Another year, and more important legal developments in the employment and labour fields. Below we have summarized what we believe are the top 10 Canadian employment and labour decisions of 2023 (with an 11th thrown in for good measure) that employers should be aware of:
Split decision from Canada's highest Court deems project owner to be an employer for purposes of OHS.
In 2023, the Supreme Court of Canada released its much-anticipated decision in R v Greater Sudbury (City). The Ontario Court of Appeal's decision in the same proceeding created much controversy in the construction industry when it was held that liability for a construction site fatality could potentially attach to a project owner by means of its role as an "employer". The case stems from an incident which occurred in September 2015 when a pedestrian was fatally struck and killed on a construction site by a road grader operated by an employee of Interpaving Limited, who was contracted by the City of Sudbury to undertake the construction project. The City had also sent inspectors, employees of the City, to oversee quality control on the project.
The SCC determined that the City was an "employer" within the meaning of the Occupational Health and Safety Act, RSO 1990, c. O.1 (the "OHS Act"), particularly that it had its own employees at the construction project (the inspectors) and it was also an employer of Interpaving by virtue of contracting them to undertake the project. The Court focused on the issue of control, and held that the degree of control an owner has over workers does not play a role in establishing whether it is an employer, or subject to the duties of an employer, under an Occupational Health and Safety ("OHS") scheme. The SCC was concerned that a control requirement could defeat the public welfare purpose of creating overlapping responsibility of such legislation and give workplace actors a tool for frustrating regulatory prosecutions by pointing a finger at another party and arguing that they had no control over a hazard. While the SCC held that control was not a relevant factor in determining who is an "employer" for the purposes of the OHS Act, it did confirm that an owner's degree of control is a relevant consideration in evaluating an owner/employer's due diligence defence.
Therefore, while the result of this decision is that an owner, simply by virtue of contracting for the services of a constructor, can be prosecuted for breaching an employer's duties under an OHS scheme, the existence of the due diligence defence functions as a safety valve, in which the presence of control may be a factor. The SCC concluded that as a result, there was no justification for narrowing the offence under section 25(1)(c) (the duty of an employer to ensure that the measures and procedures prescribed are carried out in the workplace) by overlaying a control requirement, and that concerns about fairness were answered by the availability of the defence.
It is important to note that this decision was an even 4-4 split amongst the Supreme Court Justices and may not result in a binding legal precedent; however, the decision is still entitled to great respect and will be very persuasive. It will be interesting to see how this issue is dealt with by other Courts in the future.
Key Takeaway
By virtue of the Ontario Court of Appeal, and Supreme Court of Canada's decisions in this matter, project owners may now be considered employers under the Occupational Health and Safety scheme simply by engaging a constructor to complete work on site. This will result in owners being burdened with additional responsibilities and obligations with respect to their projects. Owners should make a conscious effort to ensure they are in compliance with not only the Occupational Health and Safety obligations of owners, but those of employers as well, in order to most effectively insulate themselves from liability.
Human Rights Act takes precedent over conflicting legislation absent "express and unequivocal language".
We previously wrote about the New Brunswick Court of Appeal's decision in Blaney here.
Ms. Blaney, a former Progressive Conversative member of the New Brunswick Legislative Assembly, was appointed CEO and President of Efficiency NB. During their subsequent election campaign, the liberal government characterized Blaney's employment as a "patronage appointment." Following the liberals coming into power in 2014, the government took steps to terminate Blaney's employment and then dissolve Efficiency NB by means of enacting An Act to Dissolve the Energy Efficiency and Conservation Agency of New Brunswick, SNB 2015, c.3 (the "Dissolution Act"). Ms. Blaney filed a Human Rights complaint against the Province alleging the elimination of her position was politically motivated, contrary to the Human Rights Act, RSNB 2011, c. 171 which precludes discrimination on the basis of political belief or activity (the "Complaint").
The Human Rights Commission initially declined the Complaint on the basis that it lacked jurisdiction pursuant to a provision of the Dissolution Act, but later revised its position to deal with some of the events underlying the Complaint as they had occurred prior to the particular section of the Dissolution Act coming into force. The Commission commenced an investigation, later referring the matter to a Board of Inquiry for determination. The Province sought Judicial Review of the Commission's decision, and on Judicial Review the application judge ruled that the Commission's decision to refer the matter to the Board of Inquiry should not be quashed.
