Will Saving Provisions No Longer Save Us?

Saving provisions are widely used in employment agreements to ensure that even if a decision-maker finds that some aspect of some clause is not enforceable due to the fact that it could possibly, maybe, one day, maybe, sorta violate the Employment Standards Act (ESA), the saving provision will communicate to that judge that this was not the employer’s intention to do so. 

A saving provision did not work for the employer in the recent case of Groves v. UTS Consultants Inc., 2019 ONSC 5605. The contract, in this case, violated a few parts of the ESA and the contract’s saving provision did not do its job of saving! 

ESA Violations in Mr. Groves’ Contract

First off, this case involved the sale of a business. The purchasing company contracted Mr. Groves,  the founder and president of the selling company, to have him continue on with the purchasing company as an employee. Mr. Groves’ employment contract with the purchasing company contained a clause that attempted to waive his years of service with the selling company in the event of a termination from the purchasing company. The court ruled that this provision violated section 9(1) and 65(2) of the ESA, regarding the length of service in the event of the sale of a business and length of service for the purposes of determining entitlement to severance entitlements. 

The court also found that the contract violated section 60 of the ESA because it stated that pay in lieu of notice would be calculated on “base salary only.” Section 60 of the ESA requires that the employer cannot reduce wages or alter any other term or condition during the employee’s notice period. Basing pay in lieu of notice on “base salary only” excludes variable compensation, as well as vacation pay or pension contributions.  

Not Saved by the Saving Provision

The court considered the following saving provision in Mr. Groves’ contract: 

Notwithstanding the foregoing, the Company guarantees that the amounts payable upon termination, without cause, shall not be less than that required under the notice and severance provisions of the Employment Standards Act.

Previously courts have “read up” termination provisions that did not comply with the ESA where the contract also contained a saving provision that communicated the employer’s intention to comply with the ESA. 

In the case of Mr. Groves’ contract, the court declined to do so, stating instead that the employer had sought to contract out of the ESA and that saving provision could not be used to “rewrite the express language in an agreement to cause it to comply.”

Takeaways

Mr. Groves was offered 13 weeks of notice on termination by the purchaser. The court awarded him 24 months! 

This decision draws attention to the need to have extremely carefully crafted employment contracts in order to create certainty around entitlements on termination. Saving provisions will not reliably save poorly drafted provisions.

If you need help getting your contracts in order, get in touch!

So, You’re a Respondent in a Workplace Complaint

You’ve been asked to meet with HR or People Ops. You may – or may not – be aware of what the meeting is about, but you’re a little rattled. You’re told the company will be conducting an investigation, meaning a matter is being taken seriously. You wonder whether you should go it alone, or talk to a lawyer – someone who can help you navigate an unfamiliar process. 

In short – yes! Speaking with a lawyer is a good idea. Here’s what they can do for you: 

Ensure that you understand the allegations – If you have not been told the allegations made by the complainant(s), or if you have been given only partial information, a lawyer can assist you in obtaining and thoroughly understanding the allegations. You will then be prepared for your interview, and in a better position to give a complete statement of the facts (i.e. your side of the story).

Ensure that policies are being followed – Your workplace likely has a policy addressing how and when workplace investigations will be conducted. Your lawyer will help you understand your rights under the policy and under the law. If the investigator deviates from a process articulated by the policy, a lawyer will assist you in determining whether, when and how to advocate for yourself, to ensure that the process is followed and procedurally fair to you. 

Help you navigate your communications with the investigator – Not all investigators are properly trained, and they can err in a number of ways, including failing to gather all the relevant information, failing to properly document all of the steps in the investigation process, and failing to provide timely communication as the investigation progresses. 

Intervening as a respondent is a delicate process because an investigator’s role is to make important determinations that will affect you. The last thing you want to do is needle the fact-finder. Rather, respondents should be cautious and strategic about each communication with an investigator.

Inform you of the process and help you prepare for it –  Often workplace investigators will not permit lawyers to attend your interview(s) with you (particularly if the investigation is an internal one). Since a workplace investigation is not a police investigation, you don’t have a legal right to have a lawyer present. Instead, a lawyer can help you plan and prepare in advance for your interview(s). They can discuss possible disciplinary actions the employer can take based on your history (i.e. first instance of misconduct vs. a pattern) and the gravity of the allegation(s). They will steer you to the important subject matter. 

