However, the Courts did not rule out the potential for severance pay exceeding 24 months, but it has to be under “exceptional circumstances.”

In a recent Court of Appeal for Ontario decision Currie v. Nylene Canada Inc,  the Court upheld the trial court’s decision to award Ms. Currie 26 months of severance. In doing so, the Court recognized a set of factors that can be qualified as “exceptional circumstances.”

In paragraph 11 of the decision, the Court summarized Ms. Currie’s employment experience: 

1. Ms. Currie left high school to start work (at age 18) as a twisting operator at Nylene and worked there for her entire career, ultimately rising to become the Chief Operator reporting to the Shift Leader;
2.  After working at Nylene for 40 years, her employment was terminated by Nylene near the end of her career, when she was 58 years old;
3.  Ms. Currie had very specialized skills making it very difficult for her to find alternative suitable employment. Moreover, at the time of her termination, her computer skills were limited. She made diligent efforts to attempt to gain basic computer skills and mitigate her damages but the trial judge was not convinced she would succeed in securing alternative employment;
4. The work landscape had evolved significantly since Ms. Currie had entered the workforce in 1979 and, as her experience was limited to working for Nylene and its predecessors in one manufacturing environment, her skills were not easily transferable; and
5.  Given Ms. Currie’s age, limited education, and skill set, the termination “was equivalent to a forced retirement.”

The key finding that the Courts made was that this was a “forced retirement.” Ms. Currien has been working at the company for 40 years. She’s been making fibers in the company since 18 years old. When the plant closed down, she was essentially forced out of work.  However, despite her 40 years of dutiful service, Nyelene was not willing to provide her with re-employment or sufficient pay-in-lieu of notice. 

Ms. Currie likely had no other transferable skills. However, she can still be employed, since she is only 58 years old.  Yet, since she is terminated by Nyelene, she has to find another position without any computer skills. In the current digital age, this limitation greatly reduces Ms. Currie’s opportunity to secure similar employment. In such circumstances, the Courts ruled that the 24-month cap on common law is not applicable in Ms. Currie’s circumstances. 

If you are an individual who’s been working at a company for many many years and has been recently terminated due to the factory closing down or other reasons, you too might be entitled to a similar amount of notice as Ms. Currie. 

Your employer needs to repay you for your decades of loyalty and dedication. If they don’t, contact us. 

De Bousquet PC is always ready to help employees left helpless by the brutality of their employer. We will stand our ground and help you acquire the severance pay you are rightfully entitled to. 

The post You Could Be Entitled to More Than Two Years of Severance Pay first appeared on De Bousquet Professional Corporation Blog.

Rules of Civil Procedure

One of the biggest reasons so many civil cases settle is on account of Rule 49 of the Rules of Civil Procedure (the Rules), which encourages and facilitates settlement by imposing cost consequences (payment of a portion of another party’s legal fees) on a party who fails to accept a reasonable offer. For instance, if a party fails to accept a reasonable offer (i.e. they are awarded an amount at trial that is less than the amount of the offer), Rule 49 empowers a judge to apportion substantial indemnity legal costs on that party from the day the offer was made to the day judgment was granted. Offers must be made at least 7 days before the commencement of trial.

Rule 49 contains several considerate sub-rules that further perpetuate a process that is conducive to settlement. For instance, Rule 49.06 is an often used sub-rule that prevents offers to settle from being pled by a Plaintiff or Defendant. Importantly, this rule only applies to offers to settle made during litigation. The purpose is to ensure that parties make good-faith attempts to resolve the dispute without the underlying fear that by doing so, they are admitting fault and/or weakness in their positions should the matter to proceed to trial.

Though pre-litigation offers are not caught by 49.06, other legal principles and devices are used to ensure that pre-litigation offers to settle cannot be invoked in a party’s pleading, namely, “without prejudice” and “settlement privilege.”

Without Prejudice

Parties wishing to protect pre-litigation offers to settle from disclosure during litigation can assert that an offer was made on a “without prejudice” basis. Without prejudice, offers are protected from disclosure during litigation. Where the party suspects that litigation is on the horizon, and is attempting to “buy peace” without admitting liability or fault, the party will classify the offer as “without prejudice” on the settlement communication (i.e. letter or email). If the offer to settle was made by the opposing party, and it is the opposing party who wishes to disclose it in its pleading, the party can still contend that the offer was made on a without prejudice basis despite the fact that the party making the offer never classified it as “without prejudice.”

Courts have found settlement offers to be “without prejudice” despite the fact that these words were not explicitly written in the offer document. The key is to ascertain the offering party’s intentions. The contents of the offer and the context in which it was written are used to determine the central question: Was the offer made to buy peace between the parties? If yes, the offer is without prejudice. The fact that “without prejudice” was or was not written in the offer is not determinative.