On appeal, the Court of Appeal discussed at length the importance of human rights legislation and the high threshold required to supersede it, re-iterating the "quasi-constitutional" status of the Human Rights Act. The Court of Appeal cited the Supreme Court of Canada in Insurance Corporation of British Columbia v. Heerspink et al., [1982] 2 SCR 145, and expanded on the high threshold required to "oust" the jurisdiction of the Human Rights Act. It was established that the legislature must include "express and unequivocal language" in order to supersede human rights legislation. Ultimately, the Court of Appeal determined that the Dissolution Act was not sufficiently specific to conclude that the Legislature intended to override the Human Rights Act, and the Commission was subsequently permitted to refer the Complaint to the Board of Inquiry.
Key Takeaway
Protections afforded to employees and other citizens by human rights schemes cannot be easily removed, and human rights legislation will generally take precedence over conflicting legislation.
New tort of harassment recognized in Alberta.
The Alberta Court of King's Bench rendered an important decision in which it recognized a new tort of harassment. In this decision, the Court dealt with a claim in which the plaintiffs, Alberta Health Services ("AHS"), Ms. Nunn and Mr. Brown (employees of AHS), asserted that they were defamed by Mr. Johnston and sought a significant award of damages and a permanent injunction, restraining Johnston from making further defamatory statements. While the Court concluded that democratically elected governments, including municipal governments and band councils, cannot maintain an action in defamation, and that the absolute privilege which applies to government extends to public bodies sufficiently connected to government, such as AHS, therefore denying this portion of the plaintiffs' claim, it went on to recognize the new tort of harassment.
The Court recognized the tort of harassment in contrast to both the Ontario Court of Appeal and British Columbia courts previously refusing to recognize the existence of such a tort. The Court's rationale for recognizing the tort of harassment included: a) the classification of harassment as a criminal act; b) that the court regularly grants restraining orders preventing harassment; c) that harassment, as a common law tort, would not impede the legislature from creating a statutory cause of action or indicating that harassment is non-actionable; and d) the inadequacy of the current tort law framework in addressing the harms of harassment.
Drawing on the criminal offence of harassment, the Alberta Court of King's Bench established that a defendant has committed the tort of harassment where they have:
- engaged in repeated communications, threats, stalking, or other harassing behaviour in person or through other means;
- that they knew or ought to have known was unwelcome;
- which impugn the dignity of the plaintiff would cause a reasonable person to fear for their safety or the safety of their loved ones, or could foreseeably cause emotional distress; and
- caused harm.
Key Takeaway
The recognition of the tort of harassment is yet another signal from Canadian courts that such behaviour in today's workplace, and society as a whole, is unacceptable. Employers should ensure that they are familiar with their obligations to prevent and address workplace harassment under the applicable Occupational Health and Safety scheme, as well as provide their employees and management with training in how to identify and address such behaviors. This case serves as another example of how employers can be held liable for harassing behaviour under the current law.
Verbal fixed-term contract deemed enforceable over later written contract.
In this case, the grievor was a licensed endocrinologist who had been hired by the New Brunswick Department of Health to serve as CEO and President of Horizon Health Network for a five-year term beginning March 7, 2022 (the "Employment"). The Employment was negotiated and accepted orally and through a series of text messages. On March 3, 2022, the grievor received the following text message from the Deputy Minister of Health regarding the Employment:
"LISTON – Let me know when you have a moment. They are not able to add double pension at treasury per treasury board, and that came straight from Cheryl, but they would be willing to increase salary to 360k in place of that.
THE GREIVOR – That with benefits, car allowance and 6 weeks holiday? We have a deal.
LISTON – Love it, it's a go!"
The following day, two press releases announced the grievor's appointment. At this time, no written employment contract was entered into. However, on March 15, 2022 (one week after commencing his role) the grievor asked for a written employment contract in order to finalize the last details of his compensation package, including the payment of his licensing fees. On March 23, 2022 he was provided with an offer of employment dated March 4, 2022 which included a termination clause that did not form part of the previously agreed to arrangement. Having already resigned his previous positions and having commenced the Employment, the grievor testified to feeling vulnerable, explaining that had there been discussions of a termination clause such as the one at issue, he would not have agreed to accept the Employment.
After the death of a patient awaiting services in a New Brunswick Emergency Room, the grievor was terminated with one year's pay in lieu of notice on July 15, 2022 pursuant to the termination provision as found in his written offer of employment. The termination was subsequently grieved and referred to adjudication pursuant to the Public Service Labour Relations Act.
