CH-20-21 The Employment Relationship – Canadian Business and the Law : Chapter Notes

This Document Contains Chapters 20 to 21 Chapter 20 The Employment Relationship Instructor’s Manual–Answers by Dorothy DuPlessis I. Teaching Objectives After studying this chapter, students should have an understanding of • the basic elements of the employment relationship • the ways in which the law affects recruitment practices • the content of a typical employment contract • the legal issues relating to the terms and conditions of employment This chapter provides an introduction to the employment relationship. It presents the legal framework governing the employment relationship and explores the legal risks associated with each phase of employment—from recruiting and hiring, through to the terms and conditions of employment. The chapter also provides the background for Chapter 21, which covers the legal issues arising from the termination of the employment relationship, and an introduction for Chapter 22, which deals with the acquisition of professional services. The Business Law in Practice scenario at the beginning of the chapter focuses on the distinction between an employee and an independent contractor and why the distinction is important. It also explores the extent to which an employer is liable for the conduct of his employee. The challenge for students is to understand the importance of the hiring decision and to appreciate the legal risks associated with the hiring process. The chapter also focuses on how the risks can be addressed and managed. II. Teaching Strategies The first part of the chapter provides an introduction to employment. One of the more complex issues in employment law for students is the legal framework that governs employment. • Which level of government has jurisdiction over employment? One approach to explaining the framework is through a chart. The Legal Framework of Employment
Public Sector Nonunionized
FEDERAL Unionized
Private Sector Nonunionized
COMMON LAW Unionized
Public Sector Nonunionized
PROVINCIAL Unionized
Private Sector Nonunionized
Unionized
Special legislation affects particular groups of employees (i.e., police officers, firefighters), often because these employees have particular duties in society or are deemed essential. Legislation at both the federal and provincial level allows for unionization. About 30 percent of employees are unionized (31.5 percent in 2012, according to Human Resources and Skills Development Canada, ). The focus on the framework of laws that govern employment leads to a discussion of the following questions: • Who is an employee? A distinction is made between an employee and an independent contractor and various tests are used by the courts. An interesting development in this area has been the growth in self-employment (i.e., independent contractors). It seems that this is not simply a result of poor economic times but also is due to advantages (e.g., flexibility and cost) for both the employer and the worker. • Why does it make a difference whether a person is classified as an employee? Question for Critical Thinking (QCT) 3 (page 534), Situation for Discussion (SD) 1 (page 534), 671122 Ontario Ltd v Sagaz Industries Canada Inc (page 506). • What are the legal risks when hiring employees? The second part of the chapter looks at the entire recruiting process, from developing a job description, through soliciting applications, to interviewing, and explores the risks associated with each step. It is important to emphasize that employers cannot discriminate in hiring; otherwise, they may be subject to human rights complaints. It is also important to emphasize that the other risks associated with hiring are both business (hiring someone who is not productive) and legal (hiring someone who commits a wrong, which the employer is responsible for). • How does human rights legislation affect the hiring process? What is discrimination? What are the defences to discrimination? QCT 2, QCT 4, QCT 5 (pages 533–534), The Meiorin Case (page 511), Canada (Attorney General) v Johnstone (page 512) The material on discrimination in employment lends itself to a guess speaker or in-class exercises. Officers employed by the Human Rights Commission are often available to give presentations on the legislation, its history, and its effects on business practices. If this is not possible, an in-class exercise based on the relevant Human Rights Act is an alternative. Human Rights Exercise Answer true or false to the following statements: [ ] 1. An application form may ask for the applicant’s age. [ ] 2. An application form may ask if the applicant is willing to travel. [ ] 3. An employer can ask a job applicant for proof of citizenship. [ ] 4. An application form may ask whether an applicant is pregnant. [ ] 5. An application form may ask the applicant to list all clubs to which he or she belongs. [ ] 6. An employer may ask about past criminal charges for certain types of work. [ ] 7. An employer may ask whether an applicant is legally entitled to work. [ ] 8. An application form can ask whether the applicant has any physical disabilities or health problems affecting the job applied for. [ ] 9. An application form may ask for the name and address of a person to be notified in case of emergency. [ ] 10. An employer may ask prohibited questions if “optional” is marked on the application form. The answers to these questions are “True” for questions 2, 6, and 7 and “False” for the remainder, based on the New Brunswick Human Rights Act. This exercise could be easily adapted for any jurisdiction by consulting the relevant Human Rights Act. The exercise allows for a discussion of why many of these questions are prohibited—they elicit information that relates to a prohibited ground of discrimination. For example, asking for proof of citizenship may reveal where a person was born, and the Act prohibits discrimination on the basis of “place of origin.” It is also important to point out that many of these questions can be asked after an offer of employment has been made because the decision to hire has already been made, and the information is needed for health plans, insurance schemes, and so on. The third main section of the chapter deals with the offer of employment and the employment contract. A strategy that could be adopted for use in class is the presentation of an actual employment contract and an examination of the legal risks that particular clauses attempt to address. Alternatively, Figure 20.2 in the textbook (page 519) could be used to focus a discussion of why an employment contract should contain these types of clauses. For example, a clause relating to non-competition protects an employer’s goodwill; a clause reciting management rights relates to being able to change an employee’s job without triggering a constructive