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THE
LAW of work Second Edition David j. Doorey
Copyright © 2020 Emond Montgomery Publications
07/18/2020 - tp-dd95260e-c8ad-11ea-a652-024 (temp temp) - The Law of Work
The Law of Work Second Edition David J. Doorey
Toronto, Canada 2020
Copyright © 2020 Emond Montgomery Publications
07/18/2020 - tp-dd95260e-c8ad-11ea-a652-024 (temp temp) - The Law of Work
Copyright © 2020 David Doorey. NOTICE & DISCLAIMER: All rights reserved. No part of this publication may be reproduced in any form by any means without the written consent of Emond Montgomery Publications. Emond Montgomery Publications and all persons involved in the creation of this publication disclaim any warranty as to the accuracy of this publication and shall not be responsible for any action taken in reliance on the publication, or for any errors or omissions contained in the publication. Nothing in this publication constitutes legal or other professional advice. If such advice is required, the services of the appropriate professional should be obtained. We have attempted to request permission from, and to acknowledge in the text, all sources of material originally published elsewhere. If we have inadvertently overlooked an acknowledgment or failed to secure a permission, we offer our sincere apologies and undertake to rectify the omission in the next edition. Emond Montgomery Publications Limited 1 Eglinton Avenue E, Suite 600 Toronto ON M4P 3A1 https://www.emond.ca/highered Printed in Canada. We acknowledge the financial support of the Government of Canada and the assistance of the Government of Ontario. Emond Montgomery Publications has no responsibility for the persistence or accuracy of URLs for external or third-party Internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. Vice president, publishing: Anthony Rezek Publisher: Mike Thompson Director, development and production: Kelly Dickson Developmental editor: Katherine Goodes Production manager: Laura Bast Production editor: Anna Killen
Copy editor: Leanne Rancourt Typesetter: Amnet Proofreader: Darryl Kamo Indexer: Arleane Ralph Cover designer: Jordan Bloom Cover image: Liyao Xie/Getty Images Printer: Webcom, a division of Marquis
Library and Archives Canada Cataloguing in Publication Title: The law of work / David Doorey. Names: Doorey, David J., author. Description: Second edition. | Includes index. | Revision of: The law of work.—Complete edition—Toronto, Canada : Emond Publishing, 2017. Identifiers: Canadiana 20200155784 | ISBN 9781772556186 (softcover) Subjects: LCSH: Labor laws and legislation—Canada—Textbooks. | LCGFT: Textbooks. Classification: LCC KE3109 .D66 2020 | LCC KF3320.ZA2 D66 2020 kfmod | DDC 344.7101—dc23
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07/18/2020 - tp-dd95260e-c8ad-11ea-a652-024 (temp temp) - The Law of Work
Brief Contents Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxv The Law of Work: A Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxvii
PART I The Law of Work: Themes, Frameworks, and Perspectives Chapter 1 Chapter 2 Chapter 3 Chapter 4
Canadian Law of Work in a Nutshell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A Framework for Analyzing the Law of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Key Perspectives That Shape the Law of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What Is Employment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selected Cases: Part I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 17 35 53 69
PART II The Common Law Regime Chapter 5 Chapter 6 Chapter 7
A Brief History of the Common Law Model of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . The Job Recruitment and Hiring Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Requirements to Create and Modify an Employment Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 8 Expressed Terms of Employment Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 9 Implied and Ancillary Employment Contract Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 10 Termination by an Employer with “Reasonable Notice” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 11 Termination by “Frustration” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 12 Summary Dismissal: Termination for Cause Without Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 13 “You Forced Me to Quit!”: The Special Case of Constructive Dismissal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 14 Damages in Wrongful Dismissal Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 15 “I Quit!”: Termination of the Employment Contract by the Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 16 Tort Law and the Employment Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selected Cases: Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
73 87 97 113 133 153 169 179 201 217 237 247 265
PART III The Regulatory Regime Chapter 17 Introduction to the Regulatory Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 Chapter 18 Wage Regulation and Pay Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285 iii
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iv Brief Contents Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Chapter 26 Chapter 27
Regulating Hours of Work, Time Off, and Overtime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Regulating the End of Employment Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction to Human Rights at Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Bona Fide Occupational Requirement, the Duty to Accommodate, and Other Discrimination Defences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Occupational Health and Safety and Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . The Right to Work: Immigration and Mobility Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Privacy Law at Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Globalization and the Law of Work: International Labour Law and Trade Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selected Cases: Part III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
305 321 337 351 373 391 407 423 439 455
PART IV The Collective Bargaining Regime Chapter 28 Introduction to the Collective Bargaining Regime and the Canadian Labour Movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 29 A Brief History of Labour and the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 30 Why Do Workers Join Unions, and What Effects Do Unions Have on Business? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 31 The Unionization Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 32 Unfair Labour Practices and the Right to Organize . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 33 Collective Bargaining and the Making of a Collective Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 34 The Law of Industrial Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 35 The Collective Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 36 Grievances, Labour Arbitration, and “Just Cause” for Discipline in the Unionized Workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 37 The Regulation of Unions: Legal Status, the Duty of Fair Representation, and Decertification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 38 Public Sector Labour Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selected Cases: Part IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
459 475 491 503 525 541 557 585 611 643 661 677
PART V The Canadian Charter of Rights and Freedoms and Work Chapter 39 The Canadian Charter of Rights and Freedoms and Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 681 Selected Cases: Part V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705 Glossary
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GL:707
Index Credits
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IN:721 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CR:733
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Contents Brief Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dedication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . For Instructors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Law of Work: A Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii xxi xxii xxiii xxiii xxv xxv xxvii
PART I The Law of Work: Themes, Frameworks, and Perspectives CHAPTER 1
Canadian Law of Work in a Nutshell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 II. The Three Regimes of Work Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 A. The Common Law Regime (Part II of This Text) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 B. The Regulatory Regime (Part III of This Text) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 C. The Collective Bargaining Regime (Part IV of This Text) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 III. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 CHAPTER 2
A Framework for Analyzing the Law of Work . . . . . . . . . . . . . . . . . . . . . . . 17 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 II. Law Is What Law Does . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 III. A Framework for Analysis of the Law of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 A. The Work Law Subsystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 B. External Inputs and the External Feedback Loop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 IV. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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vi Contents CHAPTER 3
Key Perspectives That Shape the Law of Work . . . . . . . . . . . . . . . . . . . . . . 35 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 II. The Main Perspectives That Shape the Law of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 A. The Neoclassical Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 B. The Managerialist Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 C. The Industrial Pluralist Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 D. The Critical Reformist Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 E. The Radical Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 III. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 CHAPTER 4
What Is Employment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 II. Legal Tests for Determining Employment Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 A. The Common Law Tests for Employment Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 B. Employment Status in the Regulatory and Collective Bargaining Regimes . . . . . . . . . . . . . . . . . . . . . . 59 III. Is the Distinction Between Employee and Independent Contractor Appropriate? . . . . . . . . . . . . . . . . . . . . 63 IV. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Selected Cases: Part I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
PART II The Common Law Regime CHAPTER 5
A Brief History of the Common Law Model of Employment . . . . . . . . . . . . . . . . 73 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 II. Master and Servant Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 A. English Master and Servant Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 B. Master and Servant Law in the Canadian Colonies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 III. The Common Law of Employment Contracts in the 19th Century . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 A. The Common Law of Employment Contracts in 19th-Century England . . . . . . . . . . . . . . . . . . . . . . . . . . 78 B. The Common Law of Employment Contracts in 19th-Century Canada . . . . . . . . . . . . . . . . . . . . . . . . . . 80 C. Key Developments in the 20th Century . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 IV. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
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The Job Recruitment and Hiring Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 II. The Common Law and Discrimination in Job Recruitment and Hiring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 III. Common Law Torts That Apply to Job Recruitment and Hiring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 A. Tort of Deceit or Fraudulent Misrepresentation by a Prospective Employer . . . . . . . . . . . . . . . . . . . . . . 89 B. Tort of Negligent Misrepresentation by a Prospective Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 C. Fraudulent or Negligent Misrepresentation by a Job Applicant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 IV. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 CHAPTER 7
The Requirements to Create and Modify an Employment Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 II. The Requirements to Create a Legally Enforceable Employment Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 A. Capacity to Enter into a Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 B. Intention to Create a Legally Enforceable Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 C. Three Elements of a Contract: Offer, Acceptance, and Mutual Consideration . . . . . . . . . . . . . . . . . . . . . 100 III. Making Modifications to an Employment Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 A. Contract Amendments When the Employee Agrees to the Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 B. Modifications When the Employee Does Not Agree to the Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 IV. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 CHAPTER 8
Expressed Terms of Employment Contracts . . . . . . . . . . . . . . . . . . . . . . . . 113 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 II. Interpreting “Ambiguous” Contract Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 III. Sources of Employment Contract Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 A. Restrictive Covenant Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 B. Termination of Contract Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 IV. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 Appendix : Sample Employment Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
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Implied and Ancillary Employment Contract Terms . . . . . . . . . . . . . . . . . 133 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 II. Implied Contract Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 A. On What Basis Do Judges Imply Contract Terms? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 B. How Judges Use Implied Terms to Shape Employment Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 C. Implied Terms That Regulate the Conduct of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 D. Implied Terms That Regulate the Conduct of Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 III. Contract Terms Found in Ancillary Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 IV. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 CHAPTER 10
Termination by an Employer with “Reasonable Notice” . . . . . . . . . . . . . 153 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 II. Employee Vulnerability and the Rules Governing Termination of Employment Contracts . . . . . . . . . . . . . . 155 III. A Brief History of the Origins of Implied Reasonable Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 IV. How Modern Canadian Courts Assess an Employer’s Duty to Provide Reasonable Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 A. The “Bardal Factors” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 B. Summary of the Bardal Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 C. Other Factors Affecting the Length of Reasonable Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 IV. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 CHAPTER 11
Termination by “Frustration” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 II. The Implications of a Finding of Frustration of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 III. The Test for Frustration of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 IV. Frustration Due to Illness or Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 A. What Medical Evidence Is Relevant in Assessing Permanent Disability? . . . . . . . . . . . . . . . . . . . . . . . . . 171 B. Does Frustration of Contract Apply When a Contract Provides for Sickness and Disability Benefits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 C. Is the Duty to Accommodate a Disabled Worker a Precondition for Frustration of Contract? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
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Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 CHAPTER 12
Summary Dismissal: Termination for Cause Without Notice . . . . . . . . . 179 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 II. The Basic Legal Principles Applied to Summary Dismissal Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 A. The Proportionality Test: McKinley v. BC Tel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 B. Can the Employer Rely on Evidence of Employee Misconduct Learned After the Decision to Terminate the Employee? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 C. Single Wrongful Acts Versus “Cumulative Just Cause” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 D. Employer Condonation of Employee Misconduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 E. Specific Penalty Clauses in Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 III. Common Grounds for Summary Dismissal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 A. Dishonesty and Conflict of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 B. Gross Incompetence and Safety Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 C. Breach of Faithful Service to the Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 D. Insubordination and Insolence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 E. Harassment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 F. Violence and Threats of Violence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 G. Absenteeism and Lateness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 H. Off-Duty Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 I. Inappropriate Use of Employer Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 J. Intoxication at Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 IV. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 CHAPTER 13
“You Forced Me to Quit!”: The Special Case of Constructive Dismissal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 II. The Legal Concept of “Constructive Dismissal” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 A. Constructive Dismissal Based on Employer Behaviour That May Not Breach a Term of the Contract but That Makes Continued Employment “Intolerable” . . . . . . . . . . . . . . . . . . . . . . 203 B. Constructive Dismissal Based on Substantial Breach of an Essential Term of the Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204 III. Common Scenarios That Give Rise to a Constructive Dismissal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 A. Changes to an Employee’s Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 B. Changes to an Employee’s Job Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
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C. Reassignment of an Employee to a Different Work Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208 D. “Don’t Come to Work!”: Unpaid Disciplinary Suspensions, Temporary Layoffs, and Administrative Leaves or Suspensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 E. Employee Harassment or a Poisoned Work Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210 IV. Employee Acceptance and Condonation of the Employer’s Repudiation of Contract . . . . . . . . . . . . . . . . . . 211 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 CHAPTER 14
Damages in Wrongful Dismissal Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . 217 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 II. General Theory of Damages and Absence of “Specific Performance” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 III. Categories of Damages in Wrongful Dismissal Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 A. Compensatory (or Ordinary) Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 B. Aggravated Damages for Bad Faith in the Manner of Dismissal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 C. Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 IV. The Duty to Mitigate Compensatory Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226 A. The Standard of Mitigation Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 B. Mitigation with a Job Offered by the Former Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 CHAPTER 15
“I Quit!”: Termination of the Employment Contract by the Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 II. The Test for Assessing Whether an Employee Has Resigned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 III. The Requirement for an Employee to Give an Employer Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . 239 IV. Calculating Damages When an Employee Fails to Give Proper Notice of Termination . . . . . . . . . . . . . . . . . . 242 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 CHAPTER 16
Tort Law and the Employment Relationship . . . . . . . . . . . . . . . . . . . . . . . . 247 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247 II. What Is a Tort? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
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III. An Employer’s Vicarious Liability for Tort Damages Caused by an Employee . . . . . . . . . . . . . . . . . . . . . . . . . 248 IV. Common Torts That Apply to Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 A. Intentional Torts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 B. Non-intentional Torts (Known as “Negligence”) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254 V. Tort Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258 VI. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261 Selected Cases: Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
PART III The Regulatory Regime CHAPTER 17
Introduction to the Regulatory Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271 II. Jurisdiction: The Power to Regulate Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273 III. The Process of Law Making: Statutes and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274 IV. Expert Administrative Tribunals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277 V. What Regulatory Standards Are of Interest in the Law of Work? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279 VI. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282 CHAPTER 18
Wage Regulation and Pay Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285 II. The Scope of Wage Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 A. Wage Regulation Applies to Employment Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 B. Many Employees Are Excluded from Wage Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 C. Wage Laws Vary by Occupation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 III. Minimum Wage, Wage Freeze, and Maximum Wage Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 A. Minimum Wage Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 B. Wage Freeze or Restraint Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290 C. Maximum Wage Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292 IV. Regulating Wage Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292 A. Equal Pay for the Same Job (Equal Pay Laws) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294 B. Equal Pay for Equal Work and Equal Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
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xii Contents V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301 CHAPTER 19
Regulating Hours of Work, Time Off, and Overtime . . . . . . . . . . . . . . . . . 305 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 II. A (Very) Brief History of Working Time Laws in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306 III. The Justifications for and Limitations of Contemporary Working Time Regulation . . . . . . . . . . . . . . . . . . . . 308 IV. Contemporary Working Time Regulation in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 A. Hours of Work and Overtime Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309 B. Statutory Holidays, Paid Time Off (Vacation Pay), and Food Breaks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313 C. Leaves of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 CHAPTER 20
Regulating the End of Employment Contracts . . . . . . . . . . . . . . . . . . . . . . 321 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321 II. Statutory Minimum Notice of Termination Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322 A. Common Features of Statutory Notice of Termination Provisions in Canada . . . . . . . . . . . . . . . . . . . . . . 322 B. The Interrelationship Between Statutory and Contractual Notice of Termination Requirements . . . . . 327 III. Severance Pay (Ontario and Federal) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329 IV. Statutory Protection Against Unfair Dismissal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330 A. Laws That Prohibit Dismissals Contrary to Public Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330 B. Unjust Dismissal Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333 CHAPTER 21
Introduction to Human Rights at Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337 II. A (Very) Brief History of Human Rights Law in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338 III. Common Features of the Canadian Human Rights Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340 A. Anti-Discrimination Provisions Apply to the Entire Life Span of the Employment Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340 B. Human Rights Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342
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C. The Process for Filing, Investigating, and Litigating Human Rights Complaints . . . . . . . . . . . . . . . . . . . 343 D. The Remedial Powers of Human Rights Tribunals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343 E. The Limits on Raising Human Rights Complaints in Multiple Legal Forums . . . . . . . . . . . . . . . . . . . . . . 345 IV. What Is Discrimination? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 CHAPTER 22
The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351 II. A Two-Step Model for Analyzing Human Rights at Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352 III. The Prohibited Grounds of Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354 A. Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 357 B. Sex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359 C. Race, Colour, Ethnic Origin (or Place of Origin), Nationality, Ancestry . . . . . . . . . . . . . . . . . . . . . . . . . . . 361 D. Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362 E. Religion or Creed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363 F. Marital Status, Family Status (and Civil Status in Quebec) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364 G. Sexual Orientation, Gender Identity, and Gender Expression . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366 H. Political Opinion or Belief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366 I. Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366 J. Source of Income, Social Condition, or Receipt of Public Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366 K. Record of Offence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367 IV. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368 CHAPTER 23
The Bona Fide Occupational Requirement, the Duty to Accommodate, and Other Discrimination Defences . . . . . . . . . . . . . . . . 373 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373 II. The Bona Fide Occupational Requirement (BFOR) Defence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374 A. The 1999 “Meiorin Test” for the BFOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 B. The Duty to Accommodate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376 III. The Special Interest Organization Defence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384 IV. Other Defences to Prima Facie Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386 A. The Nepotism Defence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386 B. The Personal Care Attendant Defence, Homeworker Defence, and Domestic Worker Defence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387
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Occupational Health and Safety and Workers’ Compensation . . . . . . . 391 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391 II. A (Very) Brief History of Injury Compensation and Prevention Laws in Canada . . . . . . . . . . . . . . . . . . . . . . 392 III. Contemporary Injury Prevention Legislation: Occupational Health and Safety Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 A. The Internal Responsibility System (IRS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394 B. The Employer’s Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394 C. The Rights and Duties of Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394 D. OHS Enforcement and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397 IV. The Criminal Liability of Organizations for Workplace Injuries and Death . . . . . . . . . . . . . . . . . . . . . . . . . . . 398 V. Workers’ Compensation Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399 A. Injury Causation and the No-Fault Principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399 B. Funding Workers’ Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400 C. Wage-Loss, Rehabilitation, and Survivor Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 D. The Return to Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 VI. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 CHAPTER 25
The Right to Work: Immigration and Mobility Law . . . . . . . . . . . . . . . . . . 407 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407 II. A Brief History of Migrant Workers in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407 III. Migrant Workers and “Flexible Labour” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409 IV. Immigration Status in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411 A. Citizens, Permanent Residents, and Foreign Nationals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411 V. Temporary Work Permit Programs in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412 A. Live-in Caregiver Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412 B. Seasonal Agricultural Worker Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413 C. Temporary Foreign Worker Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413 D. Open Work Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415 VI. The Precarious Status of the Migrant Worker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415
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VII. Employment-Related Legal Entitlements and Migrant Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416 VIII. Federal Regulation of Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418 IX. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419 CHAPTER 26
Privacy Law at Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423 II. Privacy Legislation in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425 A. Provincial Privacy Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425 B. Federal Information Privacy Law: The Federal Personal Information Protection and Electronic Documents Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 C. Human Rights Statutes and Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 III. The Common Law and Privacy at Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430 A. Tort Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430 B. Contract Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432 IV. Privacy in the Unionized Workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433 V. Recent Case Law Related to Privacy and “Reasonableness” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434 VI. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436 CHAPTER 27
Globalization and the Law of Work: International Labour Law and Trade Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439 II. International Labour Law and the ILO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 440 A. The Guiding Philosophy of the ILO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 440 B. “Labour Is Not a Commodity” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 C. What Does the ILO Do? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442 III. Trade Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444 A. Direct Effects of Trade Agreements on Canadian Work Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445 B. Indirect Effects of Trade Agreements on Canadian Work Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448 IV. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452 Selected Cases: Part III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455
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PART IV The Collective Bargaining Regime CHAPTER 28
Introduction to the Collective Bargaining Regime and the Canadian Labour Movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459 II. A Brief Overview of the Common Law’s Treatment of Collective Worker Activities . . . . . . . . . . . . . . . . . . . . 460 III. The Outputs and Legal Institutions of the Collective Bargaining Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465 IV. Who Is Governed by the Collective Bargaining Regime in Canada? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466 V. Canadian Unions Today: A Snapshot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470 VI. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473 Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473 CHAPTER 29
A Brief History of Labour and the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475 II. The Emerging Labour Movement: 1860s to 1910 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476 A. Craft Unionism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476 B. Early Legislation Restricting Unions and Collective Worker Action: Pre-1870s . . . . . . . . . . . . . . . . . . . . 477 C. Early Legislation Regulating and Legitimizing Union Activity: 1870s and Beyond . . . . . . . . . . . . . . . . 479 D. Employer Intransigence and Increasing Worker Militancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481 E. Industrial Disputes Investigations Act, 1907 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482 III. Labour in the Early 20th Century and the Interwar Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482 A. The Great Depression and the Wagner Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484 B. Oshawa General Motors Strike, 1937 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485 IV. The Foundations of the Modern Collective Bargaining Model: PC 1003 and the “Rand Formula” (1940s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486 A. PC 1003 (1944): The Wagner Model Comes to Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486 B. The Rand Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487 V. Public Sector Collective Bargaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488 VI. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489 CHAPTER 30
Why Do Workers Join Unions, and What Effects Do Unions Have on Business? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491 II. Why Do Workers Join Unions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492
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A. Instrumental Reasons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492 B. Economic Reasons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493 III. Other Factors That Influence the Likelihood a Worker Will Join a Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495 A. Personal and Job Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495 B. Socio-economic Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495 C. The Work Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496 IV. How Do Unions Affect Business Outcomes? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496 A. Union Effects on a Company’s Productivity and Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496 B. Union Effects on Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 C. Union Effects on Business Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498 D. Union Effects on Executive Compensation, Civic Engagement, and Income Inequality . . . . . . . . . . . . . 499 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500 CHAPTER 31
The Unionization Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503 II. The Pillars of the Canadian Collective Bargaining Model: Majoritarianism and Exclusivity . . . . . . . . . . . . . 504 III. The Union Organizing Campaign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504 IV. The Union Certification Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506 A. Jurisdiction and “Trade Union” Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506 B. Timeliness of Certification Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507 C. Measuring Employee Support for the Union and Collective Bargaining . . . . . . . . . . . . . . . . . . . . . . . . . 508 V. Voluntary Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519 VI. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521 CHAPTER 32
Unfair Labour Practices and the Right to Organize . . . . . . . . . . . . . . . . . 525
I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525 II. Why a Statutory “Right to Unionize”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525 III. The Substance of Unfair Labour Practice Provisions Regulating Employer Behaviour . . . . . . . . . . . . . . . . . 526 A. The Intimidation and Coercion Prohibition and “Anti-Union Animus” . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 B. The Interference and Domination Prohibition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529 IV. Employer Expression Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532 V. Remedies for Unfair Labour Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535 VI. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537
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xviii Contents Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538 CHAPTER 33
Collective Bargaining and the Making of a Collective Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541 II. The Effects of Union Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541 III. How Collective Bargaining Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542 IV. Types of Legal Rules Regulating Collective Bargaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545 A. Statutory Freeze Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545 B. The Duty to Bargain in Good Faith and Make Reasonable Efforts to Conclude a Collective Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546 V. Broader-Based Collective Bargaining? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552 VI. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 CHAPTER 34
The Law of Industrial Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 II. Mapping the Options for Resolving a Collective Bargaining Deadlock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 III. The “Economic Warfare” Route . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559 A. Union and Employee Weapons: The Strike . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560 B. Employer Weapons: Lockouts and Unilateral Alteration of Terms of Employment . . . . . . . . . . . . . . . . . 570 IV. The Interest Arbitration Route . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576 Appendix: City of Toronto/CUPE, 2011–2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579 CHAPTER 35
The Collective Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585 II. The Legal Status of Collective Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 586 III. Regulation of Collective Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 A. Common Mandatory Collective Agreement Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 B. Default Collective Agreement Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588 C. Prohibited Collective Agreement Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589 IV. The Principle of “Reserved Management Rights” in Collective Agreement Interpretation . . . . . . . . . . . . . . 589 V. Sources of Collective Agreement Terms and Rules of Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591 A. Expressed Collective Agreement Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591
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B. Implied Contract Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594 C. Ancillary Collective Agreement Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598 VI. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602 Appendix: Sample Collective Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605 CHAPTER 36
Grievances, Labour Arbitration, and “Just Cause” for Discipline in the Unionized Workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611 II. The Grievance Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611 A. Filing a Grievance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612 B. Settling or Withdrawing a Grievance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612 III. The Labour Arbitration Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614 IV. The Labour Arbitration Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616 V. Labour Arbitration Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616 VI. The Expanding Scope of Labour Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617 VII. What Is “Just Cause” for Discipline or Dismissal in Unionized Workplaces? . . . . . . . . . . . . . . . . . . . . . . . . . . . 621 A. The Basic Building Blocks of “Just Cause” Arbitration Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622 B. Summary of Specific Grounds for Discharge and Discipline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 626 VIII. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637 CHAPTER 37
The Regulation of Unions: Legal Status, the Duty of Fair Representation, and Decertification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 643 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 643 II. What Is the Legal Status of a Union to Sue and Be Sued in the Common Law Regime? . . . . . . . . . . . . . . . . 644 III. A Union’s Duty of Fair Representation (DFR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645 A. The History of the Duty of Fair Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646 B. The Scope of the Duty of Fair Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646 C. The Substance of the Duty of Fair Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 647 IV. The Decertification of Unions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651 A. Decertification Due to Loss of Majority Employee Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 652 B. Other Reasons for Decertification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655 C. The Effects of a Successful Application for Decertification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 655 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 657 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 657 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 658
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Public Sector Labour Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661 II. Terminology: What Is the “Public Service”? Who Is “the Employer”? Who Is a “Public Servant”? . . . . . . . . 662 A. What Is the “Public Service,” and Who Is “the Employer” in Public Service? . . . . . . . . . . . . . . . . . . . . . . . 662 B. Who Is a “Public Servant”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 664 III. Distinguishing Features of Public Sector Collective Bargaining Law and Policy . . . . . . . . . . . . . . . . . . . . . . 665 A. Essential Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 665 B. Public Sector Strike and Picketing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 668 C. Limits on Topics That Can Be Collectively Bargained . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 668 D. Interest Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 669 E. Bargaining Unit Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672 IV. Implications of Public Servants’ Duty of Fidelity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 675 Selected Cases: Part IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 677
PART V The Canadian Charter of Rights and Freedoms and Work CHAPTER 39
The Canadian Charter of Rights and Freedoms and Work . . . . . . . . . . . 681 I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 681 II. What or Whom Does the Charter Govern? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 682 III. Understanding “Charter Challenges” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 683 A. Step One: Has Government Infringed a Charter Right or Freedom? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684 B. Step Two: If an Infringement Has Occurred, Is It Justified in a Free and Democratic Society? . . . . . . . . 684 IV. How the Charter Has Influenced the Law of Work in Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 686 A. The Charter and the Common Law Regime of Work Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 686 B. The Charter and the Regulatory Standards Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 687 C. The Charter and the Collective Bargaining Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691 V. Chapter Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701 Questions and Issues for Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702 Selected Cases: Part V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GL: 707 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IN: 721 Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CR:733
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Preface This is a different sort of law book. It was born out of frustration with existing legal and industrial relations texts that were, to my mind, unsuitable for the vast majority of people who study the laws that govern work in Canada. Upper-year law school students represent a tiny fraction of Canadians who study work law in post-secondary institutions or for professional purposes. Traditional legal texts are too dense with case law for readers who are new to the field. On the other hand, law books written specifically for legal, business, human resource, and labour relations practitioners lack broader context and, to quote my favourite law teacher, Harry Arthurs, “often degenerate into the mere recitation of rules and … contribute neither to genuine interdisciplinary insights nor to greater citizen involvement in the law.” The Law of Work is written as an invitation to non-lawyers and lawyers alike to engage with the fascinating world of labour and employment law in a more accessible and contextual manner than is typical with most legal texts. It is the first Canadian law text to examine at length all three regimes of work law—common law, regulatory standards, and collective bargaining—from an interdisciplinary perspective that draws on economics, sociology, industrial relations, history, labour, and management studies. The book is written in plain language for easy use in undergraduate and graduate university and college courses outside the law faculty. The first edition was adopted by instructors at universities and colleges across the country in business, human resources, industrial relations, and labour studies. The book has also been adopted for use in Canadian law schools in labour and employment law courses. The extensive endnotes are designed to permit instructors in law schools to easily create a supplement for the text with additional case law and secondary materials. We have reduced the number of chapters from the first edition by merging several chapters and moving a few chapters to an online supplement. This was done to reduce the overall length of the book. Additional revisions have been made based on suggestions from instructors who have adopted the book. The second edition text moves quickly, using many short chapters that cut through huge swaths of historical and contemporary legal developments, allowing instructors to select the topics and level of detail they wish to explore. Part I (Chapters 1 – 4) introduces some key themes, frameworks, and perspectives that inform the parts that follow. The “framework” in Chapter 2 maps the interrelationships that exist throughout the various components of the “law of work” system. This is a descriptive exercise intended to introduce to a new audience what everyone in the field knows: that we cannot understand the laws and norms that govern work in isolation from the broader social, political, cultural, and economic contexts in which they emerge and function. This observation has long guided industrial relations teaching and scholarship. The framework also emphasizes the interrelationships and interactions among the three regimes of work law. A central theme of the book is that the three regimes
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function together to create a unified system of law. While this is not an original insight, few books bring the three regimes together in a coherent format. Part II (Chapters 5–16) explores the common law regime, including contracts and torts. Part III (Chapters 17–27) examines the regulatory regime, including protective employment standards and broader regulation of labour markets. Three supplemental chapters for Part III are also available for instructors who have adopted the book for course use (see “For Instructors” section, below). They are “Intellectual Property Law and Work” by May Cheng, Sarah Goodwin, and Mark Bowman; “Pensions, Insolvencies, Bankruptcies, and the Worker” by Simon Archer; and “Regulating Unemployment” by David Doorey. Part IV (Chapters 28–38) considers the collective bargaining regime and industrial relations, including how laws promote, restrain, and otherwise interact with unions and collective bargaining processes. (Note that the chapters in Parts I and IV are also available in a separate volume, Canadian Labour Relations: Law, Policy, and Practice, 2nd edition, .) Finally, Part V explains the role of the Charter of Rights and Freedoms on the laws of work. I am hopeful that this book will mark a welcome new approach to teaching and learning about how our laws govern the labour relationship. This fully updated second edition introduces exciting new features, including “Applying the Law” practical exercises found at the end of most substantive law chapters. Inside the new “Applying the Law” boxes you will find scenario-based legal problem-solving exercises that allow students to apply the materials to real-life workplace scenarios. Answers are provided in the Instructors’ Manual.
Acknowledgments Many people contributed valuable research, reviewer feedback, or helpful suggestions during the writing of this book, including Bernie Adell, Eric Tucker, Alison Braley-Rattai, Leah Vosko, Cynthia Estlund, Michael Lynk, Rick MacDowell, Pnina Alon-Shenker, Lorne Slotnick, Erin Kuzz, Jim Robbins, Morley Gunderson, Mark Rowlinson, Armine Yalnizyan, Gail Misra, Rafael Gomez, Andrew Pinto, Chris Sweeney, Mitchell Doorey, Ryan Edmonds, Jim Stanford, Awale Deria, Nick Ruhloff, Judy Fudge, Christine Sesek, Monica Hypher, and The Junction Pigeons. Thanks are also due to reviewers of various parts of this project: Pnina Alon-Shenker (Ryerson University), Nicole Barnabé (University of Manitoba), Alec Gallacher (University of Toronto), Dan McGarry (Seneca College), and Chantal Westgate (McGill University). As noted below, several chapters in this book were written by some of Canada’s leading scholars and practitioners in the field, and their expertise, cooperation, and enthusiasm have been much appreciated. The book is much stronger for their contributions. Special thanks are owed to Harry Arthurs, who is the inspiration for this text. Harry provided helpful suggestions in relation to this project, but more generally has offered unwavering support and encouragement since my law school days over two decades ago. I also want to thank the Emond Publishing team for their hard work and for sharing my vision for the book. In particular, great thanks are due to Mike Thompson and Paul Emond for their enthusiastic support for the project and their many contributions to the book, to my copy editor Leanne Rancourt, and to the rest of the team, particularly Kelly Dickson, Anna Killen, Katherine Goodes, and Darryl Kamo.
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Preface xxiii
Finally, my greatest thanks are reserved for my wonderful family. I am the luckiest man alive that fate and the alphabet placed me beside my spouse, May Cheng, at the British Columbia call to the bar ceremony over 20 years ago. Her boundless positive energy inspires me every day, and this book and my new career as an academic would not have been possible without her. And, of course, to my beautiful children, Amanda and Dylan, who make every day special.
Dedication This book is dedicated to my parents and to my brother Stephen. We miss you. David J. Doorey Toronto
For Instructors For additional information and resources, please visit the accompanying website for this book at www.emond.ca/LW2. The Updates tab on the site provides links to the author’s Law of Work blog, organized to reflect the thematic structure of this book, and featuring breaking news, updates, commentary, and more. For information on obtaining the teaching resources available to instructors who have chosen this book for their courses, visit the For Instructors tab on the book’s website, or contact your Emond Publishing representative for more information. These teaching resources include PowerPoint slides, a test bank, role playing exercises and instructions for a collective bargaining simulation, an image bank, three supplemental chapters for Part III of this text (as described above), and more.
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About the Authors David J. Doorey is an associate professor of work law and industrial relations at York University and academic director of Osgoode Hall Law School’s professional part-time LLM program, specializing in labour and employment law. He is a senior research associate at Harvard Law School’s Labor and Worklife Program, a member of the International Committee on Harvard’s Clean Slate Project on labour law reform, and he has been a visiting scholar at the University of Toronto Faculty of Law and Centre for Industrial Relations and Human Resources. He is a recipient of the prestigious Dean’s Award for Excellence in Teaching at York and is a regular media commentator on work law and industrial relations. His scholarly articles have been published in leading Canadian and foreign law journals, and he is articles review editor of the Canadian Labour and Employment Law Journal. He was a recipient of the Morley Gunderson Prize and the H.D. Woods Prize for Outstanding contributions to Canadian industrial relations and the David Watson Memorial Award from the Queen’s Law Journal for the law journal article making the most significant contribution to legal scholarship. His popular Law of Work blog has been awarded the Fodden Award for the Best Law Blog in Canada and was an inaugural inductee into the Canadian Law Blog Awards Hall of Fame in 2016. He was called to the law bars of Ontario and British Columbia and practised labour law on behalf of employees and unions in both provinces before returning to academia. Professor Doorey was educated at the University of Toronto (BA, MIR), London School of Economics and Political Science (LLM Labour Law), and Osgoode Hall Law School (JD, PhD). He lives in Toronto’s west end and in Prince Edward County with his family and Australian Labradoodle, and he coaches kids’ hockey.
Contributors
Simon Archer (online chapter) is a partner with Goldblatt Partners LLP and co-director of the Centre for Comparative Research in Law and Political Economy at Osgoode Hall Law School, York University. Bob Barnetson (Chapter 24) is a professor of labour relations at Athabasca University. Alison Braley-Rattai (Chapter 29) is an assistant professor in the Department of Labour Studies at Brock University. May Cheng (online chapter) is a partner with Osler, Hoskin & Harcourt LLP in Toronto. Sarah Goodwin and Mark Bowman are associates with Fasken Martineau DuMoulin LLP. John Craig (Chapter 26) is a partner with Fasken Martineau DuMoulin LLP in Toronto. Justine Lindner is an associate lawyer with McCarthy Tétrault LLP in Toronto.
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xxvi About the Authors
Michael Lynk (Chapter 23) is an associate professor of labour law in the Faculty of Law at Western University. Sarah Marsden (Chapter 25) is an assistant professor in the Faculty of Law at Thompson Rivers University. Claire Mummé (Chapter 5) is an assistant professor of labour law in the Faculty of Law at the University of Windsor. Benjamin Oliphant (Chapter 39) is a lawyer with Gall Legge Grant & Zwack LLP in Vancouver in Vancouver and an adjunct professor in the Faculty of Law at the University of British Columbia. Christopher C. Rootham (Chapter 38) is a partner with Nelligan O’Brien Payne LLP and teaches at the University of Ottawa. Scott Walsworth (Chapter 30) is an associate professor of industrial relations at the Edwards School of Business, University of Saskatchewan.
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The Law of Work: A Timeline LEGEND RED = Regulatory Regime BLUE = Collective Bargaining Regime
2010
GREEN = Common Law Regime
2000
NAFTA (1992) 1990
Canada – US Free Trade Agreement (1988)
1980
• • • •
Merrifield v. Canada (Attorney General) (2019): Ont. CA rules there is no “tort of harassment” in Canadian common law (2019) SFL v. Saskatchewan (2015): SCC recognizes a limited Charter-protected right to strike “Gender identity” or “gender expression” added to some human rights statutes (2012 – 2015) Jones v. Tsige (2012): Ont. CA recognizes privacy tort of “intrusion upon seclusion”
• • • •
Honda Canada v. Keays (2008): SCC reforms “bad faith discharge” damages law BC Health Services (2007): Charter protects collective bargaining Parry Sound (2003): Labour arbitrators must apply employment-related statutes RWDSU, Local 558 v. Pepsi-Cola Canada (2002): Secondary picketing is legal per se
• Dunmore v. Ontario (2001): Expanded scope of section 2(d) of the Charter • McKinley v. BC Tel (2001): SCC explains test for “summary dismissal” • The Meiorin decision on the BFOR defence to employment discrimination (1999) • Vriend v. Alberta (1998): Sexual orientation read into human rights statutes • Wallace v. UGG (1997): Bad faith in the manner in which an employee is terminated • Farber v. Royal Trust Co. (1997): SCC explains the law of constructive dismissal • Weber v. Ontario Hydro (1995): Expanded jurisdiction of labour arbitrators • Machtinger v. HOJ Industries (1992): Statutory and common law notices • Central Okanagan School District, No. 23 v. Renaud (1992): The duty to accommodate • CADP v. Alberta (1990): Duty to accommodate religion • “Labour Trilogy” decisions (1987): No Charter right to collective bargaining, strike • First proactive pay equity acts (Manitoba, 1986; Ontario, 1987) • RWDSU, Local 580 v. Dolphin Delivery (1986): Charter and private common law disputes • OHRC v. Simpsons-Sears (1985): “Indirect discrimination” recognized • Canadian Charter of Rights and Freedoms (1982) • Wm. Scott & Co. (Re) (1977): Arbitral test applied in “just cause” for discipline or dismissal cases • Canadian Human Rights Act (1977)
1970
1960
ILO Equal Remuneration Convention (1951) ILO Convention 98 (1949)
1950
ILO Convention 87 (1948) UN Universal Declaration of Human Rights (1948) Second World War (1939 – 1945)
1940
American Wagner Act (1935)
• Federal wage controls legislation for public sector and some private sector workers (1975) • Occupational health and safety statutes • Maternity leave laws (early 1970s) • First duty of fair representation laws (Ontario, 1971) • Severance pay law (federal, 1970) • Woods Task Force on Labour Relations (1967) • R. v. Arthurs, Ex p. Port Arthur Shipbuilding Co. (1967): Summary dismissal without notice • Federal Public Sector Staff Relations Act (1967) • Russel Steel (1966): Reserved management rights doctrine in labour arbitration • Statutory notice of termination laws (mid to late 1960s) • Hersees of Woodstock v. Goldstein (1963): Secondary picketing is illegal per se • Ontario Human Rights Code (1962) • Canadian Bill of Rights (1960) • Bardal v. Globe & Mail Ltd. (1960): Criteria for assessing “reasonable notice” • Standard 8-hour day, 40-hour week legislation in some provinces • Canadian Labour Congress formed (1956) • Female Employees Fair Remuneration Act (Ontario, 1951) • Fair employment practices laws banning discriminatory hiring (early 1950s) • First racial discrimination laws (Ontario, 1944; Saskatchewan, 1947) • “Rand Formula” award (1946) • Paid vacation laws (1944 – 1950) • PC 1003: Template for modern collective bargaining laws (1944) • Christie v. The York Corporation (1940): Discrimination in contract permissible • Unemployment Insurance Act (1940) • Carter v. Bell & Sons (Canada) Ltd. (1936): Termination with “reasonable notice” • “On to Ottawa Trek” (1935) • Men’s minimum wage, 8-hour day legislated in various provinces
Great Depression (1929 – 1933)
1930
ILO Minimum Wage Fixing Convention (1928)
ILO Hours of Work Convention (1919)
1920
• Unemployment “relief” camps (1930)
• TEC v. Snider (1925): Provinces have primary jurisdiction over work law • First minimum wage law for men (BC, 1925) • First 8-hour day, 48-hour week law (BC, 1923) • Winnipeg General Strike (1919) • Early minimum wage laws for females only (1917 – 1920)
ILO formed (1919)
• Workmen’s compensation legislation (1914 – 1920) • Meredith Commission on Workers’ Compensation (1913)
First World War (1914 – 1918) 1910
• Industrial Disputes Investigation Act (1907): Mandatory government conciliation • Lord’s Day Act (1906): Prohibited conducting of business on Sundays • Railway Labour Disputes Act (1903): Early labour dispute conciliation law
1900 10
15
20
25
30
35
Union density, 1920–present (% of non-agricultural paid employees in unions)
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Part I
The Law of Work: Themes, Frameworks, and Perspectives CHAPTER 1
Canadian Law of Work in a Nutshell
CHAPTER 2
A Framework for Analyzing the Law of Work
CHAPTER 3
Key Perspectives That Shape the Law of Work
CHAPTER 4
What Is Employment?
