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Case in Point

Legal Developments in Human Resources Law

Divisional Court Finds Arbitrator’s Approach to Pre-Access Drug and Alcohol Testing Reasonable

Posted in Human Rights, Labour Relations

The Divisional Court has dismissed a judicial review application of an arbitration decision that held that pre-access drug and alcohol testing was contrary to the parties’ collective agreement and the Ontario Human Rights Code. While the Court declined to comment on the Code, it upheld Arbitrator Surdykowski’s finding that the applicant had violated the collective agreement and was therefore ordered to cease and desist pre-access alcohol and drug testing of employees.

In addressing a policy grievance brought by the United Association of Journeymen, Local 663, Arbitrator Surdykowski applied the Supreme Court of Canada’s 2013 decision in Irving Pulp & Paper v. CEP Local 30. In particular, the arbitrator noted that the dangerousness of a workplace will not automatically justify the unilateral imposition of random drug or alcohol testing. In fact, as the Supreme Court noted, additional evidence of enhanced safety risks, such as evidence of a general problem with substance abuse in the workplace, is required.

While drug and alcohol testing may still be appropriate and permissible in certain circumstances, such as post-incident and reasonable cause situations, the Divisional Court’s decision reinforces the need for evidence of drug and alcohol-related issues in the workplace to justify pre-access testing.

 

Divisional Court Upholds Jan Wong’s Obligation to Repay Settlement Funds for Breach of Confidentiality

Posted in Administrative Law, Labour Relations

The Ontario Divisional Court has unanimously upheld Arbitrator Louisa Davie’s decision that Jan Wong breached her confidentiality obligations under a settlement with her former employer, The Globe and Mail (the “Globe”) and is bound by the repayment obligation she agreed to as part of the settlement. The Court held that Ms Wong lacked standing to advance a judicial review application in the circumstances and dismissed all of Ms Wong’s challenges to Arbitrator Davie’s July 2013 decision.

In 2008, the Globe, Ms Wong and her Union entered into a Memorandum of Agreement (“MOA”) that resolved grievances relating to Ms Wong’s termination of employment with the Globe and denial of sick leave benefits. Among other terms of settlement, the Globe agreed to pay Ms Wong two years’ salary as a lump sum and Ms Wong agreed to keep the terms of settlement confidential. In the MOA, the Globe, the Union and Ms Wong agreed that if Ms Wong breached confidentiality, Arbitrator Davie would decide whether a breach had occurred and, if it had, Ms Wong would be required to repay the two years of salary to the Globe.

Ms Wong subsequently wrote and self-published a book in which she used multiple phrases that disclosed that the Globe made a financial payment to her as part of the 2008 settlement.

In her July 2013 decision, Arbitrator Davie agreed with the Globe’s position that Ms Wong had breached her confidentiality obligations and was required to repay to the Globe the lump sum salary payment that she had received.

Ms Wong brought an application for judicial review of Arbitrator Davie’s decision, arguing (among other issues) that the decision violated procedural fairness and principles of natural justice on the basis that the Union failed to properly represent her interests and advance the arguments she wished to make, Arbitrator Davie was biased based on her involvement in mediating the 2008 settlement, and the arbitrator applied the wrong analytical framework in deciding whether the repayment clause was enforceable.

The Divisional Court agreed with the respondents that Ms Wong lacked standing to challenge Arbitrator Davie’s decision. As a general principle, only an employer and the union have standing in court to challenge an arbitrator’s decision and none of the exceptions to that general principle applied on the facts. Ms Wong’s argument that her union representation was so deficient that she should be granted standing to bring the judicial review did not “find any traction in the evidence.” There was “little basis” upon which Union counsel could be “fairly and rationally criticized” and the litigation strategy decisions about which arguments to advance were Union counsel’s decisions to make. The Court found that Union counsel did his best to protect Ms Wong’s interests even when she was not protecting her own interests. The significant impact of Arbitrator Davie’s decision on Ms Wong was not a deciding factor in terms of her standing.