dismissal; a clause relating to notice may be an attempt to exclude an implied term of reasonable notice. • Why is it important that prospective employers check the references of prospective employees? QCT 6 (page 534) • What are the risks of an employer making an offer of employment? What obligations do employees have to employers? SD 3, SD 5 (page 534), SD 6 (page 536), SD 8 (page 536), Queen v Cognos Inc (page 516); RBC Dominion Securities v Merrill Lynch Canada Inc (page 517). The last part of the chapter introduces a broad range of topics that affect employment. It will probably be difficult to cover all these topics in any depth. One way of covering the material is through an assignment as outlined in Task II in the Student Activities below. • How does the law affect the content of an employment contract? Business Application of the Law: Unpaid Overtime (page 521) • How does the law address workplace harassment? What is workplace harassment? SD 7 (page 536), Business and Legislation: Workplace Bullying and Violence (page 525) • Is drug and alcohol testing in the workplace permitted? Communications, Energy and Paperworkers Union v Irving (page 527), SD 4 (page 535) • To what extent may an employer monitor the activities of its employees? Is an employer entitled to collect and disseminate information about an employee? Is an employer entitled to monitor an employee’s e-mail communications? QCT 2 (page 533), SD 2 (page 534), Technology and the Law: Privacy of Personal Information on Work Computers (page 530) III. student activities Task 1: After a discussion of discrimination, have students complete the Human Rights Exercise in the Teaching Strategies section above. Task 2: The material in this chapter intersects well with topics covered in courses on human resource management. Students, particularly business students, may have taken courses that assessed from a management perspective such issues as alcohol and drug testing, workplace harassment, and personal use of workplace technology. They would have considered such matters as: • the impact of alcohol and drugs on productivity • the effect of workplace policies on motivation the use of social media in the workplace An individual or a group assignment that builds on that knowledge could provide an opportunity for the practical application of the law. For example, students could be asked to prepare three- or four-page papers on developing a policy that addresses workplace harassment, alcohol and drug testing, use of technology, and so on, in the workplace. Part of the paper could be a summary of the law that affects the policy being considered. Students could either be given a prepared set of readings or be directed to selected employment law handbooks or websites that cover the topic. The second part of the paper could be the development of the workplace policy that addresses the issue under consideration. The policy, for example could cover such points as these: • How is the policy to be implemented? • Who is responsible for the policy? • Who is covered by the policy? • What is the reason or rationale for the policy? • What problem does the policy address? • What are the options under the policy? Task 3: The DVD that supports the Instructor Manual has a segment titled “Workplace Bullying: The Silent Epidemic.” After viewing the segment, and in conjunction with Business and Legislation: Workplace Bulling and Violence (page 525), have students consider the following questions: • What is bullying? • Why is it prevalent in the workplace? • How should the law respond to workplace bullying? • What should an anti-bullying policy contain? IV. Explanation of Selected Features Page 506 Case: 671122 Ontario Ltd v Sagaz Industries Canada Inc, 2001 SCC 59, [2001] 2 SCR 983 Critical Analysis: The determination of whether a worker is an employee or an independent contractor is critical as employee status is the gateway to most employment protection under both the common law and employment-related legislation. What factors indicate the presence of an employer and employee relationship? In this case, the court set out a number of factors that support the conclusion that the relationship between AIM and Sagaz is that of employer and independent contractor. Presumably, the converse of these factors would tend to support a finding of employer and employee relationship. Therefore, indicia of an employer and employee relationship are • the payment of the costs of conducting business by the employer • restrictions on the employee’s ability to carry on other activities and to represent others • a specified amount of the time that the employee is to devote to the employer’s business • the absence of a commission • control by the employer over how the employee does the work Page 511 Case: British Columbia (Public Service Employee Relations Commission) v BCGEU (The Meiorin Case), [1999] 3 SCR 3, [1999] SCJ No 46 Critical Analysis: The onus of proving that a standard, requirement, or qualification is a BFOR lies with the employer. What issues will the employer have to address in order to establish a BFOR? This case raises the issue of what is meant by discrimination and the fact that discrimination need not be intentional to be contrary to human rights legislation. Students might be left with the impression that any performance standard that tends to favour one sex over the other is prohibited. A standard that favours one sex over another is discriminatory but can be justified as a bona fide occupational requirement (BFOR). The problem with the firefighter performance standard was that it was discriminatory (it favoured men over women because of physiological differences between men and women) and the province did not establish that the performance standard was necessary for doing the job of a firefighter. For an employer to establish a discriminatory standard as a BFOR, the employer must establish the following on a balance of probabilities: • The employer adopted the standard for a purpose rationally connected to the performance of the job. There must be a legitimate purpose for the BFOR (i.e., safety). • The employer adopted the particular standard in an honest and good faith belief that it was necessary to fulfill the legitimate work-related purpose. • The standard is reasonably necessary to accomplish the legitimate work-related purpose. To demonstrate that the standard was reasonably necessary, the employer must show that it is impossible to accommodate individual employees sharing the characteristics of the claimant without imposing undue hardship on the employer. The employer first identifies the general purpose of the standard and determines if it is rationally connected to the performance of the job specifications. Then the employer needs to demonstrate the rational connection between the general purpose for the standard