Selected Cases: Part I
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CHAPTER 1
Canadian Law of Work in a Nutshell LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 3 II. The Three Regimes of Work Law 4 A. The Common Law Regime (Part II of This Text) 4 B. The Regulatory Regime (Part III of This Text) 9 C. The Collective Bargaining Regime (Part IV of This Text) 11 III. Chapter Summary 12 Questions and Issues for Discussion 13 Exercise 13 Notes and References 14
• Describe the three regimes that comprise the law of work in Canada. • Describe the two branches of the common law that regulate work and employment. • Understand the levels of courts in Canada. • Define precedent and the principle of stare decisis. • Describe the role of the courts, governments, and expert administrative tribunals in the law of work. • Recognize how the concepts of freedom of contract and inequality of bargaining power have influenced the development of the law of work in Canada.
I. Introduction At the beginning of a long journey, it is useful to survey a topographical map of the terrain to come—to study the forest canopy before entering the thicket. We can see patterns from above not apparent from the forest floor. It helps to have a sense of where we are going so that we can anticipate what is to come. Therefore, we will begin our journey by looking down at a map of sorts: a map of the law of work in Canada. This map charts the manner in which our legal system regulates labour markets and the buying and selling of labour. For over a century, legal scholars have studied these laws. In truth, though, scholars have mostly been interested in work performed through one specific organizational form: employment. Workers can of course sell their labour through arrangements other than employment. I once contracted with a company called High Park Building Services Inc. (or HPBS) to build me a backyard deck. It turned out that HPBS was really just a guy named Jason Phillips who was between jobs and who had set up a company so that he could use his carpentry skills to earn some money. Whether I hired Jason as my employee or contracted with a company called HPBS is crucially important to how the law treats our relationship. If Jason is my employee, then all of the laws that govern employment considered in this text apply to our relationship. But if my contract is with the company HPBS, maybe none of them do. It’s the same work in either case, but the legal rules that govern the work are fundamentally different depending on how our relationship is characterized. Whether so much should depend on this fine distinction between employment and not employment is one of the great debates in our legal field.1 We will revisit this debate at employment: An organizational form through which a person (employee) sells their labour power to a buyer of labour (employer) in exchange for value and in which the relationship is governed by an employment contract. 3
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4 Part I The Law of Work: Themes, Frameworks, and Perspectives various points throughout this text, and we will explore how the law draws the distinction between an employee and a worker who is not an employee in Chapter 4. The reason for mentioning the “employment” versus “not employment” distinction at this early stage is to explain the boundaries of our map of the law of work set out in this chapter. It is a high-level map of how Canadian law governs the employment relationship. It does so through three distinct legal regimes: (1) the common law of employment; (2) regulatory law; and (3) collective bargaining law. This chapter provides an overview of the key components of the legal system that governs employment in Canada, outside of Quebec. Quebec is a special case because its legal system, including much of the law that governs the employment relationship, is based on the French model of civil law rather than the British-based common law system applied elsewhere in Canada. Therefore, while we will occasionally consider cases and regulations originating in Quebec in this text, our focus will be on the legal system that governs the rest of Canada.
II. The Three Regimes of Work Law As noted above, the system of laws that governs employment in Canada (outside of Quebec) consists of three distinct yet overlapping regimes (see Figure 1.1): 1. The common law regime (covered in Part II). 2. The regulatory regime (covered in Part III). 3. The collective bargaining regime (covered in Part IV). FIGURE 1.1 Mapping the Three Regimes of Work Law
Common Law Regime
Regulatory Regime
Collective Bargaining Regime
What follows is a brief introduction to each of these regimes. The remainder of the text is devoted to filling in the details.
A. The Common Law Regime (Part II of This Text) The common law regime comprises both the law of contracts and the law of torts.
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Chapter 1 Canadian Law of Work in a Nutshell 5
1. The Law of Contracts The cornerstone of the common law regime is the contract and, in particular, employment contracts between employers and individual (non-union) employees. A contract is a legally binding agreement in which two or more parties make promises to provide benefits to one another. In a typical employment contract, the employee promises to provide labour power in exchange for monetary compensation in the form of a wage paid by the employer, and sometimes other benefits, such as health benefits and pension contributions. The two parties discuss, or negotiate, what the terms of the contract will be, and their agreement becomes a contract, a source of legal rules by which the parties are to be governed.
BOX 1.1 » TALKING WORK LAW Understanding Legal Terminology In Canada and the United States, the common law regime and the regulatory standards regime are commonly grouped together under the label employment law. The legal regime that governs collective bargaining processes, by contrast, is usually referred to as labour law. This text uses the terms work law and law of work synonymously to refer to the entire system of legal rules comprising all three legal regimes.
While the law of contracts has deep roots in the common law system, dating back centuries in Britain, the law of employment contracts dates only from the late 1800s in Canada.2 Prior to that time, the relationship between buyers and sellers of labour was dealt with under a branch of law known as master and servant law and through a mix of contract, property, criminal, and tort law.3 We will learn more about master and servant law later in the text, particularly in Chapter 5, as well as tort law. For now, it is sufficient to note that master and servant law permitted workers (“servants”) to recover unpaid wages from their employers (“masters”), but also allowed for workers who quit a job to be imprisoned.4 Legal historians describe master and servant law as a system of rules based on “status,” by which they mean that workers were considered subservient to their masters, and therefore subject to their masters’ largely unquestioned authority. The master and servant regime was exported from Britain into parts of early Canada, but by the early 1900s it had been largely supplanted by the emerging common law of the employment contract and the principle of freedom of contract.5 “Freedom of contract” is a powerful idea. Its supporters argue that allowing employees and employers to “negotiate” the conditions of employment leads to the fairest and most efficient outcomes for the parties, the economy, and society as a whole. Professor Hugh Collins of Oxford University summarized the central arguments made in favour of freedom of contract as a means of coordinating employment relations as follows: contract: A legally binding agreement consisting of reciprocal promises between two or more parties. employment contract: A contract between an employer and an individual employee that defines the conditions under which the employee will provide labour to the employer in exchange for a monetary benefit (wages, salary), and sometimes other benefits (e.g., health benefits). An employment contract may be written or oral. common law: A system of judge-made rules originating in England around the 12th century, and inherited by Canada as a British colony, that uses a precedent-based approach to case law. Earlier decisions dealing with similar facts or legal issues guide later decisions in an attempt to create legal predictability. However, common law rules can and often do evolve as social values change.
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6 Part I The Law of Work: Themes, Frameworks, and Perspectives The principle of freedom of contract removes the possibility of workers being treated exactly like commodities, because by giving them the power to choose, the principle ensures the elementary respect for the dignity, autonomy, and equality of citizens. So too the principle ensures a measure of justice and fairness by permitting everyone to seek work without discrimination and obstructions to competition. Furthermore, freedom of contract permits the parties to regulate their own relationship in order to deal with the special difficulties presented by the unique combination of characteristics of the employment relationship. The parties are likely to have the best information about where their interests lie, and therefore they should be permitted to forge a compromise between their competing interests without interference by a paternalistic state.6
Occasionally, disputes arise between employers and employees in which one of the parties accuses the other of violating the employment contract. Those disputes may end up in a courtroom in front of a judge if one party sues the other party for breach of contract. If the lawsuit does not settle (most do), a judge will conduct a trial. At the trial, the parties will present a story to the judge in the form of documentary evidence and witness testimonies, recounting versions of what happened leading up to the disagreement. The judge must then decide whether the contract was breached and, if so, what the guilty party should be ordered to do as a remedy for the breach.
BOX 1.2 » TALKING WORK LAW The Law of Work and Higher Education Work law is taught to thousands of students each year in dozens of Canadian universities and colleges, including in law schools but also in programs in business and commerce, human resource management, legal studies, labour studies, industrial relations, and paralegal training. The number of students learning work law in programs outside of law schools far outnumbers those in law schools. This is not surprising with so many professions that require knowledge of work laws. Only lawyers who have attended law school and passed the required bar exams can practise work law as a profession. In Canada, there are 17 law schools that offer a Juris Doctor (JD) or Bachelor of Laws (LLB) in the common law model, four that offer degrees only in the civil law model used in Quebec, and two (University of Ottawa and McGill University) that offer programs in both legal systems. Each law school has its own law library. The largest law library in Canada is housed at Osgoode Hall Law School at York University in Toronto, with over 800,000 volumes. Each province’s professional legal body, or “law society,” also has a law library. In the past, lawyers
needed to visit a law library to conduct research on old cases. Nowadays, much if not all of that legal research can be conducted electronically through the use of both free (CanLII) and fee-based services (Lexis Advance Quicklaw). The exercise at the end of this chapter gives you the opportunity to practise finding common law case law using CanLII (), which provides free online access to Canadian case law and legislation databases.
The Great Library at Osgoode Hall Law School in Toronto.
breach of contract: Occurs when a party to a contract violates one or more terms of a legally binding contract. remedy: The means by which a court or tribunal enforces its decision, such as by ordering the guilty party to pay monetary damages or take such further action the court deems appropriate to compensate victims for loss or deter future wrongful conduct.
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Chapter 1 Canadian Law of Work in a Nutshell 7
The judge writes a decision that is distributed to the parties and then published in legal case digests and, nowadays, electronic case databases. At that point, the decision becomes part of the common law of employment contracts, a large body of legal decisions about employment contracts dating back to the beginning of the employment model in 19th-century Britain. The common law of employment contracts in Canada now comprises hundreds of thousands of decided cases. Lawyers research case law in search of decisions and reasoning that support their arguments. They also must be prepared to distinguish cases that do not support their argument—to explain to the judge why a previous decision relied on by their opponent is different from the one they are dealing with now. This process is necessary because the common law system operates on a precedent-based system known as stare decisis, a Latin phrase meaning, loosely, “to stand by a previous decision.” Guided by a desire for the law to be predictable, the principle of stare decisis instructs judges to follow the reasoning and outcomes in earlier cases that dealt with similar legal issues and facts. If the earlier decision was decided by a higher level of court from the same jurisdiction (see Figure 1.2 for the levels of Canadian courts), then the reasoning in that decision is a binding precedent. This means that a lower court judge who later deals with a lawsuit involving the same, or very similar, factual and legal circumstances must apply the same legal reasoning applied by the higher court, even if they do not agree with it. Decisions that are not binding precedents can still have “precedent” value. Since the common law system prefers predictability, judges usually follow earlier decisions, even those that are not issued by a binding higher court, unless they distinguish the facts or legal issues decided in the earlier decision or they rule that the earlier decision was just plain wrong.
2. The Law of Torts Torts are the second branch of the common law. A tort is a legal wrong defined by judges to allow a person to recover damages for harm caused by the actions of another person when the harm caused does not violate a contract or government statute.7 Many of the torts that are applied in Canada were initially developed years ago by British judges. You have likely heard of some of them, even if you did not know they were called torts: nuisance, trespass, deceit, negligence, conspiracy, defamation, and assault and battery. All of these torts have potential application to the relationships that structure work in our society. Other less well-known yet important torts with application to work include intentional infliction of mental suffering and negligent misrepresentation. Chapter 16 explores some of the most important applications of tort law to the workplace in the common law regime. distinguish: To explain how a prior legal decision dealt with facts or legal issues that are different from the facts or issues in the current case. precedent: An earlier decision by a judge that dealt with the same, or very similar, facts and legal issues as those before a judge in the current case. stare decisis: A Latin term meaning “to stand by a previous decision.” It is a guiding principle in the common law regime. jurisdiction: The scope of authority over which a government, court, or expert administrative power has the power to govern. binding precedent (or binding decision): An earlier decision by a court of higher ranking dealing with the same legal issue in a case that comes before a lower court judge. The lower court judge is required to apply the same reasoning and legal test applied by the higher court. tort: A type of wrongful act done by one person to another (or to another’s property) that judges have recognized as legally actionable. Examples are nuisance, trespass, negligence, and conspiracy. statute: A law, or legislation, produced by a government that includes rules that regulate the conduct of business and people. An example is the Ontario Employment Standards Act, 2000.
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8 Part I The Law of Work: Themes, Frameworks, and Perspectives FIGURE 1.2 Levels of Canadian Courts Supreme Court of Canada (SCC) Sits in Ottawa. Hears final appeals from all jurisdictions in Canada. Court must first grant “leave” (permission) to hear an appeal.
Courts of Appeal Each province and territory (except Nunavut) has its own Court of Appeal. There is also a Federal Court of Appeal that hears appeals from lower-level federal courts and tribunals.
Courts of First Instance (Lower Courts) These courts have different names across the country, and, other than in Nunavut, where there is a unified Court of Superior Justice, the courts of first instance are usually further subdivided into inferior and superior courts, which have jurisdiction over different subject matter. Judges in the inferior courts are appointed by the provinces, whereas superior court judges are appointed by the federal government. Superior courts have general authority to hear most private lawsuits and serious criminal matters, while inferior courts are usually assigned less serious criminal matters, traffic violations, and some specialized subject matters, such as many family law matters. Most (though not all) employment-related matters are heard initially in the superior courts of the jurisdiction in which the legal proceeding is launched. Here is a quick overview of provincial and territorial courts of first instance: JURISDICTION
INFERIOR COURT
SUPERIOR COURT
Alberta
Provincial Court
Queen’s Bench
British Columbia
Provincial Court
Supreme Court
Manitoba
Provincial Court
Queen’s Bench
New Brunswick
Provincial Court
Queen’s Bench
Newfoundland & Labrador
Provincial Court
Supreme Court
Northwest Territories
Territorial Court
Supreme Court
Nova Scotia
Provincial Court
Supreme Court
Ontario
Ontario Court of Justice
Superior Court of Justice
Prince Edward Island
Provincial Court
Supreme Court
Quebec
Court of Quebec
Superior Court
Saskatchewan
Provincial Court
Queen’s Bench
Yukon
Territorial Court
Supreme Court
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Chapter 1 Canadian Law of Work in a Nutshell 9
The usual remedy for a tort violation is monetary damages, but judges can also order injunctions to remedy a tort. An injunction is an order to stop doing something unlawful. As we will learn in Part IV, torts and the courts’ use of injunctions have played an important role throughout history in restricting collective activities of workers, such as strikes and picketing, aimed at winning better working conditions.8
B. The Regulatory Regime (Part III of This Text) As noted above, the common law regime is guided by the powerful claim that “freedom of contract” advances individual liberty while producing the most efficient and desirable distribution of skills and resources in a society. On this basis, defenders of freedom of contract argue that the courts and governments should limit their intervention in employment relations to enforcing contracts between employers and individual workers.9 However, this position has long been the subject of intense debate and dissent. Most of the time, employers enjoy far superior bargaining power as compared with employees and are therefore able to unilaterally fix the terms of the contract. This “inequality of bargaining power” leaves most employees with a simple choice of whether to accept or not accept the terms the employer offers. No negotiation takes place at all. Think about your job, if you have one. Did you engage in negotiations with your employer at the time you were hired, or did you just accept whatever wage rate and other conditions your employer provided? Employees of Walmart or Tim Hortons do not normally negotiate over starting wages or health benefits. Typically, the employers present a standard form employment contract (if they even bother to put anything in writing), and the worker signs it. Sometimes a person has multiple job possibilities, so they may be able to reject a poor offer by one or more employers. However, often, and particularly in periods of high unemployment and for jobs requiring low skills, far more workers are seeking work than there are jobs available. Since most workers require income from work to survive, the option of not accepting a job is often not a realistic one. In most cases, workers need a job far more than an employer needs any particular worker. The fact that the more powerful party—employers—can almost always fix the terms of the employment contract unilaterally is not a new insight. Adam Smith (1723 – 1790) knew it, as did Karl Marx (1818 – 1883), two great thinkers with very different perspectives on the role of markets, law, and work.10 German sociologist Max Weber (1864 – 1920) summarized the point as follows: The formal right of a worker to enter into any contract whatsoever with any employer whatsoever does not in practice represent for the employment seeker even the slightest freedom in the determination of his own conditions of work, and it does not guarantee him any influence in the process. It rather means, primarily, that the more powerful party in the market, i.e., normally the employer, has the possibility to set the terms, to offer a job “take it or leave it,” and given the normally more pressing economic need of the worker, to impose his terms upon him.11
The Supreme Court of Canada has recognized that employment contracts are distinguishable from typical commercial contracts by the inherent inequality of bargaining power involved. For example, in the 1992 case of Machtinger v. HOJ Industries, the court agreed with the following observations by Professor Katherine Swinton: [T]he terms of the employment contract rarely result from an exercise of free bargaining power in the way that the paradigm commercial exchange between two traders does. Individual employees on the whole lack both the bargaining power and the information necessary to achieve more favourable contract provisions than those offered by the employer, particularly with regard to tenure.12
injunction: A legal order issued by a judge prohibiting a person from engaging in a particular course of action, such as breaching a contract, committing a tort, or violating a statute.
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10 Part I The Law of Work: Themes, Frameworks, and Perspectives The claim that employees usually are the weaker party in the employment contract is not very controversial. However, whether this inequality of bargaining power is problematic and creates a need for legislative intervention to protect employees is one of the great debates in work law policy.13 We will explore it throughout this text. However, it was important to introduce the debate at this early point in order to understand the origins of the second regime of work law, the regulatory standards regime. In practice, employers often have not exercised their superior power in a responsible manner deemed acceptable to society. In the early days of industrial capitalism in Canada, for example, before much employment protection legislation existed, working conditions were often horrific, characterized by dangerous practices, long hours, low pay, and verbal and physical abuse at the hands of employers. Consider the following description of working conditions in some late 19th-century Canadian factories, as described by a commissioner in a government inquiry: Many children of tender age, some of them not more than nine years old, were employed in cotton, glass, tobacco, and cigar factories. … Some of them worked from six o’clock in the morning till six in the evening, with less than an hour for dinner, others worked from seven in the evening till six in the morning. … The darkest pages in the testimony … are those recording the beating and imprisonment of children employed in factories. Your Commissioners earnestly hope that these barbarous practices may be removed, and such treatment made a penal offence, so that Canadians may no longer rest under the reproach that the lash and the dungeon are accompaniments of manufacturing industry in the Dominion.14
The sorts of working conditions described in the preceding passage led governments across Canada to intervene in freedom of contract by enacting legislation (statutes and regulations) that regulates working conditions. In fact, there has never been a time in Canada when employment was purely a matter of free contracting; for as long as employment has existed, so too has employment regulation. Nowadays, employment is among the most regulated of all relationships in society. In Part III, we will examine government legislation that regulates wages and working time, workplace health and safety, human rights and discrimination, workers’ compensation, and other forms of legislation that aim to protect employees. Legislation that has as its central purpose the protection of vulnerable employees from the superior bargaining power of employers is known as protective standards regulation.15 There are other types of legislation relevant to the law of work that do not specifically target vulnerable workers but nevertheless affect labour markets and the employment relationship in important ways. For example, vulnerable employees are not the focus of intellectual property (IP) legislation, but IP laws affect who owns the product of a worker’s labour. Immigration laws determine who is entitled to work in Canada. Legislation governing bankruptcies, privacy, pensions, and global trade is not directly or solely directed at the employment relationship, but these laws have important effects on that relationship. Thus, the law of work includes both protective standards regulation and the broader system of legal rules that have important effects on labour markets. We consider both types of legislation in Part III. regulations: Government-made detailed rules introduced as a supplement to, and pursuant to authority created in, a statute. For example, the Ontario Employment Standards Act, 2000 requires that employers pay at least “the prescribed minimum wage,” but does not say what that wage rate is. That act gives the government the right to introduce regulations (in s. 141), and one regulation (O. Reg. 285/01) sets out the precise amount of the minimum wage. protective standards regulation: Government regulation designed primarily to protect employees by imposing mandatory standards, such as minimum contract requirements and safety rules.
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Chapter 1 Canadian Law of Work in a Nutshell 11
Regulation is usually enforced by a combination of government inspections and complaints filed by people who believe their statutory rights have been violated. The task of hearing those complaints falls to expert administrative tribunals. Tribunals are created by statutes and are not the same as courts, although they sometimes function in a similar manner. Governments staff tribunals with experts in the field, who help employers and employees resolve disputes through mediation. When settlements cannot be obtained, tribunals hold hearings and issue legally binding decisions. By assigning authority over employment statutes to expert administrative tribunals, governments also limit the volume of employment-related disputes going to the courts. For example, one of the busiest administrative tribunals in Canada is the Ontario Labour Relations Board, which has authority to interpret several employment-related statutes, including the provincial Labour Relations Act and Employment Standards Act. The adjudicators are known as chairs or vice-chairs, and almost all are former practising lawyers in the field. The adjudicators conduct hearings and issue decisions resolving disputes arising under those statutes. Similar tribunals exist in every jurisdiction in Canada. The courts play a smaller role in the regulatory standards regime than in the common law regime. The role of the courts is limited mostly to reviewing tribunal decisions to ensure that the tribunal does not exceed the authority granted it under its constituting statute, a process known as judicial review.
C. The Collective Bargaining Regime (Part IV of This Text) The third regime of work law, the collective bargaining regime, is also primarily a response to the imbalance of power in the employment relationship. However, rather than impose mandatory rules (“pay at least the minimum wage,” “do not work more than 48 hours in a week,” “do not pay women less than men for the same work”) like the regulatory standards regime, the collective bargaining regime addresses the inequality of bargaining power by conferring more power on workers so that they can bargain a better deal for themselves. Whereas a single worker acting alone usually lacks sufficient power to bargain with their employer over working conditions, a group of workers acting in combination often does have sufficient power to bargain. If those workers, acting as a collective, can withhold their labour (strike) as bargaining leverage, then their bargaining power grows substantially. The collective bargaining regime is concerned with the processes through which workers act collectively in pursuit of higher wages and better benefits and working conditions. Otto KahnFreund (1900 – 1979), who was professor of law at Oxford University, provided a now often-cited justification for labour (collective bargaining) laws: In its inception [the employment relationship] is an act of submission, in its operation it is a condition of subordination, however much the submission and the subordination may be concealed by the indispensable figment of the legal mind known as the “contract of employment.” The main object of labour [collective bargaining] law has always been, and we venture to say will always be, to be a countervailing force to counteract the inequality of bargaining power which is inherent and must be inherent in the employment relationship.16
expert administrative tribunals: Decision-making bodies created by a government statute and given responsibility for interpreting and enforcing one or more statutes and any regulations pursuant to that statute. judicial review: The process through which a decision of an expert administrative tribunal is appealed to a court on the basis that the tribunal exceeded its authority (or jurisdiction) as defined in the statute that created it or that the tribunal’s decision was wrong. How much deference a court must give to the expert tribunal’s decision is a complex question that is considered in a field of law known as administrative law. strike: Legislation can assign a particular definition to the word strike. In Canada, strikes are usually defined to include both (1) a collective refusal by employees to perform work, and (2) a deliberate collective slowdown by workers designed to restrict the output of an employer (commonly known as a work to rule).
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12 Part I The Law of Work: Themes, Frameworks, and Perspectives This idea that collective bargaining produces a “countervailing force” that permits employees to deal with the employer on a more equal footing is central to the collective bargaining regime. Whether law should encourage or prohibit collective worker action is one of the great enduring debates in labour law and policy. We will explore these issues in detail in Part IV. The collective bargaining regime comprises three categories of legal rules: 1. Government-made statutory rules found in labour relations statutes regulating the formation and administration of unions, collective bargaining, and industrial conflict, enforced by expert administrative tribunals called labour relations boards. 2. Collectively bargained rules found in collective agreements. Employers and unions usually negotiate these, although in some cases collective agreements are imposed in whole or in part by interest arbitrators. Collective agreement rules are enforced by either labour boards or expert labour arbitrators. 3. Judge-made rules based in common law torts that mostly apply to labour picketing and strikes, which are issued and enforced by the courts. All three categories of rules function together to create a complex, multi-layered legal model that seeks to balance the sometimes overlapping but often competing interests of workers and employers and their associations, suppliers, consumers, the broader society, and the economy in general. Canadian government support for collective bargaining has ebbed and flowed dramatically over the past century, from outright hostility prior to the 1940s to cautious support in the decades following the Second World War to resistance again, at least by conservative political parties, since the 1980s.17 We will discuss these trends in greater detail in Part IV, including ways in which law and labour policy is used by governments to promote or discourage the spread of collective bargaining. Once workers are covered by a collective agreement, the legal rules of contract interpretation applied by judges to individual employment contracts in the common law regime, introduced above and explored in Part II of the text, no longer apply. The collective bargaining regime replaces the common law of the employment contract for unionized workers. Canadian labour law statutes require that all disputes between unions and employers about the interpretation and application of collective agreements be resolved by labour arbitrators rather than judges. Since the 1940s, labour arbitrators have developed a large body of labour arbitration case law, and many of the rules of interpretation that are applied to collective agreements are different from those applied to individual employment contracts by judges in the common law regime, as we will learn in Part IV of this text.18
III. Chapter Summary This chapter introduced the three regimes of work law that regulate the employment relationship in Canada at a general level, as if we were looking down at a topographical map of the law. We can summarize what we learned as follows:
collective agreement: A contract between an employer (or employers) and a trade union (or trade unions) that sets out the conditions of employment for a group of employees. interest arbitrator: An individual or three-person expert arbitration board tasked with writing the terms of a collective agreement when the union and employer are unable to reach agreement through voluntary collective bargaining. labour arbitrator: An individual or three-person expert arbitration panel appointed to decide disputes over the application and interpretation of collective agreements.
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Chapter 1 Canadian Law of Work in a Nutshell 13
• The common law regime is concerned with legal rules found in employment contracts between individual employees and employers, including rules judges have developed over the years when interpreting those contracts, and with another branch of judge-made legal rules known as torts. We learn more about this regime in Part II. • The regulatory regime is concerned with rules governing the work relationship—and employment contracts in particular—created by governments and codified in legislation (statutes and regulations). The regulatory regime includes both legislation designed to protect vulnerable employees and legislation that affects labour markets in substantial ways. Those rules are interpreted by expert administrative tribunals created by governments for that purpose. We learn more about this regime in Part III. • The collective bargaining regime is concerned with three categories of legal rules. The first category comprises government-made statutory rules that regulate areas including union formation, collective bargaining processes, and industrial conflict. The second comprises collective bargaining rules found in collective agreements, which are negotiated by unions (on behalf of employees) and employers (and sometimes employer associations). Labour arbitrators decide collective agreement disputes, guided by a large volume of labour arbitration jurisprudence developed since the 1940s. The third comprises judgemade rules based in common law torts that continue to apply within the collective bargaining regime, particularly in relation to picketing and strikes. We learn more about this regime in Part IV.
QUESTIONS AND ISSUES FOR DISCUSSION 1. What two branches of law comprise the common law regime? 2. Briefly explain the three regimes of work law. Who (or what) is responsible for resolving disputes that arise under each of the three regimes? 3. What are three levels of courts in Canada? 4. Explain the concept of stare decisis. 5. What are some strengths and weaknesses of “freedom of contract” in the context of work law? 6. What three categories of legal rules compose the collective bargaining regime?
EXERCISE Throughout this text, we will examine a lot of case law decided by courts and expert administrative tribunals. In the past, accessing case law was difficult and mostly the domain of lawyers. It required visiting a law library and conducting complicated legal research using dense legal reporting books and complex legal research skills honed in law school and years of legal practice. Today, lawyers and non-lawyers alike can access legal decisions on their computers. While the most thorough legal databases require payment of expensive fees, increasingly legal decisions are being posted on free Internet databases. The Canadian Legal Information Institute (CanLII) is a prime example. It is produced by the various Canadian law societies with the goal of making “Canadian law accessible for free on the Internet.” This text includes a number of exercises that encourage readers to conduct their own legal research using CanLII. To give you a sense of how CanLII works, try the following exercise. 1. Go to the CanLII home page: . 2. In the search window, type the phrase “wrongful dismissal” in quotation marks. That search should give you over 7,000 legal decisions.
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14
Part I The Law of Work: Themes, Frameworks, and Perspectives
3. Find one decision that sounds interesting to you from the brief description that appears in the search results. Select the link to the decision. Answer the following questions: a. What is the name of the case? b. What year was the case decided? c. In what province did the case originate? d. Was the case decided by a court or an expert administrative tribunal? e. If it was a court, which court? If it was a tribunal, which tribunal? f. Read the case. Can you determine what the dispute was about and which party won the case? If this is your first time reading a legal decision, it may be difficult for you to follow what is happening. Do not fear, because that is normal. Reading the law takes a bit of practice because the law uses specialized language. We will decipher this language throughout this text.
NOTES AND REFERENCES 1. G. Davidov, “The Reports of My Death Are Greatly Exaggerated: Employee as a Viable (Though Overly-Used) Legal Concept,” in G. Davidov and B. Langille, eds, Boundaries and Frontiers of Labour Law (Oxford: Hart, 2006) 133 at 133-34; B. Langille, “Labour Law’s Back Pages,” in Davidov and Langille, ibid., at 13; and J. Fudge, E. Tucker & L. Vosko, “Changing Boundaries in Employment: Developing a New Platform for Labour Law” (2003) 10 CLELJ 329; and H. Collins, “Independent Contractors and the Challenge of Vertical Disintegration to Employment Protection Laws” (1990) 10 Oxford J Legal Stud 353. 2. C. Mummé, The Indispensable Figment of the Legal Mind: The Contract of Employment at Common Law in Ontario, 1890 – 1979 (PhD dissertation, Osgoode Hall Law School, 2013) at 83. 3. P. Craven, “The Law of Master and Servant in Mid-Nineteenth Century Ontario” in D. Flaherty, ed, Essays in the History of Canadian Law, vol. 1 (Toronto: University of Toronto Press, 1981) 175-211. 4. See, e.g., An Act to Regulate the Duties Between Master and Servant, and for Other Purposes Therein Mentioned, S. Prov. Can. 1847, c. 23, S. Prov. Can 1851, c. 11; and Ontario Master and Servant Act of 1855, 18 Vict., c. 136. 5. Sir Henry Maine famously wrote that “the movement of the progressive societies has hitherto been a movement from Status to Contract,” and the transition from master and servant law to the employment contract model is often considered an important part of that story. H.S. Maine, Ancient Law: Its Connection with the Early History of Society, and Its Relation to Modern Ideas (London: J. Murray, 1861) at 170. However, as we discuss in Chapter 5, employment contracts have always been heavily regulated and subject to special rules of interpretation developed by common law judges. See Mummé, supra note 2. 6. H. Collins, Employment Law, 2nd ed (Oxford: Oxford University Press, 2009) at 14-15. Leading works
advocating the freedom of contract school of employment law and the common law model that supports it include R. Posner, Economic Analysis of Law, 5th ed (New York: Aspen Law and Business, 1998) at chapter 8; M. Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962); R. Epstein, “In Defense of Contract at Will” (1984) 51 U Chicago L Rev 947; and R. Epstein, Simple Rules for a Complex World (Cambridge, MA: Harvard University Press, 1995) at chapters 8 and 9. 7. On Canadian tort law, see E. Weinrib, Tort Law: Cases and Materials, 4th ed (Toronto: Emond Montgomery, 2014); and A.M. Linden, Canadian Tort Law, 6th ed (Toronto: Butterworths, 1997). 8. See the discussion in H. Carty, An Analysis of the Economic Torts (Oxford: Oxford University Press, 2001). 9. See, e.g., Posner, supra note 6, at chapter 11. 10. A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 1 (London: 1776) at 81: “it is not … difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into compliance with their terms. … In all such disputes the masters [employers] can hold out much longer.” K. Marx & F. Engels, The Communist Manifesto (London: 1848) at 347: “In proportion as the bourgeoisie, i.e., capital, is developed, in the same proportion is the proletariat, the modern working class, developed—a class of laborers, who live only so long as they find work, and who find work only so long as their labor increases capital. These laborers, who must sell themselves piecemeal, are a commodity, like every other article of commerce, and are consequently exposed to all the vicissitudes of competition, to all the fluctuations of the market. Owing to the extensive use of machinery, and to the division of labor, the work of the proletarians has lost all individual character, and, consequently, all charm for the workman. He becomes an appendage of the machine, and it is only the
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Chapter 1 Canadian Law of Work in a Nutshell 15 most simple, most monotonous, and most easily acquired knack, that is required of him. Hence, the cost of production of a workman is restricted, almost entirely, to the means of subsistence that he requires for maintenance, and for the propagation of his race.” See also K. Marx, Capital (Hamburg: 1867). For a review of Marx and the application of his work to industrial relations and the law of work, see J. Goddard, Industrial Relations, the Economy, and Society, 4th ed (Toronto: Captus Press, 2011) at chapter 2. See also M. Skousen, The Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes (Armonk, NY: M.E. Sharp, 2007). 11. M. Weber, “Freedom and Coercion” in M. Rheinstein, ed, Max Weber on Law in Economy and Society (Cambridge, MA: Harvard University Press, 1954) at 188. 12. Machtinger v. HOJ Industries, [1992] 1 SCR 986 at 1003. 13. A vast amount of legal literature exists on this debate, dating from the beginning of waged labour. A good summary of some of the leading historical voices in this debate is found in Labour Law Casebook Group, Labour and Employment Law: Cases, Materials, and Commentary, 8th ed (Toronto: Irwin, 2011) at chapter 1. In particular, see the famous exchange between M. Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962) at 12-15, and C.B. MacPherson, “Elegant Tombstones: A Note on Friedman’s Freedom,” in Democratic Theory: Essays in Retrieval (Oxford: Oxford University Press, 1973) 143-56 at 143. Some recent contributions include B. Langille, “Labour Law’s Theory of Justice,” in G. Davidov & B. Langille, eds, The Idea of Labour Law (Oxford: Oxford University Press, 2011) 101-20 at 111;
H. Arthurs, “Labour Law After Labour,” in Davidov & Langille, 13-29 at 13; and A. Davies, Perspectives on Labour Law, 2nd ed (New York: Cambridge University Press, 2009) at chapter 2. 14. J. Rinehart, The Tyranny of Work: Alienation and the Labour Process, 2nd ed (Toronto: Harcourt Brace, 1987) at 40; and G. Kealey, Canada Investigates Industrialism (Toronto: University of Toronto Press, 1973) at 14, 22. 15. S. Bernstein, K. Lippel, E. Tucker & L. Vosko, “Precarious Employment and the Law’s Flaws: Identifying Regulatory Failure and Securing Effective Protection for Workers” in L. Vosko, ed, Precarious Employment: Understanding Labour Market Insecurity in Canada (Montreal: McGillQueen’s University Press, 2006) at 203. 16. P. Davies & M. Freedland, Kahn-Freund’s Labour and the Law, 3rd ed (London: Stevens, 1983) at 18. This passage was quoted with approval by Chief Justice Dickson of the Supreme Court of Canada in Slaight Communications Inc. v. Davidson, [1989] 1 SCR 1038 at part IV. 17. L. Panitch & D. Schwartz, From Consent to Coercion: The Assault on Trade Union Freedoms, 3rd ed (Toronto: Garamond Press, 2003); and J. Fudge & E. Tucker, Labour Before the Law (Oxford: Oxford University Press, 2001). 18. A number of books describe labour arbitration law in Canada, including D. Brown, D. Beatty & C. Deacon, Canadian Labour Arbitration, 4th ed (Aurora, ON: Canada Law Book, 2006); M. Mitchnick & B. Etherington, Labour Arbitration in Canada (Toronto: Lancaster House, 2006); and R. Snyder, Collective Agreement Arbitration in Canada, 5th ed (Markham, ON: LexisNexis, 2013).
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CHAPTER 2
A Framework for Analyzing the Law of Work LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 17 II. Law Is What Law Does 18 III. A Framework for Analysis of the Law of Work 20 A. The Work Law Subsystem 20 B. External Inputs and the External Feedback Loop 26 IV. Chapter Summary 29 Questions and Issues for Discussion 31 Exercise 31 Notes and References 31
• Describe the key components of the work law subsystem. • Explain how the work law subsystem interacts with the broader society in which it functions. • Describe how the power, values, and goals of key actors influence the legal rules governing employment. • Identify the different legal rules, or outputs, of the three regimes of the work law subsystem. • Explain how the three regimes of the work law subsystem interact with and influence one another in ways that can affect the legal rules produced within each regime.