Your lawyer can also help you navigate interim measures implemented by your employer and propose how such measures might be modified to feel less punitive (e.g. if your employer places you on a leave for the duration of the investigation).

Ensure the investigator has all the relevant information – The investigator’s determination is only as good as the information they have. Once your lawyer has a clear understanding of the allegations, they can advise you on the type of information to produce to support your response and, if applicable, what witnesses to suggest that the investigator interview.  The investigator may or may not choose to interview your suggested witnesses, but the names are still worth raising, along with your reasons for your suggestions. 

Notably, a lawyer with experience in workplace investigations will help you decide what is relevant and when to draw the line and let the investigator do their job. 

Provide general support and coaching – The process is likely to be an intimidating one, producing all sorts of emotions and you may have trouble staying focussed and concise as a result. Your lawyer will be able to support and advise you on how to navigate this process, advocate for yourself in a concise and strategic manner that does not alienate the investigator, and point you to resources to cope with negative feelings about the investigation. 

Final Thoughts

From a cost standpoint, some lawyers offer unbundled legal services (also known as ‘limited scope’ or ‘discrete task representation’) and pre- or mid-investigation consultations about process are well-suited to that model. One or two consultations are sometimes all that is needed to put a respondent’s mind at ease and get a complete and accurate version of their side of the story on the table. Employment lawyers with expertise in conducting workplace investigations are best suited to help you when you are a party in a workplace investigation. 

SpringLaw’s Marnie Baizley is an employment lawyer and trained workplace investigator (AWI-CH), who regularly advises parties in investigations. Get in touch if you are in need of guidance!  

Power Imbalances and Romance in the Workplace

McDonald’s is in the news this week after their Board told their CEO, Steve Easterbrook, to “move on” after learning that he had been engaging in a romantic relationship with an employee. While the relationship was “consensual,” McDonald’s policy forbids managers from having romantic relationships with subordinates – whether they directly supervise them or otherwise. Easterbrook acknowledged that what he had done was against the “values of the company.” 

A similar story broke last week when Congresswoman Katie Hill resigned amid allegations of inappropriate sexual relationships with staffers in her office and on her campaign team. 

So what’s wrong with finding love at the office? In both of these cases, the (main) issue was the imbalance of power. In our post #metoo era the issues inherent in relationships with power imbalances are being taken seriously and acted on. 

Both Hill and Easterbrook were at the top of their respective food chains. They engaged in romantic relationships with those below them on those food chains and with those over whom they held power in the workplace. Whether they were in relationships with those whom they directly supervised or not, there is no question that both Hill and Easterbrook would have had the power to impact their lovers’ trajectory at work – for good or ill – should they have chosen to do so.  

What’s a Power Imbalance?

While both of these news examples are courtesy of our friends to the south, this is an issue that comes up frequently in workplaces all over the world. In Ontario, the Human Rights Code directly addresses the situation of sexual advances made by those in positions of power – check out section 7(3) – enshrining the right to be free from unwanted advances in our law.  The Ontario Occupational Health and Safety Act contains similar language. 

The trouble with engaging in a romantic relationship with someone over whom you hold power is that their consent to such a relationship cannot be truly said to be voluntary. Maybe your secretary is dating you not because she actually digs you, but because she’s afraid (probably fairly) that you’ll fire her or start treating her badly if she rejects you. 

Liability for Employers

Employers who look the other way when the professor starts dating their research assistant or the boss starts dating the janitor risk claims of sexual harassment. Employers have a legal duty to provide a safe workplace and to prevent and address sexual harassment. Passively condoning office relationships where power imbalances exist could be a violation of that duty. 

Takeaways

Preventative policies on this topic are essential. Employers need to be able to rely on clearly established standards of conduct in order to take next steps with employees who may be in violation. Where a romantic relationship exists between a superior and a subordinate, employers should take immediate steps to ensure that conflicts of interest are prevented as much a possible and get legal advice about how to manage the situation. Often situations will be serious enough to require responses like the one taken by McDonald’s. 