and the requirements of the job. Once the legitimacy of the employer’s purpose of having the standard in place is established, the employer must demonstrate that it was adopted with an honest and good faith belief that it was necessary to complete the job properly. Finally, the employer must demonstrate that the standard is reasonably necessary for the employer to accomplish his purpose. The employer must establish that it cannot accommodate the claimant and others adversely affected by the standard without experiencing undue hardship, such as substantial financial cost and interference with the rights of other employees. Page 512 Case: Canada (Attorney General) v Johnstone, 2014 FCA 110 (CanLII) Critical Analysis: As a result of this decision, do you think employers are required to accommodate an employee’s childcare needs that result from participation in dance classes, sporting events, family trips, and the like? Must employers accommodate family care obligations involving family members other than young children? No, employers are not required to accommodate obligations that stem from personal choice. The court said: “it is …important not to trivialize human rights legislation by extending human rights protection to personal family choices, such as participation of children in dance classes, sports events like hockey tournaments and similar voluntary activities.” The employer must accommodate parental obligations that form part of the legal relationship between parent and child, specifically those obligations “which a parent cannot neglect without engaging his or her legal liability.” For example a parent cannot leave a young child at home, unsupervised. The case only deals with parental obligations such as child rearing and childcare that flow from “family status.” The case does not deal with obligations that might flow from other dependent relationships such as the provision of care for a disabled sibling, an aging aunt, uncle, grandparent, or parent. That said, there are natural analogies to be drawn to other dependent relationships and there is developing case law indicating that family status extends beyond childcare to eldercare of a parent. See for example, Devaney v ZRV Holdings Limited (2012 HRTO 1590). Of note is that the decision technically only applies to the federal sector but that said, it is likely to be influential and persuasive in most jurisdictions (some jurisdictions have already applied the test). Also, not all jurisdictions have human rights protections for family status (New Brunswick is the exception) and the definition of family status varies. Some Acts do not define family status and other Acts limit the definition to the parent-child relationship. Page 514 Business Application of the Law: Avoiding Discrimination in Hiring Practices Critical Analysis: Why should employers be so constrained in the hiring process? Human rights legislation prohibits discrimination on certain grounds in employment. Employers are prevented from asking certain questions related to sex, ancestry, religion, and so on, to prevent employers from obtaining information that is not relevant to the hiring decision. The constraint on the employer is to ensure equality of opportunity, that people are hired based on bona fide (genuine) qualifications relevant to job performance and individual merit, and that individuals are not denied employment opportunities because of prohibited considerations. Page 516 Case: Queen v Cognos Inc, [1993] 1 SCR 87, 99 DLR (4th) 626 Critical Analysis: Promises and representations led to legal consequences for Cognos when the promises and representations failed to materialize. What if the promises and representations had been made by a recruiting firm rather than an employee of Cognos? What if the promises and representations had been made by an employee of Cognos that was not authorized to make them? It is most likely that Cognos would still be liable for the promises and representations if they were made by a recruiting firm as the recruiting firm would be acting as agent of the employer. If the promises and representations were made by an employee who was not authorized to make them, the employer may still be liable because of apparent authority. Page 517 Case: RBC Dominion Securities Inc v Merrill Lynch Canada Inc, 2008 SCC 54, [2008] 3 SCR 79 Critical Analysis: Based on this decision, what are the duties of departing employees? What are the implications of this decision for businesses where competition by former employees is a concern? Departing employees have the duty to give reasonable notice of resignation to the employer and they have a duty of confidentiality. In the absence of non-competition and non-solicitation clauses and a fiduciary relationship, departing employees are free to compete against their former employer immediately on resignation. The most important implication of this decision is that it highlights the need for enforceable non-competition and non-solicitation agreements to protect against direct competition from a departing employee immediately on resignation. The agreements need to be writing, put in place at the time of hiring, and should only include reasonable and necessary non-competition clauses. See Cristin Schmitz, “Departing manager hit with $1.5M in damages,” The Lawyers Weekly (24 October 2008) 1. Page 518 Photo caption: What duties do employees owe their employers? Employees owe the duties set out in the employment contract. In addition, employees have a duty of good faith in the performance of their employment duties, a duty of confidentiality during and after termination, and a duty to give reasonable notice of resignation. If the employee has the status of a fiduciary, she has correspondingly higher duties to the employer. See Cristin Schmitz, “Departing manager hit with $1.5M in damages,” The Lawyers Weekly (24 October 2008) 1. Page 521 Business Application of the Law: Unpaid Overtime Critical Analysis: Managers and supervisors are not entitled to receive overtime under employment standards legislation. What is the distinction between a manager/supervisor and an employee entitled to overtime? If the CIBC suit is ultimately successful, what impact will it likely have on employees working overtime? What should employers do to assess their exposure to similar class actions lawsuits? The title of the employee is not conclusive as to whether the employee is entitled to receive overtime pay under employment standards legislation. The issue is whether the employee is performing management functions. There are no hard and fast rules, but the more discretion and authority employees have to make business decisions, the more likely it is they are performing management functions. For example, a retail store manager who can hire additional employees or fire employees without consulting anyone