I. Introduction In Chapter 1, our survey of the topographical map of work law introduced, at a high level of generality, the three legal regimes that comprise the main subject matter of this text—the common law of employment, regulatory standards, and collective bargaining. Dividing the law into these three distinct regimes is a useful way for law professors and lawyers to organize and teach the laws that govern employment in Canada. The first two regimes (common law and regulatory standards) have traditionally been taught in “employment law” seminars using “employment law” texts.1 The collective bargaining regime, by contrast, has usually been hived off and taught as separate courses in “labour law,” “labour arbitration law,” and “industrial relations” and described in law texts with similar names.2 As mentioned in Chapter 1, this text uses the labels work law and the law of work when discussing the entire system of legal rules in all three legal regimes.3 However, compartmentalizing the laws that govern employment into the three regimes, while useful for organizing educational materials, oversimplifies the complexity of the legal framework that governs the work relationship in Canada. This becomes evident when we zoom in on our map of the law of work. A closer inspection shows a far more complicated terrain, one that cannot be so neatly compartmentalized. Continuing on with our geographical analogy, we see that rivers flow across boundaries; inhabitants move from one part of the map to another, only to return later; some inhabitants function in all three regimes simultaneously. The real world of work law is a far more complex place than our discussion so far has suggested. We need a way to understand and organize this complexity. This chapter addresses this challenge by developing a conceptual framework for the analysis of the law of work. This framework draws a more complete map of the laws that govern work, as well as the relationship of those laws to the broader economic, legal, political, social, and environmental context in which they evolve and function. 17
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18 Part I The Law of Work: Themes, Frameworks, and Perspectives
II. Law Is What Law Does Let’s begin with a simple lesson about legal rules. The relationship between a seller and buyer of labour is above all else a human relationship, and human behaviour is complex. People behave as they do for all sorts of reasons, of which formal legal rules are but one. Often, in fact, legal rules in employment contracts and government regulations conflict with other powerful economic, legal, political, social, and environmental forces present in society. When that occurs, something has to give, and sometimes it is the legal rules that are cast aside. This lesson is demonstrated in the news article excerpt presented in Box 2.1. The excerpt describes the experience of recent immigrants working in Toronto’s Chinatown. Some were charged a $400 fee to obtain a job that pays them only $25 per day for ten hours of work, seven days a week. Others earn $4 per hour for a 70-hour workweek. As we learn in Part III, Ontario’s government long ago introduced employment standards legislation that includes a minimum wage law, rules capping maximum hours of work, and rules requiring overtime pay at a higher hourly rate for hours worked beyond 44 hours in a week (regulation regime).4 The employment practices described in the story clearly violate these legal rules. Systemic violations of labour rights such as those described in Box 2.1 raise complex questions: Why would employees agree to work under conditions that violate minimum legal standards? Why does the government bother passing employment standards laws if workers and employers are prepared to agree to conditions falling below the legal minimums? Why do some employers violate these laws? How do those employers get away with such violations? Why isn’t the law working? The excerpt in Box 2.1 reminds us of a fundamental point: we should never assume that people comply with legal rules. What matters is how a legal rule actually affects behaviour (if it does at all) and not simply what a legal rule says. To paraphrase film character Forrest Gump, “Law is as law does.”5 Non-compliance with legal rules is a big problem in the law of work. A 2017 report by Professors Vosko, Tucker, and Noack found that in complaints filed and assessed under the Ontario Employment Standards Act between 2008 and 2015, violations were found 69 percent of the time.6 Another study found that “about 25% of all federal employers were not in compliance with most [employment standards] obligations … and that 75% of these employers were not in compliance with at least one [employment standards] provision.”7 Professor Harry Arthurs noted in his 2006 study of Canadian federal labour standards that this latter figure likely understated non-compliance because it is based on employer self-reporting.8 Ignorance of laws is no doubt partially to blame for this non-compliance. Work-related laws can be complicated and difficult to understand. But ignorance of the law is only part of the story. As noted earlier, sometimes a legal rule is sacrificed because it conflicts with more powerful societal rules and norms. Other times a legal rule is knowingly violated because, considering all relevant factors, including the odds of being caught and the penalties for non-compliance, it makes more economic sense to someone to break the law than to comply with it. Economists refer to this type of infraction as an efficient breach.9 Efficient breaches are a common problem with employment regulation because governments lack the resources, capacity, and often the political will to inspect all workplaces, and many employees will not complain for fear of losing their jobs in reprisal. If a government decides to aggressively enforce its legal rules, some employers might respond by fleeing the reach of the law altogether by moving their business (and the jobs) to another jurisdiction. In that case, a law designed to help workers could actually cause their unemployment. efficient breach: A deliberate violation of a contract or government statute owing to the belief that it is more economically efficient to violate the legal rule than to comply with it.
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Chapter 2 A Framework for Analyzing the Law of Work 19
BOX 2.1 » Recent Immigrant Workers in Toronto’s Chinatown and Labour Rights Violations hours had exhausted her, and she quit her job. She had no The bustling streets, sidewalks and shops of Toronto’s Chinaawareness of her rights as a worker until she was approached town hide a troubling reality: many of the Asian immigrants by the researchers conducting the survey; the legal clinic has to Canada who work in the restaurants, salons, and other subsequently assisted Ms. Zheng in her complaints against her businesses are subjected to exploitation and dangerous and former employer. illegal working conditions. Various studies and investigative Wei Sun was one of the eight volunteers who conducted reports have uncovered a high proportion of workers who the survey, which took place both on the street and via teleendure serious labour rights violations, regarding such issues phone. She was quoted in the Toronto Star: as the paying of minimum wage, hours worked per week, overtime, holidays, and in many cases, unsafe equipment or Many of the workers have worked in those kinds of working conditions. conditions for years and they just don’t care about Several such issues were identified in a 2010 survey of their rights. They just do whatever their bosses order workers in various industries by the Chinese and Southeast them to do and accept what they pay them. They Asian Legal Clinic. The clinic issued a similar report in 2016, never challenge. … It’s shocking in Canada that focused primarily on the restaurant industry, entitled “Sweet these people are working 70 hours a week, with an and Sour: The Struggle of Chinese Restaurant Workers.” The average hourly wage of $4.* results of this survey illustrate how recent immigrants looking for employment are commonly working overtime without * N. Keung, “Few Aware of Labour Rights in Toronto’s Chinatown,” Toronto compensation, and often unaware of the laws in Ontario reStar (23 July 2010), online: fear that doing so would put their jobs at risk. Sources: Based off of “Chinese Restaurant Workers Underpaid and Many Asian immigrants to Canada come from countries Overworked, New Report Says,” CBC News (25 April 2016), online: ; Chinese and Southeast Asian Legal Clinic, ; them especially vulnerable to exploitation by business owners Keung, ibid. when they arrive in Toronto or other large immigrant centres in Canada. Because many also lack strong English language skills, they often remain unaware of their rights, or are not able to access legal support. The 2010 report included statistics based on surveys of immigrant workers, which indicated that fewer than one in five respondents know what Ontario’s maximum hours of work laws are; two-thirds are unaware of their rights to overtime and holiday pay; and four out of ten are unaware of the current minimum wage in the province. For the most part, they remain simply unaware that they have legal protections, whether or not they actually have a written employment contract. The report’s subjects work largely in service-sector jobs. Sue Zheng, who arrived from Fuzhou, China in 2006, is one of the workers profiled in the 2010 report. She describes coming to Canada with no English language skills and finding work in a nail salon. The 40-year-old mother of two Many Asian immigrants to Canada come from countries with was desperate for work in order to feed her few workers’ rights, and they are vulnerable to exploitation by employers. children, but after two months the long
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20 Part I The Law of Work: Themes, Frameworks, and Perspectives We are beginning to scratch the surface of the complexity we are dealing with when we study the law of work. If we are to make sense of how legal rules come about and why some are effective and others are not, we need a richer framework that can map this complexity. One way to do this is to treat work law as one of many components, or subsystems, present in any complex, multi-faceted society, and to then study how those subsystems interact to produce the rules that govern work. The remainder of this chapter discusses such a framework.
III. A Framework for Analysis of the Law of Work Treating work law as one of a variety of subsystems operating in society at any given time provides a more realistic depiction of how things actually work. It allows us to see how legal rules relating to the labour relationship are influenced by a whole range of pressures emanating from outside the formal confines of laws targeting the employment relationship. The framework discussed in this section helps us more fully assess the role of law in our society, explain legal rules, and predict the impact of legal rules.10 The law of work framework is presented in Figure 2.1. It is descriptive and demonstrates the breadth of our subject, drawing attention to the reality that the law of work is more than the sum of its parts. Every legal rule we encounter in this text is a result of the interaction among a variety of forces, including fierce debates, rich histories, reluctant compromises, and sometimes violent and bloody clashes. The laws that govern work in any society emerge from this complex milieu. Therefore, we need to understand that legal rules do not operate in a vacuum. They shape and are shaped by the many broader social, economic, political, and environmental forces operating in society generally at any given time.11
A. The Work Law Subsystem As noted earlier in this chapter, the separation of laws governing employment into three distinct regimes obscures the important interconnections among the three regimes.12 It presents an incomplete picture of how the laws that govern employment actually function in the real world. To obtain a fuller, more accurate view, we need to step back and view the laws that govern the employment relationship as a distinct subsystem of the broader society in which it functions. This subsystem is presented in the box in Figure 2.1 labelled “The Work Law Subsystem.” Since the work law subsystem is the focus of our attention in this book, it is presented in much greater detail and as central in the framework.
subsystem: In legal sociology, a self-contained system within the broader social system that possesses its own rules, norms, and modes of communication. Examples include economic and market; legal; political; social, cultural, and religious; and ecological/ environmental subsystems.
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Chapter 2 A Framework for Analyzing the Law of Work 21
FIGURE 2.1 Law of Work Framework THE WORK LAW SUBSYSTEM The Common Law Regime (Part II of the text) KEY ACTORS Employers • Individual employees
INTERNAL INPUTS Power • Values • Goals
KEY LEGAL INSTITUTION Judges/courts
RULE-MAKING PROCESSES Individual negotiations • Civil litigation
OUTPUTS Employment contracts • Torts • Workplace norms
The Regulatory Regime (Part III of the text, Chapters 18-24) KEY LEGAL INSTITUTIONS Government inspectors • Administrative tribunals • Judges/courts
RULE-MAKING PROCESS Legislative process
OUTPUTS Protective regulatory standards legislation
The Collective Bargaining Regime (Part IV of the text) KEY ACTORS
INTERNAL INPUTS Power • Values • Goals
Government Employers and their associations • Employees and their associations
EXTERNAL INPUTS
ECONOMIC AND MARKET SUBSYSTEM Labour and other market forces at local, regional, and global levels
RULE-MAKING PROCESSES Legislative process Collective bargaining, strikes, and lockouts • Arbitration • Civil litigation
BROADER LEGAL SUBSYSTEM Legal rules governing tax, trade competition, immigration, business associations, welfare, property, and constitutional law (among other fields) (Part III of the text, Chapters 25-27, Part V, Chapter 39, and various online supplemental chapters exploring bankruptcy, pension, and intellectual property laws)
KEY LEGAL INSTITUTIONS Labour tribunals • Labour arbitrators • Judges/courts
POLITICAL SUBSYSTEM Party politics, political values, and political systems
OUTPUTS Collective bargaining legislation • Collective agreements • Torts/labour injunctions • Workplace norms
SOCIAL, CULTURAL, AND RELIGIOUS SUBSYSTEM Social and cultural norms, religion, family, language, social group dynamics, and identity politics (class, race, gender, etc.)
ECOLOGICAL/ ENVIRONMENTAL SUBSYSTEM Climate, access to natural resources, geography
* Legal rules produced by each of the three regimes of work law feed back into the subsystem as information and experience and can provoke changes and adaptations by the actors in all three regimes, which can produce new outputs.
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EXTERNAL FEEDBACK LOOP
INTERNAL INPUTS Power • Values • Goals
INTERNAL FEEDBACK LOOP*
KEY ACTOR Government
22 Part I The Law of Work: Themes, Frameworks, and Perspectives
1. The Three Regimes of the Work Law Subsystem The work law subsystem is dominated by the three traditional regimes of work law already introduced. However, now we add some new layers of detail to produce a more complex and realistic depiction of the legal system. For those new to the study of law, or work law in particular, some of the concepts and terms used in the following description of the work law subsystem will be new. Not to worry; as we proceed through this text, we will consider everything that follows in greater detail and consider examples. The purpose of the discussion here is to introduce the main components of the framework. a. The Common Law Regime (Part II of This Text) The key actors in the common law regime are employers and individual employees. They engage in the rule-making process of negotiation, and their agreements produce the main output of the regime—individual employment contracts of service. When disputes arise about those contracts, they are sometimes resolved through civil litigation, which is the second rule-making process in this regime. Civil litigation can also produce legal rules in the form of torts, another important output. The courts (and the judges who preside over them) are the key legal institution. Judges/courts produce legal rules when they issue the contract interpretation and tort decisions that form the essence of the common law of employment. An additional output produced by the common law regime is workplace norms. These are unwritten rules that nevertheless can have a great influence on how people are expected to behave in given situations.13 Workplace norms are created over time through common experience that creates expectations. Since things have long been done in a particular way, people expect that those things will continue to be done in those ways. How often can employees take washroom breaks, and do they need to ask permission? Is playful banter and horseplay between workers tolerated or treated as harassment? Does the employer create a climate in which complaints can be raised, or are employees too fearful to speak up? Can workers talk about personal matters or use email or social media during working hours? Who gets first choice in vacation time or overtime? And so on. These are examples of questions and issues that can arise at any workplace, and yet the answers may not be written down in any document. However, workplace norms can explain why people behave as they do, and ignoring them can create an incomplete picture of how legal rules influence behaviour. As we learn in Part II (for example, in Chapter 9 at pages 135-36), workplace norms are sometimes recognized by judges as “past practices,” which can create legally enforceable contractual rights or influence the interpretation of contracts. Another addition to our framework is internal inputs. How the key actors behave—their bargaining strategy, their manner of communication, their propensity to resist or concede points, to pursue conflict or to resist it, and to obey or violate legal rules—depends on their relative power, as well as their values and goals. Understanding the power dynamic is crucial to understanding how law operates in practice. For example, the employers of recent immigrants in Toronto’s Chinatown possess a substantial power advantage. The workers need the piddling wages paid by the employers just to survive. Many of the workers do not qualify for any type of public assistance. Some workers may not legally be able to work in Canada because they do not have a work permit, so they have few other employment options. If they resist the employer, they
negotiation: Discussion between two or more people aimed at reaching an agreement. civil litigation: The processes involved with lawsuits filed in court not involving criminal law statutes, such as legal actions for breach of contract or torts. workplace norms: Norms or expectations that arise in a workplace as a result of past practices or relationships that can influence behaviour at work, even though they are not codified in contracts or statutes.
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Chapter 2 A Framework for Analyzing the Law of Work 23
could be deported. The employers know all of this, and this gives them great power to set working conditions. Yet not all actors who possess the power to impose their will on others exercise it in an exploitative manner. The decision by an employer to pay a wage rate that is far below subsistence levels reflects a value choice. Some employers pay workers more than the market requires because they are guided by a value system based on humane and decent treatment of workers, or because they believe higher pay will result in a more productive worker. For example, some companies have adopted a “living wage” policy that sets wage levels at a rate that considers the cost of living in the location where the work is performed, even though they have the bargaining power to insist on lower wages.14 Actors’ goals also shape their decisions. Henry Ford voluntarily adopted eight-hour workdays and doubled his workers’ wages in 1914, not only as “an act of social justice” (e.g., values), but also because he believed doing so was necessary “so that the business would be on a lasting foundation.” Ford believed that “low wage business is always insecure,” and that his business depended on workers having money to buy cars.15 If we just assume that terms of employment contracts result from free negotiation shaped by market forces, we would be unable to explain the terms of employment at Ford in the early 20th century. We need to consider how power, values, and goals shape the strategies of the parties who set working conditions.
b. The Regulatory Regime (Part III of This Text) The regulatory regime, as noted in Figure 2.1, is the domain of the government. It is the actor that decides upon the content of the standards and enacts them into law by means of the legislative process (rule-making process). Governments, in their law-making function, are also influenced by internal inputs in the form of power, values, and goals. A government’s perspective on the appropriate role of the state in regulating labour markets often shapes its goals and values as it sets its agenda for regulatory reform, as we discuss in Chapter 3. However, sometimes governments make decisions affecting work laws for more pragmatic political reasons. For example, the federal Conservative government imposed a ban on the use of foreign temporary workers in 2014 by restaurant employers only after the practice attracted considerable public backlash (see Chapter 25).16 A government’s power is a function of the political climate at a given time and place. The greater the level of support for the government’s policy agenda from key stakeholders, including but not limited to the electorate, the greater the capacity of the government to implement that agenda. The output of this regime is regulatory standards legislation intended to protect employees, examples of which are explored in Part III. The key legal institutions responsible for implementing and enforcing that legislation include government inspectors, expert administrative tribunals (e.g., employment standards and human rights tribunals), and judges/courts (which are mostly responsible within the regulatory standards regime for overseeing the administrative tribunals). c. The Collective Bargaining Regime (Part IV of This Text) Finally, the collective bargaining regime involves two distinct streams or types of rule-making processes that produce a range of legal rules (outputs): 1. the legislative process, through which governments enact collective bargaining legislation that regulates unionization, collective bargaining, industrial disputes, and collective agreement administration; and 2. the collective bargaining process, through which unions and employers develop rules through a mix of collective bargaining, sometimes accompanied by industrial conflict, collective agreement administration and labour arbitration, and occasionally civil litigation, involving mostly tort law.
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24 Part I The Law of Work: Themes, Frameworks, and Perspectives The government is the key actor in the legislative process, whereas employees and employers, along with their collective associations, are the key actors in the collective bargaining process. Unions are the most common example of collective associations, but there are other non-union forms of employee associations in Canada;17 employer associations also exist, particularly in industries such as construction and professional sports. As in the case of the common law regime, how the actors in the collective bargaining regime behave and what legal rules are produced through collective bargaining are influenced in large measure by the relative power of the actors and their respective values and goals (internal inputs).18 The key legal institutions in the collective bargaining regime are expert labour tribunals (mostly labour relations boards), arbitrators (both labour arbitrators and interest arbitrators), and judges/courts, which are involved in policing some aspects of collective action, particularly through the use of torts and labour injunctions to restrain strikes and picketing. Finally, the outputs of the collective bargaining regime include (1) collective bargaining legislation; (2) collective agreements between unions and employers (and sometimes employer associations), as interpreted by labour arbitrators; (3) court-ordered torts and labour injunctions that restrict some forms of collective bargaining - related activities; and (4) the same types of workplace norms we discussed in relation to the common law regime.
2. The Internal Feedback Loop A key to understanding the framework presented in this chapter lies in paying attention to how its various components interact in an ongoing dynamic process. Two types of feedback loops appear in Figure 2.1: (1) an internal feedback loop and (2) an external feedback loop. The internal feedback loop appears in blue and shows how the outputs of each regime “feed back” into the other regimes as information that can influence actors’ behaviour and rule-making processes, and eventually produce new outputs. To demonstrate, consider an obvious example of regime interaction within the work law subsystem. Regulatory standards, such as the minimum wage found in Canadian employment standards legislation, regulate both individual employment contracts in the common law regime as well as collective agreements in the collective bargaining regime. Neither type of contract can include a wage clause that provides for less than the statutory minimum wage. Nor can either type of contract include a term that discriminates contrary to human rights legislation, to give another example. In these ways, the outputs from the regulatory standards regime directly influence the range of options available to the key actors and legal institutions in the other two regimes. So we cannot fully understand the outputs of the other two regimes without acknowledging the effects of the regulatory standards regime. Similarly, the legal rules produced by the common law regime affect outputs from the other two regimes. For example, governments have occasionally mimicked rules developed in the labour arbitrator: An individual or three-person expert arbitration panel appointed to decide disputes over the application and interpretation of collective agreements. interest arbitrator: An individual or three-person expert arbitration board tasked with writing the terms of a collective agreement when the union and employer are unable to reach agreement through voluntary collective bargaining. tort: A type of wrongful act done by one person to another (or to another’s property) that judges have recognized as legally actionable. Examples are nuisance, trespass, negligence, and conspiracy. labour injunction: An order issued by a judge that prohibits or restricts a union and unionized workers from engaging in some type of collective action, such as a strike or picketing. feedback loop: An explanatory device that demonstrates how outcomes produced by a system (e.g., legal rules produced by a legal system) can influence other systems (e.g., the economic system) and also “feed back” into the original system as information in a process of perpetual learning, experience, and change.
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Chapter 2 A Framework for Analyzing the Law of Work 25
common law and incorporated them into regulatory standards. The statutory “notice of termination” requirements in Canadian employment standards legislation (discussed in Part III) are an example; they are modelled after the long-standing common law implied contract term requiring “reasonable notice” of termination. More fundamentally, the common law regime acts as the default legal system. Almost every regulatory standard and every collective bargaining law represents the government’s response to some perceived inadequacy in the common law model. To fully understand what objective statutory laws are seeking to achieve, we need to understand how the common law would deal with the matter in the absence of legislation. Finally, legal rules produced by the collective bargaining regime in the form of collective bargaining laws and collective agreement provisions influence outputs from the other regimes. Canadian collective bargaining legislation imposes many restrictions on the freedom of employers and individual employees to contract that would otherwise prevail in the common law regime. An obvious example is that in the common law, a strike by workers is a breach of contract and a tortious conspiracy, but collective bargaining legislation shields workers from those actions by protecting a limited right to strike in some circumstances.19 Also, many modern-day statutory standards mimic terms that unions and employers had originally included in collective agreements. For example, the roots of present-day maximum hours legislation are firmly embedded in the Nine-Hour Movement organized by Canadian unions of the early 1870s, as well as hours of work provisions that appeared later in collective agreements.20 The three regimes of work law “learn” from one another. See Box 2.2 for another example of how collective bargaining outputs can influence what occurs in the common law regime.
BOX 2.2 » An Example of the Internal Feedback Loop: The Dofasco Way Industrial relations scholars have shown that collective agreements, bargained within the collective bargaining regime, influence the terms of individual employment contracts in non-union workplaces (within the common law regime). This is known as the spillover effect of collective bargaining.* Some non-union employers pay their employees more than market forces alone would dictate and offer other benefits, including “grievance procedures” that attempt to mirror what unions bargain into their collective agreements, in order to remove or reduce the incentive for their employees to join unions. The spillover effect is an example of the operation of the internal feedback loop: outputs from the collective bargaining regime become inputs in the common law regime, influencing the internal inputs of the actors there, and ultimately the terms of employment contracts and workplace norms within the common law regime. The following excerpt from a newspaper story provides a glimpse into this process. Robert Perkins thought he had a deal. He gave Dofasco 32 years of his life in the grit and noise of the Hamilton steel mill. In exchange he was to get a se-
cure retirement with a good pension and health benefits. It was all part of a contract called The Dofasco Way, the package of welfare programs leavened with a healthy dose of fear that kept the company unionfree for 75 years, creating what employees always felt was a “family atmosphere” where management really cared about them. Today, after taking early retirement because of the way his body was worn down in fulfilling his part of that contract, Perkins and several hundred other Hamilton Dofasco veterans fear the old way is dead and the deal has been summarily changed. “They gave us a package when he retired and now they’ve decided across the board to take away those benefits,” said Perkins’ wife, Bonnie Hamilton. “Something’s just not right here. If they get away with this, what’s going to be next?” Dating back to 1937, The Dofasco Way combined welfare initiatives such as recreation programs, concerts, picnics and a massive Christmas party with one
Nine-Hour Movement: A social movement peaking in the early 1870s seeking a legislated maximum nine-hour workday. spillover effect: The effects that collective agreement settlements bargained by unions and employers have on individual employment contracts in non-union workplaces.
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26 Part I The Law of Work: Themes, Frameworks, and Perspectives of Canada’s first profit-sharing plans. Called The Fund, the plan gave industrial workers an undreamt of promise of security in their old age. That promise, however, was always coupled with a far from subtle threat—join a union and it could all be taken away. That combination of threat and promise worked for 75 years, but today, many veteran workers fear The Dofasco Way is dying a “death of a thousand cuts,” as the steel industry concentrates into a few firms with a global reach. … The Dofasco Way was rooted in the visceral hatred company founders Clifton and Frank Sherman had toward labour unions—an evil they sought to keep
out of their Hamilton plants by creating a sense of mutual interest between workers and management. “My father felt a union created unrest in a company,” Frank Sherman Jr. recalled in a 2008 Spectator interview. “He felt if people working in his company were doing as well as people in unions, why would they need one?”† * R. Freeman and J. Medoff, What Do Unions Do? (New York: Basic Books, 1984); D. Neumark and M. Wachter, “Union Effects on Nonunion Wages: Evidence from Panel Data on Industries and Cities” (1995) 49:1 Indus & Lab Rel Rev 20; and L. Kahn, “Union Spillover Effects on Organized Labor Markets” (1980) 15:1 J Hum Resources 87. † S. Arnold, “The Dofasco Way,” Hamilton Spectator (2012), online: .
If we study work law in silos, as three distinct regimes that do not interact, we would miss the relationships described in Box 2.2. If we look only at the collective bargaining regime, we will not even notice the benefits Dofasco gave its employees as a union avoidance strategy and, therefore, the true effects of collective bargaining will be underestimated. If we study only the common law regime, we might wrongly conclude that Dofasco employees used superior negotiating skills to bargain high wages and a generous benefit and retirement package, or that their high productivity justified these generous contractual entitlements. Only by recognizing that the regimes are interconnected through a process of ongoing information feedback will we discover the full story of how legal rules emerge and influence labour market outcomes.
B. External Inputs and the External Feedback Loop So far, we have looked only at what goes on within the work law subsystem itself—at how the laws that govern employment are created and how the three regimes of work law interact with one another. Now it is time to cast our gaze outward to the broader social system within which the work law subsystem functions. As noted earlier, the work law subsystem does not operate in isolation from the rest of society. It is influenced by its external environment, and the legal rules it produces can also influence that external environment. These interactions are demonstrated in Figure 2.1 by the purple arrows that flow out of the work law subsystem to the external inputs, and from the external inputs back into the work law subsystem. These arrows indicate the external feedback loop component of our framework.
1. External Inputs We can group these external forces into five distinct subsystems that function within every advanced society. We can call these external inputs because they affect the development of work laws from outside the work law subsystem itself (they involve forces that are not directly “about” work laws but nevertheless affect work laws). • Economic and market subsystem. Work law regulates labour markets. Its objective, beyond protecting workers and regulating conflict, is to influence key labour market indicators, such as labour costs, employment levels, labour market skills and training, and labour market adjustment and flexibility. Labour markets are, in turn, influenced by other union avoidance: A management strategy designed to reduce the risks that employees will join unions.
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Chapter 2 A Framework for Analyzing the Law of Work 27
domestic and foreign markets, including money markets, trade markets, energy markets, transportation markets, product and consumer markets, and securities markets. Changes in these other markets can influence what happens within the work law subsystem. For example, as competition for an employer’s goods intensifies, the price it can charge for those goods may fall, producing a lower profit margin. This consumer market change may cause the employer to demand wage concessions from employees and influence the amount of wages and benefits the employer can afford to pay its employees. Some of the employers in Toronto’s Chinatown, described in Box 2.1, above, are operating in a highly competitive global industry in which profit margins are very low and competition comes from low-wage countries such as Bangladesh, Honduras, and China. The market pressure on these employers to keep labour costs low is intense. These market pressures produce a strong incentive for the employers to cheat on compliance with Canadian employment standards laws. • Broader legal subsystem. The laws that govern work are part of a large, complex, and interrelated legal system. The laws we are interested in are influenced by developments in many other legal fields, including tax, trade, immigration, competition, business, securities, criminal, intellectual property, social security, privacy, property, constitutional, tort, criminal, and contract law. We are interested in these broader legal fields insofar as they have important effects on how labour markets function.21 Consider some examples. Immigration laws are not specifically concerned with protecting vulnerable employees, but they influence who can have a job in Canada, as well as the conditions under which new immigrants work. Laws that govern privacy in Canada affect the rights of employers and employees even though they have much broader application. Criminal law has played an important role in controlling worker resistance to employer power in Canada. Intellectual property laws regulate ownership of the products of work. Constitutional law determines which levels of government have jurisdiction to enact work laws and restricts the range and substance of laws governments can pass. Free trade laws that reduce tariffs and quotas influence the competitiveness of Canadian labour markets and investment decisions in ways that can affect relative bargaining power vis-à-vis employers and workers.22 The preceding examples illustrate how laws that do not specifically target the employment relationship nevertheless have a substantial impact on that relationship and on labour market functioning more generally. We cannot fully understand the law’s role in regulating labour markets without considering these laws in addition to those that are specifically targeted at protecting vulnerable employees. Therefore, our exploration of regulatory standards in Part III will include (in Chapters 25-27 and 39) consideration of government legislation that affects the behaviour of labour market actors even though protecting vulnerable employees is not its central purpose. • Political subsystem. The law of work is a function of the broader political economy within which it functions.23 The political belief system and the distribution of political power during a particular time shape how a government behaves as a lawmaker and an employer. Proposed changes to work laws are often included in political campaigns as a way to attract voters. Politicians who prefer little regulation of labour markets have vastly different ideas about the role of the state than do politicians who favour greater labour market regulation, and these debates often play out in work law reforms as political winds shift.24 We will explore the dominant political perspectives that have often shaped debates about work law in Chapter 3. free trade: A term used to describe a trade law policy characterized by low or zero trade tariffs and low or zero quotas on the amount of goods that flow between national borders.
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28 Part I The Law of Work: Themes, Frameworks, and Perspectives • Social, cultural, and religious subsystem. Social, cultural, and religious values are powerful determinants of human actions, and they have key implications for the law of work.25 The rich fields of “sociology of work,” “industrial sociology,” and “law and society” study how legal rules and the tendency for them to be obeyed (or Demonstrators in Montreal took part in a protest in 2013 disobeyed) reflect social against Quebec’s proposed Values Charter. norms and values.26 As noted above, employers of the workers in Toronto’s Chinatown are able to ignore employment standards laws in part because the workers lack the language skills and social support mechanisms that would enable them to resist this form of exploitation. The organizations mentioned in Box 2.1 that assist the new immigrants attempt to build up these social networks as part of a broader strategy in pursuit of greater levels of legal compliance. Consider, as another example, the Quebec government’s recent ban on the wearing of religious symbols at work by public sector workers. This law is rooted in cultural and religious tensions within Quebec and cannot be understood without careful consideration of those tensions.27 • Ecological/environmental subsystem. The types of labour market activities that are feasible are influenced by simple geography (e.g., ocean communities have fisheries and ports, mountain communities have skiing) and access to natural resources (think forestry and mines). Climate can affect the strategies of work law actors in simple ways, such as when a union attempts to coordinate a labour dispute and the accompanying picketing for the balmy summer months rather than the frigid winter months. More fundamentally, climate change poses substantial challenges for labour markets, and work law may need to adapt to respond in the years to come.28 These other subsystems are described as external inputs in our framework because, although they are not directly related to legal rules that govern the labour relationship, they can each affect the types of work laws governments enact; the perspectives and reasoning applied by tribunals, arbitrators, and judges; and the behaviour, strategies, power, values, and goals of the actors within the work law subsystem. And the influence can flow in both directions, as demonstrated in Figure 2.1 by the external feedback loop represented by the purple feedback arrows flowing out of the work law subsystem on the right side of the figure to the external inputs, and then back into the work law subsystem.
2. The External Feedback Loop We will consider how the external feedback loop influences the development of the law at various points in the text. However, to provide a quick example, consider the history of human rights legislation in Canada, which will be explored in greater detail in Part III. In important early cases within the common law regime, judges refused to recognize a tort of discrimination with the result that, within that regime, it is lawful for employers to discriminate against job applicants and employees.29 Not surprisingly, an outcome of the common law regime was
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Chapter 2 A Framework for Analyzing the Law of Work 29
employment discrimination. Women were paid less than men; people were refused employment because of their religion; Chinese and non-white workers were treated worse than white workers; and so forth. This output of the common law regime was noted within the broader Canadian society, and it created controversy, social division, unrest, and exclusion. Over time, as social and cultural values evolved, more Canadians came to recognize these blatantly discriminatory practices as unjust. These sentiments eventually were reflected in political discourse, leading to the enactment of “human rights” legislation (within the regulatory standards regime). By the 1940s, legislation had been introduced in Canada prohibiting discrimination in employment on the basis of such grounds as race, creed, colour, nationality, ancestry, and place of origin. In the 1950s, gender was added as a prohibited ground, followed by disability and family status in the 1980s. Sexual orientation was added to Quebec’s Charter of Human Rights and Freedoms as a prohibited ground of discrimination in 1977, but it was not until 1986 that the next province (Ontario) added sexual orientation to its Human Rights Code. Other provinces followed, but some held out, including Alberta and Prince Edward Island, which continued to permit discrimination in employment against gay and lesbian workers until 1998. In that year, the Supreme Court of Canada decided the case of Vriend v. Alberta, in which it ruled that Alberta’s human rights legislation violated the Canadian Charter of Rights and Freedoms by not including sexual orientation as a prohibited ground.30 This constitutional law decision effectively required those provinces that had not already done so to add sexual orientation to the list of prohibited grounds of discrimination in their human rights legislation. This (very simplified) recounting of the history of human rights legislation demonstrates the analytical contribution of the external feedback loop in our framework. For decades, employment discrimination was lawful in Canada. However, changes within the social, cultural, and religious subsystem, in the form of growing intolerance of blatant labour market discrimination, undermined the sustainability of this discriminatory legal model. Politicians picked up on this movement (within the political subsystem) and began calling for government intervention in the labour market in the form of new regulatory standards banning some forms of employment discrimination. However, not all forms of discrimination were considered equally abhorrent. It took much longer for social and political pressures to build for a prohibition on sexual orientation discrimination to be introduced. Not until a major event occurred within the broader legal subsystem did a prohibition on sexual orientation in Canada become universal. The external feedback loop is an analytical tool that draws our attention to the crucial fact that laws are a function of the broader social system in which they exist, and that laws involve an evolutionary process. They are not static. This text will regularly challenge the reader to step back and consider the legal rules in this broader context. This way, we can better understand how we got to the present point, and perhaps also better predict where we are headed.
IV. Chapter Summary This chapter introduced a framework for analyzing the law of work. This framework represents an important analytical tool and a conceptual model for organizing the content that will follow in the remainder of the text. The key insight is that the laws that govern work are part of a complex system that comprises economic, legal, political, social, cultural, religious, and ecological/ environmental subsystems. We need to consider the law of work in this context in order to have a comprehensive understanding of the forces that influence and shape it. This framework will make more sense to you (hopefully!) as we progress through the text.
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Part I The Law of Work: Themes, Frameworks, and Perspectives
FIGURE 2.2 Law of Work Framework Worksheet THE WORK LAW SUBSYSTEM The Common Law Regime (Part II of the text) KEY ACTORS Employers • Individual employees
INTERNAL INPUTS Power • Values • Goals
KEY LEGAL INSTITUTION Judges/courts
RULE-MAKING PROCESSES Individual negotiations • Civil litigation
OUTPUTS Employment contracts • Torts • Workplace norms
The Regulatory Regime (Part III of the text, Chapters 18-24) KEY LEGAL INSTITUTIONS Government inspectors • Administrative tribunals • Judges/courts
RULE-MAKING PROCESS Legislative process
OUTPUTS Protective regulatory standards legislation
The Collective Bargaining Regime (Part IV of the text) KEY ACTORS Government Employers and their associations • Employees and their associations
EXTERNAL INPUTS
ECONOMIC AND MARKET SUBSYSTEM
INTERNAL INPUTS Power • Values • Goals
RULE-MAKING PROCESSES Legislative process Collective bargaining, strikes, and lockouts • Arbitration • Civil litigation
BROADER LEGAL SUBSYSTEM
KEY LEGAL INSTITUTIONS Labour tribunals • Labour arbitrators • Judges/courts
POLITICAL SUBSYSTEM
OUTPUTS Collective bargaining legislation • Collective agreements • Torts/labour injunctions • Workplace norms
SOCIAL, CULTURAL, AND RELIGIOUS SUBSYSTEM
EXTERNAL FEEDBACK LOOP
INTERNAL INPUTS Power • Values • Goals
INTERNAL FEEDBACK LOOP*
KEY ACTOR Government
ECOLOGICAL/ ENVIRONMENTAL SUBSYSTEM
* Legal rules produced by each of the three regimes of work law feed back into the subsystem as information and experience and can provoke changes and adaptations by the actors in all three regimes, which can produce new outputs.
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Chapter 2 A Framework for Analyzing the Law of Work 31
QUESTIONS AND ISSUES FOR DISCUSSION 1. What are internal inputs, and how do they influence the outputs of the common law and collective bargaining regimes? 2. Give an example of how a legal rule produced by the regulatory standards regime affects the outputs of the common law or collective bargaining regime through the operation of an internal feedback loop. 3. Describe the two rule-making processes within the collective bargaining regime. 4. Explain the relevance of “efficient breach” in the context of work law. 5. The various subsystems identified as external inputs in the law of work framework presented in this chapter have all attracted considerable scholarly attention in their own right. You may have taken other non-law courses that study work and employment. Link the following academic disciplines to an appropriate external subsystem: • environmental justice, • political science/political economy, • law and society, • labour market economics, • sociology of work, • work and gender, and • labour history.
EXERCISE Using the law of work framework worksheet in Figure 2.2, list factors in the “External Input” boxes that you believe contributed to the poor working conditions experienced by the recent immigrants to Toronto described in Box 2.1.
NOTES AND REFERENCES 1. See, e.g., G. England, Individual Employment Law, 2nd ed (Toronto: Irwin, 2008). 2. See, e.g., G. Adams, Canadian Labour Law, 2nd ed (Aurora, ON: Canada Law Book, 1993); and M. Mitchnick & B. Etherington, Labour Arbitration in Canada (Toronto: Lancaster House, 2006). The practice of separating the three regimes into “employment law” and “labour law” was not universally adopted in Canada. For example, Professors Harry Glasbeek, Eric Tucker, and Judy Fudge of Osgoode Hall Law School long taught and organized their teaching materials on the basis that the three regimes needed to be understood as a coherent web of rules and not as distinct subfields. See H. Glasbeek, J. Fudge & E. Tucker, Labour Law (Toronto: Osgoode Hall Law School, York University, 2007-8). 3. In Britain and much of Europe, the term labour law is used to describe all three regimes that govern employment (common law, regulatory standards law, and collective bargaining law): see, e.g., H. Collins, K. Ewing & A. McColgan, Labour Law: Text and Materials, 2nd ed (Oxford: Hart, 2005). In Canada and the United States, texts that
combine all three regimes are more often entitled “labour AND employment law”: see, e.g., Labour Law Casebook Group, Labour and Employment Law: Cases, Materials, and Commentary, 8th ed (Toronto: Irwin, 2011). This is the first book in Canada to adopt the shorter monikers “work law” and “law of work” to describe all three regimes, but authors in other countries have done so: M. Crain, P. Kim & M. Selmi, Work Law: Cases and Materials, 2nd ed (New Providence, NJ: LexisNexis, 2010); and R. Owens, J. Riley & J. Murray, The Law of Work, 2nd ed (South Melbourne: Oxford University Press, 2011). 4. Employment Standards Act, 2000, SO 2000, c. 41, Part VII (“Hours of Work and Eating Periods”), Part VIII (“Overtime Pay”), and Part IX (“Minimum Wage”). 5. The character Forrest Gump in the movie Forrest Gump (1994) said: “Stupid is as stupid does.” See D. Doorey, “Harry and the Steelworker (or Teaching Labour Law to Non-Law Students)” (2008) 14 CLELJ 107. 6. L. Vosko, A. Noack & E. Tucker, Employment Standards Enforcement: A Scan of Employment Standards Complaints and Workplace Inspections and Their Resolution Under the
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Part I The Law of Work: Themes, Frameworks, and Perspectives Employment Standards Act, 2000 (March 2016) at 29, online (pdf): .
