Thoughts from a Management Lawyer

Production of Inspectors Notes under OHSA

Just wrote about the Ontario Labour Relations Board's recent decision regarding the production of an Ministry of Labour inspectors notes, photgraphs and certain other documentation in the context of an OHSA appeal.  Have a read.

Forum Selection Clauses in Contracts

When drafting an employment agreement it is important to include a forum selection clause where the parties agree to the appropriate jurisdiction for hearing any dispute between them.  These provisions, while not critical in every case, can prove tremendously valuable where it is not clear which of two jurisdictions is appropriate for hearing the dispute.

The Supreme Court of Canada in the recent case of Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd.considered the issue in a non-employment context.  Shortly after filing a statement of defence, the respondent moved to dismiss the claim on the ground that "Ontario Courts had no jurisdiction because the appellants had  signed agreements providing that disputes would be arbitrated or litigated in North Carolina".

The Court held that  the Ontario Rules of Civil Procedure provide two rules under which a party may challenge whether an Ontario court can or should hear an action:

Rule 17.06 permits a party who has been served with an originating process outside Ontario to move for an order setting aside the service or staying the proceeding on the grounds that service is not authorized by the Rules or that Ontario is not a convenient forum for the hearing of the proceeding.  This rule requires that the motion be brought before the party delivers a defence, notice of intent to defend or notice of appearance.

* * *

Rule 21.01(3)(a) permits a defendant to seek a stay or dismissal of the action on the basis that the court has “no jurisdiction over the subject matter of the action”.  Thus, when another forum ― an arbitration panel, a tribunal or another court ― has the exclusive jurisdiction to deal with the claim, the Ontario Superior Court of Justice will not take jurisdiction, based upon agreement or statute.

An issue arose in this case about whether a moving party could bring a motion under Rule 21.01(3)(a) where it had delivered a statement of defence (the argument being that you attorn to the jurisdiction once you file the statement of defence).  The Court disposed of this by noting:

. . . there is nothing in Rule 21.01(3)(a) that requires it to be brought before delivery of a statement of defence.  Within the framework provided by the Ontario Rules of Civil Procedure, a statement of defence that specifically pleads a foreign forum selection clause does not amount to consent that Ontario assume jurisdiction so as to preclude consideration on the merits of whether to enforce the clause.

The Court then summarized its earlier decision in In Z.I. Pompey Industrie v. ECU-Line N.V by noting "in the absence of specific legislation, the proper test in determining whether to enforce a forum selection clause is  discretionary  in nature.  It provides that unless there is a “strong cause” as to why a domestic court should exercise jurisdiction, order and fairness are better achieved when parties are held to their bargains."

In this case, other than the delivery of a statement of defence, there was no “strong cause” argued for Ontario to displace the forum that the parties agreed should resolve their disputes (North Carolina).  As such, the Court concluded that Ontario Courts had no jurisdiction to decide the case.

From an employment law perspective, including an appropriate forum clause goes a long way in resolving issues about jurisdiction.  Further, care should be taken about the timing of the motion to have the issue determined and whether this should be done before or after the delivery of the defence and, if after, what should be plead in the defence about the contractual foreign forum selection clause.

The Court of Appeal judgment is also worth reading.

 

Characterization of Settlement Monies - Get it Right

In a decision that will likely fly under the radar, the Federal Court of Appeal in Canada (Attorney General) v. Warren, 2012 FCA 74 (CanLII) considered the “treatment” of monies paid to an employee in settlement of a grievance.

This was an application for judicial review of the decision of an Umpire under the Employment Insurance Act upholding the decision of a Board of Referees which concluded that the sum of $12,000, received by Ms. Warren, constituted “compensation for relinquishment of a right to reinstatement”.  The Court allowed the application for judicial review.

Following an incident in the workplace, Warren applied for benefits under the insurance plan and was denied by the employer.  Ms. Warren then applied for and received medical employment insurance benefits from October 25, 2009 until March 6, 2010 and then regular employment insurance benefits.  Ms. Warren’s union filed a grievance following the employer’s denial of the grievance and the grievance was fully and finally settled as follows:

Pursuant to the agreement, the employer was required to pay to the respondent the all-inclusive sum of $12,000, less any statutory deductions, and to provide a neutral letter of reference. The respondent was required to resign her employment, return her employer’s property, withdraw her grievance and release her employer from any liability with respect to any claims that may arise regarding the employment or the cessation of the employment. The respondent subsequently executed a release (containing the customary non-admission of liability clause) on February 2, 2010.