If you’d like to discuss how to deal with the romance in your office get in touch

Did your employee really mean to retire?

You can take it back. The Ontario Court of Appeal has ruled that employees can take back their intention to retire. We have spoken about whether an employee can take back their intention to retire in a previous blog post regarding the Ontario Superior Court decision in English v. Manulife Financial Corporation. This decision was recently overturned by the Ontario Court of Appeal.

2018 Superior Court Decision

English, the 66-year-old employee in this case, provided Manulife, her employer, with a resignation letter after she became aware of their intention to change the computer system. The employer accepted her offer but informed her that she could rescind or reconsider her resignation. On October 11, 2016, less than three weeks after English’s resignation, Manulife announced that it would “suspend the conversion indefinitely.” A couple of weeks later, English informed her employer that she intended to rescind her resignation upon news that the conversion was no longer scheduled. Manulife chose to accept her resignation anyway and ended her employment on December 12, 2016.  English subsequently sued for wrongful dismissal.

The Superior Court found in favour of Manulife on the grounds that English’s notice of retirement was clear and unequivocal and while Manulife could have chosen to rescind her resignation, they were not obligated to do so. The court referred to the basic principles of contract law which state that a contract that has been offered and accepted will be enforced by the courts unless the terms of the contract are ambiguous. 

2019 Court of Appeal Decision

The Court of Appeal disagreed with the motion judge’s finding, deciding instead that English’s retirement letter was not clear and unequivocal; therefore, she was entitled to withdraw it. The court reasoned that at the time English informed Manulife of her intention to resign she also told them she was unsure whether she wanted to resign. Her employer responded by saying that she could change her mind at a later date. Manulife is bound to the assurance it made to English that she could change her mind. For this reason, English’s termination was ruled a wrongful dismissal.

Takeaways

When an employee presents a letter of resignation, you should inquire into the circumstances surrounding their decision, particularly in instances where the resignation is a surprise or otherwise unusual. The lesson to be learned from this is that an employee’s resignation may not be enough to establish that there is a clear and unequivocal intention to resign.  Also, be mindful of the assurances you provide to employees at the time of dismissal as they may be able to rely on these statements later.

Get in touch if you have any questions about employee resignations!

Come On, Let’s Celebrate! Employers’ Obligations to Accommodate Religious Holiday Leaves

Canada is touted as a multicultural country and the home of many religious groups, but it is still the case that the two statutory religious holidays in Ontario – Christmas and Good Friday – belong to one faith tradition. If you are a mid to large-sized employer it is very likely that some of your staff will celebrate different holidays and make leave requests at different times of the year. As workplaces become more diverse, employers should be mindful of the Ontario Human Rights Code (the Code) and its prohibition of discrimination on the basis of religion or creed, a protected ground under the Code. Employers should also be aware of the Code obligations regarding religious accommodations. With Diwali coming up, it seems like a great time to review these responsibilities!

The Code and Religious Holidays

Under the Code, employers have an obligation to provide religious accommodations to their employees up to the point of undue hardship. In order to address any potential adverse impact to the employee from the time they take off to celebrate religious holidays, the employer can offer options like special/compassionate paid leave, overtime or compressed work week arrangements. An employer must establish undue hardship in order to circumvent their obligations under the Code. In most cases, meeting the standard for undue hardship would be difficult and an accommodation of the employee’s request would be expected.

What is a Religious Activity?

Many religious traditions have more than one holiday or practice and it can be hard to distinguish which creed-based activities require accommodations in the form of time off from work. Accommodating religious beliefs does not necessarily require employers to offer paid time off for every creed-based activity. Not all religious activity demands time off. For instance, attending the mosque for Eid or the synagogue on Rosh Hashanah is not the same as attending a social event hosted by a religious group. While an employee may or may not ask for paid time off to attend the latter, it is important to keep these distinctions in mind when employees make these requests. 

