2010 Labour and Employment Law - McCarthy Tétrault · The Top 5 Labour and Employment Issues for...

McCarthy Tétrault LLP mccarthy.ca

2010 Labour and Employment Law

Client Conference – Ontario Region

Labour and Employment Conference Friday, October 15, 2010

Table of Contents - Plenary

1. Agenda

2. Presenters Profiles

Guest Speakers

Barry Fisher, Barry Fisher Arbitration & Mediation

Johan Lubbe, Jackson Lewis LLP

McCarthy Tétrault

Ben Ratelband, Chair

Randy Bauslaugh

Paul Boniferro

Nathalie Gagnon

Tina Giesbrecht

Gerald Griffiths

Fazilah Hussain

Sunil Kapur

Trevor Lawson

Naseem Malik

Robb Macpherson

Chris McHardy

Kate McNeill

Dean Palmer

Daniel Pugen

Brian Wasyliw

3. An Update on Significant Legislative

Developments

Paper

Labour and Employment Client Conference 2010

4. An Update on Significant Case-Law

Developments

Paper

5. Issues in the Recruitment and Hiring

Process

Paper

6. Immigration Audits Article

7. Issues in Executive Compensation A. Issues in Executive Compensation Paper

B. CCGG Say-on-Pay Article

8. The Top 5 Labour and Employment

Issues for 2011

Paper

Table of Contents - Workshops

9. Workshop A:

How to Respond to Departing

Employees and Fiduciaries

Paper

10. Workshop B:

How to Use Mediation Effectively A. Paper – Trevor Lawson and Kate McNeill

B. Paper 1 – Barry Fisher

C. Paper 2 – Barry Fisher

11. Workshop C:

Dealing with Workplace Harassment

and Violence

PowerPoint

Labour and Employment Conference Friday, October 15, 2010 Agenda

Introduction

8:00 a.m. Continental Breakfast and Registration

8:30 a.m. Greetings from the CEO, Marc-André Blanchard

8:40 a.m. Welcome and Introduction by the Chair, Ben Ratelband

Plenary Session

8:45 a.m. An Update on Significant Legislative Developments Dean Palmer and Daniel Pugen

Dean and Dan will discuss significant legislative developments that employers need to know such as:

• Bill 168's workplace violence and harassment amendments to the Occupational Health and Safety Act.

• The new Human Rights Tribunal summary hearing process.

• An update on the status of the Accessibility for Ontarians with Disabilities Act, 2005.

9:00 a.m. An Update on Significant Case-Law Developments Tina Giesbrecht and Trevor Lawson Trevor and Tina will discuss significant labour and employment case-law from the past year, including:

• Tort claims against employers after the Court of Appeal's ruling in Piresferreira v. Ayotte.

• Independent contractors, dependent contractors and employees after Reid Heritage Homes.

• Bad faith dismissal damages in the unionized context - GTAA.


• Departing employees' plans to compete - Aquafor.

9:25 a.m. Issues in the Recruitment and Hiring Process

Sunil Kapur and Gerald Griffiths

Sunil and Gerald will discuss important issues and considerations employers should keep in mind during the recruitment and hiring process, including human rights considerations, job advertisements, criminal background checks, and offers of employment.

9:45 a.m. Immigration Audits Naseem Malik Naseem will describe an immigration audit and its importance to an organization's overall risk management and personnel retention. Naseem will also provide an overview of major changes to immigration to take effect in early 2011. 10:00 a.m. Issues in Executive Compensation

Robb Macpherson and Randy Bauslaugh Robb Macpherson along with Randy Bauslaugh, one of our pension and benefits specialists, will discuss current issues in executive compensation including different compensation plans, "say on pay" in Canada and specific issues in wrongful dismissal case-law relating to executives.

10:20 a.m. Break 10: 40 a.m. Recent Developments in U.S. Labour Law Johan Lubbe (Partner, Jackson Lewis LLP) Our special guest speaker, U.S. labour & employment lawyer Johan Lubbe, will talk about interesting new developments in U.S. Labour law and how these changes will impact U.S. organizations and employers.

11:05 a.m. The Top 5 L & E Issues for 2011

Paul Boniferro and Brian Wasyliw

It's our annual top 5 list! Paul Boniferro and Brian Wasyliw will outline five important issues that we will be keeping our eye on in the upcoming year:

• How will collective bargaining be impacted by the two year wage freeze that the Government of Ontario has declared in respect of public sector employees?


• The law regarding the accommodation of 'family status' as a ground of discrimination continues to develop.

• How has the Ministry of Labour reacted to the implementation of Bill 168?

• The new procedural rule regarding summary judgment has impacted the way that wrongful dismissal actions are litigated.

• An update regarding the impact of the new structure of the Ontario Human Rights system.

11:30 a.m. Question Period 12:00 p.m. Lunch 1:00 p.m. Labour and Employment Game Show

Sunil Kapur, Robb Macpherson and Dean Palmer

Host - Ben Ratelband Contestants - Robb Macpherson, Dean Palmer and Sunil Kapur In this interactive presentation, Robb, Dean and Sunil will compete to see who can come out on top and correctly answer a number of questions arising from a hypothetical fact scenario containing labour and employment law obstacles to be avoided. You, the audience, will get a chance to participate by voting on the answers and engaging in an interactive question and answer session.

Workshops (choose one of A to C) 2:00 p.m.

• A: How to Respond to Departing Employees and Fiduciaries Fazilah Hussain, Chris McHardy and Brian Wasyliw

Employers are often rightly concerned about departing employees and the impact on business and customers. As such, many employers have put into place agreements that restrict an employee's activities post-employment. In this workshop, Chris, Brian and Fazilah will discuss the general duties of a departing employee and fiduciary as well as post-employment obligations of confidentiality, non-solicitation and non-competition. Although the enforceability of written agreements addressing these issues can be difficult, the importance of properly drafted agreements is more important than ever given recent developments in the case-law. Our presenters will discuss strategies for ensuring properly formed and enforceable agreements as well as new case-law that employers need to know.


• B: How to use Mediation Effectively

Barry Fisher (Mediator and Arbitrator), Trevor Lawson and Kate McNeill

Whether its grievance arbitration, labour board matters, human rights applications, wrongful/constructive dismissal litigation in the Courts or other matters, mediation is an important, and sometimes mandatory, part of the litigation process and should be strategically approached. In this interactive workshop, special guest arbitrator and mediator Barry Fisher, along with Trevor Lawson and Kate McNeill, will discuss effective strategies at mediation to ensure a successful outcome. Our speakers will discuss practical points such as preparing for mediation, selecting a mediator, determining your mediation strategy as well as address what happens in a "real life" mediation.

• C: Dealing with Workplace Harassment and Violence Nathalie Gagnon, Daniel Pugen and Ben Ratelband

Workplace harassment and violence has become a "hot" topic lately, and with good reason. With the introduction of Bill 168, employers have specific new, broad and proactive duties with respect to workplace harassment and violence. Further, in addition to occupational health and safety, workplace harassment and violence can weave its way into the law of constructive dismissal, workers' compensation, human rights and the rights of unionized employees under a collective agreement. In this interactive workshop, Ben, Nathalie and Daniel will address the legal framework of workplace harassment and violence and will also examine what is really meant by the terms "harassment" and "violence", including the subject of "psychological harassment". Our presenters will discuss disciplining employees for workplace harassment and violence, workplace investigations and the specific requirements under Bill 168. Finally, Ben, Nathalie and Daniel will lead an interactive examination of two hypothetical fact situations dealing with workplace harassment and violence. 3:00 p.m. Reception

All Welcome

Barry Fisher Biography

Barry B. Fisher LL.B. is a mediator and arbitrator in Toronto. His practice focuses on both labour

and employment law matters. He is the author of the Wrongful Dismissal Database, an online

database published by Carswell, designed to assist lawyers and human resource professionals in

determining reasonable notice. Barry is a frequent presenter at seminars and educational courses

on issues relating to employment law, labour law, and ADR.

He is listed in The Best Lawyers in Canada (2008 and 2009 editions) in the category of Alternative

Dispute Resolution. Barry has also been referred to as a leading member of the employment bar

in the 2008 Canadian Legal Lexpert Directory and prior editions.

Johan Lubbe Biography

Johan Lubbe is a Partner in the White Plains, New York, office of Jackson Lewis LLP. He

coordinates the firm’s International Employment Law Practice Group, which assists U.S.

corporations with their challenges in managing their global workforce.

Mr. Lubbe has been practicing law for the past 25 years in South Africa (inactive) and in the U.S.

He advises corporations on cross-border employment and expatriate issues. He frequently

defends American employers in employment discrimination lawsuits, executive terminations, and

trade union matters. He has tried cases to verdict and successfully argued appeals to the various

appellate courts. He further represents many foreign corporations in the U.S. on their day-to-day

employment, wage-and-hour and other workplace matters.

Mr. Lubbe frequently speaks at international employment law conferences, such as at the annual

conferences of the European Employment Lawyers Association (EELA) on topics such as

Employment Laws and the Investment Decisions of International Companies and on Cross-

border Enforcement of Covenants Not to Compete; and at the International Bar Association (IBA)

on topics such as Employment Issues in International Mergers and Acquisitions and on

Compensation for Management and Directors in M & A Transactions.

Mr. Lubbe is also a frequent speaker on international employment law issues in the U.S. Recent

presentations include Employment Law Issues and Developments in China (U.S. Chamber of

Commerce); Employment Issues of Global Offshoring (annual Global Forum conference

of Society of Human Resource Management (SHRM)); Terminating Foreign-Based Employees

(annual conference of Personnel Coop); Employment Law Developments in Latin America

(National Foreign Trade Council); and Managing Employee Mobility in the Global Market Place

(annual conference of American Corporate Counsel Association (ACC)).

Ben Ratelband Lawyer Profile


TITLE

Partner

OFFICE

Toronto

DIRECT LINE

416-601-8016

E-MAIL

[email protected]

LAW SCHOOL

University of Toronto, LLB, 1996

BAR ADMISSIONS

Ontario, 1998

Biography Ben Ratelband is a partner at McCarthy Tétrault’s Labour and Employment Group in Toronto and is a member of the firm’s Environment Health and Safety Group.

Mr. Ratelband’s practice is focused exclusively on management-side labour, employment and health and safety law. He has advised and represented employers in the sectors of manufacturing, security, energy, trucking, health care, education, information technology, correctional services, hospitality, public service, water supply and finance and investment. Mr. Ratelband has also advised and represented those employers in collective bargaining, labour board proceedings, labour arbitration, mediation, employment litigation, judicial review and civil appeals, employment standards, privacy, human rights, occupational health and safety and workplace safety and insurance proceedings. He regularly provides training for clients’ managers and other staff to assist them in meeting their legal duties.

Mr. Ratelband has spoken on various labour, employment and health and safety topics for such organizations as the Canadian Institute, Rotman School of Business at the University of Toronto, the Human Resources Professionals Association of Ontario, and the Ontario Bar Association. He has also written on a number of labour and employment law topics for various legal publications.

Prior to joining McCarthy’s, Mr. Ratelband worked in the field of management-side labour relations in private and public sector settings in both Ontario and the Yukon. He was legal counsel to the Management Board Secretariat of the Ontario Ministry of the Attorney General, where he represented the Crown as an employer in a variety of forums, including the Divisional Court and the Court of Appeal.

Mr. Ratelband received his B.A. (Hons.) from York University, where he graduated cum laude in 1992, and he received his LLB from the University of Toronto in 1996. He was called to the Ontario bar in 1998.

Randy Bauslaugh Lawyer Profile


TITLE

Partner

OFFICE

Toronto

DIRECT LINE

416-601-7695

E-MAIL

[email protected]

LAW SCHOOL

Osgoode Hall, LLB, 1981

BAR ADMISSIONS

Ontario, 1983

Biography Randy Bauslaugh is a partner in our Pensions, Benefits and Executive compensation Group in Toronto. His practice is focussed on pensions, benefits, executive compensation and related investment arrangements.

Mr. Bauslaugh has advised on numerous pension plan restructurings, wind-ups and surplus distributions. His clients include corporations, boards of trustees of multi-employer plans, individuals and Canadian and foreign governments.

Mr. Bauslaugh is chairperson of the International Pension and Employee Benefits Lawyers Association and a member of the editorial advisory board of Benefits and Pensions Monitor. He is also a member of the MEPP (multi-employer pension plan) Consultation Committee of the Financial Services Commission of Ontario, Canadian Bar Association, Ontario Bar Association, Canadian Pension and Benefits Institute and the Association of Canadian Pension Management.

Randy is listed in the Canadian Who's Who, and cited in Chambers Global: The World's Leading Lawyers for Business, The Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada, and The Best Lawyers in Canada in the area of pensions and benefits law. He is also cited in The Canadian Lexpert Legal Directory as a "most frequently recommended" practitioner in pensions and employee benefits and in the Federated Press Directory of Professionals as a "distinguished contributor." He enjoys the highest rating granted to lawyers for professional competence and integrity in the Martindale-Hubbell legal directory

His speaking engagements have included “Legal Issues and Outcomes in Pensions” at the federal-provincial pension conference in November of 2009, and “Investing in Alternative Energy”, The Road to Recovery: Caribbean's Economic Development & Pension Funds, 5th Annual Economic & Financial Development Conference, Miami, Florida, July 15, 2010.

Mr. Bauslaugh obtained a BA from the University of Waterloo in 1977 and his LLB from Osgoode Hall Law School in 1981. He was called to the Ontario bar in 1983.

Paul Boniferro Lawyer Profile


TITLE

Partner

OFFICE

Calgary

DIRECT LINE

403-260-3735

E-MAIL

[email protected]

LAW SCHOOL

Osgoode Hall Law School, LLB, 1991

BAR ADMISSIONS

Ontario, 1993

Alberta, 2007

Biography Paul Boniferro is the National Leader, Practices and People at McCarthy Tétrault and a partner in the firm’s National Labour and Employment Group, practising in both Toronto and Calgary.

As National Leader, Practices and People, Mr. Boniferro is a member of the firm’s senior leadership team. His responsibilities include overseeing all practice groups, partner admissions, recruiting, talent development, professional development and training, compensation and all personnel matters.

As a practising Labour and Employment lawyer, he uses his unique combination of experience gained in the private and government/political sectors to advise federally and provincially regulated clients on a wide spectrum of employment issues, including executive compensation, terminations, wrongful dismissals, grievance arbitration, collective agreement negotiations, human rights complaints, government relations, occupational health and safety issues, and WSIB claims.

Governments of all stripes have sought Mr. Boniferro's advice and assistance in developing policy and legislation in labour and employment law. He is a biannual presenter at Retail Roundtable Compensation Survey Group meetings, where he updates all major Canadian retailers on developments in the area of labour and employment law. He recently acted as Chief Spokesperson for the Government of Ontario (Ministry of Correctional Services) in collective bargaining with the Ontario Public Service Employees Union. In addition, Mr. Boniferro assisted the Liquor Control Board of Ontario in averting a strike with its unionized employees. He is a past member of McCarthy Tétrault’s Board of Partners and was National Practice Group Leader for the firm’s Labour and Employment Group.

Prior to joining McCarthy Tétrault, Mr. Boniferro was a Senior Policy Advisor to the Ontario Minister of Labour during one of the province’s most significant periods of labour relations reform. There, he advised the government on changes to the Labour Relations Act, the Workers’ Compensation Act, the Employment Standards Act and the Pay Equity Act. Since joining McCarthy Tétrault in 1996, he has been retained by the government on a number of occasions to provide advice on labour relations and employment issues. In 2004,

McCarthy Tétrault LLP 2 mccarthy.ca

Paul Boniferro Lawyer Profile

Mr. Boniferro was appointed to the Minister of Labour’s Employment Standards Action Group, and prior to that, was appointed by the Premier of Ontario to act as Special Negotiator with Québec on construction labour mobility.

He represents a wide number of private and public sector employers, both unionized and non-unionized, including those in manufacturing, energy, property management services, steel and hospitality.

Mr. Boniferro appears in the 2003 Canadian Legal Lexpert® Directory, a guide to the leading lawyers in the area of labour, and was selected as one of Lexpert’s “Top 40 Under 40” in September 2003. A much-requested presenter at labour and employment conferences, he is also an instructor for the Human Resources Professionals Association of Ontario (HRPAO) and is the past-chair of the HRPAO Government Affairs Committee. He is also a member of the Human Resources Association of Calgary and the Canadian and Calgary Bar Association, Labour and Employment Subsection.

Mr. Boniferro received his BA (Political Science) from the University of Western Ontario in 1987 and his LLB from Osgoode Hall Law School in 1991. He was called to the Ontario bar in 1993 and the Alberta bar in 1997. Mr. Boniferro has also studied in the MBA program at Lake Superior State University in Michigan.

Nathalie Gagnon Lawyer Profile


TITLE

Partner

OFFICE

Montréal

DIRECT LINE

514-397-4205

E-MAIL

[email protected]

LAW SCHOOL

Université de Montréal, LLB, 1993

BAR ADMISSIONS

Québec, 1994

Biography Nathalie Gagnon is a partner in our Labour and Employment Group in Montréal.

Ms. Gagnon's practice is focused exclusively on management-side labour and employment law in sectors such as manufacturing, services, pharmaceuticals, financial institutions and universities.

She developed an expertise in a variety of employment-related matters at both the provincial and federal level, including labour standards, employment agreements, employment policies, wrongful dismissal actions, employee terminations, human rights, privacy as well as access to information.

Ms. Gagnon regularly represents both provincially and federally regulated employers before various administrative tribunals as well as before the civil courts and labour arbitrators. She is also regularly involved in mediation, conciliation and other alternate dispute resolution processes.

Ms. Gagnon is a frequent lecturer at seminars and conferences relating to employment and labour law. She received her bachelor of civil law from Université de Montréal in 1993. She was admitted to the Québec bar in 1994.

Tina Giesbrecht Lawyer Profile


TITLE

Partner

OFFICE

Calgary

DIRECT LINE

403-260-3582

E-MAIL

[email protected]

LAW SCHOOL

University of Manitoba, LLB, 1993

BAR ADMISSIONS

Manitoba, 1994 Alberta, 2001

Biography Tina Giesbrecht is a partner in our Labour and Employment Group in Calgary.

Ms. Giesbrecht advises a wide spectrum of both federally and provincially regulated clients on labour and employment matters including grievance arbitration, human rights complaints, executive compensation employment contracts, personnel policies, fiduciary obligations, non-competition and non-solicitation agreements. She also advises clients on employment issues arising from the purchase and sale of businesses including group terminations and successorship rights. In addition, Ms. Giesbrecht advises employers on privacy, workers’ compensation, occupational health and safety matters and termination of employment.

Prior to joining McCarthy Tétrault, Ms. Giesbrecht practised in Winnipeg and taught employment law at the University of Manitoba. She regularly writes articles and presents seminars on a variety of labour and employment law issues.

Ms. Giesbrecht is past Chair of the CBA Labour and Employment Subsection, Alberta Bar Association and a member of the Canadian Bar Association, the Law Society of Alberta, the Law Society of Manitoba, the Manitoba Bar Association, the Canadian Association of Counsel to Employers and the Human Resource Association of Calgary.

She received her BA in 1990 and her LLB in 1993 from the University of Manitoba. Ms. Giesbrecht was called to the Manitoba bar in 1994 and to the Alberta bar in 2001.

Gerald Griffiths Lawyer Profile


TITLE

Associate

OFFICE

Toronto

DIRECT LINE

416-601-8333

E-MAIL

[email protected]

LAW SCHOOL

University of Ottawa, LLB, 2007

BAR ADMISSIONS

Ontario, 2008

Biography Gerald Griffiths is an associate in our Labour and Employment Group in Toronto.

Mr. Griffiths represents management in a variety of labour and employment issues including employment standards, wrongful dismissal, labour arbitrations, occupational health and safety, human rights, and labour and employment issues arising in corporate transactions.

Mr. Griffiths obtained his B.Comm from Queen's University in 2004 and received his LLB (cum laude) from the University of Ottawa in 2007. Mr. Griffiths received the University of Ottawa Common Law Students' Society Award for Excellence for his mooting competition successes and other contributions to the school.

Mr. Griffiths is a member of the Law Society of Upper Canada, the Ontario Bar Association, and the Canadian Bar Association, and was called to the Ontario bar in 2008.

Fazilah Hussain Lawyer Profile


TITLE

Associate

OFFICE

Toronto

DIRECT LINE

416-601-7532

E-MAIL

[email protected]

LAW SCHOOL

Queen’s University, JD, 2008

BAR ADMISSIONS

Ontario, 2009

Biography Fazilah Hussain is an associate in our Labour and Employment Group.

Ms. Hussain represents management in a variety of labour and employment issues including employment standards, wrongful dismissal, labour arbitrations, occupational health and safety, human rights and labour and employment issues arising in corporate transactions.

Ms. Hussain received her B.Sc. (Hons) from the University of Waterloo in 2004, and her JD from Queen's University in 2008. During the summer of 2006, Ms. Hussain completed the Public International Law program at the Queen's International Study Centre at Herstmonceux Castle, England. In the summer of 2007, Ms. Hussain interned at the United Nations Secretariat, in its Department of Political Affairs, in New York City.

Ms. Hussain is a member of the Law Society of Upper Canada, the Canadian Bar Association, and the Ontario Bar Association. She was called to the Ontario bar in 2009.

Sunil Kapur Lawyer Profile


TITLE

Partner

OFFICE

Toronto

DIRECT LINE

416-601-8339

E-MAIL

[email protected]

LAW SCHOOL


BAR ADMISSIONS

Ontario, 1997

Biography Sunil Kapur is a partner and the Practice Lead of our Labour and Employment Group in Toronto.

Mr. Kapur has advised and represented employers in the sectors of financial services, manufacturing, transportation, education, health care, security, information technology, resources and public service. Mr. Kapur has advised and represented those employers in labour board proceedings, arbitration, mediation, collective bargaining, employment litigation, judicial reviews, civil appeals and human rights. Mr. Kapur has advised numerous fortune 500 companies on labour and employment matters arising from mergers and acquisitions. He regularly provides training for clients on a wide range of issues.

Mr. Kapur is a part-time member of the Ontario Human Rights Tribunal. Mr. Kapur was a founding member of the Advisory Committee to the Ontario Labour Relations Board.

Mr. Kapur is a regular speaker on labour, employment and human rights matters. He is a member of the business committee of the Toronto Board of Trade, the business and employment sections of the American Bar Association, the Ontario and Canadian Bar Associations and the Canadian Association of Counsel to Employers.

Mr. Kapur received his B.Sc. from the University of Toronto in 1992. He was an Ontario Graduate Scholar and has won several academic awards from the University of Toronto. Mr. Kapur received his LLB from Osgoode Hall Law School in 1995 and was called to the Ontario bar in 1997.

Trevor Lawson Lawyer Profile


TITLE

Partner

OFFICE

Toronto

DIRECT LINE

416-601-8227

E-MAIL

[email protected]

LAW SCHOOL

Dalhousie University, LLB, 1998

BAR ADMISSIONS

Ontario, 2000

Biography Trevor Lawson is a partner in our Labour and Employment Group in Toronto. He regularly advises federally and provincially regulated employers concerning all aspects of labour and employment law, including collective bargaining and collective agreement administration, labour arbitration, mergers and acquisitions, outsourcing, employment agreements, compensation plans and restrictive covenants, employment policies, employment standards, discrimination and harassment, wrongful dismissal and privacy.

Mr. Lawson represents employers in all aspects of labour and employment law litigation, and has appeared in proceedings before the Ontario Superior Court of Justice, Court of Appeal for Ontario, Ontario Labour Relations Board, human rights tribunals, boards of arbitration, coroner’s inquests and other administrative tribunals.

Mr. Lawson’s clients carry on business in a variety of sectors, including manufacturing, energy, technology, hospitality, property management, transportation, pharmaceuticals, banking and finance. Mr. Lawson regularly makes presentations to management groups on a wide range of employment-related subjects.

Mr. Lawson received his BA (Hons.) in Political Science from McMaster University in 1995, and his LLB from Dalhousie University in 1998. He was called to the Ontario bar in 2000.

Naseem Malik Lawyer Profile


TITLE

Counsel

OFFICE

Toronto

DIRECT LINE

416-601-8218

E-MAIL

[email protected]

LAW SCHOOL

University of Saskatchewan, LLB, 1994

BAR ADMISSIONS

Ontario, 1996

Biography Naseem Malik is counsel in the firm’s Labour and Employment Group in Toronto. His practice focuses on business immigration law.

Previously, Mr. Malik was employed by the Department of Citizenship and Immigration. He worked as an Immigration Examining Officer at Pearson International Airport. Mr. Malik assists his clients, which range from large multinational corporations, financial institutions, industrial and high-tech companies to musicians and entertainment groups, in order to facilitate their entry into Canada for business-related purposes.

He assists clients with a wide range of business immigration matters, including:

¬ Temporary Resident Visas for persons who require such visas prior to entering Canada;

¬ Work Permit applications pursuant to the North American Free Trade Agreement (NAFTA), General Agreement on Trade and Services (GATS) and the Immigration and Refugee Protection Act;

¬ Service Canada positive labour market opinion applications;

¬ Permanent Residence applications;

¬ Citizenship applications;

¬ Study Permit applications;

¬ extension applications for work permits, study permits and visitor records;

¬ obtaining permission for the spouse of a temporary foreign worker to obtain a work permit permitting them to work in Canada;

¬ Temporary Resident Permits/Rehabilitation applications relating to criminal inadmissibility;

¬ analyzing Criminal Code provisions and foreign statutes to assess whether a person is inadmissible to Canada based on prior criminal convictions; and


Naseem Malik Lawyer Profile

¬ analyzing and dealing with medical inadmissibility issues.

In addition to his legal skills, Mr. Malik also provides practical advice relating to logistical issues that arise when foreign nationals travel to Canada for business purposes.

He has spoken at the McCarthy Tétrault Labour and Employment Law Client Conference in Toronto on the topic of business immigration in 2002, 2003, and from 2005 to 2009. In May 2003, Mr. Malik spoke at the Canadian Bar Association's Annual Conference in Montréal on immigration-related issues. Mr. Malik has had immigration-related articles published in 2004 and 2005 in Law Times and 2004, 2005, 2007 Lawyers Weekly. He was a featured contributor to a 2008 corporate immigration article in Canadian Lawyer magazine. He was also recently quoted extensively in a 2010 Law Times article on business immigration.

He contributed to a cross-border manual on immigration and customs issues for Carswell in 2003. In 2005, he participated as seminar leader at a one-day intensive course on business immigration at the Law Society of Upper Canada. Mr. Malik participated in the 2008 "Mastering Immigration Applications for Foreign Workers" conference held by the Canadian Institute and was a featured speaker at the 2009 and 2010 Ontario Bar Association's Institute CLE.From 2005-2007, Mr. Malik was a member of the OBA Immigration and Citizenship subsections’ Executive, and has been recognized by Lexpert since 2003 as having a significant practice in the field of business immigration.

He received his BA (Psychology) in 1991 from the University of Saskatchewan and his LLB from the University of Saskatchewan Law School. Mr. Malik was called to the Ontario bar in 1996. He is a member of the Law Society of Upper Canada and the Citizenship and Immigration section of the Canadian Bar Association.

Robb Macpherson Lawyer Profile


TITLE

Partner

OFFICE

Toronto

DIRECT LINE

416-601-7711

E-MAIL

[email protected]

LAW SCHOOL


BAR ADMISSIONS

Ontario, 1981

Biography Robb Macpherson is a partner and a member of the Labour and Employment Group in Toronto. He advises employers concerning all aspects of labour and employment law, including collective bargaining, collective agreement administration, executive compensation, mergers and acquisitions, restructuring and insolvency, wrongful dismissal, employment agreements, employment policies, employment standards, health and safety, workplace discrimination and harassment, employee benefits, privacy, pay equity and plant closures.

Mr. Macpherson acts as counsel to employers in all aspects of labour and employment law litigation, including acting as counsel before the Ontario Labour Relations Board, the Canada Labour Relations Board, boards of arbitration, the Human Rights Tribunal of Ontario, and other boards and tribunals. He also regularly conducts collective bargaining on behalf of employers and represents employers in mediation and alternative dispute resolution of disputes.

Mr. Macpherson acts for clients in a number of sectors, including financial institutions, insurance, manufacturing, energy, automotive, logistics, technology, transportation, and universities.

Mr. Macpherson has made frequent presentations and has written papers on a wide range of employment-related subjects, including executive compensation, collective bargaining, human rights, drug testing, workplace harassment and progressive discipline.

Mr. Macpherson is listed in the 2010 edition of Chambers Global: The World’s Leading Lawyers for Business, as a leading lawyer in the area of employment and labour.

He received his BA from Queen’s University in 1974 and his LLB in 1979 from Osgoode Hall Law School. Mr. Macpherson articled with our predecessor firm of McCarthy & McCarthy in Toronto and was called to the Ontario bar in 1981.

Christopher McHardy Lawyer Profile


TITLE

Partner

OFFICE

Vancouver

DIRECT LINE

604-643-5918

E-MAIL

[email protected]

LAW SCHOOL

University of British Columbia, LLB, 2000

BAR ADMISSIONS

British Columbia, 2001

Biography Christopher McHardy* is a partner in the Vancouver Labour & Employment Group. He advises employers on a broad range of issues relating to labour, employment, human rights, privacy and immigration law. His experience includes:

¬ advising US clients on labour, employment, privacy and immigration laws in connection with establishing business operations in British Columbia;

¬ advising employers on, and preparing and negotiating, employment and consulting agreements, restrictive covenants; workplace policies, employee handbooks and other employment-related documents;

¬ advising on labour and employment issues in corporate mergers, acquisitions and outsourcing;

¬ advising employers on union certification drives and applications, decertification applications, unfair labour practices and collective bargaining; and representing employers in collective bargaining;

¬ defending employers against employee claims in provincial and superior courts, the Human Rights Tribunal, the Employment Standards Tribunal, the Labour Relations Board, labour arbitration boards, the Workers’ Compensation Board and its Appeal Tribunal, the Privacy Commissioner and other administrative bodies;

¬ representing employers in mediation and other alternative dispute resolution processes;

¬ advising employers on human resource management practices, privacy laws, union avoidance, and employee hiring, layoffs and terminations; and

¬ advising and assisting organizations and individuals with immigration matters, particularly work permits, Provincial Nominee Program applications and permanent residence.


Christopher McHardy Lawyer Profile

Mr. McHardy received his B.Comm. (1997 Honours) and his LLB (2000) from the University of British Columbia. Mr. McHardy has focused his practice on labour and employment matters since his call to the BC bar in 2001.

*denotes Law Corporation

Kate McNeill Lawyer Profile


TITLE

Associate

OFFICE

Region

DIRECT LINE

416-601-8108

E-MAIL

[email protected]

LAW SCHOOL

University of Ottawa, 2006

BAR ADMISSIONS

New York, 2006;

Ontario, 2007

Biography Kate McNeill is an associate in the firm’s Labour and Employment Group in Toronto.

Ms. McNeill represents management in a variety of labour and employment issues including employment standards, wrongful dismissal, labour arbitrations, occupational health and safety, human rights and labour and employment issues arising in corporate transactions.

Ms. McNeill is a member of the Law Society of Upper Canada, the New York State Bar Association, the Ontario Bar Association, and the Canadian Bar Association.

Ms. McNeill received her BA (Hon.) in Sociology from Queen's University in 2002. As a participant in the Joint JD/LLB Program, she received her JD from Michigan State University College of Law in 2005 and her LLB from the University of Ottawa Law School in 2006.

She was called to the New York State Bar in 2006 and the Ontario Bar in 2007.

Dean Palmer Lawyer Profile


TITLE

Partner

OFFICE

Toronto

DIRECT LINE

416-601-7833

E-MAIL

[email protected]

LAW SCHOOL

University of Toronto, LLB, 1983

BAR ADMISSIONS

Ontario, 1985

Biography Dean Palmer is a partner in our Labour & Employment Group in Toronto. He represents employers in all areas of employment and labour law.

Mr. Palmer regularly assists employers with wrongful dismissal actions, employee terminations, employment standards claims, human rights complaints, grievances, arbitrations, collective agreement negotiations, employment contracts, workers’ compensation claims and employment issues arising from the purchase and sale of a business.

He regularly appears before the Ontario Labour Relations Board, boards of arbitration, workers’ compensation tribunals and various other tribunals dealing with labour and employment matters.

Mr. Palmer is a frequent lecturer at seminars and conferences relating to employment and labour law. He attended the Faculty of Commerce and Business Administration at the University of British Columbia and then attended the University of Toronto Law School, where he received his LLB in 1983. Mr. Palmer was called to the Ontario bar in 1985.

Daniel Pugen Lawyer Profile


TITLE

Associate

OFFICE

Toronto

DIRECT LINE

416-601-7955

E-MAIL

[email protected]

LAW SCHOOL


BAR ADMISSIONS

Ontario, 2005

Biography Daniel Pugen is an associate in the firm’s Labour and Employment Group in Toronto. He represents and advises management on a variety of labour and employment issues including employment standards, terminations of employment, employment contracts, labour arbitrations, collective bargaining, labour board proceedings, privacy, human rights, workers’ compensation, occupational health and safety, and labour and employment issues arising in corporate transactions.