When Ms. Warren notified the Employment Insurance Commission of the settlement, and specifically that she had received $9,600 (net of taxes) from her employer, the Commission deducted the $12,000 (gross) from the benefits she had received and concluded that there was an overpayment to Ms. Warren of $1,536 which had to be remitted.

Unless the payment could be characterized as compensation for relinquishment of the right to reinstatement, it was properly allocated under the provisions of the Employment Insurance Act  and theEmployment Insurance Regulations.  The leading case is Canada v. Plasse and Meechan v. Canada (Attorney General) which the Court

The legal principle to be taken from these authorities was succinctly stated in the decision of this Court in Attorney General of Canada v. Cantin, 2008 FCA 192 (CanLII), 2008 FCA 192 (Cantin). There, the Court stated that, in federal law, the right to reinstatement is an employee’s right to resume his or her position following a wrongful dismissal.  In such circumstances, compensation to relinquish the right to reinstatement following a wrongful dismissal does not constitute earnings within the meaning of the Act and the Regulations (Cantin, para. 33). However, wrongful dismissal is a prerequisite to a right to reinstatement.

Ms. Warren had not been terminated and, as such, the payment received by Ms. Warren did not constitute compensation for relinquishment of a right to be reinstated.

How money is characterized for tax and employment insurance purposes is an important consideration in many settlements.  But simply calling something “compensation to relinquish the right to reinstatement” doesn’t make it so.  Understanding how these words have been interpreted is critical to ensuring that the settlement achieves the desired ends (closure and finality) while withstanding scrutiny and challenge.

 

After Acquired Just Cause - Timing is Important

Employers will sometimes discover things after an employee is terminated that gives them cause for concern.  Whether this post-termination misconduct amounts to “just cause” is a complex issue.  The issue was recently considered in Gillespie v. 1200333 Alberta Ltd. (which was an appeal of this judgment) where the employee was terminated, without cause, and removed certain documents that “identified PCN patients by name and contained their address, Alberta Health Care number, and other identification numbers. This was confidential information that the Appellant was not entitled to remove from the clinic, including after termination of her employment, pursuant to Non‑disclosure Agreements signed by the Appellant on February 1, 2007 and April 25, 2007”.

At the time of the termination, the employer was not aware of the removal of this information.  In fact, the employer only discovered the removal of this information “several months later”.  The question was whether this post‑dismissal discovery was cause for dismissal.

The Trial Judge found that the “post‑termination conduct was sufficient to ground termination for cause”.

The Court discussed the circumstances in which post-discharge evidence can be relied upon:

The case law with regard to the admissibility of subsequent event evidence indicates that there are two circumstances in which evidence of post‑termination conduct can be relied upon to establish grounds for dismissal: first, when the post‑termination conduct sheds light on the reasonableness of the dismissal for cause at the time it was implemented (Cie minière Québec Cartier v. Quebec,1995 CanLII 113 (SCC), [1995] 2 S.C.R. 1095 at para. 13); and second, when the post‑termination conduct reveals an undesirable aspect of the employee’s character, such as deceitfulness, that would itself justify his or her dismissal (Lake Ontario Portland Cement Co. Ltd. v. Groner, 1961 CanLII 1 (SCC), [1961] S.C.R. 553 at 564). This second category of cases in which post‑termination conduct can be relied on is perhaps not without controversy: see the discussion in Saskatchewan Assn. of Health Organizations v. C.U.P.E., Local 3967, 203 L.A.C. (4th) 1 (Sask. Arb. Bd.). However, for purposes of this appeal, I will assume that post‑termination conduct can be relied upon in both of these circumstances.

