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Case in Point

Legal Developments in Human Resources Law

Hicks Morley Case in Point Blog is Moving

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We will continue to track recent case law developments in a broad range of areas that are of interest to employers and human resources professionals alike – just in a new spot.

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Accrual of Service or Seniority Based on “Days Worked” is Not Discriminatory, Tribunal Rules

Posted in Human Rights

The Human Rights Tribunal of Ontario (HRTO) recently issued a decision of particular interest to employers with groups of employees who, although covered by a collective agreement, accrue service or seniority based on days of active work.

The Limestone District School Board employed casual employees who were covered by a CUPE collective agreement. Casual employees had sporadic hours of work and were used to fill in for absent regular employees. The collective agreement stated that casual employees were not entitled to accrue seniority. Instead, they accrued service based on the “days worked” as a casual employee.

The Applicant was a casual Educational Assistant and then became a casual Caretaker. During her tenure as a casual employee, she took two pregnancy/parental leaves and had a series of unrelated sick leaves, during which times she did not accrue service, since these were not “days worked.” The Applicant became a regular part-time Caretaker and was then entitled to accrue seniority and to be credited with her “days worked” as a casual employee towards her newly acquired seniority.

The Applicant claimed that it was discriminatory and contrary to the Human Rights Code (Code) for the Board and the collective agreement to have denied her any ability to accrue service while on statutory or sick leaves.

The Board argued that the accrual of “days worked” as a casual employee was negotiated with and agreed upon by CUPE as an appropriate method of service accrual for a casual employee. Given the sporadic and unpredictable nature of casual work, this was a reasonable method of service accrual. The Board also argued that accruing service based on “days worked” as a casual employee was not discriminatory, in that the days a casual employee did not work could be due to a variety of reasons, and not specific to any of the prohibited grounds of discrimination.

Significantly, the HRTO adopted the Board’s argument that failure to accrue service for days not worked, regardless of the reason for not working, was not discrimination contrary to the Code.

This case was argued by Vince Panetta of our Kingston office. For more information on this case or related matters, please contact Vince or your regular Hicks Morley lawyer.

Bender v. Limestone District School Board, 2016 HRTO 557

Appellate Court Finds Settlement for Payment of Bonus Enforceable Despite Breach of Non-Compete Clause

Posted in Employment Law

The Court of Appeal recently upheld a motion judge’s finding that an employer was required to pay a bonus despite the fact that the dismissed employee was in breach of a non-compete clause.

In Wilson v. Northwest Value Partners Inc., the parties entered into a settlement at mediation regarding Wilson’s claim for benefits (inclusive of a bonus) following the termination of his employment with Northwest. In the days following the mediation, Northwest learned that Wilson was working with a competitor contrary to the terms of a non-compete clause in his employment contract. Counsel for Northwest then confirmed in a letter that Northwest was no longer prepared to accept the terms of the proposed settlement and wished to proceed with the action. In response, Wilson brought a motion to enforce the settlement. By way of cross-motion, Northwest asked the court to declare that the parties had not reached a settlement or alternatively provide an order that the enforceability of the settlement agreement be determined at trial.

The central issues before the motion judge were: (1) whether the parties had indeed reached a settlement; and (2) whether any settlement reached should be enforced.

In deciding whether the parties had reached a settlement, the motion judge reviewed the facts and concluded that the parties had intended to create a legally binding settlement and had reached an agreement on all of the essential terms of the settlement, largely evidenced through the settlement documentation exchanged.

In concluding that the settlement should be enforced the motion judge was mindful of certain key legal principles including finality, the fact that a settlement agreement should not be enforced if it would create a real risk of injustice and “second thoughts” do not constitute a valid reason for non-enforcement. Ultimately, the motion judge concluded that Northwest failed to demonstrate any real risk by the enforcement of the settlement. Specifically, he found that there was nothing in the settlement agreement which purported to release Wilson from the terms of his employment contract; rather the settlement only required Wilson to relieve Northwest from the action. As a result, Northwest remained free to pursue its allegation that Wilson was in breach of the non-compete (which it was doing through a separate action), a fact the motion judge found had no bearing on the settlement reached.