Mr. Pugen has represented clients before Labour Arbitrators, the Ontario Human Rights Tribunal, the Ontario Labour Relations Board, the Workplace Safety and Insurance Appeals Tribunal, the Financial Services Tribunal of Ontario, the Ministry of Labour and the Ontario Superior Court of Justice. He regularly speaks at conferences and writes on a variety of labour and employment issues.

Mr. Pugen received his BA in Political Science from York University in 2001, where he graduated with Distinction and was a member of the Dean’s Honour Roll. He received his LLB from Osgoode Hall Law School in 2004.

Mr. Pugen was called to the Ontario Bar in 2005 and is a member of the Law Society of Upper Canada, the Ontario Bar Association and the Canadian Bar Association.

Brian Wasyliw Lawyer Profile


TITLE

Associate

OFFICE

Toronto

DIRECT LINE

416-601-8292

E-MAIL

[email protected]

LAW SCHOOL

Dalhousie University, LLB, 2002

BAR ADMISSIONS

Ontario, 2003

Biography Brian Wasyliw is an associate in our Labour and Employment Group in Toronto.

Mr. Wasyliw maintains a litigation practice with a focus on labour and employment related disputes. He represents management in a variety of labour and employment issues including employment standards, wrongful dismissal, labour arbitrations, occupational health and safety and labour and employment issues arising in corporate transactions. Prior to joining the Labour and Employment group, he spent five years in the firm’s litigation department, focusing on commercial litigation, class actions, medical malpractice and professional discipline.

Since joining McCarthy Tétrault LLP after law school in 2002, Mr. Wasyliw has appeared as counsel at all levels of court in Ontario and before many administrative tribunals. Mr. Wasyliw is also actively involved in the firm’s pro bono initiatives. Mr. Wasyliw has published several papers and case commentaries and has appeared on live television to discuss current issues in labour and employment law.

Mr. Wasyliw received his BA (Criminology/Psychology) from Simon Fraser University in 1999. He received his LLB from Dalhousie University in 2002. Mr. Wasyliw was called to the Ontario bar in 2003.

Ontario Update: The Year in Review Significant Changes to Labour & Employment Legislation Dean T. Palmer and Daniel M. Pugen

This paper summarizes the following notable legislative changes over the past year:

1. Bill 168: Workplace violence and harassment amendments to the Ontario Occupational Health and Safety Act (“OHSA”)

2. Changes to the Human Rights Tribunal Rules of Procedure - Summary hearings

3. The introduction of the “Integrated Accessibility Regulation” under the Accessibility for Ontarians with Disabilities Act, 2005.

1. Bill 168: Workplace Violence & Harassment

On June 15, 2010, Bill 168, the Occupational Health and Safety Amendment Act (Violence and Harassment in the Workplace) 2009 came into force. Bill 168 amends the Occupational Health and Safety Act (the “OHSA”) by imposing new obligations on employers with respect to workplace violence and harassment.

The main features of Bill 168 are summarized below:

Definitions of Workplace Violence and Harassment

Bill 168 defines "workplace violence" and "workplace harassment" as follows:

• "Workplace harassment" means engaging in a course of vexatious comment or conduct against a worker in a workplace that is known or ought reasonably to be known to be unwelcome.

• "Workplace violence" means (a) the exercise of physical force by a person against a worker, in a workplace, that causes, or could cause, physical injury to the worker; (b) an attempt to exercise physical force against a worker, in a workplace, that could cause physical injury to the worker; or (c) a statement or


behaviour that it is reasonable for a worker to interpret as a threat to exercise physical force against the worker, in a workplace, that could cause physical injury to the worker.

It is important to note that the definition of “workplace violence” applies to actual and attempted violence as well as threats of violence. Moreover, the violence may be committed by any “person” against a worker (such as co-workers, customers, public).

The definition of "workplace harassment" is very broad. Unlike "harassment" as defined in the Human Rights Code, the definition of "workplace harassment" under Bill 168 may include conduct that is not related to a prohibited ground of discrimination (such as sex, age, ethnicity, religion).

Case-law from other jurisdictions has broadly interpreted what constitutes “workplace violence” and “workplace harassment”. Such case-law has found that good faith performance management and normal supervision and direction of employees is not “harassment.” It remains to be seen if this approach will be followed in Ontario.

Workplace Violence and Harassment Policies

Bill 168 requires employers to prepare written policies dealing with workplace violence and harassment. Workers must be trained on these policies, which must be posted in workplaces with more than five workers and reviewed by the employer annually.

A Program to Implement the Policies

Under Bill 168, employers are required to develop and maintain a program to implement workplace violence and harassment policies.

The workplace violence program must include measures and procedures to:

• control the risks identified in the workplace violence assessment (see below);

• call for immediate assistance when workplace violence occurs or is likely to occur, or when a threat of workplace violence is made;

• report incidents or threats of workplace violence to the employer or supervisor; and

• establish how the employer investigates and manages incidents, complaints or threats of workplace violence.

The workplace harassment program must include procedures for reporting and investigating incidents of workplace harassment.


Employee Training

Employers are required to provide information and instruction on the contents of the workplace violence and workplace harassment policy and program. The information and instruction must be appropriate for the individual worker.

Workplace Violence Assessments and Reassessments

Bill 168 also requires employers to assess the risk of workplace violence that may arise. In addition to taking into account its own workplace conditions, an employer’s assessments must also take into account the conditions of other similar workplaces.

The employer must advise the joint health and safety committee (or the health and safety representative in smaller workplaces) of the results of the assessment. If the assessment is in writing, a copy must be provided. If the workplace does not have a joint health and safety committee or a health and safety representative, the workers must be advised of the results of the assessments and of how to obtain a copy of the assessment (if the assessment is in writing).

Bill 168 requires that employers reassess the workplace for workplace violence risks "as often as is necessary" to ensure the workplace violence policy and program protects workers.

The assessments should be well-documented and conducted by competent individuals who have broad experience and understanding of the workplace. Although the nature of the organization will determine what type of assessment to conduct, it is imperative that an employer, at the very least, review all relevant documentation and speaks with its employees (or a representative sample) with a view to (i) identifying any workplace hazards; (ii) evaluating the risk that any hazards will cause harm; and (iii) creating possible controls to eliminate or reduce the hazards.

Domestic Violence

Bill 168 specifically addresses the issue of domestic violence in the workplace by requiring employers to "take every precaution reasonable in the circumstances" to protect workers from domestic violence that would likely cause physical injury to workers in the workplace. This obligation on the employer arises only if the employer is aware, or ought reasonably to be aware, of the situation. What constitutes "domestic violence" is not defined. Further, this obligation only relates to domestic violence in the workplace, not an employee’s home.

Disclosure of Persons with a Violent History

One aspect of Bill 168 that may prove contentious is the obligation on employers and supervisors to provide information, including personal information, to a worker about a person with "a history of violent behaviour" if:

• the worker could be expected to encounter that person in the course of his/her work; and

• there is a risk of workplace violence likely to expose the worker to physical injury


Bill 168 contains no guidance on who would be a person with a "history of violent behaviour." However, it is interesting to note that the person must have a history of "violent" behaviour (and not necessarily "harassing" behaviour) in order for the disclosure obligation to be triggered. Moreover, the violent behaviour does not have to be behaviour for which the individual was criminally charged.

Work Refusals

Bill 168 clarifies that a worker may refuse to work where the worker has reason to believe that the worker is in danger of being a victim of workplace violence. The normal OHSA work refusal process would be triggered (the employer would investigate the refusal, followed by a Ministry of Labour inspector if necessary).

There is no corresponding right to refuse work where “harassment” is believed likely to endanger the health and safety of a worker. Further, OHSA will continue to prohibit workers in certain public and broader public sector workplaces from refusing work where the unsafe condition is “inherent in the work” or is a “normal condition of employment”.

What Should Employers Do?

Employers are required to ensure compliance with Bill 168 and address the risk of workplace violence and harassment in the workplace. As such, employers should:

• Create written workplace violence and harassment policies and programs that: (a) are brief and simple; (b) convey that all employees are responsible for maintaining a safe workplace; (c) provide clear definitions and examples of prohibited conduct; (d) cover incidents involving co-workers as well as incidents involving outside individuals; (e) send a strong message that workplace violence and harassment is not tolerated; and (f) provide a reporting and complaint procedure as well as the steps to e taken to deal with or investigate any complaint.

• Train employees on the policies and programs;

• Undertake risk assessments to determine the possibility or prevalence of workplace violence and appropriately document the process. It may be appropriate for the assessment process to include: (a) individual interviews with a sample of workers; (b) a review of the physical workplace; (c) a comparison of similar workplaces; (d) a review of any previous incidents; and (e) the likelihood of interactions with the public that could lead to danger or confrontation.

• Re-asses the workplace annually, post-incident or if significant changes occur in the workplace (whichever occurs first).

• Disclose incidents of workplace violence and harassment with the joint health and safety committee and any risk assessments undertaken.

• Provide ways for employees to report instances or risks of workplace violence and harassment.


• Discipline employees for not following workplace violence and harassment policies or for committing workplace violence or harassment.

• Offer a confidential employee assistance program to allow employees subject to workplace violence or harassment, or those with personal problems, to seek help.

• Review the hiring process and any criminal background check policies

• Ensure that proper security measures are in place at the workplace to protect workers from members of the public or customers; and

• Keep detailed records of any workplace violence or harassment, investigation or work refusal.

2. Summary Hearings at the Human Rights Tribunal

Since the 2008 changes to the Ontario human rights system which created the “direct access model”, those wishing to file human rights applications could file directly to the Human Rights Tribunal (the “Tribunal”). The Human Rights Commission no longer investigates claims or fulfills the “gate keeping” function of choosing whether or not to refer a claim to the Tribunal for a hearing.

As a result of the 2008 changes, the number of cases going to a full hearing has increased significantly. Further, some commentators have noted that, under the new system, all cases (even frivolous ones) must go to a full hearing before disposition. To address some of these challenges, the Tribunal introduced changes to its rules of procedure effective July 1, 2010 in order to more efficiently deal with certain types of complaints. Of particular note is the new availability of a “Summary Hearing” (Rule 19A) as a further power of the Tribunal to address frivolous claims, prevent abuse of processes and quickly adjudicate matters prior to a full hearing.

Standard Human Rights Tribunal Procedure

In the standard course, an Application filed with the Tribunal can proceed through the following procedural steps:

• An Applicant files an “Application” with the Tribunal

• The employer files a “Response”

• The Applicant might file a “Reply”

• Parties may participate in a voluntary mediation process

• Parties disclose and exchange relevant documents and witness statements

• The Tribunal will conduct a hearing on the issues in dispute


Since the 2008 changes, there was almost no opportunity for employers to address claims without merit early on in this process. A hearing was almost inevitable and going through all of the procedural steps leading up to it meant that a respondent employer, even for frivolous claims, faced significant delays and costs. Unfortunately, unlike in Court, costs cannot be recovered at the Tribunal.

Prior to the July 1, 2010 changes, an employer would have to prove either of the following to succeed in a request that the Tribunal dismiss cases early on and prior to a hearing:

• The Tribunal was without jurisdiction to hear the matter, or

• The Application did not disclose a prima facie case of discrimination on the face of it.

On a prima facie argument, the Tribunal would consider the motion on the assumption that all allegations made by an employee in an Application were true. This made it extremely onerous for an employer to succeed in such a motion. Further, the employer would only being able to put forward this argument at the hearing (after all the procedural steps). The new Summary Hearing procedure provides a new and welcomed option for employers.

Summary Hearings

A party, including a responding employer, can now request that the Tribunal hold a Summary Hearing to determine whether an Application should be dismissed in whole or in part on the basis that there is “no reasonable prospect” that the Application, or part of it, will succeed.

In a Summary Hearing, the Tribunal may inquire into the merits of the allegations set out in the Application before a full hearing. In other words, it need not accept everything alleged in the Application as true in order to finally dispose of it before holding a full hearing. To do this the Tribunal may hear some evidence from either party. Therefore, in situations where a claim may disclose a prima facie case of discrimination on its face, but then, after reviewing some evidence reveals that some or all of the allegations are unfounded, the Application may be finally disposed of much earlier than was previously possible.

The Tribunal may even bring a Summary Hearing on its own motion without receiving a request by a party.

The Summary Hearing Process

If the Tribunal decides to hold a Summary Hearing after receiving a request by a party it will send a “Notice of Summary Hearing” to all parties. This Notice will include the time and date of the hearing. Summary Hearings may be conducted in person or by teleconference. The Notice will specify the chosen mode and further instructions on how to participate.

The usual rules on disclosure of documents (Rule 16) and disclosure of witnesses (Rule 17) do not apply to the Summary Hearing process. However, the Tribunal may provide directions to the parties on what disclosure may be required prior to or at the Summary Hearing.


How a Summary Hearing will be conducted will depend on the nature of the case and the issues to be decided. The Tribunal will often issue a “Case Assessment Direction” in advance of a Summary Hearing, which may, among other things:

• address what documents need to be given to the other side and filed with the Tribunal prior to hearing and the deadlines for doing so;

• indicate which witnesses parties should have available and the nature of the evidence they should be prepared to give;

• clarify the issues to be dealt with and in which order; and

• require the parties to be prepared to make submissions on factual or legal questions

After the hearing, the adjudicator will consider all the evidence and submissions and make a decision. If the adjudicator dismisses all or part of an Application, reasons for the decision will be provided. If the adjudicator decides not to dismiss all or part of the Application he or she may make case management directions for the processing of the Application. An adjudicator is not required to give any reasons where the decision is not to dismiss an Application.

Conclusion

The Summary Hearing may prove to be an invaluable tool for employers to efficiently address Applications that do not raise human rights concerns or that make allegations of discrimination without providing much factual support. Indeed, it may also assist the Tribunal in lessening the backlog of cases in the system. Employers should consider whether they have a case that would benefit from the type of quick adjudication offered by the Summary Hearing procedure.

3. Accessibility for Ontarians with Disabilities Act, 2005: Making the Workplace Accessible for Employees with Disabilities

In June 2005 the Ontario Government passed the Accessibility for Ontarians with Disabilities Act, 2005 (the “AODA”). Its goal is to gradually improve accessibility for persons living with disabilities through the implementation of five “Accessibility Standards.” These Standards are currently being developed by the Ministry of Social Services (the “Ministry”) and are aimed at breaking down the barriers that prevent or limit persons with disabilities from participating in a variety of activities, including employment.

Employers already have a “duty to accommodate” employees with disabilities under the Human Rights Code, which requires employers to respond to disability-related concerns. Under the AODA’s Accessibility Standards, employers will have to take a much more proactive role in meeting any accommodation needs of current and


prospective employees with disabilities, as well as other members of the public. The AODA does not in any way diminish the pre-existing legal duties of employers under the Human Rights Code.

Although the only Standard that has been filed as a regulation to date and has become law in Ontario is the “Customer Services Standard,” employers should anticipate that the pending “Employment Standard” will follow suit in the near future.

Accessibility Standards: Timelines for Implementation and Compliance

Private sector employers who are covered by the existing “Customer Service Standard” must already plan ahead to comply with that regulation by January 1, 2012. Many Public Sector employers who were required to already be fully compliant by January 1 of this year have been experiencing difficulty in achieving timely compliance. To address some of these challenges, the Ministry has proposed a revised approach that harmonizes the implementation of the remaining standards.

On May 31, 2010, the Ontario government announced the development of an Integrated Accessibility Regulation (the “Proposed Regulation”), which includes and integrates the following three Standards into one streamlined regulation:

• Employment Standard

• Information and Communications Standard, and

• Transportation Standard

The Proposed Regulation includes:

• proposed timelines for compliance with accessibility standards

• a proposed framework for monetary penalties for businesses and organizations that do not comply, and

• proposed designation of the License Appeal Tribunal as the tribunal to hear appeals relating to the AODA. The License Appeal Tribunal is an omnibus tribunal that hears disputes in cases under a various statutes, including the Child and Family Services Act, the Day Nurseries Act and the Travel Industries Act.

The timeline for compliance for all organizations ranges from 2011 to 2025. Private sector employers should anticipate implementing compliance gradually over the coming decade, with the bulk of requirements relating to the Employment Standard becoming due in 2016 for employers with more than 50 employees, and 2017 for those who employ fewer than 49.


The proposed Integrated Accessibility Regulation is currently made available for review on the website of the Ministry, and is open for public comment until October 16, 2010.1

The Employment Accessibility Standard

Part “C” of the Proposed Regulation addresses “Accessible Employment Requirements”. These will likely have the largest impact on employers’ obligations both in terms of administrative resources and costs. The goal of this Standard is to help employers create equal employment opportunities for people with disabilities by removing barriers to employment.

The proposed Employment Accessibility Standard will apply to the recruiting, hiring and retaining of paid employees, including full time, part time, or apprenticeships. However, it does not apply to unpaid employees, volunteers, or persons on co-op or high school work experience placements.

Based on the current draft, the Employment Standard will obligate organizations to:

• Provide training on the requirements of the accessibility standards to employees and, for employers with 50 or more employees, create a document describing the training policies

• Establish, maintain and implement policies governing the implementation of the accessibility standards. The policies must include a description of how the organization will meet the standards as well as a statement of commitment for meeting the needs of persons with disabilities. As noted above, for employers with more than 50 employees, a separate document will have to be prepared describing the policy, which is available to any person upon request (and in a format that meets the person’s needs).

• Accommodate persons with disabilities in the recruitment process by, for example, notifying applicants that accommodations will be provided to enable their participation in the recruitment process and also notifying selected applicants that any assessment and selection materials and processes used will be available in an accessible format upon request.

• Develop individual accommodation plans for employees with disabilities, upon request. The plans must assess and accommodate employees on an individual basis, identify the accommodation to be provided, include timelines for the provision of accommodations, and include individualized workplace emergency information. This would only apply to public organizations and private sector employers with 50+ employees.

• Provide electronic information in a new format if working with electronic information is necessary to perform the job.

• Deliver individualized workplace emergency information to employees with disabilities

1 http://www.mcss.gov.on.ca/en/mcss/programs/accessibility/index.aspx


• Take into account the accommodation needs of employees with disabilities in existing performance management, career development and redeployment processes

• Develop procedures for return-to-work of employees who are absent from work due to a non-workplace injury or illness that uses individual accommodation plans, where appropriate.

• Employers with 50 or more employees will also have to file an annual accessibility compliance reports with the Ministry for review and approval.

Once the AODA’s new “Employment Standard” is filed as a regulation and becomes law in Ontario, Employers must comply with it in the timeframe that will be set out in the regulation. Although this may not occur for some time, as the obligations under the “Employment Standard” will be proactive and substantial and likely require additional HR staffing and resources to implement, Employers should stay apprised of the AODA’s development to ensure that its organization is ready.

Ontario Update: The Year in Review Significant Changes to Labour & Employment Legislation Dean T. Palmer and Daniel M. Pugen

Bill 168 – Changes to OHSA re: Workplace Violence and Harassment

• In force as of June 10, 2010 - New obligations on employers with respect to workplace violence and harassment.

• Definition of workplace harassment: “course of vexatious comment or conduct”; “against a worker in a workplace”; “known or ought reasonably to be known to be unwelcome.”

• Definition of workplace violence: actual, attempted and threatened physical force. • Workplace violence and harassment policies + workplace violence and harassment programs:

o control the risks identified in the workplace violence risk assessment (workplace violence program)

o call for immediate assistance (workplace violence program) o report incidents (workplace violence and workplace harassment program) o respond to and investigate complaints (workplace violence and workplace harassment program)

• Information and instruction on contents of policy and program. • Risk assessments (only for workplace violence):

o take into account own workplace and other similar workplaces o advise JHSC or health and safety rep of results o reassess “as often as is necessary” – annually or post-incident

• Domestic violence – reasonable precaution to protect workers from domestic violence that would likely cause physical injury to workers in the workplace. Only arises if employer aware or ought reasonably to be aware.

• Disclosure Obligation – “history of violent behaviour”. • Work refusals – clarified that applies to workplace violence. • Steps that should be taken.

Summary Hearings at the Human Rights Tribunal

• Human Rights Commission’s role scaled back – no longer investigates claims or fulfills “gate keeping function”

• Number of cases going to hearing at the Human Rights Tribunal increased. • Changes to Tribunal rules to more efficiently deal with certain cases.


• Standard proceedings with procedural steps - No opportunity to quickly address claims without merit early on in the process.

• Employer had to show no prima facie case (onerous test) or Tribunal has no jurisdiction. • New summary hearing process:

o party can request a summary hearing to dismiss all or part of a claim. o “no reasonable prospect” of success. o Tribunal can inquire into merits and review evidence. o Tribunal can issue directions on the process and procedure moving forward.

• Important new tool to efficiently dismiss matters early. Accessibility for Ontarians with Disabilities Act, 2005 (“AODA”) – Employment Standard

• AODA passed in 2005 – goal to improve accessibility for disabled individuals through implementation of “accessibility standards”.

• Standards are currently being developed and will be filed as regulations to the AODA. • Doest not take away from obligations under Human Rights Code. Goal is to provide specific accessibility

standards. • Only standard that is now law is the “customer service standard” – private sector employers must comply

with the customer service standard by January 1, 2012. • Ontario government announced that it would integrate the “employment standard”; the “information and

communication standard” and the “transportation standard” in one proposed regulation. • the proposed regulation will include: timelines for compliance (2011 – 2025), monetary penalties for non-

compliance and designation of License Appeal Tribunal to hear disputes. o bulk of “employment standards” will be in force by 2016 and 2017.

• The proposed regulation is open for public comment until October 16, 2010. • Proposed “employment standard”:

o applies to recruiting, hiring and retaining paid employees. o training on requirements of standards (and for workplaces with 50+ employees creation of

documents describing training). o policies on implementation of standards (and for workplaces with 50+ employees creation of

documents describing policy). o accommodate persons with disabilities in the recruitment process. o informing agencies of available positions. o develop individual accommodation plans for employees with disabilities (applies to workplaces

with 50+ employees). o electronic information in accessible format. o individualized workplace emergency information to employees with disabilities. o performance management - must take into account accommodation needs of disabled

employees. o return to work plans o file annual compliance reports with Ministry for review and approval (applies to workplaces with

50+ employees). • Early stages, proactive obligations – important to stay apprised of developments.

Ontario Update: The Year in Review Significant Case-Law Developments Trevor Lawson and Lesley Henry

• Bad Faith Dismissal: (GTAA v. Public Service Alliance Canada, Local 00041) Employers who fail to act in a good faith manner when executing disciplinary measures may face significant damage awards.

• Independent Contractor v. Employee: (McKee v. Reid Heritage Homes) - “Dependent Contractors” are entitled to reasonable notice of termination, just like employees.

• Labour Law Update: (Plourde v. Wal-Mart Canada Corp.) An employer who exercises its right to close their business may still be exposed to a finding that it committed an unfair labour practice in so doing and liability for damages in relation to the closure.

• Infliction of Mental Suffering: (Piresferreira v. Ayotte) - The tort of negligent infliction of mental suffering is not available in the employment context.

• Fiduciary Duties of Departing Employees: (Aquafor v. Whyte, Dainty and Calder Engineering) Senior employees can plan for a competing enterprise while still working for their current employers, so long as there is no specific contractual term restricting them from doing so.

• Overtime Class Actions: (Fulawka v. Bank of Nova Scotia, Fresco v. CIBC and McCracken v. CNR) An overtime class action lawsuit should not be certified if the underlying claims are based on individual circumstances and there are no "common issues" raised by an "identifiable class" of individuals.

• Privacy: (Poliquin v. Devon Canada Corporation) Employers have the right to manage the workplace and adopt and enforce computer use policies.

Effective Mediation

• Overview of mandatory mediation Rule 24.1 of the Rules of Civil Procedure

• Preparing for Mediation

Timing of Mediation


Selecting a Mediator

Preparing a Statement of Issues

Determining Your Mediation Strategy

• At the Mediation

The Beginning: Joint Mediation Session

The Negotiation

The “Tipping Point”

The End

Ontario Update: The Year in Review Significant Case-Law Developments Trevor Lawson and Lesley Henry

Introduction

Over this past year we have seen many important labour and employment court decisions. This paper will provide an overview of some significant labour and employment cases and developments in the past year.

A. Bad Faith Dismissal

Greater Toronto Airports Authority v. Public Service Alliance Canada, Local 00041 [Grievance No. GV-008-04 (12 February, 2010), O.B. Shime]

Background

The employer, the Greater Toronto Airports Authority (“GTAA”) closely monitored employees on sick leave after a rash of costly fraudulent sick leave absences were discovered. The grievor had been employed by GTAA for over 23 years with no record of discipline. Months after a work-related injury, she underwent knee surgery and was given an expected recovery time of four weeks. Unbeknownst to GTAA, the grievor was living with another GTAA employee who was under surveillance watch at the time for an unrelated disciplinary issue. The surveillance obtained by GTAA raised suspicions as to the legitimacy of the grievor’s absence. The grievor was seen driving and walking through stores without any obvious indications of her alleged recovery process. The GTAA requested medical documentation to verify the grievor’s condition, and subsequently the grievor returned to work. GTAA believed that the limp she displayed during her first day back at work was further evidence of fraud and confronted the grievor. During the course of a meeting, GTAA concluded that the grievor exhibited inconsistent behaviour and insincerity about her injury and absence. The grievor was terminated for cause.

Arbitrator’s Decision

The Arbitrator held that GTAA had an obligation to act in good faith with respect to the administration of the collective agreement. The GTAA was found to have acted egregiously and in bad faith by acting prematurely and not conducting a full investigation of the situation. The decision strongly criticizes GTAA for not obtaining medical corroboration to support its suspicions before proceeding with the ultimate penalty of termination for cause. Moreover, the employer was penalized for not considering a lesser penalty given the grievor’s history.


The following remedies were ordered:

all record of the incident to be removed from the grievor’s file;

GTAA was prohibited from discussing the matter;

a positive letter of reference was to be provided;

lost wages to the date of the award;

award of $50,000.00 in damages for mental distress;

future economic loss damages for loss of seniority, pension and other benefits reflecting years of service and the likelihood that the grievor would have retired from the company; and

award of $50,000.00 for punitive damages.

Reinstatement was not considered appropriate due to GTAA’s "high-handed, arbitrary and capricious" conduct. GTAA has applied for a judicial review of the decision.

What does this mean for Employers?

This case reads as a cautionary tale for employers when executing disciplinary measures subject to the applicable collective agreement.

• Employers should verify any suspicions and corroborate with professional opinions where possible.

• Employers must apply progressive discipline and carefully consider an employee’s history before making decisions about discipline — particularly termination, which should be a last resort.

• Management rights must be applied in a good faith manner.

B. Independent Contractor v. Employee – Intermediate Category

McKee v. Reid Heritage Homes [2009 ON C.A. 906]

In the 2009 decision of McKee v. Reid’s Heritage Homes Ltd., the Ontario Court of Appeal confirmed that there is an intermediate category between an employment relationship and an independent contractor. After reviewing numerous cases, the Court held that “an intermediate category exists, which consists, at least, of those non-employment work relationships that exhibit a certain minimum economic dependency, which may be demonstrated by a complete or near-complete exclusivity. Workers in this category are known as ‘dependent contractors’ and they are owed reasonable notice upon termination.” The Court held that the analysis begins with determining whether a person is an employee or a contractor. If the relationship is found to be that of a contractor, the Court must then determine whether the person is an independent or a dependent contractor.


Defining the Worker as an Employee, Independent or Dependent Contractor

Employers should be aware that the dependent contractor falls under the contractor category. Courts will first determine whether a worker is an employee or a contractor in the normal way, answering questions such as:

Who supplies the equipment?

What degree of control does the employer impose over the work?

How is the worker paid?

Does the worker hire and direct other workers?

If the worker is found to be a contractor, the next stage begins to determine whether that contractor is independent or dependent. The sole factor in this determination is exclusivity — whether the employer is the only source of income for the contractor. Exclusivity inherently implies that the contractor is economically dependent on the employer, and is entitled to reasonable notice upon termination, just like an employee.

At the first stage, when the courts are determining whether someone is a contractor or an employee, exclusivity is but one factor that is considered. However, once it has been determined that the worker is a contractor, exclusivity becomes the sole and defining factor. Employers, resting on the laurels that they are in a contractor relationship, may be surprised to find that they are responsible for providing reasonable notice to contractors found to be in this intermediary position — not quite a contractor, not quite an employee.

What does this means for Employers?

Employers should consider the essence of their relationship with their workers, particularly those classified as independent contractors, given that dependent contractors are now entitled to reasonable notice of termination, just like employees.

To manage this obligation, employers can take steps to ensure they are engaging in best practices by reviewing current relationships with workers and taking steps when entering into new relationships. Employers should consider the following:

Are your contractors working exclusively for you? Where your contractor is economically vulnerable by virtue of their exclusivity, employers will be responsible for providing reasonable notice.

Are contractors performing an essential function of your business? If so, they are more likely to be seen as employees.

Are workers operating under a valid contract? Employers should ensure that they are working under valid contracts with clearly defined provisions.

What termination provisions, if any, are contracted? Contract should have termination provisions that at least match, if not exceed, the legislated standards.


C. Labour Law Update

Plourde v. Wal-Mart Canada Corp [2009 SCC 54]

One of North America’s favourite discount department stores survived a recent Supreme Court challenge in recent decision.

In August of 2004, the United Food and Commercial Workers Union, Local 503 (“UFCW Canada”) was certified by the Commission des relations du travail (“CRT”) to represent employees of Wal-Mart’s establishment in Jonquière, Quebec. After several bargaining sessions, the parties could not reach an agreement, and the union filed an application under the Quebec Labour Code to refer the dispute to arbitration in order to establish the provisions of a first collective agreement. On February 9, 2005, the Minister of Labour referred the dispute to arbitration and notified the parties of the referral. That same day, Wal-Mart informed the employees that it had decided to close the store. On April 29, 2005, the Appellant’s employment, along with that of approximately 190 other employees, was terminated. Three employees filed a complaint under s. 16 of the Quebec Labour Code claiming that they lost their employment because of the unionization of the store. They sought an order under s. 15 of the Code that they be reinstated in their jobs. The CRT was not satisfied that the store closure was definitive and allowed the employees’ complaint, holding that Wal Mart had failed to discharge its onus under Section 17 of the Code that the dismissals were for good and sufficient reason. It reserved its jurisdiction to determine the appropriate remedies. The Superior Court of Canada dismissed Wal Mart’s application for judicial review, but the Court of Appeal overturned that decision. In the end, the Supreme Court agreed to hear an appeal by UFCW Canada in which the union argued that the giant retailer's actions violated Quebec labour laws and the right to freedom of association under the Canadian Charter of Rights and Freedoms.

Supreme Court of Canada’s Decision

The main issue before the Supreme Court was whether a permanent store closure constitutes a good and sufficient reason for terminating employment for the purposes of Section 17 of the Quebec Labour Code. Wal-Mart maintained it closed the Jonquière store because it was struggling financially when UFCW Canada wanted 30 more employees hired as part of the first collective agreement.

In a 6-3 decision, Justice Ian Binnie noted there is no legislation in Quebec that obliges any employer to remain in business, even if it closes for “socially reprehensible” reasons. The majority took what appears to be a very narrow view of the issue before it, finding that the only issues were whether a reverse onus section of the Quebec legislation applied when a workplace has been permanently closed, and whether employees can claim ‘reinstatement’ when their workplace has been closed. The majority ruled that Section 17 of the Quebec Labour Code, which shifts the onus to the employer to prove its actions were not tainted by anti-union animus, does not apply when the employer has closed the workplace.

The Court went on to find that the case law establishes that the closure of a store or plant constitutes "good and sufficient reason" to terminate an employee within the meaning of section 17. In other words, the closure of a business ends the inquiry into the reasons for the employee's dismissal – the termination is sufficiently explained


by the closure. As a result, a remedy under section 15 of the Code is not available when there has been a store closure and the employee's workplace no longer exists.

In addition, the majority ruled that employees whose employment is terminated due to a closure of the business cannot claim reinstatement under the Quebec Labour Code. That is how the law has been interpreted in Quebec for years, and from a practical perspective, it would be highly unusual for a labour board to order an employer to ‘reopen’ after it has closed a workplace and moved the work elsewhere.

It is of note, however, that Binnie J. clarified that employees and unions can challenge a workplace closure tainted by anti-union animus under the normal unfair labour practices sections of the Code. The only impact of this decision is that the reverse onus doesn’t apply in circumstances of a workplace closure. This a significant benefit to employers like Wal-Mart, since it forces unions to prove “on a balance of probabilities” that the motive for the workplace closure and resulting mass termination of the workers was due to the employees’ exercising union activities.