The Court made the following observations:

1. The case law that deals with post‑termination conduct makes it clear that the relevant dividing line in examining conduct is the time of termination of the employment contract (whether immediate or at the conclusion of a period of working notice)
2. Misconduct before termination and misconduct after termination are subject to different analyses in terms of relevance to the issue of grounds for dismissal.
3. No contracting party is entitled to fundamentally repudiate obligations under a contract, as the employer has certainly done in terminating employment, and to afterwards require the other contracting party to continue to comply with his or her contractual obligations.
4. There are other ways to enforce the Non‑disclosure Agreements, that do not involve the illogic and unfairness of permitting an employer to retroactively justify its repudiation of an employment contract by an employee’s post‑repudiation breach.

The Court overturned the Trial judgment finding that post-termination conduct was sufficient to ground just cause in this case.  Specifically, as noted above, the “timing” of the conduct (e.g. after the employee had been terminated) is what seems to have caused the appeal court concern.

 

Length of Service - Sometimes Not an Easy Matter

In the absence of a legally enforceable contract dealing with entitlement on termination, it has been said that an employee employed for an indefinite term may only be terminated summarily for just cause or in the absence of just cause, upon reasonable advance notice or pay in lieu of such notice.

Determining the period of reasonable notice of termination at common law is an exercise that is said to be more “art than science”.  As previously noted, courts have rejected any formula-based approach to notice determination in favour of a more individualized approach first espoused by the Ontario High Court in Bardal v. Globe and Mail Ltd. where the Court noted:

“There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case,having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.”

Length of service is one of the key factors that is used in deciding on the notional period of reasonable notice in any given case.  In most cases, length of service is easily determined.

However, in cases where the employee works for some period, leaves the employ of the company for whatever reason (e.g. resigns or is terminated) and is subsequently rehired after some break in service the issue of length of service isn't so clear.  How do we deal with the “break in service” in determining length of service for purposes of calculating the period of reasonable notice where the employee is subsequently terminated?

The issue was recently considered in Dobbs v. The Cambie Malone’s Corporation 2011 BCSC 1830 (CanLII).  In this case, the central issue was whether Mr. Dobbs “should be regarded as an employee with 11 years of continuous service or an employee with 30 months of service at the time of his termination”.  Although this was the “central issue” the Court noted that “ the length of continuous service may have less bearing on the notice period than the parties assume.”

The Court observed:

“On the undisputed facts, Mr. Dobbs has either 11 years of continuous service, or 11 years of service onsisting of an initial 8.5 years, a hiatus of 11 months and a subsequent 30 months of service prior to his termination. In my view, the issue is whether the notice period ought to be affected by the 11-month break in service given all of the factors present in this case.”  How is the “break in service” to be treated?

The Court summarized the law in Beach v. Ikon Office Solutions, Inc., [1999] B.C.J. No. 1574 (S.C.), where the Court said at para. 13:

Where there is no express term in the re-employment contract dealing with the issue, the question is whether the employer has effectively recognized continuity of service.

Following a review of a number of case, Madam Justice Wedge in Dobbs put the law this way:

All of these decisions stand for the proposition that in the absence of an express contract term dealing with a hiatus in an employee's term of employment, the question is whether the employer and employee conducted themselves at the point of rehire in a manner consistent with the employee being given credit for the entire employment period. It is a question of fact to be determined on all of the evidence.

In this case, the Court determined that in the discussions leading to Dobbs' return "the parties assumed that Mr. Dobbs would be treated as an employee with many years of service with the company and not as a newly hired employee".  Accordingly, the Court held him to be an 11 year employee not a 30 month employee.

It is important for employers to turn their mind to breaks in service when re-hiring a former employee and decide how prior service will be treated .   A carefully drafted employment contract can specifically spell out the intentions about how prior service will be handled.   Although there may be some ability to deal in the contract with the impact of prior service on common law reasonable notice, for example, it is critically important to understand the rules regarding breaks in service and prior service under the Employment Standards Act, 2000 and that any attempt to contract out of these requirements will be void and unenforceable.

 

Duty to Accommodate Requires a Plan

The Ontario Human Rights Tribunal did an excellent job of succinctly explaining the duty to accommodate in Black v. Etobicoke Ironworks:

The duty to accommodate has procedural and substantive components. Procedurally, the employer has an obligation to take the necessary steps to determine what kinds of modifications or accommodations might be required in order to allow the employee to participate fully in the workplace. The substantive duty requires the employer to make the modifications or provide the accommodation necessary in order to allow the employee to participate fully in the workplace, such as by modifying duties or hours or the workplace itself, as the case may be, up to the point of undue hardship.