On appeal, the Court of Appeal found that there was no ground upon which it could interfere with the motion judge’s finding. Specifically, the Court noted that there was clear evidence to support the judge’s finding that the parties had settled Wilson’s claim for payments owing to him, there was nothing wrong with enforcing the settlement despite Wilson’s breach of the non-compete and the conclusion that the settlement did not include any claim by Northwest for the alleged breach of the non-compete was entirely reasonable. In this regard, the Court was mindful of the fact that the breach of the non-compete was not on the table at mediation and there was a significant amount of time remaining in the duration of the non-compete (11 months).

This case is a good reminder to employers that if post-employment activities are a concern when settlement discussions are occurring, these concerns should be clearly raised and documented. A word of caution, however, that courts remain reluctant to deny employees bonus payments or other benefits which are arguably earned and owing prior to termination and unrelated to post-employment conduct.

Full Payout to End of Fixed Term Contract in Case of Early Termination, No Duty to Mitigate

Posted in Employment Law

In Howard v. Benson Group Inc. (The Benson Group Inc.), the Ontario Court of Appeal ruled that in the absence of an express provision specifying a pre-determined notice period or pay in lieu (for early termination without cause), on the early termination of a fixed term contract an employee is entitled to the wages the employee would have received to the end of the fixed term contract. The Court also ruled that, absent an express provision addressing mitigation, an employee whose employment is terminated (without cause) prior to the end of a fixed term contract does not have an obligation to mitigate his or her damages. In other words, the employer has to pay the contract out to the end of the fixed term.

In this case, the employee was employed pursuant to a five-year fixed term contract. His employment was terminated without cause after 23 months and the employer paid out two weeks’ notice, relying on the Employment Standards Act, 2000 and the following contractual term:

8.1       Employment may be terminated at any time by the Employer and any amounts paid to the Employee shall be in accordance with the Employment Standards Act of Ontario [sic].

As described in a previous blog post, the trial judge found clause 8.1 unenforceable and awarded common law reasonable notice. The trial judge did not award a payout of wages for the remainder of the five-year fixed term. The employee appealed and was successful.

The Court of Appeal noted that the employment contract expressly provided for early termination. Clause 1.3 of the contract set out the general framework: “(t)he Employee and the Employer may terminate the Employee’s employment at any time in accordance with the terms and conditions of this Agreement.” Since the trial judge found clause 8.1 unenforceable, that clause was effectively removed from the contract. As a result, the contract did not specify a period of notice or pay in lieu in the event of early termination.

By declaration of the Court, the employer became liable to pay the employee the amount equal to his salary and benefits for the unexpired term of the employment contract (almost three years).

This decision further highlights the challenges that employers face when trying to draft adequate fixed term employment contracts and limit their liability upon termination. It is of paramount importance that all provisions of an employment contract be carefully drafted and the impact of recent case law on that drafting be considered.

(See our article “Employment Contracts: How to Get it Right and Help Your Chance of Success” for tips on best practices.)

Court Reaffirms Broad Academic Discretion of Universities

Posted in Education Law

In Tran v. University of Western Ontario,  the Ontario Superior Court recently considered both the ability of an institution to shield itself from civil action on the basis of “academic discretion” and the liability of the individual employees of the institution in exercising such discretion.

Justice Dunphy accepted that universities enjoy broad discretion in respect of academic decisions. However, he also noted that academic discretion ought not to be used as a “guillotine” to avoid civil actions that relate to academic decisions. He accepted that there are a range of decisions made by an academic institution, some of which are clearly within the broad discretion afforded to the institution but others which may not fall so clearly within such discretion. As the court is obligated to permit novel claims to be tested, the decisions which do not fall clearly within the institution’s academic discretion are those ones that must be examined before being struck from a statement of claim.

In this motion, Western sought to strike allegations pertaining to: mentoring, supervision and training; maintenance of academic records; evaluation; and the internal investigation process, on the basis that each of the allegations related to the exercise of its academic discretion. After examining each claim, Justice Dunphy found they ultimately fell within the broad discretion afforded to Western and struck them. While not suggesting that the plaintiff do so, the Court granted leave to amend the claims relating to academic discretion.

Justice Dunphy also struck the claims made against various employees of Western. In doing so, he accepted that each of the employees was acting in his or her capacity as a member of the applicable faculty at Western. As the university may only act through its employees, the Court accepted that the actions of the employees were truly those of Western. The claims against all of the individual defendants were struck.