Wrongful Dismissal Cases

In Ramos v Hewlett-Packard (Canada) Co.,[1] the Court held that the fact of a pre-litigation offer should not generally be pled

The three recognized exceptions are:

• Where the defendant has pled that the plaintiff was dismissed for cause. Here, a plaintiff is permitted to plead in reply that the defendant had offered the plaintiff before litigation, an additional payment in lieu of notice, thereby waiving the cause upon which the defendant relied to justify the dismissal.
• Where the plaintiff claims mental distress. This depends on the facts of the case.
• Allegations of bad faith conduct or conduct justifying punitive damages on the employer’s part. Here, the employer is entitled to advance evidence that it made settlement offers to the plaintiff employee which contradicts the bad-faith claims being pled.

Settlement Privilege

In the alternative, a party to a litigation proceeding could challenge the disclosure of a pre-litigation settlement offer by invoking the common law principle of settlement privilege and seeking to strike the relevant portion of the pleading as scandalous per Rule 25.11 of the Rules.

Settlement privilege is a common law principle that protects communications exchanged by parties as they try to settle a dispute. It enables parties to have honest and frank discussions without fear that the information they disclose will be used against them. In its absence, parties would be reluctant to engage in settlement discussions if those discussions could be admitted at trial as evidence of concessions.

Pleadings that evidence privileged communications may be struck on the basis that they are scandalous, frivolous, or vexatious.  Courts have cited an overriding public interest in the settlement of lawsuits.

In Inter-Leasing Inc. v Ontario (Minister of Finance),[2]  the Divisional Court laid out a three-step test for settlement privilege to apply:

1. Litigation must be in existence or within contemplation;
2. The communication must be made with the express or implied intention that it would not be disclosed to the court in the event negotiations failed; and
3. The purpose of the communication must be to attempt to effect a settlement.

[1] 2017 ONSC 4413

[2] 2009 CanLII 63595 (ON SCDC)

The post How our Legal System Encourages Settlement first appeared on De Bousquet Professional Corporation Blog.

While ingenious and an effective capitalization on the power of the internet, this new model has had some perverse effects on workers’ rights. Where traditionally, most employees are entitled to minimum standards laid out in the Employment Standards Act (“ESA”), such working arrangements bypass the traditional employee-employer relationship by categorizing agents as independent contractors. The arrangements often contain arbitration clauses, meaning that problems are solved through sophisticated dispute resolution forums under foreign law, in suave European capitals. For instance, Uber’s agreement with its drivers centers on an arbitration clause that results in dispute resolution taking place in Amsterdam, under Dutch law. 

Arbitration clauses are increasingly common in today’s complex society. Since the parties are often able to agree on the arbitrator, the location and the duration of proceedings, they grant parties more flexibility and more control. Arbitration is also more efficient than civil proceedings and can prove to be cheaper. The downside, however, is that large corporations can set the parameters of these agreements, to the detriment of the other less powerful party. 

Optimistically, such arbitration clauses are progressive in that they provide more “modern” solutions to contractual disputes. A more cynical interpretation, however, is that they cleverly force workers to contract out of provincial employment legislation like the ESA. This is especially problematic since it is not uncommon for independent contract workers to make less than the minimum wage. Some view corporations adding arbitration clauses to workers’ contracts as a means of evading local legal obligations.

In 2018, David Heller, an Uber Eats driver, began a class-action lawsuit against Uber, claiming that he and his class members (fellow drivers) were not independent contractors, but employees, who were entitled to mandatory minimum entitlements set by the ESA. Mr. Heller also claimed that the arbitration provisions of the service agreements entered into between the parties were void and unenforceable. The Judge ruled in favour of Uber, citing the validity of the arbitration clause. 

The case proceeded to the Ontario Court of Appeal, where the court forcefully maintained that the arbitration clause was invalid on two grounds: 1) it contracts out of the ESA, and 2) it is unconscionable under common law.

With regard to contracting out of the ESA, it was held that section 5 of the ESA precludes parties from contracting out of employment standards legislation. Specifically, employees cannot contract out of the provisions of the ESA that allow complaints about labour standards to be brought before the Ministry of Labour. 

With regard to unconscionability, the essence of the ruling was that there was a huge inequality in bargaining power between Uber and the drivers. Moreover, hefty arbitration filing fees in the tens of thousands of US dollars, and complex travel arrangements meant that it would be almost impossible for a driver to exercise their rights under the arbitration provision, which already weighed heavily in favour of Uber.

Next month, the Supreme Court of Canada will hear Uber’s appeal, in a decision that may reverberate throughout the employment law world for many years to come. The Court will decide if the Ontario Court of Appeal’s decision to invalidate the arbitration clause was correct. The ruling will more than likely speak to whether employers can draft service agreements with independent contractors and employees that contain arbitration clauses, and whether such clauses can legally contract out the provincial employment standards legislation. 

The post Arbitration Clauses and Contracting Out of Employment Standards Legislation – Why the Gig Economy Faces Uber Big Problems first appeared on De Bousquet Professional Corporation Blog.