else in the organization, or who is given a budget for marketing and can make decisions on how those dollars are spent, is probably performing management functions. If the CIBC suit is ultimately successful, employers will need to be careful about the hours that their employees work as they will be liable to pay overtime for hours that exceed the limits specified in employment standards legislation. Employers will need to have policies in place stating that employees are not permitted to work overtime without written permission. This may absolve the employer from liability; however, the employer needs to be cognizant of giving too much work or seeing the employee working overtime. In these cases, the employer may be deemed to have permitted the overtime and is therefore liable to pay. Howard Levitt states, “The CIBC case likely will just drive overtime underground, with more employers prescribing polices and more employees taking work home.” Employers are also likely to hire fewer employees and contract out more work. (Source: Howard Levitt, “Overtime case resets the corporate clock,” The Globe and Mail (20 June 2007) F5.) Employers should assess their exposure to similar class action lawsuits by determining if their employees are working excessive hours without pay and whether they are cultivating an environment that encourages employees to work excessive hours. Page 522 Working for Free: The Unpaid Internship Critical Analysis: What is the harm in unpaid internships? From the perspective of the intern, there is the lack of pay and the lack of respect that often comes with “working for free.” In addition, many young people saddled with student debt and other obligations cannot afford to take advantage of the intern position to gain experience and a possible foot in the door at an organization. In short, the unpaid internship disadvantages individuals from less-privileged families who cannot afford to work without pay even when trying to establish a career in a field. From the perspective of the employer, the harm may be a violation of employment standards legislation, which can result in liability for unpaid wages, vacation pay and statutory holiday pay, and fines for violating the Act. The other concern is reputational harm as there may be negative publicity associated with taking advantage of a vulnerable segment of society. Sources: Andrew Langille, “Why Canada needs better labour market data and the Canadian Internship Survey,” Youth and Work (19 May 2014,) online: Youth and Work ; Lee-Anne Goodman, “Study shines light on the dark side of internships,” The Canadian Press (23 May 2014), online: Globe Advisor.com ; Simon Houpt, “Unpaid internships at magazines new target of Ontario labour ministry,” The Globe and Mail (27 March 2014), online: The Globe and Mail ; Christopher Munroe, “Are unpaid internships legal in Canada?” Gowlings Knowledge Centre (February, 2014), online: Gowlings ; Lee-Anne Goodman, “Unpaid internships appear to be on the rise as Canada’s laws just a ‘hodgepodge’,” The Star (2 March 2014), online: The Star ; Lai-King Hum & Kristen Pennington, “Will work for free! Employers, beware of offers of free work by unpaid interns,” McMillan LLP (24 July, 2013), online: McMillan ; Canadian Intern Association (19 May 2014), online: . Page 522 Photo caption: Who is harmed by the closure of unpaid internship programs? Some would argue that the intern is harmed because he is denied an opportunity to gain experience in a field and obtain opportunities to succeed in the job market and a career. Others argue that the sponsor is harmed because he does not receive the benefit of unpaid labour. See: Andrew Coyne, “Government crackdown on unpaid internships hurts interns the most,” The National Post (2 April 2014), online: National Post . Page 524 Photo caption: An anti-harassment policy addresses inappropriate behaviour in the workplace. What should the policy contain? The Canadian Human Rights Commission in cooperation with Human Resources Development Canada and Status of Women has written Anti-Harassment Policies for the Workplace: An Employer’s Guide (March 2006). The guide recommends that an anti-harassment policy contain the following: • a policy statement (management supports a harassment-free workplace) • the law (harassment is against the law) • employees’ responsibilities and rights (right to be free of harassment, responsibility to report harassment, etc.) • supervisors’, managers’, and employers’ responsibilities (treat all employees with respect, investigate complaints, refuse to tolerate harassment, etc.) • an undertaking that allegations will be dealt with seriously, speedily, and confidentially • descriptions of harassing behaviours • procedures (reporting, approaches for dealing with problems, time frames, appeals, etc.) • remedies, corrective action, and safeguards • protection against retaliation Source: Canadian Human Rights Commission, Anti-Harassment Policies for the Workplace: An Employer’s Guide (Ottawa: Public Works and Government Services, 2006); Canadian Human Rights Commission online at . Page 525 Business and Legislation: Workplace Bullying and Violence Critical Analysis: Human rights legislation prohibits harassment, so why are specific workplace anti-harassment and anti-violence rules needed? Human rights laws protect employees only against harassment on the basis of discrimination, for such factors as race, sex, religion, etc. Specific workplace ant-harassment and anti-violence rules are needed because to address bullying behaviour that does not fall within the human rights prohibitions against harassment. The advantage of specific rules is that they can provide a concrete definition of prohibited conduct and provide specific direction for dealing with workplace bullying. In particular, the legislation can provide a streamlined, simplified mechanism for dealing with complaints, rather than having them heard by a court or human rights tribunal, which can be costly and cumbersome. Also, the passage of specific legislation brings the problem of workplace harassment to the public eye and encourages employers to develop polices to address the issue. For a discussion of legislative provisions across Canada, see Patrick Herrera, “Keeping the bullies and brutes at bay,” The Globe and Mail (12 June 2010) B16. Page 527 Case: Communications, Energy and Paperworkers Union of Canada, Local 30 v Irving Pulp & Paper, Ltd., 2013 SCC 34, [2013] 2 SCR 458. Critical Analysis: When is alcohol testing permitted in the workplace? It is important to stress that the SCC has not prohibited random alcohol testing in its entirety. Rather, employers who want to impose testing where there are dangerous operations must justify and substantiate the policy’s reasonableness through verifiable evidence that the workplace has a problem with alcohol use. Also