Although this decision seems to suggest that courts will engage in a more rigorous examination of the allegations which are sought to be struck on the basis of “academic discretion”, the integrity of the institution to make academic decisions was upheld and the broad discretion afforded to these institutions remains intact.

Human Rights Tribunal Rules that Miscarriage is a Disability

Posted in Human Rights

In a recent decision, the Human Rights Tribunal of Ontario (Tribunal) found that the Applicant, who had suffered a miscarriage, had a disability within the meaning of the Human Rights Code (Code). While this decision has garnered much attention in the media, its potential significance for employers going forward may not result from the particular disability at issue, but from the analysis leading to this conclusion.

The Applicant alleged that she had experienced a series of unconnected events in 2013 that together “profoundly affected her health and well-being.” These included injuries from a slip-and-fall, a subsequent miscarriage and the death of her mother-in-law. The employer terminated her employment following a period of absences from work. At issue at this stage of the proceedings was whether the Applicant fell within the protections of the Code.

With respect to the Applicant’s miscarriage in particular, the Applicant testified that she continues to experience “significant emotional distress from the miscarriage even today.” The Tribunal accepted this evidence and went on to find that the miscarriage constituted a disability within the meaning of the Code. In doing so, the Tribunal ruled that a miscarriage is neither a common ailment, nor is it transitory. The Tribunal further noted that a miscarriage may also be protected under the ground of sex or as an intersection of sex and disability.

As such, although the Tribunal found that the physical event of miscarriage may constitute a disability and is itself disabling, the Applicant’s subsequent significant “emotional distress” appears to have been a consideration in reaching the conclusion that the Applicant was disabled. This was notwithstanding the fact that the Applicant did not assert a mental health disability in seeking to establish her claim.

Moreover, while there is significant jurisprudence establishing that temporary and transitory illnesses and ailments are not disabilities, the Tribunal expressly rejected the assertion that in order to constitute a disability, the condition must have “an aspect of permanence and persistence.”

Prudent employers should remain mindful of the various legal obligations that arise under the Code when a disability is asserted – be it physical or mental in nature – and adopt a “best practices” approach. This includes responding sensitively to all disability-related requests on an individual basis, and inquiring further into the employee’s specific needs to ascertain whether accommodation is appropriate in the circumstances.

Mou v. MHPM Project Leaders, 2016 HRTO 327 (CanLII)

Federal Privacy Commissioner Weighs In Against Sharing Details of Employee Discipline

Posted in Information and Privacy

In a recently released decision summary, the Office of the Privacy Commissioner of Canada (OPC) held that a bank acted properly in deciding not to tell the victim of unauthorized access precisely how it had punished its offending employee (Employee).

The victim, the complainant in this case, was a neighbour of the Employee who happened to work at the complainant’s bank. The complainant became suspicious that the Employee had improperly accessed her personal information at the bank and she complained to the bank. It confirmed that her account had been accessed by the Employee without authorization. The complainant requested further details about the privacy breach, including “how many times and on what dates the employee had accessed her account, what information was accessed, whether it was disclosed to a third party, and what specific disciplinary measures were taken” against the Employee. The bank was forthright about the breach but told the complainant that it could not disclose the specific measures taken against the Employee. Dissatisfied with this response, the complainant pursued the matter internally with the bank and eventually filed a complaint with the OPC.

The OPC held that the bank had acted appropriately in providing the complainant with the details relating to her own personal information but withholding the information relating to what discipline it had taken against the Employee. In other words, the OPC held that the complainant was entitled to her own personal information (which included details about how and when the information was accessed), but not to the Employee’s information, including the specific disciplinary steps taken against her.

The OPC’s guidance is welcome and topical in light of the media attention recently given to the problem of employee “snooping” and in light of the pending federal breach notification requirement. Note that the Office of the Information and Privacy Commissioner of Ontario has taken a different approach in enforcing Ontario privacy legislation, requiring institutions and health information custodians to share the details of any disciplinary response to a privacy breach.

Organizations are advised to pay close attention to the applicable regulatory guidance in notifying and otherwise communicating with individuals affected by improper employee access and other types of privacy incidents.