One of the most interesting things about this decision is the scathing dissent written by Abella J. As the most experienced labour lawyer on the Bench and the former Chair of the Ontario Labour Relations Board, Abella J. argues that the majority decision is contrary to the entire history of Canadian labour law and Quebec law. In her dissent, she points out that the majority interpretation provides employees with the protection of the reverse onus in all cases of employee retaliation against employees for union activity except with respect to the most drastic form of retaliation of all: mass dismissals in the form of a complete closure of the workplace.

Impact of this Decision

Despite the positive outcome for Wal-Mart in this decision, the majority avoided making sweeping pronouncements about the Charter and freedom of association, and instead decided the case on the relatively narrow issue of the meaning of section 17 of Québec's Labour Code. As a result, the impact of the case on employers located outside of Québec may be limited.

Furthermore, while it is encouraging for employers that the Supreme Court of Canada confirmed that a store closure will not automatically result in a finding that employees were dismissed without good and sufficient reason, the Court did indicate that a union could still be successful in bringing a complaint on the basis that the store closure itself constituted an unfair labour practice. As stated by the majority in their decision, a closure will not protect an employer from all potential negative financial consequences, and a finding of an unfair labour practice and an award of damages remains a very real possibility.

D. Infliction of Mental Suffering

Piresferreira v. Ayotte [2010 ONCA 384]

In Piresferreira v. Ayotte an employee who was pushed by her supervisor was awarded over $500,000 in damages at trial on the basis of the torts of battery, and intentional and negligent infliction of mental suffering. However, the trial decision was appealed, and the Ontario Court of Appeal has now clarified and restricted the


circumstances in which departing employees are entitled to damages in excess of common law reasonable notice.

On May 12, 2005, Marta Piresferreira, a ten year employee of Bell Mobility, failed to arrange a meeting with a client. Her supervisor, Richard Ayotte, was enraged. Piresferreira tried to explain that she had done her best to arrange the client meeting by showing Ayotte a message on her BlackBerry. Ayotte responded by pushing her. Ayotte instructed Pirseferreira to leave his office, telling her that he was writing her a Performance Improvement Plan (“PIP”).

Ayotte presented her with the PIP at his first opportunity. Taken aback, Piresferreira filed a complaint with HR regarding Ayotte’s conduct. Bell Mobility moved quickly to investigate Ayotte’s conduct and disciplined him; however, Pireseferreira refused to work, as despite Bell Mobility’s assurances that Ayotte had been “relocated”, Ayotte remained in the workplace.

Piresferreira was diagnosed as being unable to work as a result of posttraumatic stress disorder arising from Ayotte’s shove and what she perceived as a betrayal by Bell Mobility.

Trial Decision

Piresferreira successfully sued Ayotte and Bell Mobility for over $500,000. At trial, Ayotte was held liable for the torts of battery, and intentional and negligent infliction of mental suffering. Bell Mobility was vicariously liable for Ayotte’s actions, and directly liable for both negligence and constructive dismissal.

In addition, Bell Mobility was liable for 12 months pay in lieu of notice and $45,000 in damages arising from the manner in which Piresferreira was dismissed. The Trial Judge declined to award those damages as they would duplicate the damages she received for the torts.

The Court of Appeal Decision

Jurianz J.A., writing for the Ontario Court of Appeal, held that the Trial Judge erred on a number of grounds and substantially reduced the damages awarded to Piresferreira.

Three aspects of the decision are of particular importance for employers.

(a) Intentional Infliction of Mental Suffering

For the tort of intentional infliction of mental suffering to be made out there must be: (1) flagrant or outrageous conduct; (2) calculated to produce harm; (3) resulting in a provable illness.

The Court of Appeal found that the Trial Judge erred in holding that Ayotte’s conduct was “calculated to produce harm” through his “reckless disregard” of Piresferreira’s emotional well being; “recklessness” alone is not sufficient for an act to be “calculated to produce harm”. Ayotte could not have known that that kind of harm was substantially certain to follow. For the tort to be made out, the extent of harm need not be anticipated, but the kind of harm must have been intended or known to be substantially certain to follow from the act.


(b) Negligent Infliction of Mental Suffering

Importantly, the Court of Appeal also found that there is no tort of negligent infliction of mental suffering in the employment context. Where an employer’s allegedly tortious behaviour arises out of the termination of employment (or constructive dismissal), compensation for mental distress is only available under the framework set out under Honda v. Keays.

(c) Damages for Wrongful Dismissal

Under the Honda v. Keays framework, the impugned conduct still warranted damages of $45,000 in addition to 12 months notice for constructive dismissal, as Piresferreira was shoved by Ayotte and Ayotte deliberately timed the PIP to ward off her filing a complaint. Additionally, Bell Mobility did not advise her of the discipline provided to Ayotte and did not take the steps necessary to ensure that she felt safe returning to work.

Impact of this Decision

This decision can give some comfort to employers that damages awards similar to those in the trial decision are unlikely to become common. It is also a helpful reminder and clarifier of the types of damages available to departing employees upon dismissal:

The tort of negligent infliction of mental suffering is not available in the employment context.

In order for the tort of intentional infliction of mental suffering to be made out, the person committing the alleged tort must intend or understand that the kind of harm is substantially certain to follow from the act.

Under the Honda v. Keays framework, employees may still receive additional damages where there is an independent actionable wrong arising from an employee’s dismissal. Employers should take care in dealing with instances of workplace harassment upon dismissal.

E. Fiduciary Duties of Departing Employees

Aquafor v. Whyte, Dainty and Calder Engineering [2010 ONCA 2733]

In this case, Aquafor sued Whyte and Dainty, two of its former employees, and their new firm, Calder Engineering, for breach of fiduciary duty, misuse of confidential information and failure to provide reasonable notice of resignation. Whyte and Dainty had worked for Aquafor for over 10 years; they were partners in the firm and were responsible for about 25% of its business. In 2003, while still employed at Aquafor, the two began to plan their departure and the establishment of their own business, including leasing office space and preparing a business plan. These actions were done outside of business hours. Before they left, they also told some of their clients of their plans. In addition to the claims against Whyte and Dainty personally, Aquafor sought a disgorgement of profits from the new firm, Calder Engineering.

The Court held that although Whyte and Dainty were fiduciaries in light of their positions at Aquafor, they had not breached their fiduciary duties. In particular, the Court found that the notice of more than 3 weeks was enough and that they were permitted to take the necessary first steps to set up their business.


The Court also did not find any evidence that Whyte and Dainty had solicited clients unfairly or engaged in competitive behaviour. In this regard, the Court considered that the information provided to Aquafor clients was not improper. The Court noted that they only told the clients that there were leaving; they did not improperly solicit the clients, and the clients followed them to the new firm because of their expertise and the existing relationships. Similarly, employees of Aquafor who left to join the new firm were found to have left because they wanted to, and not because they were courted to do so. As well, the Court held that there was no misuse of information stemming from the similarity between the Calder Engineering and Aquafor bid proposals as the template and wording did not constitute confidential information.


Overall, this case suggests that absent a specific contractual term which restricts them from doing so, even very senior employees can plan for a new and competing enterprise while still working for their current employers, provided that they do so without actively soliciting clients or misusing confidential information. The effect of this decision is to increase opportunities for senior employees to set up competing firms while continuing to work for their current employer. It also requires employers to consider whether contractual restrictions on solicitation and competition should be included in employment agreements with senior employees, and to ensure that such provisions are enforceable.

F. Overtime Class Actions

In 2010 we saw a series of class action lawsuits related to unpaid overtime. In this section, we will specifically discuss three significant cases. While there are differences among the three decisions outlined below, each may nonetheless serve as springboard for similar class action lawsuits targeting large employers in Canada.

Fulawka v. Bank of Nova Scotia [2010 ONSC 1148]

In this case, Fulawka sought certification on her behalf and on behalf of employees who worked at Bank of Nova Scotia (BNS) from and after 2000. The proposed class consisted of over 5300 full time branch employees with front line sales positions. Fulawka claimed that she and other class members regularly worked overtime to perform their job functions, and that they did not receive additional pay for doing so. The work outside of regular business hours included meeting with clients and attending meetings and courses. Since it was hard to know when overtime would be required, the employees could not obtain the necessary advance approval. In any event, the employees stated that overtime was often not approved and as such, they tended not to apply for the pre-approval. The claim alleged breach of contract, breach of the Canada Labour Code, and unjust enrichment.

The Court certified the class. Those parts of the claim that attempted to directly enforce the provision of the Code were not allowed as the Court stated that the Code contained its own enforcement provisions. However, the Court allowed the pleading that the duties of the Code were implied contractual terms, and determined that it was not plain and obvious that the causes of actions (save for those that went directly to enforcing the Code) would not succeed. In finding that the class definition was appropriate, the Court noted the absence of any systemic process to record overtime, and the fact that it was the responsibility of each employee to seek pre-approval. The Court considered that these were systemic wrongs that triggered the common issues among class members. The Court was satisfied that there was an evidentiary foundation for the claim. The Court found that not paying for overtime work was not an individual, case-by case, problem, but was grounded in policy and the workplace situation.

Interestingly, the Court also determined that it was not plain and obvious that a claim in negligence would not succeed, suggesting a duty of care to establish appropriate workplace policies to address overtime issues.


Fresco v. Canadian Imperial Bank of Commerce,[2010 ONSC 4724]

Like Fulawka, Fresco is also an overtime class action involving a chartered bank, – and a case that received much attention last year. In June 2007, Fresco, a customer service representative at CIBC, brought a class action lawsuit on her own behalf and that of thousands of former and current CIBC employees. At the certification hearing, the Court refused to certify the class on the basis that it was plain and obvious that CIBC’s overtime policy met the Canada Labour Code requirements, and that there was no evidence to establish that CIBC’s method of recording employees’ hours was unlawful. The Court considered that any problems with the pre approval procedure that the bank required for overtime pay stemmed from how the policy was applied in individual cases.

The finding that there was no evidence of any systemic wrongdoing relating to overtime policy is a different finding than that made in Fulawka. Overall the Court found that there was no evidence to establish that the common issues in the litigation were common to all members of the class.

In a recent decision released on September 10, 2010, the certification decision was upheld by the Divisional Court, with one dissenting Judge, who concluded that the overtime policy did violate the Code and that the evidence adduced on the common issues was sufficient. The Divisional Court was unanimous in upholding the costs award in favour of CIBC in the amount of $525,000.

McCracken v. Canadian National Ry. Co [2010 ONSC 4520]

In this recent decision, McCracken brought a class action on behalf of himself and some 1,500 current and former CNR employees, who, as in the bank cases, were not paid for overtime. The action alleged breach of contract and breach of the Canada Labour Code requirements. It was the position of CN that these employees were managers and thus, not governed by the overtime provisions in the Code. The Court rejected CN’s position and certified the class. It was first determined that the courts have concurrent jurisdiction to deal with the minimum employment requirements in Part III of the Code. The Court went on to refer to the “preferable procedure” test for certification under the Class Proceedings Act, and determined that the class action was the better approach in this case. (Interestingly, this is a different approach than that taken by the Court in Fulawka.)

There were 4 substantive claims advanced: breach of contract, breach of the duty to act in good faith, unjust enrichment and negligence. The Court allowed the breach of employment contract claim as a factual matter to be determined, and also considered that there was a basis for the unjust enrichment claim to proceed. On those claims, the Court was satisfied that the issues were common to all members of the class, however, the claim grounded in lack of good faith was not allowed on the basis that it is not recognized as a claim that is distinct from contractual terms. The Court also did not allow the claim based on negligence / a breach of the duty of care to deal properly with overtime matters, suggesting that there was no reason to enter the torts area. (This too is a different approach than that taken in Fulawka.)

The Plaintiff in Fresco is seeking leave to appeal to the Court of Appeal; the Fulawka decision has been appealed to the Divisional Court and will be heard this December, and the McCracken decision has also been appealed. While the Divisional Court in Fresco referred to the case specific nature of these cases, the future of these types of overtime claims and the impact they will have on labour relations remains to be seen. What is certain at this point is that workplaces must be cognizant of, and cautious regarding, the issue of overtime payments.

What do these decisions mean for Employers?

Employers should adopt strategies to assess their current exposure to similar class action lawsuits. Immediate action may assist in (i) reducing the likelihood of an overtime class action lawsuit being filed against your organization; (ii) reducing the likelihood that such a class action lawsuit, if filed, will be successful; and (iii) reducing potential liability.


Such strategies may include the following:

Conduct an audit of your organization’s current overtime policies in relation to all employees in Canada.

Conduct an analysis of the eligibility requirements under such overtime policies.

Create a complete list of the employee positions/classifications that are (and are not) eligible to receive overtime, the number of hours that must be worked before such employees are eligible to receive overtime and the rate of overtime pay for each hour of overtime worked by such employees.

Determine whether your overtime policies have been compliant with the overtime provisions of all applicable employment standards legislation over the past several years. Evidence that your overtime policies comply with applicable employment standards legislation may assist your organization in arguing that a lawsuit should not be certified as a class action. A lawsuit should not be certified as a class action if the underlying claims are based on individual circumstances and where there are no "common issues" raised by an "identifiable class" of individuals. If your organization can establish that all such claims arise only in exceptional circumstances where your overtime policy was not followed, you are in a stronger position to argue that a class action should not be certified.

Conduct an analysis of whether your organization’s overtime policies have actually been followed by your organization over the past several years. Ensure that employees have not been ‘allowed’ to ‘voluntarily’ work overtime without additional compensation.

Ensure managers keep good records of all hours worked by employees, including authorized overtime.

Make any changes necessary to existing overtime policies to ensure they are compliant with all applicable employment standards legislation on a going-forward basis.

Regularly review your overtime policies.

G. Privacy Law

A well-drafted computer-use policy can provide evidence to uphold a termination for cause and can protect an employer from harassment claims, as recent case law illustrates. The scene is well-known in the workplace: an employee receives an e-mail joke or photo from a colleague down the hall, has a giggle, and forwards the message to other colleagues, friends at other organizations, and relatives who might appreciate the joke. In minutes, a complete cyber network is created, and it has passed along a message. Sometimes the message is innocuous, e.g., it involves cute images or funny expressions. Other times, it involves racist, sexist or pornographic jokes or images. In most organizations where employees use computers for their jobs, employers draft and implement computer-use policies that limit personal — and prohibit inappropriate — computer use.

Poliquin v. Devon Canada Corporation [2009] ABCA 216

The Court of Appeal decision in Poliquin v. Devon Canada Corporation underscores the importance of employers adopting, and enforcing, these policies.

Mr. Poliquin was a long-time employee of Devon Canada Corporation (“Devon”) and had supervisory responsibilities over other employees. Devon had a Code of Conduct that included a provision on appropriate


computer use. The company permitted employees to use its computers for limited personal use, but specified that the system “should not be used for sending pornographic, obscene, inappropriate or other objectionable messages or attachments via e-mail”. Poliquin acknowledged that he had read, understood and accepted the terms in the Code of Conduct. Poliquin violated the computer-use policy on several occasions by forwarding pornographic, derogatory and/or racist e-mails. Apart from these incidents, he was considered a valued employee and had received positive performance appraisals and exemplary performance ratings. Nonetheless, Devon dismissed him for cause, and the Court of Appeal upheld this decision.

Limits on Employees’ Privacy in the Workplace

Although the case technically revolves around the issue of whether summary judgment was appropriate in the circumstances, the court makes some notable observations on the limits of employees’ privacy in the workplace and on employers’ right to monitor computer usage, including that “the workplace is not an employee’s home; employees have no reasonable expectation of privacy in their workplace computers”. The court also specifically acknowledges the employer’s right to set ethical, professional and operations standards for their workplace. It indicates that the ramifications for failure to enforce a reasonable computer-use policy may be extreme and may even go beyond the walls of the organization. An employee’s misuse of the employer’s computer system to access, receive and disseminate inappropriate materials could:

• compromise the employer’s reputation in the community, as e-mail messages forwarded from work computers often carry the organization’s signature and may be viewed as sent on behalf of the organization;

• adversely impact the work environment;

• diminish the productivity of the employee in question;

• expose the employer to lawsuits for failing to protect its employees from harassment or discrimination; and

• introduce worms and viruses “through inappropriate accessing of pornographic or racist websites, or through receiving tainted material downloaded from these websites”.

In light of these significant risks, the court concluded that “an employer is entitled not only to prohibit use of its equipment and systems for pornographic or racist purposes, but also to monitor an employee’s use of the employer’s equipment and resources to ensure compliance”.


This case supports the employer’s right to manage the workplace and enforce reasonable policies.

Employers should:

Implement a clear-cut and comprehensive computer-use policy that sets out permitted and proscribed uses of workplace computer systems. If an employer does not want an employee to have a reasonable expectation of privacy over any data found on a computer or the employer’s network, then this should be


clearly stated in the policy. This policy, like all policies, should be carefully drafted and subsequently reviewed to ensure its continued applicability and validity.

Ensure that all employees receive copies of the policy and acknowledge their receipt and understanding of the policy.

Send out periodic reminders of the terms and conditions of the policy.

Conduct regular monitoring to ensure compliance with the policy.

Hold all employees, including supervisors, to the same standards and expect them to adhere to the policy.

Never take violations of the policy lightly.

Issues in the Recruitment and Hiring Process Sunil Kapur and Gerald Griffiths

1. Using a Head Hunter or Employment Agency

• The Head Hunter acts as an “agent” of the Employer • Be aware of the potential liabilities which may attach as a result • Best Practices for using a head hunter or employment agency

2. The Job Posting, Advertisement and Job Application

• Ensure the content is accurate – avoid misrepresentations • Ensure compliance with the Ontario Human Rights Code • Be mindful of potential new requirements under the Accessibility for Ontarians with Disabilities

Act and the Proposed Employment Accessibility Standard • Examples of the questions you can ask and the questions you can’t ask

3. The Interview

• Human rights considerations: understand the limitations on the questions you can legally ask • Be careful what you say, don’t oversell – issues of misrepresentations • Be wary of “enticing” employees away from secure employment, as an employer’s liability upon

termination may increase significantly.

4. Conducting Reference, Background and Criminal Checks

• Potential liability for not diligently conducting reference and background checks • Reference and Background checks:

• the use of the internet and social networking sites • be mindful of issues of discrimination

• Criminal checks: • new procedure and requirements for conducting searches on the Canadian Police

Information Centre database • Human rights considerations associated with criminal checks


5. Making the Offer and Executing the Employment Contract

• considerations associated with making an offer • Paper the relationship, avoid the so-called “welcome aboard letter” • Steps to ensure the employment agreement is binding and enforceable

Issues in the Recruitment and Hiring Process Sunil Kapur and Gerald Griffiths

Introduction

Attracting and hiring the right people is often crucial to the success of an organization. When the right people are hired, the organization as a whole will benefit. Conversely, significant organizational costs and legal liabilities often arise when the wrong people are hired or when the hiring process is not executed effectively.

From the decision to hire a head hunter, making a job advertisement, conducting an interview, checking references, making an offer and executing the agreement, there are a myriad of human rights, contractual and tort-related issues which may arise at all stages in the recruitment and hiring process. This paper provides an overview of some of the key issues to consider in the various stages of this process.

1. Who will be contracted to attract the right people?

Finding the right people can be a time consuming and tedious process. Often employers do not have the capacity to conduct this process from start to finish on their own. Employers often find it useful to contract the services of a head hunter to assist in finding the right people. These employment agencies or search firms are an excellent resource. However, employers should be aware that there is still a potential for liability for who and how they hire new employees even when a head hunter is contracted to perform those services. As a head hunter is technically an agent of the employer, the potential liability associated with improper pre-employment processes remains with the employer.

In order to reduce the risk of liability, an employer should keep in mind the following guidelines when choosing to use the services of a head hunter:

• Get the facts - Make sure that the agency provides details of the manner in which it sources potential candidates.

• Ensure that the agency’s recruiting policies and practices are not in violation of the Ontario Human Rights Code: – They are an extension of your company and their practices should reflect positively on you. Further, any violation of the Code by your agent is a violation by you.


• Make sure that the agency is informed – Ensuring that the agency is provided with accurate and complete details of the job that is being offered means that you stand a better chance of finding well-suited candidates.

• Make sure that no misleading information is provided – It is your responsibility to ensure that the agency understands that no misleading information concerning the job being offered or the company itself is to be provided to any potential candidates.

• Do not allow a breach of an existing employment contract - The agency must not engage in conduct that would result in a breach of any contracts of employment between the potential candidates and their current employer.

• Get informed regarding an applicant’s choice to leave secure employment – As an employer, it is in your best interest to make sure that the agency knows that if they are inducing or enticing an employee away from secure employment, that they must inform you, the employer, of this fact. Inducement away from long term employment is one of the key hot spots in recruiting, and can often add significant expense in any future termination decision.

2. What should be contained in the Job Posting and Advertisement?

In an effort to attract the right people, some employers have become very creative in the manner in which they advertise both themselves and the job opportunities that are available. While creativity is encouraged, it is important that employers keep in mind that there are limits that must be respected.

(A) The Accuracy of the Content

As is discussed in greater detail below, employers can face significant liability when they overstate or misrepresent a specific position. Accordingly, when creating a job posting or advertisement, employers must ensure that the content is truthful and that they are not inserting any sort of misrepresentation into the advertisement itself. An employment relationship which is based on false promises and misrepresentations of any sort is bound to end unhappily and with potential legal exposure for the employer. It is important therefore that all job postings or advertisements be carefully reviewed prior to their release.

(B) Obligations under the Human Rights Code

The Ontario Human Rights Code (the “Code”) additionally places limitations on the content of job postings and advertisements. The Code aims to prevent discrimination and harassment on prohibited grounds such as race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, marital status, family status or disability. The Code applies directly to the employment experience and must be a key consideration in all stages of the pre-employment hiring process.

With respect to the advertising of employment opportunities, s. 23(1) of the Code reads as follows:

The right under section 5 to equal treatment with respect to employment is infringed where an invitation to apply for employment or an advertisement in connection with employment


is published or displayed that directly or indirectly classifies or indicates qualifications by a prohibited ground of discrimination.

When drafting a job advertisement, employers must be careful not to directly or indirectly ask about any of the prohibited grounds listed above. While they may seem innocent, some qualifications contained in an advertisement can unfairly prevent or discourage people from applying for a job because of a perception that they are not welcome based on their race, gender, etc… For example, the Ontario Human Rights Commission has indicated that even advertising that a job requires “Canadian work experience” may create a discriminatory barrier to employment.

Further, requirements or duties of employment as described in an advertisement should be reasonable, genuine and directly related to the job. For example, it is reasonable and job-related to require that a receptionist speak clearly in English, but it is not acceptable to require “un-accented English”.

(C) Accessibility for Ontarians with Disabilities Act

In addition to these general obligations under the Code, employers may soon be required to comply with the new more specific obligations under the Accessibility for Ontarians with Disabilities Act (the “AODA”). The AODA mandates the creation of “standards” which prescribe specific levels of accommodation to certain activities. Among those standards which have been proposed is the Accessibility Standard for Employers. A final Accessibility Standard for Employers (the “Proposed Employment Standard”) has gone to the Minister for approval, and while it does not yet have the force of law, this proposed standard would impose several additional obligations on employers at this stage in the recruitment process.

These obligations include that advertisements and job postings would be required to state that individual accommodation will be provided for applicants who meet the required qualifications, and that employers must inform applicants that accommodation will be provided to applicants with disabilities to enable their participation in the recruitment and hiring process. The Proposed Employment Standard further provides that organizations must provide information about the employment opportunity to organizations that provide employment services for persons with disabilities. If an Accessibility Standard for Employers receives the force of law its content may yet be different than the Proposed Employment Standard; however, employers should be mindful of these potential new obligations when reviewing or revising employment and accommodation policies.

3. What should be included in the Job Application?

The job application is the employer’s first opportunity to obtain information concerning prospective candidates. While the temptation to be as comprehensive as possible in the questions asked is great, it is critical to ensure that you balance your desire for information with your legal obligations.

In keeping with the fundamental premise of protecting individuals from discrimination on prohibited grounds, as discussed above, the Ontario Human Rights Code imposes strict constraints on what employers are permitted to communicate or obtain in a job application. The Code states the following at s. 23(2):


The right under section 5 to equal treatment with respect to employment is infringed where a form of application for employment is used or a written or oral inquiry is made of an applicant that directly or indirectly classifies or indicates qualifications by a prohibited ground of discrimination.

On an employment application form, questions which enquire as to the following grounds of discrimination, either directly or indirectly, are expressly prohibited:

• race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, age, record of offences, marital status, family status or disability

It should be noted that while direct questions pertaining to national or ethnic origin are prohibited, an employer can enquire as to whether the applicant is eligible to work in Canada. While questions relating age or date of birth are prohibited, an employer can enquire as to whether the applicant is 18 years of age or older. Further, with respect to criminal records and convictions, while it is not permissible to ask whether an applicant has ever been convicted of any offence generally, an employer may ask whether they have ever been convicted of a criminal offence for which a pardon has not been granted. Finally, if information relating to convictions is necessary because of the nature of the job, a further inquiry may be appropriate. For example, if the job involves driving a truck, it is reasonable for the employer to ask whether the applicant has been convicted of any offences under the Provincial Highway Traffic Act.

Under the AODA’s Proposed Employment Standard, employers who use assessment and selection materials must inform those applicants selected that these materials are available upon request in an accessible format and that these materials and processes measure the applicant against the essential duties of the job.

Questions that can be asked in the context of an employment application:

• What is your name, address and telephone number?

• Are you legally able to work in Canada?

• Are you 18 years or older?

• What is your employment history? (It is permissible to ask for full details.)

• What is the highest level of education you have completed?

• Are you available for shift work? If not, what accommodations would you require?

• Have you ever been convicted of an offence under the Criminal Code which has not been pardoned?

• We require our employees to be bonded – will this be a problem for you for any reason?

Questions that cannot be asked in the context of an employment application:


• Do you have any disabilities?

• What is your nationality?

• What is your social insurance number? (This might contain information about a person’s citizenship status or place of origin.)

• Which primary and secondary schools did you attend and why? (This could elicit identification of religious observance.)

• Are you married?

• Are you pregnant? If not, do you intend to have children in the near future?

• What is your religion?

• Do you have any memberships in clubs or other organizations?

4. The Interview

The job interview is the employer’s opportunity to assess whether the applicant brings the required skills to the job as well as the applicant’s opportunity to gauge whether this would be a workplace which they would be interested in joining. There are a number of problems that can arise in the context of an interview as it is an inherently subjective exercise where first impressions can sometimes cloud the otherwise better judgment of the participants. In order to ensure that the experience is positive and productive for both the employer and the applicant, there are a few things that should be kept in mind.

(A) The Questions you can ask and the Questions you can’t ask

As with the job application, the job interview process is subject to the provisions of the Ontario Human Rights Code. The Ontario Human Rights Commission has indicated that at the interview stage of the employment process, the employer may expand the scope of job-related questions if it is necessary to determine, for example, the applicant’s qualifications or their ability to perform the essential duties of the position being offered. That being said, the following caveats should be considered.

With respect to race, ancestry, ethnic origin, place of birth and gender, questions are generally not permissible. However, some employers who provide special services may be permitted to ask questions where specific answers to those questions may be useful and necessary for the job.

Questions regarding religion or creed are generally prohibited, however it may be permissible to deal with accommodation issues regarding an individual’s religious observance. For example, a retail store may need to deal with the issue of whether an applicant’s observance of the Sabbath will impact on their ability to work the hours required.


Questions concerning disabilities during an interview will be permitted only to the extent necessary to establish whether an individual is capable of performing the essential duties of the job. If he or she is not, an employer must determine whether any accommodation could be made to allow the applicant to perform the essential duties of the job.

Questions concerning an applicant’s citizenship cannot be asked in most cases, and should be limited to whether the applicant is legally entitled to work in Canada. However, for some jobs, such as senior executives, further questioning about the applicant’s citizenship may be appropriate as there may be restrictions on the applicant’s ability to assume the position as an officer of the corporation based on provincial or federal corporate legislation.

As with employment applications, if the job requires an employee to be bonded, it is certainly appropriate to ask questions to ensure that the applicant may be bonded.

Questions that concern marital and family status or age are inappropriate and should be avoided. Employers should be aware that even by asking seemingly innocent questions on these subjects, they can be giving the applicant the impression that these are issues of concern to the employer.

(B) Avoid Misrepresentations

It is crucial that employers avoid making false promises and misrepresentations during the hiring process. There is a wealth of case law dealing with the concept of “wrongful hiring”. These cases often involve interviewers making inaccurate claims about a job in the course of heightening a potential employee’s interest in the job. If the inaccurate claims result in the potential employee taking the job, the employer may have exposed itself to significant liability.

In Queen v. Cognos Inc., the leading case on this issue, the Supreme Court of Canada held that an interviewer has a duty to take reasonable care to avoid making false or misleading statements to potential employees. If employers make such statements, they may be liable for negligent misrepresentation. In Cognos, the employer misrepresented the security of the job being offered and the nature of the position that the employee would have. Based on the employer’s representations, the applicant accepted the offer of employment. Although the contract of employment between the parties contained a disclaimer which allowed the company to dismiss him on minimal notice, the company was nonetheless found liable for making false promises and was required to pay damages to the employee for lost income, the loss suffered on the purchase and sale of his new home, emotional stress, and the cost and expenses incurred in finding a new job.

According to the Court in Cognos, the following five factors are necessary in order the establish “negligent misrepresentation”:

(i) there must be a special relationship between the person making the representation and the job applicant sufficient to give rise to a duty of care;

(ii) the representation must be untrue, inaccurate or misleading;

(iii) the person making the representation must have been negligent;


(iv) the job applicant must have relied on the misrepresentation in deciding to accept employment; and

(v) the reliance must have caused the job applicant to suffer a loss.

Accordingly, an employer is under a duty of care during a pre-employment interview to exercise reasonable care and diligence in making representations regarding the employment opportunity being offered. Prudent employers will not make over-reaching promises at the interview stage. If there are aspects of the employment position being offered which the employer is not certain about or which are subject to change or approval, the employer should be candid with the job applicant about such circumstances. Further, it should be noted that although some written contracts of employment incorporate a term that requires the employee to waive any right to assert a claim based on any pre-contractual representations, negligent or otherwise, made by the employer, such provisions do not provide a guarantee against liability for negligent misrepresentation.

(C) Issues of Enticement

The other key consideration when conveying your interest in hiring an applicant is the concept of enticement. Employers who recruit an employee from another employer may face added liabilities if they dismiss that employee without cause in the future. This increased risk of liability generally stems from the fact that individuals who are enticed away from one job to another may be sacrificing the security of their existing employment as well as giving up their seniority, benefits and a chance of advancement.

(D) Summary of Considerations

In order to ensure that a job interview process is efficient, appropriate and legally compliant, an employer should keep the following tips in mind:

• Establish objective criteria to govern the hiring decision – A job interview is a dynamic environment and it is not only helpful to the interviewer, but a legally sound practice, to develop a uniform set of questions to be asked of every applicant. This ensures fairness and lends objectivity and credibility to an otherwise subjective endeavour.

• Interview in pairs and take detailed notes of the interview - Sharing the task of interviewing can be beneficial because you have two sets of eyes and ears to assess the candidate more objectively. Having two interviewers can also provide verification of what was said during the interview. It also increases the applicant’s perception of fairness and assists in a defence to discrimination complaints or allegations of unfair dealings, should they arise. A written record of what was said may also help differentiate candidates from one another and allow other people who were not present during the interview to provide input about who the best candidate is.

• Ensure that the individuals communicating with the applicant are consistent, truthful, candid and accurate in their comments – This might require a written job description or in essence a script for them to rely on in order to ensure that they do not misrepresent the position that is available or the terms on which employment is being offered. The interview process is really a mutual one during which you not only assess whether the candidate is the best person for the job, but the candidate also assesses whether


your workplace is the best place for them. It is helpful if there is someone knowledgeable about the requirements of the job who is available to answer a candidate’s questions.

• Vet questions in advance of the interview – Ensuring that your interview complies with the Ontario Human Rights Code is critical to ensure a successful and legally sound process. It is also important to ensure that the interviewers understand what they can and cannot ask during the course of the interview, and that they should avoid straying from the pre-approved script whenever possible.

• Ensure that all communications made to the applicant are documented and reviewed – This may help to ensure that if such representations are relied upon at a later date by the applicant, that the employer is prepared for them and has made provisions to ensure that they are met.

• Be sure to understand the applicant’s situation - If a certain communication by the employer ends up enticing the employee away from secure employment, it is beneficial to know about this up front, rather than to be surprised by it at a later date.

5. Conducting Reference & Background Checks – New Processes and Requirements

Often employers do not go the extra step to confirm their initial impressions of a candidate, choosing instead to trust their intuition and the applicant. While in many cases this is successful, in others failing to follow up can lead to adverse consequences. Reference and background checks are a good way of ensuring that you have the right person for the job.

(A) Potential Liabilities and Considerations

Conducting a reference check is a relatively simple and productive way of confirming your impressions of a candidate with someone who has already worked with them. While the reference’s opinion may not impact on your decision in the end, it will provide an added perspective that may warrant consideration.