The Arbitrator found that the governing contract of employment was made orally and the terms of same could only be varied where consented to by the employee; to this end, the Arbitrator held that the Department's payment of the grievor's licensing fees did not constitute consideration (i.e., the compensation needed) for the addition of the termination provision.
While the Arbitrator held that the grievor's duty to mitigate his losses was a "general principle of law," the onus of proving same was on the Employer who did not adduce evidence to this end. Therefore, the Arbitrator ordered payment of the duration of the five-year contract term, including special damages encapsulating lost vehicle allowance benefits, lost pension benefits, and lost health and dental benefits, in addition to aggravated damages in the amount of $200,000.00 for the breach of the employer's implied obligation to act in good faith when dismissing the grievor.
Key Takeaway
This case is important as it serves as a reminder that verbal agreements can form legally enforceable employment contracts and emphasizes the importance of additional consideration for any variations made to such agreements. Employers should be sure to put all employment agreements in writing before the employee commences work, and any variations or amendments to existing contracts which are desired must be supported by some form of new compensation and/or benefit to the employee affected or the employee must be provided with the required contractual, statutory or common law notice to implement the change.
Changed substratum doctrine invalidates termination provision in employment contract.
Shoplogix dismissed Celestini from his employment without cause in 2017, taking the position that Celestini's rights were governed by an employment contract signed 12 years earlier. Celestini took the position, however, that the termination provisions were unenforceable because the substratum (foundation or basis) of the 2005 contract had disappeared, or been substantially eroded, due to material changes in his employment duties since 2005. The motion judge found that Celestini's responsibilities fundamentally and substantially increased over the course of his employment, and that as such, the basis of the 2005 contract disappeared and implicated the changed substratum doctrine which left the notice terms in the 2005 contract no longer enforceable. The Ontario Court of Appeal held that this decision should be afforded deference, denying Shoplogix's appeal.
The Court of Appeal noted that Celestini and Shoplogix entered into an Incentive Compensation Agreement, a bonus plan for management-level employees, which the motion judge found was consistent with substantial and fundamental changes to Celestini's role that began in 2008 when a new CEO was brought on and a reduction in senior management personnel caused Celestini's workload and responsibilities to increase substantially. The Court of Appeal noted that the changed substratum doctrine recognizes the potential inappropriateness and unfairness of applying a historical contract's termination provisions to circumstances that were not contemplated at the time of contracting, but that a written employment contract may oust the application of the doctrine if it expressly provides that its provisions, including the termination provisions, continue to apply even if the employee's position, responsibilities, salary or benefits change. The Court went on to note that there must be a fundamental expansion, not a reduction, in the employee's duties in order to engage the doctrine, but that this did not mean that a change in the employee's formal title must also have occurred. The question of whether the "employee's level of responsibility and corresponding status has escalated so significantly" is one of substance, not form, and most important is whether there were actual increases, of a fundamental nature, in the duties and degree of responsibility of the employee (i.e., where the duties and responsibilities are fundamentally increased the meaning of the job title is redefined as if a new job title were given).
Key Takeaway
This decision serves as a helpful reminder for employers to ensure the requisite language to oust the new substratum doctrine is included in all employment contracts. This will help to limit liability to long-term employees in the event they are terminated.
Supervisor found to be criminally liable following workplace fatality.
We previously wrote about the New Brunswick Court of King's Bench decision in R v King here.
On August 16, 2018, Michael Henderson (the "Deceased") died as a result of an incident at a construction site in Fredericton, New Brunswick. The Deceased was instructed by his supervisor, Jason King (the "Accused"), to clean the bottom of a hole inside a clarifier (a large tank). The Accused then made the decision to conduct a leak test, which required a pipe within the clarifier to be sealed with an inflatable plug, but did not communicate to the Deceased that such a test would be done. The Deceased was killed when the plug let go from its position, pinning the Deceased against the wall of the hole and allowing approximately 32,000 liters of water to flood instantly into, filling, the hole. The Deceased unfortunately drowned, despite frantic attempts to rescue him. As a result of the incident, the Accused was charged with criminal negligence causing death, pursuant to section 220(b) of the Criminal Code, RSC 1985, c. C-46.
At trial, the Accused was found to have failed to act in accordance with the minimally acceptable standard of conduct of a reasonable site supervisor. The trial judge held that the Accused having run water into the hole while the Deceased was working in it, which was unquestionably unsafe, and his many omissions, including his failure to: read and familiarize himself with any of the employer's safety manuals; identify the hole where the Deceased was working as a confined space; have a safety plan for confined spaces and the leak test; make attempts to plan for, or implement, safety precautions for the test; inform the employees that the test was being conducted; and place any barriers around the hole to prevent employees from entering, showed wanton and reckless disregard for life and safety. The Accused was subsequently found guilty of criminal negligence causing death and was sentenced to three (3) years in prison.