The Tribunal in Hamilton-Wentworth District School Board recently discussed the obligations of the employer and the employee in the accommodation and cited the Ontario Human Rights Commission Guidelines on Accommodation:

The person with a disability is required to:

• advise the accommodation provider of the disability (although the accommodation provider does not generally have the right to know what the disability is)
• make her or his needs known to the best of his or her ability, preferably in writing, so that the person responsible for accommodation may make the requested accommodation
• answer questions or provide information regarding relevant restrictions or limitations, including information from health care professionals, where appropriate and as needed
• participate in discussions regarding possible accommodation solutions
• co-operate with any experts whose assistance is required to manage the accommodation process or when information is required that is unavailable to the person with a disability
• meet agreed-upon performance and job standards once accommodation is provided
• work with the accommodation provider on an ongoing basis to manage the accommodation process
• discuss his or her disability only with persons who need to know. This may include the supervisor, a union representative or human rights staff.

The employer is required to:

• accept the employee’s request for accommodation in good faith, unless there are legitimate reasons for acting otherwise
• obtain expert opinion or advice where needed
• take an active role in ensuring that alternative approaches and possible accommodation solutions are investigated, and canvass various forms of possible accommodation and alternative solutions, as part of the duty to accommodate
• keep a record of the accommodation request and action taken
• maintain confidentiality
• limit requests for information to those reasonably related to the nature of the limitation or restriction so as to be able to respond to the accommodation request
• grant accommodation requests in a timely manner, to the point of undue hardship, even when the request for accommodation does not use any specific formal language
• bear the cost of any required medical information or documentation. For example, doctors’ notes and letters setting out accommodation needs, should be paid for by the employer.

While lacking the force of law, the Guideline are instructive.  The employer obligations are understated in the Guidelines to the extent that they can be interpreted as suggesting passivity and "catching rather than pitching" in the accommodation process.  The cases seem to suggest that employer's who are proactive while sensitive to the  accommodation obligations and individual needs of employees requesting accommodation, are in a better position when challenged.  

The Tribunal concluded in both cases that the employer had failed to fulfill its duty to accommodate under the Human Rights Code.  In Hamilton-Wentworth District School Board, the Tribunal held that, in the circumstances of that case, the employer "failed to actively, promptly and diligently canvas possible solutions to the applicant's need for accommodation".  

Though both cases did not go the employer's way, they are worth reading closely as many important lessons can be gleaned from them. Recognizing that each case will need to be considered on its individual merits, the cases suggest that employers should take a reasonable and proactive approach to accommodation.  Being patient is important and has its place, but employers should be aware of their obligations and ensure that they are deliberate and strategic in meeting those obligations.

 

How to Determine the Period of Reasonable Notice and What's Mitigation?

Although, on occasion, we see cases that try to tweak the way in which the period of reasonable notice at common law should be determined, in the end, the tried and true Bardal test continues to win the day and there's really no reason to change.

The most recent example is McGroarty v. Linita Design which is a Divisional Court appeal of a judgment awarding the plaintiff damages "based on a reasonable notice period of 17 months" less mitigation income.  The defendant appealed and the appeal was dismissed by the Divisional Court.

The appeal was over two issues:

The appellant submits that the trial judge erred in his determination that a 17 month notice period was reasonable having regard to all of the relevant factors.  As well, it submits that the trial judge also erred in failing to deduct all of the income the respondent earned during that notice period in mitigation of her damages.

Reasonable Notice

 The Court reviewed the law with respect to reasonable notice.  Although flirting with the "month per year of service" rule of thumb relied upon by many HR practitioners as a "rough guide" for determining the period of reasonable notice and by many plaintiffs lawyers as a "hard and fast" rule, the Court ultimately, and correctly, followed the Court of Appeal decision in Minnott v. O'Shanter and rejected any "rule" for determining the period of reasonable notice.

The proponents of the "rule of thumb" approach to notice determination rely on predictability and certainty, things that are lacking in the more traditional approach to notice determination espoused by Bardal v. Globe and Mail and the hundreds of cases that have followed it.  Under theBardal approach, the court will consider a range of factors and come up with a range of reasonable notice.

