The top 10 employment law decisions of 2017

By Stuart Rudner

One might think that by the year 2017, employment law would be settled and there would be few, if any, issues that are unpredictable or where the law is “open to interpretation.” That would be wishful thinking; 2016 included its share of new developments, surprising court decisions, and significant legislative developments.

The reality is that as social attitudes evolve, the law adapts through the introductions of new legislation and changing judicial interpretation. In addition, our courts and tribunals have deliberately maintained discretion and flexibility on many issues, relying upon the fundamental importance of employment to individuals as a reason to avoid “hard and fast” rules. As a result, many issues will be decided based on the specific facts of the case, and some issues are hard to predict with certainty.

As we all return from what was hopefully an enjoyable holiday season, Rudner MacDonald takes a look at the top 10 developments in employment law in 2016:

10. Wilson v. Atomic Energy of Canada Ltd.: No without cause dismissal for federal, non-union workers

Any (non-unionized) employee can be dismissed without cause as long as they get the appropriate notice or pay in lieu, right? This Supreme Court of Canada decision clarified that non-managerial employees regulated by the Canada Labour Code cannot be dismissed unless there is “cause”. To many, this was not news at all, as the wording of the code always suggested such an intent.

However, over the years, many federally regulated employers routinely engaged in without cause dismissals, and they were rarely challenged for reasons other than insufficient notice. Wilson confirmed that non-managerial employees regulated by the Canada Labour Code cannot be dismissed without “cause.

 This confirmation, or clarification, has led to some confusion, as “cause” in this context is very different from “just cause” for dismissal. Rather, “cause” for federal, non-unionized, non-managerial employees regulated by the code means that there needs to be a legitimate reason for dismissal, which can include just cause or a documented lack of work. Employers in this sphere cannot simply let someone go for any reason, or no reason at all, by providing notice or termination pay. Doing so without “cause” will expose the employer to a claim. In other words, those employees, like unionized workers, have greater job security and cannot be let go as easily as most others. We did a full blog post on the decision here.

9. Donaldson Travel Inc. v. Murphy et al: Non-solicit, disguised as non-compete, struck down

It is an ongoing battle: Employers want to protect their customer base and their business, and individuals want to be able to earn a living. Many employers are shocked to learn that in the absence of a contractual restriction, their salespeople are free to join a competitor and pursue their clients. For that reason, restrictive covenants are a frequent battleground, as employers routinely try to push the envelope and see how broadly they can restrict the actions of their former employees.

Courts do not like to interfere with an individual’s ability to earn a living any more than is reasonably necessary, and will refuse to enforce covenants that are not. A non-competition clause, which prevents an individual from working in the same industry, is usually seen as an unreasonable restriction. A non-solicitation clause allows the individual to stay in the industry where they have their experience, contacts, and knowledge, but prevents them from actively contacting customers for business opportunities that compete with their former employer. Courts are more likely to enforce such clauses so long as the terms are reasonable.

As a result, many employers try to expand the scope of non-solicitation clauses by preventing the employee from “accepting” work (rather than simply precluding them from soliciting it). In this case, the employee signed off on a non-solicitation clause that included a restriction on her soliciting or accepting business from any corporate accounts or customers served by the employer upon termination, either directly or indirectly.

The impugned phrase was “or accepts business” in the clause – something that the Court of Appeal found was more akin to a non-competition covenant, and the clause itself was struck down. Employers should remember that courts will not “fix” offending clauses; if a court finds that a six-month restriction was reasonable but the clause provides for 12, it will be struck out in its entirety. As a result, if employers ask for too much, they may get nothing. To quote the Rolling Stones, you can’t always get what you want, but you get what you need.

8. Amalgamated Transit Union, Local 113 and the Toronto Transit Commission (Use of Social Media Grievance): Failing to protect employees from third-party cyber harassment

We have read a lot about the need to protect employees from harassment at the hands of other employees or managers. However, as social media creeps into every aspect of life, employers may also have to protect employees from outsiders in the virtual world.

In this case, a grievance was brought with respect to abusive tweets that customers were making to the TTC’s public twitter account, @TTCHelps. Customers were using harassing, derogatory, abusive, racist, homophobic, sexist, and/or threatening language in making their complaints to the TTC about its workers. In some instances, the tweeters were posting pictures of the impugned worker’s badge and/or ID. The arbitrator found the TTC liable for failing to protect its employees from online harassment through the TTC’s customer service twitter account. By ignoring the offensive language in tweets to this account, or briefly protesting the remarks followed by a link to the TTC’s complaints service, the TTC was found to be condoning this online harassment, and thus contributing to a hostile work environment. Read our full blog post on this decision here.

7. Keenan v. Canac Kitchens Ltd.: Astonishing 26-month reasonable notice period award

Historically, we have said that the maximum period of notice of dismissal is 24 months. We have also said that contractors get far less notice of termination. In yet another important decision involving Canac Kitchens, Keenan v Canac Kitchens saw two contractors (albeit dependent, and not independent) awarded 26 months of notice.