Despite Ms Wong’s lack of standing, the Divisional Court went on to decide the merits of the application. The Court found that there was no evidence of a breach of natural justice in the arbitration proceeding or any reasonable apprehension of bias by Arbitrator Davie. The Court agreed with the characterization by the Globe’s counsel during oral argument that this was “basically a simple case” about enforcing a settlement arising out of a labour grievance. In the Court’s view, Ms Wong was trying to greatly complicate the matter in a fundamentally flawed way by raising the Globe’s alleged actions outside the MOA.

The Court held that Arbitrator Davie correctly and reasonably concluded that Ms Wong had breached the MOA and commented that it was hard to see how Arbitrator Davie could have concluded otherwise, given the MOA and the statements in Ms Wong’s book.

On the issue of equitable relief from the MOA’s repayment obligation, the Court found that Arbitrator Davie applied the proper legal analysis in concluding that the repayment provision was not unconscionable. Although Arbitrator Davie did not refer to a particular decision that Ms Wong sought to rely on, the Court was satisfied that Arbitrator Davie applied the same considerations, applied the proper legal test and applied a decision that referred to the case in question. The Court noted that an arbitrator is entitled to latitude in applying the law to a particular context and is not required to use the same language or engage in the same analysis as a judge would use in deciding the same issue.

The Court dismissed Ms Wong’s argument that the MOA’s repayment provision was unenforceable. There was no inequality of bargaining power in this case: the terms of the MOA had been the subject of significant negotiation and Ms Wong was represented throughout by experienced counsel, both Union counsel and her own personal counsel. The Court also held that there was no inherent unfairness in requiring Ms Wong to repay the monies that she agreed to repay if she breached the MOA. The repayment provision was the mechanism by which the confidentiality clause sought by the Globe could be enforced: “The deal under the MOA was clear. The Globe and Mail was to pay the applicant a large lump sum and the applicant was to stay quiet about the payment. It was an entirely reasonable enforcement mechanism… .”

Ms Wong was ordered to pay costs of $15,000 to each of the respondents.

The Divisional Court’s decision reinforces many of the fundamental principles of our labour relations system, including the exclusive union representation model, the deference granted to arbitrators in deciding cases within the applicable labour relations context and the enforceability of settlements. At the end of the day, this case illustrates the simple proposition that a deal is a deal.

The Globe and Mail was represented by Hicks Morley’s Stephen Shamie and Jodi Gallagher Healy.

HRTO Decision Granting Significant Remedies Upheld on Appeal

Posted in Human Rights

The Divisional Court has upheld a decision of the Human Rights Tribunal of Ontario in which the Tribunal ordered significant damages against the Hamilton-Wentworth District School Board and also ordered reinstatement of an employee after an almost decade-long absence from the workplace. The Court agreed with the applicant’s submission that “the goal of the remedial provisions of the Code ought not to be thwarted because of the passage of time that was largely beyond the control” of the applicant. The Vice-Chair’s decision was held to be “intelligible, transparent and with justification” and within the range of reasonable expectations.

This case demonstrates the potential breadth of remedies that may be available in the human rights context. The School Board is currently seeking leave to appeal from the Court of Appeal for Ontario.

Another Reminder to Employers: Draft Termination Notice Provisions with Care

Posted in Employment Law, Minimum Standards

The Ontario Superior Court has reaffirmed that if a termination provision in an employment contract does not strictly comply with the requirements of the Employment Standards Act, 2000 (“ESA”), it will be considered null and void.

In Miller v. A.B.M. Canada Inc., the plaintiff, Mr. Miller, was a management accountant. He was hired into the position of Director, Finance and Business Process Improvement at $135,000 per year, which the Court found to be a middle management position. He was employed for 17 months in total before his employment was terminated.

The termination provision in his employment contract stated ““regular employees may be terminated at any time without cause upon being given the minimum period of notice prescribed by applicable legislation, or being paid salary in lieu of such notice or as may otherwise be required by legislation.” (emphasis added).” The Court held that neither the plaintiff’s car allowance nor his 6% pension contribution were included as amounts to be paid during the notice period, contrary to the ESA. As the provision was null and void, a period of reasonable notice was calculated.