Time Off Isn’t for Everyone

A final thought to keep in mind is that two employees who belong to the same faith tradition may approach holiday celebrations differently– and that’s okay! Some people don’t feel comfortable taking the day off and others just don’t want to. Employees are going to display different attitudes about their traditional holidays, and it is important that everyone’s perspective is respected. More than anything, employers should endeavour to create an environment where everyone feels comfortable being their entire selves at work and can request time off without fear that they will be viewed as less invested in the business.

Everyone deserves to spend time with their loved ones and enjoy their traditions. Make sure your workplace makes this a priority! 

If you would like to discuss how best to manage the diversity of religious traditions celebrated by your employees, get in touch!

Cast Your Vote…During Working Hours

Did you make it out to the polls this Thanksgiving weekend for the advanced voting days? Not to worry if you didn’t because there is still time – the Canadian Federal Election is on Monday, October 21, 2019! Voting hours will vary depending on your time-zone but all polls will be open for a 12-hour stretch.

Employee Rights on Election Day

Voting is often described as a person’s “civic duty” so it is no surprise that the legislature considered the importance of having provisions in the Canada Elections Act (the “Act”) that speak to the employee’s right to cast their vote during the workday. 

Section 132(1) of the Act states that an employer must provide their employees with “…three consecutive hours for the purpose of casting his or her vote.” While casting one’s ballot usually only takes a few minutes, employees who do not live near their office may need more time. Employers can decide when to permit their employees to take this designated voting time. Employers cannot deduct an employee’s pay or otherwise penalize an employee for taking time off to vote.    

Final Thoughts

Take a look at the FAQ page of the Elections Canada website for more information about Election Day and different voting options! Having the opportunity to vote is an important part of our democracy, so pay attention to the members of your community who may have a difficult time accessing the polls. Ask your neighbours if they need a ride or would like some support getting to the polls.

And for all you first-time voters (congrats!),  just a note that taking a selfie with your ballot is a violation of the Act! Wait until you get outside and take a photo next to the Elections Canada arrow – the lighting is better there anyway.

Ministry of Labour Inspections

The Ministry of Labour (MOL or the Ministry) has been busy implementing its Healthy and Safe Ontario Workplaces Strategy. Introduced by the previous Wynne government, the initiative has focused on small Ontario industrial businesses. A small business is one with fewer than 50 workers. 

Occupational Health and Safety Act Inspections

In late August, the Ministry published a report on the results of the inspection initiative. During the period April 1, 2018 to March 31, 2019, the Ministry of Labour visited 3,942 small business workplaces and issued 13,907 orders and requirements under the Occupational Health and Safety Act (OHSA). They also issued 184 stop-work orders. 

MOL inspectors will look into how employers are complying with OHSA including:

  • A health and safety policy and a program to implement the policy
  • Workplace violence and harassment policies and programs
  • Health and safety representative or joint health and safety committee
  • Complying with posting requirements (for example, OHSA, Health and Safety at Work poster)

Inspectors will also check up on what steps employers are taking to protect workers by taking suitable action to identify and control hazards.

Under OHSA, while employers must comply with specific regulations and requirements, they also have a duty to meet the often higher standards of taking all reasonable precautions to protect their workers. 

Employment Standards Act Violations

The MOL also has the power to enforce the Employment Standards Act (ESA) and can even conduct inspections covertly. From April 1, 2018 to March 31, 2019, 22,434 ESA claims were investigated, an increase of 7,500 over the previous fiscal year. The top five violations found during the 2018/2019 investigations were:

  • Payment of Wages
  • Vacation Pay/Vacation Time
  • Termination Pay
  • Public Holiday Pay
  • Overtime Pay

Take Aways

Compliance with the law can seem onerous, especially for small employers who often take more of a casual approach with their workers. However, not complying with the law can cost a small business big bucks in terms of fines or various other orders that require spending money. In some instances, violations of OHSA can even lead to jail time. The minimum standards set by OHSA and the ESA exist to ensure fair and safe working conditions. Employers, disregard them at your peril!

If you are a small business owner who has questions regarding the Healthy and Safe Ontario Workplaces Strategy or OSHA get in touch!