There is no legal obligation on an employer to conduct a reference check nor is there an automatic risk of legal liability for failure to check references. However, where the nature of the job offered is such that the employee could cause harm to a third party (such as bouncers, lifeguards or security guards), and where the employer requests references, the employer may face liability if the references go unchecked and damage is suffered as a result.

In Downey v. 502377 Ontario Ltd. an Ontario court held a tavern, as well as its management, liable for $2 million for not properly checking the references and potential criminal background of two of the bouncers that they employed. The two bouncers viciously beat a customer in the parking lot of the establishment, causing him permanent brain damage and rendering him unable to manage his own affairs. The Court noted that although the employer had made an effort to contact one reference, they had not followed through in an appropriate or sufficient manner. The Court held that had the employer properly checked the references, they would have known that the two bouncers posed a threat of violence or danger to patrons on their premises.


The threat of liability as established in Downey was reiterated by the Supreme Court of Canada in 1999 when it held in Jacobi v. Griffiths that direct liability can be imposed on an employer who is negligent in hiring or supervising an employee who causes damage to another. As an example, in Wilson v. Clarica Life Insurance Co., the Defendant insurance company was found directly liable for theft by its insurance agent because of negligent hiring. The company did not speak with any of an applicant’s previous employers, and only some of his references. In a previous job, the applicant had stolen money, and the Alberta Court of Appeal held that the company was liable to person the agent had defrauded.

(B) Reference and Background Checks

Reference and background checks are a good way to ensure you have the right person for the job, but they are not always straightforward. Conducting simple reference checks on prospective employees has become complicated.

Private sector employers in some provinces and federally regulated employers are subject to personal information protection legislation. This legislation imposes obligations on employers regarding the collection, use, disclosure and retention of personal information. Under personal information protection legislation, consent is generally required prior to collecting or disclosing a person’s personal information. When employers governed by this legislation are conducting reference checks, employers do not need the consent of the applicant, but must still be careful to give the applicant notice in advance that the employer intends to contact previous employers or conduct background checks and ensure that the collection and use of the information is "reasonably required" for the establishment of the employment relationship (i.e., to determine the job applicant’s suitability for the position).

Although consent from the applicant is not required for reference checks, a prospective employer may still wish to obtain written consent, especially if the prospective employer intends to contact previous employers who are not listed as referees.

Employers might want to use the Internet to perform background checks. Similarly, prospective employees are doing their own checks on potential employers by searching for blogs and articles on-line. Employers should be cognizant of the following issues:

• Be careful about discrimination on unlawful grounds, mistaken identity and the collection, use and disclosure of personal information not relevant to the employment relationship;

• Remember all background checks must meet the reasonableness test;

• Be wary of collecting information you do not need; and

• Be wary of collecting or using information which may not be accurate.

(C) Criminal Record Checks

Criminal record checks are an important part of pre-employment screening where the nature of the workplace, client base or work is sensitive, and where vulnerable sector screening may be appropriate. Criminal record


checks are now subject to an Interim Policy Statement issued by the Royal Canadian Mounted Police (RCMP) that is designed to bolster associated privacy controls. Before November 2009, employers could conduct a basic criminal records check or a vulnerable workers check by submitting a request to a local police force or third-party screening provider. These agencies would then conduct a search of the Canadian Police Information Centre (CPIC), a national database administered by the RCMP. Some of these agencies were not abiding by the policies of the CIPC system, by disseminating the details of convictions, discharges or pardons to employers without the informed consent of the prospective employee, and without confirming identity by means of a fingerprint comparison.

Now, employers can still check for criminal records, but there are a number of changes which bare scrutiny.

• CPIC agencies are not permitted to conduct criminal records checks on behalf of third party screening service providers that have not entered into a properly authorized agreement with such agencies.

• An individual must consent (in an informed manner) prior to having a CPIC check conducted by either a CPIC agency or third party screening service provider.

• Criminal records checks will include a qualified statement with respect to its result: (a) in the case of a negative result, that the search “did not identify any records for a person with the name(s) and date of birth of the applicant”; or (b) in the case of a positive result, that the search “could not be completed.” In either case, positive identification that a criminal record may or may not exist, as well as the details of any such record, can only be confirmed once the individual subject’s identity is confirmed via fingerprint comparison.

• Fingerprints are required for positive identification before criminal records are released. Accordingly, third-party screening providers, and other organizations (including prospective employers), will no longer receive confirmation of the existence of a criminal record and/or details relating to the nature of a criminal record, without fingerprint verification.

• The RCMP’s current fingerprint verification process can take up to 120 days or more, depending on whether the fingerprint is filed on paper or electronically.

There are also human rights implications of criminal record checks of which employers should be aware. It is important for employers to consult the provincial or federal human rights legislation applicable to their business to understand their obligations. In order to discriminate on the basis of a criminal record, a clear criminal record must be a bona fide occupational requirement (BFOR) and meet a three-part test: (a) there must be a rational connection between the BFOR and the performance of the job; (b) the BFOR must have been established with an honest and good faith belief that it is necessary to fulfil a legitimate work-related purpose; and (c) the BFOR must be reasonably necessary to meet that purpose (i.e., it is impossible to accommodate the employee without imposing undue hardship upon the employer). However, the Ontario Human Rights Commission in De Pelham v. Mytrak Health Systems has held that termination of employment based on a charge for an offense is not a breach of the Human Rights Code. Employers need to have specific and sufficient information about the position, and bear the following in mind:


• Take appropriate steps to confirm the existence of a criminal conviction, and if one exists, whether it was pardoned. Then, assess the details of that conviction before making any determination as to the suitability of a prospective employee.

• Ensure that any third-party screening service providers used for background checks are party to authorized agreements with CPIC agencies.

• Discuss with your third-party screening service provider how they intend to modify their practices in order to comply with the RCMP’s Interim Policy Statement and how that might impact your hiring practices.

• Where a CPIC check result states that a search “could not be completed,” ask the prospective employee directly about the report, whether they have a criminal record, and the nature of that record.

• Instruct the prospective employee to verify their response by attending at their local police headquarters and having the police run a national criminal records check, and then submitting the report to the appropriate contact person responsible for hiring decisions.

• If criminal record checks are a critical part of your hiring process, consider building in additional time to the hiring cycle to allow for fingerprint verification, or requiring that all candidates provide confirmation of a clear criminal record as part of the job application process.

• Ensure that the individual responsible for hiring is trained and familiar with both the CPIC process and the RCMP’s Interim Policy Statement.

(D) Summary of Considerations

Choosing to conduct reference or background checks, while often recommended, is not always a straight-forward decision. In many cases, the nature of the job available will dictate whether such checks are necessary, either because it is explicitly required by a particular piece of legislation or rules of a self-governing profession, or because the job carries a risk of harm to third parties. In other cases, it may simply depend on the preferences of the employer and their policies and practices. Either way, if you do choose to engage in background or reference checks, there are a few critical points to keep in mind:

• Always follow through - If you make a practice of asking for references, regardless of the nature of the job offered, it is in the best interests of all parties to always follow through with reference checks – failure to do so brings an increased risk of liability if any harm occurs.

• Ensure that you are not in violation of the Ontario Human Rights Code - If you decide to require a comprehensive background check (i.e. criminal record checks, credit checks or attendance record checks), you must comply with the Code. Employers are restricted from basing employment decisions on certain prohibited grounds and these grounds may be disclosed in the context of a background check.

• Ensure that you are meeting all require notice and consent requirements - When obtaining a comprehensive background check, always remember to comply with the various notice and consent requirements. Legislation such as the Ontario Consumer Reporting Act requires that a candidate be


informed of the background check prior to it being conducted and that such notice be displayed in a particular font with explicit wording.

• Be careful in making an offer - If you intend on conducting a background check after making an offer of employment, be sure that the offer is clearly conditional upon your obtaining a satisfactory background check. This practice will help to lessen the risk of breaching the Ontario Human Rights Code.

6. Making the Offer

The offer of employment represents an employer’s intention to be bound to a relationship with a candidate. It establishes the parameters by which that relationship will be governed and is the employer’s first and often only chance to secure the employment relationship. As such, this critical step must be carefully thought out, controlled and well executed. Otherwise, an employer may find itself in a situation where an offer has been made and accepted, thus forming a contract of employment, before all of the intended elements of that contract have been established.

The most important thing to keep in mind at this stage is that whatever conditions or promises the employer wants to be able to rely on in the future must be a part of the employment offer when it is first made. Further, any terms that an employer does not want to be bound to must be avoided at this stage.

In order to ensure that this process goes smoothly and that both the employer and candidate are on the same page as to what the proposed employment relationship will look like, an offer of employment should be:

• in writing – offers made orally are difficult to confirm at a later date and make future conflicts troublesome to resolve.

• clear, concise, and tailored to the position being offered – there should be no potential for misunderstanding as a result of poor drafting or undue length.

• accurate – misrepresentations to a candidate at any point during the pre-employment process can be fatal to the employment relationship.

• reviewed and finalized by all appropriate personnel, including Human Resources and any relevant members of the management team – if a party is going to be bound to the terms of the offer at a later date, they should have an opportunity to vet those terms at this stage.

• explained, understood and agreed to before acceptance – it is in no one’s best interests to communicate poorly at this or any other stage.

An additional obligation of note under the AODA’s Proposed Employment Standard is that it would require that any documented job offers of organizations employing 50 or more employees inform the candidate about the organization’s individual accommodation procedures.


7. Executing the Employment Contract

The last, but definitely not least, step in the pre-employment process is finalizing your agreement and executing the employment contract. While this might seem like little more than a formality, it is critical that this step be dealt with in the proper manner.

One of the most common problems that occurs in the context of a new hire is caused by the so-called “welcome aboard letter”. Quite often employers offer the candidate employment without specifying the terms and conditions of that employment. Then, when the employee reports for his first day of work, he or she is given the details of his employment. By that point however, the employment contract may have already been formed and additional consideration may be required to make the later terms and conditions binding.

Similar circumstances occurred in Francis v. Canadian Imperial Bank of Commerce where the Defendant bank sent the Plaintiff a letter offering employment which the Plaintiff accepted in writing. On reporting to work, the Plaintiff was then asked to sign numerous forms and documents including an “Employment Agreement” which included a provision stating that in consideration of employment by the bank, the Plaintiff agreed that his employment could be terminated upon stipulated advance notice or payment in lieu of notice. The Ontario Court of Appeal held that the employment contract was formed by the initial exchange of correspondence and that the Defendant had provided no consideration to make the terms of the Employment Agreement binding.

In British Columbia, the Court of Appeal went further in Singh v. Empire Life Insurance Company. Despite the “Employment Agreement” containing an “Entire Agreement Clause” (a clause stating that the Employment Agreement replaces all prior agreements), the court held that a prior letter confirming the details of an earlier meeting, as well as indicating that a future contract would follow was an interim contract that was meant to exist alongside the written Employment Agreement. The court held that the Employment Agreement was without fresh consideration.

In order to avoid this scenario, it is recommended that an employer turn their mind to papering the employment relationship at its outset. While it may seem like something that can be done upon arrival, it is worthwhile to not only establish the terms and conditions as described in the context of making the offer, but to execute a formal employment contract prior to the new employee’s first day on the job. This ensures that all parties are on the same page vis-à-vis the parameters of the job, as well as preventing any confusion upon the employee’s arrival at the company.

When putting together a formal employment contract, an employer must keep in mind that for any contract to be valid and binding, it must be entered into voluntarily, understanding the terms of the contract. In order to meet this requirement, employers should provide candidates with adequate time to carefully review, consider, ask questions, and if necessary, have an opportunity to obtain independent legal advice before entering into the employment contract.

Finally, employers are often guilty of not having their employment agreements reviewed by legal counsel prior to execution. At the time of hiring when the parties are in agreement and on friendly terms, it may seem like an unnecessary cost to have the contract reviewed, but this can be quite costly in the end. The courts will resolve


any ambiguity in interpreting an employment agreement against the author (the employer), therefore it is recommended that the agreement be reviewed by legal counsel. Legal counsel can also ensure that the employment agreement is valid and in compliance with statute and common law.

Conclusion

Compliance with the above recommendations will ensure that you have increased protection from a legal perspective and will provide a strong basis on which to found a long-lasting employment relationship.

Canadian Immigration Issues for Employers Naseem Malik

Conducting an Immigration Audit

An Immigration Audit is an examination of how your company deals with temporary foreign workers coming to Canada, and should assist your operation and your clients in Canada. These workers include permanent employees and contract workers, foreign service providers, company transfers and new hires

You need to determine whether your company is in compliance with Canada Immigration law at the current time, and how effective and successful your company has been in obtaining work permits for foreign nationals who are new hires to the company, and transferring existing employees from offices abroad to offices in Canada.

The outcome of an immigration audit should determine whether your company has a well-constructed plan in place to handle these situations.

Before an immigration audit can be conducted an employer, with the help of its legal advisors, needs to become familiar with types of relevant issues that should be considered whenever someone is travelling to Canada for business related activities.

This is currently quite critical especially since the penalty sections of the Immigration and Refugee Protection Act of Canada are more punitive than under the old Immigration Act, but more importantly, there is now a greater chance that they will now be enforced. Under those sections anyone who illegally employs a foreign national in Canada can be sentenced to 2 years in jail and a 50,000 fine. Even if a company and/or its officers are not found to in violation of Canadian immigration law, and not subject to jail sentences and heavy fines, there are many other negative outcomes that can occur if non-compliance is detected by Canada Immigration.

• The temporary foreign worker could be ordered to leave Canada for a minimum of 6 month and may have a very difficult time working in Canada in the future

• The person could be denied entry to the country

• The person could be delayed and hassled at the immigration secondary area

• The person could have a flag put on the immigration computer, which can result in an automatic referral into the immigration secondary area every time they enter Canada.

• The company could earn a negative reputation with Immigration as one that engages in dubious practices, which could lead to future applications being given a higher degree of scrutiny


Positives Outcomes

Generally speaking it just makes good business sense to stay on the right side of the law so that your foreign workers can obtain their work permits in an efficient manner. Compliance also reduces the probability that any of the previously mentioned negative outcomes will occur. In addition foreign workers can engage in employment activities in Canada under the assurance from the government that are legally authorized to do so, thereby decreasing the stress and anxiety associated with worrying about detection by government officials. Compliance also helps to establish a positive working relationship with the government-

What is NON- Compliance?

Non compliance is not adhering to the accepted practices policies and laws that have been adopted by Canada Customs and Immigration, and does not always refer to working illegally. It can take the form of

• Applying for a work permit at the wrong location (for example trying to apply at the border when you are not eligible to do so)

• Applying for a work permit without necessary additional government pre-approval from HRDC

• Applying for the wrong work permit category

• Not answering questions properly at Canada customs or immigration at the border

• Asking for consideration for a work permit exempt category without providing the necessary supporting documents

• Arriving in Canada without taking an immigration medical or obtaining a temporary pardon for a past criminal record

• Arriving in Canada without a temporary resident visa if you are a national of a prescribed country

• Travelling without the proper travel documents

• Not applying for an extension of a work permit within the proper timelines

Working with the McCarthy Tétrault Labour and Employment Group’s Immigration Specialists can assist employers to conduct an immigration audit of their organization and assess their needs for strategic planning We can help to put in place standards and practises which can greatly reduce problems for the flow of key personnel into Canada. We can also assist in the retention of valuable employees who are foreign nationals and help with establishing hiring practices for non-Canadians.

Issues in Executive Compensation Robb Macpherson, Randy Bauslaugh and Melissa Arruda The development, implementation and administration of executive compensation plans and policies creates significant challenges for human resource professionals and involves the application of a wide range of legal principles requiring the application of different areas of expertise in areas of the law including employment, pension and benefits, tax, securities and corporate governance. The purpose of this paper is to provide an overview of some key executive compensation issues about which human resource professionals need to be aware. Executive Compensation Plans

Objectives and Principles of an Executive Compensation Plans

Examples of Executive Compensation Plans

Executive Compensation Plans and Employment Agreements

Current Issues in Executive Compensation

Say on Pay

What’s Driving the “Say On Pay”?

“Say on Pay” in Canada

Model Say-on-Pay Policy for Boards of Directors

Wrongful Dismissal and Executive Compensation

Recent Case

Sample “Date of Termination” Clause

Deferred Compensation -- Supplemental Executive Retirement Plans (“SERPs”)

A Closer look at SERPs

Establishing the SERP Promise

Funding and Security

The Tax Conundrum Posed by SERP Arrangements Secured by a Letter of Credit (“LOC”) held under an

Retirement Compensation Arrangement (“RCA”)

Accessing Refundable Tax associated with SERPs Secured by LOCs

Issues in Executive Compensation Robb Macpherson, Randy Bauslaugh and Melissa Arruda

Executive Compensation Overview

The development, implementation and administration of executive compensation plans and policies creates significant challenges for human resource professionals and involves the application of a wide range of legal principles requiring the application of different areas of expertise in areas of the law including employment, pension and benefits, tax, securities and corporate governance. The purpose of this paper is to provide an overview of some key executive compensation issues about which human resource professionals need to be aware.

Objectives and Principles of an Executive Compensation Plans

The objectives of executive compensation have been articulated by the Canadian Coalition for Good Governance (“CCGG”). The focus of these objectives is on “pay for performance” and linking risk management with the executive compensation structure. The four objectives include:

• Paying for performance to align the interests of executives and shareholders

• Ensuring that compensation does not encourage or reward undue or unmanageable risk

• Attracting, motivating and retaining top talent in highly competitive environments

• Reflecting the realistic and practical market alternatives for executives

These objectives can guide compensation committees in developing executive compensation packages.

In addition to these objectives, Executive Compensation Principles were issued by the CCGG in June 2009. The six principles of compensation developed and enunciated by the CCGG are as follows:

• Pay for performance should be a large component of executive compensation.

• Performance should be based on measurable risk adjusted criteria, matched to the time horizon needed to ensure the criteria have been met.

• Compensation should be simplified to focus on key measures of corporate performance.

• Executives should build equity in their company to align their interests with shareholders.


• Companies should limit pensions, benefits, and severance and change of control entitlements.

• Effective succession planning reduces paying for retention.

These principles, together with the CCGG objectives, can create a solid foundation for an executive compensation agreement.

Examples of Executive Compensation Plans

There are a wide range of executive compensation plans. Such plans may, on their terms, be applicable to only senior executives or may be applicable to the entire management team or, indeed, the entire workforce. Executive compensation plans will have different purposes depending upon their terms. Some executive compensation plans provide for deferred compensation with a primary purpose of retaining employees because they reward employees based on the employer’s performance over time. These plans may include investment vehicles and may permit a deferral of taxation.

Other executive compensation plans provide performance incentives to employees on a year-to-year basis based on individual performance as well as the performance of the Corporation. There is no limit on the different categories of executive compensation plans but typical executive compensation plans include:

• bonus plan;

• short-term incentive plan;

• long-term incentive plan;

• share purchase plan;

• stock option plan;

• phantom stock plan;

• profit-sharing plan;

• deferred share unit plan;

• restricted stock plan;

• golden parachute/change of control agreement;

• pension plan;

• senior executive retirement plan (“SERP”);


Designing the correct package of executive compensation plans for your business requires a market analysis of what is necessary to achieve the objectives of executive compensation including recruitment of top talent, incentivising performance and executive retention.

Executive Compensation Plans and Employment Agreements

Executive compensation plans will typically be referred to in written employment agreements for executives and will form part of the terms and conditions of employment for the executive. However, a well drafted plan can be amended by the corporation from time to time without requiring the specific consent of the executives. However, caution must be taken to ensure that any such amendment does not give rise to a constructive dismissal claim.

Executive compensation plans, as discussed below, may also form a basis for claims for damages in the context of wrongful dismissal lawsuits brought against corporations by dismissed executives.

Current Issues in Executive Compensation:

Recent sensational media coverage has propelled executive compensation agreements into the spotlight. Some of the issues which are being currently discussed include: shareholder “say on pay,” executive compensation in the context of wrongful termination, and SERP arrangements.

Say on Pay

What’s Driving the “Say On Pay”?

Reasons for the increased and continued scrutiny of executive compensation have been the subject of much debate. In an editorial on this subject, The New York Times noted:

Many factors are driving compensation upward, including the frantic hunt for talent accelerated by increasingly rapid turnover of chief executives. Most investors are less concerned with absolute pay levels than the sense that raises, bonuses and stock grants arrive as a matter of course rather than as a reward for success.

The real value of say-on-pay is not to slash executive salaries as a matter of principle, but to force corporate boards and their compensation committees to better explain their decisions. That explanation should include the extent of financial relationships with the consultants making recommendations on executive pay.

“Say on Pay:” The Essentials

A say-on-pay vote or an advisory shareholder vote is a non-binding resolution at an annual meeting of shareholders that allows shareholders to comment upon executive compensation, either positively or negatively. The United Kingdom and Australia have had regulations in place since 2002 requiring such a non-binding vote on a company’s remuneration report. A large number of shareholder resolutions have called for the adoption of an advisory vote on executive compensation in the United States.


“Say on Pay” in Canada

Under Canadian corporate law, how much a company pays its executives is within the exclusive authority of its board of directors. Canadian securities laws require extensive disclosure of how much has been paid to a public company’s top executives, and the basis upon which that compensation has been calculated. Shareholders do not have any direct input into the process, nor do they have any right to approve or disapprove. As with other decisions that may be taken by a board, shareholders who object to a company’s executive compensation practices may seek to change the directors, make a shareholder proposal to express their views, or assert a breach of the directors’ fiduciary duties.

Over the past few years, various shareholder proposals have been made to seek a shareholder vote on executive compensation, with the result that as of October 2010, almost 40 of Canada’s largest companies have agreed to give their shareholders a non-binding vote on executive compensation.

“Say on Pay” in the United States

Starting in 2007, the United States has seen a steady increase in support for ‘say-on-pay’ votes. This has been reflected in the press, in the United States Congress, and in the number of shareholder proposals being made. Indeed, in a significant number of recent shareholder meetings, non-binding ‘say-on-pay’ proposals have received substantial support and have been approved in many instances. In February of 2009, in response to public pressure, issuers receiving financial assistance from the Troubled Asset Relief Program (TARP) were required to put their executive compensation to an advisory shareholder vote.

Model Say-on-Pay Policy for Boards of Directors

A Model policy (including the form of Resolution) is available through the CCGG. This policy may be helpful to companies and boards when determining whether or not a non-binding vote on executive compensation is the right move for the company. A copy of this policy is found at the end of this paper.

Wrongful Dismissal and Executive Compensation

Often, issues of executive compensation emerge in the context of wrongful dismissals. It is important to remember that the common law relating to employment agreements is relevant and that compensation plans form part of the employment agreement.

The notice period of a terminated employee is one area of law which attracts much attention. The period of time which constitutes a terminated employee’s notice period may provoke questions surrounding executive compensation issues such as bonus entitlements.

Recent Case

In the recent case of Mathieson v. Scotia Capital Inc., [2009] O.J. No. 4879, a 58 year old investment banker was terminated from his position as Industry Head after 30 years of service. When terminated, he was provided with 24 months of salary continuance – excluding any bonus payments. Although Scotia’s bonus policy was


discretionary, the court concluded that it was an implied term of the employment contract. The court maintained Mathieson’s notice period of 24 months, and set his bonus entitlement to $460,000 year over the notice period. The case confirmed an employee’s entitlement to discretionary bonuses over the notice period. To support this conclusion, the Court cited Justice Lax in Veer v. Dover Corp. Ltd. (1997), 31 C.C.E.L. (2d) 119 (Ont. S.C.J.):

The bonus component of Mr. Veer’s salary was discretionary, but Mr. Veer received a bonus every year. The Defendant did not disagree that bonus comprised a significant component of Mr. Veer’s remuneration and I find that it had become an integral part of his compensation … The only real issue is the amount of bonus which would have been paid to him through the notice period.

Bonus entitlements during the notice period can result in a costly battle between the employer and the terminated employee. The best way to navigate this issue is to tackle it during the drafting of an executive agreement, if possible. For these reasons, there is a need for clarity in the terms and conditions of any contract between the employer and the employee. Some best practices include defining the term “date of termination” in a clear and concise manner.

An example of an effective and clear “date of termination” clause is as follows:

Sample “Date of Termination” Clause

“Date of Termination” means:

if this Agreement and the Executive’s employment hereunder terminates on account of [his] [her] death, the date of [his] [her] death;

if this Agreement and the Executive’s employment hereunder terminates on account of [his] [her] voluntary resignation, without Good Reason, the effective date of such voluntary resignation;

if this Agreement and the Executive’s employment hereunder terminates on account of [his] [her] Permanent Disability, the date of such termination as is set forth in the disability plan or policy of the Corporation applicable to the Executive at that date; or

if this Agreement and the Executive’s employment hereunder is terminated by the Corporation for Cause or without Cause or by the Executive for Good Reason, [after a Change of Control], the date specified in the Notice of Termination [(which, in the case of termination by the Executive for Good Reason [after a Change of Control], will be not less than 30 days nor more than 60 days from the date such Notice of Termination is given)].

For greater certainty, the “Date of Termination” means the actual date of termination described in (i), (ii), (iii) and (iv), above, and will not include any period following the actual date of termination in each instance, during which


the Executive is in receipt of or is eligible to receive any statutory, contractual or common law notice of termination or compensation in lieu thereof or severance payments following such actual date of termination.

While an executive compensation agreement may never truly be “bullet-proof,” drafting provisions which anticipate the future is always a good precaution.

Deferred Compensation – Supplemental Executive Retirement Plans (“SERPs”)

A Closer look at SERPs

SERPs appear to be an important component of executive compensation in Canada. According to a survey conducted by Towers Perrin (now Towers Watson) in 2008, 88% of companies responding to a survey on supplemental pension practices in Canada indicated they have a SERP for 1 or more employees; up from 73% in 2004. Moreover, the same survey found that employees aged 45 to 54 view competitive retirement benefits as one of the top five attraction/retention drivers for employees aged 55 and over; competitive retirement benefits is rated number three, behind base pay and health care benefits. These facts suggest that Canadian companies are going to be paying more and more attention to SERP commitments.

A SERP functions as a long-term financial reward. This reward may serve the dual purpose of attracting top talent to an organization and/or retaining individuals that are instrumental to the success of a company.

There are many different structures used to provide SERP benefits. None of them are as tax-friendly as a registered pension plan. But under Canadian tax rules, maximum tax sheltered (i.e., tax-qualified) pension benefits or savings are achieved at annual incomes of $124,722. As a consequence most SERPs are provided as “top hat” or hold harmless arrangements that provide benefits in excess of the maximum rate of accrual or contribution applicable to registered pension plans. Providing SERP benefits in excess of such rates may attract adverse tax consequences, such as immediate taxation to the executive on annual accruals. For that reason, it is our experience that most SERPs simply top-up or supplement benefits provided under registered pension plans (i.e., tax-qualified plans), using the formula used in the registered plan.

Establishing the SERP Promise

The commitment to provide a SERP can be established on a Defined Benefit or Defined Contribution basis, and be either funded or unfunded. Three common methods of promising SERP benefits include:

• Contractual commitment

• Board resolution

• Formal plan

Regardless of the way in which the SERP promise is made, the funding of the SERP is often the most important part of establishing a SERP.


Funding and Security

As mentioned, SERPs may be funded or unfunded. An unfunded SERP is simply a “pay-as-you-go” arrangement, whereby benefits are paid from corporate revenues as benefits fall due. According to the Towers Watson survey, 48% of SERPs are “pay-as-you-go” arrangements.

Because of the long-term nature of the promise (employees could be in a SERP throughout their career and then be collecting benefits for another 40 years or more after retirement), many SERPs provide some sort of security. The Towers Perrin survey suggests the following breakdown of security arrangements:

• 22% invested assets (it is not clear if this is provided through a trust or simply assets earmarked that would also be available to the general creditors of the employer in the event of insolvency);

• 21% letter of credit security

• 6% provide up-front settlement (i.e., a lump sum payment or up front annuity purchase at retirement); and

• 4% other.

The Tax Conundrum Posed by SERP Arrangements Secured by a Letter of Credit (“LOC”) held under an Retirement Compensation Arrangement (“RCA”)

At the risk of oversimplification, an RCA is defined in subsection 248(1) of the Income Tax Act as an arrangement under which an employer makes contributions to a custodian in trust to provide retirement benefits. Under the RCA rules, the employer contribution is fully tax deductible to the employer at the time it is made; an amount equal to 50% of the contribution is paid to Canada Revenue Agency (CRA) as refundable tax; earnings on the trust fund are also subject to the 50% refundable tax and the refundable tax is refunded at the rate of $2 for every $1 of benefit paid, and the balance of the fund can be returned when the arrangement is terminated. Employees incur no tax consequences until benefits are paid, at which time the payments are included in income for tax purposes as and when received. Rather than contributing cash or setting up complex insurance arrangements, many employers arranged to have an irrevocable, renewable, standby letter of credit (“LOC”) placed in the trust to secure the payment of benefits. CRA ruled many years ago that the amount of the contribution to the trust would be the standby charge for the LOC (and not the face amount of the letter), which is usually between 0.75% and 3% of its face amount. So the employer generally pays two times the cost of the standby fee for the LOC into trust. 50% is immediately remitted to CRA as refundable tax, and the balance is used to obtain the LOC. While there are several conditions that might trigger payment of the LOC, typical conditions give the trustee the ability to draw on the LOC for the full amount in the event benefit payments are not made when due, or in the event the letter is not renewed within a stipulated number of days prior to expiry in an amount sufficient to discharge the accrued SERP liabilities. When the employee retires, the employer pays or discharges the benefit from corporate revenues, so refundable tax cannot be accessed until the arrangement is terminated. Many of


these arrangements have been in place for many years and have sizeable accumulations of refundable tax. In some cases, in our experience, there may be millions of dollars locked up as refundable tax. No interest is paid on the refundable tax. Accordingly, the issue for many employers is how to unlock the refundable tax.

Accessing Refundable Tax associated with SERPs Secured by LOCs

There are a number of techniques to control the build up of refundable tax or accelerate access to it including the following:

• Set up separate RCAs for each executive – so that as each leaves refundable tax is triggered.

• Set up RCA for smaller groups of executives

• When the design of the arrangement or underlying plans are changed, consider terminating the existing arrangement and triggering a refund (this may require employee consent)

• Where there is a corporate reorganization, M&A activity or similar environmental changes, consider whether it may be possible to terminate the old arrangement.

The issue with the latter techniques is that some form of continuing arrangement is likely to be substituted. So the tax issue is going to be whether as a matter of fact or law the old arrangement has been terminated in a manner that will trigger a refund of accumulated refundable tax.

In every case, the feasibility of obtaining a refund of the RCA tax without jeopardizing the SERP benefits and without violating the ITA depend on the facts and circumstances particular to each organization. However this is something that ought to be on the radar screens of organizations that secure SERP promises this way, so they are ready to take advantage of relevant opportunities when they arise.

January 2010 EngagEmEnt by DirEctors with sharEholDErs In our Board Engagement and “Say on Pay” Policy dated April, 2009 (available at www.ccgg.ca), CCGG indicated that its members believe that institutional shareholders should have regular, constructive engagement with the boards and board compensation committees of public companies to explain their perspectives on governance, compensation and disclosure practices, and to provide detailed comments on the company’s practices to the board.

CCGG believes that boards will welcome this direct, constructive interaction with large shareholders and that it will lead to a better alignment of the interests of shareholders with the interests of the board and management. Where engagement meetings focus on executive compensation or other matters directly relating to management, CCGG expects that these meetings will normally be held without management present.

CCGG has also issued its policy on how it will choose issuers to engage with and how these meetings will be conducted. This policy is available on our website www.ccgg.ca.

“say on Pay” aDvisory votE CCGG regards annual “Say on Pay” shareholder advisory votes as an important part of this ongoing integrated engagement process between shareholders and a board, giving shareholders an opportunity to express their satisfaction with the board’s approach to executive compensation in the year as well as over a longer period of time. The company’s approach to compensation should reflect the links between its strategic objectives and compensation, measured using financial and non-financial measures over a number of years.

CCGG recommends that boards voluntarily add to each annual meeting agenda a shareholder advisory vote on the board’s and company’s reports on executive compensation. CCGG recognizes that this may be difficult for smaller companies to adopt immediately due to a lack of internal or external resources or until common industry practices have developed.

CCGG also recognizes that some issuers may prefer to hold “Say on Pay” votes every two or three years on the basis that compensation plans are designed to reward performance over a multi-year time frame and should be considered by shareholders on a similar basis. However, CCGG believes that annual votes are the best practice as compensation decisions are made annually by most boards. Annual votes will also ensure a focus by investors on executive

2009-2010 ccgg boarD of

DirEctors

ChairDavid DenisonCPP Investment Board

ViCe ChairBarbara PalkTD Asset Management

DireCTOrS Dan ChornousRBC Asset Management

Gordon J. FyfePSP Investments

Emilian GrochAlberta Teachers’ Retirement Fund Board

Stephen A. JarislowskyJarislowsky Fraser

Wayne KozunOntario Teachers’ Pension Plan

Doug PearcebcIMC

Donald F. ReedFranklin Templeton Investments Corp.