Cherry’s fate begs the question: Did Sportsnet have a legal leg to stand on? Can an employer fire an employee for making controversial remarks? 

Whether Mr. Cherry was terminated with or without cause is unknown. This distinction has important financial consequences for both the employer and the employee. Don Cherry had been employed by Sportsnet on a series of fixed-term contracts. The most recent two, including the one that was recently terminated, were each for one year. His contracts were always renegotiated when they ended, and he was not guaranteed continued employment once they ended.

It is likely that his contract would be considered a true fixed-term contract. When an employee on a fixed-term contract is terminated without cause (i.e., for a reason other than a material breach of the contract), they are generally entitled to the entire amount left owing on their contract.

However, courts sometimes find that employment relationships that purport to be fixed-term are actually indefinite. Although unlikely in Don Cherry’s case, he would be entitled to even more if his contract were found to be for an indefinite term. At common law, permanent employees are presumptively owed reasonable notice or pay in lieu thereof and are entitled to all non-discretionary payments that make up their total compensation package. 

Therefore, an employee dismissed ‘without cause’ is owed the value of benefits, unpaid bonuses, sales commissions, retirement plan contributions and stock options that he or she would have received during the notice period but for their termination. 

With cause terminations exempt the employer from providing the employee with their entitlements under a fixed-term contract or, in the case of indefinite-term employees, with their common law entitlement to notice or pay in lieu thereof. 

This distinction makes ‘with cause’ dismissal an alluring option for employers, who can easily fall into the temptation of summarily dismissing an employee at the first hint of misconduct. However, such a course of action is a heavy-handed solution that employers only should use judiciously. If performed unjustly or without requisite degree of justification, the employer can expose itself to significant liability, which can include damages for mental distress inflicted on the employee in addition to damages for breach of contract or common law notice. While there are no hard and fast rules for determining when an employer can lawfully terminate an employee for cause, a frequently cited legal test was articulated in Regina v. Arthurs:

If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to the employer’s business, or if he has been guilty of wilful disobedience to the employer’s orders in a matter of substance, the law recognizes the employer’s right summarily to dismiss the delinquent employee.

Historically, courts have developed certain grounds for ‘just cause’ dismissal, in keeping with the Arthurs test. These grounds include dishonesty, incompetence, insubordination, intoxication, sexual harassment, criminal conduct, breach of fiduciary duty, and breach of employee duties. Accordingly, only the most serious forms of misconduct will be considered “cause” to dismiss an employee. The main inquiry to be made is whether the employee has engaged in misconduct that gave rise to a breakdown in the employment relationship. Further, employers have an obligation to consider an employee’s entire employment history and any mitigating factors in assessing whether cause for dismissal exists.

Other legally relevant factors courts have used when determining if the employer had cause, include: 

• whether the employee had received previous warnings; 
• whether the employee knew his or her job was in jeopardy;
• whether the employee’s behaviour had been ignored or condoned by the employer; 
• whether the employer had condoned similar behaviour from other employees; 
• How long the employee had been working for the employer. 

Given how events unfolded and the arbitrary nature of his termination, it is safe to say that Mr. Cherry was not given notice of his termination. That means he was either dismissed with cause, or without cause with minimal notice, which would be accompanied by a substantive severance package. Even if he was dismissed for cause, given his high public profile, Sportsnet likely severed the relationship by providing Cherry with some sort of severance pay. After all, in some circumstances, it is best to deal the knockout blow using a velvet glove. Cherry’s special status as a prominent public figure means that this kind of treatment is the exception, not the rule. 

If he was, in fact, fired for cause, one would have to analyze and consider several of the factors previously mentioned. First, the history of Mr. Cherry’s relationship with Sportsnet would be relevant since Mr. Cherry has a history of making politically incorrect statements. How Sportsnet reacted to previous indiscretions is highly relevant to the analysis. If Sportsnet failed to reprimand Cherry, this may signify a condonation of his behavior and would make dismissal for cause harder to justify. Moreover, whether Mr. Cherry received a series of escalating reprimands and warnings that made it clear that further controversial remarks could be cause for dismissal could support Sportsnet’s decision to dismiss him for cause. Also relevant would be Sportsnet’s internal policies and procedures. Repeated violations of major policies, or single violations of important policies, could be grounds for just cause dismissal, provided that the policy was reasonable. The fact that the remarks were made ‘on the job’ also bolsters a potential ‘just cause’ dismissal, since Mr. Cherry is in a representative role with the organization. His on-air remarks directly implicate his employer’s reputation and public standing.

The post Don Cherry Fired from Sportsnet – Can an Employee be Fired for Making Controversial Remarks? first appeared on De Bousquet Professional Corporation Blog.

The common law notice period is the period of time that a court determines a terminated employee would reasonably need to secure alternative, similar employment. Generally, the notice period consists of one month for every year of service. The notice period can fluctuate based on the principles established in Bardal v. Globe & Mail Ltd. Per the Bardal principles, a greater reasonable notice period can be awarded to an employee having regard to the character of the employment, the employee’s length of service, the employee’s age and the availability of alternative employment. 