Another One Bites the Dust – Mass Closures and Employer Responsibilities to Employees

Another large fashion retailer has fallen out of style with consumers, closing its doors for good across Canada. Last Sunday, Bradley Sell, the Chief Financial Officer of the Canadian subsidiary Forever XXI ULC (“Forever 21 Canada”), announced that all 44 of its Canadian stores would be closing. Sell cited economic viability as the primary reason for the Canadian closures. Approximately 2,000 employees will lose their jobs as a result. The Ontario Superior Court has granted the company protection from its creditors under the Companies’ Creditors Arrangement Act (CCAA).

ESA Requirement Upon Mass-Termination

While filing for bankruptcy can offer an employer an opportunity to restructure its operations without the looming specter of insurmountable debt, bankruptcy is not a “get out of jail free card” for employers. In Ontario, under the Employment Standards Act (the “ESA”) employers must provide enhanced benefits to employees who have been terminated via a “mass termination.” Section 58(1) of the ESA defines a mass termination as a termination wherein more than 50 employees of an establishment are terminated within a four-week period. An establishment can include more than one retailer location and the four-week period is a window of time that begins the moment the establishment terminates 50 or more employees.

The employer must provide the Ministry of Labour (the “MOL”) with notice of the mass termination via a Form 1. The notice of termination period begins the moment the Director of Employment Standards of the MOL receives the Form 1, as such late filing of the Form 1 will have cost implications for the employer. The employer must post a copy of the Form 1 in a visible area of the workplace beginning on the first day of the notice period.

Notice entitlements will depend on the number of employees terminated. Section 74.11 4.3 of the ESA sets out the required notice period based on the number of employees terminated:

  • 8 weeks’ notice if 50 to 199 employees are to be terminated;
  • 12 weeks’ notice if 200 to 499 employees are to be terminated; and
  • 16 weeks’ notice if 500 or more employees are to be terminated.

The notice provided can be in the form of working notice or it can be pay in lieu of notice, where the employees stop working but get paid for the notice period. 

What about Severance?

Employees with more than 5 years of service with the employer will be entitled to severance pay, in addition to notice of termination, if they are terminated because of a “permanent discontinuance.” In mass termination situations, the severance entitlement is triggered even if an employer does not have a payroll of $2.5 million or more.

Final Thoughts

Even with the protections for employees provided by the ESA, it is undeniable that these mass-terminations have a considerable impact on workers in the retail industry.  Many stores are disappearing from the retail landscape – Gymboree and Payless Shoe Source also filed for bankruptcy this year – and it is very likely that we will continue to see this trend of closures as consumer trends shift away from “fast fashion” and more people use online platforms to source goods. 

If you have been involved in a mass termination or are just interested in learning more, we invite you to explore our So You’ve Been Fired e-book or get in touch!

What Happens to Vacation When an Employee is on a Leave?

Employers often have questions about what to do with vacation when an employee is on a leave. Do they still earn vacation time? Do they still get vacation pay even if they aren’t getting paid? Vacation is one of the trickiest employment standards, but we will shed some light into its dark corners in this post! 

The Right to Vacation

Under the Ontario Employment Standards Act (the ESA), employees are entitled to vacation both during periods of active and inactive employment. Employees are entitled to a minimum of two weeks of vacation per year if they have been employed for less than five years and three weeks per year after five years of employment. Vacation can be paid time off or additional pay. Employees who work part-time generally earn vacation pay on each paycheque, as opposed to paid time off. 

Inactive Employment

A period of “inactive employment” is a period of time during which the employee is still employed but may not actually be working. Employees on leaves of various types would be considered inactively employed. The ESA sets out a variety of different leaves under Part XIV. The leaves set out the parameters under which an employee can take a leave and have their job held until their return. Generally, the leaves require a period of active employment before an employee is eligible, are only for a set amount of time and are unpaid. The most commonly used ESA leaves are pregnancy leave and parental leave. The ESA also provides job protection for things like organ donor leave, family caregiver leave, bereavement leave and reservist leave – just to name a few.    