$30,000 in Damages Awarded against Volunteer Board of Directors for Discriminatory Posters in Housing Co-operative

Posted in Human Rights

The Human Rights Tribunal of Ontario (Tribunal) recently awarded $30,000.00 in damages against the volunteer members of the Board of Directors of Rouge Valley Co-operative Homes Inc. The Tribunal found that the Board failed to adequately address resident complaints about harassing and discriminatory messages posted throughout the co-operative (Co-op), contrary to section 2 of the Ontario Human Rights Code (Code).

In Welykyi v. Rouge Valley Co-operative Homes Inc., ten residents (Applicants) were targeted by an unknown perpetrator who posted 18 vulgar and offensive messages about them throughout the Co-op. The messages contained comments relating to the prohibited grounds of disability, race, sex, gender identity, ancestry, age and receipt of public assistance and were described as being “truly heinous” and displaying a “shocking level of ignorance and intolerance.”

The Applicants, many of whom were prior Board members themselves, reported the matter to the new volunteer Board of Directors. The Board made efforts to remedy the situation, which included issuing three notices to all members, relocating security cameras, installing additional cameras that did not record footage, consulting with members of the police, holding a board meeting and/or mediation and eventually installing a new camera in the mailroom. Ultimately these efforts were unsuccessful. The Applicants then alleged that the Board had failed to ensure that they were free from harassment and discrimination with respect to their housing as required under the Code.

The question before the Tribunal was whether or not the efforts of the volunteer Board of Directors to ensure the Applicants were free from harassment and discrimination were adequate.

The Tribunal first considered the Board members’ awareness of the human rights issues. It noted that at the relevant time the Board did not have an anti-discrimination/anti-harassment policy or mechanism in place to deal with the issues, even though as a result of the incidents the Board adopted a Human Rights By-law and the Board members underwent human rights training. The Tribunal also found that “…the Board had no appreciation of the human rights dimension of the harassment” until the Centre for Equality Rights in Accommodation (CERA) became involved and wrote to the Board members reminding them of their obligations under the Code.

The Tribunal then focused on the actions taken by the Board “post-complaint” and noted “significant deficiencies” in the response to the harassing messages, including:

  • The complete absence of communication with the Applicants. The Tribunal stated that when a housing provider receives a complaint, it should acknowledge the complaint and assure the complainants involved that it will be addressed. The Board’s efforts at holding a meeting and offering mediation were found to be deficient. First, given the context of the ongoing conflict between the old and new Board members, the Tribunal found that it was not clear that the meeting was intended to resolve the harassing messages. Only the previous Board members were invited rather than all of the victims of the harassment. As well, the meeting invitation stated that the goal of the meeting was to “develop a plan to serve our Co-op in the future” without any mention of the harassing messages. Second, the Tribunal noted that mediation is a dispute resolution process, and given that both parties agreed that the harassing messages had to stop, mediation was not required in these circumstances. Finally, in any event, the meeting broke down and the issue of the messages was never discussed.
  • The failure of Board members to express denunciation of the harassing messages and concern for the victims or to give any indication to the victims that something would be done about the messages. The Tribunal held that the harassing messages created a poisoned atmosphere for the Applicants and it was the responsibility of the Board to “take back” the living space for the residents. This could have been done by publicly denouncing the harassment and keeping the residents advised of the situation.
  • The failure of the Board to take prompt action to counteract the effect of the discriminatory messages. The Tribunal found that even if the meeting was intended to address the messages, the meeting was held almost five months after the messages began to be posted. In addition, the third notice sent to Co-op members was the first, and only, notice to actually refer to and describe the harassment. It was not sent until four months after the harassing messages began. Finally, the delay by the Board in installing the camera in the mailroom (approximately five months after the messages started) supported the Tribunal’s conclusion that the Board did not act proactively. While the Board had installed fake cameras earlier on, the effectiveness of installing those cameras was undermined by the fact that it became widely known among Co-op members that the cameras were not real.

Finally, with respect to the resolution of the complaint, the Tribunal found that the Board did not make any real efforts to investigate the harassment. Specifically, Board members did not attempt to speak to residents or anyone else who may have had knowledge of the incidents in question.