Kim ShannonSionna Investment Managers

about ccgg

Representing the interests of institutional investors, the Canadian Coalition for Good Governance promotes good governance practices in Canadian public companies and the improvement of the regulatory environment to best align the interests of boards and management with those of their shareholders, and to promote the efficiency and effectiveness of the Canadian capital markets.

CCGG Policy moDEl sharEholDEr EngagEmEnt anD

“say on Pay” Policy for boarDs of DirEctors

120 Adelaide Street West, Suite 2500, Toronto, ON M5H 1T1 416-868-3576 [email protected] ccgg.ca

compensation programs as a part of their annual proxy voting processes, rather than every few years. In addition, annual votes are consistent with the voting provisions in most other jurisdictions where “Say on Pay” votes have been or are to be mandated.

“Say on Pay” votes impose new obligations and responsibilities on shareholders. CCGG urges its members and all other shareholders to carefully consider each “Say on Pay” vote on a company by company basis, avoiding a “check the box” approach, and to discuss their concerns, if any, with the company in advance of the shareholders’ meeting.

suggEstED moDEl boarD Policy on EngagEmEnt anD say on Pay CCGG has prepared the following model policy in order to provide guidance to boards on their engagement with shareholders, expected disclosure on their approach to executive compensation, a recommended form of the advisory resolution and what could be done by the board with the results of the vote.

CCGG understands that some companies will customize their board policy on engagement to reflect their specific circumstances or regulatory environment, or may already have in place formal or informal policies that have the same effect as this model policy. CCGG recommends that boards either adopt the substance of our model policy (recognizing any adaptations that may be needed for their company) or confirm to investors that the company has in place practices that achieve substantially the same results.

However, CCGG urges companies to use the recommended form of “Say on Pay” resolution as closely as possible so that there is consistency among issuers on the question put to shareholders.

DirEctor comPEnsation to bE rEviEwED At this time, CCGG has not reviewed director compensation as a policy matter and, as a result, has not included it in this policy, but may do so in the future. CCGG recognizes that issuers subject to the Bank Act (Canada) are already required to submit to shareholders the approval of a bylaw providing for aggregate director compensation, and that it may be appropriate for the shareholders of other issuers to also have the right to approve director compensation.

bEst PracticEs summariEs CCGG intends to periodically issue a summary of the best practices adopted by issuers on engagement, say on pay and other governance matters in order to provide practical guidance to all issuers on how to best implement these important board policies. ISSuerS Are INvITed TO cONTAcT STepHeN GrIGGS, execuTIve dIrecTOr Of ccGG, AT 416 868 3585 Or [email protected] WITH queSTIONS Or cOMMeNTS. CCGG wishes to thank Carol Hansell, senior partner in the Corporate Finance & Securities, Corporate Governance and Mergers & Acquisitions practices of Davies Ward Phillips & Vineberg LLP, for her assistance and guidance in the development of this policy.

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[Name of Company]

Policy of thE boarD of DirEctors The board adopts this policy relating to shareholder engagement and an annual shareholder advisory vote on executive compensation, commonly known as “Say on Pay”.

EngagEmEnt with sharEholDErs on govErnancE mattErs The board of directors believes that it is important to have regular and constructive engagement directly with its shareholders to discuss governance issues of importance to shareholders and to allow and encourage shareholders to express their views on governance matters directly to the board outside of the annual meeting. These discussions are intended for the board to be able to listen to its shareholders and to explain to them otherwise publicly available material information, and will be subject to the company complying with its obligation not to make selective disclosure of a material fact or material change.

In order to allow shareholders to provide timely and meaningful feedback to the board, the board will develop practices to increase engagement with all of its shareholders as is appropriate for its shareholder base and size. Examples of engagement include meeting with the company’s larger shareholders and organizations representing a number of shareholders and establishing methods of hearing from smaller shareholders on an ongoing basis. The board will also consider emerging shareholder engagement practices in other jurisdictions as they develop, such as asking specific questions as a part of the proxy process, holding “town hall” meetings, undertaking investor surveys and using web-based tools that allow shareholders to provide feedback and/or ask questions of the board.

comPEnsation DisclosurE to sharEholDErs by thE boarD The company is required by s. 9.3.1 of National Instrument 51-102 Continuous Disclosure Obligations to provide shareholders with the information stipulated in Form 51-102F6 on executive compensation.

It is the policy of the board that the executive compensation information will be in two parts. First, the information required to be disclosed by Form 51-102F6 will be contained in the management information circular of the company for its annual meeting as a report to shareholders from the issuer.

Second, the [Human Resources] Committee of the board, on behalf of the entire board of directors (as compensation is ultimately a core responsibility of the entire board), will in its report to shareholders discuss the key strategic objectives of the company and how the executive compensation plan is designed to motivate management to achieve

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them. While the CD&A disclosure primarily provides information relating to the most recently completed financial year, the Committee’s report will also describe the approach to compensation for subsequent financial year(s), highlighting any changes made to the prior year’s compensation plan and instances where and why discretion was exercised by the board in the prior year, along with explanations for these decisions.

The Committee’s report, together with the CD&A, is intended to provide shareholders with the information needed to understand the goals the board is trying to achieve with its compensation policies and to understand the rationale for the compensation awards and arrangements. The compensation disclosure provided to shareholders should be complete, clear and understandable and sufficient detail will be given to shareholders to assist them in forming a reasoned judgment about the company’s approach to compensation.

aDvisory “say on Pay” votE The board believes that shareholders should have the opportunity to fully understand the objectives, philosophy and principles the board has used in its approach to executive compensation decisions and to have an advisory vote on the board’s approach to executive compensation.

PurPosE of “say on Pay” aDvisory votE The purpose of the “Say on Pay” advisory vote is to provide appropriate director accountability to the shareholders of the company for the board’s compensation decisions by giving shareholders a formal opportunity to provide their views on the disclosed objectives of the executive compensation plans, and on the plans themselves, for the past, current and future fiscal years.

While shareholders will provide their collective advisory vote, the directors of the company remain fully responsible for their compensation decisions and are not relieved of these responsibilities by a positive advisory vote by shareholders.

form of rEsolution The management information circular distributed in advance of each annual meeting of shareholders will ask shareholders to consider an annual non-binding advisory resolution substantially in the following form:

Resolved, on an advisory basis and not to diminish the role and responsibilities of the board of directors, that the shareholders accept the approach to executive compensation disclosed in the Company’s information circular delivered in advance of the [insert year] annual meeting of shareholders.

Il est résolu, à titre consultatif et sans que soient diminués le rôle et les responsabilités du conseil d’administration, que les actionnaires acceptent l’approche en matière de rémunération de la haute direction divulguée dans la circulaire de sollicitation de

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procurations de la Société transmise en vue de l’assemblée annuelle [année] des actionnaires.

Approval of the above resolution will require an affirmative vote of a majority of the votes cast at the annual meeting of shareholders.

rEsults of aDvisory “say on Pay” votE As this is an advisory vote, the results will not be binding upon the board. However, the board will take the results of the vote into account, as appropriate, when considering future compensation policies, procedures and decisions and in determining whether there is a need to significantly increase their engagement with shareholders on compensation and related matters.

The company will disclose the results of the shareholder advisory vote as a part of its report on voting results for the meeting.

In the event that a significant number of shareholders oppose the resolution, the board will consult with its shareholders (particularly those who are known to have voted against it) to understand their concerns and will review the company’s approach to compensation in the context of those concerns. Shareholders who have voted against the resolution will be encouraged to contact the board to discuss their specific concerns.

The board will disclose to shareholders as soon as is practicable (ideally within 6 months), and no later than in the management proxy circular for its next annual meeting, a summary of the comments received from shareholders in the engagement process and the changes to the compensation plans made or to be made by the board (or why no changes will be made). annual rEviEw of this Policy The board recognizes that shareholder engagement and “Say on Pay” are evolving areas in Canada and globally, and will review this policy annually to ensure that it is effective in achieving its objectives.

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The Top 5 Labour and Employment Issues for 2011 Paul Boniferro and Brian Wasyliw

Issue #1 – Trends & Collective Bargaining

• The Province of Ontario has called for restraint in spending on public sector wages. The goal is to freeze wages for two years.

• The same approach has been taken in British Columbia where the “net zero” program has resulted in approximately half of the unionized public sector signing renewal agreements with no wage increases.

• The program of fiscal restraint was viewed by one arbitrator as sufficient reason for a public sector employer to withdraw its bargaining offer of wage and benefit increases.

• However, another arbitrator awarded an agreement that included a 2% wage increase. • The impact on the Public sector is direct. This development may also trickle through to private

sector bargaining.

Issue #2 – The Impact of Bill 168

• Bill 168 has been in effect since June of this year. It is estimated that many employers have not complied with the requirements to assess and develop policies as required.

• The impact of Bill 168 has not been very public from an enforcement perspective. Currently the Ministry will field complaints and will inquire as to the existence of a policy or not.

Issue #3 – The Status of “Family Status”

• The issue of “family status” has become a hot topic in recent years. • Section 5 of the Ontario Human Rights Code (the “Code”) states: • Every person has a right to equal treatment with respect to employment without discrimination

because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, record of offences, marital status, family status or disability.

• Section 10 of the Code defines “family status”:"family status" means the status of being in a parent and child relationship.

• A test of ‘serious interference’ has been developed to determine whether or not discrimination has occurred. The onus then shifts to the employer to justify such a change by proving that the change constitutes a bona fide occupational requirement (BFOR). This includes establishing that the employee cannot be accommodated without imposing undue hardship upon the employer.

• The ‘serious interference’ test has not been universally adopted. • As the Ontario Human Rights Commission states itself: “Not every circumstance related to family

status and caregiving will give rise to a duty to accommodate… In most circumstances where


there is a significant conflict between an important caregiving responsibility and an institutional rule, requirement, standard or factor, a duty to accommodate will arise.” (emphasis added)

• if the need for accommodation is temporary, employers should generally accommodate;

• if an employee's need for accommodation is not much different than that of most parents, i.e. the Evans case, there is less likely to be an obligation to do so;

• Courts and tribunals are more likely to require accommodation for the needs of a very ill or disabled child or parent;

• if the problem can be resolved another way, say through daycare, there less likely to be an obligation to accommodate;

Issue #4 - The New and “Improved” Ontario Human Rights Regime:

• Complaints are now made directly to the Human Rights Tribunal, with the Human Rights Commission taking on a peripheral role in the Human Rights complaints process.

• The Human Rights Legal Support Centre was established to provide legal assistance, advice and representation to people filing human rights applications at the Tribunal.

• In the year ending March 31, 2010, the Centre had received 38,579 calls. • Early estimates indicate that in the past year the number of new complaints filed continues to be

in the neighbourhood of 3,500. • The new human rights system is seeing more cases proceeding to a full hearing and these cases

are reaching the hearing stage in a much shorter timeframe. Employers must now be prepared to respond to human complaints in a faster, more robust fashion.

Issue #5 - Impact of the New Rules of Civil Procedure

• Significant changes have been made to the Ontario Rules of Civil Procedure, the process and framework by which legal actions, including wrongful dismissal actions, proceed.

• The changes implemented in January 2010 now permit judges to make findings of credibility and even to conduct a mini-trial. Even where an employer alleges substantial mitigation issues, summary judgment may be an appropriate and cost-effective way to determine a wrongful dismissal action.

• Counsel for plaintiffs have taken full advantage of the new rule. It appears to be resulting in more settlements earlier in the course of the action.

The real impact of the summary judgment procedure has been to compress the timeline for substantively responding to a wrongful dismissal claim.

The Top 5 Labour and Employment Issues for 2011 Paul Boniferro and Brian Wasyliw

Issue #1 – Trends & Collective Bargaining

In an effort to reign in spending and restore the provinces financial health, Finance Minister, Mr. Dwight Duncan, has called for Ontario’s public sector workers (about one million) to take a two year wage freeze. A similar step was taken with respect to non-bargaining unit employees through legislation; Public Sector Compensation Restraint to Protect Public Services Act, 2010 (the “Restraint Act”) which came into effect in March 25, 2010 and will continue until March 31, 2012. The Government has indicated that it intends to respect all current collective agreements however, it has also indicated that it will work to seek renewed agreements of at least two years that do not require corresponding funding increases.

A similar concept was introduced in British Columbia where it was dubbed the “Net Zero” mandate on Collective Bargaining. A similar two year freeze in that province has resulted in just over half of the provinces unionized public sector employees to re-negotiate agreements that were set to expire in 2010.

In a recent case, the Labour Relations Board considered whether an employer (Municipal Property Assessment Corporation) had breached its duty to bargain in good faith by withdrawing its offer of a wage and benefit increase when the Restraint Act was introduced. The Board determined that the expressions of the Ontario Government regarding frozen wages, as well as the introduction of the Restraint Act for non-bargaining unit employees, was sufficient to change the climate in negotiations and it was a material change, such that the employer was not breaching its duty to bargain in good faith when it revoked its offer.

In Ontario at least one arbitrator has seen fit to depart from the “expect zero” line of thinking. On September 16, 2010, arbitrator Norm Jesin awarded 17,000 workers from long term care homes 2% wage increase for this year. Arbitrator Jesin stated that; "given that increases are being found for other nursing home employees and for some other health care employees I accept that there should be a wage increase in these agreements". The arbitrator did note that the decision to award only a 2% increase was premised on the current downward economic trend.

Nevertheless, this trend is worth keeping an eye on. The impact upon employers in the public sector is obvious. The extent to which these developments can influence bargaining in the private sphere remains to be seen. At the very least there is a substantial possibility that the statistics published by the Ministry of Labour will reflect this new policy, thus potentially impacting bargaining in the private sector based on these statistics.


Issue #2 – The Impact of Bill 168

Bill 168 amended the Occupational Health and Safety Act (the “OHSA”) to deal with workplace violence, including physical force by a person against a worker (or attempted physical force) or statements and behaviour that may reasonably interpreted as a threat to exercise physical force against a worker.

Employers must assess the risk of workplace violence that may arise due to the nature of the workplace, the conditions of work, or the type of work being preformed.

Employers are required to have a policy posted in the workplace to address workplace harassment. Harassment is a “coarse of vexatious comment or conduct against a worker in a workplace that is known or, ought reasonably to be known, to be unwelcome”. The policy must be reviewed as often as necessary, but at least once a year. Furthermore, employers are required to provide information and to instruct their employees on workplace violence in a policy and program.

Employers must maintain a program with respect to their workplace violence policy that includes attempts to control the risks identified during the assessment process, the ability to summon immediate assistance in response to workplace violence, or the threat of workplace violence, assistance for workers to report incidents or threats and a mechanism for the investigation into incidents, complaints or threats of workplace violence.

As with other workplace safety issues, employees are entitled to refuse to do particular work where he or she has reason to believe that workplace violence is likely to occur.

Bill 168 took effect in June of 2010, and it is estimated that many Ontario workplaces have not complied with the requirements of Bill 168 as of that date.

The Ministry has indicated, through its awareness campaign, that when an Inspector attends at a workplace they will first ask to meet with a Supervisor as well as representatives from the Joint Health and Safety Committee. The Inspector will ask for a copy of the Employer’s policy and program with respect to violence and harassment.

If an Inspector arrives at your workplace, employers should cooperate but should also contact counsel as soon as the Ministry representatives arrive, whether it is in response to a specific complaint or not.

It should be noted of course, that Police are still the first responders to any incidents of violence or harassment. It is the role of the Police to respond and to investigate such incidents.

At this point the Ministry has indicated that they are not doing any type of blanket compliance checking. Rather, the Ministry is taking a responsive approach with respect to Bill 168 policies and conducting their inspections as follow up to complaints or to matters in which the Police have become involved.


Issue #3 – The Status of “Family Status”

The issue of “family status” has become a hot topic in recent years. Courts, tribunals and arbitrators have been increasingly called upon to examine an employer’s accommodation obligation where an employee’s needs relating to his or her family status have come into conflict with workplace requirements. For instance, does an employer have a legal obligation to accommodate employees who have childcare challenges or other family obligations, such as caring for an ailing parent?

Section 5 of the Ontario Human Rights Code (the “Code”) states:

Every person has a right to equal treatment with respect to employment without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, record of offences, marital status, family status or disability.

Section 10 of the Code defines “family status”:

"family status" means the status of being in a parent and child relationship.

Analysing “Family Status”

Some principles have emerged as to how courts and tribunals will examine the issue of discrimination on the basis of family status. An employee has to show:

1. the employer changed a term or condition of the employment; and

2. the change resulted in a serious interference with a substantial parental or other family duty or obligation

of the employee.

Under this ‘serious interference’ test, only where an employee is able to prove both parts of the two-stage test is discrimination established. The onus then shifts to the employer to justify such a change by proving that the change constitutes a bona fide occupational requirement (BFOR). This includes establishing that the employee cannot be accommodated without imposing undue hardship upon the employer.

That approach has been criticized by both the Canadian Human Rights Tribunal in Hoyt v. Canadian National Railway and the Federal Court of Canada in Johnstone v. Canada. In Johnstone, the court stated that there is no reason to apply a higher standard of proof to demonstrate discrimination in the context of family status complaints than for other grounds of discrimination by requiring a change in a term or condition of employment. Similarly, in Hoyt, the Tribunal stated that it would be inappropriate for “family status” to have a more restrictive definition than other prohibited grounds of discrimination.


The Policy of the Ontario Human Rights Commission

“Not every circumstance related to family status and caregiving will give rise to a duty to accommodate. As noted above, the duty to accommodate only arises where a prima facie case of discrimination has been shown. Where rules, requirements, standards or factors have the effect of disadvantaging persons who have significant caregiving responsibilities related to their family status, either by imposing burdens that are not placed on others or withholding or limiting access to opportunity, benefits or advantages available to others, a duty to accommodate caregiving needs related to family status may arise. In most circumstances where there is a significant conflict between an important caregiving responsibility and an institutional rule, requirement, standard or factor, a duty to accommodate will arise.”

Recent Cases:

Johnstone v. Canada (Border Services Agency) 2010 CHRT 20

The complainant was employed by the Canada Border Services Agency (“CBSA”). Employee shifts at the agency varied from day to evening or night and could be changed on five days’ notice. When the complainant gave birth to her second child, she asked for a more stable schedule so that she could care for her children. CBSA refused and suggested she work part-time, which she did.

She filed a complaint under the Canadian Human Rights Act claiming that she was discriminated against on grounds of family status. She claimed that CBSA failed to accommodate her. The CBSA argued that her child care obligations were the result of a choice that the complainant and her husband had made.

The Tribunal found in favour of the complainant. It awarded her $35,000 for lost wages and ordered the CBSA to implement a plan to prevent situations that deprived employees who are parents from advancement within the company. The Tribunal found that the change that the complainant requested would not entail undue hardship to the CBSA.

Power Stream Inc., [2009] O.L.A.A. No. 447 (QL) (Jesin)

Meanwhile, other adjudicators are struggling with family status discrimination claims and the confused legal framework in different jurisdictions. In one case, an arbitrator in Ontario was dealing with four grievances arising from a change to the hours of work initiated by the employer and agreed to by the union based on the preference of a vast majority of its members. The change was to a 4 x 10 hour shift schedule. That caused problems for four fathers trying to meet their child care obligations.

For three of the four, the new shift schedule meant they had to adjust the child care schedule they had established which put an increased burden on their wives. It also affected their ability to attend their children’s extra curricular activities.

The fourth grievor had worked out a joint custody arrangement with his former wife where the children lived with each parent for alternate weeks. The 10 hour shifts made that impossible and the grievor could only have the children living with him on weekends.


The arbitrator ruled against the first three grievors, finding that not every conflict between a work obligation and a parental obligation should give rise to a finding of discrimination. The fourth grievor’s case was more complex, and the arbitrator ruled:

[I]t is reasonable to conclude that a change in a workplace rule which forces parents to alter a carefully constructed custody agreement to their detriment in order to accommodate that workplace rule may be found to be discriminatory… .1

Putting the Issue ‘To Bed’?

The conflict between an employee’s family obligations and an employer’s duty to accommodate requires an examination of the unique facts and circumstances of each case. Given that this area of the law remains uncertain, employers should proceed cautiously in responding to requests for accommodation. it is advisable that employers are prepared to respond to employees who request accommodation due to significant childcare or eldercare responsibilities or, alternatively, to employees whose attendance or performance may be affected, and possibly protected, by “family status” issues.

Some general guidelines that can be discerned from the case law to date include:

• if the need for accommodation is temporary, employers should generally consider trying to accommodate where possible;

• if an employee's need for accommodation is not much different than that of most parents it is less likely that an employer will be required to accommodate;

• Courts and tribunals are more likely to require accommodation for the needs of a very ill or disabled child or parent;

• a parent has an obligation pursue reasonable solutions to a conflict, accommodation is a two-way street;

• if there is an unanticipated emergency, there is generally an obligation to accommodate.

Issue #4 - The New and “Improved” Ontario Human Rights Regime:

Beginning June 30, 2008, major changes to the Ontario Human Rights Code came into force, resulting in a drastically transformed system and procedure for the handling of human rights complaints in Ontario. Most significantly, complaints are now made directly to the Human Rights Tribunal, with the Human Rights Commission taking on a peripheral role in the Human Rights complaints process.

1 Power Stream Inc., [2009] O.L.A.A. No. 447 (QL) (Jesin)


The Human Rights Legal Support Centre was established to provide legal assistance, advice and representation to people filing human rights applications at the Tribunal. The Centre has the statutory mandate of providing a broad range of services that go well beyond traditional “legal representation”. For example, the Centre provides assistance in completing applications to the Tribunal and in collecting documentation in support of an application. The Centre places considerable emphasis on “up front” assistance, including the issuance of demand letters and assistance with settlement negotiations. The Centre also provides legal advice at the mediation and adjudication stages of the human rights process.

Unofficially the Centre has indicated that 2009/2010 was an extremely busy year. In the year ending March 31, 2010, the Centre had received 38,579 calls. Updated numbers have not yet been released with respect to how many of these calls result in an active retainer to assist beyond the filing of materials.

We reported last year that there was a considerable spike in the amount of complaints filed with the Tribunal just prior to the new regime taking hold. That spike was with respect to the final year of the Tribunal under the old system. As it turns out, that spike may be more of a plateau. Early estimates indicate that in the past year the number of new complaints filed continues to be in the neighbourhood of 3,500. With the exception of the final year under the old system, the Tribunal has historically (from 2003-2007) received approximately 2,400 complaints per year.

However, the new human rights system is seeing more cases proceeding to a full hearing and these cases are reaching the hearing stage in a much shorter timeframe. While cases under the previous regime often languished in the system for years at a time, human rights cases are now racing through the system in a matter of months. As a result, employers must now be prepared to respond to human complaints in a faster, more robust fashion.

It is important to be diligent if you receive an application under the Code. You should immediately investigate the matter, gather relevant documents, speak to witnesses and get in touch with legal counsel. These steps will help your organization respond efficiently and strategically to a human rights complaint.

Issue #5 - Impact of the New Rules of Civil Procedure

Significant changes have been made to the Ontario Rules of Civil Procedure, the process and framework by which legal actions, including wrongful dismissal actions, proceed. The most immediate impact has been felt by employers with respect to the new rules regarding summary judgment.

The mechanism of summary judgement was introduced as a method to provide quicker access to justice and to resolve claims, where they could be disposed of on largely legal grounds. A motion for summary judgment would be brought where there are very few or no factual issues in dispute, such that the matter may be determined on issues of law without the need for testimony. Judges were not permitted to make findings of fact. This limited the utility of, or at least limited the attempts to utilize, the summary judgment procedure in the past.


The changes implemented in January 2010 now permit judges to make findings of credibility and even to conduct a mini-trial. Even where an employer alleges substantial mitigation issues, summary judgment may be an appropriate and cost-effective way to determine a wrongful dismissal action.

In fact, there is no doubt that summary judgment motions in wrongful dismissal cases have proliferated. Every day there are motions for summary judgment scheduled in wrongful dismissal actions. What is perhaps surprising is that we have yet to see more than a trickle of decisions. This would lead an observer to conclude that the vast majority of these motions are driving the parties to reach a settlement. That result should not be too surprising.

In many wrongful dismissal cases the only real issue on the table is the appropriate amount of notice to which the employee is entitled. Frankly, most counsel will have a fairly good view of where the decision would end up if it was put to a judge. The reality is that the real impact of the summary judgment procedure has been to compress the timeline for substantively responding to a wrongful dismissal claim. Facing a motion for summary judgment, an employer will quickly be forced to focus on the real disputed issues and to make a determination of whether the case should be fought or settled. Where the horizon was previously a trial far down the road, it is now a decision that may have to be made within a month or two of the claim being served.

Departing Employees and Fiduciaries Chris McHardy, Brian Wasyliw and Fazilah Hussain

Introduction

Departing employees are a reality of the workplace. Seemingly gone are the days when an employee would remain with the same employer for the duration of their career. Where companies are potentially vulnerable to departing employees, employers have sought to restrict the competitive activities of the departed. It can be very difficult to enforce these restrictions (known as restrictive covenants), however, they are arguably becoming more important than ever given some recent decisions in the Ontario Courts.

All employees are bound by particular obligations under the common law. However, a special category of employees, called fiduciaries, are placed to a higher standard by virtue of the position they hold in the company or organization. The manner in which the Courts have enforced fiduciary obligations has varied, and some recent results may surprise you.

In this paper, we will describe some of these developments and make suggestions to employers who are looking for a way forward.

The Common Law Obligations of Departing Employees

Departing employees owe their employer certain duties even in the absence of a written employment agreement. These “common law duties” are implied in any employment agreement. These obligations include:

The duty of confidentiality

Employees must respect the confidentiality of business information, both during and after their employment. It is important to remember that this restriction will only apply to information that truly is confidential. The determination of what information is confidential will be influenced by; 1) the nature of the information, 2) the accessibility of the information and 3) the manner in which the information was handled within the company.

The duty of fidelity and good faith

This is the duty of the employee to remain loyal and faithful to his or her employer during the course of employment. The duty includes providing reasonable notice of resignation and the duty not to compete during the course of his or her employment.


Without an enforceable restrictive covenant against post-employment competition, departing employees are free to compete with their former employer so long as they don’t breach any common law duties owed to the former employer.

The Additional Duties of Fiduciary Employees

Fiduciary employees are those employees who hold positions of trust and, because of their responsibility, duties and/or access to information they can owe extensive duties to their employer, with or without a written contract.

Who is a Fiduciary Employee?

Examples of fiduciary employees include directors or other executives of the company or organization. The Courts have also held that certain “key employees” may be fiduciaries. The test to determine who is a fiduciary depends on the facts and circumstances in each case and will not be concluded based solely upon the employee’s title. Some of the considerations taken into account by the Court will include:

• How much trust is placed on the employee?

• Does the employee have a significant or direct impact on the operation and success of the business?

• Does the employee have access to confidential information, not available to other employees?

What are the Duties and Responsibilities of a Fiduciary?

The duties and responsibilities of a fiduciary include those applicable to all employees, as well as additional duties that relate to the avoidance of conflict and placing the interests of the Company above personal interests.

Employers have often taken some comfort in knowing that the most “key employees” will be held to this higher standard of duty. The reality is that the concept of fiduciary employees originated in a noble place, the misappropriation of corporate opportunities for personal gain. When the principles of fiduciary duty are listed and discussed they also sound very comforting. However, employers must be very cautious if they intend to rely solely on the principles of fiduciary duty for protection.

Aquafor Beech Ltd. v. Whyte, [2010] O.J. No. 2011 (S.C.)

In this recent Ontario decision, the employer pursued an action against a breakaway group of employees who left to start a competing business. The employer sued the two departing employees and their new company. Mr. White and Mr. Dainty were both professional engineers who were doing well, but were unsatisfied working at Aquafor. Together they represented approximately 25% of Aquafor’s revenue. After Mr. White and Mr. Dainty left Aquafor to start their competing business, Aquafor sued them for breach of fiduciary duty. Aquafor had not required Mr. White or Mr. Dainty to sign any agreement limiting their ability to compete or to solicit Aquafor’s clients.

Of interest, Aquafor itself was established when a group of employees left a previous engineering firm to start the competing business that became Aquafor. The judgment of Justice Conway is set against the backdrop of the


general reluctance to restrain trade and to allow employees, and particularly professionals, to go out into the world and earn a living as they choose.

Justice Conway expressed little trouble in determining that Mr. White and Mr. Dainty were, in fact, fiduciaries. The particularly interesting analysis arises when the judge moves on to consider whether or not Mr. White or Mr. Dainty had breached any fiduciary duties that they owed to Aquafor. For the purpose of illustrating the narrow fashion in which the fiduciary duties were described, a few specific examples are set out below:

Notice of Resignation

The obligation to provide reasonable notice of resignation is a general one that applies to all employees and the failure to give reasonable notice of resignation is not, in itself, a breach of fiduciary duty. In any event, Justice Conway determined that the time given here, which was three weeks (extended to five) for Mr. White and four weeks for Mr. Dainty, was not unreasonable. The judge determined that this amount of notice gave time for Aquafor to transition matters and to train or hire replacement employees.

Planning to Establish a New Competing Business

The judge noted that mere planning to compete is not a breach of fiduciary duty. The tasks and activities associated with establishing Calder were conducted outside of Aquafor’s normal business hours. The Trial Judge noted that a fiduciary is not allowed to compete during their employment, however, there was no evidence that the Defendants did so before providing their notice of resignation.

Soliciting Aquafor Clients

Justice Conway noted that while the defendants were entitled to compete following their resignation from Aquafor, they are restricted from doing so unfairly. It is unfair for a fiduciary to solicit clients without allowing the previous employer, Aquafor, the opportunity to solidify its relationships.

There was no direct evidence of solicitation by these defendants despite the existence of what many employers would consider very suspicious circumstances. Ultimately, the evidence of clients who were alleged to have been solicited was very persuasive and important. The judge felt that it was critical that Aquafor did not provide evidence that established that any Aquafor clients were asked to come with the defendants or were persuaded to leave Aquafor by the defendants.

Solicitation of Employees

While some Aquafor staff and employees who expressed unhappiness at remaining with Aquafor did leave to secure employment with Calder, the Judge found that this was not a breach of fiduciary duty as there was evidence that the employees had asked to join Calder.

Appropriation of Corporate Opportunities

Aquafor advanced an argument that Calder, through Mr. White and Mr. Dainty, was required to decline work from clients of Aquafor since it reflected unfairly seizing opportunities that properly belonged to Aquafor. His Honour recognized that Mr. White and Mr. Dainty are professionals who had established long standing client relationships that had significant personal aspects. These relationships were a significant factor in the clients deciding to move their work to Calder. The judge noted that clients have the right to choose which professionals they wish to rely on and was not prepared to find that there were specific opportunities that belonged to Aquafor, which Calder was required to decline.


Confidential Information

While recognizing that some of the form and content of proposals generated by Calder were identical to those used at Aquafor, the Trial Judge was not prepared to find that Aquafor had treated this type of information as confidential. As such, there was no breach or misuse of confidential information.

Some Conclusions to Draw

The Trial decision in this case serves to illustrate the great difficulties that employers will have in seeking to restrain their employees from competing and soliciting work absent clear contractual terms. While employers have traditionally taken a certain comfort that fiduciary employees are held to a high standard regarding unfair competition, the decision in this case is likely to give employers pause as to their ability to pursue and restrain departing fiduciaries. It should be noted that the decision is currently under appeal.

Enter the Written Agreement… Restrictive Covenants

A restrictive covenant, in the employment context, is a category of clause that may be included in a written agreement seeking to limit the ability of an employee to solicit the other employees or customers following the termination of the employment relationship. A restrictive covenant may extend as far as attempting to prohibit an employee from competing with the former employer for a certain period of time.

Restrictive covenants offend the common law doctrine that prevents restraint on trade. In order to reconcile with that doctrine, restrictive covenants are only enforceable where they provide for reasonable restrictions that protect a legitimate proprietary interest of the employer.

The three main types of restrictive covenants are:

Non-Competition Clause

The Non-Competition clause is intended to limit the departing employee’s ability to engage in competitive activities. This is the broadest form of restrictive covenant.

Courts will generally only uphold a non-competition clause where a non-solicitation clause would be insufficient to provide the proper protection. These clauses are typically applicable to senior employees, in positions of trust who are the “face of the business”.

Non-Solicitation of Employees Clause

This covenant is designed to prevent a departing employee from influencing or coercing other employees to resign as well. Its aim is to prevent the departing employee from taking advantage of his or her relationships with other employees to the detriment of the former employer.


Non-Solicitation of Customers Clause

This type of covenant is designed to limit the ability of a departing employee to lure away the customers (or in other cases, suppliers) of the former employer for a period of time following the termination of employment. This provides important protection designed to afford the employer time to re-staff and to cement the relationship with the client.

When does an employer need a Restrictive Covenant?

Although the common law provides some protection against post-employment competitive activities by departing employees, there are circumstances where the employer may require additional protection.