What many employees do not know is that reasonable notice payments are not limited to an employee’s base salary. As a matter of legal principle, reasonable notice payments are meant to put the employee in the same position they would have been in had the employer given them adequate notice. If the employee would have received the payment during the reasonable notice period, they will be owed the amount in any payment received in lieu of notice. Accordingly, an employee is entitled to all non-discretionary payments that he or she was earning while employed. Non-discretionary payments include bonuses, benefits, sales commissions, retirement plan contributions and stock options. 

Non-Discretionary Bonuses

Uncertainty arises where the contract provisions or policies governing non-discretionary bonus payouts specifically limit an employee’s entitlement to the bonus payments upon termination.  Some diligent employers will make specific provisions that preclude payment of non-discretionary bonuses that the employee would have earned during the reasonable notice period. The enforceability of such clauses is contentious, and courts have struggled to stick to a unifying principle. The confusion recently prompted the Supreme Court of Canada to hear an appeal on the issue in October 2019. That decision has yet to be reported. 

In the meantime, the Court of Appeal for Ontario’s decision in Paquette v TeraGo Networks Inc. is widely regarded as the leading case on the subject. The Court established a two-part test to determine if an employee was entitled to receive bonus payouts they would have earned during the reasonable notice period:

1. Was the bonus an integral part of the employee’s compensation package, triggering a common law entitlement to damages in lieu of bonus? Factors relevant to this analysis include:

1. Whether the bonus was received each year (albeit not necessarily in the same amount);
2. Whether the purpose of the bonus was to remain competitive with other employers;
3. Whether the bonuses were historically awarded, and the employer had never exercised its discretion against the employee; and
4. Whether the bonus constituted a significant component of the employee’s overall compensation.

1. If so, is there any language in the bonus plan that would restrict the employee’s common law entitlement to damages in lieu of a bonus over the notice period?

Non-discretionary bonuses which have been regularly provided in the past in regular amounts are considered to be integral to the contract of employment and will be included in the calculation of pay in lieu of reasonable notice. Further, for step 2, courts require clear and express language that purports to restrict the employee’s common law entitlements. 

Performance During Reasonable Notice Period

Some crafty employers have made the argument that the dismissed employee is not entitled to bonus payments because their performance leading up to termination was poor, and if they had continued working during the reasonable notice period, they would not have received the bonus payments. 

Employers who have made this argument have been unsuccessful in their attempts to limit their liability. Courts have generally sided with the employee in awarding damages for bonuses that would have been paid to them during the reasonable notice period. Courts have looked to several factors in deciding in favour of the employee, the most common being whether the employee received the bonus in previous years. 

Case Law 

In Schultz v. Canada Lands Company CLC Limited, the Employer argued that even if Mr. Schultz was given reasonable notice, he would not have been eligible for a bonus during that time in view of the bonus policy, which indicated that employees who received “partially meets expectation” (or worse) as a performance review rating were not eligible to receive a bonus. They argued that Mr. Schultz would have received a poor review rating and therefore, would not have been eligible for a bonus. The Court found several problems with this argument. 

First, Mr. Schultz was never advised of these limiting criteria. His offer letter indicated only that he would be eligible for a bonus of up to 25% of his salary. No limiting criteria were mentioned to him. Secondly, Mr. Shultz never received a “partially meets expectations” rating. In his last performance review, Mr. Shultz received an overall rating of “successful”. The Court found that it was speculative to suggest that he would have necessarily received a rating that would have prevented him from receiving the bonus. Further, and perhaps most importantly, the evidence indicated that Mr. Schultz received a bonus each year he was employed. Consequently, the Court rejected the Employer’s argument and decided in favour of the employee in awarding him damages for loss of bonuses. 

In Eberle v. Sunhills Mining Limited Partnership, the Court held that the employee was entitled to compensation for the lost bonus. The Employer cited performance issues and target levels that it argued should limit the bonuses payable to the employee. The Court accepted that though there was a negative review shortly before termination, it was difficult to see what impact this might have had on an assessment of Mr. Eberle’s performance levels. Moreover, it was not consistent with performance reviews over the preceding years.

The post Can Negative Performance Affect Bonus Owed to an Employee During the Reasonable Notice Period? first appeared on De Bousquet Professional Corporation Blog.

In Ontario, workplace harassment is primarily addressed under the Occupational Health and Safety Act (“OHSA”), although the Ontario Human Rights Code (the “Code”) also addresses certain forms of it. Under both the OHSA and the Code, harassment is defined as “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.” This definition includes both repeated conduct and individual incidents, although recurring behaviour more frequently qualifies as harassment. Further, it does not matter whether the person knew that the conduct was unwelcome – the test is objective and looks at what the person ought to have known.