The Tribunal accepted the Applicants’ submission that the Board members’ failure to address the harassment adequately exacerbated the effect of the harassment. As a result, even though the Board members were not directly responsible for the messages, the Tribunal awarded $3,000 compensation to each member targeted by the harassment for the failure of the Board to adequately investigate and address their complaints. The Board was also ordered to post copies of the decision for a period of six months.

This case highlights the importance of housing providers being aware of their Code obligations to maintain accommodation free from discrimination and harassment as well as the potential severe consequences for failing to do so. It also provides guidance with respect to addressing claims of discrimination and harassment. Housing providers should ensure that they take all claims seriously, act proactively, and most importantly, communicate with the residents at all stages of the investigation. It would also be wise for housing providers to have a discrimination and harassment policy which provides a mechanism to address Coderelated complaints.

With thanks to Hicks Morley Articling Student Kathleen Tate for her assistance in the preparation of this post.

BC Court Dismisses CFL Concussion Case for Lack of Jurisdiction

Posted in Labour Relations

In a recent decision that has garnered media attention, the Supreme Court of British Columbia concluded it was without jurisdiction to hear claims brought against the Canadian Football League (CFL), its teams and various individuals relating to concussions alleged to have occurred to a former professional football player, as all of the matters in dispute arose under a binding collective bargaining agreement.

Arland Bruce commenced a civil court action for negligence, failure to warn and negligent misrepresentation, seeking substantial damages against the CFL teams and other defendants for an alleged failure to provide safe working conditions and protect his health and safety during his years as a professional football player. Specifically, Mr. Bruce alleged that he was knocked unconscious and suffered a concussion during a game for the BC Lions on September 29, 2012, and that the BC Lions and Montréal Alouettes teams were negligent in allowing him to return to play in the Western Division Final on November 18, 2012 (BC), and throughout the 2013 season (Montréal), and that they misrepresented and failed to warn him of the dangers of continuing to play professional football.

As in Ontario, the relevant BC and Québec labour legislation provides labour arbitrators with exclusive and broad remedial jurisdiction to interpret and apply the terms of a collective agreement under a mandatory grievance and arbitration process, which is binding on the employer, the union and employees. Accordingly, the CFL and the teams brought an application to have the claim removed from the courts and struck out on the basis that the courts did not have jurisdiction to hear the case. They argued that the alleged claims were governed by the terms of his Standard Player Contract (SPC) and the applicable collective agreement, and therefore, pursuant to established Supreme Court of Canada case law, they were within the exclusive jurisdiction of a labour arbitrator – not the courts.

In response, Mr. Bruce argued that the statutory regimes that typically grant labour arbitrators exclusive jurisdiction over such disputes were inapplicable to the CFL due to the unique nature of the collective bargaining relationship, among other things.

The Court rejected this argument and accepted the position of the CFL, the teams and the other defendants. It concluded that Mr. Bruce’s claims arose under the collective agreement, and therefore, must resolved through the grievance and arbitration process. The Court struck out his claim in its entirety.

In reaching its decision, the Court concluded that the dispute related to matters of health and safety, and specifically, whether the CFL or the teams that Mr. Bruce had played for had taken steps to ensure his health and safety in carrying out the duties they allegedly owed to him. More particularly, the Court determined that the substance of Mr. Bruce’s claim fell within the scope of the provisions of the collective agreement addressing player safety and player equipment. It further found that the language of the arbitration provisions required disputes between a player and his team and/or the CFL, like that involving Mr. Bruce, to be finally and conclusively settled through the grievance and arbitration process, even if not all of the parties are bound by the collective agreement.

The Court expressly rejected Mr. Bruce’s argument that the wording in the relevant provisions – i.e. that a dispute “may be submitted to arbitration” and that a grievance “may be initiated” – made the grievance and arbitration procedure optional or non-exclusive. Nor was the Court persuaded that a player’s ability to negotiate his personal compensation or certain other items in the SPC gave it jurisdiction over the case. Instead it found that the authority to negotiate these issues had been delegated by the CFL and  CFLPA and had to be performed within the terms of the collective agreement.