This case confirms that 1) courts will not be bound by how the parties choose to define their relationship, and will look at the underlying circumstances to determine whether a worker is an employee or a contractor (independent or dependent), and 2) that notice periods are creeping upward, and we will continue to see more cases break through the unofficial 24-month ceiling. This case is particularly notable since it combines both issues and provided generous “severance” to contractors who did not have any managerial responsibilities. See our full post on the decision here.

6. Strudwick v. Applied Consumer & Clinical Evaluation Inc.: Human rights damages on the rise

We often say that bad facts make bad law. In this case, a particularly egregious set of facts gave the Ontario Court of Appeal an opportunity to express its disapproval  by awarding one of the highest amounts ever for of “injury to dignity, feelings, and self-respect” for the breach of the plaintiff’s rights to be free from discrimination under the Ontario Human Rights Code.

In this case, the evidence showed that the employer engaged in a reprehensible course of action in relation to a hearing impaired employee, including efforts to force her to resign. Many practitioners lament the fact that damages under the Human Rights Code are not nearly as significant as they should be. In the last few years, we have seen a trend toward increased damages in several areas, including human rights. In many cases, initial decisions involve substantial awards which are cut down by appeals courts (such as Keays or Boucher). In this case, however, the Court of Appeal doubled the initial award, suggesting that the civil courts may be willing to “put their money where their mouth is” and clearly express their disapproval of such conduct.

5. Fernandes v. Peel Educational & Tutorial Services Limited: Summary dismissal for teacher’s fabrication of grades upheld

As set out in Stuart’s book, You’re Fired! Just Cause for Dismissal in Canada, summary dismissal is a particularly complicated issue and the result of almost any case will be difficult to predict. The threshold for finding just cause is high, and many have become convinced that no misconduct will warrant dismissal in the eyes of the courts.

However, the Ontario Court of Appeal may have given employers some new hope when it found that a teacher’s fabrication of students’ grades was, in fact, just cause to terminate that teacher’s employment. This decision reversed the trial court’s decision, which found there was no just cause and awarded 12 months of pay as damages. As we often say, “just cause is not a lost cause.” Read our full blog post on this decision here.

4. Thompson v. 580062 Ontario Inc. (Slainte Irish Gastropub): Reinstatement now the default remedy for OHSA reprisal

Moving away from the civil courts, this year also saw some clarity in the world of Occupational Health and Safety Act applications. The Ontario Labour Board determined that, in the event of a reprisal for enforcing an employee’s rights under the Occupational Health and Safety Act, the default remedy is now reinstatement. This is a very strong message from the board, giving increased job protection for those who may otherwise be afraid of coming forward with complaints of unsafe conditions, harassment, and/or violence at work due to potentially negative repercussions. It also confirms one of the very few exceptions to the general rule that reinstatement is not available to dismissed (non-unionized) employees. Read our full blog post on the decision here.

3. Bill 132: New duties for investigating workplace harassment  

Coming into force in September 2016, Bill 132 in Ontario furthers the current provincial government’s efforts to tackle harassment in the workplace. This bill was an amendment to, among other pieces of legislation, the Occupational Health and Safety Act, and revised the definition of “harassment” in the act to include “sexual harassment.” It also placed numerous positive duties on employers to investigate, create policies, and train employee on procedures in the event of a harassment complaint.

Failure to investigate can now result in a Ministry of Labour-ordered investigation, at the employer’s expense, or a hefty fine. All organizations are now expected to comply with the bill’s provisions, and anyone not yet in compliance is strongly suggested to contact their employer lawyers to do so as soon as possible. This bill should cause every employer in Ontario to revise their policies and update their practices. Read our comments on Bill 132 here and here.

2. Paquette v. TeraGo Networks and Lin v OTPPB: Bonuses will be counted as part of compensation package for purpose of calculating severance in most cases

By default, pay in lieu of notice of is to include all forms of compensation, such as salary, benefits, bonuses, commissions, stock options, profit-sharing, etc. However, some can be excluded via contract or policy. Employers often attempt to exclude bonuses, and this has been done successfully in many cases.

Usually, employers include language stating that bonuses will not be paid if the employee is no longer “actively employed.” However, both of these cases suggest that most of the contractual provisions to that effect will not be sufficient to displace the common law entitlement. They affirm that if a bonus forms an integral part of an employee’s compensation, it should be included in the assessment of their entitlement if dismissed without cause.

The cases do suggest that in order to oust an employee’s entitlement to bonuses during the notice period, the terms of the bonus agreement must unambiguously alter or remove the employee’s common law right to damages, which include compensation for the bonuses that would have been received while employed and during the reasonable notice period, but it is unclear as to how that is to be done. As a result, many employers that have previously refused to pay out bonuses during the notice period may be required to.  