Earning Vacation While On Leave

While it may seem counterintuitive that an employee still earns vacation while they are on a leave – aren’t they already kind of on a vacation? – but that’s the way it is. However, while an employee who is inactively employed will always earn vacation time, they may not earn paid vacation time if their contract stipulates that paid vacation is earned through active service. Even where a contract contains this stipulation, an employee’s vacation entitlement (be it paid or unpaid or both) must never be less than the minimum ESA entitlement. Remember ESA vacation is earned through active AND inactive service. The Ontario Ministry of Labour provides some good examples of how this works in their Guide to the ESA, Your Guide to the Employment Standards Act

Paid or Unpaid – Vacation Time and Vacation Pay 

Whether an employee earns paid time off while on a leave will depend on the wording of the employment contract. Paid vacation is typically earned on paid time and not on unpaid time. 

The ESA requires that an employee be paid (or earn) a percentage of their wages as vacation – 4% for 2 weeks and 6% for 3 weeks. For employees on unpaid leaves, they will typically not earn paid vacation time (or vacation pay) because they have not earned wages upon which they would earn paid vacation. However, employees on unpaid leaves will still earn vacation time as per their minimum ESA entitlement – it will just be unpaid. For example, if Mark takes an unpaid parental leave of 6 months, and his annual vacation entitlement is 2 weeks, he will earn one week of paid vacation (for the 6 months he worked and earned wages) and 1 week of unpaid vacation (for the 6 months he was on an unpaid leave). 

Your head may be spinning by now – that’s just what the ESA vacation section does to people! If you have an employee on leave and are about to throw your computer out the window trying to figure out what they are entitled to, put that computer down and get in touch! We can help! 

 

Time Theft and the Case of the Winnipeg City Workers

This news story was just so wonky, and incorporated many of the crazy things we regularly get questions about, that we had to write about it! This situation took place in Winnipeg, Manitoba. On this blog, we usually focus on Ontario law because we are in Ontario, but other than Quebec, employment law is similar across Canada so the principles discussed here would apply across the common law provinces.

Slacking Inspectors 

Last week, the City of Winnipeg fired eight employees in its Property and Planning department. These employees were unionized, so their terminations are being challenged by their union – they may get their jobs back but they are off for now. 

The terminations followed a City of Winnipeg investigation, which was prompted after an anonymous citizens’ group paid a private investigator to video city inspectors conducting personal business during their work shifts. How crazy is that?

The citizens’ group is anonymous but allegedly consists of business owners and contractors. One can only imagine how frustrated these people must have been by the hold-ups of their building inspections to take the drastic step of hiring a private investigator. But the group found what they were looking for!

17 Property and Planning employees were followed and videoed taking extended lunches and coffee breaks, doing their grocery shopping, spending hours at the gym and running personal errands, all on work time. These employees were followed by private investigators for three months before the group handed over their footage to the City. 

Once the private investigator’s footage was handed over the City, the City conducted its own investigation. This investigation used more conventional workplace investigation methods, including reviewing timesheets and interviewing people. 

Is That Legal?

Videoing and recording are topics that come up a lot in the workplace. If you’re in a public space, like these employees who were being followed were, then filming without sound is generally legal. There are exceptions which we won’t get into here. Surreptitious filming of someone in a place where they do have an expectation of privacy, like a bathroom or their home, is generally not legal. 

Audio conversations can generally be legally recorded as long as one person who is participating in the conversation is aware that the conversation is being recorded. Secretly leaving an audio recorder in a room where you are not participating in the conversation is generally not legal. 

Takeaways

This story raises all sorts of interesting workplace and privacy issues. Our lives are increasingly being surveilled, but using a private investigator to spy on employees is still pretty out there. This is likely not something that the City would have done on its own, but once the footage was in its hands, it had a public responsibility to act. 

Supervisors have hard jobs, especially when it comes to employees working in the field – like these inspectors – and when it comes to remote workers, who could be working (or not working) anywhere. Employers need to be able to trust that their employees are actually working when they are supposed to be. 

Not working on work time constitutes time theft. The employee is accepting pay for time when they were not actually working. Technology provides employers with increasingly numerous ways to keep tabs on remote employees, but the balance always needs to be struck between employee privacy and the employer’s right to manage the workforce. 

If you have questions about workplace privacy or time theft, get in touch. 

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