Key Takeaway
Employers must ensure that they stress the importance of compliance with Occupational Health and Safety requirements to all employees and supervisors/management. Not only for the simple reason that compliance helps ensure that their colleagues and fellow workers are safe, but because failure to do so can now result in not only financial liability but imprisonment if an injury or fatality were to occur.
Past practice cannot justify layoffs in absence of contractual term. Signing of layoff letter is not condonation of same.
Pham brought a claim for wrongful dismissal after receiving a notice of layoff, followed by several extensions. Qualified Metal Fabricators brought a motion for summary judgement to dismiss the claim on the basis that Pham had agreed to or condoned the layoffs, or alternatively, failed to mitigate his damages by not seeking new employment. The motion judge dismissed Pham's claim, as well as the cross-motion for judgement. Pham appealed the decision.
Pham had been laid off, with 30 other employees, as a result of the COVID-19 pandemic. On March 23, 2020, Qualified Metal Fabricators' plant manager met with Pham and informed him of the layoff, at which time he was provided with a letter that informed him he would be placed on temporary layoff during which time his benefits would continue. On June 2, 2020 the layoff was extended for up to 35 weeks. It was extended again on September 23, 2020, at which time Pham was provided with a letter stating that the layoff was subject to Ontario Regulation 228/20 under the Employment Standards Act, 2000, SO 2000, c. 41 (the "ESA") which provided that an employee whose hours were temporarily reduced or eliminated for reasons related to COVID-19 was retroactively deemed to be on Infectious Disease Emergency Leave rather than terminated. On December 9, 2020, the layoff was extended once again until September 4, 2021. Pham secured alternative employment on February 3, 2021, and subsequently received a recall letter from Qualified Metal Fabricators on February 9, 2021.
The Court of Appeal held that absent an express or implied term in an employment agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee's employment contract that constitutes constructive dismissal. While section 56(1) and 56(2) of the ESA gave a laid off employee 35 weeks to "wait and see" if they would be recalled before electing termination and/or severing the employment relationship and deemed a layoff exceeding 35 weeks to be a termination, Pham's terms of employment did not expressly permit his employer to lay him off. Qualified Metal Fabricators argued that it had an implied right to lay off Pham due to its past practice of laying off employees in 2009, however, the Court of Appeal held that the fact that other employees were laid off does not constitute an implied term of Pham's contract of employment permitting his layoff. Furthermore, the Court held that Pham did not condone his layoff, despite having signed the layoff letter provided by the employer.
Key Takeaway
Employers must include express language in employment contracts which address their ability to temporarily layoff workers in order to take advantage of layoff rights included in employment legislation. Even if an employer has laid off employees in the past, this may not be enough to justify lay offs that are challenged, nor is the employee signing the letter advising of the layoff enough to establish acceptance of same.
Failure to comply with COVID-19 vaccination policy amounts to frustration of contract.
When Bell informed VuPoint, on or around September 8, 2021, that its installers would be required to receive two doses of an approved COVID-19 vaccine, VuPoint adopted a mandatory proof of vaccination policy requiring all installers, including Mr. Croke, to be vaccinated against COVID-19 and provide proof thereof. The policy indicated that non-compliance would result in the employee being "prohibited from performing work for certain customers (including Bell)" and "may not receive the assignment of any jobs", however, it did not address termination of employment.
Mr. Croke, who only performed work for Bell, refused to get vaccinated or provide proof of his vaccination status, and was subsequently terminated by VuPoint effective October 12, 2021. He was provided two (2) weeks of working notice, and severance pay in accordance with the Canada Labour Code. VuPoint's position was that Mr. Croke's employment was frustrated, and the parties agreed that being unable to work for Bell and Mr. Croke's failure to become vaccinated resulted in his complete inability to perform the duties of his position.