Some argue that the period of reasonable notice is intended to approximate the amount of time it would take an employee to find alternate employment and to "compensate employees for the time and effort they have invested in their employer’s business".  According to Chief Justice McCruer in the seminal Bardal case:

There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.

The Court of Appeal in Minnott rejected the formulaic approach to notice determination:

Predictability, consistency and reasonable certainty are obviously desirable goals in employment law both for employers and for those advising employees who have been or are about to be dismissed C a point emphasized by Lacourciere J.A. in his majority reasons in Cronk. These goals, however, are best achieved by a careful weighing and blending of the Bardal and other factors relevant to the calculation of reasonable notice, by establishing reasonable ranges for similar cases, recognizing that no two cases are the same, and even by establishing upper limits for particular classes of cases where appropriate.

The Court in McGroarty found that the 17 month reasonable notice period was within the range of reasonableness.

Mitigation

The appelant also argued that the trial judge erred when he refused to deduct all mitigation income earned from alternate employment over the period of reasonable notice.   The Court in McGroarty v. Linita Design:

It is clear that this employer bears the burden of showing with evidence that this wronged employee has failed to mitigate her damages.  In the absence of proof by the employer that this employee obtained other employment of “approximately similar kind”, this employee should in fairness be entitled to recover the former salary owing arising from that number of hours required to be worked.  Certainly, it cannot fairly be said that this reduction in the hourly wage, by a full one-third, is “employment of like nature”. This was clearly an inferior employment position to that which she had previously enjoyed with the appellant. Recognizing this fact, and looking “at the entire picture”, the trial judge took into account and gave proper allowance for the “extra time and trouble” expended for the respondent to mitigate, and that at the substantially lower rate of hourly pay.

A review of the case law presented by the parties in this appeal confirms that the assessment of damages by a trial judge where an employee obtains new employment within the notice period at a substantially lower rate of pay, and with differing hours of work, remains quite unsettled in law. Having regard to the breadth of possible re-employment fact situations, our law is not so inflexible such that any and every benefit derived from complying with the duty to mitigate must in every circumstance require a deduction from the resulting damages. On the unique facts of this case, the trial judge correctly applied the law.

This case is instructive but the broad principles that the court espouse, particularly on the "unique" mitigation facts, ought to be applied with caution.

 

Frustration of Employment Contracts and Wrongful Dismissal

An interesting, though complicated issue is whether (and when) a contract of employment becomes frustrated by reason of a long-term and permanent disability.  Such was the issue that recently confronted the Court in Fraser v. UBS.  The case did not consider any human rights issues.

The Background

In this case, the plaintiff was a long-service employee of some 20.5 years service with the employer.  She commenced employment with the employer at age 20.  She became ill in 2005 and was off work for 6 months collecting short term disability benefits (“STD”) by which time, according to the Court, “her illness had evolved".

She returned to work for 4 months, then went off again for 6 months on STD.  Despite a somewhat positive prognosis regarding a further return to work from an independent medical assessment in 2007, the plaintiff was not able to return to work at the conclusion of the STD period and she applied for long-term disability (“LTD”) benefits, through RBC insurance. 

The RBC policy provided that LTD benefits were “available for 24 months if a person was disabled, in the context of being unable to perform any of the material and substantial duties of regular employment.  After 24 months, disability payments would be determined on the basis of an inability to perform the duties of any gainful occupation.”

RBC approved the LTD benefits from March 2007 until January 2009 and terminated these on January 31, 2009, according to the court:

“…. on the basis that the plaintiff did not follow medically recommended treatment to assist in her recovery or at least did not provide proof of such as required under the policy.  There is a separate lawsuit outstanding related to that decision by RBC insurance. “

The plaintiff, according to the court, “did not advise UBS of any change in her medical prognosis.  She did not return to work and did not indicate that she had ceased receiving medical treatment for disability.”

On June 5, 2009, the employer wrote to her advising that her employment was terminated.  The letter provided as follows:

 “UBS has been advised that your long-term disability insurance payments ceased on January 31, 2009.  Our understanding is that this is as a result of a sufficient lack of medical evidence for continuing disability payments.  Following this, you have had no communications with UBS about your return to work and have not advised that you are able to return to work.