Notably, in calculating an appropriate notice period the Court held that the plaintiff had some responsibility for the fact the contract was not compliant with the ESA. It took into consideration the plaintiff’s prior experience in the human resources field and the fact that his position with the defendant required him to monitor relevant legislation, including employment standards legislation. The Court found that the plaintiff could have “voiced objection to whatever provisions he found unsatisfactory” in the employment contract, but did not. It stated:

By signing the contract, Mr. Miller signified to the employer that he had read, and understood, and accepted the terms of the contract. Had he in fact read what he acknowledged having read, the parties could have either negotiated their differences, or parted ways and avoided a period of employment that has been unhappy and no doubt costly for both. In the circumstances of this case, the employee cannot escape bearing some responsibility for the fact that both parties entered into a contract which fell below ESA standards. [para 51]

In the final analysis the Court awarded three months’ notice and it is unclear whether, or by how much, the reasonable notice period was reduced due to the plaintiff’s role in entering into an unenforceable contract. However, a three month notice period is on the low end for a short service middle management employee.

This case is yet another reminder to employers that termination provisions in employment contracts must be carefully drafted to ensure strict compliance with the ESA. Otherwise, an employer may unexpectedly find itself paying out a term of reasonable notice instead of the minimum standards notice it thought was agreed upon in the employment contract. What will remain to be seen is whether other courts in similar cases will hold employees responsible in some small way for agreeing to an unenforceable contract term.

Common Law Notice – Can Employers Deduct STD and LTD Payments?

Posted in Employment Law

As demonstrated by the Ontario Superior Court’s recent decision in Diamantopoulos v. KPMG LLP (“KPMG“), the answer to this question is still “it depends.” In determining the issue, courts will look at a number of contextual factors to determine “the intention of the parties” when they entered the employment agreement.

In KPMG, the plaintiff commenced a sick leave for depression following a disciplinary meeting regarding her conduct and attitude. When her application for long-term disability (“LTD”) benefits was denied, the employer contacted her to arrange for her return to work. It made several unsuccessful attempts to meet with the plaintiff and eventually terminated her employment when she failed to report to a scheduled meeting. The plaintiff then advised that she had been diagnosed with breast cancer and was undergoing treatment. As a result, the employer modified her severance package and continued her benefit coverage to ensure she was eligible to apply for both short-term disability (“STD”) and LTD benefits.

Terminations of this kind are sometimes considered risky by employers. Indeed, the plaintiff subsequently launched an action and claimed that the employer should be liable for aggravated damages, punitive damages and intentional infliction of mental distress. The Court dismissed all of these claims and specifically found that the plaintiff had been treated with “courtesy, respect, fairness and sympathy throughout her employment.”

The STD/LTD Deductibility Question

The plaintiff received both STD and LTD payments during her ten month notice period. In order to determine the intention of the parties with respect to the deductibility of these payments from the notice award, the Court reviewed both the employment contract and the disability policy.

The Court found that the STD payments should be deducted from the notice award based on the following:

  • the benefits were provided as salary continuance;
  • the plaintiff had not contributed directly to the cost of the benefits; and
  • the costs of the benefits were absorbed by the employer as a form of self-insurance.

The Court came to the opposite conclusion with respect to the LTD payments. It found that the LTD payments were “disability benefits” not salary or income replacement. This conclusion was based on the following:

  • the LTD payments were more in the form of private insurance payments, (the employer only paid premiums to the insurer);
  • the plaintiff had contributed to the cost of the benefit; and
  • the payments were made by the insurance provider directly to the plaintiff.

These conclusions are in line with other cases which have found that unless the STD/LTD benefits are self-insured by the employer, they will not be deductible. Accordingly, in situations where disability benefits are not provided through an “Administrative Services Only” Plan, employers would be wise to assume that benefit payments will not be deductible.