The Ontario Superior Court of Justice held that Bell's vaccination mandate created the unforeseen, supervening event necessary to support a finding of frustration, as it meant that Mr. Croke could not perform any work for VuPoint unless he was vaccinated. The Court found that neither Mr. Croke, nor VuPoint, were in default of the employment agreement. As VuPoint lacked control over Bell's policy, the Court likened the circumstances to cases where employees are unable to work due to a statutory or legal change that results in the employee being unqualified to perform their job. The Court ultimately concluded that Mr. Croke's complete inability to perform the duties of his position for the foreseeable future constituted a radical change that struck at the root of the employment contract, resulting in the frustration of the contract. The Court went on to note that the concept of frustration can also apply to situations where the contract may be capable of being performed "but would be totally different from what the parties intended were it performed after the change that has occurred."
Key Takeaway
Frustration of contract may be supported by a finding of some supervening event, which was not foreseen at the time the employment contract was formed, that results in the employee being unable to perform their job. However, it may also be established in situations where although the employee may be capable of performing their job, the work would be "totally different from what the parties intended were it performed after the change has occurred."
Independent contractors have duty to mitigate under fixed-term contracts.
In this case, the Ontario Court of Appeal weighed in on the question of whether independent contractors engaged pursuant to a fixed-term contract have a duty to mitigate their damages. The appellants engaged the respondent as an independent contractor, whose services were terminated without cause on November 22, 2017. As a result, the appellants sued for payment of the remaining 65 months of their contract. The trial judge found that the contract did not have a termination provision and that it clearly and unambiguously provided for a 72-month fixed term.
The appellants submitted that the trial judge erred in holding that the respondent was not required to mitigate his damages. This submission was accepted by the Court of Appeal. The Ontario Court of Appeal held that the trial judge erred by conflating the situation of independent contractors with that of employees working under fixed-term contracts, and that it, the Court of Appeal, had never held that independent contractors do not have a duty to mitigate following breach of a fixed-term contract. It was determined that a duty to mitigate arises when a contract is breached, including contracts with independent contractors, unless the terms of the contract provide otherwise.
Key Takeaways
It is important that employers (or in the case of an independent contractor relationship; clients) be aware that independent contractors operating under fixed term contracts do, in fact, have a duty to mitigate their losses should the contract be terminated early. This will help to minimize liability to such
parties in the event an early termination is challenged by the contractor.
-
Milwid v IBM Canada Ltd., 2023 ONCA 702; (and a BONUS!) Lynch v Avaya Canada Corporation, 2023 ONCA 696
Court awards reasonable notice periods in excess of typical 24-month "ceiling".
These two decisions out of the Ontario Court of Appeal serve as examples of notice period awards which go above and beyond the 24-month reasonable notice "ceiling".
In Milwid v IBM Canada Ltd. the motion judge's decision to award 27 months' reasonable notice was upheld by the Court of Appeal. The Court noted that the evidence established that the respondents' skills were not transferrable because they related, almost exclusively, to the appellant's products, and that this was an exceptional circumstance not covered by the Bardal factors, which could warrant a notice period exceeding 24 months. Therefore, an award of 26 months' reasonable notice was upheld. The Court of Appeal went on to note that the motion judge's decision to award an additional month notice, bringing the total to 27 months, was appropriate to reflect the circumstances of the COVID-19 pandemic.
In Lynch v Avaya Canada Corporation, Avaya terminated the employment of Lynch, a professional engineer, due to a company restructuring, after 38 years of service. The motion judge found that a 30-month notice period was appropriate in all the circumstances. The Court of Appeal held that when drafting reasons in wrongful dismissal cases in which they propose to award damages for a period of reasonable notice in excess of 24 months, judges should specifically identify those factors that they think demonstrate the presence of "exceptional circumstances" for the purpose of calculating the period of reasonable notice. The factors identified as exceptional circumstances included: the fact that Lynch specialized in the design of software to control unique hardware manufactured by Avaya at its Belleville facility; it was uncontested that Lynch's job was unique and specialized, and that his skills were tailored to and limited by his very specific workplace experience at Avaya; during his lengthy employment, Lynch developed one or two patents each year for his employer; Avaya identified Lynch as a "key performer" in one of his last performance reviews; and although similar and comparable employment would be available in cities such as Ottawa or Toronto, such jobs would be scarce in Belleville where Lynch – who was approaching his 64th birthday – had lived throughout his employment.
Key Takeaway
These cases serve as an important reminder that enforceable termination provisions are a must in all employment contracts. Without such limits built into their contracts, employers could face significant common law reasonable notice awards for employees who can establish they are wrongfully dismissed, and who can show that there were "exceptional circumstances" necessitating a large award above the typical 24-month cap.
This article was written with contributions by Claire Dowden, an articled clerk at Cox & Palmer.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