Workplace harassment includes unwelcome conduct that should be known to be offensive, embarrassing, humiliating or demeaning to a worker, or behaviour that intimidates or isolates a worker. Examples of such behaviours include, but are not limited to: yelling or threatening a worker, prohibiting a worker’s expression or communication with others, making rude or offensive remarks, humiliating a worker with malicious gossip or rumours, or excluding the person from work activities or ignoring them completely, etc. Generally, workplace harassment does not include reasonable action taken by an employer or supervisor relating to the management and direction of workers or the workplace (subsection 1(4) of the OHSA). Examples include negative but valid performance reviews and disciplining workers. Further, conflict in the workplace will not constitute harassment in and of itself.

Some forms of harassment also fall under the Code. However, the Code deals explicitly with actions that discriminate against people based on a protected ground. Therefore, if the harassment involves discriminatory conduct, it will be covered by the Code.

How do these pieces of legislation protect workers from harassment? The OHSA requires employers to have a policy in place that deals with allegations and incidents of harassment. Further, employers have a duty to conduct a thorough investigation into such allegations. If an employee is experiencing workplace harassment, he or she should begin by bringing it up to Human Resources or management. The employer is then required to implement its harassment policy and conduct an investigation. If the employer fails to address the matter adequately or does not have a policy in place, the employee can contact the Ontario Ministry of Labour (the “MOL”). The MOL can then investigate the employer’s response to the situation and harassment policy. However, it will not investigate the specific harassment investigations or order compensation or other individual remedies. Instead, it can require the employer to alter its policies and/or conduct a thorough investigation.

Additionally, section 50 of the OHSA prohibits employers from reprising against an employee who makes a complaint of harassment, as it is an attempt by the employee to enforce his or her rights under the OHSA. This means that employers cannot punish employees for making harassment allegations, for example, by reducing the employee’s responsibilities or terminating his or her employment. This is true even if no actual harassment took place. Therefore, if you are unsure about whether your situation qualifies as workplace harassment, you are still protected from your employer’s retribution. If you feel that your employer has reprised against you, you may file a complaint with the Ontario Labour Relations Board (the “OLRB”). Individual remedies are available in such situations, and will generally be awarded to put the employee into the position he or she would have been in had the reprisal not occurred. For example, if an employee was terminated in response to making a harassment complaint, the OLRB may order reinstatement with back pay.

If the harassment falls under the Code, the employee can file an application with the Ontario Human Rights Tribunal (the “HRTO”). The HRTO can also award individual remedies. These can be financial, in which case the employee may be compensated with general damages for the loss of the right to be free from discrimination, including to compensate him/her for injury to his/her dignity, feelings, and self-respect, and/or with special damages for any special financial costs that were incurred as a result of the discriminatory harassment. Further, the HRTO can order non-financial remedies, such as reinstatement to your job, a promotion, or the removal of the harasser from your work environment. 

The Code also prohibits reprisals for making complaints of discrimination, including harassment that is discriminatory, and the HRTO is also the proper forum to address such situations.

Unfortunately, many people experience workplace harassment at some point in their life. However, there are steps that one can take to address it. There are various legal tools available that are designed to stop workplace harassment when it occurs and compensate victims for any damage it has caused them. Employees are not without recourse.

The post Are You Being Subjected to Workplace Harassment and, If So, What Can You Do About It? first appeared on De Bousquet Professional Corporation Blog.

In North v. Metaswitch Networks Corporation, 2017 ONCA 790, the Court of Appeal affirmed the following rule: 

The other approach is to first assess the termination clause to see whether there is any contracting out of an employment standard. If there is, then the termination clause is void, and there is nothing to which the severability clause can be applied. In that way, the severability clause is not void, but it is inoperative where the agreement contracts out of or waives an employment standard.

The rule means that severability clauses cannot be used to save a termination clause that violates the ESA because the entire termination clause is automatically void. 

In Amberber, the court had to decide whether the following sentence in a termination provision constituted a severability clause:

In the event that the applicable provincial employment standard legislation provides you with superior entitlements upon termination of employment (“statutory entitlements”) than provided for in this offer of employment, IBM shall provide you with your statutory entitlements in substitution for your rights under this offer of employment.  

In doing so, the Court considered whether the sentence purported to sever any part of the termination provision. It found that it did not. Therefore, it was not a severability clause and was simply a portion of the termination provision that ensured compliance with the ESA. 

Although the employee’s argument was unsuccessful in Amberber, similar arguments have been accepted in two cases since decided. In Groves v. UTS Consultants Inc., 2019 ONSC 5605 (CanLII), the Superior Court expressly referred to Amberber in its decision, finding that:

In Amberber, the Court of Appeal “read up” a termination provision to comply with the ESA because the provision was capable of an interpretation that would be in compliance with the ESA: Amberber, at para. 54.

