, if failed to do so then K automatically renewed for 1 year. G given 6 months notice. Later alleged that she wasn’t renewed because of some political positions she had taken. o Brought a ton of legal proceedings – unfair labor practice, age discrim, wrongful dismissal, breach of K, etc.o There were 3 hearings – all by affidavito Interlocutory award issued – arbitrator ordered the operation of the non-renewal of her K be suspended until

the determination of her complaints on their merits, and that she be deemed employed by NBC and assigned roles and performances

o Court looks at decisions that mention mutual confidence between an ER and EE as a condition/factor to be considered in making such a mandatory order The ER needs to have confidence in EE, the situation needs to be “workable”

o NBC argued that there was no mutual confidence – the artistic director had no confidence in casting G, she is incompatible with his vision

o However, there is nothing that says such an order can’t be made, and the appeal court doesn’t have grounds to interfere with the interlocutory order

Arbitration Agreements in the Employment Ko In BC, we do have an Arbitration Acto In commercial disputes, arbitration clauses are commonly used in agreements between the parties

What they entail is that parties waive the right to go to court and agree that the matter will be dealt with by arbitration

o A number of advantages to arbitrations Availability of confidentiality (though not iron clad, b/c all subject to limited form of JR by the courts) Can choose arbitrator who has specialized knowledge in that area

o In theory, available for use in employment agreements

“A comparative analysis of the law regulating employment arbitration agreements in the US and Canada”o Use of arbitration and ADR is increasing in employment disputeso Few Canadian employment K’s have arbitration provisions – why? Because Canadian courts haven’t really

addressed the enforceability of arbitration decisionso Primary legal setting for resolution of employment disputes = administrative tribunals and agencies

So disputes go to quasi-judicial bodies – which are specialized in their jurisdictionso No fed or prov statutes in Canada expressly govern arbitration agreements b/w non-union EE’s and their ER’so Empl arbitration agreements are thus regulated by general statutes that regulate all domestic contractual

arbitration agreementso Courts tend to uphold arbitration agreements, restrict court involvement in them

Subject to their discretion to determine the validity and enforceability of the agreement pursuant to the Arbitration Act

o Agreements may be unconscionable – courts willing to recognize this in face of unequal bargaining power b/w EE and ER

Class ActionsMacaraeg v. E Care Contact Centerso About a potential class action someone wanted to bring against E Care Centre to enforce ESA rightsFacts: In ECare’s E K, nothing about overtime but verbally told company did not pay overtime. She worked long hours and was not paid for overtime. After termination of E, she brought claim seeking damages for overtime pay (breach of K claim) for herself and on behalf on class of EE’s at E Care. Intention was to bring action on her own behalf and then have it certified under CPA and she would represent class of plaintiffs.

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o Under CL there is NO implied term to pay overtime – so unless specifically included in E K, the court will not determine EE’s should receive overtime. IF parties do specifically K for overtime and that is not done, it is a breach of K and actionable Otherwise, it is merely a statutory right and can only be enforced through provisions of the ESA

o P argued that ESA overtime provisions should be implied terms of the KTRIAL: o Held that overtime provisions are implied terms of Ko She relied on Machtinger for the proposition that where severance provisions are void because they don’t

comply with ESA minimum, the more generous of the ESA or the common law will apply It was also said that if the court determined the ESA severance provisions applied, the EE’s would have had

the right to enforce statutory provisions through courto So by analogy, can also pursue statutory overtime in the courts o Relied on BCSC decision Kempo, for the proposition that where an E K doesn’t meet minimums of ESA, the

minimums of the act apply applies that principle to over time provisionso So therefore, statutory minimums become implied terms of K of employmento In the second part of her analysis, she refused to follow a whole bunch of other cases that said that EEs have no

right to pursue statutory rights under the ESA in courts Distinguishes past decisions b/c they didn’t consider the fact that statutory minimums were implied terms

of the K (just considered them statutory rights)… she finds they are implied terms and so can be addressed by court

Past decisions, b/c statutory rights, have to go through appeal mechanism set up by the Act Act did not expressly or by implication preclude Macaraeg from pursuing her action civilly for breach of K

o The ER appealedBCCA Decisiono Rejected her analysis and application of Machtinger and Kempo

o That case was not concerned with whether statutory minimums become implied terms of the employment Ko It was about what parties intend the notice provisions to be in the event that provisions were null and void

To address this case, the first question is whether a person who alleges minimum rights under the ESA breached has access to courts to enforce those rights

o GENERAL RULE : no right to courts at common law to enforce statutorily conferred rights, exceptions will arise where, on consideration of the whole legislation, it intended parties to be able to enforce it through civil action

o Need to the review the ESA to determine whether the act provides for enforcement mechanismo The court then reviewed all the enforcement mechanisms of the Act – found that there was an effective

mechanism for enforcement of OT rightso Therefore, general rule applied and there was no access to the courts

NOTE: If the court had found that the ESA did not provide for an effective enforcement mechanism and therefore the legislature intended for the courts to be involved, the court would have found that the OT provisions were indeed implied terms of K of employmento But they didn’t - so there was no claim, and no claim could be certified as class actiono Decision sounds death knell for class actions in terms of bringing class actions re: employment

standards

Restrictive Covenants (RC)o Everything we have been talking about so far in the class has been about the start of E, at the termination of E –

restrictive covenants deal with what you can/cannot do after termination of Eo In certain parts of business world, they are a very important mechanism to protect proprietary interestso Types of RC’s you will see in E agreements:

Non-competition agreement: will purport to restrict EE from working in specific competitive activities for a period of time after termination and w/in certain geographic area Used particularly in situations where EE’s are given a client base and close r/ship develops and ER

becomes vulnerable. If the EE leaves and competes, the clients may follow and the ER that brought clients in will lose clients to previous ER

Non-solicitation agreement (2 variants): likely also restricted by geographic area

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Restriction on soliciting customers Unlike non-compete agreement, a non-solicitation is not as invasive. Still allowed to compete, just

not allowed to solicit clients from previous ER Restriction on soliciting other EE’s

Not allowed to solicit EE’s from ex-ER’s companyo RC’s frequently found in purchase and sale agreements as well as E agreements (two are quite different)

Power imbalance when it comes to E K’s is a major policy rationale and is not as much of a concern in Purchase and Sale agreements.

o Note: Purchase and Sale Agreement’s will often contain RC’s preventing the seller to go into competition with the buyer for a certain time period. Here, courts are much more lenient b/c there is not the power imbalance that exists in an E/ER r/ship. More lenient b/c if seller could not ensure buyer there is a way to keep them out of competition, it would be

very hard to sell a business (practical considerations)CL APPROACH TO RC’s– tension b/w freedom to K and public policy considerations against restraint of trade.o At CL, courts are naturally hostile to restraints of trade because it violates public policy of liberty to trade and

free exchange of goods/serviceso Starting place when it comes to RC’s – PRIMA FACIE UNENFORCEABLE UNLESS REASONABLE AND IN THE

PUBLIC INTERESTo So, what is a REASONABLE RC (factors to consider):

Courts look at geographic scope (will scrutinize scope to make sure it does not go further than necessary/overly broad) (ie. if restricted from selling insurance anywhere in Canada/BC it is unlikely courts will enforce if market base is only the lower mainland)

Courts will look at length of time – outside limit is 24 months and in a number of instances courts have found less time is reasonable.

Courts looks at scope of activity prohibited Tratch case – had sold LTD insurance, signed a non-compete agreement that prevented him from selling

ANY KIND of insurance – BCCA held that was invalid because the scope was too broad

Shafron (Severance) FACTS: Shafron owned insurance company and sold shares to KRG. He continued to be employed for a number of years under numerous E K’s. All contained non-competition clauses that restricted him to not to work for another insurance broker for 3 years in the “metropolitan city of Vancouver”. Shafron left KRG and began working for another insurance broker in Richmond. KRG started action.

Problem: there is no entity “metropolitan city of Vancouver” TJ: dismissed action finding “Metro…” is ambiguous and KRG burden of showing covenant was reasonable was not met b/c they could not show that the covenant meant.CA: set aside TJ decision and found non-compete clause was enforceable. Found that “Metro…” was ambiguous but essentially decided to rewrite clause to mean “city of Vancouver, UBC endowment lands, Richmond and Burnaby”

In re-writing, they applied the doctrine of SEVERANCE . This doctrine involves reading down an otherwise invalid RC to what the court determines to be reasonable – in doing this, court relied on Transport North American (SC applied doctrine of severance and read down interest rate to 60% legal rate – read down otherwise unenforceable provisions)

SCC: overturned CA and effectively put an end to application of doctrine of NOTIONAL SEVERANCE to fix a defective non-compete or non-solicit agmt.o Court outlined two types of severance:

BLUE PENCIL SEVERANCE – used when portion of the K can simply be crossed out leaving the remainder of the provisions effective. This method has been effective when, for example, various regions are listed and some are crossed off leaving other more reasonable regions (world, Canada, BC, Vancouver…) Is available in E context but may only be resorted to sparingly, when the portion to be crossed out is

clearly severable, an error, trivial, and can easily be remedied by crossing out. NOTIONAL SEVERANCE – reading down otherwise illegal/unenforceable provisions to make it

legal/enforceable Not appropriate and should not be used in context of E agmts for 2 reasons:

o Unlike Transport, when there is a “bright-line test for legality” (ie. 60%), there is not bright line test in RC’s for what is reasonable. Reasonableness depends on circumstances of each case.

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o If we were going to apply in E K, it would be invitation for ER’s to impose unreasonable restrictions on EE’s knowing the court is going to enforce it. This will result in many EE’s deciding to abide by unreasonable RC that never get challenged.

o The doctrine of notional severance cannot be used in case of ambiguity. Even if not ambiguous, the notion of severance has no place in context of RC in E agmts. Doctrine of notional severance does not give court right to import their idea of what is reasonable.

o Doctrine of blue pencil was argued could be used to just cross out “metropolitan” – rejected as the doctrine must be applied to trivial matters, not the main part of the agmt. No indication that had parties put their minds to it, they would have crossed out “metropolitan”

NOTE: Tie Shafron back in with Meryl Lynch v. RBCo Shafron was about an ER trying to draft something legit to protect himself. Contrast with RBC where they did not

have any RC’s in place. In that circumstance there was no restriction on EE’s at all. There it was based on fiduciary duties. Ultimately in RBC, court relied on duty of good faith and fair dealing, but had the court not found manager had that obligation, RBC would have been left with limited remedies. Usually, absent RC, EE’s are free to compete

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