of note, alcohol testing is permissible where there has been an incident and there is reasonable cause to believe alcohol may have been a factor, where testing is part of a return to work program for substance abuse, or where there is reasonable cause to believe the employee is impaired on the job. Page 527 Photo caption: What evidence is necessary to establish the reasonableness of random alcohol testing in a dangerous workplace? The SCC’s decision in Irving leaves uncertainty regarding the quantum and nature of evidence that is necessary to establish the reasonableness of a random alcohol testing policy. If the employer is able to demonstrate evidence of an alcohol problem, it can justify the unilateral imposition of random alcohol testing but the court provided little analysis as to what evidence might be sufficient to justify the testing. In the Irving decision, eight alcohol incidents over a 15-year period was not sufficient. Page 530 Technology and the Law: Privacy of Personal Information on Work Computers Critical Analysis: The Supreme Court’s finding that policies and procedures diminish an expectation of privacy demonstrates the importance of computer use policies in the workplace. What should a computer use policy contain? A policy on computer use needs to be reasonable, made known to employees, and enforced. At a minimum, the policy should: • Contain provisions about the personal use of work computers, i.e., that the use should be minimal, if at all • Lessen employee’s expectation of privacy, i.e., employer use of monitoring software • Remind employees of their responsibility to use work computers in a responsible manner, i.e., not for unlawful conduct, information theft, harassment of other employees etc. • Explain the consequences for violation of the policy Page 530 Photo caption: Do employees have a right to privacy on workplace computers? If employees are permitted to use their workplace computers for personal use, then the employees may reasonably expect privacy in the information contained on their work computers. In such cases, monitoring of the computer use is then a violation of the employees’ privacy rights. If, however, the employer tells the employee that the employer will be monitoring emails and Internet use via a computer-use policy and obtains the employee’s consent to the monitoring, the expectation of privacy will be diminished but not eliminated. If an employer prohibited personal use of workplace computers by employees and actually enforced that policy, then no personal use would be permitted and a written policy dealing with monitoring by the employer would likely be enforced. See: Doug McLeod, “Employers may face liability for monitoring e-mail,” The Lawyers Weekly (1 March 2013) 11; Larry Page, “Employer monitoring of work computers: What are the privacy rights of employees?” Davis LLP (4 February 2015), online: Mondaq . Chapter 21 Terminating the Employment Relationship Instructor’s Manual—Answers by Dorothy DuPlessis I. Teaching Objectives After studying this chapter, students should have an understanding of • how the employment relationship ends • the differences among dismissals for just cause, dismissals with notice, and constructive dismissals, and wrongful dismissals • the issues arising from a wrongful dismissal suit • the components of a termination settlement Chapter 21 is a continuation of the employment relationship introduced in Chapter 20. Whereas Chapter 20 dealt with the issues involved in entering an employment relationship, Chapter 21 examines the issues that arise on ending the employment relationship. In particular, the chapter focuses on how the reasons and manner of dismissal affect the obligations of the employer and employee. Chapter 20 and Chapter 21 also provide an opportunity to apply the general principles of contract law that are discussed in part two of the text. For example, the discussion of remedies for breach of contract in Chapter 9 can be reviewed and strengthened by application to a wrongful dismissal suit. II. TEACHING STRATEGIES • How may an employment relationship be terminated? • What is just cause? When does just cause exist? Question for Critical Thinking (QCT) 3 (page 563), Technology and the Law: The Facebook Firings (page 542); Situation for Discussion (SD) 1 (page 563), SD 2 (page 564), SD 6, SD 7 (page 565), McKinley v BC Tel (page 544) • What are the risks for the employer in just cause dismissals? SD 5 (page 564), SD 8 (page 565), Business Application of the Law: Fired during a Mass Conference Call (page 541) The first part of the chapter examines the various grounds for termination with cause. Rather than focusing on all the grounds, one approach is to concentrate on one particular ground. For example, discussion could centre on what an employer would need to do to terminate someone for incompetence. The following provides a sample set of procedures that an employer could follow. Having such procedures in place may assist an employer in avoiding a wrongful dismissal suit. Terminating for Incompetence Establishing grounds to justify termination for cause based on incompetence is not an easy task. There are, however, steps that every employer can take to make a very convincing case that the grounds do indeed exist: 1. Establish standards for job performance. 2. Tell the employee how he or she has failed to meet these standards. 3. Specify steps for improvement. 4. Issue a letter of warning. 5. Ensure performance standards are reasonable. 6. Clarify the consequences of failure to improve. 7. Assist the employee in meeting standards. 8. Conduct regular follow-up. 9. Anticipate an employee’s excuses as to why she or he could not meet the standards. 10. Refrain from giving mixed messages. Source: Howard Levitt, “Avoiding severance requires proof of deliberate misconduct,” The National Post (8 March 1999) D10. The examination of an employer establishing grounds for dismissal for incompetent could be followed up by a discussion of the employee’s perspective. An employee who recognizes the warning signs and has a fairly good idea that she is about to be terminated is not without options. Although the employee may not be able to save her job, she can make dismissing for cause extremely difficult. The employer may then choose to offer compensation rather than go the just cause route. An employee should prepare a response. For example, an employee may establish the following: • She was unaware of the standards. • Past achievements preclude an argument that there is cause. • The employer failed to precisely delineate how the employee failed to meet its standards. • She did not have sufficient time to improve. • The standards are unreasonable. For further details, see Howard A Levitt, “Countering a charge of incompetence,” The National Post (16 March 1999) D10. A second approach to grounds for dismissal is to ask whether the following incidents constitute grounds for dismissal without notice. Some are obviously not grounds (i.e., 1, 5, 9), some are probably grounds (i.e., 7, 10), and for some, it depends on all the facts (i.e., 2, 3, 4, 6, 8). This exercise will help students to understand the importance of investigation in this area and not jumping to conclusions. Grounds for Dismissal Which of the following would constitute just cause for dismissal? 