7. Federal Labour Standards Review, Fairness at Work: Federal Labour Standards for the 21st Century (Ottawa: Human Resources and Skills Development Canada, 2006) at 192. The problem of high non-compliance with work laws is not a distinctly Canadian problem. On the problem of non-compliance in the United States, see D. Weil, “Implementing Employment Regulation: Insights on the Determinants of Regulatory Performance,” in B. Kaufman, ed, Government Regulation of the Employment Relationship (Madison, WI: Industrial Relations Research Association, 1997) at 429. 8. Federal Labour Standards Review, supra note 7 at 191-92. 9. R. Posner, Economic Analysis of Law, 5th ed (New York: Aspen, 1998) at 131; and C. Goetz & R. Scott, “Liquidated Damages, Penalties, and the Just Compensation Principle: A Theory of Efficient Breach” (1977) 77 Colum L Rev 554. 10. The framework developed in this chapter draws on a long and rich history of systems approaches to law and, in particular, work on industrial relations systems developed by John Dunlop (Harvard University) and later adapted to the Canadian setting by Alton Craig (University of Ottawa): J. Dunlop, Industrial Relations Systems (New York: Henry Holt, 1958); and A. Craig & N. Solomon, The System of Industrial Relations in Canada, 5th ed (Scarborough, ON: Prentice Hall, 1996). The influential 1969 Woods Task Force on Labour Relations in Canada adopted the term industrial relations systems, assigning it this meaning: “the complex of market and institutional arrangements, private and public, which society permits, encourages, or establishes to handle superior-subordinate relationships growing out of employment and related activities.” See The Report of the Task Force on Labour Relations (Ottawa: Queen’s Printer, 1969) at 9. The industrial relations systems model drew on insights from broader systems theory. See especially T. Parsons & N. Smelser, Economy and Society: A Study in the Integration of Economy and Social Theory (London: Routledge, 1956); and N. Luhmann, The Differentiation of Society (New York: Columbia University Press, 1982). See also R. Nobles & D. Schiff, Observing Law Through Systems Theory (Oxford: Hart, 2013). 11. H. Arthurs, Law and Learning: Report of the Consultative Group on Research and Education in Law (Ottawa: Social Sciences and Humanities Research Council of Canada, 1983) at 59. See also Doorey, supra note 5. 12. B. Langille, “Labour Law Is a Subset of Employment Law” (1981) 31 UTLJ 200. 13. This is a key insight of legal pluralism, a strand of legal theory that draws attention to the many sources of rules
and norms that shape behaviour beyond formal contract and state-based law. In the work context, these ideas are reflected in a rich literature on industrial pluralism. See, e.g., H. Arthurs, “Understanding Labour Law: The Debate over ‘Industrial Pluralism’” (1985) 38 Curr Legal Probs 83; S. Henry, “Factory Law: The Changing Disciplinary Technology of Industrial Social Control” (1982) 10 Intl J Soc L 365; and Dunlop, supra note 10 at 7-18 for a discussion of the “web of rules” that shape workplace behaviour. 14. A vast literature exists on “living wage” campaigns and policies. For a review, see D. Doorey, “Mapping the Ascendance of the ‘Living Wage’ Standard in Non-State Global Labour Codes” (2015) 6 Transnat’l L Theory 435; and L. Glickman, A Living Wage (Ithaca, NY: Cornell University Press, 1997). A recent example involves the company Hennes and Mauritz (H&M), the world’s second-largest clothing retailer, vowing to implement a “living wage” policy throughout its global supply chain. See “H&M Fails to Pay Factory Workers Living Wages Advocate Groups Allege,” Global News (24 September 2018), online: . 15. H. Ford, My Life and Work (Garden City, NY: Doubleday, 1922) at chapter VIII. The full quotation reads: “Many employers thought we were just making the announcement because we were prosperous and wanted advertising and they condemned us because we were upsetting standards—violating the custom of paying a man the smallest amount he would take. There is nothing to such standards and customs. They have to be wiped out. Some day they will be. Otherwise, we cannot abolish poverty. We made the change not merely because we wanted to pay higher wages and thought we could pay them. We wanted to pay these wages so that the business would be on a lasting foundation. We were not distributing anything—we were building for the future. A low wage business is always insecure.” 16. See L. Goodman, “Jason Kenney Suspends Restaurants from Scandal-Plagued Temporary Foreign Worker Program” National Post (24 April 2014), online: . 17. See, e.g., D. Taras & B. Kaufman, “Non-Union Employee Representation in North America: Diversity, Controversy, and Uncertain Future” (2006) 37 Indus Rel J 513. 18. See Craig & Solomon, supra note 10 at 8-10; and R. Chaykowski, “Collective Bargaining: Structure, Process, and Innovation,” in M. Gunderson, A. Ponal & D. Taras, eds, Union-Management Relations in Canada, 5th ed (Toronto: Pearson, 2005) at 257. 19. Another example involves so-called yellow dog contracts, which are legal under the common law regime based on
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Chapter 2 A Framework for Analyzing the Law of Work 33 freedom of contract but are prohibited by Canadian labour relations legislation. A yellow dog contract was a contract term that required an employee to refrain from joining a union as long as they were employed with a particular employer, and it permitted the employer to fire the employee if the term was breached. Modern labour legislation prohibits contract terms that prohibit an employee from joining a union. 20. See D. Morton, Working People, 5th ed (Montreal and Kingston: McGill-Queen’s University Press, 2007) at 21-25. 21. The argument that “labour law” encompasses the bundle of laws that have important effects on labour markets has been made by H. Arthurs, “Charting the Boundaries of Labour Law: Innis Christie and the Search for an Integrated Law of Labour Market Regulation” (2011) 34 Dal LJ 1. 22. See the discussion in A. Jackson, Work and Labour in Canada: Critical Issues, 2nd ed (Toronto: Canadian Scholars’ Press, 2009) at 248-53; R. Grinspun & R. Kreklewich, “Consolidating Neoliberal Reforms: ‘Free Trade’ as a Conditioning Framework” (1994) 43 Stud Pol Econ 33; and K. Banks, “Must Canada Change Its Labour and Employment Laws to Compete with the United States?” (2013) 38 Queen’s LJ 419. 23. See Arthurs, supra note 21. 24. F. Martinello, “Mr. Harris, Mr. Rae, and Union Activity in Ontario” (2000) 26 Can Pub Pol’y 17; D. Doorey, “A Model
of Responsive Workplace Law” (2012) 50 Osgoode Hall LJ 47; and L. Panitch & D. Schwartz, From Consent to Coercion: The Assault on Trade Union Freedoms, 3rd ed (Aurora, ON: Garamond, 2003). 25. See, e.g., H. Krahn, G.S. Lowe & K.D. Hughes, Work, Industry, and Canadian Society, 6th ed (Toronto: Thomson Nelson, 2011). 26. See, e.g., the periodical Work, Employment, and Society published by Sage Publications: . 27. See R. Lau, “Quebec’s Proposed Religious Symbol Ban for Public Workers Fueled by Specific Symbols: Study” Global News (2018), online: ; and “Charter of Quebec Values Would Ban Religious Symbols for Public Workers,” CBC News (2013), online: . 28. See C. Lipsig-Mummé, ed, Climate@Work (Halifax: Fernwood, 2013); and D. Doorey, “Just Transitions Law: Putting Labour Law to Work on Climate Change” (2017) 30 J Envtl L & Prac 201. 29. Christie v. The York Corporation, [1940] SCR 139; and Seneca College v. Bhadauria, [1981] 2 SCR 181. 30. Vriend v. Alberta, [1998] 1 SCR 493, 156 DLR (4th) 385.
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CHAPTER 3
Key Perspectives That Shape the Law of Work LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 35 II. The Main Perspectives That Shape the Law of Work 38 A. The Neoclassical Perspective 38 B. The Managerialist Perspective 41 C. The Industrial Pluralist Perspective 43 D. The Critical Reformist Perspective 46 E. The Radical Perspective 47 III. Chapter Summary 48 Questions and Issues for Discussion 48 Exercises 49 Notes and References 49
• Describe the five key perspectives that have dominated debates and thinking about the role of law in governing work relationships in Canada. • Recognize how the dominant perspective in political and public discourse can influence the form and content of work laws. • Describe how the dominant perspectives have changed in Canada over time.
I. Introduction According to the Fortune 500 rankings of American corporations, the fiscal 2017 profits for Wal-Mart Stores (Walmart) were just over US$13.5 billion, making it one of the most profitable corporations in history.1 Walmart paid its CEO, Doug McMillon, $22.4 million in compensation that year.2 At the same time, the median Walmart retail employee earned about $19,177 in 2017. That means that McMillon earned 1,188 times what the median Walmart employee earned that year.3 The law in both Canada and the United States requires Walmart to pay its employees at least a minimum wage set by the government, even if Walmart would like to pay its employees less and those employees were prepared to work for less. However, in neither country does the law impose a mandatory ceiling on employee compensation. Why do our governments impose legal floors on wages, but not legal ceilings? The answer is that minimum wage laws protect “vulnerable workers” who might be taken advantage of by employers owing to their lack of bargaining power. If there were no minimum wage, many employers currently paying that rate would pay their employees less provided they were able to attract workers who need jobs and are willing to work for less. The minimum wage represents a government’s rejection of market forces as a mechanism for setting wages for lowincome workers. The government is essentially saying, “We don’t trust labour market forces and freedom of contract to produce an acceptable wage, given the standard of living we want for our citizens.” Governments have not been concerned about maximum wages, because highincome workers have sufficient bargaining power to look after their own interests. Very high income has not typically been considered a social and economic problem, whereas very low income often has. However, not everyone agrees that there should be a minimum wage, and some think there should be a maximum wage.4 Whenever a Canadian government raises the minimum wage, 35
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Part I The Law of Work: Themes, Frameworks, and Perspectives
complaints arise from business groups that the move will “cost jobs,” countered by worker advocates who reject those claims or argue that the increase is too small. Both sides in this debate point to studies they claim support their position. Others argue that minimum wage policy is about decency and fairness, not economics. There is no “correct” answer to the question of whether governments should regulate wages. There are only arguments for and against that regulation based on different perspectives, which are explored in Box 3.1.
BOX 3.1 » TALKING WORK LAW Is the Minimum Wage a Good Policy? The answer to the question above depends on a person’s perspective. Whether a minimum wage should exist and the level at which such a wage should be fixed are among the many interesting debates that arise within the law of work. We will explore these debates in greater detail in Part III. Attitudes and opinions vary widely. Consider the range of opinions reflected in the following quotations from recent Canadian debates over proposed increases to minimum wage levels: From the Fraser Institute, a conservative Canadian think tank that advocates on behalf of corporate interests for limited government regulation in labour markets: Increasing British Columbia’s minimum wage to $10.25 an hour could lead to a loss of more than 52,000 jobs. When governments impose high labour costs on businesses, employers react by hiring fewer workers and reducing the number of hours employees work.* From the Wellesley Institute, a think tank that advocates for better health in urban centres: An increase in the minimum wage will raise the floor for all Ontario employees. This increase will have a positive impact on those working for minimum wage and other low wage workers. It could also transfer income from shareholders to employees. The com-
bined impact would reduce income inequality. In a time when governments feel that their budgets are constrained, this is a policy approach to address and reduce income inequality that is crucial and timely.† From “Fairness at Work,” a government-commissioned study of federal employment standards laws in Canada: In the end, however, the argument over a national minimum wage is not about politics and economics. It is about decency. Just as we reject most forms of child labour on ethical grounds, whatever their economic attractions, we recoil from the notion that in an affluent society like ours good, hard-working people should have to live in abject poverty.‡ * Fraser Institute, “BC’s $10.25 Minimum Wage Could Cost More Than 52,000 Jobs and Reduce Opportunities for Young Workers” (29 April 2011), online (news release): . † S. Block, “Who Is Working for Minimum Wage in Ontario?” (October 2013), executive summary, online (pdf): Wellesley Institute . ‡ H. Arthurs, Fairness at Work: Federal Labour Standards for the 21st Century (Ottawa: Human Resources and Skills Development Canada, 2006) at 247.
In making decisions about what laws to enact, governments are influenced by their perspectives on the role of markets, governments, management, unions, ethics, and power in society and in the workplace. In this way, how a society governs its labour markets is influenced by the political economy in which its legal rules are produced. Do judges and citizens, and the politicians they elect, trust that labour markets will produce desirable outcomes? Do existing legal rules give preference to some interests over others, and, if so, is this distribution of rewards just? Would a different set of preferences be preferable? The answers to these sorts of questions will influence the extent and form of legal rules that emerge to govern work in any society. Therefore, as we learn about these legal rules, we need to be alert to the dominant modes of thinking, or perspectives, used to justify legal rules.
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Chapter 3 Key Perspectives That Shape the Law of Work 37
Alexandria Ocasio-Cortez attending the third annual Women’s March in January 2019.
For example, one perspective (perspective A) might view the vast difference between the pay of Walmart’s CEO and the median pay of Walmart store employees as a healthy and normal result of market forces. The CEO is “worth” over $22 million annually, while the average retail employee is “worth” $10 per hour (for example) because that is what the market dictates for these workers. A perspective A supporter might recall fondly the famous speech by the fictional character Gordon Gecko (played by actor Michael Douglas) in support of free market forces in the 1987 movie Wall Street, in which he argued that “greed, for lack of a better word, is good” because it drives ingenuity and encourages hard work.5 Another perspective (perspective B) might view the vast gap between executive pay and average worker pay as a failure of the market-based model. While the CEO can afford to live in a gated mansion with security, yachts, a personal staff, and expensive cars, his employees rely on food banks and public subsidies to feed their children and pay their rent.6 A perspective B supporter might nod along when New York Congresswoman Alexandria Ocasio-Cortez argues that “a system that allows billionaires to exist” is immoral in a country where many working people have no access to health care and there is mass poverty,7 or when US Senator Bernie Sanders tweets:
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Part I The Law of Work: Themes, Frameworks, and Perspectives Do you know how rich a billionaire is? Let’s say you earn $50k/year & save every. single. penny. After 20 years, you’d have saved $1 million. After 200 years, you’d be dead, but would have saved $10 million. Only after 20,000 years(!!!), would you have saved $1 billion.8
If perspective A dominates contemporary social and political thinking, then we should expect few if any new laws to be enacted to address the income gap. However, if perspective B dominates, then the vast difference between executive and average worker pay would be perceived as a recipe for an unhealthy and economically and politically unstable society. We might therefore anticipate a new law designed to transfer more wealth from executives down to average employees. The varying perspectives on the appropriate role of law in governing work discussed in this chapter can influence not only the laws governments enact but also the actions, decisions, and strategies of the other actors who help shape work laws (including employees, employers, unions, and employer associations). We need to be alert to the background modes of thinking that shape the actions and laws we will study in this text. Therefore, in this chapter, we introduce the dominant perspectives that have shaped the development of the law of work in Canada. This exercise will give us another important tool through which to analyze the laws we will discuss in the remainder of the text.
II. The Main Perspectives That Shape the Law of Work Five key perspectives have shaped the debates surrounding the legal regulation of the labour relationship in Canada (and elsewhere):9 1. 2. 3. 4. 5.
The neoclassical perspective. The managerialist perspective. The industrial pluralist perspective. The critical reformist perspective. The radical perspective.
These perspectives are summarized in Table 3.1. This taxonomy no doubt oversimplifies the complexity and richness of each of the perspectives, but it is useful for our purposes here. In practice, the boundaries between the perspectives are more blurred. Individuals can move between perspectives from argument to argument, or over their lifetimes. Some laws cannot be neatly fit into just one of the categories. However, our objective is simply to introduce and identify the dominant strands that have prevailed in work law policy debates over the years. As we proceed through the text, we will occasionally note how legal policies have reflected, or been influenced by, shifts in the dominant perspective.
A. The Neoclassical Perspective The neoclassical perspective is an economics-based view of work law based on the assumption that labour markets operate generally in the same manner as markets for other goods—labour is a commodity like all other commodities.10 Neoclassicists assume that labour markets are perfectly competitive, or nearly so. We will leave it to the economists to explain the details of the neoclassical economic model.11 Here, we are only concerned with introducing at a general level how the neoclassical perspective has influenced the law of work.
neoclassical perspective: An economics-based view of the law of work based on the ideal of a perfectly competitive labour market. It rejects government intervention in labour markets and collective bargaining and argues that employers and individual employees should set working conditions under a system of freedom of contract.
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Chapter 3 Key Perspectives That Shape the Law of Work 39
TABLE 3.1 Perspectives on the Law of Work Perspective
Labour Markets
Employment Regulation
Unions/Collective Bargaining
Neoclassical
• Labour markets are presumed to be perfectly competitive and efficient.
• Regulation artificially raises costs of labour above optimal market levels and introduces rigidities, with harmful social and economic consequences.
• Unions are harmful labour cartels that artificially raise labour costs and reduce efficiency, with harmful economic and social consequences.
• Labour market forces alone should not determine working conditions if they result in conditions that do not maximize employee motivation and satisfaction.
• Regulation is largely unnecessary, since employers have an economic interest in treating workers fairly.
• The desire of workers to support collective bargaining indicates a failure of management.
• If necessary to deal with bad employers, standards should be set at a low enough level that they do not impose undue rigidity and costs on good employers.
• Collective bargaining introduces harmful rigidity and should be resisted. However, if employees choose unionization, the employer should attempt to work with the union.
• Labour markets are imperfect and characterized by a significant imbalance of power between workers and employers.
• Regulation is necessary to protect workers from harsh labour market forces and to ensure a basic and fair level of working conditions.
• Collective bargaining and unions are essential to providing workers with a “voice” and balancing bargaining power in the labour relationship.
• Regulation is especially important for workers who do not have the protection of collective bargaining.
• Collective bargaining is an important tool in combatting income inequality and promoting democracy in the workplace and in society more broadly.
• Unfettered labour markets produce an optimal allocation of resources. Managerialist
Industrial pluralist
Critical reformist
• Labour markets are imperfect and characterized by a significant imbalance of power between workers and employers, especially with regard to women, youth, visible minorities, and new immigrants, who tend to be the most vulnerable workers.
• Strong regulatory protections are the best way to ensure equitable employment outcomes in a market system.
• Collective bargaining is a strong institution for empowering workers but has failed to reach the most vulnerable workers in society.
Radical
• Labour markets are constructs designed by and for capitalists to maintain capitalist control and privilege.
• Regulation is a marginally effective tool for addressing the exploitation of labour that is an inevitable outcome of capitalist relations.
• Unions (and collective bargaining) can be an important and useful means of raising class consciousness, but they will have limited impact unless their focus is on challenging the capitalist model.
However, since neoclassical prescriptions for work law flow from the assumption that labour markets are perfectly competitive, we need to know something about what that means. In a perfectly competitive market, an equilibrium wage rate exists for any given job, which is the rate “at which workers are willing to supply exactly the number of hours that employers want to buy.”12 For example, an equilibrium wage rate for baristas of $10 per hour means that every employer in the economy that needs a barista can find one at that rate. The demand for baristas equals the supply of baristas when $10 per hour is offered. equilibrium wage rate: A theoretical wage rate fixed through market forces in which the supply of labour (the number of hours workers are prepared to work) equals the demand for labour (the number of hours purchasers of labour wish to buy).
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Part I The Law of Work: Themes, Frameworks, and Perspectives
An employer who offers a wage rate lower than $10 per hour will not be able to attract baristas. No barista would accept a rate lower than the equilibrium rate, since other employers offer the equilibrium rate or higher. Workers are assumed to be mobile (able to quit a job and move to a better job whenever they like, or to stop selling their labour altogether) and to possess full information of all alternative job opportunities. No single barista can bargain a wage rate higher than the equilibrium rate, since in a perfectly competitive world the employer can attract all the workers it needs at the equilibrium rate, and all workers are assumed to possess similar skills. This description of perfectly competitive labour markets obviously does not describe the real world. There is no such thing as a perfectly competitive labour market. However, neoclassicists argue that real-world labour markets “approximate” the theoretical model, so that lessons learned by studying models of hypothetical, perfectly competitive labour markets should still guide labour policy.13 Since market forces are assumed to operate competitively and to produce the most efficient (optimal) outcomes, attempts to interfere in market forces through the introduction of non-market disturbances, such as regulatory standards to protect workers or the promotion of collective bargaining (and unions), will produce harmful effects, including unemployment. The neoclassical perspective rejects all of the regulatory standards legislation we will explore in Part III. For example, if a government introduced a minimum wage of $12 per hour into a perfectly competitive labour market for baristas in which the equilibrium wage rate was $10 per hour, employers would respond by hiring fewer baristas, perhaps replacing them with machines (i.e., substituting capital for labour). Worse still, some employers may simply close or move outside the reach of the law. In this way, a minimum wage is predicted in the neoclassical perspective to cause higher unemployment.14 This position is reflected in the quotation from the Fraser Institute, a Canadian think tank that espouses the neoclassical perspective (a “think tank” is an institution that conducts research and advocates for certain types of policies), in Box 3.1. A similar analysis applies to all other wage and non-wage working conditions imposed by government regulation. Since neoclassicists believe market forces alone produce the optimal conditions of employment, any legislation that imposes substantive contract terms is wrongheaded and potentially harmful. If a condition of employment were optimal, then the market would have produced it as a standard term of employment contracts. Hence, employment standards legislation requiring notice to terminate an employment contract is unnecessary, according to neoclassical law and economics scholar Richard Posner (University of Chicago), because if employees and employers valued them, these clauses “would be negotiated voluntarily.”15 Similarly, occupational health and safety laws impose costs on employers and are unnecessary, because markets will produce the most efficient level of safety, and employers have “a selfish interest in providing the optimal … level of worker health and safety.”16 Nor should governments introduce human rights legislation to prohibit discrimination in employment. Market forces alone will take care of any employer dumb enough to discriminate on the basis of factors unrelated to productivity. If women or visible minorities will work for less than men performing similar work, then rational profit-seeking employers will hire only women and visible minorities, and discriminating employers who pay more for white men will be driven out of business or forced to change their discriminatory practices.17 Richard Epstein (University of Chicago), a scholar in the neoclassical perspective, explains this dynamic as follows: [T]he employer who sacrifices economic welfare for personal prejudice will pay for her preferences on the bottom line. By forgoing superior labor in order to hire inferior workers, she will sacrifice resources to indulge consumption choices, and will be at a systematic disadvantage relative to employers whose economic motivations are more rational.18
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Chapter 3 Key Perspectives That Shape the Law of Work 41
Neoclassicists argue that attempts to “fix” discrimination through legislation will impose unnecessary and inefficient costs on employers and will not help the people the laws are intended to benefit. Finally, the neoclassical perspective also opposes laws that support or legitimize unionization and collective bargaining.19 They see unions as a type of harmful cartel, a combination of workers organized to control the supply of labour in order to artificially raise wages above the equilibrium wage rate.20 Collective bargaining often results in unionized workers receiving higher wages and better benefits than non-union workers. In the neoclassical perspective, this is a bad thing. Those benefits to unionized workers are said to come at the expense of other non-union workers, employers, shareholders, and consumers, since employers may pay for the costs of collective bargaining by raising their product costs.21 Thus, in the neoclassical perspective, the laws we will consider under Part III and Part IV are met with suspicion or outright hostility. The neoclassical perspective prefers the common law regime (Part II). This preference makes sense because the foundation of that regime is the notion of “freedom of contract” between individual employee and employer.22 Law plays a role in this perspective, but a limited one. Judges should enforce the contracts the parties have agreed to, and governments should enact legislation to protect contracts and property rights to restrict anti-competitive practices and, possibly, to promote greater information and mobility in labour markets. Beyond that, the setting of working conditions should be left to contract and market forces. Since the late 1980s, the neoclassical perspective has been very influential in North America in shaping debates about labour policies, especially when politically conservative governments are in power.
B. The Managerialist Perspective The managerialist perspective is closely linked to human resource management (HRM). It shares with the neoclassical perspective the belief that government intervention in the labour relationship should be minimal and that, ideally, unions and collective bargaining should not be present at a workplace. However, managerialists put their faith in enlightened management practices rather than theoretically perfect competitive markets. They emphasize that employers and employees share a community of interest: both want the business to be successful. The managerialist perspective draws inspiration from the pioneering work of sociologist Elton Mayo (Harvard University, 1880 – 1949) and his Hawthorne experiments from the late 1920s to the early 1930s. Mayo and his researchers concluded that socio-psychological feelings that came from being studied and working as a team caused employees to be more productive.23 This finding was crucial to the emergence of the “human relations” school (later HRM), which asserts that workers who are treated well on a psychological level will feel more committed to the employer’s goals, and this commitment will translate into a more productive labour force. The objective of management should be to foster cooperation and trust with workers. Employers who mistreat their employees will suffer economically, which could result in the failure of their business. Conversely, treating workers decently increases productivity and profits. Therefore, businesses will look out for employees’ concerns because it is in their economic interest to do so. This belief is a guiding philosophy of the managerialist perspective. cartel: A combination of individuals or companies that attempt to use collective force or coordination to fix market prices. managerialist perspective: A view of the law of work guided by the belief that employers have an economic incentive to treat employees decently and fairly in order to extract commitment and effort. Government legislation of employment should be kept at a minimum. Unionization is a response to poor management and is disruptive.
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Part I The Law of Work: Themes, Frameworks, and Perspectives
FIGURE 3.1 The Managerialist Perspective Demonstrated in a Corporate “Employee Charter”
Magna is committed to an operating philosophy which is based on fairness and concern for people. This philosophy is part of Magna’s Fair Enterprise culture in which employees and management share in the responsibility to ensure the success of the company. It includes these principles:
Job Security
Being competitive by making a better product for a better price is the best way to enhance job security. Magna is committed to working together with you to help protect your job security. To assist you, Magna will provide job counselling, training and employee assistance programs.
A Safe and Healthful Workplace
Magna is committed to providing you with a working environment which is safe and healthful.
Fair Treatment discrimination or favouritism.
’
Magna will provide you with information which will enable you to compare your total compensation, companies your division competes with for people. If your total compensation is found not to be competitive, your total compensation will be adjusted.
Communication and Information
Through regular monthly meetings between management and employees and through publications, Magna will provide you with information so that you will know what is going on in your company and within the industry.
The Hotline
Should you have a problem, or feel the above principles are not being met, we encourage you to contact the Hotline to register your complaints. You do not have to give your name, but if you do, it The Hotline is committed to investigate and resolve all concerns or complaints and must report the outcome to Magna’s Global Human Resources Department.
Hotline Number: 1-800-263-1691
ECMEnCA-US201310
Source: Magna Corporation. Reprinted with permission.
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Chapter 3 Key Perspectives That Shape the Law of Work 43
Magna’s “Employee’s Charter” in Figure 3.1 is consistent with the managerialist perspective on how employers should treat workers.24 Magna is a large mostly non-union automobile parts company with its head office in Aurora, Ontario. In the managerialist perspective, employment regulation should be kept to a minimum, since these laws inject rigidity into the work relationship and impose unnecessary costs on employers.25 If laws are necessary to deal with the worst types of employers (those who do not perceive the wisdom in treating workers decently), the legal standards should be set at a low level and be flexible enough to not punish or hamstring “good” employers.26 Unions and collective bargaining are perceived to be an unnecessary impediment to managerial prerogative and flexibility, so governments should not use law to promote either. The Human Resources Professionals Association captured the managerialist perspective’s view on collective bargaining when it proclaimed in marketing a union avoidance webinar that “if you are union-free, you should try to stay that way” and that to achieve this, “management has to succeed every single day, forever and always.”27 Since it is in the economic interest of management to treat workers fairly, workers have no need to look to unions for protection. Managerialists argue that the decision of workers to support unionization reflects a failure of management to address employee needs through progressive HRM policies.28 This idea is captured in the old HRM adage, “organizations get the unions they deserve.”29 However, because unionization is perceived to be a rational response by employees to perceived employer mistreatment, the managerialist accepts, more so than the neoclassicist, that unions have a legitimate role to play in protecting workers from abuse at work. Hence, the managerialist perspective does not call for the outright legal oppression of unions and collective bargaining, as do the neoclassicists, although it does advocate for the right of employers to resist their employees’ attempts to unionize and for a system that permits employees to easily remove a union.30
C. The Industrial Pluralist Perspective The industrial pluralist perspective views the work relationship very differently than both the neoclassical and managerialist perspectives. The guiding insight of the industrial pluralist perspective is that an inherent imbalance of power exists between employees and employers that is problematic for both social and economic reasons. In the unfettered labour market model favoured by neoclassicists, individual workers lack the ability to safely voice their concerns or desires for fear of losing their job (they lack “voice”). This lack of voice leaves workers without the means to participate in decisions that can significantly influence their lives. Individual workers also lack sufficient bargaining power to negotiate above whatever level of working conditions the employer is prepared to offer. While this lack of power may benefit employers and business owners, industrial pluralists argue that it produces vastly unequal societies in which the wealth created through worker labour tends to gravitate upward to a relatively small proportion of wealthy elite. The resulting income inequality produces an unsustainable and volatile economy, which plants the seeds for political instability. Thus, for the industrial pluralist, creating or encouraging countervailing power to that of employers should be a central public policy objective of laws governing work. The best approach to rectifying this imbalance is for the law to promote collective bargaining, in which unions or other employee associations that are independent of the employer negotiate with employers on behalf of workers. industrial pluralist perspective: A view of the law of work that emphasizes the inequality of bargaining power between employers and employees and advocates especially for collective bargaining and unions as a means of empowering workers so that they can bargain fairer employment outcomes.
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Part I The Law of Work: Themes, Frameworks, and Perspectives
This emphasis on inequality of bargaining power in the capitalist employment relationship, and its perceived harmful effects, is shared with the next two perspectives we will consider (the critical reformist and radical perspectives). All three dismiss as naive and empirically false the managerialist’s claim that employers, through progressive HRM policies, will voluntarily strike an acceptable balance between the competing interests of employees and employers. They also reject the “free market” prescriptions of neoclassicists, arguing that the models on which they are based bear no resemblance to the real world, favour the interests of employers and society’s wealthy and powerful elite, and produce vast economic inequality.31 The differences between these last three perspectives rest primarily on the focus of their critiques and on the types of solutions they prescribe to address the problems. Industrial pluralists argue that the goal of law in relation to work and employment should be to strike an appropriate balance between the efficiency concerns of employers, on the one hand, and the equity concerns of workers on the other hand.32 To achieve this goal, the industrial pluralist supports regulatory labour standards that promote a basic floor of adequate working conditions. However, their main objective is to promote unionization and collective bargaining (discussed in Part IV). Collective employee representation is considered the most effective way to ensure worker voice and promote a healthy distribution of wealth throughout the economy. Collective bargaining, including a legal right to withhold labour (to strike), empowers workers by putting them on a more equal footing as they bargain for the sale of their labour. It better ensures that workers can bargain a reasonable share of the economic pie produced by their labour—a result that benefits the economy (by fuelling consumption) and society (by producing a decent standard of living).33 Box 3.2 features the benefits of collective bargaining according to industrial pluralists.
BOX 3.2 » TALKING WORK LAW The Benefits of Collective Bargaining Industrial pluralists argue that collective bargaining is valuable because it promotes several important outcomes: • Democracy and voice. It introduces a form of democracy into the workplace by giving workers the tools and power to participate directly in the development and enforcement of workplace rules and practices.* • Distributive fairness. It empowers workers to bargain a larger share of the economic pie than is possible in the alternative system in which individual employees bargain for the sale of their labour. The result is a stronger middle class and less income inequality, which, according to industrial pluralists, facilitates a healthier economy and more stable society.† • Improved productivity. In a much-cited (and debated) 1984 book entitled What Do Unions Do?, Harvard University economists Richard Freeman and James Medoff concluded that collective bargaining tends, overall, to improve productivity slightly, although results vary across employers and sectors.‡ The explanations provided for this result included the observation that
unionized workers have lower turnover rates and that collective bargaining “shocks” management into implementing more efficient processes.§ * For discussion of the “voice” effects of collective bargaining, see Weiler, infra note 31; R. Freeman & J. Medoff, What Do Unions Do? (New York: Basic Books, 1984); G. Davidov, “Collective Bargaining Laws: Scope and Purpose” (2004) 20:1 Intl J Comp Lab L & Ind Rel 81-106 at 86; C. Craver, “Why Labor Unions Must (and Can) Survive” (1998) 1:1 U Pa J Lab & Employment L 15-47; K. Klare, “Workplace Democracy and Market Reconstruction” (1988) 38 Cath U L Rev 1. See also Davies, supra note 9 at 183-85; and D. Doorey, “Graduated Freedom of Association: Worker Voice Beyond the Wagner Model” (2013) 38:2 Queen’s LJ 515-48 at 516-20. † See discussion and sources cited in Lynk, “Labour Law and the New Inequality,” infra note 34. ‡ Freeman & Medoff, supra note *. See also J. Bennett & B. Kaufman, What Do Unions Do? A Twenty Year Perspective (New Brunswick, NJ: Transaction, 2004). § M. Gunderson & D. Hyatt, “Union Impact on Compensation, Productivity, and Management of the Organization,” in M. Gunderson & D. Taras, eds, Canadian Labour and Employment Relations, 6th ed (Toronto: Pearson, 2009) 383 at 392-94.
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Industrial pluralists emphasize the link between collective bargaining and income equality. For example, the International Labour Organization (ILO), the leading global institution that promotes collective bargaining around the world, found that income inequality is lower in countries “in which a greater proportion of workers are affiliated with trade unions.”34 Figure 3.2 depicts the relationship between declining unionization and increasing income inequality (as measured by the Gini coefficient) in Canada from 1980 to 2010. Industrial pluralists argue that income inequality is a dangerous social and economic problem, and that laws promoting decent working conditions and protecting the workers’ right to collective bargaining must be part of the solution. Industrial pluralism was the dominant perspective in Canadian politics from the late 1940s until the late 1980s, with all of the major political parties supporting collective bargaining.35 Unions represented almost 40 percent of Canadian workers in the mid-1980s, before union density began a decline to its current (2018) rate of about 28.1 percent overall (and about 16 percent in the private sector).36
FIGURE 3.2 Union Coverage and Income Inequality in Canada 0.44
44%
0.42
42%
0.40
38%
0.38
36%
0.36 Union Coverage
2010
2008
2006
2004
2002
2000
1996
1996
1994
1992
0.30 1990
30% 1988
0.32
1986
32%
1984
0.34
1982
34%
Gini Coefficient (range 0-1.00)
40%
1980
Union Coverage (%)
Gini Coefficient
Source: H. Mackenzie & R. Shillington, “The Union Card: A Ticket Into Middle Class Stability,” (May 2015) at 8, online (pdf): .
Gini coefficient: A statistical measure of economic inequality that measures the extent to which income distribution among individuals or households within a population deviates from a perfectly equal distribution. The higher the number over 0, the higher the inequality. In a population with a Gini score of 0.0, everyone earns the same amount. In a population with a score of 1.0, one person earns all the income.
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Part I The Law of Work: Themes, Frameworks, and Perspectives
D. The Critical Reformist Perspective As noted above, the world view of the critical reformist perspective shares much in common with the industrial pluralist perspective. However, the critical reformist perspective is more critical of the outcomes actually produced by collective bargaining in Canada.37 In practice, collective bargaining has historically benefited certain privileged segments of the working population and not reached the most vulnerable workers. Professor John Godard (University of Manitoba) describes this point: [Critical reformists] tend to be highly supportive of labour unions and collective bargaining, but they are at the same time often highly critical of the system within which unions currently operate. Their general argument is that … unions tend to be least effective in the workplaces where workers are most in need of assistance.38
A particularly rich strand of the critical reformist literature involves feminist critiques of collective bargaining in Canada. Professor Judy Fudge (McMaster University) captured the essence of this critique: Despite the fact that collective bargaining is gender neutral on its face—at best it assumes a sexless worker, at worst an all male cast. Mostly, it has been done by men for the benefit of men. Its theorists are mostly men, as are its functionaries: arbitrators, board members, union leaders, managers, and lawyers. One of the presumptions of the postwar social consensus was that the labour force was unfragmented; that it was composed of full-time male workers in regular and secure employment. Unions bargained for a family wage for their male members. Until recently, women were ignored.39
By 2018, more women (32.3 percent) were covered by collective agreements bargained by unions than men (27.9 percent), primarily because most unionized workers are in the public sector, where women are highly represented.40 However, critical reformists emphasize that most vulnerable or precarious jobs (see the discussion in Chapter 4) in Canada are still filled by women, visible minorities, the disabled, young workers, and new immigrants. These jobs are still mostly non-union and are characterized by low pay, job insecurity, lack of benefits, and greater risk of injury.41 Critical reformists are interested in how legal rules and structures have failed to protect Canada’s most vulnerable workers. First, the common law model (Part II) requires workers to “bargain” improvements on their own, but precarious workers lack the bargaining power to do so. Second, although regulatory standards (Part III) often (although not always) apply to these workers, in practice, government enforcement is wanting, compliance with the law is low, and the workers do not have the means and knowledge to enforce the laws on their own.42 Third, collective bargaining law (Part IV) remains irrelevant to Canada’s most vulnerable workers, since unions lack the desire or capacity (or both) to effectively represent these workers under our existing legal models. Therefore, the focus of this perspective is on critiquing existing legal structures that fail vulnerable workers—especially women, visible and religious minorities, new immigrants, and young workers—and on proposing legal reforms that would do a better job in this regard. Critical reformists focus on the legal possibilities for more robust and broad-reaching systems of collective representation and resistance than are offered by existing collective bargaining legal models as well as more effective regulatory standards legislation.43 critical reformist perspective: A view of the law of work that supports both collective bargaining and regulatory standards, but emphasizes how both have tended to fail the most vulnerable workers. This perspective focuses on how laws can be reformed to better protect these workers.
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E. The Radical Perspective The focus of the radical perspective in relation to work law is on the recurrent “regulatory dilemmas” that by necessity define all capitalist labour markets.44 This perspective builds on the insights and arguments of Karl Marx. Very briefly, Marx observed that most workers in a capitalist society lack the property necessary to create value through their labour power. Therefore, they must enter a crowded labour market to sell their labour power to those who own property (employers) to survive, since few have independent means of wealth. From the employer’s perspective, the worker represents a unit of production (a commodity), and the objective is to extract maximum labour effort from that unit at minimal cost to produce profits. However, workers have non-productive needs too; they are humans who seek personal fulfillment and development both at work and in the non-work sphere. They seek earnings from selling their labour to aid in fulfillment of those needs. This dynamic is the source of the regulatory dilemma that confronts all capitalist economies. Employers and workers have conflicting interests. Laws that restrict an employer’s ability to extract maximum effort at minimum cost to protect workers will come at the expense of the employer’s interests in maximizing profits. Professor Eric Tucker (York University) summarizes the conflict as follows: [A]t each phase in the circuit of capital, the need of workers for self-development confronts the logic of capital, which seeks to reduce workers to commodity sellers in competition with each other, to exercise control over their productive capabilities, to shape their needs and to appropriate for themselves the surplus value that is realized in the … process of production.45
The emphasis of the radical perspective is on the various class struggles that arise in a society as workers seek to overcome the inherently exploitive nature of capitalism. This emphasis leads to a different perspective on the role of law in labour markets than the other perspectives we have considered. The emphasis in the radical perspective is on either reforming the capitalist model or, more likely, supplanting it altogether with a different model in which power is more equally distributed throughout society. In common with the critical reformist and industrial pluralist perspectives, the radical perspective is highly critical of both the neoclassical and managerialist perspectives. Both of those latter perspectives downplay the crucial role that capitalist models and institutions play in creating the power imbalance that so often leads to worker exploitation as employers pursue more profits. The relationship among the radical, industrial pluralist, and critical reformist perspectives is more complex. The radical perspective is generally supportive of regulatory standards and unions and collective bargaining, like the other two perspectives. Regulatory standards can protect workers from the worst types of employer abuses, and unions can be a means of raising class consciousness and of extracting greater benefits from employers through collective action. Therefore, all three perspectives tend to agree on the need for employment regulation and strong unions. All three also recognize that there will be unavoidable conflict in work relations. However, radicals accuse industrial pluralists (and to a lesser degree critical reformists) of ceding too much to the capitalist model.46 Industrial pluralists tend to accept that, with effective regulatory standards laws and strong unions, employees’ interests can be effectively addressed within the capitalist model (albeit occasionally with conflict in the form of strikes or other forms of employee resistance).47 Radicals argue that, although regulatory standards and laws that protect and promote collective bargaining can serve a useful role, it is a limited role. Capitalism will radical perspective: A view of the law of work inspired by Karl Marx’s insights and criticisms of the capitalist system. It considers regulatory standards regulation and collective bargaining to be helpful but limited in their ability to respond to the exploitive nature of capitalism. This perspective advocates for a more fundamental transformation of the economic model.