Examples of this include:

1. Where the employee may have developed special relationships of confidence or trust with other employees, such that the employer will be vulnerable to the employee soliciting or influencing others to terminate their employment;

2. Where the employee may have developed special relationships of confidence or trust with the employer’s customers or suppliers putting the employer at risk if the employee solicits them;

3. Where the employee may have been in a position to obtain confidential business information which is of such significance and sensitivity that the employer will be vulnerable if the employee makes use of or discloses the information to others.

These are examples of the circumstances where the employer should obtain restrictive covenants. Without restrictive covenants the employee is only subject to the common law obligations set out above and may be free to compete.

Restrictive covenants are ideally going to be included in the initial employment offer. However, when there is a change in circumstance, such as to the duties of the employee, the employer may wish to update or add a restrictive covenant during the course of the employment relationship. An employer may do so as long as fresh consideration is provided to the employee to ensure the covenant is binding and enforceable. Covenants can also be negotiated at the time when the relationship is terminated, although this is often difficult to accomplish.

Drafting Restrictive Covenants

As mentioned, the Courts will not enforce a restrictive covenant against a departing employee unless the employer can show that the restraints imposed in the restrictive convent are reasonable and fair.

A restrictive covenant will held to be enforceable only if it meets the following criteria:

1. It protects a legitimate business interest of the former employer, such as the former employer’s relationships with its employees, customer or suppliers or its trade secrets;


2. The restraint imposed by operation of the restrictive covenant is reasonable and does not go beyond what is necessary to protect the former employer’s business interests in terms of:

a. its duration;

b. its geographic scope (example The Courts have held that the “Metropolitan City of Vancouver” is not a recognizable location and thus, the clause containing it was unenforceable);

c. the activities which it seeks to restrain; and

d. overall fairness;

3. The language of the restrictive covenant must be clear as the Courts will not allow any ambiguity in an employment contract to be corrected. In a recent decision, the Supreme Court of Canada confirmed that notional severance (i.e. the concept which allows a Court to rewrite an ambiguous clause in order to provide clarity) is not applicable in the employment context; and

4. The restrictions are as minimal as possible.

Enforcing a Restrictive Covenant

The former employer has a number of options to choose from when enforcing a restrictive covenant, depending on the outcome that the former employer is seeking.

If the former employer is seeking compensation for losses suffered as a result of the wrongful conduct of a departing employee, the former employer may start a lawsuit (such as the Aquafor case discussed above) or, if the employment agreement includes an arbitration clause, arbitral proceedings before a private third party arbitrator.

If the former employer wishes to stop the employee from actions being taken, the former employer may issue a cease-and-desist letter demanding compliance and/or apply for a court order or “injunction” requiring the departing employee to stop all wrongful conduct.

What is required to obtain an injunction?

An injunction is a court order restraining particular activity. An injunction is granted without a trial on the issues (where witnesses can present competing versions of events), and therefore it is an extraordinary remedy. However, an injunction is often the only effective means by which a former employer can enforce restrictive covenants. Not surprisingly, therefore, the burden of proof on an application for an interim injunction rests with the former employer.

The Issue is Substantial

Although the injunctive proceeding is not a full trial and there is no ultimate order regarding enforceability of the written agreement (or common law duty), the judge will take a hard look at the clause in question. If the employer has a strong case, not necessarily a winning case, then that will often be enough. If there is a major question as


to enforceability, or if the proceeding is brought as a form of harassment or vindictiveness, then the employer can expect to be turned away.

Irreparable Harm

The former employer must also show that, unless an interim injunction is granted, it will be exposed to “irreparable harm”, that being:

…harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. Examples of the former include…where one party will suffer permanent market loss or irrevocable harm to its business reputation.

R.J.R. MacDonald v. Canada (1994), 111 D.L.R. (4th) 385 (S.C.C.)

It is this prong of the test that frequently poses the most difficulty for employers, and their counsel, when attempting to obtain injunctive relief. The employer must show some form of damage that cannot be quantified. Damage that could lead to the insolvency of the business, perhaps by a drastic and irretrievable loss of market share, would be the clearest example.

Undertaking as to Damages

Except in the rarest of cases, a former employer seeking an interim injunction from the court must be prepared to provide an undertaking to compensate the departing employee for any damages which he or she suffers as a result of the injunction should it be subsequently determined, at trial or otherwise, that the injunction ought not to have been issued in the first place.

A Special Note on Arbitration

Employers ought to obtain legal advice as to whether arbitration is an advantageous process for the resolution of claims against departing employees. However, any employer choosing to include an arbitration clause in an employment agreement should also include an express provision permitting the employer to apply to the court for an interim injunction, if necessary, to restrain wrongful conduct on the part of the departing employee pending the outcome of the arbitration. Although it is not impossible to obtain an interim injunction in the absence of such a provision, it may be significantly more difficult.

What are the pros and cons of enforcement?

The key advantages to former employers of enforcement through litigation of a departing employee’s restrictive covenants and other employment-related duties are:

1. the protection of the former employer’s business interests, including its confidential business information, trade secrets, business relationships and market share; and


2. the deterrent effect on other employees contemplating future breaches as the former employer will be seen to take principled positions with respect to the enforcement of contractual obligations.

Any former employer considering litigation ought to weight these advantages against the following disadvantages:

3. the high cost of litigation;

4. the time and commitment of the former employer’s staff who will be required to assist and support litigation counsel prosecuting the claim;

5. the potential for disclosure of the former employer’s confidential business information through the litigation process;

6. the potential for liability pursuant to the undertaking as to damages; and

7. the potential disruption to client relationships if clients are required to participate in litigation through the disclosure of documents or as witness in the litigation proceeding.

Litigation Strategies

Cautious employers may adopt the following litigation strategies designed to minimize their exposure to potential harm by departing employees and improve the likelihood of success in the event of litigation:

8. approach all standard form employment agreements, and restrictive covenants in particular, with a healthy degree of caution;

9. ensure that each employment agreement reflects the unique circumstances of the employment relationship and the employee’s particular responsibilities;

10. give appropriate time and consideration to the terms of all restrictive covenants at the outset of the employment relationship so as to ensure that their terms are necessary and reasonable;

11. draft restrictive covenants defensively and in anticipation of litigation;

12. seek legal advice if ever in doubt as to the necessity or reasonableness of any restrictive covenant;

13. create systems for the periodic review of the restrictive covenants in their employment agreements to ensure that they are suitable and likely to be enforced; and

14. to the extent possible, adopt business practice which minimize the risk of loss on the termination of employment of any employment, including practices designed to maintain broad interface with clients (such that the departure of a single employee is not fatal to the overall client relationship) and distribute confidential information on a need-to-know basis only.


Conclusion

Restrictive covenants fill a middle ground. In many cases employers would be unwise to rely upon the common law duties that attach to employees, even those who are fiduciary employees. On the other hand, employers should be careful not to be too aggressive in who they require to sign a restrictive covenant. Restrictive covenants offer effective protection for employers against competition by former employees, but only if they are drafted properly with due regard to the strict tests applicable to former employers seeking to enforce them. They will not be enforced unless they are necessary, reasonable and clear.

Making Effective Use of Mediation in Wrongful Dismissal Actions Trevor Lawson and Kate McNeill

Background

Rule 24.1 of the Ontario Rules of Civil Procedure establishes a program for mandatory mediation for case managed civil actions filed in the Regional Municipality of Ottawa-Carlton, the City of Toronto and the County of Essex. Rule 24.1 applies to wrongful dismissal actions filed in Ottawa, Toronto or Essex. Under Rule 24.1, local mediation committees have been established and mediation co-ordinators have been designated to administer the mediation program in Ottawa, Toronto and Essex. Mandatory mediation is an extremely important step in the litigation of a wrongful dismissal action, as the vast majority of cases will settle at mediation. The following is a brief summary of the mediation process and of the key points employers should consider at each stage of the process in order to ensure that they are well positioned to succeed at mediation.

Preparing for Mediation

(a) Timing of Mediation

Under Rule 24.1, mediation is to take place within 180 days after the defendant files its Statement of Defence. Mediations can only be postponed if the parties consent in writing and file the consent with the local mediation co-ordinator. In most wrongful dismissal actions, the parties will agree to schedule the mediation after pleadings have closed, and prior to scheduling examinations for discovery. Mediations are generally scheduled for up to 3 hours, but the parties can agree to continue the mediation beyond 3 hours. Under Rule 24.1, each party is required to pay an equal share of the mediator’s fees. It is common however for one party to propose that the other party pick up the entirety of the mediator’s fees as part of a settlement proposal at mediation. This kind of proposal often forms part of a plaintiff’s final settlement offer at mediation.

(b) Selecting a Mediator

Under Rule 24.1, the parties may select a mediator from a list of mediators compiled by the local mediation committee, or the parties may select a mediator who is not on the list. If the parties fail to appoint a mediator within 180 days after the Statement of Defence is filed, the local mediation co-ordinator will appoint a mediator.


We generally recommend that the parties choose their mediator rather than have the mediator be appointed by the local mediation co-ordinator. Experienced employment counsel will generally have a preferred list of mediators that they can offer to opposing counsel, and more often than not, counsel will be able to agree on a mediator. The parties can schedule the mediation on a mutually agreeable date. The location of the mediation is also a matter that can be agreed upon between the parties. Mediations can be conducted at the mediator’s office (if they maintain an office), at a mediation centre, or at the offices of legal counsel for one of the parties.

Like legal counsel, not all mediators are created equal. Mediators each bring different styles, background, skills and expertise to bear on the mediation process. In determining the appropriate mediator for a particular file, we generally consider the following issues:

(1) What is the nature of the issues in dispute? Is this a “cause” case or a notice period case? Is

there a discrimination/harassment or accommodation aspect to the case? Is there a disability/benefits aspect to

the case? Certain mediators are better situated than others to deal with certain kinds of issues.

(2) Does one party (or both) need to receive a strong message about the strengths or

weaknesses of their case? Some mediators are more forceful and interventionist in their handling of the

mediation process and more likely to deliver a strong message to the parties regarding the relative strengths and

weaknesses of their case. Other mediators are more passive in their approach.

(3) Is there a reasonable prospect of settlement, or is one party (or both) approaching

mediation as a step in the litigation process which they are participating in only because they are

required to do so? In a very limited number of cases where there is no reasonable prospect of settlement, the

parties may be less likely to direct their time and resources to using a particular mediator, and content to allow the

local mediation co-ordinator to appoint a mediator. In the vast majority of cases however, there is at least some

prospect of settlement. In many cases in which settlement seems remote going into mediation, a skilled and

experienced mediator can make the difference and increase the likelihood that a settlement is achieved.

(4) Are there any other unique features of this action that lend themselves towards utilizing a

particular mediator?


(c) Preparing a “Statement of Issues”

Under Rule 24.1, the parties are each required to prepare a “Statement of Issues” and provide a copy to every other party and to the mediator. The plaintiff is required to provide the mediator with a copy of the pleadings to the action. In their respective Statement of Issues, the parties are required to succinctly identify the factual and legal issues in dispute, and briefly set out their position and interests with respect to each issue in dispute. Parties are also required to attach to their Statement of Issues any documents that the parties consider to be of central importance to the action. Although not required to do so under Rule 24.1, parties may also attach to their Statement of Issues case law, articles and other authorities or materials that are relevant to the issues in dispute.

The Statement of Issues is an extremely important part of the mediation process as it provides the mediator with his or her first impression of the case, and of the relative strengths and weaknesses of the parties’ respective positions. Accordingly, it is important for employers to work closely with their legal counsel in preparing the Statement of Issues, and to gather and provide to their legal counsel all relevant documents required to support the positions advanced in the Statement of Issues.

(d) Determining Your Mediation Strategy

Prior to the mediation, employers should also meet with their legal counsel in order to discuss their overall mediation strategy, including:

(1) identifying the appropriate representative(s) of the employer to attend the mediation;

(2) discussing the strengths and weaknesses of the employer’s position, the pros and cons of

settlement, the likely outcome if the action proceeds to trial, the costs of litigating the action to a conclusion (win

and loss) if the matter does not settle, and the amount of time the employer’s representatives will be required to

dedicate to the litigation;

(3) identifying the elements/quantum of the employer’s settlement position, and how that settlement

position will progress from ‘opening’ to ‘final’,

(4) addressing and preparing to respond to the positions advanced in the employee’s Statement of

Issues (which may require the employer to provide additional documentation for use at mediation);


(5) identifying any information the employer wishes to gain from the employee through the mediation

process (e.g. status of the employee’s mitigation efforts, whether they have received Employment Insurance

benefits, etc.);

(6) determining the tone and content of the ‘message’ the employer wishes to send to the employee

at the mediation (e.g., the employer is determined to see the matter through to trial, has all of the documentation

and witnesses required to substantiate the employer’s position, will not settle at any cost, or will not settle for

more than already offered or for ‘nuisance’ value, etc.)

It is extremely important that the representative(s) of the employer who attend the mediation have knowledge of the issues in dispute and authority to settle the action. Under Rule 24.1, if the representative of a party who attends the mediation session requires another person’s approval before agreeing to a settlement, that representative must arrange to have ready telephone access to the person whose approval is required throughout the mediation session, whether it takes place during or after regular business hours.

At the Mediation

(a) The Beginning

In the majority of mediations, the parties will initially meet in a joint mediation session. In certain cases (e.g., where there is a particular animosity between the parties), one or both of the parties may object to a joint mediation session, or the mediator may, on his or her own initiative, recommend that the parties forego the initial joint mediation session, in which case the mediation will be conducted by the mediator shuttling back and forth between the parties, who will remain in separate rooms throughout the mediation.

At the outset of the mediation, the mediator will generally advise the parties the ‘ground rules’ for the mediation, focussing primarily on his or her background, role in the mediation process and the fact that all communications at a mediation session and the mediator’s notes and records are deemed to be without prejudice settlement discussions, as per Rule 24.1. The mediator may also require the parties to sign a confidentiality agreement.

The mediator will then provide the parties with an opportunity to provide a brief opening statement, summarizing their respective positions. The mediator may have additional questions regarding the status of settlement discussions, if any, to date, or ask for clarification regarding issues raised by the parties in their respective Statement of Issues or opening statements. If a party is represented by legal counsel, their legal counsel will generally be responsible for communicating their client’s position at mediation. However, there may be certain times when the mediator asks the client representative to address a particular issue, or where legal counsel suggests that their client representative speak to an issue directly.


(b) The Negotiation

At the conclusion of the initial joint mediation session, the mediator will generally direct the parties into separate caucus rooms and begin the negotiation process. After this stage of the mediation begins, the mediator will generally shuttle between the parties rather than reconvening the parties in a joint session. The mediator will generally discuss with the parties his or her assessment of the relative strengths and weaknesses of their case and attempt to bring one party forward to advance a settlement offer.

As noted above, we recommend that employers meet with their legal counsel prior to mediation in order to determine their ‘opening’ and ‘final’ settlement positions at mediation and their overall negotiation strategy. However, we also recommend that employers revisit their overall negotiation strategy with their legal counsel once the negotiation stage begins, in order to take into account and assess:

(1) any new information that has come to light during the opening session that may be relevant to the

employers negotiation strategy (e.g., if the plaintiff reveals that he or she has been successful in mitigating his or

her damages, or it becomes apparent that the plaintiff has failed to make any reasonable efforts to do so, if the

plaintiff has received Employment Insurance benefits, etc.); and

(2) the mediator’s assessment of the relative strengths and weaknesses or the employer’s case,

both of which may affect the employer’s opening and final settlement positions and overall negotiation strategy.

The mediator will likely discuss his or her assessment with each party after they have broken out into their

respective caucus rooms, and not in the presence of the other party.

The mediator will then generally shuttle back and forth between the parties as they advance offers and counter-offers, and attempt to move the parties towards settlement. Following the presentation of each new offer or counter-offer, employers and their legal counsel should again reassess their negotiation strategy (in the absence of the mediator) before advising the mediator of their next counter-offer, if any.

(c) The “Tipping Point”

In most mediations, there is often a point in the negotiation stage where it becomes apparent that the parties are close to either concluding a settlement or walking away from the mediation. It is at this point that the real work begins for your legal counsel and the mediator, and often requires creativity to bridge whatever gap remains between the parties in order to achieve the breakthrough required to conclude a settlement. This is often the most emotional point in the mediation for the parties, and often requires employers and plaintiffs to step back from an emotional response and remain focussed on their overall settlement strategy.


(d) The Closing

Once the significant elements of a settlement are in place, the parties must then resolve the details and paper the settlement, such as identifying elements of the settlement funds which are taxable (and the rate of taxation) and which elements of the settlement funds are not subject to taxation; confirming whether a portion of the settlement funds can be directed into an RRSP; addressing the repayment of any amounts received from Employment Insurance; confirming when the settlement funds will be paid, agreeing on the language to be included in a letter of reference, agreeing on the language of a release and whether the release should be mutual; and agreeing on which party will take out the Order dismissing the action.

All of the agreed upon terms and conditions of the settlement should be reflected in written Minutes of Settlement prepared by legal counsel at the conclusion of the mediation. The Minutes of Settlement should be carefully reviewed and signed by both parties before they leave the mediation. Each party should retain a signed original of the Minutes of Settlement.

Rule 24.1 provides that where a party fails to comply with the terms of the Minutes of Settlement, any other party to the Minutes may (1) make a motion to a judge for judgment on the terms of the agreement (and the judge shall grant judgment accordingly); or continue the action as if the Minutes of Settlement had not been entered into.

Dynamite Mediation Briefs and Minutes of Settlement

In

Wrongful Dismissal Mediations

Barry B. Fisher Arbitrator & Mediator

393 University Ave, Suite 2000 Toronto, Ontario, M5G 1E6

Te: 416 585 2330 [email protected]

www.barryfisher.ca

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Introduction: Ever since mandatory mediation has become standard in employment cases ( at least for actions started in Toronto, Ottawa and Windsor) there has been a plethora of courses and articles focused on the elements of mediation advocacy. These articles have focused largely on the mechanics of the oral advocacy in the mediation. The purpose of this article is to focus on the written elements of the mediation, namely the mediation brief and the minutes of settlement. A) Mediation Brief I find that I generally receive two types of mediation briefs; very helpful and terrible. The purpose of this paper is to help make your mediation brief one of the former and not the latter. Here are some useful practice points . Practice Point No. 1 Key to writing any mediation brief is to first ask yourself the question “ Who is my primary audience? “ or “ Who are I am trying to influence in this mediation brief?” These are four following possible audiences:

o The mediator o The opposing lawyer o The opposing client o Your own client

The style of mediation brief that you choose will depend largely on who you

consider your primary audience. In other words, a mediation brief written to influence a mediator may be very different from one seeking to influence opposing counsel.

In an informal survey I conducted among lawyers a few years ago, when I asked

them who they thought was their primary audience, most responded that they considered the opposing counsel as the primary audience and the mediator as the secondary audience. Classic interest based mediation theory would have you think that the primary audience should be the opposing party, but in fact this informal survey revealed that many lawyers do not even send their clients the opposing lawyers’ mediation brief before the mediation . As a mediator, I can attest to the fact that I often receive mediation briefs less than 24 hours before the mediation, in which case it would next to impossible for the opposing client to have read that brief before the mediation. Often the first time the client sees the opposing mediation brief is at the mediation itself. Needless to say, at that time the client is probably focusing on the oral aspects of the mediation so your brilliant written advocacy has little or no effect on the opposing client.

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So here is Practice Point No. 1: If your primary audience for your mediation brief is the opposing client, serve

the other side with two copies of your brief as soon as possible, preferably before your opponent has done his or her mediation brief . This will improve your chances that the opposing client will actually read your brief. By providing the other side with two copies of your brief, you avoid the delay that may occur if you expect the other lawyer to photocopy your brief and send it to his or her client.

Practice Point No. 2

Although Rule 24.1.10 requires that the mediation brief ( or as it called in the

Rules “ Statement of Issues”) be in the form prescribed in Form 24.1C, there is effectively no sanction if the mediation brief is not in compliance with the form. Personally, I think that the prescribed form is next to useless for the following reasons.

1) The fill in the blanks format impinges on the lawyers’ creativity as the lawyer

tends to concentrate on filling in the form, rather than creating a persuasive document. The best advocacy is story telling, and no one ever told a story by filling out a form, rather we tell stories by a narrative.

2) The form starts by asking the parties to list the issues in dispute even before the

reader knows what the case is about. I do not even read this section until I have understood the narrative .

3) The section about stating the clients position and interests is completely useless and conveys nothing of use to the reader . Typical clauses inserted in this section are as follows:

“ Settlement of this matter” “ The Plaintiff should realize that he has no case and should agree to a dismissal “ “ Although the Plaintiff is prepared to negotiate over the damages, he will never compromise his claim that he has been treated unfairly”

So here is Practice Point No. 2: Ignore Form 24.1C. You can do a much better job on your own

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Now lets us talk about what should go into a mediation brief. I openly approach this topic on the assumption that the mediator is a very important part of the audience for the brief. First of all, everything the mediator knows about your case before he or she walks into the room is found in that brief. Secondly, if you choose to use an evaluative mediator, as opposed to a facilitative mediator, it is important that the mediator thoroughly understand the factual, legal, personal and business aspects of the case. If you state your position in a fair and balanced manner in your brief, this can only positively affect the impression that the mediator has of your case. On the other hand, if you routinely overstate your case, claim outrageous damages in every case and throw up ridiculous defenses, don’t be surprised if the mediator inadvertently misses those few nuggets of wisdom mixed in with the rest of the garbage. We all know that lawyers spend most of their time filtering through information, disposing of the irrelevant and uncovering the relevant. The mediation brief should be a distillation of that process. You know that for there to a rational discussion of certain issues, there must be disclosure of certain facts. For instance :

1. If one issue is reasonable notice, the mediator needs to know the age of the plaintiff, her length of service his position, his compensation package, and any other relevant factors . Put that information up front, preferably in bullet form like this :

Profile of the Plaintiff John Smith:

Age : 55 ( DOB December 5, 1953) Length of Service: 30 years ( January 1, 1979 to December 31, 2008 ) Position: Sales Manager, responsible for 7 salespersons and over 15 million of sales in Ontario, held present position for last 12 years . Compensation : Base Salary : $50,000 ,bonus plan ( see below for details ) , usual health benefits ( no employee contribution, company car ( taxable benefit as per 2008 T4 = $2,800) Special Circumstances related to Notice : John has a health problem which affects his re-employability ( chronic insomnia ) , inadequate educational background ( John only completed high school ) and was engaged in the sale of a very specialized product ( ear wax removers ) for his entire career. Furthermore, the ear wax industry has recently moved offshore so there is little or no prospect of reemployment in this industry . 2. The mediator cannot do his job if he doesn’t even know what the facts and figures are regarding compensation issues . For example, if there is a bonus, we need an outline of the bonus plan, a history of payments and preferably a copy of the plan document . The Plaintiff’s brief may look like this

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Management Incentive Plan : John has been a member of the MIP for 12 years . He has received a payout in every year, except 2001, when no one in the entire company received a bonus apparently due to the fact that senior management made some speculative purchases in the ear wax removal futures market, which turned out to be a disaster . Johns’ MIP in the last 3 years was as follows : 2006 $12,000 2007 $15,000 2008 $14,500

As the MIP year is the calendar year, John as been paid all MIP owing up to his last day of work. However, even though the MIP was an integral part of his compensation, the defendant, in their severance offer, offered only payment of the MIP at 50% of John’s historical three year average, citing a sudden downturn in the ear wax removal market. The plaintiff remains skeptical of this, but is willing to engage in a discussion about how we can replicate in the settlement what would have occurred had the defendant given John working notice. Absent such evidence, a three year backward average is the only data a Court would have in which to calculate his bonus entitlement over the notice period.

Notice how this lawyer has not only put the facts in his brief , but has also starting setting forth not only the issues in dispute , but a possible way to resolve that issue .

The defense response to this issue might look like this : John has correctly set out his bonus history . The MIP plan ( see attached at tab

3, page 2) makes it clear that the major component of the MIP bonus pool is based on the Defendants EBITDA. As this is a public company listed on the TSX , we have no problem showing John and his lawyer at the mediation all the financial information which would lead an educated reader to predict that this years’ EBITDA will likely decrease by over 83%, which will lead to a corresponding drop in the 2009 MIP. As part of the mediation team, I will be bringing Joe Demers, C.A. , who is the CFO of the defendant. You might also might want to look at the Defendant’s Ontario Securities Commission filings, which will give you greater insight into the defendants precarious financial outlook.

Defense counsel is not wasting his time putting forth silly defenses like, the bonus was discretionary, the clause says you have to be in the employ of the company at the time of the payout and we intentionally let you go one day before the payout or any of the stuff that the courts has continually rejected as largely bogus arguments . Instead, she focuses on the plaintiff’s soft spot, the financial health of

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the defendant and the industry. Remember, in the plaintiff’s mediation brief, he wants to emphasize the dismal state of the ear wax removal industry as a factor to increase the notice period. The defendant is using that same fact against the plaintiff on the bonus issue. The defendant is then relying on the fact that the plaintiff and his lawyer are probably not financial wizards, so she states that the bonus is based on the defendant’s EBITDA but does not explain what that is ( the answer, according to Wisegeek.com, is “Earnings before interest, taxes, depreciation and amortization or, to give it its acronym, EBITDA, is a measure of a company's cash flow before certain deductions. It allows investors to see how much money a company is making before taxes, depreciation and amortization have been deducted.”).

Perhaps the plaintiff’s counsel will not even check this out before the mediation, as many counsel seem not even to carefully read their opponents’ mediation briefs, and will be embarrassed at the mediation when this lack of knowledge will undoubtedly show. The willingness to show case the CFO at the mediation illustrates that the defendant takes their position seriously . If the CFO performs well at the mediation, but the case does not settle , then defense counsel will already have had his star witness perform once. If the CFO falls flat on his face, then perhaps the company will accept the three year average.

Referencing the OSC, but not providing copies in the brief, is also a strategic move. Will Plaintiff’s counsel invest the time to actually look up these filings? If he or does not, can I make my point more effectively by bringing copies along to the mediation and having the CFO explain them ?

3) If the issue is just cause, and it is a real issue, the defense brief should spell out the evidence that it has to show it can prove cause . The allegation alone is useless, the evidence is what it is all about . If you allege theft and have a video, show it at the mediation. If you allege expense account fraud, show the reports , the receipts and why they are false. If you have real witness statements signed by real people, show them . If you hope that a witness you have not spoken to yet says what your client assures you he will say , then don’t hang your case on this witness. Show the plaintiff’s counsel that his client is probably lying to own lawyer. This allows the plaintiff’s counsel to talk real litigation risk with his client. By the way, please don’t tell me that you have a strong case because you know that your client is telling the truth and that the other side is lying. Unless you were in the room when the conversation took place all you know is what someone reported to you. Neither mediators nor judges assess credibility based on lawyers protestations.

If you are a plaintiff defending a cause case, stick with one reply and ride that

horse all the way. If your client did some monkey business with his expense account but his real defense is condonation, don’t weaken your case by first denying the improper expense and once that is proven, plead that everybody else did it also. Remember that upholding a discharge is a two step process; first, was the conduct improper, second was the conduct serious enough to warrant discharge or should there have been a lesser

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penalty. You actually have a lot more credibility if you admit the misconduct but argue the penalty. Employers also are more apt to discuss a financial settlement if the plaintiff is admitting to some thing that they srongly believe is true. One other thing, plaintiffs, just cause will not go away just because you ignore it in your brief. If the issue is real, deal with it in your brief . Get your version out on the table first. It is very frustrating to read the plaintiff’s mediation brief and be told that the only issue is reasonable notice, then to open the defense brief and find two warning letters and a culminating incident. In the mediator’s eyes, that plaintiff’s counsel just lost credibility points.

4) Mitigation is almost always an issue, so plaintiffs, just don’t ignore it. I cannot

count the number of times a plaintiff has failed to bring to the mediation any mitigation documentation, and then asked why not, says inane things like “I did not know I had to bring it”, or “I left it home”, or “My hard drive crashed last night and I lost all the records. “

A good plaintiff’s brief contains a chart of all the plaintiff’s mitigation efforts,

identified by date, company applied to, position applied for, interviews, offers etc. The thicker the better. Note to plaintiffs’ counsel. Read this list, no matter how boring. You do not want to find, in the middle of the mediation , that your non-English speaking client with a Grade 4 education, has apparently applied for a job as an architect ( this is a real case, name withheld to avoid further embarrassment).

Defense counsel, we all know that no matter what the plaintiff does with respect

to mitigation, it is never enough to satisfy your client. Luckily the only person the plaintiff has to satisfy on this issue is the judge, not your client. I find as a general rule, that the less help that an employer provides to an employee at the time of discharge ( i.e. allege just cause, pay ESA only, no reference letter, no outplacement counseling) the more they will argue poor mitigation . Remember that the case law requires to show not only that the plaintiff did not adequately look for a job, but also that if he had done so, it is likely that he would have found employment. If you are serious about this, do your homework . One of the best examples of this was when a defense lawyer walked into the mediation with a big thick binder and started talking about mitigation. I thought that he had done a search of all the jobs that the plaintiff could have applied for in the last 12 months, however I almost fell off my seat when he showed us all that this was what was available on Workopolis for the plaintiff’s job category for a single day! Needless to say, the plaintiff’s efforts looked pitiful compared to the big binder.

So here is Practice Point No. 3: Put in your mediation brief the evidence and arguments that best portray

the strength of your case and responds to its weaknesses. No more and no less.

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How to deal with legal arguments in a mediation brief depends on the mediator and the other lawyer. I do not need to read from the Bardal case the famous quote about the reasonable notice factors. On the other hand , I do like to see a report from say , the Wrongful Dismissal Database, available on line at www.wrongfuldismissaldatabase.com.

If there is a particular case that is helpful and maybe not well known, by all means

summarize it and provide a copy in your brief with the relevant parts marked. Tell us all how it helps your case . Do not belabor the point because most of the issues about legal arguments work better when they are orally discussed at the mediation . The mediation brief is not a factum.

So here is Practice Point No. 4: If your mediator and your opponent are knowledgeable about the legal

issues, don’t spend a lot of energy in the brief on pure legal argument.

Practice Point No. 5 In any employment mediation, the opposing parties used to have some sort of

relationship . The history of that relationship is probably going to affect the mediation, so tell the mediator what he or she needs to know . I once had a case where I did not found out until two hours into the mediation that the President of the employer was the Plaintiff’s father in law. Neither lawyer told me initially because it was not “legally relevant.” True, but nonsense never the less. Do you think that the negotiation dynamics were affected by this relationship? Of course they were. After discovering this little tidbit of information, we stopped talking about notice periods, and talked about relationship issues, ( the father was upset because his daughter had sided with her husband and not him in the dispute, the son in law wanted his wife to stop complaining to him that she missed her daddy) and the case settled on fair terms for both.

Even if the termination is without cause, the reason for the dismissal is still

important to the parties emotional outlook about the mediation. The mediator needs to know if the termination was without cause because it was a legitimate shortage of work or because there were performance issues short of cause. If the plaintiff had health issues which may have affected her work performance but she did not discuss it in the workplace because of privacy issues, that is information that a mediator needs to know so that he or she can deal with it. For instance, it may explain to an employer why this employee’s performance dropped in the last year, whereas without this information they just thought that she was getting lazy. Similarly if the defendant is legitimately going through tough economic times, show the plaintiff what steps the company has taken to reduce costs and raise revenues. When plaintiff’s feel that the pain of the recession is not being borne just by themselves, they often are willing to moderate their demands.

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So here is Practice Point No. 5 Don’t forget the emotional and relationship issues in your brief, especially if

such information would not be admissible in a courtroom . A mediation is not a trial. It is a negotiation and real people make tough decisions based on facts and emotion .

Practice Point No. 6 Pleadings are virtually useless in a mediation except to allow us to call some of the settlement monies things like general damages, tort claims, moral damages and anything else that we hope the CRA and EI will approve. As pleadings are of limited value in a mediation, please don’t regurgitate your pleadings in the brief. Save yourself the bother and paper and give me a letter saying that you were too lazy to do a mediation brief but I did do so some pleadings, so go read them yourself and then you should be able to figure out my case.

So here is Practice Point No. 6, with due credit given to Mark Twain , A short mediation brief is better than a long pleading.

Practice Point No. 7 As a mediation is a negotiation, the mediator needs to know what has gone on before to try to settle. If there has been no negotiations, tell me that. If there has been an exchange of offers, whether they are still on the table or not, tell me that Include copies of all Rule 49 offers. If monies have already been paid and benefits have been continued, tell me that . Dollar amounts referred to in pleadings and demand letters are not real offers. If that is all you have done, be honest and tell me that there has been no real negotiations.