1. The employer is suffering economic hardship. 2. An employer is dissatisfied with an employee’s performance. 3. An employee had a physical altercation with a customer. 4. An employee harassed a co-worker. 5. An employee has an unpleasant personality. 6. An employee had an affair with a co-worker. 7. An employer stole a large sum of money from the employer. 8. An employee posted derogatory comments about her employer on Facebook. 9. The employer learns that a junior employee is seeking employment elsewhere. 10. An employee circulated crude jokes about a co-worker by email. (end of examples) • In the absence of just cause, how much notice of termination is an employee entitled to? What factors do courts use in calculating reasonable notice? QCT 1 (page 563), SD 4 (page 564) • What are the risks for the employer in dismissals with notice? The material on reasonable notice could be approached by an examination of charts that give examples of notice periods for different classes of employees, considering their length of service and age. See Stacey Reginald Ball, Canadian Employment Law (Aurora, Ont: Law Book, 2012) at 9:50.1–9:50.6. A second approach to this area is to study a case that deals with one of the factors that tends to increase the notice period. For example, a frequently cited factor tending to increase the period of notice is a high degree of specialization on the part of the employee. The following case illustrates this point. McKay v Eaton Yale Ltd (1996), 31 OR (3d) 216 (Gen Div). Factual Background: Helen McKay was terminated from her position as a manufacturing/engineering technologist with the defendant when its Scarborough plant closed. McKay was 46 years old and had been employed by the company for more than 22 years. Although she only had a high school education, she had developed a high degree of technical expertise through on-the-job training and held a position normally filled by qualified engineers, technologists, or draughtspersons. Her position, however, did not involve supervisory duties. Legal Question: How much notice is she entitled to? Resolution: The court awarded her 24 months’ notice. The court calculated the length of notice by awarding one month of notice for every year of service, then adjusting it for other factors. No adjustment was allowed for age, a downward adjustment of five months was made because McKay was not a management- or supervisory-level employee, and then an upward adjustment was made for her very specialized experience. The approximate six-month upward adjustment was to compensate for the fact that she would probably have to take a much different and lower-level type of work. The court acknowledged that 24 months’ notice was unusually high for a middle-management-level employee, but said that the specialized nature of her employment should be given more weight than the other factors because it will have major significance on her re-employment. The case can also be used to focus a general discussion of the practical implications of notice periods. Although the factors used in the calculation are well known, it is uncertain the weight to be given to each. Most courts list the factors then state a number without any indication if one factor was more relevant or is to be given more weight than another. Regardless of the method used for calculation, it can be said that notice periods have increased. There have now been a number of cases in which the notice period has exceeded two years (see textbook page 548, footnote 19). This also suggests that there does not appear to be a general cap on notice, although at one time in some jurisdictions, it was thought to be 24 months for high-level employees and 12 months for low-level employees. In Ontario, the Court of Appeal in Minott v O’Shanter Development Co Ltd (1997), 30 CCEL (2d) 1 (Ont CA) confirmed that there was no de facto 12-month limit on notice periods for non-managerial or non-supervisory employees. To complete the chapter the following questions may be addressed: • What is constructive dismissal? Potter v New Brunswick Legal Aid Services Commission (page 549) • How can an employer address the risk of triggering a constructive dismissal? • If an employee successfully sues for wrongful dismissal, how much in damages is he or she entitled to? Explain. QCT 4, QCT 5 (page 563), SD 3 (page 564), Honda Canada Inc v Keays (page 554) III. STUDENT ACTIVITIES Task 1: To build the practical application of the law and the integration of the law into the functional areas of business, students could be asked to prepare a company policy on termination for just cause. Additionally, students could be asked to develop procedures for terminating on one of the grounds for dismissal, such as neglect of duty, conduct incompatible, serious misconduct, and so on. The section “Terminating for Incompetence” in the Teaching Strategies above provides an example of the kind of procedures that students would be expected to develop. This type of an assignment allows students to integrate learning from their human resource management courses. Task 2: Have students in small groups consider whether the Grounds for Dismissal in the Teaching Strategies section above are just cause for dismissal. Have students support their argument with legal analysis. Also have them consider what additional information is useful or necessary to answer the question. IV. EXPLANATION OF SELECTED FEATURES Page 540 Photo caption: Is using the company computer for personal use grounds for dismissal? Using the company computer for personal use could potentially be grounds for dismissal as excessive use may amount to habitual neglect of duty or willful disobedience if a policy is in place limiting or forbidding the use of the company computer for personal use. In assessing whether the conduct of the employees constitutes just cause for dismissal, the courts will consider such factors as the nature of the personal use, how often and how long the personal use was, whether any warnings were given about personal by the employer, and whether the employer has a written policy covering personal use. Page 541 Business Application of the Law: Fired during a Mass Conference Call Critical Analysis: Did Armstrong have just cause to terminate Lenz’s employment? What are the risks to AOL of Lenz`s termination? Determining whether an employer has just cause