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always work to the advantage of capital; the party that owns the means of production, by virtue of its economic power, will always have greater influence on and access to the political processes that produce legal rules. Therefore, radicals focus much more on the problems of the capitalist model and on class-based resistance to it than do industrial pluralists. The distinction between the radical and critical reformist perspectives is the most blurred. Both perspectives critique the limited success of unions and collective bargaining in Canada to fundamentally address many types of worker exploitation and mistreatment, yet both are generally supportive of collective bargaining as an institution. However, a belief that exploitation of workers can be fundamentally addressed through the enactment of “better” or different types of regulatory standards (Part III) than presently exist is a critical reformist argument rather than a radical argument. The radical perspective demonstrates less confidence than does the critical reformist perspective in the ability of capitalism to be tamed by protective employment standards regulation. The radical perspective played an important role in the development of Canadian work law, particularly during the formative years of the Canadian collective bargaining regime. Radicalinspired organizations, such as the Communist Party of Canada, organized unions and led strikes in the early 20th century that contributed to the climate of industrial worker resistance that laid the groundwork for labour legislation that survives to this day.48 Growing income inequality, large-scale global economic downturns and unemployment, and corporate corruption have spawned renewed interest in the radical perspective and Marx’s work.49
III. Chapter Summary The purpose of this chapter is to introduce the main schools of thought, or perspectives, that have tended to guide law of work debates. In practice, the lines between the perspectives are much more blurred than they appear to be in this chapter; people and organizations can agree with elements of multiple perspectives at once, or they can shift from one perspective to another depending on the issues being debated. However, the categories presented here are nevertheless useful for the journey we have begun. These perspectives help shape the law of work in a variety of ways. The most obvious is that they influence key policy debates within the political subsystem that produces the legal regulation of work. Often we see reference to the perspectives explicitly in the political speeches and propaganda disseminated by politicians and political parties. Academics and think tanks that research and write about work law often have an allegiance to one or more of these perspectives, and their views and arguments can influence legal developments. Public opinion on the role and form of work laws can reflect one or more of these perspectives, and that opinion in turn influences the beliefs and actions of lawmakers, workers, employers, and associations, as well as judges and adjudicators who enforce legal rules. An understanding of the dominant perspectives will help readers recognize their influence as we proceed through the text.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Briefly explain the key components of the five perspectives in work law identified in this chapter. 2. Which of the perspectives are supportive of the regulatory standards regime, and which are not? 3. What are the arguments for and against unions and collective bargaining presented in this chapter? 4. What distinguishes the industrial pluralist, critical reformist, and radical perspectives? 5. What distinguishes the neoclassical and managerialist perspectives?
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EXERCISES 1. Locate a media story that considers a debate about work law reform in Canada. Can you identify arguments in the story that can be associated with one of the perspectives discussed in this chapter? 2. The new provincial minister of labour has little background in law or labour relations, having operated a small non-union business most of her career. However, she is concerned about a report she read indicating that income inequality in Canada is growing rapidly and that “real wages” (wage levels relative to rising costs of living) are falling for many workers. She wants to explore ways to halt these trends. In particular, she is considering two proposals: (1) raising the minimum wage, and (2) amending labour laws to encourage more unionization. You are the deputy minister. The minister has asked you to prepare a short briefing memo for her that provides background on the various perspectives that traditionally shape debates about workplace law reform. Prepare a memo for the minister that examines how the perspectives considered in this chapter would likely perceive the two proposals she is considering. Then explain to the minister which of these perspectives best describes your own viewpoint and why.
NOTES AND REFERENCES 1. “Wal-Mart Stores, Inc.,” online: Fortune 500 . 2. “Six C.E.O. Pay Packages That Explain Soaring Executive Compensation,” New York Times (25 May 2018), online: . 3. Ibid. See also G. Kessler, “Does the Walton Family Earn More in a Minute than Walmart Workers Do in a Year?” Washington Post (19 February 2019), online: . 4. See the discussion and sources presented in D. Doorey, “Is It Time to Regulate ‘Maximum’ Pay in Canada?” online, Law of Work (blog): . See also D. Gruending, “Canadian CEOs Make 171 Times Average, Let’s Talk Maximum Wage,” Rabble.ca (2 March 2014), online: ; and M. Sabnavis, “Bank CEO Compensation: Should There Be a Cap on Pay of Top Bankers?” Financial Express (7 March 2019), online: . 5. Wall Street (Twentieth Century Fox, 1987). 6. E. Fox, “Wal-Mart’s Low Wages Cost Taxpayers,” CNN Money (5 June 2013), online: .
7. R. Joseph, “Alexandria Ocasio-Cortez Says ‘System That Allows Billionaires Is Immoral,’” Global News (22 January 2019), online . 8. M. Day, “Bernie Against the Billionaires,” Jacobin Magazine (2 March 2019), online: . 9. This is a common taxonomy found in industrial relations textbooks and scholarship, although terminology can vary. See, e.g., J. Godard, Industrial Relations, the Economy, and Society, 4th ed (Concord, ON: Captus Press, 2011) at 9-18; and R. Hebdon & T. Brown, Industrial Relations in Canada, 2nd ed (Toronto: Nelson, 2012) at 16-17. See also A. Davies, Perspectives on Labour Law, 2nd ed (Cambridge: Cambridge University Press, 2009); and J. Budd & D. Bhave, “The Employment Relationship,” in A. Wilkinson, T. Redman, S. Snell & N. Bacon, eds, Sage Handbook of Human Resource Management (London: Sage, 2010) 51-70. 10. A. Alchian and W. Allen, University Economics, 3rd ed (Belmont, CA: Wadsworth, 1972) at 407-8. 11. Extensive literature exists on the application of the neoclassical economics model to labour markets. Most standard labour market economics texts explain the model. See, e.g., Alchian & Allen, supra note 10; and R. Ehrenberg, R. Smith & R. Chaykowski, Modern Labour Economics: Theory and Public Policy (Toronto: Pearson, 2004) at 44-57. For a discussion on and critique of the neoclassical
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Part I The Law of Work: Themes, Frameworks, and Perspectives perspective as applied to labour markets, see B. Kaufman, “Economic Analysis of Labor Markets and Labor Law: An Institutional/Industrial Relations Perspective,” in C. Estlund & M. Wachter, eds, Research Handbook on Economics of Labor and Employment Law (Northampton, MA: Edward Elgar, 2012) at 52. See also Davies, supra note 9 at 26-32; B. Kaufman, “The Impossibility of a Perfectly Competitive Labour Market” (2007) 31 Cambridge J Econ 775; J. Stanford, Economics for Everyone (London: Pluto Press, 2008) at 99-110; and J. Stiglitz, “Employment, Social Justice and Societal Well-Being” (2002) 141 Intl Lab Rev 9.
12. Davies, supra note 9 at 26. Since no individual employer or employee can influence the market-wide equilibrium wage rate for jobs, neoclassical economists say that everyone is a “price taker” in the labour market. Employers will hire the number of employees they require at the equilibrium wage rate. 13. Kaufman, “Economic Analysis,” supra note 11 at 58-61. The assumption that real-world labour markets approximate the perfectly competitive theoretical models is among the mostly hotly contested topics in work law. See Stiglitz, supra note 11. 14. See R. Posner, Economic Analysis of Law, 5th ed (New York: Aspen, 1998) at 361; and Davies, supra note 9 at 139-42. Neoclassicists also argue that the harmful effects of employment regulation are disproportionately experienced by the least advantaged workers. See the video clip of neoclassicist Milton Friedman on the minimum wage at . 15. Posner, supra note 14 at 359; and R. Epstein, “In Defense of the Contract at Will” (1984) 51 U Chicago L Rev 947. 16. Posner, supra note 14 at 363. 17. G. Becker, The Economics of Discrimination (Chicago: University of Chicago Press, 1957); and R. Epstein, Forbidden Grounds: The Case Against Employment Discrimination Laws (Cambridge: Harvard University Press, 1992). 18. R. Epstein, Simple Rules for a Complex World (Cambridge: Harvard University Press, 1995) at 176. 19. R. Epstein, “A Common Law of Labor Relations: A Critique of the New Deal Labor Legislation” (1983) 92 Yale LJ 1357. 20. Posner, supra note 14 at 350-58. 21. R. Epstein, “The Case Against the Employee Free Choice Act” (working paper, University of Chicago Law and Economics Olin Working Paper No. 452, 2009), online: . 22. Davies, supra note 9 at 28: “[N]eoclassical economists are strong advocates of the doctrine of freedom of contract. This means that people should be allowed to enter into contracts with whomever they choose, on whatever terms
they wish. The law should only interfere where there is evidence that a person has not given his or her genuine consent, for example, in case of duress or undue influence.” 23. E. Mayo, The Social Problems of an Industrialized Civilization (Abingdon, UK: Routledge, 2007). 24. See the Magna “Employee’s Charter” for Canada/USA at the company’s website: . 25. Godard, supra note 9 at 15. 26. D. Doorey, “A Model of Responsive Workplace Law” (2012) 50:1 Osgoode Hall LJ 47 at 67-76; and J. Budd & D. Bhave, “The Employment Relationship,” in A. Wilkinson, T. Redman, S. Snell & N. Bacon, eds, Sage Handbook of Human Resource Management (London: Sage, 2010) at 64. 27. See “Human Resource Professional Association Offers Credit for Union Avoidance Education,” online, Law of Work (blog) (2 November 2010): . 28. See M. Belcourt, G. Bohlander & S. Snell, Managing Human Resources, 6th ed (Toronto: Nelson Education, 2010) at 556. 29. T. Humber, “Good HR Makes Union Growth Harder,” HR Reporter (30 May 2017), online: . 30. Doorey, supra note 26. 31. Kaufman, “Economic Analysis,” supra note 11; and P. Weiler, Governing the Workplace: The Future of Labor and Employment Law (Cambridge, MA: Harvard University Press, 1990). 32. J. Budd, R. Gomez & N. Meltz, “Why a Balance Is Best: The Pluralist Industrial Relations Paradigm of Balancing Competing Interests,” in B. Kaufman, ed, Theoretical Perspectives on Work and the Employment Relationship (Champaign, IL: Industrial Relations Research Association, 2004); N. Meltz, “Industrial Relations: Balancing Efficiency and Equity,” in J. Barbash & K. Barbash, eds, Theories and Concepts in Comparative Industrial Relations (Columbia, SC: University of South Carolina Press, 1989); H. Collins, Employment Law, 2nd ed (Oxford: Oxford University Press, 2010) at 5; and J. Budd, Employment with a Human Face: Balancing Efficiency, Equity, and Voice (Ithaca, NY: ILR Press, 2004). Foundational works in industrial pluralism include J. Commons, Industrial Goodwill (New York: McGraw-Hill, 1919); S. Webb & B. Webb, Industrial Democracy (London: Longmans, Green, 1897); and J. Commons, A History of Labor in the United States (New York: Macmillan, 1919). In Canada, a leading voice in industrial pluralism was Harry Arthurs. See especially H. Arthurs, “Understanding Labour Law: The Debate over ‘Industrial Pluralism’” (1985) 38 Curr Legal Probs 83.
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Chapter 3 Key Perspectives That Shape the Law of Work 51 33. See the argument by Professor Robert Reich (University of California, Berkeley), who was formerly US secretary of labor, on how unions and collective bargaining promote a healthy economy in “Why We Need Stronger Unions, and How to Get Them,” online, Robert Reich (blog) (27 January 2009): . 34. International Labour Organization, World of Work 2008: Income Inequalities in the Age of Financial Globalization (Geneva: ILO, 2008) at 83; S. Dynarski, “Fresh Proof that Strong Unions Help Reduce Income Inequality,” New York Times (6 July 2018), online: ; and A. Semuels, “Fewer Unions, Lower Pay for Everybody,” The Atlantic (30 August 2016), online: . See also discussion in the Canadian context by M. Lynk, “Labour Law and the New Inequality” (2009) 15 Just Lab 125, online (pdf): . 35. For a discussion of the rise and fall of industrial pluralism in Canada, see L. Panitch & D. Schwartz, From Consent to Coercion: The Assault on Trade Union Freedoms, 3rd ed (Aurora, ON: Garamond, 2003); and H. Arthurs, “Landscape and Memory: Labour Law, Legal Pluralism, and Globalization,” in T. Wilthagen, ed, Advancing Theory in Labour Law and Industrial Relations in a Global Context (Amsterdam: Koninklijke Nederlandse Akademie van Wetenschappen, 1998) at 21. 36. Statistics Canada, “Union Status by Geography,” Table 14-10-0129-01, online: ; Statistics Canada, “Union Status by Industry,” Table 14-10-0132-01, online: . 37. A. Forrest, “Organizing Eaton’s: Do the Old Laws Still Work?” (1988) 8 Windsor YB Access Just 190. 38. Godard, supra note 9 at 15. Godard labels this perspective “liberal-reformist.” 39. J. Fudge, “Reconceiving Employment Standards Legislation: Labour Law’s Little Sister and the Feminization of Labour” (1991) 7 JL & Soc Pol’y 73 at 77. See also D. Beatty, “Ideology, Politics, and Unionism,” in K. Swan & K. Swinton, eds, Studies in Labour Law (Toronto: Butterworths, 1983) 299; J. Conaghan, “The Invisibility of Women in Labour Law: Gender Neutrality in ModelBuilding” (1986) 14 Intl J Soc L 377; and J. White, Sisters in Solidarity: Women and Unions in Canada (Toronto: Thompson Educational, 1993). 40. See Statistics Canada, “Union Status by Industry,” supra note 36; there is a pull down window to search by gender.
41. See the collected works in L. Vosko, ed, Precarious Employment: Understanding Labour Market Insecurity in Canada (Montreal: McGill-Queen’s University Press, 2006); and Law Commission of Ontario, Vulnerable Workers and Precarious Work (Toronto: Law Commission of Ontario, 2012), online: ; and the discussion on precarious work in Chapter 4. 42. M. Thomas, Regulating Flexibility: The Political Economy of Employment Standards (Montreal: McGill-Queen’s University Press, 2009). 43. Recent literature from a critical reformist perspective includes C. Cranford, T. Das Gupta, D. Ladd & L. Vosko, “Thinking Through Community Unionism,” in Vosko, supra note 41 at 353; J. Fudge, “After Industrial Citizenship: Market Citizenship or Citizenship at Work?” (2005) 60 RI 631; K. Rittich, “Feminization and Contingency: Regulating the Stakes of Work for Women,” in J. Conaghan, R.M. Fischl & K. Klare, eds, Labour Law in an Era of Globalization: Transformative Practices and Possibilities (Oxford: Oxford University Press, 2002); K. Stone, “Rethinking Labour Law: Employment Protection for Boundaryless Workers,” in G. Davidov & B. Langille, eds, Boundaries and Frontiers of Labour Law (Oxford: Hart, 2006) at 155; and A. Blackett, “Emancipation in the Idea of Labour Law,” in G. Davidov & B. Langille, eds, The Idea of Labour Law (Oxford: Oxford University Press, 2011). 44. See, e.g., E. Tucker, “Reforming Labour Law: Can We Escape Labour Law’s Recurring Regulatory Dilemmas?” (2010) 39:2 Indus LJ 99; M. Lebowitz, Beyond Capital, 2nd ed (New York: Palgrave Macmillan, 2003); R. Hyman, “Pluralism, Procedural Consensus, and Collective Bargaining” (1978) 16 Brit J Indus Rel 16; and H. Braverman, Labour and Monopoly Capital: The Degradation of Work in the Twentieth Century (New York: Monthly Review Press, 1974). 45. Tucker, supra note 44 at 108. 46. Tucker, supra note 44 at 113-15. See also Godard, supra note 9 at 16-17; and R. Hyman, Industrial Relations: A Marxist Introduction (London: Macmillan, 1975). 47. Godard, supra note 9. See also Budd, Gomez & Meltz, supra note 32. 48. On the sporadic role of the Communist Party in Canadian labour history, see J. Fudge & E. Tucker, Labour Before the Law: The Regulation of Workers’ Collective Action in Canada, 1900-1948 (Don Mills, ON: Oxford University Press, 2001); and D. Morton, Working People, 5th ed (Montreal and Kingston: McGill-Queen’s University Press, 2007).
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49. See, e.g., T. Eagleton, Why Marx Was Right (New Haven, CT: Yale University Press, 2011); S. Jeffries, “Why Marxism Is on the Rise Again,” Guardian (4 July 2012), online: ; and R. Varghese, “Marxist
World: What Did You Expect from Capitalism?” Foreign Affairs (July/August 2018), online: .
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CHAPTER 4
What Is Employment? LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 53 II. Legal Tests for Determining Employment Status 54 A. The Common Law Tests for Employment Status 56 B. Employment Status in the Regulatory and Collective Bargaining Regimes 59 III. Is the Distinction Between Employee and Independent Contractor Appropriate? 63 IV. Chapter Summary 64 Questions and Issues for Discussion 64 Notes and References 66
• Distinguish between an employee, an independent contractor, and a dependent contractor. • Explain why this distinction is important in the law of work. • Explain how the courts, administrative tribunals, and governments (in statutes) distinguish between the different groups of workers. • Explain how employees are often misclassified as independent contractors or unpaid interns or trainees with the result that they are excluded from employee protections in the law. • Discuss contemporary debates about whether it still makes good policy sense to rely on the technical legal distinction between “employees” and “independent contractors.”
I. Introduction Samir was a taxi driver in Ottawa. He owned his own car and paid the car’s expenses, including the insurance. He did not own the taxi licence that permitted him to use his car as a taxicab, so he rented one. Samir decided what hours to work and where in the city to focus his efforts. He could hire another worker to drive his car when he was not available. He was not paid a wage; his compensation comprised the amount of fares received from customers remaining after paying his expenses. One of those expenses was a fee paid to a dispatch company called Blue Line Taxi. That fee entitled Samir to pick up customers at designated Blue Line taxi stands in Ottawa, and to use a two-way radio system through which Blue Line assigned customers to taxi drivers. By agreeing to drive his car under the Blue Line Taxi banner, Samir subjected himself to a set of rules prepared by Blue Line relating to dress code and treatment of customers, among others. If Samir violated one of these rules, Blue Line could suspend him from access to the dispatch service. Late one night, on a quiet and dark street, a customer sliced Samir’s throat and ran from the car. Samir suffered serious injuries, as well as trauma that prevented him from ever driving a taxicab again. He was unable to do any job for a long while, and he applied for benefits under workers’ compensation legislation, which creates a government-controlled insurance plan to compensate employees injured in the course of their employment (see Chapter 24). However, he was at first denied the benefits because he was found not to be an employee of Blue Line. The adjudicator ruled that Samir was an independent contractor, in business for himself and therefore not covered by workers’ compensation legislation, which only insures employees. Samir appealed, and the workers’ compensation appeals tribunal overturned that decision and ruled that he was an employee of Blue Line and, therefore, was entitled to workers’ compensation benefits.1 It might seem strange that an issue so important to Samir and his family turns on a narrow, technical legal distinction between employment and not employment. Yet, as mentioned in
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Chapter 1, this question of employment status—whether a worker is characterized as an employee or a “self-employed” independent contractor—is a central boundary issue in the law of work. Common law judges and governments (through legislation) have developed a complex system of legal rules to regulate the employment relationship. Most of the material considered in this book relates to those rules, which do not apply to workers who are characterized as independent contractors. Nor do they apply to types of work that are not recognized as being part of the formal labour market at all, such as caring for your children or other family members and other types of unpaid work, such as volunteer work. This chapter explores how the courts and governments have drawn boundaries around the employment relationship for the purposes of developing and assigning special legal rules to that relationship. We need to confront the question of how the law distinguishes between work performed through the institution of “employment” from work performed through all other sorts of arrangements at the outset of our journey, because it is a fundamental question that transcends all three legal regimes: common law, regulatory law, and collective bargaining law. We will also look at how courts and governments have sometimes recognized a hybrid category of “dependent contractor,” which lies in between a true employee and a true independent contractor to extend the reach of employment-related legal rules to economically vulnerable contractors. Finally, we will consider the policy question of whether this distinction between employment and not employment still makes sense as a way of defining who should be entitled to work-related protections and other social benefits, such as Employment Insurance.
II. Legal Tests for Determining Employment Status
An employee is a worker who enters into an employment contract with an employer that involves an exchange of labour for wages (and maybe benefits), and that contract is subject to all of the laws that govern employment contracts. As we will discuss throughout this text, those laws serve both to preserve an employer’s authority over its employees and to provide a measure of protection for employees, who are presumed to be vulnerable. Independent contractors, on the other hand, are businesspeople who are presumed to be capable of protecting their own interests.2 Therefore, as depicted in Figure 4.1, our laws confer a wide spectrum of protections on “employees” through both common law and statutory rules and entitlements, whereas independent contractors are largely left to their own devices. Independent contractors enter into commercial contracts to sell their labour in exchange for revenues and the chance of profit, and the laws that govern commercial contracts are very different from those that apply to employment contracts. The distinction between an employee and an independent contractor is also important in determining liability when workers cause damage to others in the course of their work. Judges have held employers liable (in tort law) for damages caused by their employees according to a rule known as vicarious liability, which is considered in Chapter 16. A business would rarely be held liable “vicariously” for harm caused by an independent contractor.3 Since an employee is acting on behalf of the employer and under the employer’s control, it is sometimes fair to hold the employer liable for damage caused by its employees.
independent contractor: A worker who is in business for himself or herself and who, therefore, is not an employee. employee: A worker who is in a position of subordination to an employer and subject to rules set out in an employment contract. commercial contract: A contract between two businesses, including a business in the form of an independent contractor. vicarious liability: A legal rule under which an employer is liable for damage caused to a third party by one or more of its employees.
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Independent contractors are also treated differently than employees in tax law. The Income Tax Act treats independent contractors as businesses and permits them to claim expenses to reduce their total tax bill, whereas employees are not permitted to deduct expenses.4 The ability to deduct expenses and thereby reduce their tax burden causes some workers to request to be treated as an independent contractor even though the law might consider them employees. What distinguishes employees from independent contractors is autonomy and control. Employees are workers who sell their autonomy over certain key decisions, such as how and when to work, in exchange for income (wages, benefits) and some measure of job security. Employees agree to be subordinate to their employer’s control.5 Independent contractors are running their own business and retain more autonomy and control over how and when they perform their work. While this may sound straightforward, in practice it is not always easy to decide whether an employment relationship exists. In many instances, workers exhibit a mix of autonomy and subordination. Courts, tribunals, and governments have struggled to create legal tests to help them distinguish employees from independent contractors. Over time, a third intermediate category known as a dependent contractor also emerged. As a result, today we can think of the status of workers along a continuum, as depicted in Figure 4.1.
FIGURE 4.1 Categories of Workers in the Law of Work INDEPENDENT CONTRACTORS
DEPENDENT CONTRACTORS
In business for themselves. Relationship is considered a commercial contract; therefore, the employment laws considered in this text and intended to govern the employment relationship do not apply. Independent contractors may voluntarily opt into some social insurance schemes, such as workers’ compensation and Employment Insurance. Unlike employees, independent contractors are permitted to deduct business expenses under the Canadian Income Tax Act.
Employment laws do not apply
Workers who have more autonomy than an “employee,” but who remain economically dependent on one primary customer. ■ Common Law Regime o Entitled to implied “reasonable notice” of termination of contract. ■ Regulatory Standards Regime o Coverage under some human rights, workers’ compensation, and health and safety legislation. ■ Collective Bargaining Regime o Full coverage under collective bargaining legislation.
Employment laws may apply
EMPLOYEES Subordinate to and economically dependent on their employer. ■ Common Law Regime o Full law of the employment contract considered in Part II of this text applies, including common law implied terms such as the entitlement to “reasonable notice of termination” (Chapter 10). ■ Regulatory Standards Regime o Full coverage under employment-related statutes: • Employment standards. • Human rights. • Workers’ compensation. • Occupational health and safety. • Pay equity/employment equity. • Employment Insurance. ■ Collective Bargaining Regime o Full coverage under collective bargaining legislation.
Employment laws apply
dependent contractor: A worker whose status falls in between that of an employee and an independent contractor. This worker has more autonomy and independence than a typical employee, yet remains economically dependent on one customer for income and is subject to considerable control at the hands of that customer.
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We will consider first how common law judges distinguish between these categories of workers before turning our attention to the regulatory and collective bargaining regimes.
A. The Common Law Tests for Employment Status Courts have long struggled with the appropriate legal test to distinguish between an employee, an independent contractor, and a dependent contractor.
1. Distinguishing Between an Employee and an Independent Contractor The courts’ approach to assessing whether a worker is an employee or an independent contractor has evolved over time. Initially, courts looked primarily at the degree of control exercised over the worker (the “control test”). The Supreme Court of Canada described the control test as follows: “the essential criterion of employer-employee relations is the right to give orders and instructions to the employee regarding the manner in which to carry out his work.”6 However, the control test was criticized for being overly simplistic and soon gave way to a more nuanced “fourfold test,” applied in the 1947 case of Montreal v. Montreal Locomotive Works Ltd., which considered (1) control, (2) ownership of the tools, (3) chance of profit, and (4) risk of loss.7 In some cases, judges also applied what they called the “organization test,” which asked whether the work in question is “an integral part of the business” of the purported employer or only peripheral to that business, and whether the worker had been integrated into the business, such as through regular scheduling and required adherence to company rules and procedures.8 More recently, in the 2001 case of 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., the Supreme Court of Canada encapsulated these various tests into the following new leading statement of the approach judges must take in assessing whether a worker is an employee or an independent contractor: The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker’s activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks.9 [Emphasis added]
Ultimately, courts look at all of the facts and decide whether the worker looks more like an employee or more like an entrepreneur who is in business in their own right. We will learn in Chapter 10 that in the common law regime, employees are entitled to notice of termination to give them time to prepare for unemployment and look for work. In the three cases considered below, the workers are claiming that they were “employees” in order to receive damages due to the alleged employer’s failure to provide them with this contractual entitlement to notice of termination.
BOX 4.1 » CASE LAW HIGHLIGHT Employee or Independent Contractor? Braiden v. La-Z-Boy Canada Limited 2008 ONCA 464 Key Facts: Braiden worked for La-Z-Boy for 22 years as a sales representative. In 1996, 15 years into this employment, the employer instructed him to sign a contract that stated he was an “independent sales and marketing consultant” and not an “employee” of La-Z-Boy. In 1997, Braiden was instructed by La-Z-Boy to incorporate a business, and future contracts would
be signed between that company and La-Z-Boy. Braiden worked mostly from a home office, exclusively for La-Z-Boy, and he paid his own expenses. He was paid solely on the basis of commissions. La-Z-Boy set sales targets and controlled which products Braiden could sell and prohibited him from assigning his work for La-Z-Boy to other workers. In 2003, Braiden’s contract was terminated without notice, which would be unlawful if he were an employee but not if he were an independent contractor. Braiden sued La-Z-Boy for wrong-
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Chapter 4 What Is Employment? 57 ful dismissal, which (as we will learn in Part II) is a lawsuit that alleges an employment contract was terminated without reasonable notice having been given. Issue: Was Braiden working pursuant to an “employment” contract, and, if so, did the employer violate that contract? Decision: Yes and yes. The court referred to the Supreme Court of Canada decision in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. for the applicable legal test and concluded as follows: In many ways, the question … —whose business is it?—lies at the heart of the matter. Was the individual carrying on business for him or herself or was the individual carrying on the business of the organization from which he or she was receiving compen-
sation? In my view, given the findings of the trial judge, the answer to that question can only be that Mr. Braiden was carrying on the business of La-Z-Boy. Braiden was required to work full time and exclusively for La-Z-Boy. The clients were assigned to him by La-Z-Boy. His territory, which products he sold, the quantity and price, and what sales methods were to be used were determined by LaZ-Boy. Finally, the sales work he performed was crucial to LaZ-Boy’s business. Since Braiden was an employee, he was working pursuant to an employment contract. Applying the rules of the common law of employment contracts (which we will discuss in Part II), Braiden was entitled to “reasonable notice” from La-Z-Boy of the impending termination of his contract. In this case, that amounted to 12 months’ notice.
In Braiden, the contract clearly stated that the worker was not an employee, and yet the court ruled that he was. The courts have said that how a contract describes a worker, while relevant, does not determine the worker’s status. If it did, then an employer could easily avoid all of its employment law obligations by simply including a term in every employment contract stating that the worker is an “independent contractor.”
BOX 4.2 » CASE LAW HIGHLIGHT Employee or Independent Contractor? Fisher v. Hirtz 2016 ONSC 4768
wrongfully terminated without reasonable notice. Hirtz argued that Fisher was an independent contractor.
Facts: Hirtz owned a company called Group Five that supplied tradespeople to perform work on home renovations. Fisher was a painter and was assigned work by Group Five. There was no written contract, and Fisher was free to accept or not accept jobs. Fisher submitted invoices for hours worked and was paid biweekly based on $35 per hour, with no statutory deductions and no benefits from Group Five. Fisher filed her taxes as an independent contractor, paid for her own insurance, and obtained her own workers’ compensation coverage. Fisher owned most of the tools needed to complete the painting jobs, but the paint was supplied by Group Five. She was not restricted by Group Five from taking other jobs, although in practice that rarely happened. After about four years, Hirtz and Fisher had an argument and Fisher was no longer assigned work. Fisher sued, alleging that she was an employee and she had been
Issue: Is Fisher an employee of Group Five or an independent contractor? Decision: Fisher is an independent contractor and therefore not entitled to reasonable notice of termination. The court discussed the leading cases, including Sagaz Industries and Braiden v. La-Z-Boy (see above), and ruled that Fisher more closely resembled an independent contractor than an employee. She treated herself as an independent contractor in every way, owned most of the tools, and had freedom whether to accept jobs offered by Group Five or take other work even if she rarely did. She was dependent on Group Five only because she chose to be, not because the relationship restrained her from building a painting business. The court dismissed the wrongful dismissal lawsuit because Fisher was not an employee.
Box 4.3 presents a conceptual tool that helps assess how a court is likely to decide a dispute over whether a worker is an employee or an independent contractor.
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BOX 4.3 » Employee or Independent Contractor? The “Scorecard” Method Courts and administrative tribunals are often asked to decide whether a worker is an “employee” or an “independent contractor” because different laws and rules apply to employment contracts than to contracts between two businesses. Although courts apply a variety of legal tests to arrive at a decision on the matter, all of these tests attempt to answer one fundamental question: Does the worker look more like an employee or like an entrepreneur in business for themselves? One way to assess whether a worker is an employee or an independent contractor is to use a “scorecard” to track the
FACTORS THAT MAKE THE WORKER LOOK MORE LIKE AN EMPLOYEE
factors adjudicators consider. Judges and tribunals do not refer explicitly to a scorecard like this, but they do weigh the following factors. No individual factor is determinative of the status of the worker. When using this scorecard, consider all of the facts and ask yourself whether, based on the distribution of checkmarks in the scorecard, the worker more closely resembles an independent contractor in business for themselves or an employee dependent on the company for income. See the Exercise at the end of this chapter for scenarios to test this approach.
FACTORS THAT MAKE THE WORKER LOOK MORE LIKE AN INDEPENDENT CONTRACTOR
The company sets working hours and assigns work.
The worker has considerable discretion over when and how to perform work.
The company owns the tools needed to do the job.
The worker owns the tools needed to do the job.
The company controls how the work is done and closely supervises the work.
The worker receives little direct supervision by the company.
The customers/clients are the company’s.
The worker has a variety of customers/clients.
The worker works exclusively for the company.
The worker advertises their services on the open market.
The work is performed at the company’s premises.
The worker has their own office and pays their own expenses.
The worker has no personal assets invested in the company.
The worker has invested their own money in the business, so is at risk of loss but could also earn a profit.
The worker must perform assigned tasks themselves.
The worker can hire others to perform work.
Regular employee deductions are made from pay.
The worker issues invoices to the company; no employee deductions are made.
The company sets the price of the goods or services sold to customers.
The worker has discretion to set the price of goods sold or services sold to customers.
The contract defines the worker as an employee.
The contract defines the worker as an independent contractor.
2. Dependent Contractors in the Common Law Regime The intermediate category of “dependent contractor” recognizes that a worker might have some autonomy in the manner in which they perform work, and may have the external appearance of being an independent contractor, yet still be economically dependent and subordinate. Courts have ruled that dependent contractors, owing to their subordinate status of economic dependence, should in some respects be treated as if they are employees. Most importantly, a dependent contractor is entitled to “reasonable notice” of termination when their services are terminated, like an employee. In assessing whether a worker is a dependent contractor, courts first consider whether the worker looks more like an employee or a contractor by examining the same factors we just looked at in Box 4.3. If that analysis leads the court to conclude that the worker more closely resembles a contractor than an employee, a second step then considers whether the worker is an
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Chapter 4 What Is Employment? 59
independent or a dependent contractor. In considering this latter question, the courts emphasize the degree to which the worker performed exclusively or almost exclusively for the company.10 The decision in Box 4.4 demonstrates this approach.
BOX 4.4 » CASE LAW HIGHLIGHT Dependent Contractors in the Common Law Keenan v. Canac Kitchens Ltd. 2016 ONCA 79 Key Facts: Keenan was hired as an installer of kitchen cabinets in 1976 and was promoted to foreman in 1983, which required him to supervise installers at jobs assigned by Canac Kitchens. In 1987, he was informed by Canac that he would henceforth perform his work as a contractor rather than an employee of Canac. Canac would assign jobs to installers and pay Keenan a fixed amount per job out of which he would pay the installers and manage the project. Keenan was required to obtain insurance in case of damage to the cabinets. He set up a sole proprietorship called Keenan Cabinetry through which he provided services to Canac. Payments from Canac did not include any deductions. He worked almost exclusively for Canac, but as work from Canac declined beginning in 2007, he started to do some jobs for another cabinetry company, amounting to about 25 percent of his billings compared to about 75 percent from Canac. In 2009, Canac informed Keenan, who was 63 years old, that his services were no longer needed. Keenan sued to recover damages for failure by Canac to provide him with “reasonable notice” of termination of the relationship.
Keenan argued that he was a dependent contractor, while Canac argued he was an independent contractor. Issue: Was Keenan a dependent or an independent contractor? Decision: Keenan was a dependent contractor. The court of appeal ruled that in assessing whether a worker is a dependent contractor, “a finding that the worker was economically dependent on the company due to complete exclusivity or a high level of exclusivity weighs heavily in favour of the conclusion that the worker was a dependent contractor.” In assessing whether the relationship was one of exclusive service or near exclusivity, the judge must consider the entire history of the relationship. For almost 30 years, Keenan worked exclusively for Canac. Only in the final few years did he work for another company, and that was only because Canac cut back on jobs. Viewed in its entirety, this was a relationship of economic dependence and near exclusive service to Canac. Since Keenan was a dependent contractor, he was entitled to “reasonable notice,” which the court assessed at a lengthy period of 26 months. Therefore, Canac was ordered to pay 26 months’ wages as damages.
B. Employment Status in the Regulatory and Collective Bargaining Regimes Expert tribunals tasked with interpreting and enforcing employment-related statutes of the sort we explore in Part III take a similar approach to the courts in deciding whether a worker is an employee for the purposes of the statute they are interpreting. The issue of employment status frequently arises because many statutory entitlements in Canada apply only to employees, as indicated in Figure 4.1. In a typical case, a worker files a complaint under a statute that provides entitlements to employees, and the employer responds by arguing that the worker is not an employee and therefore is not covered by the statute. The investigator or tribunal must then decide if the worker satisfies the definition of “employee” in the statute. When dealing with statutes, it is important to begin by looking at what the statute says about the matter. In terms of the distinction between an employee and an independent contractor, Canadian statutes tend to provide definitions of “employee” that are not particularly helpful. The Alberta Employment Standards Code definition of “employee” is typical: “employee” means an individual employed to do work who receives or is entitled to wages and includes a former employee.11
This definition tells us that an “employee” is a worker who is paid for work they perform, but it does not explain the difference between an employee and an independent contractor. That
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distinction is left mostly to the investigators, tribunals, and courts tasked with enforcing the legislation. As the case in Box 4.5 demonstrates, those adjudicators approach the question in a similar manner to the common law courts and apply similar or the same legal tests.
BOX 4.5 » CASE LAW HIGHLIGHT Employee or Independent Contractor for Purposes of Employment Standards Legislation Director of Labour Standards v. Acanac Inc. 2013 SKQB 21 Key Facts: Acanac provides a technology platform that delivers voice communication over the Internet. Sabau was retained in September 2009 as a technical assistant at a rate of $10 per hour, later raised to $12. His job was to answer calls from Acanac customers and provide them with technical help using Acanac’s platform. Sabau was given basic training, and an Acanac manager could listen in on calls for quality control. An agreement between the parties identified Sabau as an independent contractor. Sabau logged onto Acanac’s system at the start of a shift and logged out for breaks and at the end of his shift. He also kept track of hours worked on a time sheet. In 2010, the relationship ended and Sabau filed a complaint under the provincial employment standards legislation claiming $6,625 in unpaid wages. Acanac argued that Sabau was an independent contractor. An employment standards adjudicator sided with Acanac, but Sabau applied to the court for judicial review of the decision. Issue: Was Sabau an employee for the purposes of the Saskatchewan Labour Standards Act or an independent contractor? Decision: The court overruled the labour standards adjudicator and found that Sabau was an employee. The judge
referred to the statutory definition of “employee,” which stated simply that an employee is “a person of any age who is in receipt of or entitled to any remuneration for labour or services performed for an employer.” An “employer” was defined as a person that employs employees and who “either has control or direction of [the] employees, or is responsible, directly or indirectly … for the payment of wages to … one or more employees.” The court then looked to the common law tests of employment status, including the Supreme Court of Canada decision in Sagaz Industries (referenced above). The fact that Sabau signed a contract stating he was an independent contractor was relevant, but not determinative. Acanac had control over Sabau in the sense that it coached and monitored him and ultimately could terminate the relationship for poor performance. The clients were Acanac’s, so Sabau had little ability to expand his client base or grow his income. While Sabau owned the phone and computer needed to perform the job, the court concluded that “the true tool here was Acanac’s system. It was Acanac’s system that opened up Sabau’s opportunity to engage callers.” Considering “the totality of the relationship,” the court found that Sabau looked more like an employee than an independent contractor. Acanac was ordered to pay Sabau $6,625 in wages due under the Labour Standards Act.