The Court interpreted the decision in Amberber to hold that the sentence, in that case, ensured that any portion of the termination clause that fell short of the ESA had to be read up to comply with the ESA. It could do so because the rest of the termination provision did not necessarily limit the employee’s entitlements such that they did not comply with the ESA. Instead, the rest of the clause was already capable of an interpretation that would be in compliance with the ESA. The sentence in question removed any ambiguity as to the interpretation, confirming that the remainder of the clause was to be read up to comply with the ESA.

The Superior Court in Groves proceeded to find that the following “saving clause” could not be used to assist or read up a termination provision that was incapable of an interpretation that would comply with the ESA:

“[n]otwithstanding 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 [ESA].”

A similar decision can be found in Rossman v Canadian Solar Inc, 2018. 

These decisions show that plaintiffs are getting creative in arguing that termination clauses are void, and judges are willing to listen. Although this suggests that the courts may be trying to find ways to be more employer-friendly following recent decisions that have made it easier for employers to draft valid termination provisions, it also adds to the uncertainty in interpreting such clauses. The difference between a sentence in a clause that ensures compliance with the ESA and one that is an inapplicable “saving clause” that fails to save a termination provision could be basic wording that at first glance is almost synonymous. Employers should continue to try to use very precise language when trying to oust their employees’ common law entitlements upon termination, while employees should continue to find creative arguments for why such termination clauses are void. Currently, it feels as though many termination clauses could be interpreted either way.

The post Ensuring Compliance with the Employment Standards Act or an Inoperative Severability Clause? Subtle Differences in the Wording of Termination Provisions Can Lead to Opposite Effects first appeared on De Bousquet Professional Corporation Blog.

The obligation to disclose often conflicts with a competing interest – the privacy of third parties who are not parties to the litigation. Often, events unfold so as to implicate a multilateral web of people, be they employees, businesses, family members, etc. After all, parties do not act in a vacuum. Accordingly, in a hyper-surveilled and digitally traced world, an emerging mandate has taken hold of our collective zeitgeist for greater privacy. 

How do these trends affect a party’s obligation to disclose relevant documents that contain information about third parties? Can lawyers refuse to provide opposing counsel with relevant documents on the basis of privacy owed to third parties?

Pursuant to Ontario’s Rules of Civil Procedure – the rules that govern Ontario’s civil court proceedings – a lawyer is required to disclose all documents that are relevant to a matter at issue in an action. However, subject to the proportionality provisions of the Rules, a judge or master may consider the privacy of non-parties and limit the scope of such disclosure through various methods, including confidentiality agreements. 

An instructive precedent can be found in John Tuer v. The Bank of Nova Scotia, 2019 ONSC 184. The dismissed Plaintiff filed a wrongful dismissal claim against his former employer, the Defendant. The Plaintiff brought a motion seeking production of documents related to the Defendant’s recruitment of third-party employees/prospective employees. The Plaintiff successfully argued the relevance of the recruitment documents. Master R. A. Muir noted that relevance was determined by the pleadings – the initial documents that state the parties’ claim and defence – and that the Defendant’s intentions and the process it followed in hiring the third-party employee were matters in issue. 

Muir qualified his opinion by stating that some consideration must be given to the privacy of the non-parties involved in the recruitment process and that the Plaintiff’s production requests raised significant privacy concerns. Accordingly, Muir was agreeable to the Defendant’s proposal that if the court determined the requested documents were relevant, it would produce them subject to the signing of a confidentiality agreement. Muir was also agreeable to limiting the disclosure to the employee who was actually hired and one other employee who was seriously considered for the role. 

That said, courts have steadfastly upheld the intent of the aforementioned Rules. In Brown v. KMI Brokers Inc., the Court stated:

One of the major purposes of the amendments to the Rules since 1984 has been to ensure a full exchange of relevant information between parties in a timely and efficient manner. (Ceci (Litigation Guardian) v. Bonk (1992), 1992 CanLII 7596 (ON CA), 89 D.L.R. (4th) 444 (Ont. C.A)). The service of a full and complete, sworn Affidavit of Documents is the fundamental starting point for the implementation of this objective in civil proceedings. Given the critical importance of documentary disclosure to the effective and efficient advancement of court proceedings, parties must comply with Rule 30.03(1) in a reasonably timely manner. Observance of this rule is not a matter of discretion; it is a basic precondition to a party’s ongoing participation in the litigation. This point is reflected in Rule 30.08(2), which provides that failure to serve a sworn Affidavit of Documents may result in very serious consequences, including a party’s claim being completely dismissed in the case of a Plaintiff, or a Defendant’s defence being struck.

That said, courts are unwilling to infringe on this principle, and the decision to do so is not taken flippantly. Once relevance and proportionality are established, the onus shifts to opposing counsel to argue why the circumstances call for limiting disclosure.  

Privacy Legislation

In the factual circumstances of John Tuer v. The Bank of Nova Scotia, the Court held that privacy legislation did not preclude disclosure of such documents. 