Court of Appeal reduces 24.5 months’ notice granted to 70 year old employee

Posted in Employment Law

In 2013, the decision of Kotecha v. Affinia garnered some attention among employment lawyers and human resources professionals. The motion judge’s award of 24.5 months’ notice (22 months’ notice, in addition to the 11 weeks of working notice already provided) to a 70 year old employee was seen by some as a potential indicator marking a trend of higher notice periods for older workers at or past the age of 65.

At the time of termination, the employee was a machine operator making $18.23 an hour. He was 70 years old and had 20 years of service. Counsel for the Plaintiff brought a successful motion for summary judgment seeking a notice period of 22 months. Evidence was provided that the Plaintiff had applied for over 200 jobs and failed to achieve even a single interview. The motion judge applied the traditional four factors from Bardal v. Globe and Mail Ltd. to determine an appropriate notice period: length of service, age, character of employment and availability of  alternative employment. He indicated that older employees will have a much more difficult time securing alternate employment. The motion judge also rejected a traditional principle that an individual holding a lower level, less skilled position should be entitled to a lower notice period, and commented that the position held by the employee was of declining importance in today’s modern world.

Not surprisingly, Affinia appealed the notice period. Before the Court of Appeal for Ontario, Affinia made an argument that the motion court judge was “bound” by a previous decision involving the same employer and another employee on the basis that the facts were similar. The facts were actually not similar, as the employee in the previous decision was younger and had shorter service. The Court expressly rejected Affinia’s argument. Nonetheless, in reviewing the motion judge’s decision, the Court stated that courts should strive to “ensure that notice periods, which are inherently individual, are consistent with the case law.” In this case, while the Court of Appeal recognized that the employee had “no realistic possibility of obtaining similar employment,” the notice period of 24.5 months was found to be excessive and it held that there were no exceptional circumstances to justify the award. The Court concluded that 18 months was reasonable in all of the circumstances, and that the 11 weeks’ working notice must be deducted from that period.

While this case is good news for employers, it also demonstrates the risk and unpredictability in estimating what a judge might find to be a reasonable notice period. As a result, employers should consider having a well-crafted termination clause in their employment contracts, which will mitigate against this uncertainty.

Kotecha v. Affinia ULC, 2014 ONCA 411 (CanLII)

Arbitrator Upholds Dismissal of Grievor for Posting Vicious Comments about Co-Worker on Facebook

Posted in Labour Relations

In a recent labour arbitration award, Arbitrator Laura Trachuk upheld the dismissal of a three and one-half year employee for posting vicious, humiliating and threatening comments about a co-worker on Facebook. While the Arbitrator left many specifics out of her decision in order to protect the identities of those involved, this decision serves as an important reminder that in a “connected” society, off-duty, on-line conduct can lead to discipline and discharge.

In United Steelworkers of America, Local 9548 v. Tenaris Algoma Tubes Inc., the grievor “D” complained about a co-worker (identified in the decision as “X”) for not following workplace procedures during a shift. A Team Leader spoke with X, who stated that D was not following workplace procedures either, and both were told to finish out the shift and speak to another manager the following day.

However, before that could happen, D decided to take their dispute to Facebook, posting disparaging comments about X without referencing her by name, but by making reference instead to a distinctive physical characteristic. A co-worker responded to this post and suggested that a physically aggressive act be performed with this particular physical characteristic. The grievor then responded with further violent and sexual suggestions.

Upon learning of the postings the next day, X complained to management. The grievor took down his posts and apologized to management. He asked to apologize to X, but was told that she was too upset. The grievor was sent home pending investigation and was ultimately terminated for breach of the collective agreement and the employer’s workplace violence and harassment policy. The other employee who replied to D’s Facebook posting was given a ten-day suspension.

Arbitrator Trachuk did not hear evidence from either X or D, and made her findings based on the submissions of the parties and evidence from the manager responsible for the termination decision. The Union argued that there were a number of mitigating factors which should weigh in favour of lessening D’s penalty, including:

  • there was a workplace incident between D and X prior to the comments being made which caused D frustration;
  • the comments were made in the heat of the moment;
  • D did not refer to X by name in his postings; and
  • D had apologized for his comments and admitted that they were wrong.