Sometimes governments include definitions that extend coverage under legislation to a wider segment of workers than might be considered employees if the normal common law tests were applied. One way to do this is to make the statutes applicable to all contracts and not just employment contracts. An example can be found in the Ontario Human Rights Code, which prohibits discrimination in all contracts as well as discrimination in employment.12 This eliminates the need for a worker alleging discrimination at work to first prove they meet the legal test of employee. Similarly, the federal Human Rights Act defines employment broadly as any “contractual relationship with an individual for the provision of services personally by the individual.”13 The Ontario Occupational Health and Safety Act defines an employer as any person who employs workers, including “contractors and subcontractors” to perform work.14 These definitions encompass any contract for the performance of work by an individual worker under employment legislation, regardless of whether the worker would be characterized as an employee or an independent contractor applying the usual tests.15 Another way to extend the reach of a statute to cover a broader scope of workers than just employees is to expressly define “employee” to include dependent contractors. For example,
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many of Canada’s collective bargaining statutes simply define employee to include dependent contractors. This expanded definition ensures that collective bargaining rights are available to workers such as taxi drivers and truck owner-operators who have greater independence than a typical employee, yet remain vulnerable and dependent on a single business provider such that they are in a position of subordination similar to an employee.16 An interesting contemporary question is whether drivers working under new technology platforms such as Uber and Lyft will be characterized as employees, dependent contractors, or independent contractors when they apply for coverage under employment-related statutes. This issue is discussed in Box 4.6.
BOX 4.6 » TALKING WORK LAW Are “Gig Workers” Employees? Are workers engaged in the so-called “gig economy” employees, dependent contractors, or independent contractors? Many of these workers, such as Uber and Lyft drivers and bike couriers, for example, work with considerable independence and own their own “tools” in the form of the cars and bikes they use to perform their work. However, in other respects, they resemble employees, or at least dependent contractors. For example, by registering and logging onto the Uber app, drivers agree to be bound by rules imposed by Uber in the same way that taxi drivers have long been bound by rules imposed by the dispatch companies that refer customers to them. Canadian labour boards have ruled in the past that traditional taxi drivers that rely on a dispatch service are employees or dependent contractors and therefore protected by employment-related legislation.* Is an Uber driver in a similar situation? Professor Eric Tucker of York University has discussed the issue of control in the gig economy: To achieve its goals of maintaining standards and efficiency, Uber exercises considerable control over its drivers. Although Uber drivers are not required to book onto the service, once they do, they are governed by Uber’s rules. For example, when a fare is offered to a driver, the driver has a very limited time to accept. If the driver does not respond in time, the fare is offered to another driver. Drivers who decline too many trips may be forcibly logged off the app for a period of time. The driver and the vehicle must meet quality standards set by Uber and are subject to customer reviews after each trip, with poor reviews potentially resulting in deactivation. These controls sound remarkably similar to those imposed by traditional dispatches, which complicates Uber’s
claim that functionally it is merely a rentier capitalist selling digitialized [sic] dispatch services to drivers. Moreover, it is precisely these kinds of functional controls that make both traditional dispatches and Uber vulnerable to being legally classified the employer of the drivers in its network. Indeed, there is a rash of claims being brought by Uber drivers seeking employee status, whether for the purposes of collective representation or to gain the protection of minimum employment standards, as well as growing legal academic commentary on whether Uber employees are or should be considered employees.† Uber drivers in Canada and elsewhere have already begun to file legal actions asserting they are Uber employees. In 2018, the English Court of Appeal ruled that Uber drivers are employees because they are subject to considerable control by Uber once they turn on the Uber app.‡ In 2019, the Ontario Court of Appeal struck down as illegal a clause in the standard Uber Eats driver contract requiring that all disputes between drivers and Uber be dealt with exclusively through private arbitration held in Amsterdam. That decision cleared the way for the claim to proceed, which alleges that Uber drivers are “employees” and entitled to benefits required under the Ontario Employment Standards Act.§ As we have seen, the issue for courts and tribunals in addressing whether “gig” workers are employees or independent contractors is ultimately whether the workers look more like dependent employees or entrepreneurs in business for themselves. The answer is far from obvious when applying the usual legal tests. A more fundamental question, considered below, is whether it even makes sense to apply the distinction between employee and independent contractor to economically precarious workers, including so-called gig workers, who are
gig economy: An economic arrangement characterized by an exchange of labour for money that is facilitated by an app or electronic platform that connects customers to workers.
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barely earning a living and who are dependent on technological platforms for their income. * Retail, Wholesale and Department Store Union v. Diamond Taxicab Association (Toronto) Limited, 1992 CanLII 6786 (Ont. LRB) (taxi drivers are “dependent contractors” and covered by labour relations legislation); J. W. Ferguson Services v. Kolyn, [2005] Ont. LRB Rep. Jan/Feb 97 (a taxi driver is an “employee” under employment standards legislation); and Castlegar Taxi (1988) Ltd. v. British Columbia (Director of Employment Standards), 1991 CanLII 8187 (BCSC). † E. Tucker, “Uber and the Unmaking and Remaking of Taxi Capitalism: Technology, Law, and Resistance in Historical Perspective” in D. McKee, F. Makela & T. Scassa, eds, Law and the “Sharing Economy”: Regulating
Online Market Platforms (Ottawa: University of Ottawa Press, 2018) 357 at 379; and M. Cherry, “Beyond Misclassification: The Digital Transformation of Work” (2016) 37(3) Comp Lab L & Pol’y J 577. ‡ Uber B.V. v. Aslam, [2018] EWCA Civ 2748; and S. Butler, “Uber Loses Appeal Over Driver Employment Rights,” Guardian (20 December 2018), online: . § Heller v. Uber Technologies Inc., 2019 ONCA 1. See also “Heller v. Uber: Some Thoughts from Ontario on Uber’s Arbitration Clause,” online, Law of Work (blog): . The Supreme Court of Canada heard an appeal from this decision in November 2019, but the decision had not been issued at the time of writing.
More often, governments narrow the definition of “employee” to exclude from legislative rules and protections workers who otherwise would be considered employees if the normal common law tests were applied. As we will learn in Part III of this book, thousands of Canadian employees are excluded from all or part of employment-related statutes. For various policy reasons, some of which are far from clear, governments have decided that certain employees should not be entitled to statutory protections.17 For example, some employment standards statutes in Canada exclude information technology employees, law articling students, agricultural and construction workers, and workers exercising managerial functions from some or all of employment standards protections.18 University and college students who are working for companies as part of their educational program, such as through an academic internship, are also excluded from many statutory protections.19 In recent years, there has been considerable attention directed at companies that have mischaracterized employees as unpaid interns or trainees to avoid having to comply with employment protection statutes. As the case in Box 4.7 demonstrates, a worker who is performing training for a business outside of a formal educational program is probably an employee under employment-related statutes even if the employer claims otherwise.
BOX 4.7 » CASE LAW HIGHLIGHT Are Trainees and Interns “Employees” Under Employment Standards Legislation? Pichette v. Lumac Holdings Ltd. 2011 CanLII 80536 (NBLEB)
alleging unpaid wages and vacation pay required by the statute.
Key Facts: A gas station, Lumac, placed an ad for a cashier, but by the time Pichette applied the position had been filled. Pichette told the manager of Lumac (MacKenzie) that she would “train for nothing” and work night shifts. MacKenzie agreed to let her train for free, figuring he had nothing to lose, and if Pichette worked out well he would hire her. Pichette worked 27 hours over four days and then asked to be paid for those hours. Lumac management refused because Pichette had volunteered to work for free. Pichette filed a complaint under the Employment Standards Act (ESA)
Issue: Was Pichette an “employee” for the purposes of the ESA, or was she an unpaid trainee? Decision: Pichette was an employee. The tribunal noted that the statute defined an “employee” as a person “who performs work for or supplies services to an employer for wages, but does not include an independent contractor.” It does not exclude workers who are training, and the ESA prohibits parties from agreeing to contract out of its requirements. Therefore, even if Pichette agreed to work for free, that agreement would amount to an unlawful contracting out of the ESA. The tribunal concluded:
unpaid intern: A term used to describe a person who performs work for a business or receives training by a business but who is not paid for that work.
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regardless of any arrangements between Lumac and Pichette, and regardless of whether she said that she would work for free or not, the ESA is clear. It does not allow for unpaid training time. When an employee is given specific duties to do, from that point on he or she becomes an employee on that date. That is the situation in this case. Regardless of
what was said between Pichette and MacKenzie, it is the Act that covers the situation in this case. Pichette is entitled to her pay from day one. She must be paid for the hours that she worked at the minimum wage. Lumac was ordered to pay $266.76 in wages and accrued vacation pay.
The practice of using unpaid internships has been defended on the grounds that it enables young workers to gain much-needed experience and to build career networks that can lead to good jobs in the future. However, unpaid internships have also been criticized for taking away paid jobs, for privileging wealthy workers who can afford to work for free, and for perpetuating the exclusion of young workers from the paid labour market.20
III. Is the Distinction Between Employee and Independent Contractor Appropriate? Our discussion so far demonstrates that the distinction between an employee and an independent contractor is crucial in the law of work, but it is often blurred. There is no test that clearly distinguishes employees from contractors. In recent years there has been a spike in the number of employees who are being misclassified as independent contractors. This legal ambiguity is problematic because many of Canada’s benefits, protections, and entitlements for workers, both contractual and legislative, are linked to employment. The significance of the distinction between employees and contractors dates back to the mid20th century, when Canadian governments had in mind a particular form of work known as the standard employment relationship (SER). The SER existed in the post–World War II period primarily in large industrial workplaces, applied mostly to men,21 and was characterized by long-term job security, regular full-time hours, and internal job markets in which workers expected to rise through the ranks of a single employer over their working lives.22 Canadian labour policy promoted the ideal of the single-income male breadwinner working in an SER, earning decent pay with benefits, supported by a female spouse performing unpaid domestic work in the home, perhaps supplemented with “pin money” through occasional part-time work. Our work laws reflected this ideal and therefore were designed to protect “employees” at work and also when they lost their jobs through no fault of their own. However, the ideal of the SER no longer reflects the reality of the labour market for many Canadians. Whereas in 1960 more than 70 percent of Canadian families had a male parent working in full-time employment and a female parent at home raising children, by 2014 only 16 percent of families had a stay-at-home mother, and in 69 percent of families both parents worked.23 Nearly 40 percent of Canadians now work under work arrangements that differ substantially from the SER, including part-time, seasonal, or temporary jobs as well as “gig” workers or own account self-employed workers, who might meet the legal definition of an independent contractor but who are economically precarious and struggle to earn enough to provide for themselves and their families.24 Often, workers who are legally classified as contractors are more economically vulnerable than employees who have full-time, good-paying jobs. standard employment relationship: A model of employment characterized by stable, long-term job security, full-time hours, decent benefits, and wage rates that rise steadily over time. own account self-employed workers: Independent contractors who have no employees.
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Many of these workers are engaged in precarious work, which may be part time or full time, but is characterized by few if any employer-provided benefits or a pension plan, low wages, and less job security and tenure than is anticipated under the SER model.25 The growth in nonstandard work and precarious work over the past few decades has focused attention on the extent to which our laws have failed to protect some of the most precarious workers.26 When we view work law and policy through the lens of precarious work, in all its forms, rather than through the ideal of the SER, this deficiency becomes stark. If a central purpose of work law is to protect vulnerable workers from the harshness of pure market forces or to inject public policy concerns into labour markets, for example, then why should it matter whether a worker is formally classified as an employee or a contractor? Many scholars (and some governments) have proposed that it is time to revisit the law’s reliance on the employee – independent contractor distinction as a gateway to legal rights, entitlements, and responsibilities.27 For example, Professors Fudge, Tucker, and Vosko argue the following: A close examination of self-employment in Canada suggests that the time has come to consider dissolving the distinction between employees and the self-employed for the purpose of labour protection and social wage legislation. The majority of the self-employed much more closely resemble employees than they do entrepreneurs, although for legal purposes many would be classified as independent contractors and, as such, they would be denied the legal protection available to employees.28
A better approach, according to Fudge, Tucker, and Vosko, is to presume that any worker who is “dependent on the sale of their capacity to work” be covered by protective labour legislation, “unless there are compelling public policy reasons for a narrower definition.”29 A similar approach, used in some countries, is to expand coverage under protective work-related statutes and social programs to “workers” rather than “employees,” while making clear that a “worker” includes an employee but also own account self-employed workers, for example.30 This approach is roughly equivalent to the approach of some Canadian governments that have extended the definition of employee to include dependent contractors.
IV. Chapter Summary This chapter introduced the important distinction between “employees” and “independent contractors” in the law of work. The former are governed by a broad range of legal rules targeting employment contracts and are eligible for many employment-related legal and social benefits. The latter are in business for themselves and are treated in the law as businesses. Governments (through legislation) and the courts (in common law decisions) have sometimes extended the scope of “employees” to include economically dependent contractors who share more in common with employees than they do with independent contractors. Governments have also sometimes used a narrow definition of “employees” in statutes to exclude some types of employees from statutory provisions. Whether it is good public policy to link access to important protections and social benefits to a technical legal distinction between employee and not-employee is one of the most important ongoing debates in the law of work.
QUESTIONS AND ISSUES FOR DISCUSSION 1. What is the difference between an employee and an independent contractor? Why is this distinction important in the law? precarious work: Work that is defined by characteristics such as job insecurity; short job tenure; low pay; few benefits; low collective bargaining coverage; and sporadic, limited, or unpredictable work hours.
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2. Describe the test the Supreme Court of Canada described in Sagaz Industries Canada to distinguish between an independent contractor and an employee. 3. What is a dependent contractor, and what is the significance of a court finding that a worker is one? 4. Provide an example of Canadian legislation in which the definition of “employee” was refined to exclude a worker who would be considered an employee if the usual common law test for employment status were applied. 5. What is an unpaid intern? What are some reasons for and against making an unpaid internship unlawful? 6. Explain the difference between the standard employment relationship and precarious work. Why have some scholars proposed that precarious work is a better concept than employee versus independent contractor as a means of applying protective work laws?
APPLYING THE LAW Using the scorecard approach described in Box 4.3, read the following three scenarios and indicate whether you think the worker profiled in each would be considered an employee or an independent contractor. After doing the exercise, read the decision to see what the court or expert tribunal actually decided. Scenario One: The Massage Parlour “D” performed massages at Sweet City Massage Parlour. She was one of about 20 massage attendants who performed massages out of Sweet City’s location. Sweet City provided the rooms, massage tables, oils and ointments, and linens. D paid Sweet City $1 per massage to cover the cost of laundering the linen. D decided what days she worked at Sweet City, although if she did not report for a shift she had agreed to work she would be fined by Sweet City between $100 and $200. Customers at Sweet City could select from among the massage attendants present, but D could refuse any specific customer. No one from Sweet City supervised how D performed her massages. No wage was paid to D. Her income consisted of about 50 percent of the fees paid for the massages she gave, the other 50 percent going to Sweet City. If no customers showed up, she would earn nothing that shift. D could perform massages at her home or in other locations if she wished, and she could substitute another person to complete a scheduled shift at Sweet City. Was D an employee or an independent contractor? Check your answer by reading Abe Vergara o/a Sweet City v. MNR, 2004 TCC 263. Scenario Two: The Massage Therapist Wang performed massages at the facilities of Active Therapy Clinic (Clinic) on a full-time basis. He was the only licensed massage therapist. His contract permitted him to perform massage services elsewhere, which he did. The contract also described Wang as an “independent contractor” and not an
employee of the Clinic. Wang was paid an hourly rate while working at the Clinic. The contract stated that the customers belonged to the Clinic and not Wang. The Clinic fixed the price of a massage and supplied Wang with all of the necessary equipment and supplies to perform the massages. Wang billed the Clinic every two weeks at the agreed rate for hours worked at the Clinic, plus an amount for harmonized sales tax. Wang was paid by the Clinic without any deductions, and he claimed deductions himself, as a business, when he filed his personal income taxes. Was Wang an employee or an independent contractor? Check your answer by reading Wang v. 1139613 Ontario Limited (Active Therapy & Sports Clinic), 2013 CanLII 11224 (Ont. LRB). Scenario Three: The Forklift Sales Representative Moseley-Williams worked full time as a salesperson for a forklift supplier called Hansler. He was expected to work only for Hansler. He was assigned a jurisdiction in which to sell Hansler products and was required to meet certain requirements set down by Hansler while working. However, he performed his work mostly on his own within those parameters and was often outside of the office meeting and finding new customers. He used few tools beyond a car and a phone. MoseleyWilliams owned his own car, but Hansler paid him a monthly car allowance and also paid for a business cellphone. MoseleyWilliams received a commission, the rate of which was set out in a contract between him and Hansler, and he had not invested his money in Hansler. No statutory deductions were made from Moseley-Williams’s pay, and his contract described him as an independent contractor. Was Moseley-Williams an employee or an independent contractor? Check your answer by reading Moseley-Williams v. Hansler Industries Ltd., 2008 CanLII 57457 (Ont. Sup Ct J).
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NOTES AND REFERENCES 1. The story is based on the Decision No. 934/98, 2000 ONWSIAT 3346, aff ’d Blue Line Taxi v. Deek, [2002] OJ No. 2036 (QL) (Sup Ct J). 2. G. Davidov, “The Reports of My Death Are Greatly Exaggerated: Employee as a Viable (Though Overly-Used) Legal Concept,” in G. Davidov & B. Langille, eds, Boundaries and Frontiers of Labour Law (Oxford: Hart, 2006) 133 at 133-34; and B. Langille, “Labour Law’s Back Pages,” in Davidov & Langille, ibid. at 13. 3. See 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59; Ivic v. Lakovic, 2017 ONCA 446. 4. See, e.g., Preddie v. The Queen, 2004 TCC 181. 5. B. Langille, “Labour Policy in Canada—New Platform, New Paradigm” (2002) 28 Canadian Public Policy 133 at 137. 6. Hôpital Notre-Dame de l’Espérance and Théoret v. Laurent, [1978] 1 SCR 605 at 613. 7. Montreal v. Montreal Locomotive Works Ltd. (1947), 1 DLR 161 (PC) at 169. 8. The organization test was first applied in the British Court of Appeal case Stevenson Jordan & Harrison, Ltd. v. Macdonald, [1952] 1 TLR 101 at 111, Lord Denning. 9. 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., supra note 3, at para 47. 10. See also Belton v. Liberty Insurance Co. of Canada (2004), 72 OR (3d) 81 (CA) (sales representatives are “employees” even though their contract described them as independent contractors); Kordish v. Innotech Multimedia Corp. (1998), 46 CCEL (2d) 318 (Ont. Ct J (Gen Div)) (a worker can be an employee even if they created a corporation through which work is performed); Doyle v. London Life Insurance Co., (1985), 23 DLR (4th) 443 (BCCA); and Farmers of North America Incorporated v. Bushell, 2013 SKCA 108. 11. Alberta Employment Standards Code, c. E-9, s. 1(1) 12. See Ontario Human Rights Code, RSO 1990, c. H.19, s. 3. Contrast McCormick v. Fasken Martineau DuMoulin, 2014 SCC 39 (where a law partner was not considered an employee, and since the BC Human Rights Code applies to “employment contracts” and not other contracts, age discrimination against a partner is not a violation of the code). 13. Canadian Human Rights Act, RSC 1985, c. H-6, s. 25. 14. Occupational Health and Safety Act, RSO 1990, c. O.1, s. 1. 15. J. Fudge, E. Tucker & L. Vosko, “Employee or Independent Contractor? Charting the Legal Significance of the Distinction in Canada” (2003) 10 CLELJ 193 at 211. 16. See McKee v. Reid’s Heritage Homes Ltd., 2009 ONCA 916 at para 34. A leading early decision recognizing the
dependent contractor category was Carter v. Bell & Sons (Canada) Ltd., 1936 CanLII 75 (Ont. CA). More recent cases include Fisher v. 6007325 Canada Inc., 2017 ONSC 5943; Marbry et al. v. Avrecan International Inc., 1999 BCCA 172; JKC Enterprises Ltd. v. Woolworth Canada Inc. (1986), 300 AR 1 (QB); Erb v. Expert Delivery Ltd., 1995 CanLII 8874 (NBQB); TCF Ventures v. The Cambie Malone’s Corporation, 2017 BCCA 129; Glimhagen v. GWR Resources, 2017 BCSC 761; Keenan v. Canac Kitchens Ltd., 2016 ONCA 79; and Khan v. All-Can Express Ltd., 2014 BCSC 1429. For a recent case in which a worker is found to be an independent contractor, see Thomas v. Vancouver Free Press Publishing Corp., 2019 BCPC 9. 17. See discussion in L. Vosko, A. Noack & M. Thomas, How Far Does the Employment Standards Act, 2000 Extend and What Are the Gaps in Coverage? (Toronto: Ontario Ministry of Labour, 2015). 18. See, e.g., ibid. 19. Canadian Human Rights Act, RSC 1985, c. H-6, s. 25 20. See, e.g., British Columbia Labour Relations Code, RSBC 1996, c. 244, s. 1(1), and Ontario Labour Relations Act, SO 1995, c. 1, Sched. A, which define “employee” to include “dependent contractors.” For a discussion of the origins of and justification for the “dependent contractor” definition, see H. Arthurs, “The Dependent Contractor: A Study of the Legal Problem of Countervailing Power” (1965) 16:1 UTLJ 89; and M. Bendel, “The Dependent Contractor: An Unnecessary and Flawed Development in Canadian Labour Law” (1982), 32 UTLJ 374. See also Quebec’s Act Respecting Labour Standards, RSQ N-1.1, s. 1, which defines “employee” as a worker “who is a party to a contract” to perform work for a person when that person controls how the work is to be performed and supplies the tools and materials needed to perform the work and the worker keeps as their pay the amount remaining after deduction of expenses. 21. J. Fudge & L. Vosko, “Gender, Segmentation and the Standard Employment Relationship” (2001) 22 Econ and Indus Democracy 271. 22. J. Fudge, “The New Workplace: Surveying the Landscape” (2009) 33 Man LJ 131 at 132; L. Vosko, “Precarious Employment: Towards an Improved Understanding of Labour Market Insecurity,” in L. Vosko, ed, Precarious Employment: Understanding Labour Market Insecurity in Canada (Montreal and Kingston: McGill-Queen’s University Press, 2006) 6; J. Fudge, “The Future of the Standard Employment Relationship: Labor Law, New Institutional Economics and Old Power Resource Theory” (2017) 59:3 J Ind Rel 374; and J. Fudge, E. Tucker & L. Vosko, “Changing Boundaries in Employment: Developing a New Platform for Labour Law” (2003) 10 CLELJ 329 at 354.
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Chapter 4 What Is Employment? 67 23. Statistics Canada, “Employment Patterns of Families with Children,” online, . See also B. Langille, “Take These Chains From My Heart and Set Me Free: How Labor Law Theory Drives Segmentation of Workers’ Rights” (2015) 36 Comp Lab L & Pol’y J 257 at 259. 24. Statistics Canada, supra note 23; Vosko, supra note 22; Law Commission of Ontario (LCO), Vulnerable Workers and Precarious Work (2013), online: ; and K. Stone, From Widgets to Digits: Employment Regulation for the Changing Workplace (Cambridge: Cambridge University Press, 2004). 25. Statistics Canada, supra note 23. See also Langille, supra note 23. 26. Fudge, “The New Workplace,” supra note 22 at 139. See also L. Vosko, N. Zukewich & C. Copeland, “Precarious Jobs: A New Typology of Employment” (October 2003) 4 Perspectives 16, 19; and LCO, supra note 24, s. IV, .
27. See literature at supra note 22. There is a huge literature exploring the challenge posed to employment and labour law by changes to the nature of work and the shift away from the standard employment model. Some additional examples include Stone, supra note 24; J. Fudge, E. Tucker & L. Vosko, “Employee or Independent Contractor? Charting the Legal Significance of the Distinction in Canada” (2003) 10 CLELJ 193; H. Collins, “Independent Contractors and the Challenge of Vertical Disintegration of Employment Protection Laws” (1990) 10 Oxford J Legal Stud 331; S. Deakin, “The Comparative Evolution of the Employment Relationship,” in G. Davidov & B. Langille, eds, Boundaries and Frontiers of Labour Law (Oxford: Oxford University Press, 2006) 89; M. Finkin, “The Death and Transfiguration of Labor Law” (2011-2012) 33 Comp Lab L & Pol’y J 171; J. Fudge, “After Industrial Citizenship: Market Citizenship or Citizenship at Work?” (2005) 60 Indus Rel 1; and G. Davidov, “Who Is a Worker?” (2005), 34 Indus LJ 57. 28. Fudge, Tucker & Vosko, supra note 27 at 229. 29. Ibid. at 230. 30. See discussion in Davidov, supra note 27 at 57.
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Selected Cases: Part I Cases with boldface page numbers appear as Case Law Highlights. 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56, 57, 66 Abe Vergara o/a Sweet City v. MNR, 2004 TCC 263 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Belton v. Liberty Insurance Co. of Canada, 2004 CanLII 6668 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Braiden v. La-Z-Boy Canada Limited, 2008 ONCA 464 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56, 57 Carter v. Bell & Sons (Canada) Ltd., 1936 CanLII 75 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Christie v. The York Corporation, [1940] SCR 139 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Director of Labour Standards v. Acanac Inc., 2013 SKQB 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Doyle v. London Life Insurance Co., 1985 CanLII 301 (BC CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Erb v. Expert Delivery Ltd., 1995 CanLII 8874 (NB QB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Farmers of North America Incorporated v. Bushell, 2013 SKCA 108 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Fisher v. Hirtz, 2016 ONSC 4768 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57, 66 Heller v. Uber Technologies Inc., 2019 ONCA 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Hôpital Notre-Dame de l’Espérance and Théoret v. Laurent, [1978] 1 SCR 605 . . . . . . . . . . . . . . . . . . . . . . . . . 66 JKC Enterprises Ltd. v. Woolworth Canada Inc. (1986), 300 AR 1 (QB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Keenan v. Canac Kitchens Ltd., 2016 ONCA 79 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59, 66 Kordish v. Innotech Multimedia Corp. (1998), 46 CCEL (2d) 318 (Ont. Ct J (Gen Div)) . . . . . . . . . . . . . . . . . 66 Machtinger v. HOJ Industries, [1992] 1 SCR 986 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 15 Marbry et al. v. Avrecan International Inc., 1999 BCCA 172 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 McKee v. Reid’s Heritage Homes Ltd., 2009 ONCA 916 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Montreal v. Montreal Locomotive Works Ltd., 1946 CanLII 353 (UK JCPC) . . . . . . . . . . . . . . . . . . . . . . . . 56, 66 Moseley-Williams v. Hansler Industries Ltd., 2008 CanLII 57457 (Ont. Sup Ct J) . . . . . . . . . . . . . . . . . . . . . . . 65 Pichette v. Lumac Holdings Ltd., 2011 CanLII 80536 (NB LEB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Seneca College v. Bhadauria, [1981] 2 SCR 181 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Slaight Communications Inc. v. Davidson, [1989] 1 SCR 1038 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Stevenson Jordan & Harrison, Ltd. v. Macdonald, [1952] 1 TLR 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Vriend v. Alberta, [1998] 1 SCR 493 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29, 33 Wang v. 1139613 Ontario Limited (Active Therapy & Sports Clinic), 2013 CanLII 11224 (Ont. LRB) . . . . . . 65
69
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Part II
The Common Law Regime Formation and Requirements of an Employment Contract CHAPTER 5
A Brief History of the Common Law Model of Employment
CHAPTER 6
The Job Recruitment and Hiring Process
CHAPTER 7
The Requirements to Create and Modify an Employment Contract
The Employment Contract CHAPTER 8
Expressed Terms of Employment Contracts
CHAPTER 9
Implied and Ancillary Employment Contract Terms
The End of an Employment Contract CHAPTER 10 Termination by an Employer with “Reasonable Notice” CHAPTER 11 Termination by “Frustration” CHAPTER 12 Summary Dismissal: Termination for Cause Without Notice CHAPTER 13 “You Forced Me to Quit!”: The Special Case of Constructive Dismissal CHAPTER 14 Damages in Wrongful Dismissal Lawsuits CHAPTER 15 “I Quit!”: Termination of the Employment Contract by the Employee
Tort Law and Work CHAPTER 16 Tort Law and the Employment Relationship Selected Cases: Part II
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CHAPTER 5
A Brief History of the Common Law Model of Employment *
LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 73 II. Master and Servant Law 73 A. English Master and Servant Law 74 B. Master and Servant Law in the Canadian Colonies 76 III. The Common Law of Employment Contracts in the 19th Century 78 A. The Common Law of Employment Contracts in 19th-Century England 78 B. The Common Law of Employment Contracts in 19th-Century Canada 80 C. Key Developments in the 20th Century 81 IV. Chapter Summary 81 Questions and Issues for Discussion 82 Notes and References 82
• Explain the characteristics of master and servant law. • Describe the timeline of the emergence of the common law model of employment in England and Canada. • Explain the similarities and differences between master and servant law and the common law of employment contracts. • Describe the main features of the common law of employment contracts in the 19th century.
I. Introduction As we saw in the overview of the law of work in Chapter 1, the Canadian common law of employment contracts originates from 19th-century England. Prior to Canada’s Confederation in 1867, English statutory and common law applied in the new British colonies through a process known as reception. As a result of reception, Canadian courts applied English case law to decide the claims before them. However, much remains to be known about the history of the common law of employment in Canada, because it has only been viewed as a legal field in Canada since the 1960s, when common law employment contract claims first became the source of frequent litigation. This chapter broadly examines the historical evolution of the contract of employment, starting with its English origins.
II. Master and Servant Law The English courts first issued common law decisions regarding the employment contract in the early 19th century, at a time when master and servant law was the primary legal mechanism for
common law: A system of judge-made rules originating in England around the 12th century, and inherited by Canada as a British colony, that uses a precedent-based approach to case law. Earlier decisions dealing with similar facts or legal issues guide later decisions in an attempt to create legal predictability. However, common law rules can and often do evolve as social values change. reception: When the British Empire established a colony, it often passed a statute that specified that the law of the colony was the statutory and common law in force on that date in England. *This chapter was written by Claire Mummé, Faculty of Law, University of Windsor.
73
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74 Part II The Common Law Regime regulating the terms of employment. Master and servant law was a body of statutory and related case law first enacted in the 14th century in the wake of the Black Death (the plague pandemic of 1348 to 1350, in which one-third of England’s population died). This law determined the rights and obligations of workers and employers based on their social status. Master and servant law was exported across the British Empire and was applied, in different forms, across the British North American colonies.1 When the courts first began to issue common law employment contract decisions in the early 19th century, Lord Ellenborough, chief justice of the King’s Bench at the time, suggested that the common law’s purpose was to regulate the relationships between parties equal in rank and status. In other words, the common law was to regulate the work of higher status workers. By contrast, as scholar Daphne Simon argues, the laws of master and servant were “meant to secure the disciplining and subordination of the wage-earner.”2 But rather than simply apply general contract principles to the employment contract, in which both parties were viewed as equal in law, the courts continued to apply existing doctrines and concepts from master and servant law, such that its central subordinating features were absorbed into the common law framework.3 Therefore, to fully understand the evolution of the common law of employment contracts, a grasp of master and servant law is required.
A. English Master and Servant Law As noted above, legislation regulating waged work was first enacted in England in the 14th century to organize work relations in the aftermath of the Black Death. So as to maintain the pre-plague social and economic power dynamic between the classes, the English government (the “Crown”) enacted the Ordinance of Labourers in 1349 and the Statute of Labourers in 1351, creating a system of compulsory labour that was designed to regulate labour mobility and wage rates, and which was enforced through penal sanctions.4 In the 16th century, the various existing statutes were amended and recodified in the Elizabethan Statute of Artificers, during which time a wage recovery mechanism was created.5 The laws of master and servant were characterized by certain key features that were deployed in different socio-political contexts and toward different ends at different times, but which remained more or less in place until the late 19th century.6 The statutes regulated competition between employers by requiring justices of the peace (JPs) to set wage rates for different professions, instead of leaving it to the parties. It was illegal for one employer to hire away another’s worker or to offer higher than legislated wages. Employment contracts were generally presumed to last for one year (annual hire/general hire contract) unless the parties expressly agreed to another length of time.7 Workers owed their employers a broad duty of obedience, the violation of which provided cause for dismissal or even imprisonment, as did a variety of other types of master and servant law: A body of legislation and related case law that regulated the work of servants, agricultural workers, and skilled craft workers in England between the 14th and 19th centuries, and which was primarily interpreted and applied by local justices of the peace and magistrates. penal sanctions: State punishment imposed through criminal law, usually referring to incarceration. wage recovery mechanism: A legal provision allowing workers to claim unpaid wages before a justice of the peace or magistrate. justice of the peace: In the 19th century, a local nobleman or gentleman appointed to represent the Crown in a particular locality and empowered by statutes to resolve different types of legal matters; also known as a magistrate. annual hire/general hire contract: If the parties did not expressly agree on the length of their employment contract, it was presumed in law to last for one year. The annual hire contract was initially born out of agricultural work. It allowed workers to be employed between the agricultural seasons, and ensured that workers would not leave their employers right before a harvest.
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Chapter 5 A Brief History of the Common Law Model of Employment 75
misbehaviour. Workers could not leave their employment within the contract’s term except with their employer’s permission and faced fines or jail time for doing so.8 Workers could not, however, be fired within the contract’s term unless their employer established cause for dismissal before a JP (or magistrate).9 Workers were regulated by criminal law for contract breaches, while employers were subject only to civil fines. By the Elizabethan era (1558 – 1603), the statutes also specified that workers could not leave the parish of their birth without their masters’ permission, unless they secured an annual hire contract in another parish. Workers, therefore, could not freely move around the country looking for work.10 Some examples of the ways in which workers’ low legal status affected the laws of master and servant are shown in Box 5.1.
BOX 5.1 » CASE LAW HIGHLIGHT Master and Servant Cases in England The laws of master and servant that pre-dated the common law model of employment treated the worker as subordinate to their master, unable to quit during the life of a contract or to disobey orders without sanction. This environment is reflected in the following summaries of court decisions and rulings by JPs from the early 19th century. R v. Barton-Upon-Irwell [1814] 2 M. & S. 328 The worker (“servant”) was hired for a period of a year (an annual hire contract). After two months, he was convicted and sentenced to one month’s imprisonment for disobeying the master. After nine days, the master requested that he be released and returned to work. On his return, the servant was again charged with disobedience and insubordination and was sentenced to one month’s hard labour. He appealed this decision, arguing that the first conviction brought the employment contract to an end. The court disagreed. Lord Ellenborough CJ decided “[i]t would be clearly against the policy of the law if the servant by his own act of delinquency should have the power of dissolving the contract. … The imprisonment of the servant was so far from being a cessation of the service, that perhaps his labour might have been required of him by his master even while he was in prison. … The master indeed had an election to avoid the contract, but he made his election to continue the pauper in his service, which it was in his power to do.” Until this ruling was overturned in 1857, conviction for misbehaviour or desertion did not bring the employment contract to an end, but rather the worker had to return to work after imprisonment and could be recommitted again and again until the contract’s term came to an end.*
The Case of James Totterdale Mr. Totterdale left his home and family in Liverpool in search of work. He was hired by Mr. Perry in Wolverhampton. A short time after starting work, he received a letter from his wife advising him that one of his children was seriously ill and had only a short time to live, so he should return home immediately. He did so without stopping to get permission from his master. He reached Liverpool just in time to see his child die, and just as another of his children and his wife were stricken by the same illness. Mr. Perry had Mr. Totterdale arrested in Liverpool and returned to Wolverhampton. He was taken before the courts under charges of desertion. At the employer’s urging, the magistrate ordered that Mr. Totterdale return to his job and pay the expenses of his capture and removal, between 3 or 4 pounds.† Spain v. Arnott [1817] 171 ER 638 The servant worked on a farm. Just as he was about to sit down for dinner, his master ordered him to take some horses to a nearby town. The servant replied that he would go after he had eaten, but the master insisted that he go immediately. When he refused, he was dismissed. The servant brought a claim for wages owing, arguing that he had been dismissed without cause within the contract’s annual term. The Statute of Artificers had been interpreted to that point as requiring employers to establish cause in front of a justice of the peace before a servant could be dismissed during the contract’s term. However, Lord Ellenborough cast that step aside and ruled that masters could dismiss an employee for cause without a JP’s permission and concluded the following:
magistrate: See justice of the peace. parish: A unit of local government coinciding (in England) with the Church of England’s geographical areas.
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76 Part II The Common Law Regime If the plaintiff persisted in refusing to obey his master’s orders, he is warranted in turning him away. He might have obtained relief by applying to a magistrate [similar to a justice of the peace]; but he was not bound to pursue that course. … There is no contract between the parties, except that which the law makes for them, and it may be hard upon the servant, but it would be exceedingly inconvenient if the servant were to be permitted to set himself up to control his master in his domestic regulations, such as the time of dinner. After a refusal on the part of the servant to perform his work, the master is not bound to keep him on as a bur-
thensome and useless servant to the end of the year. In the present instance it might be very inconvenient for the master to change the hour of dinner; the question really comes to this, whether the master or the servant is to have the superior authority. * In Ex Parte William Baker, [1857] 26 Law J Rep MC 193, the Exchequer Court changed course and held that a conviction dissolved the employment contract. † From the testimony of George Odger, Secretary of the London Trades, Report from the Select Committee and Royal Commission on Master and Servant Law (House of Commons, 1865 – 1875) (Shannon, Ireland: Irish University Press, 1970) at question 1827.