So here is Practice Point No. 7 Include the negotiation history in the mediation brief

Practice Point No. 8 Courts award money damages, not declarations of liability. Settlements always involve money. Show in your mediation brief how you calculated your damages, down to every detail It is not hard. Look at this example :

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Plaintiff’s Calculation of 24 notice period for John Smith : Base Salary $100,000 Bonus over NP $27,667 based on three year average Benefits at 10% of base $10,000 Car Taxable Benefit $5,600 Subtotal $143,267

Less ESA Paid $32,692 Home Depot mitigation From Feb 09 to July09 $12,600

Subtotal $45,292 $45,292

Total Damages ( excluding coats and PJI ) $ 97,975 Now think how persuasive this will be if the following comment was made in the Plaintiff’s brief . In light of this calculation, the Plaintiff’s Rule 49 offer delivered with the Statement of Claim of $87,500 plus costs and PJI is much more likely to be in the money than the defendants Rule 49 offer, delivered last week, of $50,000 all in. Moreover, a public Court finding of 24 months notice for my client would likely be read by all the other terminated employees of the defendants as well as the existing employees who are undoubtedly concerned about their own future severance packages. Of course, a settlement along the lines of my Clients Rule 49 offer could contain a very strict confidentiality clause, with an appropriate liquidated damages clause, if required. That’s how you get the Employer’s juices flowing. Just wait until CEO in Alabama sees that. He will shut down the Canadian plant sooner than you can say “ Jack Russell”, or whatever they actually say in Alabama.

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Now the Employers calculation might look more like this : Defendant’s Calculation of 18 notice period for John Smith : Base Salary $75,000 Bonus over Notice Period $3,697 based on 83% reduction from 2008 Benefits at $350 per month, Employers’ actual costs $6,300 Car Taxable Benefit based on T4 $4,120 Subtotal $89,117

Less ESA Paid $32,692 Benefit coverage for 34 weeks At $350/ month $2,765 Car provided for 3 months

of Notice Period $686 Home Depot mitigation From Feb 09 to July09 $12,600

Subtotal $48,743 $48,743

Total Damages ( excluding coats and PJI ) $ 40,374 It should be noted that as this mediation is taking place only 9 months after the termination, this damage calculation is based on an assumption that most favors the plaintiff, which is that in the next 9 months he will earn zero in mitigation earnings. This is highly unlikely given that he easily obtained part time work at Home Depot and can be expected to obtain such work again, especially in the busy Xmas season and spring renovation period. He could easily make approximately $20,000 over the next 9 months by simply doing part time work. This calculation ignores that likelihood. In light of this, there is an excellent chance that the Defendant will beat its’ Rule 49 offer of $50,00 all in. This would both deny the plaintiff most of his costs and leave him open to paying for the bulk of the defendants’ costs . These facts, when combined with EI repayment obligations and income tax at 30% of the balance, make it highly risky for the plaintiff to hold out for his Offer to Settle. Of course, it goes without saying that if the Plaintiff were to accept the Defendants offer as is , he could choose to mitigate or not

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as this money would be his to keep. Moreover the Defendant would be open to discussing the proper allocation of the $50,000, given the many and varied claims made by the Plaintiff in his Statement of Claim . I would ask that the Plaintiff bring along any medical documentation to the mediation that would in any conceivable way support his claim for general damages. This would be important information for us to discuss. Furthermore, if our Rule 49 offer were accepted prior to the date of the mediation, we would absorb whatever outrageous cancellation fee Mediator Fisher imposes upon us. Hold on, I thought that the Plaintiff had in the bag. How come these numbers now make the defense offer seem so fair? Amazing isn’t, when you peel away the rhetoric and convert words to numbers, you see where the issues really are.

Moreover this defense lawyer wants the plaintiff to actually read her brief. She wants the plaintiff to start asking difficult questions of his own lawyer like :

o What is this EI repayment thing? o I didn’t know that the money was taxable o You mean that money I earned at Home Depot saves the

defendants the same amount? You mean I was working for free? o You told me that because I was on a contingency fee, that it would

cost me nothing if I lost, which you also said couldn’t happen. Now you are telling that I may have to shell out and pay their costs?

o If mitigation income only benefits them, I not working anymore and I will tell Home Depot that I not working there this Xmas. Does it matter that they asked me back in a letter last week? Can I just throw that letter in the garbage?

o What is this Affidavit of Document thing we have to do before next weeks’ mediation?

o Could the defendant pull their $50,000 offer without giving me chance to accept it first?

So here is Practice Point No. 8 Do a realistic damage calculation and have an argument justifying every number. Show the mediator and the other side why you could easily do much better in Court than your offer. Indicate some willingness to talk about the deal, even if it is only around the edges as you do not want to stop the settlement discussions.

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B) Minutes of Settlement Clients pay lawyers to get a deal. The deal is the ultimate work product that the client is paying for. Therefore, to leave a mediation without a fully executed and documented Minutes of Settlement is akin to producing nothing, other than a potential lawsuit about whether there actually was a deal and what was the deal. Most litigation involving mediations and mediators involve the issue of not properly documenting the deal. This should be avoided at all cost. A mediation often feels like an emotional roller coaster. After the deal is struck, there is usually a mutual feeling of relief but a sudden tiredness sets in . Now, at the worst possible time, we are forced to become what most litigators hate the most: a solicitor. There are some tricks of the trade to make this task less onerous.

1) Come to the mediation with a draft Minutes of Settlement and Release both in paper form and on a USB memory stick ( no floppies please) . Leave the numbers out but include all the usual terms and fill in the names of the parties. 2) Work on the Minutes of Settlement with the other lawyer. This can lessen the tendency to cling too closely to your own work product and avoids the other lawyer criticizing your drafting over style issues rather than content. 3) Divide up the work. One of you can do the Minutes of Settlement and other the letter of reference. 4) Mediators, in my humble opinion should not be drafting Minutes of Settlement for many reasons, including their own professional liability , practice of law vs. mediator roles, and most importantly, because their drafting could affect the outcome where the mediator sees something the lawyers did not which gives an advantage to one party over the other. For instance, in most wrongful dismissal settlements, the Employer and the Employee should obtain a EI clearance letter, However, not all defense lawyers know that, and not all plaintiff’s are so concerned about their obligation to make the repayment. If I were to draft the Minutes of Settlement on my own, I would include such a requirement for the Plaintiff to obtain such a letter and to provide for the necessary holdback. This may upset the plaintiff as he had no intention of reporting same, no matter what his lawyer told him. I have effectively changed the deal by my drafting. That is not my job. Period. Having said that, if asked, I will give advice on what I think should go in the Minutes and possible terminology to achieve that purpose. There are often real issues that need agreement while the drafting is going on, details which had not been discussed up to that point ( i.e. payment date, dismissal order v Notice of Discontinuance, content of release etc) . The mediator can be invaluable at this point

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because he or she will be seeking to calm down the frayed egos and tempers of the clients and their lawyers. The mediators job at this point is keep all eyes on the prize, getting the deal signed up. 5) Signatures on the Minutes of Settlement are required, but remember that lawyers can sign on behalf of their clients, although probably not on a release. If your client must leave the mediation before the paper work is done, either get the clients’ approval for you to sign as their lawyer, or get their cell phone or email address. You can then either read the final document to the client or email him and receive a written or oral approval . 6) Bring a laptop or do the mediation at a facility that has a computer for your use. Most lawyers’ handwriting is unreadable . Handwritten minutes of settlement also create an undue advantage for the drafter as lawyers may be less likely to request a change in another’s handwritten agreement than a typed one. This can be especially problematic where the hand drafter is an older lawyer and the non drafting lawyer is young. 7) Keep the drafting simple. Do you really need a set of recitals that set the litigation history, and that the parties have a mutual desire to settle this matter? What else could Minutes of Settlement possibly do? Why refer to a date as “two weeks from today’s date” when it is easier to type “ November 15, 2009. “ Everybody knows what a EI Repayment Letter is, so don’t spend two paragraphs citing the section of the act and what happens after the letter is received.

Of course , what is really important is the contents of the Minutes of Settlement . Here is a handy checklist 1) All parties who have obligations under the agreement should be parties to the Minutes of Settlement, even if they are not parties to the litigation. Therefore if the parent corporation of the defendant employer is obligated to do something ( like provide stock options) they should be a signatory to the deal.

2) I believe it is easier to refer to the global amount of the settlement in terms of new money flowing to the plaintiff and then to break down that amount into categories, rather than to have a separate clause for each payment. This way less math errors can seep into the agreement . Here is an example ;

The defendant shall pay the plaintiff, by October 15, 2009, the global sum of $100,000 , allocated as follows; a) $65,000 as a retiring allowance, subject to statutory deductions as required by law. The plaintiff shall be permitted to put any lawful

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amount of these monies into her RRSP upon providing to the defendant the details of her RRSP, the bottom part of page 2 of her latest Notice of Assessment and a declaration that she still has the RRSP room set out in that Notice of Assessment. Any amounts subject to tax withholding shall be at the prescribed rate of 30%.

b) $25,000 as a contribution towards her legal fees, payable to her lawyers in trust. Plaintiff’s counsel shall provide a letter to the Defendant certifying that she has billed her client at least that amount of money. No T4 shall be issued for this amount.

c) $10,000 payable to the plaintiff on account of her allegation of mental distress as set out in paragraph 3 of the Statement of Claim . No income tax shall be withheld at source nor shall a T4 be issued.

3) This example also illustrates how you specify which items are taxable and which are not. It reminds you to determine ahead of time the agreed to tax treatment and the fact that no T4 will be issued for amounts not required by law to have tax withheld at source. I have included the actual tax rate ( as the retiring allowance is in excess of $15,000 and the Plaintiff is an Ontario resident ) so that there will be no misunderstanding in the defendants’ payroll department. There is also no EI or CPP deduction on a retiring allowance. If the retiring allowance had been less than $5,000, the withholding rate would be 20%, for amounts between $5,000 and $15,000, the rate is 20%. Different rates apply in different provinces and for non-residents of Canada.

4) As mentioned already, to deal with the EI issue, the agreement should either recognize no liability as the plaintiff did not receive EI or deal with the obligation to repay. Here are some useful clauses.

The plaintiff represents that she has not received any EI benefits since her termination from employment by the defendant

Prior to the delivery to the Plaintiff of the retiring allowance set out in paragraph 1(a), the Plaintiff shall deliver to the Defendant an EI Clearance letter setting out what amount of the settlement is to be repaid to EI. The Defendant shall make the necessary payment to EI and forward the balance if any, less statutory deductions for income tax, to the Plaintiff . The Defendant shall holdback $10,000 of the settlement funds set out in paragraph 1(a) and upon shall deliver to the Defendant an EI Clearance letter setting what amount of the settlement is to be repaid to EI. The Defendant shall make the necessary payment to EI and forward the balance of the holdback, if any, less statutory deductions for income tax, to the Plaintiff .

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5) Note that any time there is an obligation to pay, a payment date should be agreed to. More disputes arise about settlements that do not specify pay dates than for any other reason. What is reasonable for a starving plaintiff is not the same as what is reasonable for a defendant who routinely drags out payments of all of its receivables.

6) It is best to deal with the issue of confidentiality right in the Minutes of Settlement because if it is left to the not yet agreed to Release, there could be an inadvertent breach in the time frame between the signing of the Minutes of Settlement and the Release. Moreover, clients actually read the Minutes of Settlement, but the Release, not so much. Here is a common clause :

The Plaintiff agrees to keep the terms of this settlement strictly confidential, save and except to his spouse, his legal and financial advisors or as required by law. The parties acknowledge that this is a fundamental term of this agreement and that absent this clause the defendant would not entered into these Minutes of Settlement.

7) If you are relying on a specific assertion of fact made by the other party in coming to an agreement to settle, which you would not have agreed to if that statement was not true, you may want to include a warranty to that effect, which means if you subsequently determine that the other side lied about this fact, you could seek to set aside the settlement. Here are some examples :

The plaintiff hereby warrants that he has neither received nor earned but has not yet received, any income from either employment or self employment, directly or indirectly, from the date of his dismissal to the date of this agreement The Defendant warrants that none of its employees received any bonus under the MIP in 2007. The Defendants warrant that the transaction referred to in paragraph 3 of the Statement of Claim did not close within the six months following the termination of the Plaintiff’s employment.

8) If on the other hand, you want to insure that the deal could not be set aside based on the accusation that someone in the course of mediation was somewhat less than forthright, then the following clause is useful:

Each party confirms that they have relied solely on their own sources of information in arriving at their decision to settle this matter on the terms set out and therefore have not relied upon any statement or representation made by the other party in coming to their decision to settle this matter on the terms set out in this agreement.

17

9) The action must be disposed of by way of an order or the filing of Notice of Discontinuance. Specify who will take out the order. Here are two common clauses:

The Plaintiff shall file a Notice of Discontinance after the settlement monies have been paid in full. The Defendant shall take out a consent order dismissing the action without costs after the settlement monies have been paid in full.

10) Don’t forget the mediator fees. Either you share them or one party pays all. Here are some clauses:

Each party shall pay one half of the mediators fees. The Defendant shall pay all of the mediator’s fees.

11) Reference letters or oral references are common parts of many deals, but employers can only control what designated people will say, not what every Tom, Dick and Mary may utter. This issue can be dealt with as follows:

The Defendant shall provide the Plaintiff with a reference letter in the form attached. The plaintiff agrees to refer all reference requests only to Mr Brian Jones, Director of Human Resources or his designee. Mr Jones, or his designee, undertakes that all oral references will be answered in a matter consistent with the enclosed letter of reference. This undertaking does not apply to any other employee of the Defendant, past or present, who may be asked by the Plaintiff or a potential employer to give a reference.

12) All deals need releases, either as a separate document attached to the Minutes or included in the Minutes themselves. Here are two examples, one where the Release is available, the other when it needs to be drafted . It is always preferable to agree on the form of Release at the mediation itself. If there are special clauses to be included, you must reference them or you run the risk that a judge determines that they are not part of a normal release.

The plaintiff agrees to sign the attached Release. The Plaintiff agrees to sign a Release in a form acceptable to both counsel. The release shall contain both a confidentiality clause as well as a tax indemnity clause. Defense counsel shall prepare the first draft.

18

Putting it All Together Mr Smith settled his at mediation for $80,000. Here is how we write it up :

Ontario Superior Court of Justice Court File # CV-09-378278

John Smith ( Plaintiff)

And

Canadian Ear Wax Removers Ltd ( Defendant )

Minutes of Settlement

The parties agree to settle this matter on the following basis : 1. The Defendant shall pay the Plaintiff, by October 15, 2009, the global sum of $80,000, allocated as follows;

a) $45,000 as a retiring allowance, subject to statutory deductions as required by law. The Plaintiff shall be permitted to put any lawful amount of these monies into his RRSP upon providing to the Defendant the details of his RRSP, the bottom part of page 2 of his latest Notice of Assessment and a declaration that he still has the RRSP room set out in that Notice of Assessment. Any amounts subject to tax withholding shall be at the prescribed rate of 30%.

b) $15,000 as a contribution towards his legal fees, payable to his lawyers in trust. Plaintiff’s counsel shall provide a letter to the Defendant certifying that she has billed her client at least that amount of money. No T4 shall be issued for this amount.

c) $20,000 payable to the Plaintiff on account of her allegation of mental distress as set out in paragraph 3 of the Statement of Claim. No income tax shall be withheld at source nor shall a T4 be issued.

2. The Plaintiff represents that he has not received any EI benefits since his termination from employment by the defendant 3. The Plaintiff agrees to keep the terms of this settlement strictly confidential, save and except to his spouse, his legal and financial advisors or as required by law. The parties

19

acknowledge that this is a fundamental term of this agreement and that absent this clause the Defendant would not entered into these Minutes of Settlement. 4. Each party confirms that they have relied solely on their own sources of information in arriving at their decision to settle this matter on the terms set out and therefore have not relied upon any statement or representation made by the other party in coming to their decision to settle this matter on the terms set out in this agreement. 5. The Plaintiff shall file a Notice of Discontinuance after the settlement monies have been paid in full. 6. The Defendant shall pay all of the mediator’s fees. 7. The Defendant shall provide the Plaintiff with a reference letter in the form attached. The plaintiff agrees to refer all reference requests only to Mr Brian Jones, Director of Human Resources or his designee. Mr Jones, or his designee, undertakes that all oral references will be answered in a matter consistent with the enclosed letter of reference. This undertaking does not apply to any other employee of the Defendant , past or present, who may be asked by the Plaintiff or a potential employer to give a reference. 8. The plaintiff agrees to sign the attached Release. Dated at Toronto this Wednesday, October 21, 2009 John Smith Canadian Ear Wax Removers Ltd by Brian Jones ASO

www.barryfisher.ca

mailto:[email protected]

http://www.barryfisher.ca/

2

Introduction

I have been involved in the field of employment law my entire legal career, since

1979. For the first 10 or so years my role was strictly that as an advocate, acting both for

employers and employees. Then I took on a role as a arbitrator, in which I was required

to make the actual decision, rather than advocate a position. In the last five years, I have

added the role of mediator. Given this somewhat varied background, I see myself as

somewhat uniquely situated to make some helpful comments on the practical aspects of

wrongful dismissal mediations. The purpose of this paper is to try to help both lawyers

and their clients gain some additional insight into not only what motivates the other side

but also some ideas on how to maximize the usefulness of a wrongful dismissal

mediation.

What Every Plaintiff and his or her Lawyer needs to know about

Employers.

Funny as this may sound, the fundamental thing to remember about employers is

that they are human too. Note that I said human, not humane. Corporations may often be

large monolithic entities, but ultimately decisions are made by real human beings, each

with their own real human wants and fears. Once you start to understand this basic

premise, you will to start to better understand the reasons why employers act as they do

not only in reaching termination decisions, but also in how they settle these disputes.

From that basic principle flows a number of observations and comments:

1. Nasty demand letters piss off employers. Nasty Statements of Claim piss off

employers. Adding personal parties to the lawsuit pisses off employers. PISSING

OFF THE EMPLOYER DOES NOT LEAD TO SETTLEMENT, IT JUST

PISSES THEM OFF.

Many lawyers and their clients believe that aggressive tactics will intimidate the

other side into submission. In fact most people‟s reaction to aggressive behavior

is to respond in kind and to raise the ante. I cannot tell you the number of times

that I have seen the following situation:

While the employee is being dismissed, he is not treated properly by the

employer and is given a severance proposal that just complies with the

Employment Standards Act. He is angry because of this mistreatment and goes off

to see a lawyer. The lawyer sends a nasty demand letter to the President of the

Company, accusing the Company of among other things, racial discrimination

and intentional infliction of mental suffering. He also demands a lump sum

settlement of 36 months pay for his client, who was a foreman with 13 years

service. The Company responds through their lawyer that of course all the

plaintiff’s allegations are ludicrous and besides, the employee was fired for just

cause, namely gross incompetence. Plaintiffs counsel starts a lawsuit for 1.2

million dollars, naming the Canadian employer, the US parent, the Canadian

3

President and the employee’s direct supervisor as defendants. The Employer files

a Statement of Defence that alleges just cause and also files a counterclaim for

2.5 million dollars in which it is alleged that due to the plaintiff’s negligence, the

employer lost a major customer.

As the lawsuit was under the Case Management Rules of the Superior

Court of Ontario, the parties are required to go to mandatory mediation before

the case can go forward.

Faced with this situation at mediation, we are now required to spend valuable time

and energy at the mediation disposing of each party‟s frivolous and unsustainable claims

so that we can deal with the real dispute. Each party inevitably blames the other for

escalating the conflict. Claims and defenses that never had any merit in the first place

now have taken on the air of respectability and rationality because they are set out in

documents that were filed in court. Remember, the only difference between a claim for

$10,000 and $10,000,000 is that the lawyer hit the keyboard three more times.

2. It is not always the money, it may be what money represents:

Call me a cynic, but I find that people view spending money very differently

depending on whether or not it is coming out of their own pocket. A self employed

dentist facing a claim for wrongful dismissal is bound to look at a $40,000 severance

payout differently than a General Manager of a multi-billion dollar corporation.

Where the money does not actually belong to the person making the decision, the

critical factor in deciding how much money to spend may be figuring out whose budget

the money will come from. For instance, some organizations require the department from

which the employee came from to bear the coat of the termination while other

organizations pay termination costs out of the HR budget. It may well be that the pay in

lieu of notice portion is paid from the operational budget but job retraining or relocation

counseling is paid from a different budget. This is especially important in governmental

organizations where money can be extracted from departmental budgets, institutional

budgets or ministry-wide budgets.

Even where finding the money is not the problem, it is often amazing how seemingly

uneconomic corporate decision-making can seem to be. I recently mediated a case where

the company‟s own lawyer told his client that if the company lost the case it would cost

them approximately $70,000 and if they won the case it would still cost them $20,000.

The employee was prepared to settle for $25,000. Their lawyer also told them that they

had a 25% chance of losing. This employer was a huge multinational company. The

company was not prepared to settle at that number because they felt that the employee

had quit, whereas the employee claimed that she had been constructively dismissed. It

seemed to be of utmost importance that this company not be seen to reward someone

who, to them, simply decided that they no longer wanted to work for the company. The

sense of paternalistic loyalty was very strong in this corporate environment. However,

when the employee made an alternative proposal of reinstatement without back pay, the

company jumped at the offer as it confirmed their sense of loyalty. In other words, the

4

employee could now be seen not as some money grabbing disloyal employee, but rather

as the formerly disobedient child, who having stomped out the house in a fit of anger,

begs forgiveness and asks to return to the ancestral home. The father ( in this case the

President) could then accept the employee back, not out of a fear of losing a lawsuit , but

rather as an act of paternalistic compassion. This would only serve to reinforce the

corporate culture of loyalty.

3. Fear of the Floodgates, or the dreaded “ Matter of Principle “

Rarely a case comes before me that either one or both parties strongly believe that the

case cannot be settled on any terms other than their own because „it is a matter of

important principle “ or “ if we settle this case, we will be faced with numerous other

similar cases “.

Sometimes there are actually important questions of principle, in fact I remember at

least one or two over the last 200 mediations that I have done. More often than not

however there is a perception that a principle is at stake but really that principle is simply

a code word for “ I do not want to settle, and either I do not know why or I don‟t want to

tell you”. As a mediator I do not try to get people to change their principles, rather I leave

that to the religious authorities. However I do try to find out exactly what the person

perceives is the principle at issue. Once that principle is articulated and defined, I try to

persuade the holder of that principle that he or she can settle this particular case without

affecting that principle. Another tactic I use is to suggest that there may be more than one

principle at play here. For instance, I may suggest that another principle worthy of

consideration is that it is better to resolve disputes than to prolong them. We then have to

consider how to balance those two principles. This opens the door to accepting

compromise without seeing it as a compromising of a single principle.

The “floodgate “ argument is another common problem at mediation. The argument

usually goes something like this “ Sure we know that we may have violated the

Employment Standards Act by not paying overtime to this person, but if we pay her then

all the other employees will file complaints too.” The fear is that the settlement will

somehow cause other people to take the same course of action. When faced with this

argument, I have a number of strategies. The first, and most obvious, is to make the

settlement confidential. This is of limited use in so far it depends largely on the honesty

of the employee. Secondly, I may point out to the employer that the best way to avoid

further lawsuits is to change their way of doing business so as to avoid future liability. If

you are open to frivolous overtime claims because the employee keeps records of their

hours worked but you do not, then institute a proper time keeping system so you are not

at the mercy of the employee‟s creative record keeping. This will not solve the historical

problems but it may avoid future problems. Thirdly, it is always useful to point out to

them that if you are worried about the floodgates being broken because of the leakage of

a confidential settlement, think of the nightmare when you lose the case in court and there

is a public record and precedent that you violated the law. Even the most timid employee

may feel empowered to take you on when he or she reads in the newspaper that his

colleague just won an overtime claim with facts very similar to his own.

5

4. Blaming the “ Deceased Manager”.

It is always difficult for an employer to settle a case where to do so will imply that

one of their managers made a poor decision or did something wrong, especially when the

potential wrongdoer is an important person within the organization. If it is necessary to

find someone to blame in order to allow a decision to settle to be made, then it is

important to cast blame on someone who no longer has power within the organization.

Convenient scapegoats are former employees, recently demoted employees, outside

consultants, lawyers and when all else fails, the Human Resources Department. Once

blame has been pinned onto a powerless person, the Employer can offer a heartfelt

apology to the employee for the manner in which that now powerless person mistreated

him or her. The subtext, of course, is that current management takes no responsibility for

the mistreatment.

5. Internal Equity v External Equity

It is very common for both sides in an employment law case to say that their main

goal is achieve a fair and just result, and then to totally differ on what that result should

be. For example, in a situation where the only issue is the quantum of reasonable notice,

we may have a situation where the case law is quite clear that a court would likely award

12 months notice. However the employer is adamant that they see anything over 30

weeks as outrageous while the employee feels that anything less than 18 months is a

grave injustice. Neither party seems to be very interested in what the lawyers are telling

them about the likely result in Court. What is going on here?

As the mediator probes the reasons behind the positions, certain things start to

emerge. The employer feels strongly about their 30 weeks because this conforms to their

long-standing practice of providing three weeks of notice per year of service. They have

applied this formula on numerous occasions and this is the only time that an employee

has objected. The employee is adamant about 18 months because his brother in law was

awarded 18 months in his recent wrongful dismissal case that just went to Court.

What is happening here is what I call the application of the principle of “ internal

equity”. People determine what is fair and just based on their personal world view. The

common law is premised on that very principle, so that to a large degree a trial judge will

determine the notice period based on what other judges have done in similar situations. In

this case, the Employers‟ world view is initially limited to its own workforce, so that if

everyone else accepted their termination formula, by definition it must be fair and just.

The Employee has even a more limited experience that the Employer , but he clings to

the fact that is in his eyes if his brother in law got 18 months , then why shouldn‟t I?

How do you deal with this at mediation ?

One technique, sometimes viewed as blunt, is to say “ I understand that you feel the

way you do but the judge will not care because ultimately it is what the judge thinks is

6

fair, not what you do.‟ This approach often has limited success because it does not satisfy

the need for the party to feel that the 12 months is fair, only that they are being forced

into accepting it. This simply adds to the feeling that the court imposed award is

inherently unjust.

Another technique is to further probe the basis for the belief and to point out how this

case differs from the other cases that they are referring to. With a little bit of questioning

we find that all the other terminations carried out by the Employer in which the three

weeks per year of service were accepted were short service clerical employees. In this

case we have a longer service executive. With this little tidbit, you can explain to the

Employer that because this case does not involve a clerical person, to pay more in this

case does not necessitate changing their view that for clerical personnel, paying three

weeks pay per year of service is fair and just. While talking to the Employee, we find out

that although his brother in law did receive an 18 months award, in fact 6 months of that

award was because the employer in that case falsely accused the brother-in-law of fraud.

Absent that issue, which does not exist in this employee‟s case, the judge would have

found that reasonable notice was 12 months.

Now, hopefully the parties will come to realize that their own sense of what is fair

was based on a set of facts different than the one they are facing in this case. Since they

no longer have any preconception as to what is fair, they are more willing to accept their

lawyers assessment as to what a Court would do, and to accept that as being fair and just.

6. No one is going to risk his or her own career so this case settles.

No matter how good a settlement looks , you cannot expect an employee, be they the

Human Resources Manager or the Vice-President of Sales, to authorize a settlement

which may result in that person getting into trouble back at the office when his or her

boss hears about it . Therefore, even if the employer spokesperson at the mediation agrees

that the plaintiff‟s offer is a good one and should be accepted, he or she will be extremely

reluctant to accept it if the result may that that manager gets dumped on by their own

boss. In some organizations, employees are not rewarded for making decisions unless

they are the right decisions. Making the wrong decision will lead to punishment. The

lesson is therefore, unless you are sure that you are making the right decision, you are

better off making no decision. Assume your lawyer tells you that there is a 50/50 chance

of success, that a loss will cost the company $100,000 and that the ex-employee is

prepared to settle for $35,000. On a simple risk analysis basis, the deal makes sense. You

properly factored in the risks of litigation, you assessed both the cost of a win and of a

loss and the offer properly reflects those criteria. However, if you stand to be critiqued

because you accepted the offer, then you must ask yourself the following question:

“ What is going to hurt my career more, settling this case for $35,000 or going to

Court and costing the Company $100,000?”

Unfortunately, the answer is often that there is less risk to one‟s career in going to

Court and letting the judge take the blame for a loss. In fact, if you can blame the judge

for the loss but take personal credit for the win, then there is a huge systemic motivation

to not settle at mediation on any other than your own terms.

7

How does one deal with this at mediation? The easiest way is to have the real

decision maker at the mediation so that that person does not have to fear what someone

else will think of his decision. Unfortunately, this is usually also the hardest thing to do

because the real decision maker will not attend the mediation. Typically the Human

Resources person at the mediation is told by the real decision maker that the mediation is

not important enough for him or her to personally attend but too important for the HR

professional to make the final decision. This leads to the common situation where the real

decision maker and the HR professional meet, usually a day or two before the mediation,

and the real decision maker gives the HR professional the company‟s bottom line

number. At the actual mediation, the HR professional then learns something new about

the case , which causes both the HR professional and the Employer‟s lawyer to change

their perspective of the case. The plaintiff makes a settlement offer, which, in light of the

new information, is a good one, but it is in excess of the real decision maker‟s bottom

line number that was proclaimed the day before. This usually comes out late in the

mediation, undoubtedly after the Employer‟s lawyer and the HR professional have told

the mediator and the other side that they have full authority to make a deal that day. Now

the HR professional is in an very uncomfortable situation, for if they admit that they need

to check this with the real decision maker , they have more or less admitted that they lied

earlier on when they represented that they had full authority. If they refuse to admit this

lack of authority, then their refusal to move off their previous bottom line looks to the

other side (and perhaps the mediator also) that they are either plain stupid, stubborn or

both. Either way, the message to the other side is that either capitulate to my

unreasonable demands or I will see you in Court. Faced with that alternative, most

plaintiffs and their lawyers would take it to Court rather than settle on the basis of what

appears to them to be a blunt attempt to use economic force.

What Every Defendant and his or her Lawyer needs to know about

Employees.

Just like Plaintiffs and their lawyers do not always know what motivates

employers, so to do employers often have misconceptions about plaintiffs and their

lawyers.

1. False accusations of cause piss off employees. Made up counterclaims piss off

employees. Sabotaging an employee’s chance of getting another job pisses off

employees. PISSING OFF THE EMPLOYEE DOES NOT LEAD TO

SETTLEMENT, IT JUST PISSES THEM OFF.

Sound familiar? Just like vicious attacks against employers lessens rather than

encourages settlement, the same applies to employees. I don‟t care how nice you are at

the time of termination or how generous you are on severance, most employees will not

thank you for your kindness in handling this most difficult situation. Anger is the number

one emotion often felt by recently dismissed employees. The last thing you want to do is

to make the employee even angrier by making needless accusations of cause, giving bad

references and the like.

8

Sometimes the motivation behind these actions is pure malice or revenge. “ We

should have fired that guy two years ago, instead we kept him on and then, when we have

no alternative, we let him go with an extremely generous severance package. Now he is

suing us! Revoke our offer and sue the jerk! “

Sometimes the motivation is strategic: “ I know that we cannot prove cause in

Court, but if we allege cause, launch a million dollar counterclaim and refuse to give him

a reference, he will give up and accept our offer because we will starve him into

submission. “

One problem with this tactic is that it depends entirely on the fear factor to work.

You are counting on the plaintiff not being able to withstand the legal expenses and the

time delay of taking the matter to Court. Sometimes this does work, often it does not. An

intelligent plaintiff‟s lawyer can prosecute a wrongful dismissal case in such a way that

the delay and expense of getting to trial is minimized, through procedures such as

keeping the Claim simple, using the Simplified Rules, using the summary motion

procedure, skipping discoveries or using written interrogatories. The other thing to

understand about plaintiff‟s lawyers is that they know that they are acting for the legal

underdog and that sometimes you have to fight a case all the way and risk not getting

paid just to prove your point. As a plaintiff‟s lawyer, I did not get ahead in this field and

become well known until other lawyers learnt that I would not give up on a case that I

believed had merit just because my client could not afford to litigate it to the end. I would

rather risk my fee before I would ever recommend a settlement to my client that was

premised on my client was not being able to risk the costs of litigation. As a plaintiff‟s

lawyer, 90% of the cases that went to trial were because the employer had no serious

offer at all on the table. Once the word got around that Fisher would go all the way to

trial if he had to, my settlement rate went up.

Therefore, these highly aggressive tactics run the risk of bringing up the “Knight

in Shining Armour Complex “ in the plaintiffs‟ lawyer. Most plaintiffs‟ lawyers when

they were in law school at least had an inkling that the purpose of becoming a lawyer was

not just to make money but also to defend the rights of the weaker members of society. If

you push them to far, you will bring that part of their personality to the surface. If on the

other hand, you approach the case from the beginning as a matter to be resolved, then the

plaintiffs‟ lawyer can suppress the KSA Complex and allow his or her business side to

come out, as in “ How can I settle this case at a fair amount for my client, get paid and

get on to my next file?”

