Know what you are owed past employment

| July 25th, 2017 | No Comments »

It is standard to receive a notice when an employer wishes to end an employment relation. This notice must grant a reasonable amount of time for the employee to find a comparable job. Alternatively, the employer may provide the employee payment equivalent to the amount the employee would have earned during the notice period, inclusive of all benefits, in lieu of a notice period. When an employer fails to provide notice, then the employee may litigate to receive the notice pay for the breach of contract. The length of the notice period or pay in lieu must consider certain factors, such as age, position, length of service and labour market conditions. Overall, notice period is intended to place an employee in a comparable position had there been no termination. However, employees may also face harsh treatment from employers wishing they resign, in hopes the employee leaves voluntarily – be mindful that an employee may still seek notice damages in this instance. If the time leading to dismissal and manner of dismissal itself caused significant hardship, employees may be owed additional compensation in aggravated and/or punitive damages.

 Aggravated damages are awarded as additional compensation to the employee when it can be established that the manner of dismissal was done in bad faith, and that the breach of contract caused mental distress or damages to reputation as it relates to future employment opportunities. Bad faith conduct may include being extremely insensitive or untruthful in the dismissal process. Further, the employee must be able to prove that damages such as mental distress were also suffered. For instance, it is not enough to claim mental distress or psychological harm. Rather, there must be evidence that proves mental distress was suffered during the course of dismissal.

Punitive Damages are awarded to the employee to punish the employer for actions during the dismissal that the courts find exceptionally indecent. For punitive damages to be awarded, there needs to be an ‘independent actionable wrong’ such as a breach of good faith. To be clear, these are additional wrongs committed by the employer, independent of the breach of contract. There also may be punitive damages awarded if it is determined that the employer’s misconduct was so malicious that it offends the court’s sense of decency – an example being an employer exploiting an employee’s disability in attempt to force them to quit.  Depending on the wrongs committed, damages may range from $10 000 – $450 000. It is important to note that punitive damages require wrongs that are exceptionally reprehensible, and are thus rarely awarded. An employment law expert will be able to assess the possibility of receiving such damages.

 Overall, when facing a dismissal that caused exceptional difficulty, it is advisable to seek the assistance of an employment lawyer. It may be the case that notice pay does not fairly compensate the harm suffered, and additional damages will need to be pursued.

‘Entire Agreement’ Clauses: Usefulness and Precautions

| July 20th, 2017 | No Comments »

Implementing an entire agreement clauses is a useful way to ensure that no verbally expressed promises are contested by an employee for being unfulfilled. An entire agreement clause can eliminate dispute over the terms of employment that were not explicitly stated within the written employment contract. The clause specifically should state that all promises and terms of employment are sufficiently expressed within the written contract. The clause must also express that the contract supersedes all discussions, negotiations and documents prior to the signing of the contract, and that all agreed terms of employment are represented within the contract being signed. This may avoid unnecessary legal costs if any future challenges of unfulfilled promises are made by the employee.

Employers must be careful not to take advantage of an entire agreement clause because the courts will not be favourable to negligent misrepresentations made to the employee, regardless of what the employment agreement states. Employers must also ensure individuals placed in positions that represent the company accurately represent the position being offered. If promises made were a necessary condition to having the employee accept the offer of employment, it is likely the promises are fundamental to the employment agreement. If found to be untrue, such a promise would be considered negligent misrepresentation. An example may be an employee being promised long term employment based on the availability of future projects, only to be terminated shortly after due to there being no such work available.

Overall, an entire agreement clause offers employers peace of mind in knowing that costly litigation will be less likely in the event an employee claims a promise has not been fulfilled. This does not absolve employers, however, of their duty to fairly represent the position offered prior to an employment agreement being signed. Courts will never act favourable to entire agreement clauses when it is found that the employer was negligent in the representation of the position offered. When drafting entire agreement clauses, it is necessary to have a legal professional draft such clauses properly and to be advised of which promises must be honoured to avoid claims of negligent misrepresentation.