Arbitrator Trachuk rejected all of these arguments for mitigation, importantly stating that the conduct in question did not constitute “off-duty” conduct because it was directed at “poisoning X’s work environment.” It was obvious to the Arbitrator that the employer’s workplace violence and harassment policy would include threats and harassment via Facebook, and that the grievor ought to have known that discipline and discharge were potential responses to this conduct.

In concluding her decision, the Arbitrator stated:

…An employee does not necessarily get one free sexual harassment before he loses his job. The grievor, in this case, posted hateful comments about X, one of which could reasonably be construed as a threat of sexual assault. When men “joke” about the sexual violence they should inflict on a woman she can reasonably be concerned that they may actually hurt her… [T]he grievor sexually harassed X and created a poisoned work environment. The grievor is not a long term employee and the company could have little confidence that he could be trusted to never harass someone else. The company is responsible under the Human Rights Code, OHSA and the collective agreement for maintaining a workplace free of harassment and, in these circumstances, reinstating the grievor would be contrary to that goal, even if he were assigned to a different shift from X. This is not an appropriate case for progressive discipline. I do not find that the company violated the collective agreement by terminating the grievor’s employment. The grievance is denied.

The employer in this case was able to rely on its policies concerning workplace violence and harassment to defend its decision to terminate the grievor for his on-line actions against a co-worker. However, whether or not an arbitrator is willing to shoe-horn off-duty conduct into such a policy will likely depend on the nature of the conduct and the wording of the policy. In order to ensure that employers are able to discipline for off-duty, on-line conduct, it is important that such conduct is contemplated under the organization’s workplace violence and harassment policies. Likewise, if an organization has policies concerning social media use, those policies should also address how on-line misconduct may be treated. Taking such steps to address these issues from a policy perspective will help employers defend their decisions to discipline and discharge employees when they engage in off-duty, on-line conduct that harms fellow employees or brings negative attention to the organization.

Supreme Court Affirms Broad Public Sector Decision-Making Privilege

Posted in Information and Privacy

Below is a post I wrote for All About Information regarding a significant decision rendered by the Supreme Court of Canada last Friday on the scope of the “advice and recommendations” exemption from disclosure found in the Freedom of Information and Protection of Privacy Act:

“Yesterday the Supreme Court of Canada held that the “advice and recommendations” exemption in Ontario’s freedom of information legislation exempts both suggested courses of action and evaluative analysis from the right of public access.

The advice and recommendations exemption provides public servants with a zone of privacy in which to make good decisions that are free from the pressures of partisan politics. Justice John Evans of the Federal Court of Appeal has described the purpose the exemption as follows:

It would be an intolerable burden to force ministers and their advisors to disclose to public scrutiny the internal evolution of the policies ultimately adopted. Disclosure of such material would often reveal that the policy-making process included false starts, blind alleys, wrong turns, changes of mind, the solicitation and rejection of advice, and the re-evaluation of priorities and the re-weighing of the relative importance of the relevant factors as a problem is studied more closely. In the hands of journalists or political opponents this is combustible material liable to fuel a fire that could quickly destroy governmental credibility and effectiveness.

The Supreme Court of Canada held that the IPC/Ontario’s interpretation of the advice and recommendations exemption as shielding only the recording of a “suggested course of action that will ultimately be accepted or rejected by the person being advised” was unreasonable. It said that the IPC’s interpretation gave insufficient meaning to the word “advice,” which has a broader meaning than the word “recommendation.” It also said the IPC’s interpretation unduly limited the protective purpose of the exemption.

The Supreme Court of Canada’s ruling applies equally to government ministries and other Ontario FOI institutions. It means that recordings of decision-supportive “evaluative analysis” made by public servants, employees, consultants and others will generally be exempt from the right of public access. This may include, for example, lists of alternatives with comments about advantages and disadvantages or simply lists of alternatives. It may also include, according to the Court, drafts of the same kind of recordings.”

John Doe v Ontario (Finance), 2014 SCC 36 (CanLII).