Canada’s overarching privacy legislation is called the Personal Information Protection and Electronic Documents Act (“PIPEDA”). PIPEDA’s application to employees is limited to federally-regulated sectors and undertakings, such as banks incorporated under the Bank Act. PIPEDA makes exceptions for the release of information without the knowledge or consent of a party to comply with the rules of court relating to the production of records (s. 7(3)(c)). 

For these reasons, though privacy continues to transform into an ever-important consideration throughout the legal process, the search for truth and justice and its accompanying full disclosure reigns supreme. Where full disclosure and privacy rights are competing interests, continue to expect courts to find crafty ways of mitigating the risks associated with full disclosure. Parties to an action will only be given access to the relevant information required to move their case forward, and probably only after the other party has put up a fight to resist disclosure.

The post Full Documentary Disclosure and Privacy Obligations to Third Parties – Are They Mutually Exclusive? first appeared on De Bousquet Professional Corporation Blog.

Accordingly, Canadian courts have established five tests to consider when attempting to determine whether a dependent contractor relationship exists between an agent and his or her principal: 

1. Exclusivity: Whether or not the agent was limited to serving the principal exclusively;
2. Control: Whether or not the agent was subject to the control of the principal, not only as to the product or service sold, but also as to when, where and how it was sold;
3. Tools: Whether or not the agent had an investment or interest in what are characterized as the “tools” relating to his or her service;
4. Risk: Whether or not the agent had undertaken any risk in the business sense or, alternatively, had any expectation of profit associated with the delivery of his or her service as distinct from a fixed commission;
5. Organization: Whether or not the activity of the agent was part of the business 

organization of the principal for which he or she worked. In other words, whose business was it?

The Ontario Court of Appeal’s recent decision in Thurston v. Ontario (Children’s Lawyer) shed further light on the exclusivity test. Thurston was a lawyer who provided legal services to the Office of the Children’s Lawyer (the “OCL”) in accordance with a series of agreements over a 13-year period. She brought a claim alleging that she was a dependent contractor and was therefore owed 20 months’ notice of termination.

The Court analyzed the terms of the agreement between Thurston and the OCL, which included the following “no guarantee of work” clause: 

“The OCL makes no guarantee of the total value or volume of work to be assigned to you.”

The Court rejected Thurston’s argument, mainly on the grounds that the income she received from the OCL only made up 40% of her total billings throughout the duration of her relationship with the OCL. Though the Court sympathized with Thurston’s significant economic loss, such a loss was insufficient to establish exclusivity under the test, or the requisite economic dependency that is at the root of a dependent contractor relationship.  

The Court went on to state that “near-exclusivity” status of a contractor requires “substantially more than 50 percent” of one’s business. This means that an agent cannot claim dependent contractor status unless at least 50% of their billings originate from the principal in question. Even then, Courts will not readily imbue an agent with such status without evidence of substantial economic dependence.

The OCL raised the issue of whether Thurston’s economic dependency was self-induced. Though it was intrigued by the argument, the Court did not affirm or negate it, deciding instead to focus solely on the percentage of Thurston’s billing.     

One can anticipate that in future cases, employers may argue that even if evidence of economic dependency rising to the levels of “near-exclusivity” exists, the dependency was self-induced by the agent. Presumably, this is a relevant factor that works against agents attempting to assert dependent contractor status. For now, an agent’s billing percentage could be wholly determinative of the matter.  

The post How Billing Percentages Can Make or Break Your Dependent Contractor Status first appeared on De Bousquet Professional Corporation Blog.

The legal implications of engaging in an office romance, however, are complicated. There are important consequences that employees and employers should understand when faced with an office romance, depending on the nature of the relationship and the employer’s policy. 

Nature of the Relationship 

Recently, Mcdonald’s fired its CEO over a relationship he was having with an employee. The board of directors fired Stephen Easterbrook on November 1, 2019, after concluding he had violated the company’s policy against manager relationships with directly or indirectly reporting employees. In a post-#metoo world, employers are hyper-sensitive to relationships where there is an endemic imbalance of power. The reality is that many employees may feel tacitly compelled to “go along” with the romantic advances of their supervisors and managers for fear of retribution. Gauging whether the less powerful employee truly consents to the relationship can be difficult. Accordingly, these relationships can be exploitative and abusive and are rife for sexual assault and sexual harassment. 

For this reason, many corporations will have explicit policies and rules prohibiting “C-Suite” executives from engaging in a romantic relationship with direct or indirect reports. If the employer has such a policy, the employee is generally under an obligation to follow it, along with all other policies, so long as the policy is “reasonable, unambiguous, well-published, consistently enforced, and [the employee must know] or ought to have known of [the policies’ contents], including the consequences of breach”: Foerderer v Nova Chemicals Corp, 2007 ABQB 349 (CanLII) at para 67. If a senior manager fails to abide by such a policy and engages in an office romance with an employee, he or she can be dismissed with cause, meaning the employee will not be entitled to severance pay. If the senior manager engages in such a relationship and fails to disclose it, courts have deemed such conduct as sufficiently dishonest and deceptive to warrant ‘with cause’ dismissal (Smith v Vauxhall Co-Op Petroleum Limited, 2017 ABQB 525). 