Do I Owe A Contractor Reasonable Notice to End Services?

| July 17th, 2017 | No Comments »

Independent contractors are not bound to their clients by an employment relation. Independent contractors are, in essence, their own employers. The courts will apply a number of tests which look at certain factors such as economic dependency, permanency, control, and risk of loss/profit among other factors to establish whether there is an employment relation. The less integrated the contractor is within the business to which services are rendered, the more likely the contractor is an independent contractor. When the contractor is deemed a dependent contractor, however, the courts view this as an employment relationship. In this instance, the contractor would be owed reasonable notice or pay in lieu if services are no longer required.

A case that demonstrates a relationship of a dependent contractor is Mancino v. Nelson Aggregate Co., [1994]. Mancino was a self-employed truck driver that served Nelson Aggregate almost exclusively. Nelson Aggregate closed the shipping location that was responsible for providing Mancino his work. Although Mancino was under his own business, the trial judge found that there was a dependency between Mancino and Nelson Aggregate characterized as “mutual and permanent in nature”. The judge looked at Mancino’s economic dependency, consistent daily attendance, requests for vacation time, and so on. Ultimately, what was an independent contractor on paper was determined to be a ‘dependent’ contractor and thus deemed an employment relation. The trial judge found that Nelson Aggregate had disclosed the likelihood of the shipping location being closed, as it was under contract, a year prior to its closing. Nelson Aggregate therefore did fulfill its duty of reasonable notice to Nancino.

Overall, employers must be aware of the difference between independent and dependent contractors. Often, businesses will seek service from an independent contractor for efficiency and affordability. However, employers must recognize situations that indicate a dependency with a contractor. Factors such as length of service, regular attendance, economic dependency, and lack of control over hours and work may indicate dependency. If services are no longer required after a dependency is established, reasonable notice may be owed. Ontario employment laws are going to become more strict in this regard, which means employers must be more aware of the nature of their relation with independent contractors. It is always advisable to seek the advice of an employment lawyer if faced with this uncertainty to avoid possible claims of notice pay, which can be costly.

Constructive Dismissal – An Intolerable Environment or Culture

| July 6th, 2017 | No Comments »

When an employer unilaterally changes a fundamental term of an employee’s job, then an employee may quit and claim ‘constructive dismissal’. Essentially, what this means is that the changes to the employment relation would have left any reasonable individual with no other option rather than to quit. The employee may then claim constructive dismissal, and if successful, would be owed a severance (referred to as ‘notice pay’) as compensation.

Unilateral changes that usually trigger constructive dismissal include significant reduction of pay, demotion, discrimination, reduction of hours and so on. The cause of a constructive dismissal is usually easily identified as a single factor of significant affect. However, the courts do not necessarily look at a single factor. Constructive dismissal may result from several changes or circumstances that create an intolerable environment for an employee. The cumulative effect, therefore, would trigger a constructive dismissal.

This was demonstrated in Shah v. Xerox Canada Ltd 2000 (OCA). Shah was an employee of Xerox for 12 and a half years with a good performance record, bonuses and raises. Shah accepted an internal transfer and reported to a manager with a personality and philosophy that was not compatible with Shah’s. Shah’s new manager was aggressive in style, very outgoing and confident, assertive and combative; Shah was reserved, withdrawn, and gentle. This created uncertain expectations for Shah, as his new team encouraged an ‘empowerment’ culture, free thinking and independence, whereas Shah liked direction and structure. Shah’s new manager raised multiple performance concerns. The first critical performance review used poor factual evidence, and the second one provided poor detail and questionable claims. Shah then received 3 unexpected and unwarranted warning letters over a 2-month span, the last placing Shah on probation without defining any expectations or allowing an opportunity to respond. This also added to the mental distress Shah was experiencing in addition to stress from his personal life. Shah requested a transfer and once his manager denied him, Shah quit and successfully claimed constructive dismissal.