The Court further concluded that Mr. Bruce could have obtained a meaningful remedy for any injuries that he may have suffered under the collective agreement, and that he could have filed a grievance at the time he commenced his civil claims in the courts. In fact, the Court noted that Mr. Bruce was “still arguably eligible” to file a grievance (if an arbitrator granted an extension to the time limits) despite having failed to initiate a grievance within the one-year time limit under the collective agreement. Importantly, however, the Court determined that even if Mr. Bruce was precluded from filing a grievance due to his delay, it would not alter the result in this case because he could have obtained an effective remedy through the grievance and arbitration process.

Significantly, the Court declined to consider the allegations relating to the conduct of the CFL, the teams and other defendants in their research and representations with respect to concussions and head injuries, which was a central part of Mr. Bruce’s case, finding that such an inquiry went to the merits of the dispute and was unnecessary to determine whether it had jurisdiction.

As a result, the Court concluded that it is without jurisdiction to hear the claims and ordered Mr. Bruce’s notice of civil claim to be struck out in its entirety.

Counsel for Mr. Bruce has indicated that he intends to appeal the decision.

While the matter arose under BC and Québec legislation, this decision affirms and applies well-established first principles of labour law in Canada in the context of labour relations governing professional sports. The decision further underscores that the exclusive jurisdiction model governs these types of disputes, and the key principle of our labour relations framework that matters arising under a collective agreement are arbitrable, and within the exclusive jurisdiction of a labour arbitrator.

The CFL was represented by Hicks Morley’s Stephen J. Shamie and Sean M. Sells, and Geoffrey J. Litherland.

Bruce v. Cohon, 2016 BCSC 419

Appellate Court Finds Restrictive Covenant Not Enforceable Where Party Had No Legitimate/Proprietary Interest to Protect in Territory

Posted in Employment Law

The Ontario Court of Appeal recently found that a restrictive covenant was unreasonable because the respondent, who sought to enforce the covenant, did not have a legitimate or proprietary interest to protect within the territorial scope of the covenant.

In MEDIchair LP v. DME Medequip Inc., the Court was asked to decide whether the application judge had erred in finding that the restrictive covenant (provided in the course of a sale of business) was reasonable in scope, having regard to the legitimate or proprietary interest of the respondent.

The Court began its analysis by reviewing the principles of reasonableness which govern the enforceability of restrictive covenants in Canada. Citing the Supreme Court of Canada in Payette v. Guay, the Court noted:

[38] […]  the test for reasonableness is whether the clause is “limited, as to its term and to the territory and activities to which it applies, to whatever is necessary for the protection of the legitimate interests of the party in whose favour it was granted.”…

[40] […]  “A non-competition clause that applies outside the territory in which the business operates is contrary to public order.” […]

Using these principles, the Court of Appeal overturned the application judge’s decision and concluded that while the covenant was unambiguous and the temporal and territorial boundaries were not too broad, the covenant was still unreasonable because the respondent did not have a legitimate and proprietary interest to protect in the territorial region.

In reaching its conclusion, the Court relied heavily on the admissions made by the respondent in cross-examination, namely that they had no plans to set up a franchise in the restricted territory and hadn’t since the covenant had been signed.

Although the Court acknowledged the different levels of scrutiny that will apply when assessing a covenant, based on whether it is given in the employment context or a sale of business, it concluded that it did not need to decide what level of scrutiny properly applied. The focus of the inquiry was not the reasonableness of the temporal and territorial restrictions; instead it was whether there was a legitimate interest entitling protection which applies regardless of the level of scrutiny used.

The Court also observed that while reasonableness will be interpreted on the parties’ anticipated expansion of the business at the time the covenant was signed, the covenant will not be enforced where such anticipated business expansion does not come to fruition. In other words, although the parties may have acknowledged at the time they signed the covenant that the respondent had an interest to protect in the territorial region cited (based on its expansion plans) the respondent was not entitled to rely on this interest when seeking to enforce the covenant if such expansion never occurred.

This case serves as a good reminder that even though a covenant may be reasonable in respect of time and space, the party seeking to rely on the covenant must still show that the covenant is necessary to protect a proprietary interest within the defined geographic scope. It also suggests that while reasonableness of a covenant continues to be assessed based on the reasonable expectations of the parties at the time it was signed, enforcement of the covenant will likely depend on the commercial realities which exist at the time of enforcement.