1. Oudin v. Centre Francophone de Toronto: Common-sense interpretation of termination clauses

No issue demonstrates the unpredictability of employment law in recent years better than the enforceability of termination clauses in employment contracts. Many employers attempt to use such clauses to displace an employee’s common law right to reasonable notice of dismissal. However, in recent years, the issue has been litigated repeatedly with results that have been less than predictable.

In many cases, courts have seized on nominal or technical deficiencies to invalidate such clauses and help employees receive more severance. Seemingly well-drafted clauses which clearly demonstrated the parties’ intention to displace the common law right to reasonable notice have been deemed to be void. And in many cases, the results continued to defy logic and remain unpredictable.

However, in 2016, the Court of Appeal of Ontario chose to adopt a contractual certainty approach to this issue, finding that where the intentions of the parties are clear, termination clauses should be upheld unless there is an actual breach of employment standards legislation.  As we stated in our full blog post on this decision, this decision might bring some clarity to the law of termination clauses, but we note that leave to appeal this decision to the Supreme Court of Canada has been sought.

If there was any doubt in our minds about which case should be at the top of the charts, it was eliminated by feedback from our clients and followers; almost everyone that offered an opinion identified Oudin.

Honourable mention

Admittedly, it was hard to restrict our Top 10 list to 10 developments. The following deserve honourable mention for their impact on the law in 2016:

Misetich v. Value Village Stores Inc.: The Johnstone family status test rejected in Ontario

Johnstone v Attorney General in 2014 confirmed that childcare obligations are protected as being part of an individual’s “family status” and that employers must accommodate those obligations in some circumstances. In Johnstone, the Federal Court of Appeal laid out four factors that a claimant needed to meet to trigger the duty to accommodate on the basis of family status:

1) The individual is under the claimant’s care.

2) There is a legal obligation on the claimant to care for this person, rather than a personal choice.

3) The claimant has made reasonable efforts to meet their obligations through seeking reasonable alternatives, but no such reasonable alternative is reasonably accessible.

4) The workplace rule in question interferes with the obligation to a degree that is more than trivial or substantial.

However, in Misetich, the Human Rights Tribunal of Ontario rejected the use of this test. The tribunal held that the test for this ground of the Human Rights Code should be no different than any other code grounds. The employee must establish a “real disadvantage to the parent/child relationship and the responsibilities that flow from it.” It does not require a different, or more restrictive, test. So childcare obligations are still entitled to accommodation as Johnstone confirmed, but in Ontario, the analysis of whether an employer has breached its obligation may not be as set out in that case.

R v. Ghomeshi: The saga continues

Not an employment law case, but the implications of this criminal case will likely be felt for years to come in Canadian workplaces. The now infamous Jian Ghomeshi was charged, tried, and acquitted of four counts of sexual assault and one count of overcoming resistance to sexual assault by choking. Several other allegations have been made against him publicly for his behaviour and harassment of colleagues during his time at the CBC. The acquittal itself was met with strong criticism. Unfortunately, it also led many people to believe that victims, or alleged victims, of harassment and assault will be further victimized if they pursue legal remedies.

While it is important to remember that this was a criminal prosecution and not a workplace investigation, this case may unfortunately have had a chilling effect on the willingness of victims of harassment to come forward. As we set out in a blog post on the subject, the verdict should not discourage victims of workplace sexual harassment. Nevertheless, it may curtail the number of complaints of harassment, which would be truly unfortunate if it results in harassment going unpunished.

Doe 464533 v. ND: Privacy update - the new tort of “public disclosure of private facts”

Also not an employment law case, but this decision nonetheless deserves mention as it expands privacy laws and addresses growing concerns regarding online dissemination of private information. In particular, it deals with the phenomenon of “sexting” and similar behaviour, and the fact that many photos/videos sent to someone for their eyes only end up online.

The plaintiff had been in a relationship with the defendant and sent him a sexually explicit video of herself at his request. The plaintiff then learned that the defendant had posted the video to a pornography site and had shown it to common friends of theirs. In holding that the damage caused by this were significant, the court adopted the new tort of “public disclosure of private facts.” Employers should be aware of this new tort and ensure they maintain the privacy of their employees’ information.

Conclusion

Well, that’s a wrap for another year. We saw significant developments relating to dismissals (both with cause and without), human rights, criminal liability, harassment and online harassment, privacy, and an assortment of other matters. We continue to advise employers to develop a relationship with an employment law firm and consult with them before taking any action of significance. New legislation is introduced every year, case law evolves, and best practices change. It is wise to obtain advice before taking action, as it will always be less costly to prevent an issue than to fix it later. “Top 10” lists like this one confirm that the law continues to evolve and is often unpredictable; however, those of us who study it on a daily basis can help you to minimize your risk and also maximize your rights as an employer.