The court considered the cumulative effect of Shah’s change of environment. This included the change in culture, the manager’s style and treatment towards Shah, including the lack of detail contained in the warning letters, unclear expectations and unfounded claims. Whereas Xerox argued that constructive dismissal must result from a unilaterally imposed fundamental change to the employment contract, the court maintained that the focus must be on whether the employer intends to be bound by the employment contract. The cumulative effect of the multiple warnings that lacked details for corrective action signified Xerox did not intend to continue the employment relation with Shah. This, in addition to the cultural change affecting Shah, resulted in a constructive dismissal.

Overall, constructive dismissal may result from conditions not typical of most constructive dismissal causes. It is important to speak with an employment law expert if faced with an intolerable situation in the workplace that makes continued employment unreasonable.

Can You Get Employment Insurance (EI) If You Quit?

| June 28th, 2017 | No Comments »

If an employee voluntarily leaves their employment without reason, this would result in disqualification from EI entitlements. There are certain circumstances, however, that an individual would be able to voluntarily leave their employment without forfeiting their EI eligibility. Under the Employment Insurance Act, there are numerous reasons that allow employees to ‘quit’ without forfeiting their EI eligibility. Each of these reasons is called ‘just cause’, which means that since the employee was justified under the Act in leaving their employment, EI eligibility is not forfeited.

The ‘just causes’ scenarios listed under the Act that allows individuals to retain their EI eligibility include:

  • Sexual Harassment
  • Moving with a spouse of dependent child
  • Discrimination
  • Work that endangers health or safety
  • The need to provide care to an immediate family member
  • Assurance of a job in the immediate future
  • Negative changes to your salary/wages
  • Excessive overtime or an employer refusing to pay for overtime wages
  • Major changes to work duties
  • Discrimination due to being a member of an association, organization, union, etc.
  • Pressure from an employer or employee to leave employment

If quitting is necessary and is linked to one or more of the above ‘just cause’ qualifiers, it is important to support your decision to leave employment with any information possible. It is important to establish that quitting was the only reasonable decision that could have been made given the situation.

Upon applying for EI, an agent will assess the claim of just cause. It is important to have as much information as possible, as an investigation of the employer (if necessary) and the reasons being claimed to support just cause will be evaluated.

Can You Collect Employment Insurance (EI) if Fired?

| June 27th, 2017 | No Comments »

The general rule for Employment Insurance eligibility is having lost employment for no fault of your own. If an employee is fired, there may be a chance that EI eligibility has been forfeited. When an employer dismisses an employee for misconduct, then this would disqualify an individual from being eligible for EI in Ontario. However, misconduct is often difficult to establish so as an employee, it is important not to assume ineligibility before attempting to apply.

Misconduct can include an inappropriate action that was deliberate and violated a term of employment. If termination resulted after only one act, then it had to have been misconduct that was very serious and incompatible with the conditions of employment. Otherwise, termination resulting from misconduct should have proceeded progressive disciplinary action – such as a warning, meeting and so forth.

It is important to gather any facts possible about the firing. Upon applying for EI after termination, a government agent will contact the employer to gain details regarding the reasons for the termination in relation to the misconduct. The employer will be required to justify why the misconduct warranted termination, which includes evidence of breach of contract, policy, or essential employment condition.

Once the investigation with the employer concludes, the employee will have an opportunity to accept or deny the reason(s) given for the dismissal, give his/her own version of events, and provide any witnesses if possible. The assigned agent will render a decision once considering both versions, each of which is given equal weight.

Overall, when being dismissed for misconduct, it is important to enquire and gather any information possible as to the reason for the firing. When in doubt, it is always best to apply for EI and allow the investigative process to determine whether EI eligibility will be granted.