to fire an employee is a difficult question because whether just cause exists is not assessed based merely on misconduct alone. Rather, a contextual approach is required that takes into consideration all of the circumstances. Before determining whether Armstrong had just cause to terminate Lenz, it would be useful to know the following: was Lenz’s misconduct a single, isolated incident? How long was Lenz’s service and did he have other infractions? Was there a policy in effect with regard to taking pictures? Were previous infractions of a policy condoned? Were warnings given to Lenz about his conduct? It seems that although Lenz may be guilty of misconduct (assuming a policy was in effect and he received earnings), it is only serious misconduct (theft, fraud, dishonesty) that would normally amount to just cause for dismissal. The risks to AOL from Lenz’s termination is that by firing for misconduct when there is not serious misconduct that justifies termination without notice, AOL may be subject to a wrongful dismissal lawsuit. Such a lawsuit may result in damages, legal fees, negative publicity, and perhaps low morale for remaining employees. See: Daniel Lubin, “Tips for the firing squad,” The Globe and Mail (23 August 2013) B11. Page 542 Technology and the Law: The Facebook Firings Critical Analysis: Do you think the outcome might have been different if the comments had been made to a few friends on a password-protected blog or if their privacy settings on Facebook only included a few friends? How can employers reduce the risk of their legitimate business interests being harmed by the social media activities of their employees? The outcome may have been different if the comments had been made to a few friends on a password-protected blog or if the privacy settings on Facebook only included a few friends, because the comments would then be less likely to affect the legitimate business interests of the employer (i.e., the employer’s reputation or the work environment). In the present case, the employer’s interests were harmed because the comments were very public, employees had access to them, and they could be easily copied and forwarded. Employers can reduce the risk of their legitimate business interests being harmed by the social media activities of their employees by instituting a social media policy and by monitoring the social media activities of their employees. See Caitlin Crawshaw, “Status update: ‘You’re fired,’” Canadian HR Reporter (29 November 2010) 1. Page 543 Photo caption: When are the social media activities of employees grounds for dismissal? The social media activities of employees are grounds for dismissal when they harm the legitimate interests of the employer. Examples include the case when the social media activities expose the employer’s confidential information, have a negative impact on the employer’s business or reputation, or lead to a hostile working environment. Page 544 Photo caption: Should an office romance be just cause for dismissal? Office romances are bound to happen, and an employer is unlikely to have grounds to fire someone simply because he or she is seeing someone at work. That said, grounds may exist when a company has a policy against fraternization, and a person repeatedly and flagrantly breaches the policy and then lies to superiors. In this case, the employee may be fired not for having an affair but for failing to disclose the relationship in violation of the policy. See Kelly O’Ferrall and Tiffany Won, “Failure to disclose workplace affair results in termination for cause,” Stikeman Elliott (9 May 2012), online: Canadian Employment & Pension Law at . Page 544 Case: McKinley v BC Tel, 2001 SCC 38, [2001] 2 SCR 161 Critical Analysis: Given that not all dishonesty is just cause, how big a lie must an employee tell before he can be fired for just cause? For example, could an employer fire an employer who told his boss that he had a headache and then went to the mall to shop? Just cause for dismissal means, in effect, that the employee has breached a fundamental term of the employment contract. However, it is difficult to prove just cause because it is a question of fact based on the assessment of the context and circumstances of the conduct of the employee. In the instance of a lie and therefore an act of dishonesty, it depends on the context that the lie was told and how it affected the employee–employer relationship. In the example, where the employee tells a lies about a headache to go shopping, this lie is unlikely to amount to just cause for dismissal; it doesn’t go to the core of honesty needed to maintain the employee–employer relationship. An employer, to justify dishonesty as a basis of just cause for dismissal, must in effect demonstrate that the degree of dishonesty was incompatible with the continuation of the employment relationship. However, some method of punishment is warranted, perhaps a deduction in pay for the inconvenience cause to the employer to replace the employee for that particular day. Page 548 Photo caption: Why are older employees generally entitled to more notice than younger employees? The main reason is that there are fewer job opportunities available to those employees who are older and re-entering the job market after the termination of a job that they may have held for many years. Many employers are unwilling to hire older employees because they believe that the older employee will not be around for an extended time or that an older employee may be set in his ways and not able to change. Also, if an employee has been in one job all of his life, his skills may be limited and he may have less to offer to a new employer. Page 549 Case: Potter v New Brunswick Legal Aid Services Commission, [2015] 1 SCR 500, 2015 SCC 10 Critical Analysis: How can employees mitigate the risk of constructive dismissal claims? To mitigate the risk of constructive dismissal in this particular case, an employer could add a suspension clause to the employment contract. In addition, employers should familiarize themselves with the express terms and conditions of the employment contract and consider whether the implementation of a particular term or condition would substantially alter the employment relationship and potentially trigger a constructive dismissal. Page 552 International Perspective: Protection for Whistleblowers in Canada and the United States Critical Analysis: Why do you think Canadian whistleblowing legislation is weak in comparison to U.S. whistleblowing legislation? Should there be financial incentives for reporting wrongdoing? Why or why not? The U.S. whistleblower protection may be stronger than the Canadian protection because the U.S. has a much longer history in this regard. The first law to protect whistleblowers in the United States, the False Claims Act, was passed in 1863. A