Starting in the mid-19th century,11 as England was in the midst of the massive technological and socio-economic transformations of the Industrial Revolution, trade union activists mobilized against the penal sanctions of the laws of master and servant. Employers had begun to use those laws as strikebreaking tools, prosecuting striking workers for misconduct, desertion, or unpermitted temporary absences. In response, unions argued that the law needed to treat the parties equally instead of imposing jail time on workers and only fines on employers. They objected to workers being arrested and hauled before JPs as criminals and argued for treating work regulation according to a contractual model, which provided at least formal legal equality between the parties.12 In 1875, the penal provisions of the laws of master and servant were finally repealed in England. Thereafter, individual statutes were enacted to regulate particular types of skilled and industrial work, while higher status workers, as well as domestic servants and clerks, were regulated by an emerging common law of employment contracts.13
B. Master and Servant Law in the Canadian Colonies As the British Crown began claiming North American lands in what is now known as Canada, the new colonies received existing English statutory and common law. Each of the Canadian colonies, therefore, theoretically received the laws of master and servant that were then in force in England. However, due to different reception dates and different political cultures and economic conditions, each colony’s laws of master and servant differed significantly from one another, and sometimes from the laws of England.14 Nova Scotia, for instance, enacted its own local statute very early, in 1765, which was primarily used by employers to prosecute merchant seamen in the fisheries industry.15 The Hudson’s Bay Company (HBC), which governed Rupert’s Land (western Canada) under Royal Charter, provided its workers with a detailed employment contract, the violation of which gave rise to financial rather than penal sanctions.16 HBC contracts incorporated many of the requirements of master and servant law. However, they also included other requirements specific to location and trade; for example, trading post workers were prohibited from having relationships with members of the Indigenous population or trade on their own account. In Quebec (then known as Canada East), master and servant law was set and regulated by municipalities under delegated authority from the Legislative Assembly of Lower Canada after deadlocked disagreement about whether it constituted private law or criminal law.17 Ontario (Canada West) enacted its own Master and Servant Act in 1847.18 That act was similar in many respects to the English statutes in force in the mid-19th century: employees who refused to work, quit within the contract’s term, were disobedient, or injured their employers’
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Chapter 5 A Brief History of the Common Law Model of Employment 77
property were subject to fines or up to one month’s imprisonment. As distinct from the English statutes, however, the Ontario master and servant statute did not regulate apprenticeships; instead, it broadly applied to servants and labourers rather than to specific occupations. (See Box 5.2.) The Ontario act also created a wage recovery mechanism that workers could use to make claims before JPs for unpaid wages. Paul Craven (York University) reports a steady stream of cases under the act between 1847 and 1877, the majority of which were wage claims brought by workers, but by the early 1870s employers were increasingly using the statute as a strikebreaking tool, deployed against collective action and trade union activity.19 As in England, Canadian trade unions organized against penal sanctions for breach of the employment contract, and in 1877 the criminal law sanctions for desertion and disobedience were repealed, while malicious and wilful contract breaches remained a criminal offence.20 In general, the Canadian experience with master and servant law was determined by its reception date and by the particularities of the local economy and labour market. Regardless of how much this law was used, the difference in rights and obligations it specified for employers and workers was symbolic and ideological: master and servant law represented a colonial policy of protecting class distinctions.21
BOX 5.2 » TALKING WORK LAW The Application of Master and Servant Law in Mid-19th Century Canada Most master and servant cases were not recorded in law books unless they were appealed to the courts. It is, therefore, difficult to research this law. Nonetheless, legal historians have located the records of specific magistrates, JPs, and police courts, which provide some details. Professor Paul Craven reports the following cases decided by the Galt Police Court magistracy after the enactment of Ontario’s master and servant statute in 1847, demonstrating the extent to which the threat of prison and fines was used to keep workers in line: A girl who left her service after a dispute over the peeling of potatoes, in the course of which her employer, as the latter testified, “gave her a little push,” was given a month to pay a $1 fine and $2.35 costs, with the alternative of two days in jail, and was told to work out her time or forfeit her wages. … A boy who was hired to work on a farm for six months and took his commitment literally, so that he served from 22 April to 22 October, and not to the end of the calendar month, was ordered to return to work and make up the nine days or spend twenty days in jail. A man who grew impatient with his employer’s lethargic search for a replacement
was offered the alternatives of returning to work for three days, forfeiting a week’s wages, paying a $7 fine, or spending ten days in jail.* * P. Craven, “The Law of Master and Servant in Mid-Nineteenth Century Ontario,” in D.H. Flaherty, ed, Essays in the History of Canadian Law, vol 1 (Toronto: University of Toronto Press, 1981) at 203.
This illustration of a mid-19th-century shoe factory in Nova Scotia shows both the highly labour-intensive nature of work at the time and the appearance of new industrial technology.
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78 Part II The Common Law Regime
III. The Common Law of Employment Contracts in the 19th Century Labour lawyers and historians have traditionally believed that the common law of employment emerged in 19th-century England, just as modern principles of contract law were developing. As it emerged, the common law is said to have displaced master and servant law, which was then in the process of becoming obsolete.22 The contractualization of employment was thought to be part of what historian Henry Sumner Maine called the “movement from Status to Contract.”23 Newer studies, however, demonstrate that master and servant law continued to be actively used as a disciplinary tool against workers until 1875.24 In Canada, existing research on the history of the common law of employment prior to the 1960s focuses on Ontario, and for this reason the next few pages will focus on its trajectory in that province.25 Whether the law’s development was similar in other Canadian provinces is an open question.
A. The Common Law of Employment Contracts in 19th-Century England The English common law of employment contracts emerged around the turn of the 19th century, as England entered its second Industrial Revolution. In the midst of this transformation, the courts of England in the early 1800s held that domestic and menial servants, as well as higher status workers, were excluded from regulation by the laws of master and servant.26 Those excluded workers now brought their employment-related claims to the common law courts. The early cases before the common law courts dealt with a wide range of workers, from professional employees such as bankers and engineers to lower status workers such as domestic servants and clerks. In these formative days of the common law model, the courts continued to apply subordinating concepts and principles from the laws of master and servant. A pure application of classical contract law would have required the parties to bargain for an employer’s right of authority and control, which had been given effect under master and servant law through workers’ duty of obedience.27 As scholar Alan Fox explained: [C]ontract as the pure doctrine defined it could not be seen by the property-owning classes as an adequate foundation for governing the employment relationship. Their needs were met by infusing the employment contract with the traditional law of master and servant, thereby granting them a legal basis for the prerogative they demanded. What resulted was a form of contract almost as far removed from the pure doctrinal form as the status relationship which had preceded it.28
The common law of employment contracts, therefore, was born and has remained a hybrid body of law, mixing contractual notions of legal equality with principles of status and subordination, setting it apart from the general law of contract. We will see examples of the distinct status of employment contract law as we work our way through Part II. Most significantly, despite theoretical legal equality between contracting parties at common law, the courts continued to assert that workers had a legal obligation to obey their employers, and that employers could dismiss workers who did not do so for cause. The courts treated employers as holding a natural right to control and direct the employment relationship and only rarely sought to anchor such a right in contract law. The courts also used class to distinguish the rights and obligations of different kinds of workers. Higher status workers were presumed to work under annual hire contracts, unless the contract indicated otherwise, and could not be dismissed within the annual term without cause. In contrast, some lower status workers, such as domestic servants and clerks, could be terminated without notice or cause where an industry custom of dismissal by notice existed.29 This class-based distinction was reinforced in the mid-19th century. Under the laws of master and servant, a worker dismissed without cause during the contract’s term was only entitled to unpaid wages already accrued. However, in the 1853 case of Emmens v. Elderton, the British
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Chapter 5 A Brief History of the Common Law Model of Employment 79
House of Lords held that the employment contract consisted not only of an exchange of wages for services but also of an ongoing promise to retain an employee in employment for the contract’s duration.30 Dismissal without cause during the contract’s term, therefore, was a breach of the employer’s promise to retain the worker in employment and entitled the worker to damages not only for wages already earned but also, potentially, for wages that would have been earned had the contract run its full term.31 This case was the beginning of the breach of contract action we today call wrongful dismissal, which is considered in Chapter 14. However, in the formative years of the employment contract model, the right to recover damages for prospective lost wages was only available to workers with fixed-term or annual-term employment contracts (typically higher status workers) and not for employees working under contracts that could be terminated upon notice. Employees governed by an annual-term contract could only be terminated for cause. The courts were asked to consider what constituted cause as the contract model developed. In the 1829 case of Callo v. Brouncker an English court held that disobedience, gross moral misconduct, habitual neglect in business, or conduct calculated to seriously injure the master’s business constituted cause for dismissal at common law.32 Disobedience was the overarching concept anchoring the types of cause that permitted dismissal. The notion of disobedience was broad: workers were required to obey all lawful orders, full stop. The case of Turner v. Mason, described in Box 5.3, demonstrates the ways in which the duty of obedience created a power differential between the parties in an employment contract.
BOX 5.3 » CASE LAW HIGHLIGHT The Implied Duty of Obedience Turner v. Mason [1845] 153 ER 411 Key Facts: A domestic servant requested that she be allowed to visit her dying mother overnight. Her employer refused, but she went anyhow, staying away until the next day. She was then fired without the standard industry custom of one month’s notice. She brought a claim to the courts seeking damages based on a failure to provide notice. The employer argued that there was cause for dismissal, which relieved it of the obligation to provide notice. Issue: Was the employee terminated for cause such that there was no contractual requirement to provide notice of termination? Decision: Yes. The court ruled that employees are required to obey all lawful orders of the employer. In this case, the order not to leave the house was lawful, and yet the employee left anyhow. This was a clear breach of the contract by the employee, justifying termination without notice. The court was unmoved by the reason the employee left:
I do not think it would be sufficient to justify her in disobedience to his order; there is not any imperative obligation on a daughter to visit her mother under such circumstances, although it may be unkind and uncharitable not to permit her. The court’s role was not to assess the fairness or kindness of the employer’s actions but to enforce the contract as they understood it. The court did recognize that exceptional circumstances might arise in which an employee would be justified in ignoring an employer’s orders: There may, undoubtedly, be cases justifying a wilful disobedience of such an order; as where the servant apprehends danger to her life, or violence to her person, from the master; or where, from an infectious disorder raging in the house, she must go out for the preservation of her life. But the general rule is obedience, and wilful disobedience is a sufficient ground of dismissal.
wrongful dismissal: A type of lawsuit by an employee against a former employer alleging that the employer terminated their contract without complying with the implied term in the contract requiring “reasonable notice.”
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80 Part II The Common Law Regime Toward the end of the 19th century, the duty of obedience was narrowed in scope for higher status workers, as the courts began to suggest that such workers were only required to obey orders that related directly to the nature of their job. So, for instance, a lace maker could not be fired for disobeying an order to do menial work.33 Although the ability to dismiss for cause is now treated as an implied contract term of the employment contract, as we discuss in Chapter 12, in the 19th century it was rarely described as such. Instead, the duty of obedience and the employer’s right to dismiss for cause were treated as existing by the natural order of things, as necessary legal incidents that arose from the nature of the employment relationship. According to treatise writer Charles Smith, the grounds of cause arose from duties that were “implied by law from the relationship of master and servant.”34
B. The Common Law of Employment Contracts in 19th-Century Canada As mentioned, very little research exists about the history of the common law of employment in provinces other than Ontario prior to the 1960s. The Ontario judiciary applied English precedents to decide the cases before them and very rarely cited cases from the other Canadian colonies. Therefore, no national or Canadian colonial body of employment law existed in the 19th century. And whereas 19th-century England was in the middle of the massive socio-economic transformation of the Industrial Revolution, Ontario at that time was still primarily a subsistence agricultural economy, with the beginnings of industrial production emerging only at mid-century. Not surprisingly, therefore, the common law of employment played a small role during this period in Ontario. Cases that were reported mostly concerned the work of middleclass and professional workers, almost exclusively male.35 The types of arguments made in early employment contract cases were demonstrative of the nature of the Ontario labour market at the time. Until the 1840s, Ontario’s economy was overwhelmingly agricultural. People did not primarily engage in waged labour but instead worked on their own farms, undertaking short-term waged labour only for the time necessary to accumulate enough money to purchase land or needed implements. Many tasks were accomplished by family members, by the pooling of labour by neighbours, or by payment in kind and sharecropping rather than through hiring waged labourers.36 Domestic service, for instance, was primarily undertaken by family members rather than by employees.37 Under English legal precedent, however, work among family members was presumed not to form an enforceable employment contract, and so most of these claims were defeated.38 Starting in the late 19th century, workers invoked the common law of employment contracts more frequently, and it was during the early 20th century that the courts of Ontario began to give it modern shape. In the late 19th century, Ontario entered into its second Industrial Revolution, ushering in an era of unprecedented economic growth.39 Between the 1890s and 1930s, the province saw significant growth in industrial manufacturing, the emergence of new manufacturing and transportation technologies, new scientific management theories to systematize industrial production, incorporation as a growing form of business organization, and a significant influx of American direct investment. American direct investment became a major political and economic force in the province, as branches of American companies opened across southern Ontario. The focus of production shifted from family-based agricultural work to waged labour in the manufacturing, resource, transportation, and financial sectors. The changing structures of economic activity, production, and the labour process over the early 20th century provoked the growth of a waged professional class of white-collar workers in Ontario, and these
implied contract term: A default contract term invented by common law judges and read into an employment contract when the written terms of the contract (if any) do not address the specific issue addressed by the implied term.
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Chapter 5 A Brief History of the Common Law Model of Employment 81
workers brought their employment claims to the common law courts with a new degree of frequency. A decisive legal moment took place in 1898, when the Supreme Court of Canada followed the English and American courts and opted to abandon the legal presumption of annual hire contracts. In England the presumption was successively weakened after the mid-19th century. In Ontario it seems to have had almost no practical significance and was infrequently litigated. Nonetheless in Bain v. Anderson & Co. the Supreme Court of Canada held that when the parties have not expressly agreed to the length of an employment contract, it would no longer be presumed to last for a year, but would rather be determined based on the intentions of the parties and the facts at hand. In England, the courts had reached a similar conclusion in 1891, holding that there was no presumption of annual employment. Rather, where no express duration was chosen by the parties, there was a presumption of indefinite duration employment, and such employees could be fired without cause as long as they were provided reasonable notice of dismissal.40 The presumption of annual hire had been conceptually significant to the development of the early common law of employment contracts in a few ways. The length of employment contracts had served to determine the permissible timing of dismissal and the potential damages for wrongful dismissal. Once the presumption was abandoned, the courts needed a new way to determine when employers could dismiss their employees, and thus expanded the concept of dismissal by industry custom to a broad right to dismissal with reasonable notice, now applicable to all employees.
C. Key Developments in the 20th Century During the early 20th century, the courts expanded the number of implied duties workers owed to their employers, adding the duties of fidelity, good faith, and confidentiality to the preexisting duty of obedience (see Chapter 9). At the same time, they drew on contractual principles to limit the rights employers could exercise over workers’ time and efforts, looking to industry custom and the intentions of the parties to allow workers some times of the day outside of their employers’ control. In Ontario, at least, the courts continued to strictly apply English precedent and rarely cited cases from the other Canadian provinces.41 The development of the common law of employment contracts seemed to stall over the mid-20th century, however, owing to the massive unemployment of the Great Depression followed by the full employment levels of World War II (discussed in Chapter 4). It would not be until the 1950s and 1960s, as the standard employment relationship of the Fordist era came to prominence, that the courts would once again actively develop the common law of employment contracts. They now did so within a national framework, no longer reliant on English law, with active conversation among the courts of the Canadian provinces. From the 1960s onward, Canadian courts developed the common law of the employment contract that will be described in the next dozen chapters.
IV. Chapter Summary This chapter examined the historical origins of the common law model of employment regulation. As was discussed, from its early years in the 19th century, the common law regulation of work has stood apart from the general law of contract. It is distinct not only in terms of its constandard employment relationship: A model of employment characterized by stable, long-term job security, full-time hours, decent benefits, and wage rates that rise steadily over time. Fordism: Refers to the era between the 1920s and 1960s, characterized by industrial mass production by semi-skilled unionized male workers with relatively secure jobs within large, vertically integrated companies. The term is derived from American industrialist and automaker Henry Ford.
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82 Part II The Common Law Regime tinued conceptual ties to master and servant law but also because it continues to grapple with the issues posed by the fundamental power asymmetries between employers and employees, as we shall see in the coming chapters.
QUESTIONS AND ISSUES FOR DISCUSSION 1. What aspects of master and servant law justify its classification as a legal regime premised on the subordination of workers? 2. In what ways does the common law of employment contracts resemble and differ from master and servant law? 3. Why did the common law of employment contracts first emerge in England when it did? 4. Was the employment relationship heavily regulated in Ontario in the 19th century? 5. When and why did common law employment contract cases arise with regularity in Ontario?
NOTES AND REFERENCES 1. See D. Hay & P. Craven, eds, Masters, Servants and Magistrates in Britain and Empire, 1562 – 1955 (Chapel Hill, NC: University of North Carolina Press, 2004) for more details on the use of master and servant law across the British Empire. 2. Lord Ellenborough in R v. Heywood, [1813] 105 ER 233; and D. Simon, “Master and Servant,” in J. Saville, ed, Democracy and the Labour Movement (London: Lawrence and Wishart, 1954) at 198. 3. Modern contract law, or “free will contract,” was itself in the process of development in the early 19th century. See P. Atiyah, The Rise and Fall of Freedom of Contract (Oxford: Clarendon Press, 1979) at xi (repr. in paperback with corrections, 1985). 4. Ordinance of Labourers, 23 Edw. III; and Statute of Labourers, 25 Edw. III, stat. 2. The enormous number of deaths resulting from the Black Death resulted in severe labour shortages across the country, allowing workers to force employer competition with regard to wages. L.R. Poos, “The Social Context of Statute of Labourers Enforcement” (1983) 1:1 LHR 27; and R. Palmer, English Law in the Age of the Black Death, 1348 – 1381: A Transformation of Governance and Law (Chapel Hill, NC: University of North Carolina Press, 1993). 5. Statute of Artificers, 5 Eliz. c. 4. The requirements of the Statute of Artificers were thereafter interwoven with the laws of settlement and the poor laws in the 17th century. Together these statutes created a comprehensive system for regulating the labour market. See, generally, S. Deakin & F. Wilkinson, The Law of the Labour Market (Oxford: Oxford University Press, 2005) at chapter 3; and N. Landau, “Who Was Subjected to the Laws of Settlement? Procedure Under the Settlement Laws in 18th Century England” (1995) 43:2 Agric Hist Rev 139.
6. The early master and servant statutes applied to the waged work of agricultural workers, household servants, and labourers, and to the employment relationships between apprentices, journeymen, and master craftsmen. Until the 1830s, they also imposed requirements for entry into the skilled trades. For a discussion on the changing uses of the master and servant statutes over time, see R. Steinfeld, The Invention of Free Labor: The Employment Relation in English and American Law and Culture, 1350 – 1870 (Chapel Hill, NC: University of North Carolina Press, 1991); R. Steinfeld, Coercion, Contract and Free Labor in the Nineteenth Century (New York: Cambridge University Press, 2001); D. Hay, “England, 1562 – 1875: The Law and Its Uses,” in Hay & Craven, supra note 1; and Deakin & Wilkinson, supra note 5. 7. An annual hire contract renewed itself automatically unless either party provided three months’ notice before the end of its term, operating similarly to a modern residential tenancy. 8. Usually one month’s imprisonment, although some of the newer statutes of the 18th and the 19th centuries increased the length to three months. See Hay, supra note 6 at 106. 9. In Spain v. Arnott, [1817] 171 ER 638, Lord Ellenborough ruled that employers could now dismiss for cause on their own authority, rather than have to establish cause before a magistrate or JP. See Box 5.1. 10. As of 1691, however, servants employed under an annual hire contract were permitted to stay beyond the year in their adopted parish and could not be removed from the parish even if they became destitute. The question of whether a servant was employed under an annual hire contract thus became a central point for litigation between parishes trying to minimize their relief obligations. See Deakin & Wilkinson, supra note 5; and Landau, supra note 5.
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Chapter 5 A Brief History of the Common Law Model of Employment 83 11. Certain key features of the law of master and servant had been abandoned by the early 19th century, as were the requirements of the laws of settlement. The wage-fixing provisions and the requirements for apprenticeship and entry into the skilled trades were repealed in the 1810s. But even with these changes, prosecutions continued to grow throughout the century, and the penalties under the statutes were increasingly punitive. As Hay, supra note 6, indicates, prosecution and imprisonment were in fact in steady ascent right up until the date of the penal sanctions’ repeal in 1875. 12. In testimony before the House of Commons, W.P. Roberts, “the miner’s lawyer,” was asked if he “would treat labour as you would treat any other commodity,” “merely as an article to buy and sell.” He replied “yes.” Testimony of W.P. Roberts, reported in the Royal Commission on Labour Report, 1865 – 1875 at questions 2299-30. 13. Deakin & Wilkinson, supra note 5. 14. Nova Scotia was asserted to be an English colony in 1714, and it was thereafter subdivided to include the colonies of Prince Edward Island in 1769 and New Brunswick in 1784. The colony of New France was ceded to the British at the end of the Seven Years War of 1756 – 63. The colony was divided into Upper and Lower Canada in 1791. Ontario, or Upper Canada, was “created” as a British colony when it was separated off from Quebec to accommodate British Loyalists fleeing the United States in the late 18th century. Western Canada, then called “Rupert’s Land,” included what is now Alberta, Manitoba, parts of Saskatchewan, the Northwest Territories, Nunavut, and parts of northern Quebec and Ontario. Exclusive control over Rupert’s Land was given to the Hudson’s Bay Company (HBC) in 1670 through a Royal Charter from the English Crown. HBC held control over the area until 1869, when the company surrendered its charter. The area was dominated by the fur trade and heavily settled by Indigenous and Métis communities. With its Charter, HBC was given the power to enact its own laws and regulations with regard to the company’s governance and for the advancement of trade, as long as those laws and regulations were not repugnant to the laws of England. HBC, therefore, created its own private system of government. See P. Craven, “Canada 1670 – 1935, Symbolic and Instrumental Enforcement in Loyalist North America,” in Hay & Craven, supra note 1. The regulation of paid employment in the fisheries in early Newfoundland was tied directly to the relationship between British merchants, resident planters, and servants through the mechanisms of Palliser’s Act. As Cadigan argues, the act had a significant effect on the shape of Newfoundland’s settlement and economy. See S. Cadigan, “Merchant Capital, the State, and Labour in a British Colony: Servant-Master Relations and Capital Accumulation in Newfoundland’s Northeast-Coast Fishery,
1775 – 1799” (1991) J Can Hist A 17. For details on the process of reception across the British Empire, see J.E. Côté, “The Reception of English Law” (1977) 15 Alta L Rev 29. 15. According to Paul Craven, it initially applied to indentured servants and to servants hired for six months or more and was then expanded to include servants hired by the month. Similar statutes were then passed in Prince Edward Island and New Brunswick. The statutes of the Atlantic colonies did not initially impose jail time for breach of contract; instead, they ordered the parties to perform their contracts (“specific performance”) or pay fines for desertion or disobedience. But magistrates appeared to have assumed the power to imprison absconding workers in Nova Scotia (even without explicit statutory authorization) and New Brunswick (before its statute was amended to include this power in 1826). See Craven, supra note 14 at 180-86. 16. The history of Rupert’s Land and the HBC Charter is a fascinating aspect of Canadian history. In particular, the fact that the company operated as a government, a business, and an employer created a unique employment law regime. For a detailed history of employment under the HBC, see E.I. Burley, Servants of the Honourable Company: Work, Discipline, and Conflict in the Hudson’s Bay Company, 1770 – 1879 (Toronto: Oxford University Press, 1997). 17. The Quebec Act of 1774 attempted to resolve the confusion created after the British colonial government introduced English common law principles and procedures into the administration of the colony. The act reverted to the use of French civil law for resolving private law disputes, while criminal law would be based on the English common law. The difficulty was that, because master and servant law used criminal penal sanctions to remedy breach of contract, it did not fall clearly within either civil or criminal law. Rather than expressly deciding how to classify employment regulation, the Legislative Assembly of Lower Canada delegated employment regulation to the colony’s three municipal districts. See Craven, supra note 14 at 186-89; Ian Pilarczyk, “‘Too Well Used by His Master’: Judicial Enforcement of Servants’ Rights in Montreal, 1830 – 1845” (2001) 46 McGill LJ 491; Ian Pilarczyk, “The Law of Servants and the Servants of Law: Enforcing Masters’ Rights in Montreal, 1830 – 1845” (2001) 46 McGill LJ 779. 18. An Act to Regulate the Duties Between Master and Servant, and for Other Purposes Therein Mentioned, S. Prov. Can. 1847, c. 23. 19. Craven, supra note 14 at 200-1. 20. Ibid. at 202-3. 21. Ibid.
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84
Part II The Common Law Regime
22. See Simon, supra note 2, for an example of this argument. 23. H.S. Maine, Ancient Law (London: John Murray, 1920) at 173. Maine famously argued that modern societies were ones that had moved from a state “in which all the relations of persons are summed up in the relations of Family” toward “a phase of social order in which all these relations arise from the free agreement of individuals.” 24. See, e.g., Deakin & Wilkinson, supra note 5. 25. See C. Mummé, That Indispensable Figment of the Legal Imagination: The Contract of Employment at Common Law in Ontario, 1890s – 1979 (PhD thesis, York University, 2013). 26. Lowther v. Earl of Radnor, [1806] 8 East, 113; and Branwell v. Penneck, [1827] 7 B and C 536, 108 Eng. Rep. 823. 27. A. Fox, Beyond Contract: Work, Power and Trust Relations (London: Faber and Faber, 1974) at 183; and P. Selznick, Law, Society and Industrial Justice (New York: Russell Sage Foundation, 1969) at 132. 28. Fox, supra note 27. 29. See S. Jacoby, “The Duration of Indefinite Employment Contracts in the United States and England: An Historical Analysis” (1982) 5 Comp Lab LJ 85 at 95-103; J. Bird, The Laws Respecting Masters and Servants, Articled Clerks, Apprentices, Manufacturers, Labourers and Journeymen, 3rd ed (London: W. Clarke, 1899) at 2. Bird explains that this practice arose because in large urban areas it was difficult to “learn the character of a servant.” Where no judicial notice of custom existed, the parties could introduce evidence to establish it. In such cases the courts examined evidence of usual practice in the industry, but also used the one month’s notice for domestic servants as a yardstick, comparing the relative social status of the industry to domestic service to determine the likelihood of the suggested custom. In Beeston v. Collyer, [1827] 172 ER 276, the court rejected the argument of an industry custom of one month’s notice for dismissal for a clerk to an army agent: “A man in this class is not likely to be able to get a situation so soon as a butler or a footman can,” said Best CJ. He added, on appeal, that “it would be, indeed, extraordinary, if a party, in his station of life, could be turned off at a month’s notice, like a cook or scullion.” By the mid19th century, the English courts held that there was an industry custom for clerks to be dismissed with three months’ notice. See also Metzner v. Bolton, [1854] 156 ER 221; and Fairman v. Oakford, [1860] 157 ER 1334. 30. Emmens v. Elderton, [1853] 13 CB 495 (HL). 31. Ibid. at 506. 32. Callo v. Brouncker, [1829] 2 Man. and Ry. 502, (1831), 4 C. and P. 518. 33. Price v. Mouat, [1861] 11 CB (NS) 508. See also Deakin & Wilkinson, supra note 5 at 14-15, 80.
34. C. Smith, A Treatise on the Law of Master and Servant (Philadelphia: T. & J.W. Johnson, 1852) at 68-69. 35. These cases stand in contrast to English cases during the time, which saw claims from lower status workers and female domestic servants throughout the 19th century. 36. J. Webber, “Labour and the Law,” in P. Craven, ed, Labouring Lives: Work and Workers in 19th Century Ontario (Toronto: University of Toronto Press/Ontario Historical Studies Series, 1995) at 118-23. 37. The work of domestic servants was important to the development of the common law of employment contracts in England. The issue of industry custom of dismissal by notice first emerged from their work. But because family members in Ontario did most 19th-century domestic work, and because the local master and servant statute covered domestic servants, they did not figure in the case law of 19th-century Ontario. This meant, for instance, that the body of law that developed in England around the industry custom of dismissal by notice for domestic servants was not actively applied in Ontario in the 19th century. 38. Other than wrongful dismissal and family work cases, cases also arose concerning the formalities required of municipal corporations in contracting with workers as towns and cities grew and municipalities were incorporated. Some cases concerned the proper interpretation of written terms of an employment contract. Such claims were almost invariably brought by workers, and, as Craven, supra note 14, indicates, they were relatively strictly interpreted to defeat workers’ interests. As noted, there were also a handful of claims for wrongful dismissal and claims for wages. Although such claims were few, when they arose the courts faithfully applied English precedent to decide them. Finally, in addition to claims among family members for wages, there were seduction cases, in which employers or parents sued men who had impregnated their daughters/servants out of wedlock for lost wages. See, e.g., Cromie v. Skene, [1869] 19 UCCP 328. 39. For general statistics and analysis of the transformation and rapid growth of the Canadian economy over the early 20th century, see O.J. Firestone, Canada’s Economic Development, 1867 – 1953 (London: Bowes and Bowes, 1958); R.C. Brown & R. Cook, Canada 1896 – 1921: A Nation Transformed (Toronto: McClelland & Stewart, 1991) at chapter 5; C. Heron, “The Second Industrial Revolution in Canada, 1890 – 1930,” in D.R. Hopkin & G.S. Kealey, eds, Class, Community and the Labour Movement (Wales: Llafur/CCLH, 1989) at 50-53; G. Stapells, “The Recent Consolidation Movement in Canadian Industry” (master’s thesis, University of Toronto, 1922); C. Heron & B.D. Palmer, “Through the Prism of the Strike: Industrial Conflict in Southern Ontario, 1901 – 1914” (1977) 8:4 Can Hist
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Chapter 5 A Brief History of the Common Law Model of Employment 85 Rev 423; P. Craven, An Impartial Umpire: Industrial Relations and the Canadian State (Toronto: University of Toronto Press, 1980) at 90-110; G. Lowe, “The Administrative Revolution: The Growth of Clerical Occupations” (dissertation, University of Toronto, 1979); and G. Bertram, “Economic Growth in Canadian Industry, 1870 – 1915: The Staple Model and the Take-Off Hypothesis” (1963) 29:2 Can J Econ & Pol Sci 159 at 176-77, 182.
40. See Lowe v. Walter, [1892] 8 TLR 358; and Bain v. Anderson & Co. (1898), 28 SCR 481. 41. For greater detail on the changing content of the common law of employment contracts in the early 20th century, see C. Mummé, “From Control Through Command to the Control of Discretion: Labour Time, Labour Property and the Tools of Managerial Control in Early 20th-Century Ontario” (2016) 45:1 Indus LJ.
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CHAPTER 6
The Job Recruitment and Hiring Process LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 87 II. The Common Law and Discrimination in Job Recruitment and Hiring 88 III. Common Law Torts That Apply to Job Recruitment and Hiring 88 A. Tort of Deceit or Fraudulent Misrepresentation by a Prospective Employer 89 B. Tort of Negligent Misrepresentation by a Prospective Employer 90 C. Fraudulent or Negligent Misrepresentation by a Job Applicant 91 IV. Chapter Summary 93 Questions and Issues for Discussion 93 Exercise 94 Notes and References 94
• Explain the ways in which common law courts regulate the job recruitment process and hiring decision. • Understand why complaints alleging discrimination in hiring decisions are dealt with under the regulatory standards regime and not the common law regime. • Define the torts of deceit and negligent misrepresentation. • Define the contract law concept of fraudulent misrepresentation.
I. Introduction The employment relationship, like a marriage, begins with a courting process. Employers search for workers by using word of mouth or by placing “want ads” in media where job seekers look for work. Prospective employees view and respond to these ads, or make cold calls, distributing their résumés as widely as possible. When the two sides meet, they discuss what the position entails and whether the job seeker is a suitable candidate. If the two sides like each other, an offer of employment might be made. This is known as the job recruitment and hiring process. Most of the law that affects this process is found in the regulatory regime (Part III), and not the common law regime. It is easy to see why: the job recruitment process occurs before the creation of an employment contract, and most of the common law regime deals with the rules of contracts. The common law regime is guided by the beacon of freedom of contract: employers and employees will enter into a contractual relationship only when both sides believe that doing so will make them better off. The role of judges in the recruitment process has primarily been focused on policing dishonesty and misrepresentations made during the courting process, to encourage a process in which the parties make informed and rational decisions about whether to enter into employment contracts. The virtual absence of common law rules governing the job recruitment and hiring process eventually worried Canadian governments. In a system driven by the concept of freedom of contract, employers would be free to hire (or to not hire) anyone they liked. Therefore, an early output of the common law regime was blatantly discriminatory hiring decisions. Job ads would openly announce “Men Only” or “Whites Only.” All of this was (and still is) perfectly lawful within the common law regime. As we noted in Chapter 2, as social values evolve, so too does the law of work. By the 1950s, governments had begun to enact various statutes that 87
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88 Part II The Common Law Regime regulated and prohibited some forms of discrimination in hiring. These laws restricted employers’ freedom of contract. For example, employers could no longer refuse to hire an employee because of their skin colour or gender. More recently, governments in many countries have debated whether to restrict employers from searching job applicant’s social media accounts and relying on information found there in their decision making. These statutory rules regulating the job recruitment and hiring process will be explored in greater detail in Part III. In this chapter, we consider the more limited role of common law courts in policing this process.
II. The Common Law and Discrimination in Job Recruitment and Hiring Let’s begin by reviewing the origins of the common law’s silence on discrimination in the job recruitment and hiring process. We need to travel back to a hot summer evening in Montreal, 1936, before there were anti-discrimination statutes. Fred Christie went to a bar at the old Montreal Forum arena. He ordered a beer but was refused because the bar had a rule against serving “negroes.” Christie sued the bar, claiming $200 for the humiliation he suffered. His case made it to the Supreme Court of Canada, where he lost. The Supreme Court ruled that the general principle of the law is “complete freedom of commerce,” the only restrictions being the existence of a statute restricting this freedom or “the adoption of a rule contrary to good morals or public order.”1 In 1940, the Supreme Court did not believe a rule prohibiting “negroes” from buying a beer fell into either of those two restrictions. In fact, the court chastised Christie for making a scene and calling the police, “which was entirely unwarranted by the circumstances,” since the refusal had been done “politely.”2 This case is called Christie v. The York Corporation, and it is an important part of Canadian legal history.3 It stands for the proposition that, in the common law regime, freedom of contract reigns supreme. Judges did not want to get involved in telling people (and businesses) who they can and cannot contract with, even if that meant turning a blind eye to blatant racism and discrimination. Christie was not an employment case, but it had important implications for the law of work, since it applied to all of contract law. It indicated that under the common law, employers have no restrictions in terms of who they hire. Years later, this legal principle was tested again in Seneca College v. Bhadauria (see Box 6.1). The court found that Bhadauria could file a Human Rights Code complaint, but that she could not sue Seneca College in a common law action for discrimination. No such common law action exists. Therefore, the result of the rulings in Christie v. The York Corporation and Seneca College v. Bhadauria is that discrimination issues in hiring decisions must be dealt with under the second regime of work law: regulatory standards.4 We will explore how human rights statutes regulate recruitment and hiring in Chapters 21 – 23.
III. Common Law Torts That Apply to Job Recruitment and Hiring As mentioned earlier, judges play a limited role in policing the job recruitment process. This role is mostly concerned with regulating the control and truthfulness of information passing between prospective employers and employees. The theory is that freedom of contract depends on the parties having sufficient truthful information to assess whether a proposed deal is rational. If one party misleads the other about key issues relating to the proposed contractual relationship, then we could no longer assume that the contract is rational and the result of a fair meeting of the minds. In the pursuit of informed contracting parties, common law judges have deployed both tort and contract law to promote a truthful flow of information during the job recruitment and hiring processes.
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Chapter 6 The Job Recruitment and Hiring Process 89
BOX 6.1 » CASE LAW HIGHLIGHT The Common Law and Discrimination in Hiring Seneca College v. Bhadauria [1981] 2 SCR 181 Key Facts: Bhadauria, a woman of East Indian origin, applied ten times for a job as an instructor at Seneca College. Although well qualified for the position, she was never once invited to an interview. She filed a lawsuit in the common law courts, alleging that she had been discriminated against on the basis of her race. She argued that the court should recognize a new tort prohibiting discrimination in hiring decisions, or a right to bring a lawsuit in court to enforce the Human Rights Code, which by this time prohibited discrimination in hiring based on race. The Ontario Court of Appeal agreed with Bhadauria and recognized a new tort, but Seneca College appealed to the Supreme Court of Canada. Issue: Does Canadian common law recognize a tort of discrimination that prohibits an employer from discriminating against job applicants based on race? Decision: No. The Supreme Court of Canada noted that the courts had not previously recognized a tort of discrimination: [A] refusal to enter into contract relations or perhaps, more accurately, a refusal even to consider the
prospect of such relations has not been recognized at common law as giving rise to any liability in tort. The court then considered whether to uphold the court of appeal’s decision to invent a new common law legal action based on discriminatory hiring: The view taken by the Ontario Court of Appeal is a bold one and may be commended as an attempt to advance the common law. In my opinion, however, this is foreclosed by the legislative initiative which overtook the existing common law in Ontario and established a different regime which does not exclude the courts but rather makes them part of the enforcement machinery under the [Human Rights Code]. … [N]ot only does the Code foreclose any civil action based directly upon a breach thereof but it also excludes any common law action based on an invocation of the public policy expressed in the Code. The Code itself has laid out the procedures for vindication of that public policy, procedures which the plaintiff respondent did not see fit to use.
A. Tort of Deceit or Fraudulent Misrepresentation by a Prospective Employer Employers cannot deliberately mislead or lie to a prospective employee to induce that person to accept an employment offer. This behaviour is caught by the tort of deceit, as well as a contract law action called fraudulent misrepresentation.5 Both legal actions can arise when an employer’s representative tells a job applicant something that they know is untrue, and the job applicant, relying on that statement, ends up suffering a loss.6 If the fraudulent statement induces the person to enter into an employment contract, that person has the option to rescind the contract (treat the contract as void) and to recover damages suffered that can be attributed to the misrepresentation. There are few decisions in which Canadian employers have been found to have committed a tort of deceit or fraudulent misrepresentation during the job recruitment process. The low number of decisions might indicate that employers rarely lie to applicants or, perhaps, that it is difficult for a prospective employee to prove deceit and fraud.
deceit: A tort in which party A makes a false statement with the intention of misleading party B; party B relies on the false statement and, as a result, party B suffers a loss. Damages can be recovered for that loss. fraudulent misrepresentation: A common law action based in contract law in which party A knowingly makes a false statement with the intention to mislead party B, and that statement induces party B to enter into a contract. In that case, party B may be able to rescind the contract and seek damages for any loss suffered. rescind: To set aside a contract and put the party back into their pre-contract position.
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90 Part II The Common Law Regime
B. Tort of Negligent Misrepresentation by a Prospective Employer The tort of negligent misrepresentation is also concerned with employers who mislead prospective job applicants, but it does not require a deliberate intention to misinform. As a result, it is more common than deceit and fraud.7 Like most torts applied in Canada, negligent misrepresentation has its roots in the British common law. The origin of this tort is the 1963 case Hedley Byrne & Co. v. Heller & Partners.8 Although it is not an employment case, the tort recognized in it has since been applied to cases where employers have made promises to prospective employees.9 In Hedley Byrne, a bank (Heller & Partners) informed a business (Hedley Byrne) that company X was a good credit risk, when in fact company X was on very shaky financial ground. Relying on the bank’s assurance, Hedley Byrne agreed to perform a large order for company X. However, company X subsequently went out of business without paying Hedley Byrne its fee. In an attempt to recover its losses, Hedley Byrne sued the bank. It argued that it was wrong for someone possessing special knowledge to make untrue statements without taking reasonable care to ensure the accuracy of those statements. The court agreed and invented a new tort known as negligent misrepresentation. The court stated the following about that tort: I consider that it follows and that it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise.10
That reference to a duty of care is crucial to understanding torts involving negligence, as we will discuss further in Chapter 16. Only people who owe a duty of care to others can commit the tort of negligent misrepresentation. The courts have held that employers and employees owe a duty of care to one another during the job recruitment process. The leading Canadian employment case applying the tort of negligent misrepresentation to the job recruitment process is the Supreme Court of Canada decision in Queen v. Cognos Inc. (see Box 6.2).
BOX 6.2 » CASE LAW HIGHLIGHT Negligent Misrepresentation in the Job Recruitment Process Queen v. Cognos Inc. [1993] 1 SCR 87
mitted the tort of negligent misrepresentation during the interview process.