Employment Contract – What to Include and Why

| June 20th, 2017 | No Comments »

A written employment contract is essential for employers and employees to minimize future disputes and the risk of costly litigation.  If properly drafted, an employment contract will clearly out the respective rights, obligations and expectations of the employer and employee. In preparing an employment contract, here are some of the most salient features to consider:

  1. Overall Clarity: an employment contract should be written in clear and precise language. In circumstances where its terms are vague or ambiguous, the courts will apply an interpretation that is least favourable to the party responsible for its drafting.
  2. Independent Legal Advice/Review: the employer should provide the employee with a reasonable opportunity to review and obtain independent legal advice before signing an employment contract, to preclude claims by the employee that it was signed under duress and therefore unenforceable.
  3. Signing and Acceptance: an employment contract should be signed before employment is commenced in order to avoid issues concerning its enforceability. If a contract is signed after employment was commenced, the employer should ensure that it provide additional consideration to the employee (g., a raise or bonus).
  4. Scope of Employment: the employment contract should clearly set out the employee’s title, duties and responsibilities. An employee’s duties and responsibilities cannot be unilaterally altered by the employer during the course of their employment. Therefore, in order to prevent claims of constructive dismissal, the employment contract should clearly state that the employee understands and accepts specific changes to conditions of employment, such as changes to salary, work location or responsibilities.
  5. Probation Period: the employment contract should clearly state whether there is to be a probationary period during which the employee could be dismissed for any reason, without pay or notice. If so, it should stipulate the length of such probationary period.
  6. Termination Clause: the employment contract should clearly state the means by which either party can terminate the employment relationship. In the case of termination for “just cause,” the employment contract stipulate what grounds will constitute “just cause.” For terminations “without cause,” it should provide for at least the minimum requirements for “notice” or “pay in lieu” of notice under the Employment Standards Act (“ESA”).  The employment contract should also make clear that in the event of termination of their employment, an employee will receive statutory severance pay (if applicable), and benefits continuation for, at the very least, the length of the ESA notice period.
  7. Restrictive Covenants: restrictions on post-employment activities are viewed by the courts as restraints of trade, and therefore are generally difficult to enforce. This is especially true in the case of a non-compete clause.  If some form of restrictive covenant is necessary, an employer should consider a non-solicitation clause that is narrowly aimed at prohibiting an employee from soliciting its customers, clients, suppliers or employees.
  8. Compensation: the employment contract should clearly set out all terms of compensation, including salary, health and medical benefits, life or disability insurance, stock options, bonuses or car allowance.
  9. Compliance with Statutory Minimums: an employment contract must comply with all basic statutory minimums under the ESA, including but not limited to, minimum wage; notice of termination (pay in lieu thereof); and vacation with pay.

Additionally, employers and employees should particularly note and account for the proposed amendments to the ESA, such as the increases to minimum wage and vacation allowance; personal emergency leave; and the risk of misclassifying employees as “independent contractors.”

If you require an experienced lawyer to prepare or review the terms of an employment contract, please contact one of our lawyers at Whitten Lublin.

 

Author: Sezar Bune, Whitten & Lublin

Can A Manager be Disciplined for After-Hours Conduct of Sexual Harassment?

| June 20th, 2017 | No Comments »

It may be commonly perceived that unacceptable conduct in relation the workplace only extends as far as the physical workplace or workplace events. Although questionable in certain circumstances, when the misconduct involves sexual harassment and is perpetrated by a managerial figure, prohibited workplace conduct may extend beyond the workplace itself to protect employees from unwanted and offensive conduct.

A case that illustrates the above is Simpson v. Consumers’ Association of Canada (OCA 2001). Simpson was an Executive Director for Consumers’ Association and was terminated for sexual harassment. The allegations against Mr. Simpson include propositioning a secretary, going to a strip club with a co-worker, having an open sexual affair with an assistant causing her to resign, and inviting workers to his cottage to swim unclothed among other things. Consumers’ Association terminated Simpson upon discovering the allegations and misconduct. Simpson then claimed unjust dismissal.

Simpson did apologize for the conduct in the workplace and claimed that the other misconduct happened outside of the workplace. However, the court found that there were workplace connections to the misconduct that took place outside of the workplace events. The court stated that sexual harassment is an objective standard which includes conduct that ought to reasonably be known as unwelcome. Given Simpson’s position in the company, he should have known his conduct was unwelcome and would receive adverse consequences. It is also important to note that the absence of sexual harassment policy in this workplace did not work in Simpson’s favour. Being in an executive position, sexual harassment policy could have easily been implemented by Simpson. This reaffirms the courts position on zero tolerance on sexual harassment absent of workplace sexual harassment policy.