number of recent financial scandals has provided further impetus for whistleblower protections. The Sarbanes Oxley Act (2002) imposes criminal sanctions on employers for retaliation against employees who inform law enforcement officials of corporate wrongdoing, as well as giving employees the right to initiate civil claims against their employers. The Dodd-Frank Act (2010) goes one step further by rewarding employees who blow the whistle on wrongdoing to the Securities Exchange Commission. By contrast, Canada appears to be soft on white-collar crime and by its inaction considers whistleblowers neither problematic nor worse than corrupt officials. See: Allan Cutler, “No protection for whistleblowers in Canada,” Hill Times (28 October 2013), online: Canadians for Accountability . Some argue that offering financial rewards may produce undesirable results including the proliferation of frivolous claims or the condoning of undesirable conduct by certain employees so that others may blow the whistle. Others argue that incentives are needed to get information that is difficult if not impossible to obtain. Also incentives are needed because whistleblowing can have a very negative effective on an employee’s career and the incentives compensate for not just the loss of a job but the loss of a career. Sources: Jim Middlemiss, “Blowing the whistle on fraud,” The Canadian Lawyer (27 January 2014), online: The Canadian Lawyer ; Barbara Shecter, “Why Canada’s whistleblower hotlines are staying silent,” The Financial Post (24 May 2014), online: Financial Post ; Joseph Cohen-Lyons, “Whistleblowing in the public sector: A balance of rights and interests,” Public Sector Digest (Spring, 2012), online: Public Sector Digest ; John Nicol & Dave Seglins, “Whistleblower lawsuit says CN is cooking its books,” CBC News (24 October 2013), online: CBC News . Page 553 Photo caption: Does whistleblowing by an employee conflict with the employee’s duty of loyalty and good faith to the employer? An employee owes a duty to her employer to act in the employer’s best interests. An employee must not compete with her employee and must not misuse the employer’s confidential information. By reporting inappropriate conduct and wrongdoing to others in the organization, or government officials, or the media, the employee risks breaching the duty of loyalty and good faith. Whistleblowing by the employee is justified if the employee has a bona fide belief that there is a public interest overriding the interest of the employer. The public interest includes the endangerment of health, security, or life or the commission of a criminal offence. In other words, an employer’s duty of loyalty to her employer is trumped by serious employer transgressions. Page 554 Case: Honda Canada Inc v Keays, 2008 SCC 39, [2008] 2 SCR 362 Critical Analysis: What does this decision mean for employers? The decision is important for employers for a couple of reasons. First, the decision will make it easier to effectively balance attendance management while accommodating those with disabilities. Employers are able to require medical documentation from employees with known disabilities to verify which absences that are disability related without the fear of damages being awarded against them. Second, employees are only entitled to receive compensation for actual damages. No longer will the notice period be arbitrarily extended in bad faith termination. Page 555 Photo caption: When are employers required to pay punitive damages in wrongful dismissal cases? Employers are required to pay punitive damages only in exceptional cases when the employer’s bad faith conduct was so malicious and outrageous that they are deserving of punishment on their own. Just because there may be an element of bad faith or misconduct or the like, it does not follow that punitive damages are awarded Page 557 Photo caption: Does mitigation require a terminated employee to accept any job? As a general rule, an employee’s obligation to mitigate means that she must make reasonable efforts to find comparable employment and to accept that employment if it becomes available. However, if an employment opportunity arises which is substantially different from his or her former role, an employee is not under any obligation to accept it. An employee must return to work for the same employer if the job offer includes equivalent salary and working conditions and does not involve an acrimonious relationship. See: Evans v Teamsters Local Union (text, page 556). Page 557 Business Application of the Law: Punitive Damages in Wrongful Dismissal Trials Critical Analysis: Both of these cases are extraordinary because it is unusual to have a jury trial in civil matters and because of the amount of punitive damage awarded by the jury. Why are jury trials in employment cases uncommon? Are these cases likely to influence punitive damage awards in other wrongful dismissal cases? Why or why not? In general, civil jury trials are rare in Canada as there is no constitutional right to a jury trial in civil cases. While a party may request a trial by jury, the Canadian courts have a broad discretion to refuse a party’s request for trial by jury on the basis that the issues are too complex or the other party might be prejudiced. Further, in employment matters, it is unusual to have a jury trial because of the expense and risk. For example, in some provinces, the plaintiff must pay significant fees in advance of having a jury trial and if the plaintiff is not successful, they will not recover these costs and will most likely have to pay additional costs amounting to tens of thousands of dollars. A jury decision is unlikely to be persuasive and affect decisions in other cases because it lacks a well-reasoned and detailed decision from a judge (the Court of Appeal decision in Boucher may have an impact because it does have reasons). In addition, the jury decision may be overturned on appeal. See: Earl Phillips, “Jury trials in employment cases,” British Columbia Employment Advisor (31 August 2012), online BC Employment Advisor . Page 558 Photo caption: Should litigants have a right to jury trials in wrongful dismissal cases? Why or why not? This is, of course, a matter of opinion. Some factors to consider: • Juries tend to be sympathetic to the employee, not the employer • Juries tend to award damages that are higher than precedent • Jury trials take more time than trials before a judge • Juries may not understand the nuances of employment and employment law • Jury trials are costly • Jury decisions, particularly on remedies, are often quashed on appeal See: “Reaching a verdict on the jury,” HR Reporter (28 August 2012), online: . Instructor Manual for Canadian Business and the Law Philip King, Dorothy Duplessis, Shannon O'byrne 9780176570323, 9780176509651, 9780176501624, 9780176795085