Notwithstanding the above, some companies chose to adopt “non-fraternization” policies, which forbid office romances for ALL employees, regardless of their managerial status. Such policies have proven to be ineffective and can even be counterproductive. 

As some employers have found, a more effective means of mitigating the risks associated with office romances is having a policy requiring employees to disclose them when they first materialize. Relationships in which the employees are on equal professional footing can garner less adverse legal consequences, provided the employees are forthcoming. Such disclosure policies address the main concerns involved, including the consent of both parties, and the underlying conflict of interest challenges the relationship may encroach on and how to avoid such conflicts. 

Where employers are silent on office romances (i.e. the employment contract does not address the subject, nor does the company’s policies and procedures manual), employees still have legal duties to disclose such relationships. Employees have common law obligations that apply as implicit terms of the employment relationship. Implied in every contract of employment as a matter of law is a general duty of good faith and fidelity. The essence of the duty of good faith and fidelity is the requirement that an employee acts honestly and faithfully during the term of employment, meaning that an employee must always put the employer’s best interests first and avoid any conflicting personal interests. In almost all scenarios, an office romance will likely engage conflicting personal interests. 

Accordingly, disclosure of an office romance is required by the common law, irrespective of whether the employer has a policy addressing the issue. 

In sum, as an employer, avoid overly onerous restrictive policies. A disclosure policy sufficiently mitigates the foreseeable risks. As an employee, disclosure is the name of the game and will protect against allegations of breaching a duty of good faith and fidelity or a contractual duty to avoid conflicts of interest.

The post McDonald’s Fires CEO over Office Romance – How to Navigate the Not-So-Rosy Waters of Office Romances first appeared on De Bousquet Professional Corporation Blog.

Before Nemeth, courts generally required very clear and specific language to rebut common law entitlements. However, in Nemeth, the Court of Appeal held that “the need for clarity does not mean that the parties must use a specific phrase or particular formula, or state literally that ‘the parties have agreed to limit an employee’s common law rights on termination.’ It suffices that the parties’ intention to displace an employee’s common law notice rights can be readily gleaned from the language agreed to by the parties.” Based on these principles, it held that the following clause was enforceable and successfully rebutted common law entitlements: 

The Company’s policy with respect to termination is that employment may be terminated by either party with notice in writing. The notice period shall amount to one week per year of service with a minimum of four weeks or the notice required by the applicable labour legislation.

Although this makes it easier for employers to limit employees’ entitlements, it also makes it much more difficult to determine which clauses successfully rebut common law notice. Predicting any individual judges’ decision on the matter is arguably more challenging than ever, as evidenced by the cases that have been decided since Nemeth.

Of eight cases that cite Nemeth, four involved termination clauses that were found to be enforceable and to rebut common law entitlements, three involved clauses that were void for violating the ESA, and one involved a clause that was enforceable but failed to rebut common law entitlements. Further evidencing the confusion, one of the cases in which the termination clause successfully rebutted common law entitlements was decided on an appeal that reversed the trial judge’s finding that the clause was void.

The confusion that the decision has created is especially clear when considering two termination clauses that were treated differently from both each other and the clause in Nemeth:

• In Doucette v Espial Group Inc, 2019 CanLII 45629 (ON SCSM) the Small Claims Court held that the following clause was unenforceable: “Your employment may be terminated for cause at any time without notice or payment in lieu thereof.  Your employment may be terminated for any other reason by the company upon delivery of one week’s notice per year of Espial service or payment in lieu thereof, or such other amount as is required under the Employment Standards Act, whichever is greater.”
• In Movati Athletic (Group) Inc v Bergeron, 2018 ONSC 7258 the Divisional Court upheld the motion judge’s decision, finding that the following termination clause was valid but did not successfully rebut common law entitlements because language limiting entitlements to statutory minimums elsewhere in the contract was more specific: “Movati Athletic Inc. may terminate your employment without cause at any time during the term of your employment upon providing you with notice or pay in lieu of notice, and severance, if applicable, pursuant to the Employment Standards Act, 2000 and subject to the continuation of your group benefits coverage, if applicable, for the minimum period required by the Employment Standards Act, 2000 as amended from time to time.”

Although the three clauses are different, those differences are subtle. That such small discrepancies can result in entirely different decisions shows that Nemeth has created a world of uncertainty when it comes to termination clauses. Until additional case law brings more clarity, employers who seek to limit their employees’ entitlements upon termination are better off sticking to the previous, stricter rules when drafting such clauses – clearly and explicitly ousting common law entitlements while ensuring compliance with the ESA. Meanwhile, employees are left guessing about what their rights are.

The post Is It Possible to Predict How Courts Will Treat Your Termination Clause? The Early Aftermath of Nemeth v Hatch first appeared on De Bousquet Professional Corporation Blog.