Based on the above, the assumption of UBS is either that you do not wish to return to work and have effectively resigned or you believe that you continue to be totally disabled.  In any event, UBS has no alternative but to confirm the termination of your employment, either as a result of your resignation or the fact that your contract of employment has become impossible to perform and has been frustrated.  The effective date of your termination of employment will be today, that is, June 5, 2009.”

The employer, as required under the Employment Standards Act, 2000 (the “Act”), paid her entitlement to termination and severance pay.  In addition, UBS   continued her medical, dental and life insurance for an additional three months, in excess of the eight week requirement under the Act.  It was acknowledged that the company complied fully with it’s obligations under the Act. 

The Issue

The central issue was whether the dismissal was occasioned by “frustration” of the employment contract (as alleged by the employer) or whether it was a “wrongful dismissal” entitling the plaintiff to damages (as alleged by the employee). 

Although, as the court observed, this is a fact specific analysis, some helpful legal principles have developed over a long period of time.  The court goes through a really nice review of the cases.

According to the Court:

In relation to employment contracts, where an employee is unable to work because of a disabling illness, the doctrine applies because the permanent disability renders performance of the employment contract impossible, such that the obligations of the parties are discharged without penalty.  If there is frustration of contract, the termination is said to be by law, or automatic.  Nothing need be done to terminate the contract.  See Fazekas v. Ault Foods Ltd., [1989] O.J. No. 913 (S.C.).

 The trial judge in Duong v. Linamar Corporation (affirmed by the Court of Appeal) put the matter as follows:

Frustration of a contract occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. See Davis Contractors Ltd. v.  Fareham Urban District Council, [1956] A.C. 696 at 728, per Lord Radcliffe.

This decision was reviewed extensively in Fraser.

The Court found that Ms. Fraser:

“…. was and continues to be permanently disabled.  She has admitted in both this action and the action against the insurance company that her illness and disability pre-date the termination of her employment, that her disability has been continuous and ongoing, that she is totally disabled and her disability is permanent such that she will never be able to work again.”

There was some dispute about the medical reports that ought to be relied upon and the timing:

It is acknowledged that the only medical information that the employer UBS had at the time of the termination was the January 2007 report of Dr. Kerin.  Counsel for the plaintiff termed this report “very optimistic” and suggested that the subsequent reports could not be taken into account in assessing UBS’ decision to terminate.  However, it is clear that UBS was in possession of additional information at the time of termination.  This included the reality that Ms Fraser had not worked for three and a half years, that there was no updated medical prognosis or reasonable prospect for being able to return to work, that she had taken no further steps to provide information to her employer to substantiate her illness, and that according to the insurer, she had not participated in or at least reported on her ongoing medical treatment.  As well, in the months following the cessation of long-term disability benefits in January 2009, she had taken no steps to appeal the insurer’s decision.

The Court went on:

In my view, the plaintiff cannot simply rely on a medical report dated over two years prior to termination, and ignore the other facts known to her employer at the time of the dismissal.  While additional medical reports were disclosed after termination, they relate to the time of termination, as well as to subsequent periods of time.  The caselaw in any event supports the reliance on evidence subsequently disclosed: see Dartmouth, supra, at pp. 374-5, Trevitt v. Blanche Equipment Rentals Ltd.,2006 BCSC 94 (CanLII), [2006] B.C.S.C. 94 (S.C.) at para. 37; 2006 BCSC 94 and MacLellan v. H.B. Contracting Ltd., [1990] B.C.J. No. 935 (S.C.) at pp. 9-10; 32 C.C.E.L. 103.

The Court found that, on the facts of this case, the contract of employment had become frustrated.  As such, there was no obligation on the part of the employer to provide notice or pay in lieu of notice.

CAW and CEP Looking to Merge

The Canadian Auto Workers and the Communications, Energy and Paperworkers Union are considering merging.  According to the CAW-CEP Discussion Paper:

After two decades of fighting mostly defensive battles against the pressures of globalization, employer aggression, hostile government policy, and public cynicism, the trade union movement in Canada faces an enormous and historic moment of truth.

The CEP-CAW New Union DiscussionProcess Protocol & Timetable states that the "purpose of the New Union Discussion process to develop and agree upon the main principles of a new Canadian union, with a new identity and structure."  While acknowledging that a bigger union doesn't equate with a better union, the Protocol calls for something innovative and different:

The formation of a new union must be founded on a desire and willingness to modernize our practices,to innovate with new models of organizing and servicing, and to rebuild our image with workers. 