Another major problem with this tactic is that if it does not work and you end up

actually going to trial, the Court will undoubtedly punish the Company for this behavior

by a combination of determining reasonable notice to be at the higher end of the range,

adding a number of months notice to the already high notice period ( called in the

business being “ Wallaced “ , after the Supreme Court of Canada case called Wallace v

United Grain Growers) , and then throwing in punitive , exemplary and mental distress

damages. It also matters little whether you drop the allegations of cause before trial, as

9

many of the post Wallace cases involve the situation where cause was dropped by the

employer as an issue well before the trial.

2. “ I was wrongfully dismissed because they had no right to fire me “

or

“I understand that the Company had to let someone go, but it should not have been

me “

Employees often fail to appreciate, or more often refuse to appreciate, that absent

some very particular situations (almost always involving a breach of a statute), a non-

unionized employer has a unlimited right to terminate the employment of anyone they

please for any reason they please. The “wrongful “ part of a wrongful dismissal case is

not the act of dismissal, but the failure to pay the proper compensation. In other words,

the only real difference between a wrongful dismissal and a rightful dismissal is money.

The reluctance to accept this legal principle often expresses itself in the plaintiffs‟

refusal to accept a seemingly appropriate settlement offer. From the plaintiffs point of

view it would be akin asking them to sell their house for fair market value when they

have no intention to move in the first place. In the house situation, the purchaser has no

way to force the employer out of their home, no matter what the price, thus the vendor

can hold out for a price well in excess of fair market value. However in the employment

situation, the employee can be forcibly removed from their position, and the most they

ever have to pay is the fair market value, as determined by a judge.

This refusal by the plaintiff to accept the employer‟s legal right to terminate one‟s

employment is often because the employee either does not know why he or she was

terminated, suspects that the real reason has not been given or disagrees with the

rationale behind the reason. The mediation process can be a useful mechanism to

explain why the company did what they did and how they made the decision.

I was recently involved in a case where the employee was convinced that the

reason she and her co-workers were chosen for termination was based in part on race and

gender. She came to that conclusion based on three essential facts: One, 80% of the

people laid off in her local office were what she categorized as visible minorities. Two,

the Company had not applied seniority as a factor based on the fact that in some

situations junior people were retained and senior people were laid off. Third, and most

importantly, the Company had indicated in a group meeting announcing the layoffs that

performance had not been a basis for making the decision as to who would go and who

would stay.

At the mediation the Employer of course denied that the decision was based on

race or gender. When asked what criteria they did use, they said that in fact the decision

was based on an overall assessment of individual employees‟ past performance reviews,

with each level of the Company required to cut back staff by 10%. When asked why the

Company did not say that to the employees at the time, they answered that it was felt at

the time that to announce that information in a group meeting would be publicly

10

humiliating to those chosen for the layoff. The plaintiff herself, when asked by the

mediator what she thought a fair way to make this decision would be, answered that it

should have been based on relative ranking of performance. Obviously the problem here

was that the employer should not have had a group meeting to explain ( or in this case to

mislead ) the selection criteria, rather it should have been done on a one on one basis.

You do not need to tell the people who are staying that their co-workers were chosen for

layoff because you are better than them, in fact you do not have to tell the people staying

anything other than get back to work. Had the Company told this highly intelligent

employee the truth at the time of termination, she would have likely accepted the logic

and rationale, negotiated a fair severance package based on the usual factors and got on

her way. Instead, we now have an employee who is being asked to now believe an ex-

employer who admits lying to her in the first place. Not exactly a credibility builder!

Now the employer is required to go through a lengthy and costly fact gathering process

to show that the reasons for her termination were based on the assessment of relative

merit, and not race or gender. Until that is done however, there was no way that this

plaintiff was going to accept a “fair market “ termination package.

3. Do not ignore the emotional component of the case

Terminations are almost always emotional events for employees and that emotion

often comes out at the mediation. Some mediators do not feel that emotion should be

shown at the mediation, especially in the group setting. Others recognize that there is a

place for emotion at the mediation as long as it is properly managed. Part of the purpose

of the mediation can be for the employee to vent their anger and frustration about the

termination, their former employer and how they have tried to cope since their dismissal.

In my opinion the best thing the employer can do in this situation is to allow the

employee to vent and listen empathetically. Listening to the employee without

responding to the employee on every point can be helpful. Your silence does not mean

you agree with their points, it just means you are listening, or at least giving the

impression that you are listening. I call this “sympathetic head nodding”.

It is okay to express a sense that you feel the plaintiff‟s pain but do not forget that

the employee is the victim and may need to feel like one. Do not, as was done in one of

my mediations, seek to say that you understand the difficulty the plaintiff must be facing

having been fired after 30 years of service when you are 30 years of age and have worked

for the company for 6 months. Do not, as happened in one of my cases, indicate to a long

term employee that his employment had to be terminated because the company‟s debt

equity ratio was out of whack in light of the recent multi-billion dollar takeover.

If you just sit back and actually listen to the employee tell his story, you can often

pick up information that can be beneficial later on in the mediation. For example, where

the employee goes on and on about how horrible it has been to have to sit at home with

nothing to do while looking for a job, it might appeal to this employee to have the

services of a relocation counselor that provides office space to its clients. This may fill a

dual need of the employee; to get professional assistance in his job search and to get out

11

of the house . If the employee mentions that he has had to borrow $20,000 from his

friends to stay afloat since his termination, then that tells us that there may be a strong

attachment to a settlement that allows him to pay off that debt. Now the settlement is not

just a number, it is a device that can be used to extract the plaintiff from a situation that is

causing him pain, that is being in debt to his friends.

4. Understanding the true cost of litigation :

Everybody knows that employers can afford to litigate more than employees,

however employees do not want to reminded of this unpleasant fact by the employer or

its lawyer. The mediator should do this task. A mediator will often not only set out the

cost of losing, but more importantly the cost of winning. Plaintiffs are often unaware of

the full financial effect that mitigation income, EI repayment, income tax and party and

party costs can have on the net amount that they will actually receive from a win at trial.

It is often possible to construct a tax effective mediated settlement which puts into the

plaintiffs‟ hands about the same amount of money which he or she would see at the end

of a successful trial but at a lesser cost than the employer would have to pay out after a

trial.

5. The spouse at the mediation:

Typically plaintiffs come to the mediation session just with their lawyers and

leave their spouses at home. I have always found this odd as the issue of settling a lawsuit

of this nature always has a dramatic effect on one‟s family income, especially when the

dismissed employee previously was the main breadwinner. Certainly in my household I

cannot imagine either my spouse or I making such an important family decision without

the direct involvement of the other.

As a mediator I encourage the plaintiff to bring their spouse along to the

mediation. For one thing, it avoids the authority issue, in other words the plaintiff cannot

seek to adjourn the mediation at a critical time with the reason that they now need to

check with their spouse. Secondly, the spouse can be there to give emotional support to

the plaintiff at the right time. A timid plaintiff may need to know that his spouse will

support him in compromising the claim, as opposed to choosing not to settle because his

spouse may get mad at him. An especially aggressive plaintiff may listen to the spouse

who reminds the plaintiff of the non-monetary aspects of not settling, things like family

stress, poor health and the effect on the kids. Everybody needs support in making difficult

decisions and for many of us that person is our spouse.

Employers sometimes do not want the spouse at the mediation, especially when

the perception is that the spouse is a difficult person who will push the plaintiff to

extreme positions. First of all, in a mediation everybody gets to decide who will be on

their team and this normally is not subject to the veto of the opposing party. Secondly, as

a mediator I welcome the spouse, especially the difficult one. I know that the spouse is

going to have a hand in the deal anyway, and I would always rather deal with the decision

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maker or co-decision maker directly rather than as a ghost back home, or in the case of

the employer, back at head office.

You see, the missing spouse is very much like the missing corporate decision

maker. The mediation works best when they are both in the mediation session.

Conclusion :

The law is definitely part of the mediation process in wrongful dismissal cases,

but it is not usually the only consideration. These cases usually involve aspects of human

behavior and motivation that have little to do with the legal rights and obligations of the

parties. To be effective at mediation requires an understanding not only of the procedural

and substantive aspects of employment law, but also a thorough understanding of what

motivates employers and employees in matters involving disputes regarding their

employment relationships. It is my hope that in some small way this paper has given the

reader some insight into this process.

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Ben Ratelband, Nathalie Gagnon & Daniel M. Pugen Labour & Employment Practice Group

Workplace Harassment and Violence

Client Conference - October 15, 2010

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McCarthy Tétrault LLP / mccarthy.ca

Presentation outline

1. Identifying workplace harassment2. Identifying workplace violence3. Workplace harassment and violence – the legal

framework4. Workplace investigations5. Disciplinary measures6. Bill 1687. Fact scenarios

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Topic #1 - Workplace Harassment Identifying harassment

¬ The “workplace”:¬ any location where the company’s business is being

conducted, including clients’ premises and meetings off premises

¬ any location where the company’s employees have gathered at the behest of the company, including work-related social events and conferences

¬ Is not confined to the company’s offices and buildings¬ Includes cafeterias, washrooms, locker rooms,

worksites, vehicles, etc.

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¬ “Unwelcome” conduct:¬ Is determined from the victim’s point of view¬ Harasser’s intent is of little relevance¬ Examine the impact of the conduct on the victim

¬ Is victim experiencing fear, stress, illness and/or financial loss?

¬ Did victim tell harasser to stop or signal discomfort in other ways?

¬ Would reasonable person have known that the conduct was unwelcome?

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Examples of harassment¬ Unwelcome sexual advances and sexually suggestive gestures¬ Jokes that make fun of race, place of origin or gender¬ Unwanted touching¬ Display of racially or sexually offensive material¬ E-mailing offensive jokes or pornographic pictures¬ Demands for sexual favours¬ Verbal threats or abuse¬ Denial of promotion to employee who rejects sexual proposition

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Topic #2 - Workplace ViolenceIdentifying violence

¬ Workplace violence is any act in which a person is abused, threatened, intimidated or assaulted in his or her employment

¬ Broader than physical assault

Canadian Centre for Occupational Health & Safety: Examples of workplace violence

¬ rumours¬ swearing¬ verbal abuse¬ pranks¬ verbal abuse¬ arguments¬ property damage¬ vandalism¬ sabotage¬ belittling criticism

¬ pushing¬ theft¬ physical assault¬ psychological trauma¬ anger-related incidents¬ rape¬ arson¬ murder¬ intimidation¬ unwarranted discipline

¬ social exclusion¬ undermining of work¬ removing areas of work

without cause¬ setting individual up to fail

at work¬ offensive jokes¬ spying/stalking¬ yelling or use of profanity

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Topic #2 - Workplace ViolenceIdentifying violence

¬ Workplace violence can also be perpetrated on or by non-employees

¬ Bullies and victims can be at any level in an organization – there need not be a power imbalance

¬ Industries identified by the MOL as being the most vulnerable toworkplace violence:

health care financial institutionssocial services transportationeducation securityretail correctional institutionshospitality

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Topic #3 - Workplace Harassment and Violence: legal framework

Human Rights Law

Common-law and Contract

Ontario Human Rights Code prohibits sexual harassment and harassment on a range of grounds of discrimination

Constructive dismissal and tort claims can arise from harassment situations

Workers Compensation

Benefits for mental stress that is an acute reaction (within 4 weeks) to a sudden and traumatic event in the workplace

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Topic #3 – The Legal Framework

Occupational Health and Safety Law

Criminal Law

Labour Law

Bill 168 and general employer obligation to “take every precaution reasonable in the circumstances for the protection of the worker” under OHSA.

Bill C-45 and Criminal Code assault provisions

Unionized workers often able to address incidents of workplace violence and harassment through grievance process under collective agreement

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Topic #3 – The Legal Framework: Human Rights Code

¬ Protects the following groups of people against discrimination and harassment:

¬ existing employees¬ applicants for employment¬ persons receiving services and/or goods (i.e. clients and

customers)¬ Harassment is defined in the Code as:

¬ “engaging in a course of vexatious comment or conduct that is known or ought reasonably to be known to be unwelcome”

¬ Section 46.3 of the Code – corporations are not automatically deemed liable for harassment of an employee by another employee (unless there is condonation of the harassment, corporate knowledge or acquiescence of the harassment or the corporation does not take reasonable steps to prevent the harassment)

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Topic #3 – The Legal Framework:Common-law and Contract

“Constructive Dismissal”¬ Where an employer unilaterally makes a fundamental change to

an employee’s contract of employment¬ e.g. - forced transfer, reduced remuneration, substantial changes

in job duties and reporting relationship¬ Objective test¬ Workplace harassment and violence can result in a finding that an

employee has been constructively dismissed on the theory that the work environment or culture is an implied term of employment that wasdetrimentally changed.

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Topic #3 – The Legal Framework:Common-law and Contract

¬ Types of behaviour by managers that may amount to “constructive dismissal”:¬ threats¬ intimidation¬ overt hostility and aggressiveness¬ rudeness¬ profanity¬ constant criticism and shouting at an employee¬ demeaning and humiliating reprimands in front of others¬ personalized verbal attacks¬ unsubstantiated allegations of theft¬ unwarranted criticism or discipline¬ harassment and discrimination

¬ Reasonable performance management and discipline will not lead to a constructive dismissal finding

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Topic #3 – The Legal Framework: Workers Compensation

WSIA, s. 13(5) & WSIB Policy #15-03-02:¬ A worker is entitled to benefits for mental stress that is an acute reaction

(i.e. within 4 weeks) to a sudden and unexpected traumatic event arising out of and in the course of his or her employment, including being the object of:

¬ physical violence¬ death threats¬ threats of physical violence where the worker believes the

threats are serious and harmful to self or others¬ harassment, including being placed in a life-threatening or

potentially life-threatening situation¬ A worker is not entitled to benefits for traumatic mental stress caused by

the employer’s decisions or actions relating to the worker’s employment

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Topic #3 – The Legal Framework: Workers Compensation

¬ In order to obtain WSIB benefits coverage resulting from workplace harassment, worker must be able to demonstrate that the harassment was “significant” (WSIAT Decision No 1394/07)

¬ In order to obtain WSIB benefits coverage resulting from a physical altercation in the workplace, the altercation must be related to work and the worker in question must not be a willing participant or aggressor(WSIAT Decision No 1345/07)

¬ Harassment may not be actionable given the statutory bar to sue if an employee receives benefits through WSIB.

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Topic # 3 – The Legal Framework: Criminal Law¬ March 31, 2004 - Criminal Code of Canada was amended to expand criminal liability

of organizations as a result of the Westray mining disaster (death of 26 miners)

Potential criminal liability for employers - Bill C-45¬ makes it easier to hold an organization criminally liable for accidents in the

workplace¬ every director, partner, employee, member or agent of an organization can be

the cause of the organization’s liability ¬ collectively, the act of two or more representatives may result in an offence,

even if the act considered individually is not an offence ¬ adds a specific duty for workplace safety to the Criminal Code ¬ it does not change the standard for proving criminal negligence – there must be

wanton or reckless disregard for the lives or safety other persons. That means that something more is required than simple negligence or the mere breach of a health or safety regulation

¬ Generally, managers and employees who make reasonable efforts to follow applicable health and safety standards and policies will not be at risk of prosecution under Bill C-45

¬ Conceivable that a serious incident of workplace violence could result in charges under Bill C-45

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Topic #3 – The Legal Framework: Labour Law

¬ In a unionized workplace, arbitrators often hold management to aduty to exercise its management rights reasonably and in a way that is not arbitrary, discriminatory or in bad faith

¬ The “old-school” style of management by intimidation and fear may result in employer liability under a collective agreement (Re T.T.C and A.T.U.)

¬ Some collective agreements may contain broad anti-violence or anti-harassment clauses that impose specific duties to protect employees and which will normally be broadly interpreted by an arbitrator.

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Topic #3 – The Legal Framework: Torts

Important case law development:Piresferreia v. Ayotte, [2010] O.J No. 2224¬ Employee subject to abusive treatment by her supervisor (frequent

yelling, swearing by supervisor, pushed by supervisor - poisoned work environment )

¬ Trial judge found supervisor liable for torts of negligent infliction of mental suffering, intentional infliction of mental suffering, and battery

¬ Appeal court stated that tort of negligence and tort of negligent infliction of mental suffering not available in the employment context – the award was restricted to damages for constructive dismissal; bad faith and battery

¬ Court of Appeal – reduces damages award from approx. $500,000 to approx. $150,000

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Topic #4 - InvestigationsPreventing harassment and violence at work

¬ Don’t condone threats or other violence¬ Be consistent in disciplinary action¬ In collective bargaining negotiations, bargain for the automatic

penalty of discharge for violence¬ Be careful of provocation¬ Provide appropriate counseling to those employees who need it¬ Be fair and consistent in dealing with employees¬ Monitor absenteeism ¬ Watch for troubling behaviour patterns that may indicate

psychological problems

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Topic #4 - InvestigationsPreventing harassment and violence at work

¬ Investigations can have negative consequences if not done properly

¬ Tips for Investigators:¬ avoid bias¬ be respectful and sensitive¬ have suitable interpersonal skills¬ have an understanding of the company’s policies on violence and

harassment¬ be trained in investigative techniques, including fact-finding, questioning,

decision-making, assessing credibility, and documentation

¬ Fair, impartial and timely investigations will lead to good results

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Topic #4 – Investigations: Preventing harassment and violence at work

Key Steps:¬ Determine whether investigation is necessary or advisable¬ Choose an appropriate investigator¬ Establish parameters/expectations for the investigation¬ Achieve cooperation in the investigation¬ union involvement¬ Maintain appropriate confidentiality (confidentiality may not

always be possible)¬ Manage the victim’s expectations¬ Manage the accused’s expectations¬ investigation report¬ Issues of privilege

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Topic #5 - Discipline for Harassment and Violence

¬ Should there be a disciplinary response to allegations or incidents of workplace harassment and violence?

¬ Considerations regarding appropriate penalties:¬ whether the attack was a flare-up or premeditated and whether it was

provoked¬ the seriousness of the attack¬ who was attacked and by whom¬ employment/discipline history and length of service of the attacker¬ whether there was an apology or remorse¬ whether the attacker intended to injure¬ whether a weapon was involved ¬ whether the employer condoned such conduct¬ whether there were any emotional problems contributing to the attacker’s

aggressive behaviour¬ traditional mitigating factors

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Topic #6 - Bill 168: Definitions

-definition borrowed from Human Rights Code(except not linked to prohibited grounds of discrimination)-broad scope of definition means considerable uncertainty for employers

“Engaging in a course of vexatious comment or conduct against a worker in a workplace that is known or ought reasonably to be known to be unwelcome”

Workplace Harassment

-includes committed violence, attempted violence or a threat of violence -violence may be committed by any “person”(incl. co-workers, customers, public)

“Exercise of physical force by a person against a worker in a workplace that causes or could cause physical injury to the worker”“Attempt to exercise physical force against a worker in a workplace that could cause physical injury to the worker”“Statement or behaviour that it is reasonable for a worker to interpret as a threat to exercise physical force against the worker, in a workplace, that could cause physical injury to the worker”

Workplace Violence

Key PointsDefinition

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Topic #6 - Bill 168: Definitions

¬ According to the MOL workplace harassment includes:¬ “psychological harassment” and “personal harassment”¬ making remarks, jokes, innuendos that demean, displaying or circulating

offensive pictures, bullying, repeated offensive or intimidating phone calls or emails, inappropriate sexual touching or advances/requests

¬ According to the MOL workplace harassment does not include:¬ reasonable action or conduct by an employer/supervisor that is part of

his normal work function even if there are unpleasant consequences for a worker (e.g. changes in work assignments, scheduling, job assessment and evaluation, workplace inspections, implementation of dress codes and disciplinary action)

¬ differences of opinion or minor disagreements between co-workers

Source - MOL Publication – “Workplace Violence and Harassment: Understanding the Law”

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Topic #6 - Bill 168Psychological harassment – a look at Quebec

“Psychological Harassment”¬ Quebec: An Act respecting Labour Standards¬ Prohibits psychological harassment and defines it as:

“…any vexatious behaviour in the form of repeated and hostile or unwanted conduct, verbal comments, actions or gestures, that affects an employee’s dignity or psychological or physical integrity and that results in a harmful work environment for the employee.

…A single serious incidence of such behaviour that has a lasting harmful effect on an employee may also constitute psychological harassment.”

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“Psychological Harassment”¬ Quebec case law has made it clear that employers still have the

right to manage their businesses¬ Psychological harassment is not a normal exercise of

managements rights and prerogative – nevertheless, psychological harassment provisions do put some limitations on employer’s managerial rights

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Preventing complaints of psychological harassment¬ When criticizing an employee’s performance, provide the support

necessary to correct the shortcomings¬ Treat employees who engage in an employment infraction in a

similar manner¬ When handling performance issues, require all employees to

provide the same work performance¬ When commenting on performance, ensure comments are

legitimate and respectful¬ Do not make comments in a disdainful or humiliating way ¬ Make managers aware of what is and is not permissible, as they

are the main targets of psychological harassment complaints

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¬ The following situations could be considered psychological and/or discriminatory harassment: ¬ Making comments, jokes, insinuations, insults, or suggestions that are

degrading, offensive or based on an illicit ground of discrimination¬ Behaving in an intimidating fashion or exercising reprisals¬ Posting inappropriate degrading, offensive or discriminatory comments

about colleagues or superiors on a personal blog or a social networking site (ex.: Facebook, Twitter)

¬ Discrediting a person: spreading rumours, ridiculing, humiliating, insulting or hurting a person or putting into question a person’s beliefs or private life

¬ Seeking to discredit a person by making the person perform humiliating tasks or tasks that are inconsistent with the person’s abilities, making up mistakes at work

¬ Preventing a person from expressing themselves, yelling, threatening, continually interrupting, not letting another person speak

¬ isolating a person: not speaking to, ignoring or excluding a person;¬ Unsettling a person: mocking a person’s beliefs, tastes or choices.

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¬ The following situations may not be considered psychological and/or discriminatory harassment: ¬ An employer exercises its management rights in a

normal manner, especially its right to assign work and to impose disciplinary measures

¬ Working conditions are demanding and restrictive¬ Employees are required to work under pressure¬ There is a personal conflict between colleagues or

between an employee and his or her superior.

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Topic #6 - Bill 168Employer obligations

Under Bill 168, Ontario employers are required to:

1. Establish workplace violence and harassment policies2. Implement workplace violence and harassment programs3. Conduct workplace violence risk assessment4. Provide employee training5. Take steps to protect against domestic violence6. Disclose information about co-workers with violent history7. Respect employee right to refuse to work if workplace

violence likely to endanger

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Topic #6 - Bill 168Employer obligations:Establish Violence and Harassment Policies

¬ Policies must be in writing and be posted in a conspicuous placewhere 5 or more workers are regularly employed at the workplace¬ A MOL Officer can order that the policy be in writing

where less than 5 workers¬ Policies are to be reviewed as necessary, at least annually

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Developing a policy on Workplace Violence and HarassmentWorkplace violence and harassment policies should:

¬ Be brief and simple¬ Convey that all employees are responsible for maintaining a safe work

environment¬ Describe the purpose of the policy¬ Provide clear definitions of all prohibited conduct¬ Cover incidents involving co-workers as well as incidents involving

outside individuals¬ Implement a "zero tolerance" policy to convey a strong message that

violence is unacceptable, but be cautious about using the label "zero tolerance" ¬ Zero tolerance should not be confused with automatic suspension or

dismissal, as it simply means that no degree or type of violence is acceptable in the workplace

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Developing a policy on Workplace Violence and HarassmentWorkplace violence and harassment policies should:

¬ Affirm that the company will respond appropriately to all reported incidents and state the reporting procedure

¬ Encourage reporting and provide multiple options for reporting without promising strict confidentiality, and put in place a whistle-blowing mechanism to help witnesses and victims to report violence

¬ Ensure the policy contains clear prohibitions and sanctions against retaliation or reprisal

¬ Include a dispute resolution mechanism for minor incidents¬ Indicate clearly that all physical assaults will be reported to the police, and follow

through on this policy¬ Consider describing the process of initiating a complaint under the policy as well

as the procedures that will be followed during the investigation¬ Specify the consequences that may be imposed if the policy is violated

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Topic #6 - Bill 168Employer obligations:Implement Violence and Harassment Programs

¬ Prepare and implement programs to implement the workplace violence and harassment policies

¬ Program must include procedures to:¬ control risks identified in the workplace violence assessment¬ call for immediate assistance when workplace violence occurs

or is likely to occur¬ report incidents or threats of violence to the employer¬ establish how the employer will investigate and manage

incidents, complaints or threats of violence¬ report incidents of harassment to the employer¬ investigate and deal with incidents and complaints of

harassment

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Topic #6 - Bill 168Employer obligations:Workplace Violence Risk Assessment

¬ Canadian Centre for Occupational Health & Safety:¬ “A risk assessment is a look at one’s workplace to

identify those things, situations, processes, etc. that may cause harm, particularly to people. After identification is made, the employer is to evaluate how likely and severe the risk is, and then decide what measures should be in place to effectively prevent or control the harm from happening. The aim of the risk assessment process is to remove a hazard or reduce the level of its risk by adding precautions or control measures, as necessary. By doing so, a safer and healthier workplace has been created.”

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Topic #6 - Bill 168Employer obligations:Workplace Violence Risk Assessment¬ Employers' must assess the risk of workplace violence that may

arise from the “nature of the workplace, type of work or conditions of work”¬ “nature of the workplace” – physical aspects of workplace

(e.g. building, construction site, vehicle, lighting, objects, entrances, etc.)

¬ “type of work” – activities workers perform (e.g. handle cash), sector of work (e.g. health care) and people who workers interact with (e.g. patients)

¬ “conditions of work” – hours worked, surrounding neighborhood, working alone, etc.

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¬ Risk Assessments should be conducted by competent individuals (or a team) who have broad experience and understanding of the workplace

¬ When conducting an assessment:¬ identify hazards ¬ evaluate likelihood of injury or illness occurring, and severity¬ identify possible controls¬ establish priorities¬ consider normal operational situations as well as non-standard events¬ the assessment provides foundation to develop prevention plan

¬ Documentation should detail the process used to assess risk, outline any evaluations of the workplace and detail how conclusions were made

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Review of Documentation¬ legislation¬ policies and practices¬ correspondence/decisions from regulators¬ layout of building/plant¬ employee complaints/grievances¬ incident/accident reports¬ training records¬ industry reports

¬ Surveys¬ Meetings

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¬ Advise Joint Health and Safety Committee of the results of the assessment

¬ Employer must reassess workplace for violence risks “as often as is necessary”

¬ changes like work location, new hours of operation, staffing, workplace design and hours of work may necessitate a reassessment

¬ assessment should be specific and take into account specific characteristics of each location

¬ Assessments where workers are mobile?¬ may not be able to take into account specific risks at every workplace location

visited¬ common risks to all locations¬ risks associated with vehicle or working alone

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Topic #6 – Bill 168Employer obligations: Provide Employee Training

¬ Employer is required to provide information and instruction that is appropriate for the worker on the contents of the policy and program with respect to workplace violence and harassment

¬ Online training vs. live training¬ Employees trained prior to Bill 168?¬ Retraining

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Topic #6 – Bill 168Employer obligations: Take Steps to Protect Against Domestic Violence

¬ Employer required to take “every precaution reasonable in the circumstances for the protection of a worker”, if the employer becomes aware, or ought reasonably to be aware, of a domestic violence risk to the worker¬ employer obligation extends only to risks of domestic violence

that that would likely result in physical injury and that “may occur in the workplace”

¬ New law does not elaborate on what constitutes “reasonable precaution” or “domestic violence”

¬ Specific elaboration on a duty that already existed

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Topic #6 – Bill 168Employer obligations: Disclosure Obligation¬ Bill 168 requires employers and supervisors to provide information, including

personal information, to a worker about a person with “a history of violent behaviour” if:¬ the worker could be expected to encounter that person in the course of his/her

work and¬ there is a risk of workplace violence likely to expose the worker to physical

injury¬ Questions to ask:

¬ “history of violent behaviour”? ¬ Are workers in contact with the person with the “history of violent behaviour”? ¬ Will workplace violence likely expose worker to physical injury

¬ Bill 168 does not provide guidance on the type or amount of information which may be provided in such circumstances (required to only disclose as much personal information as is reasonably required to protect worker from physical injury) or

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Topic #6 - Bill 168Work Refusals

¬ Bill 168 amends the existing OHSA work refusal provisions ¬ 43(3) worker may refuse to work or do particular work where he or she has reason to

believe that

[...](b.1) workplace violence is likely to endanger himself or herself

¬ Normal work refusal provisions would apply (investigation and possible referral to MOL)¬ OHSA continues to prohibit workers in certain workplaces from refusing work where the

unsafe condition is “inherent in the work” or is a “normal condition of employment”¬ i.e. police services, firefighters, corrections, defined health facilities, residential facilities

for the disabled, and ambulance¬ absent clarifying regulations, public and broader public sector employers will have to

assess when violence is/is not “inherent in the work” or a “normal condition of employment”

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Bill 168Is your workplace prepared?To Do List¬ Draft, or revise, and post written workplace violence and harassment policies .

Review policies annually¬ Conduct full risk assessments, including full documentation review and

employee surveys and interviews (if necessary). Conduct update risk assessment.

¬ Establish and implement workplace violence and harassment “programs”. Review program annually

¬ Conduct training of management and non-management staff to ensure “information and instruction” provided on workplace violence and harassment policies and programs

¬ Implement controls identified in risk assessment¬ Consult with industry associations or other similar organizations

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Bill 168Is your workplace prepared?To Do List¬ Review work refusal protocol and train managers¬ Review role of legal counsel¬ For defined sectors, clarify circumstances in which workplace violence

is considered by employer to be “inherent in the work” or a “normal condition”

¬ Ensure that employees are appropriately disciplined for not following policies

¬ Ensure that record-keeping procedures are in place for incidents of workplace violence and harassment and work refusals

¬ Review contractor compliance

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Fact Scenario #1 – Ben’s Bellowing Bombast

¬ Ben works at a social services agency that cares for disabled individuals. For the past 2 years, Ben had an “on and off” relationship with Danielle who also worked at the agency. Upon their most recent breakup 2 months ago, Danielle moved in with her new boyfriend, Nathan. When Ben learned of this, he sent Danielle a series of angry texts stating that he would “not stand for this” and that Nathan would “get what was coming to him” and that she was “dead to him”. Danielle would often respond to Ben’s texts by calling him a “loser” and someone with “no ambition or drive” who would spend the rest of his life as a “miserable rat”. Co-workers noticed that, since the breakup, Ben was having violent mood swings during the work day often to the neglect of the individuals he cared for on behalf of the employer. One co-worker reported to HR that Ben had punched the bathroom mirror and had broken a parking lot sign.

¬ Most recently, Ben visited Nathan at his house and the two got into a heated altercation which ended with Nathan slamming the door into Ben and Ben suffering a broken nose. Ben immediately emailed Danielle and told her that if Ben set foot at work the two of them “would live to regret it”. Ben also sent Nathan a threatening e-mail saying that he should “watch his back”.

¬ Danielle filed a complaint under the employer’s respectful workplace policy. Upon learning of the complaint, Ben did the same. The HR Manager and Ben’s long-time supervisor investigated Danielle’s complaint and Ben’s complaint at the same time given that the facts were similar.

¬ QUESTIONS: (1) How does Bill 168 apply, if at all? (2) Should Ben be disciplined? If so, to what extent and for what? (3) Should the employer take any interim steps pending the investigation; (4) How should the investigation be conducted?

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Fact Scenario #2 – Susan’s Solemn Situation¬ Susan works for a small publishing company with only 25 employees. The last few

months have not been kind to Susan at work.¬ A new co-worker, Fred, recently joined the company and developed a reputation

among his co-workers as being a “joker”. Fred constantly sent emails around the workplace (including to the HR manager) containing what Susan found to be sexually offensive material. Susan approached her female colleagues about the emails, but they were not bothered by the content. When Susan approached Fred, Fred started laughing and gave her a pat on the back and said “you need to loosen up a bit, baby, let’s have a drink after work”. After approaching the HR manager about the e-mails and Fred’s comment, the HR manager dismissed Susan’s concerns and said, “I am not one for political correctness. These types of e-mails/comments are harmless and nobody else has objected. In fact, they seem to strengthen employee morale. Nobody has ever resigned over something like this. To the extent you don’t like them, just delete them”

¬ After Susan’s female co-workers learned about Susan’s conversation with the HR Manager, they decided that it would be fun to draft a memo to all staff and post it in the lunchroom stating that Susan was “uptight” and a “prude” and that was one reason for her getting divorced and being lonely. The memo was posted for 2 days before it was removed.

¬ A few weeks after these incidents, Susan had a performance review in which she was judged to be performing “below standard”. The HR Manager sent Susan a letter documenting the review, which included the following: “Susan, your continued carelessness and lack of drive have impacted our customers and our company’s reputation. Moreover, you have frequently left the office early to pick up your children from day care. This has left other staff with the undesirable task of picking up your workload and therefore resenting you. Overall, you have not been a team player!”

¬ Susan is unhappy and believes that she is going to be fired and comes to you for advice...

2010 Labour and Employment Law - McCarthy Tétrault · The Top 5 Labour and Employment Issues for...

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