Employer Permitted to Define “Spouse” under Benefit Plan to Exclude Married but Separated Spouses

Posted in Pension and Benefits

In a recent decision of the Ontario Human Rights Tribunal (“Tribunal”) in VanderLinde v. Corporation of the City of Oshawa (“VanderLinde”), the Tribunal found that it is not discriminatory for an employer to require that an employee’s legally married spouse be living with the employee as a condition of eligibility as a spouse under its group benefit plan.

In the VanderLinde case, the City of Oshawa (“Employer”) offered eligible employees a group benefit plan that covered part of their medical and dental costs (“Benefit Plan”). Spousal coverage under the Benefit Plan required that a person be married and not living separate and apart from an employee, or be the common law spouse who has been continuously living in a conjugal relationship with an employee for at least one year.

In 2012, the Employer provided advance notice that, as a result of a change in service provider effective January 2013, eligible Benefit Plan employees were required to provide up-to-date information about themselves and their dependants.  Through this process, the Employer discovered that one employee, Ms. VanderLinde (“Employee”), had been erroneously claiming her husband as a spouse under the Benefit Plan since 2009, despite the fact that, although they were legally married, they were no longer living together. At this point, the Employer notified the Employee that her husband did not qualify for spousal coverage under the Benefit Plan, since he did not fall under the Benefit Plan’s definition of “spouse.” Continue Reading

No Jurisdiction to Determine Unjust Dismissal Complaint Where Employee Terminated Without Cause Pursuant to Employment Contract

Posted in Employment Law

In a recent adjudication under the Canada Labour Code (the “Code”), Adjudicator Rose relied on the Federal Court decision in Atomic Energy of Canada v. Wilson to grant an employer’s preliminary objection and dismiss an unjust dismissal complaint. In doing so, he found that in the case of without cause terminations an adjudicator lacks jurisdiction under the Code where the employee had agreed to a valid and enforceable contract of employment that complied with the Code and no discrimination, bad faith, reprisal or any other impropriety was alleged in relation to the termination.

The applicant was initially hired by the employer into a bargaining unit position, but was promoted to a non-union position and signed an employment contract upon his promotion. The employment contract provided that the employer could terminate his employment at any time by giving him two weeks’ notice in writing or his minimum entitlements under the Code, whichever was greater. About five months after his promotion the applicant was terminated without cause and was provided pay in lieu of notice and severance pay in accordance with the Code. The applicant subsequently filed a complaint under the Code alleging he had been unjustly dismissed.

The employer raised a preliminary objection to the complaint on the basis that the adjudicator was without jurisdiction to order a remedy under the Code unless the dismissal in question was “unjust.” As the Code permits an employer to terminate an employee without cause, a termination cannot be considered “unjust” merely because it was done on a without cause basis. Thus, as long as the termination was in accordance with the valid terms of an employment agreement that complied with the Code and there were no allegations that the termination was in any way “improper,” a without cause termination could not be considered unjust. In this case there were no allegations of impropriety and the employer therefore asserted that the adjudicator was without jurisdiction to consider the complaint.

Adjudicator Rose agreed with the employer’s argument and dismissed the complaint.

He found that the Federal Court’s decision in Atomic Energy of Canada v. Wilson clearly held that without cause dismissals are permitted under the Code. An adjudicator is without jurisdiction to grant a remedy under the Code merely because the dismissal was without cause, provided that an employee had entered into a valid and enforceable employment contract which complies with the Code and there are no allegations of discrimination, bad faith, or reprisal.

Adjudicator Rose noted that adjudicators must carefully scrutinize each contract of employment. Here, he found that there was no indication of impropriety nor any allegation that the dismissal arose out of discrimination, reprisal or bad faith. As such, he was without jurisdiction and dismissed the complaint.

This decision highlights for employers in the federal sector the importance of having a written contract with an enforceable termination provision that complies with the Code. In these casesemployers should be able to bring a successful preliminary objection to most unjust dismissal complaints arising from without cause terminations. However, employers should also expect to see more unjust dismissal complaints alleging bad faith or discrimination, even when none existed, in order to circumvent this type of preliminary objection.

Filo Sigloy v. DHL Express (Canada) Ltd (20 March 2014, Rose)