In terms of timing, it seems that they will report to the respective conventions of CAW (in August, 2012) and of CEP (in October, 2012).

The merger of these two unions would result in a combined membership of more than 320,000 and establish the largest private labour union.

As you'd expect with such a huge story, there's lots of press:

• CAW, CEP talk possible merger by mid-2013
• CAW, CEP unions exploring merger
• Unions must change quickly to survive, says secret report by CEP/CAW
• CAW, CEP hold merger talks
• CAW, CEP unions considering merger Marriage would create largest in private labour
• CAW and CEP to Begin Talks on New Union
• Two major Canadian unions, CAW and CEP, exploring merger by mid-2013
  
  

Working Notice, Constructive Dismissal and Employee Obligations

Employers will, on occasion, give an employee advance working notice of termination.  The issue sometimes arises about whether the employee is required to actually work through that period of working notice or can refuse to do so, and the implications associated with the employee refusing.

The British Columbia Court of Appeal has recently considered this issue in Giza v. Sechelt School Bus Service Ltd. (January 13, 2012).  In this case, the employee, a school bus driver, commenced employment with the company in September 2004.  He was informed, on September 30, 2009 that his employment was being terminated providing him with 5 weeks working notice seemingly in accordance with the BC employment standards obligations.

Rather than continue to work through the period of working notice, the employee “ drove his bus back to the respondent’s terminal and left work permanently.”

The trial judge found that, in the circumstances, the 5 weeks notice was inadequate at common law, but that the employee “repudiated his employment contract by failing to work after notice was given and was not entitled to damages.”

The employee appealed.

One of the issues, and the one I want to discuss, is “the legal effect of an employer’s termination of an employee’s contract of employment with inadequate notice as well as the effect of the employee’s failure to work during the notice period given.”

The Court outlined the trial judge’s reasons on the issue and, specifically, the observation that unless the employer constructively dismissed him during the period of working notice the employee repudiated the employment agreement, or in other words, quit by failing to remain through the period of working notice.  According to the trial judge, the mere giving of working notice (even if inadequate) does not amount to a constructive dismissal.

According to the Court of Appeal, there was no error in this finding in the circumstances.  The Court noted:

In my view, it is clear that the respondent did not constructively dismiss the appellant and that the appellant repudiated the employment contract by failing to work during the notice period.  In classic terms, he evidenced an intention not to be bound by the contract, but that did not deprive him of his right to damages for the respondent’s breach of contract in giving him inadequate notice.  [Emphasis added]

In other words, the employee’s right to damages in lieu of reasonable notice accrued when “he was given inadequate notice” and his “repudiation did not take away that right and it did not take away the right of the [employer] to the [employees’] services during the period of notice given.

The Court provided the following helpful summary:

1. the respondent breached its contract of employment by failing to give adequate notice of termination;
2. the respondent’s conduct did not amount to a constructive dismissal, that is, a repudiation by the respondent of the employment relationship; it continued during the notice period;
3. the respondent’s  breach gave the appellant a cause of action for damages in lieu of reasonable notice;
4. the period of reasonable notice for which damages could be recoverable is the period of reasonable notice to which the appellant was entitled less the period of notice actually given during which the appellant could have and should have worked and been paid;
5.  the appellant’s failure to work during the notice period was a repudiation that brought to an end the employment relationship and the ongoing rights and obligations of the parties under it;
6.  that repudiation did not take away the appellant’s cause of action for damages in lieu of notice or the respondent’s right to have the appellant’s services during the notice period that was given because those rights had accrued before the repudiation.

The Court determined that the period of reasonable notice in this case was 6 months from which was deducted the 5 weeks of working notice provided but not worked.

While there are some practical difficulties with satisfying the reasonable notice obligations through reasonable notice, this case supports the fact that the employer may do so, and, absent more (e.g. conduct giving rise to a constructive dismissal or other conduct justifying the employee refusing to work through the period of reasonable notice) the employee must do so.

This is an instructive case for employers and employees who provide or are provided with working notice of termination in whole or in part.