Overall, sexual harassment perpetrated by an individual in a managerial position outside the workplace will have consequences. The fact that the conduct occurs outside the workplace does not protect managers or senior personnel from workplace discipline. The objective standard adopted by the courts ensures that sexual harassment by a managerial figure will not be tolerated outside the workplace, as this ought to be known to be unwelcome behaviour and could be subject to consequences.  If subjected to sexual harassment outside the workplace, it is always important to make the appropriate personnel aware and seek legal advice.

Constructive Dismissal: Some common signs and considerations to make

| June 19th, 2017 | No Comments »

Constructive dismissal is a legal term that means the employer imposed changes upon the working relationship that caused the employee to quit. This, in turn, is viewed the same as an unlawful dismissal and entitles the employee damages in notice pay at the very least.

To claim constructive dismissal, the change to the employee’s job must be unilateral, meaning that the employee did not consent to the changes. In addition, the changes must also be fundamental to the employment relationship, signifying that the employer intended to end the employment relation. Courts will examine the particulars of each case to determine if the changes made amounted to constructive dismissal. Some common examples include changes in the amount of responsibility one has, having supervisory duties taken away, intentionally making the work environment intolerable (bullying, ridicule, humiliation), or a decrease in pay.

Having a significant increase of job duties without an increase in compensation may also amount to constructive dismissal, however, there are things courts look for when making this determination. Courts will look at whether the restructuring was necessary for the survival of the business, the state of the economy, and whether such changes were made in good faith and in relation to a business goal. If there is a sign that an employee agreed to the extra duties, whether implicitly or explicitly, a constructive dismissal claim will usually be unsuccessful.

When deciding to ‘quit’ and pursue a constructive dismissal claim, it is important to ask whether the changes imposed signify the employer’s intention to end the employment relation. Absent of a significant pay decrease, it is important to consult with an employment lawyer before deciding to leave employment. What may initially be seen as a fundamental change to an employee’s job may not always be the case. Alternatively, for exceptional circumstances, additional damages in addition to notice pay may be necessary to rectify the treatment to which an employee was subjected. Always seek the advice of an expert before deciding to claim constructive dismissal.

Fixed Term Contracts: To include or not to include a termination clauses

| June 7th, 2017 | No Comments »

Often, the most cost effective way to fulfill a temporary business need is to hire an individual on a fixed term contract. However, what may not be known to most employers is if the employment contract comes to a premature end, then the employee would legally be owed the amount for the remainder of the contract. The way to avoid this outcome is to include a termination clause in the employment contract.

When including a termination clause there are a few options available to employers. Employers may opt to include a reasonable notice provision, which would entitle the employee common law notice. At common law, notice periods are usually longer than those provided by minimal standards employment legislation, as factors such as age, tenure, skill level, responsibilities and so on will be factored in to the length of the notice pay. However, they are easier to draft and less likely to be found unenforceable due to errors of law.

Alternatively, employers may opt to provide the minimum notice period under law. However, due to recent common law developments (see Wood v. Deeley Imports Ltd., 2017, ONCA), employers must be very careful when drafting clauses that seek to provide for the mandatory minimum. For instance, payments for notice, benefits and severance cannot be grouped into a lump sum payment. The clause must specify the amount for each requirement of severance pay under the law. Otherwise, the clause is unenforceable and essentially non-existent.  The wording is key and thus more susceptible to legal error. It is always best to seek the service of an employment lawyer when seeking this option.

Overall, it is best to include a termination clause for a fixed term contract, as this will ensure the goal of cost effectiveness. It is important to seek the assistance of an employment law expert when implementing termination clauses.  The onus on employers to draft clear, unambiguous and legally compliant termination clauses is high, and any errors will render the clause unenforceable.