Key Facts: Queen had a job in Calgary, but was restless. He applied for a job with Cognos Inc., a firm located in Ottawa. At the interview, Cognos’s representative, Johnston, explained that the job would involve working on a new project, but did not disclose to Queen that the project was conditional on funding, which was not guaranteed. Queen was offered the job. He quit his job in Calgary and moved his family to Ottawa. Queen signed an employment contract with Cognos, which permitted Cognos to dismiss him for any reason with one month’s notice. When the funding for the project did not come through, Queen was dismissed, about 17 months after he was hired. Queen sued Cognos, alleging that Johnston had com-
Issues: Does the tort of negligent misrepresentation apply to the pre-employment recruitment process? If so, did Cognos commit this tort by failing to make clear that the job in question was contingent on funding yet to be confirmed? Decision: Yes and yes. The Supreme Court of Canada confirmed that negligent misrepresentation was now firmly entrenched in Canadian tort law: Though a relatively recent feature of the common law, the tort of negligent misrepresentation relied on and … first recognized by the House of Lords in
negligent misrepresentation: A tort in which party A, owing a duty of care, makes an untrue statement to party B without sufficient care as to the statement’s accuracy, which party B then relies upon and suffers loss as a result. duty of care: A special close relationship between two parties that creates an obligation in tort law to take reasonable steps to avoid harming the other party.
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Chapter 6 The Job Recruitment and Hiring Process 91 Hedley Byrne … is now an established principle of Canadian tort law. The court then listed the elements that must be proven to make out a case for negligent misrepresentation: (1) [T]here must be a duty of care based on a “special relationship” between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading; (3) the representor must have acted negligently in making said misrepresentation; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted. The Supreme Court found that the employer’s representative had made inaccurate statements to Queen and that Queen had relied on those statements to his detriment. Therefore, elements 2, 4, and 5 were satisfied. Element 1 was also satisfied because a representative of an employer, who the job applicant would reasonably believe is speaking on behalf of the employer, is in a “special relationship” vis-à-vis the applicant such that a duty of care arises. The more difficult question in Queen v. Cognos Inc. was whether the statements made to Queen were “negligently made” (element 3). The employer representative (Johnston) testified that he believed the project would go ahead, so that when he told this to Queen, he was speaking honestly. However, the court noted that Johnston also knew that the project still required certain funding approvals that were not guaranteed, and he did not pass this important information on to Queen. The Supreme Court indicated that this omission amounted to negligent misrepresentation. The court stated the following about the test for negligent misrepresentation by a prospective employer:
A duty of care with respect to representations made during pre-contractual negotiations is over and above a duty to be honest in making those representations. It requires not just that the representor be truthful and honest in his or her representations. It also requires that the representor exercise such reasonable care as the circumstances require to ensure that the representations made are accurate and not misleading. … Under the standard of care described above, Mr. Johnston failed to exercise such reasonable care as the circumstances required him to in making the representations he did during the interview. Particularly, he should not have led the appellant to believe that the Multiview project … was a reality when, in fact, he knew very well that the most important factor to the existence of the project, as he was describing it, was financial support by the respondent. Since Johnston kept important information to himself, allowing Queen to form the opinion that the job was secure, he acted negligently. It was not a defence that Johnston believed the project would be affirmed. Since all of the elements of the tort had been made out, Queen won his tort lawsuit. The remedial goal in tort law is to put the victim back into the position they would have been in had the tort not occurred. What likely would have occurred had Cognos not made the negligent misrepresentation? Well, Queen likely would not have immediately quit his job in Calgary, which paid him $50,000 per year. So the court ordered Cognos to pay Queen $50,000 in lost income, representing one year’s lost salary. Also, Queen would not have had to buy a house in Ottawa and then sell it at a loss of about $12,000 when he was unexpectedly dismissed. The court ordered Cognos to reimburse Queen for that loss, as well as pay him an additional $5,000 for “emotional stress.”
Queen won his case because the employer failed to disclose important information that was known at the time of the job interview—that funding for the position was not guaranteed. It is important to remember that not every statement made by an employer during the job recruitment process that turns out to be false will amount to a negligent misrepresentation.11 For example, if the statements involve guesses or predictions about future events that may or may not happen, rather than alleged statements of existing fact, a court is unlikely to find a negligent misrepresentation. The courts assume that employees are capable of understanding that sometimes predictions turn out to be wrong.12
C. Fraudulent or Negligent Misrepresentation by a Job Applicant So far, we have considered how judges have applied torts to regulate misrepresentations by employers during the recruitment process. What about job applicants? Sometimes, people looking for work embellish their credentials to make themselves more attractive to courting employers or to obtain better contract terms. This too can constitute fraudulent misrepresentation, which occurs if the job applicant knowingly makes a false representation that induces, or causes, the employer to hire the
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92 Part II The Common Law Regime applicant. If the employer learns of the dishonesty during the recruitment process, then usually a legal issue will not arise. The employer will not hire the person. But what happens if the employer does not learn of the employee’s misrepresentation until after they have already hired the employee and entered into an employment contract? This is the scenario that most often arises in the case law dealing with misrepresentation by employees during the job recruitment process. In practice, the issue of dishonesty by an employee during the job recruitment process usually arises in a wrongful dismissal lawsuit brought by a dismissed employee.13 A wrongful dismissal lawsuit, as we will learn in Chapter 10, alleges that the employer terminated its contract with the employee without giving the amount of notice required by the employment contract. Sometimes, an employer will terminate an employee’s contract when the employer learns that the employee lied during the job recruitment process (see Box 6.3). In a subsequent wrongful dismissal case, the employer would argue that the misrepresentation made by the employee during the job recruitment process voided the requirement for the employer to give notice before terminating the employee’s contract.14 We see in the Clark decision that dishonesty by a job applicant about an important fact during the recruitment process can ultimately lead an employee’s contract to be terminated, forfeiting any contractual entitlements. Note that this rule is applicable even if the employee has worked for the employer for some time before the employer learns of the dishonesty. The rationale for this rule is that mutual trust is a fundamental requirement of the employment relationship, and dishonesty of a serious nature by an employee can irreparably destroy the employer’s trust.15 The same rationale explains some other common law rules we will meet later in this part of the text, including judges’ reluctance to reinstate employees to their former jobs, regardless of how inappropriately the employer had behaved in dismissing the employee. In the Clark decision, the employee’s misrepresentations had induced the employer to enter into the contract and influenced the terms of the contract. However, sometimes a job applicant’s dishonesty may not have any influence on the employer at all. The employer would have hired the person even if the employee had not made the false claim. What happens then?
BOX 6.3 » CASE LAW HIGHLIGHT Fraudulent Misrepresentation by a Job Applicant Clark v. Coopers & Lybrand Consulting Group 2002 CanLII 45050 (Ont. CA)
contract without providing notice of termination and without paying the bonus?
Key Facts: Clark lied about his academic qualifications in an application for a job at Coopers & Lybrand Consulting. Impressed with his credentials, Coopers & Lybrand offered him a high-level management job. However, a couple of years after Clark started, the employer learned of the deception and terminated Clark’s contract with no notice. Clark sued for the three months’ wages in lieu of notice of termination and a bonus based on a percentage of his earnings, both of which were required by the terms of the contract.
Decision: Yes. The court ruled that Clark committed fraudulent misrepresentation that had induced the employer to enter into the employment contract. The court cited Professor Gerald Fridman’s text The Law of Contract in Canada when explaining the implications of this fraud: “A contract resulting from a fraudulent misrepresentation may be avoided by the victim of the fraud.” In this case, the court ruled that Clark was not entitled to claim any benefit under the contract—including notice of termination damages or his bonus—since his lies had induced the employer to enter into the contract in the first place.
Issue: Did the employee’s misrepresentations during the job recruitment process entitle the employer to terminate the
wrongful dismissal: A type of lawsuit by an employee against a former employer alleging that the employer terminated their contract without complying with the implied term in the contract requiring “reasonable notice.”
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Chapter 6 The Job Recruitment and Hiring Process 93
BOX 6.4 » CASE LAW HIGHLIGHT Fraudulent Misrepresentation by a Job Applicant Not Relied on by Employer Islip v. Coldmatic Refrigeration of Canada Ltd. 2002 BCCA 255 Key Facts: Coldmatic Refrigeration sought to hire Islip away from a competitor. It made Islip an offer of employment for a period of two years that included use of a truck and the right of Islip to purchase the truck for $1 at the end of the contract. During the negotiation stage, Islip informed Coldmatic that he was paid $75,000 per year in his current job when in fact he was only earning $64,000. Based on that information, Coldmatic agreed to pay Islip $75,000. However, shortly thereafter Coldmatic reneged on its promise to sell Islip the truck for $1. Islip claimed that was a fundamental breach of the contract, permitting him to quit and sue for unpaid wages (this is called a lawsuit for constructive dismissal, which we explore in Chapter 13), plus the value of the truck. Coldmatic argued that Islip committed fraudulent misrepresentation when he lied about his previous salary and therefore he could not claim damages under the contract. Issue: Did the employee’s misrepresentation during the job recruitment process prevent him from claiming damages for breach of contract by the employer?
Decision: No. The court ruled that all of the requirements of “fraudulent misrepresentation” had been made out—the worker had deliberately made a false statement about a fact intending to deceive the employer—except that the employer had not been induced to enter into the employment contract by the lie. Coldmatic would have hired the employee anyway, even if he had not lied about his previous salary because it was trying to capture the market of Islip’s former employer. It was prepared to pay Islip $75,000 to ensure he came to Coldmatic. The employer argued that the lie was still grounds for dismissal of Islip for cause (and without notice). The court disagreed, finding that “the misrepresentation was not of such a serious nature as to afford grounds for dismissal” without notice.* We will learn in Chapter 12 that not every incident of dishonesty by an employee creates grounds for summary dismissal without notice. The court ordered Coldmatic to pay Islip an amount equal to one year’s salary (the contract permitted Coldmatic to terminate Islip after one year) plus $27,500 to compensate him for the lost value of the truck. * A similar outcome was reached in Earle v. Grant Transport, 1995 CanLII 7289 (Ont. Gen Div). See also Zadorozniak v. Community Futures Development Corp., 2005 BCSC 26 (failing to disclose a dismissal for cause ten years earlier was not cause for dismissal).
IV. Chapter Summary This chapter explained how, in the common law regime, judges have limited their role to policing the honesty of representations made by job applicants and employers. Judges have policed honesty through a mix of tort law (torts of deceit and negligent misrepresentation) and contract law (fraudulent misrepresentation). The common law regime does not prohibit discriminatory recruitment decisions, such as giving preference to applicants of a certain gender, race, or religion. As we will learn in Part III, governments in Canada have filled this void by enacting a variety of statutes that restrict an employer’s freedom to base hiring decisions on factors the state deems inappropriate.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Amanda believes she was denied a job because of her religion. Can she sue the employer for discrimination in a common law court? 2. What is the difference between fraudulent misrepresentation and negligent misrepresentation? 3. What is the legal significance of a “duty of care” in cases involving the tort of negligence? 4. What was the employer’s misrepresentation in the case Queen v. Cognos Inc. (described in Box 6.2)? On what basis did the court calculate damages owing to the employee in that decision? summary dismissal: Termination of an employment contract by an employer without notice to the employee in response to a serious breach of contract by the employee.
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94 Part II The Common Law Regime APPLYING THE LAW 1. May lied on her application for a job as a bottler sorter at County Beer Company about which university she attended. She is hired, but one year later the employer learns of the dishonesty. The employer immediately fires May, asserting that May’s misrepresentation permits it to terminate the contract with no notice to May. May comes to you for legal advice on whether she can sue County Beer for any damages. What would you tell her? If there is any other information you would want to know before giving your advice, what information would that be? 2. Cary is a software engineer who suffers from cystic fibrosis. He was laid off from his job at a company called MDA, where he was covered by a long-term disability (LTD) insurance policy that would pay him about $3,000 per month if he became sick and unable to work. The job market was good at the time, and Cary wanted a new job that would insure LTD benefits at least equal to what he had at MDA. Cary was
offered a new job by Northern Engineering. He asked Northern’s representative about eligibility under Northern’s LTD plan. Cary was told that he would be eligible for LTD provided he completed three months’ continuous employment without illness. He was given a pamphlet that explained that LTD benefits were equal to two-thirds of regular monthly income, which would be $4,600/month. Cary accepted the job. About one year later, he became sick and claimed LTD benefits. Cary was advised that he was not eligible to receive two-thirds of his regular pay because he had failed to complete a medical questionnaire when he was hired. Instead, he was only entitled to a maximum of $1,000 per month. Cary asks you whether he could file a lawsuit against Northern Engineering and tells you he only accepted the job at Northern because he thought he had LTD coverage guaranteeing him about $4,600 per month. What advice would you give?
EXERCISE Lawyers “note up” important cases when they prepare to represent their clients. Noting up involves searching previously decided cases that deal with similar facts and issues to the case the lawyer is now dealing with. A leading case on negligent misrepresentation during the recruitment stage is Queen v. Cognos Inc. (described in Box 6.2). Try this exercise on noting up that decision. 1. Go to the CanLII home page: . 2. In the “Document text” search box, type “Queen v. Cognos” and “employment.” That search should give you over 500 decisions that cite the Queen decision. Not all of these decisions will involve alleged misrepresentations during the employment recruitment process, but some will. 3. Scroll through the decisions and look for a case that involves an alleged misrepresentation by an employer or job applicant in the recruitment process. Read that decision. 4. Prepare a case summary similar to that presented in Box 6.2, including a brief summary of (1) the key facts; (2) the main issue the court was asked to decide; and (3) the court’s decision and the remedy (if any) ordered.
NOTES AND REFERENCES 1. Christie v. The York Corporation, [1940] SCR 139 at 142. 2. Ibid. at 141. 3. For an interesting discussion of Christie v. York, see E. Adams, “Errors of Fact and Law: Race, Space, and Hockey in Christie v. York” (2012) 62 UTLJ 463.
4. In recent years, some courts in Canada have ruled that it is possible to include a claim for breach of a human rights statute as part of a lawsuit for breach of the employment contract, such as a claim for “wrongful dismissal,” which we will discuss in Chapter 14. See, e.g., Sparrow v. The Manufacturers Life Insurance Company, 2004 MBQB 281.
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Chapter 6 The Job Recruitment and Hiring Process 95 In Ontario, the Human Rights Code, RSO 1990, c. H.19, s. 46.1 now grants courts the authority to order remedies for violations of the Code as long as a violation of the Code is not the sole basis for the lawsuit (s. 46.1). For an example of a case that applies s. 46.1, see Wilson v. Solis Mexican Foods Inc., 2013 ONSC 5799. 5. Modern courts often treat the tort of deceit and fraudulent misrepresentation interchangeably, although they are distinct causes of action. Deceit is a tort, an element of which is a fraudulent misrepresentation. Fraudulent misrepresentation is actually an action in contract law that arises when a party to a contract was induced to enter into the contract by a fraudulent statement. The innocent party may rescind the contract, in addition to seeking damages. For a good discussion of this distinction, including other sources, see Lozinik v. Sutherland, 2012 ABQB 440. 6. G. Fridman, The Law of Contract in Canada, 3rd ed (Scarborough, ON: Carswell, 1994) at 295. 7. For a discussion of this tort, see A. Linden, L. Klar, and B. Feldthusen, Canadian Tort Law: Cases, Notes & Materials, 13th ed (Toronto: LexisNexis, 2009) at chapter 10. 8. Hedley Byrne & Co. v. Heller & Partners, [1964] AC 465. 9. For cases applying negligent misrepresentation in the recruitment context, see H.B. Nickerson & Sons Ltd. v. Wooldridge, 1980 CanLII 2604 (NSCA); Steer v. Aerovox Inc., 1984 CanLII 49 (NSSC); De Groot v. St. Boniface General Hospital, 1994 CanLII 16687 (Man. CA); Khashaba v. Procom Consultants Group Ltd., 2018 ONSC 7617; and Feldstein v. 364 Northern Development Corporation, 2017 BCCA 174. 10. Hedley Byrne, supra note 8 at 15. 11. See Lesage v. Canadian Forest Products Ltd., 2011 BCCA 259 (the failure to warn the employee of the possibility of the job being eliminated in the future was not negligent misrepresentation).
12. See, e.g., Grant v. Oracle Corp. Canada Inc., 1995 CanLII 16090 (Man. CA); Bureau v. KPMG Quality Registrar Inc., 1999 CanLII 1479 (NSCA); Williams v. Board of School Trustees, School District No. 63, 1986 CanLII 1207 (BCSC); and Demichelis v. Vancouver Canucks Limited Partnership, 2014 BCSC 1368. 13. In Leacock v. Whalen, Beliveau & Associes Inc., 1998 CanLII 6452 (BCCA), the employee’s negligent misrepresentation during the hiring process resulted in the court redefining the duration clause of the contract. The employee had been fired after three months. He argued that his contract was for two years, and that he was entitled to damages amounting to the pay he would have received had he worked those two years. In its defence, the employer argued that the employee had misrepresented his qualifications during the recruitment process. The court agreed, ruling that the employee had committed the tort of negligent misrepresentation by being “less than frank” about his sales performance at his previous job. The court then considered what remedy would make the employer whole, the same test applied in Queen v. Cognos Inc., [1993] 1 SCR 87. It found that had the employee not misrepresented his qualifications, the employer would still have hired Leacock. However, the employer would have bargained a contract term of only one year, rather than two years. Therefore, the court assessed the damages for the wrongful dismissal based on a one-year contract. 14. See, e.g., Schafer v. Pan Matrix Informatics Inc., 1987 CanLII 3500 (Alta. QB) (eight lies by the employee during the hiring process amounted to cause for summary dismissal); Clark v. Coopers & Lybrand Consulting Group, 2002 CanLII 45050 (Ont. CA); and Cornell v. Rogers Cablesystems Inc. (1987), 17 CCEL 232 (Ont. DC). 15. See D. Doorey, “Employer Bullying: Implied Duties of Fair Dealing in Canadian Employment Contracts” (2005) 30 Queen’s LJ 500 at 523-24; and Smith v. Reichhold Ltd., 1989 CanLII 2875 (BCCA) (employee conduct that destroyed an employer’s trust repudiates the employment contract).
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CHAPTER 7
The Requirements to Create and Modify an Employment Contract LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 97 II. The Requirements to Create a Legally Enforceable Employment Contract 98 A. Capacity to Enter into a Contract 98 B. Intention to Create a Legally Enforceable Contract 98 C. Three Elements of a Contract: Offer, Acceptance, and Mutual Consideration 100 III. Making Modifications to an Employment Contract 102 A. Contract Amendments When the Employee Agrees to the Change 103 B. Modifications When the Employee Does Not Agree to the Change 107 IV. Chapter Summary 109 Questions and Issues for Discussion 109 Notes and References 110
• Explain when a contract between an employer and an “infant” or a person with a mental impairment is legally enforceable. • Explain when the intention to create a legally enforceable contract exists. • Define offer, acceptance, and mutual consideration, and explain their significance in employment contracts. • Explain how modifications can be made to an employment contract.
I. Introduction The successful outcome of the job recruitment process discussed in Chapter 6 is an employment contract between an employer and an employee. Therefore, we have reached the point in the book when we must turn our attention to the rules of contract law. In this chapter, we consider the requirements to create a valid and enforceable employment contract, as well as the rules governing amendments or variations to those contracts. The essence of an employment contract is an exchange of a promise by the employee to perform work for a promise by the employer to pay for that labour. The common law regime presumes that employers and employees are informed, rational actors who voluntarily choose to enter into employment contracts because doing so makes them better off than they otherwise would be without the contract. This presumption breaks down, however, if one or both of the parties lack the capacity to fully grasp the consequences of the bargain, or if the parties never intend the arrangement to create legal obligations. I may offer to pay my 10-year-old daughter $5 in exchange for her cleaning the kitchen, but neither of us would intend that we can drag the other to court if she leaves the kitchen a mess or I refuse to pay up. We need to understand when a promise creates legal obligations. As explored in Chapter 5, the model of employment contracts we understand today really only emerged in Canada during the 20th century. An important implication of the courts’ move to treat the labour exchange as a form of contract was that the general rules of contract law applied. We will learn in Chapter 9 that the courts used “implied terms” to create a special type of contractual relationship that largely preserved the authority of employer over employee that had existed in the master and servant era. However, the general rules of contract law have shaped many of the core elements of the employment relationship, including the requirements of offer, acceptance, and mutual consideration that we consider in this chapter. These 97
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98
Part II The Common Law Regime
r equirements determine whether a valid employment contract has been created and also shape the rules regarding contract term modifications. There is a lot to cover, so let’s begin our lesson in contract law!
II. The Requirements to Create a Legally Enforceable Employment Contract We will divide our discussion of the requirements to create a legally enforceable contract into three parts: (1) capacity to contract; (2) intention to contract; and (3) the elements of a contract—offer, acceptance, and mutual consideration. Each of these requirements must be satisfied for a promise of labour for money to be treated as a lawful employment contract.
A. Capacity to Enter into a Contract As noted in the introduction, the common law presumes that a contract results from a meeting of the minds of two free and informed parties who have assessed that they will benefit from the exchange. The law needs to guard against exchanges where one of the parties lacks the capacity to understand the implications of the deal. Should a child be able to enter into an employment contract? It is easy to see why we might be concerned about this possibility. Children may not understand what it means to enter into a contract or what they are actually agreeing to. They could be taken advantage of. To guard against this possibility, the courts could prohibit—or refuse to enforce—all contracts with minors or persons with mental disabilities. However, that is not the approach that has been taken. In the case of children under the age of 18 (called infants or minors in legal terminology), the courts begin with the assumption that the contract is void. However, exceptions have been recognized by the courts (and sometimes by governments in legislation)1 in which employment contracts with infants are enforced. The most important exception relates to a contract that, overall, is for the benefit of the infant.2 If it is, then it is enforceable. Few modern cases involving infant employment contracts exist, but one is a case involving John Tonelli, who won four Stanley Cups with the New York Islanders hockey team in the 1980s (see Box 7.1). We noted in Chapter 1 that some of the vilest and most disturbing snapshots in the story of the Canadian law of work involve abuse and mistreatment of child workers in late 19th-century factories.3 By requiring employers to establish that a contract with a minor is for the minor’s benefit, the courts retain some ability to police child exploitation at work. Contracts involving employees with a mental impairment are treated in a similar manner. They are considered to be voidable contracts. This means that they are not automatically void. However, if a court finds that the mentally impaired party was unaware of what was being agreed to, or that the contract is very unfair, it may void the contract.4
B. Intention to Create a Legally Enforceable Contract Assuming that we have two parties that have the legal capacity to contract, the next issue is whether they actually intend to create a legally enforceable contract. Judges do not want people dragging each other to court over every little promise made in everyday interactions. In the beautiful language of Lord Stowell in an 1811 decision: “[Contracts] must not be the sport of an idle hour, mere matters of pleasantry and badinage, never intended by the parties to have any serious effect whatever.”5 In other words, I should not be able to sue my daughter because she forgot to load the dishwasher as we agreed. infant: A person under the age of 18; also referred to as a minor in legal writing. voidable contract: A contract that may be declared void at the option of one of the parties due to a deficiency. An example is an employment contract involving an employee who is considered mentally impaired.
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BOX 7.1 » CASE LAW HIGHLIGHT The Enforceability of an Employment Contract Involving a Minor Toronto Marlboro Major Junior “A” Hockey Club v. Tonelli 1979 CanLII 1969 (Ont. CA) Key Facts: At age 17, Tonelli entered into a contract with the Toronto Marlboro junior hockey team. It required him to play for the Marlboros for three years, and then pay the team 20 percent of his hockey earnings for his first three years of professional hockey. In exchange, the Marlboros provided Tonelli with a small wage, paid for his room and board and school tuition, and gave him coaching, exposure, and a chance to make the pros. When Tonelli turned 18, he informed the Marlboros that he was cancelling the contract. He signed with the Houston Aeros, a professional hockey team. Tonelli argued that the contract with the Marlboros was invalid because he was a minor when he signed the agreement.
The court ruled that, although Tonelli received benefits from the contract, overall the contract was onerous for him and highly beneficial to the Marlboros. The court noted that “where, as here, the bargaining position of the parties is manifestly unequal and one party is able to dictate terms to another, courts are increasingly vigilant to protect the weaker party and reluctant to enforce the contract against him.”
Issue: Was the contract “for the benefit” of the 17-year-old Tonelli and therefore legally enforceable? Decision: No. The contract was unenforceable. The court explained the legal test for contracts with people under the age of 18: This contract, signed by Tonelli when he was an infant, falls into the category of a contract of service. It can be enforced against him only if it was for his benefit at the time it was made. The onus is on the Marlboros to establish that it was for his benefit. Whether it was or was not for the infant’s benefit is a question of fact. … In making its decision, the Court must construe the contract as a whole and strike a balance between its beneficial and onerous features. The contract is not to be invalidated simply because it places some burdens upon an infant. These principles of law are well established, and no authority need be cited to support them.
John Tonelli. Source: Ray Stubblebine/AP.
In assessing whether there was an intention to create a legal contract, judges ask whether a “reasonable person” would assume that the intention existed, considering all of the facts. Let’s pause here to note that this is known as an objective test. It asks, “What would a reasonable person of normal intelligence think, if told about the circumstances?”6 A subjective test, in contrast, asks, “What was this person actually thinking at the time?” Through the application of an objective test, a judge can find that an intention existed to create a legally enforceable contract even if one of the parties claims that they did not actually have that intention. We will come across objective and subjective tests again later in this text. objective test: A legal test used in interpretation of contracts and statutes that asks, “What would a reasonable person of normal intelligence think, if told about the circumstances?” Contrast with subjective test. subjective test: A legal test used in interpretation of contracts and statutes that asks, “What was this person actually thinking at the time?” Contrast with objective test.
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An intention to create legal relations is usually assumed in the typical employment relationship involving an employer who offers a job to an employee, but not always. For example, consider a situation that may be familiar to many students: the unpaid internship. Often companies offer to permit a person to shadow an employee or do a variety of tasks as a way to gain experience and connections, but without an offer to “employ” or pay wages. Has an employment contract been created in such a situation? See Box 7.2 for a discussion of this issue. The Sarmiento case demonstrates that the common law regime is not very helpful to unpaid interns, volunteers, or trainees who agree to work for free in exchange for experience but then later argue that they were really “employees” and subject to an employment contract. Therefore, workers in this situation have more often looked to the regulatory standards regime, especially employment standards legislation, as the worker did in the Pichette v. Lumac Holdings case discussed in Box 4.7 in Chapter 4.7
BOX 7.2 » CASE LAW HIGHLIGHT The Intention to Create a Binding Employment Contract Sarmiento v. Wilding & Rampage Entertainment 2008 BCPC 232 Key Facts: Sarmiento was looking for experience in the film industry and agreed to volunteer as an intern with Rampage, a small film production company. After she stopped working for the company, she filed a lawsuit claiming that she had been “hired” as an employee and was owed $25,000 for the work she performed for the company. Issue: Did the parties enter into a legally enforceable contract requiring the payment of wages to the worker for work performed? Decision: No. The court accepted the company’s argument that Sarmiento had agreed to volunteer and that no mutual intention to create legal relations had existed: The evidence does not show Sarmiento was “hired” to work for Rampage generally or that after a period
of training, she took on the mantle of paid employee. Nothing in the evidence showed that the relationship between the parties changed or that there was any consideration indicative of the parties entering into an employment contract …. Quite apart from whether Sarmiento was an employee or intern, I find the evidence does not support holding that [Sarmiento] and Rampage had a common intention to enter into an employment contract. With the funding structure and limited financing behind Rampage, I am unable to conclude [the company] was looking to hire staff or that [it] employed Sarmiento in the capacity she wanted the Court to believe.* * See also Evard v. University of BC (Alma Mater Society) (1995), 14 CCEL (2d) 124 (BCSC) (a student university newspaper editor was not entitled to compensation because there was no intention to create a legally enforceable contract).
C. Three Elements of a Contract: Offer, Acceptance, and Mutual Consideration Finally, even if two parties have the capacity to contract and intend to create a legally enforceable contract, they may still fail to create a valid, legally enforceable contract. Common law judges determined very long ago—long before employment contracts existed—that for any agreement to become a legally binding contract, an offer must be made by one party that is accepted by another party, and mutual consideration must exist between the parties. These requirements apply to employment contracts in Canada today.
1. Offer and Acceptance In the case of an employment contract, the first two requirements of offer and acceptance are usually satisfied without much controversy. In the usual course, an employer will offer to employ a worker, and the worker will accept that offer. The acceptance must be unequivocal
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such that both parties understand that they are entering into a binding contract. Consider a typical “offer letter” that an employer might send to a prospective employee, as depicted in Box 7.3. Since the offer letter in Box 7.3 expressly and clearly indicates that the employee’s signature constitutes acceptance of both the offer letter and the attached contract of employment, there should be little dispute about what was offered and whether the employee accepted it.8 However, sometimes it is less clear what the employer offered or whether the employee accepted the offer. In many cases, no written contract or offer setting out what the contract’s terms will be is used. In such cases, the evidence that an offer was made by one party and accepted by another must be gleaned from the conduct of the parties or from oral testimony or other documentary evidence put before a judge that describes what the parties discussed. In Box 7.5, later in this chapter, we consider a case in which a judge was asked to decide whether a verbal offer of employment was made and accepted during a telephone conversation.
BOX 7.3 » TALKING WORK LAW The Offer and Acceptance of an Employment Contract Dear Ms. Cheng: We are pleased to offer you employment at County Beer Company commencing on Monday, January 20, 2020. As an employee of County Beer, you are entitled to coverage under our employee health plan after completion of three months’ continuous employment. Please find attached our standard Contract of Employment, which together with this offer letter, constitutes your employment contract. You should review the terms in that contract and consult a lawyer if you wish. Provided the terms are acceptable to you, please verify your acceptance of our offer of employment by signing on the space provided below. This offer of employment is open until 5 p.m. on Friday, January 17, 2020. If you have not returned a signed acceptance of this offer by that time, this offer expires. We are excited to have you aboard! County Beer is a modern, friendly, great place to work with a lot of opportunities to advance for hard-working, positive employees. Sincerely,
Dylan L. Wilson Dylan L. Wilson Director of Human Resources
I ___________________ have read this offer letter and the attached Contract of Employment. I have sought legal advice or have elected voluntarily not to seek legal advice to review the contents of the contract. My signature below indicates my acceptance of this offer of employment and the terms set out in this offer letter and the attached Contract of Employment. ____________________________ ____________________________ Employee’s Signature Date
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2. Mutual Consideration “Consideration” means something of value or a benefit. Therefore, when we say that an employment contract must contain mutual consideration, we mean that it must provide something of value to both the employer and the employee that they otherwise would not receive. The consideration need not be equal to both parties. In fact, the courts have said that they will “not enter into an inquiry as to the adequacy of consideration” and “anything of value, however small the value, is sufficient consideration to support a contract at law.”9 Law students learn early in their contracts course about the case of Chappell & Company v. Nestle, in which the British House of Lords famously wrote “A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn.” My contracts professor used to yell at us, “Where is the peppercorn!” whenever a question of mutual consideration arises in a case.10 My law school touch football team was called the Raging Peppercorns. You get the idea. Mutual consideration is important. The requirement for mutual consideration rarely creates a problem at the time an employment contract is first created. It is easy to see how consideration would normally flow both ways in a typical employment relationship. The employee receives money (a wage) and perhaps some other benefits, such as health or dental insurance or pension contributions. In exchange, the employer receives the employee’s labour power and a promise to comply with legally permissible directions issued by the employer. However, the requirement of mutual consideration applies to contract modifications (or amendments) as well. It is in this context that problems occasionally arise. For a change to a contract to be legally enforceable, both employee and employer must receive something new of value that they were not otherwise already entitled to under the existing (prior) contract. Canadian employers have sometimes run into problems when they have attempted to make a change to an employment contract that would benefit the employer without also giving a new benefit to the employee. In that case, as we will see next, the amendment can be ruled invalid for lack of “fresh” consideration to the employee, even if the employee agreed to the change.
III. Making Modifications to an Employment Contract Competing policy interests are in tension in the law that regulates mid-term contract modifications. On the one hand, good policy reasons exist to allow employers “flexibility” in governing the workplace in order to adapt quickly to changes in the business environment. It is impossible to predict all of the circumstances that could arise during the life of an indefinite-term employment contract. If terms of employment are fixed by contracts entered into months or even years earlier, the employer’s ability to adapt to new market demands is impeded, which could threaten the viability of the business. On the other hand, employees have an interest in predictability and stability in their employment conditions. If employers can simply change the contract terms whenever it suits them, then the original contract terms that employees accepted would be meaningless. Fear of reprisals may lead employees to agree with whatever changes the employer proposes, since employers can always terminate the contract simply by giving notice. The requirement for mutual consideration to modify a contract provides a small measure of protection for employees against an employer that might want to force through contract changes that benefit the employer. The requirement for mutual consideration to amend a contract dates back to the famous 1809 contract case of Stilk v. Myrick, discussed in Box 7.4. Stilk v. Myrick took place two centuries ago, but it is not hard to see how the rule applied in that case is still relevant to modern-day employment situations. At its core, Stilk v. Myrick is an employment case in which the parties agreed to amend the contract terms in the middle of the contract. However, the amendment was unenforceable because “new consideration” did not flow to both parties.
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BOX 7.4 » CASE LAW HIGHLIGHT The Origins of Mutual Consideration in Employment Contracts Stilk v. Myrick (1809), 170 ER 1168 Key Facts: Stilk agreed to work as a seaman on a dangerous sea voyage for 5 British pounds per month. Two other seamen deserted the ship, creating more work for Stilk on the return voyage. The captain (Myrick) offered to pay Stilk more for the return voyage for the additional work that would be required. However, when the voyage was done, Myrick refused to pay Stilk the additional amounts he had promised. Stilk sued to recover that money.
Decision: No. In the original contract for 5 pounds per month, the seamen had already agreed to perform “all that they could under all the emergencies of the voyage” and were bound “to exert themselves to the utmost to bring the ship in safety to her destined port.” Sometimes things happen on a voyage that create more work for the crew, and the original contract contemplated that. Therefore, Myrick received nothing new in exchange for his promise to pay Stilk more than the original 5 pounds. As a result, because he received no “new consideration,” Myrick’s promise to pay Stilk more than 5 pounds per month was not an enforceable agreement.
Issue: Was the captain’s promise to pay Stilk more than agreed to in the original contract enforceable?
In the Stilk case, it was the purchaser of the labour (the “employer,” Myrick) who benefited from the rule. More often today the rule benefits employees. A typical situation involves an employer that wants to amend or vary the terms of the employment contract, such as by reducing employee compensation or the amount of notice required to terminate the contract. It is possible for an employment contract to include expressed language that explains how a mid-term amendment can occur. For example, a contract might include a term like this: The Contract may be modified or changed in whole or part according to the will of the parties, but all such changes or modifications must be agreed to and shall not take effect until they are in writing and signed by both parties.
That language requires both parties to agree to the change and therefore, in theory at least, gives the employee the right to veto any change by withholding consent to a proposed change.11 If a contract includes a clause like that, then new consideration would not be needed to make the amendment, since mutual consideration was exchanged at the time the contract was initially formed. However, most employment contracts do not include expressed language dealing with mid-term contract amendments. Therefore, the normal common law rules of contract apply, and the Stilk decision tells us that an amendment to an employment contract without an expressed variation clause is only enforceable if (1) both parties agree to the change, and (2) both parties receive new consideration—some new benefit not required by the original contract. We can separate the contract modification rules into two categories: (1) modifications with agreement of both parties, and (2) modifications when one party does not agree to the change.
A. Contract Amendments When the Employee Agrees to the Change In order to understand the next two cases, which deal with attempted amendments to employment contracts, you need to know something about a topic we will discuss in detail in Chapters 9 and 10. In the common law regime, there is an “implied” obligation on employers to provide employees with “reasonable notice” of the termination of the employment contract. “Implied” means that the requirement to give reasonable notice exists, unless there is a term in the contract that expressly states otherwise. Judges decide how much notice is “reasonable,” applying criteria we consider in Chapter 10.
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104 Part II The Common Law Regime For now, all you need to know is that reasonable notice can be quite a lengthy period of time (up to two years or more for a long-serving employee). Therefore, employers often seek to avoid implied reasonable notice by including a written contract term requiring a defined amount of notice that is less than “reasonable notice.” The next two cases involve attempts by employers to introduce a new written notice of termination clause to replace the existing implied requirement to provide reasonable notice of termination. Rejdak v. Fight Network Inc., discussed in Box 7.5, provides a useful demonstration of how the requirements of offer, acceptance, and mutual consideration come into play in the employment setting, including in the context of a contract amendment. Let’s consider it in two parts, separating out the issues of offer and acceptance, and mutual consideration.
BOX 7.5 » CASE LAW HIGHLIGHT Offer, Acceptance, and Mutual Consideration Rejdak v. Fight Network Inc. 2008 CanLII 37909 (Ont. Sup Ct J) Key Facts: Rejdak argued that a verbal offer of employment was made by The Fight Network (TFN) in a Friday night telephone conversation. The terms of that contract included the salary amount, job title, and start date. There was no discussion of how much notice of termination would be required. Rejdak accepted the offer, quit his existing job, and began work at TFN the following Monday. During that first day, TFN gave Rejdak a written employment contract and asked him to sign it. Rejdak took the written contract home and returned it signed the following day. The written offer allowed the employer to terminate Rejdak’s employment with no notice while he was on “probation.” Rejdak’s contract was terminated during the probation period without notice. Rejdak sued the employer, arguing that the original verbal contract included an implied right to “reasonable notice” of termination and that the written contract with the probation period was unenforceable because he received no fresh consideration in exchange for giving up his greater entitlement to reasonable notice. Issue One (Offer and Acceptance): Did the parties enter into a verbal employment contract during the Friday night telephone conversation? Decision: Yes. A verbal offer was made during the phone call, which was accepted by Rejdak. The judge wrote: I conclude that on [Friday] August 5, [the employer] offered and Mr. Rejdak accepted a job on the following terms: his title was editor and creative director; his annual salary was $50,000; and he was to start on Monday, August 8, 2005. There was no indication on August 5 that his employment was subject to a probationary period. Mr. Rejdak began work at TFN prior to signing the employment agree-
ment. I conclude that there was an oral employment contract entered into by the parties on Friday evening. Issue Two (Mutual Consideration): Did the parties lawfully amend the oral contract when they signed the written contract on the second day of work? Decision: No. According to the judge, the employee received no new consideration in exchange for granting the employer the benefit of a new probationary period: Mr. Rejdak’s position is that the written employment agreement is of no force or effect because there was no fresh consideration. … TFN submits that the employment agreement signed on August 9, [2005], provided two benefits to Mr. Rejdak which constitute new consideration. The first added benefit was paid vacation. The agreement provided that Mr. Rejdak would be entitled to two weeks’ vacation. If he did not take all of his vacation in a particular year, he could carry up to one-week vacation into the next year. The second benefit under the contract was a health benefit plan: Mr. Rejdak was entitled to participate in TFN’s employee benefit plan or a private plan, if no employee plan existed. … I do not accept that either benefit constitutes additional consideration. The paid vacation merely reflects the two-week statutory minimum [already required by the Employment Standards Act]. Mr. Rejdak would reasonably have expected to receive the health benefit plan since it was a standard benefit provided to all TFN employees. The court found that the original oral contract required that the employer provide Rejdak with “reasonable notice,” which the court ruled was four months. Rejdak was entitled to damages based on lost wages for a period of four months.
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Chapter 7 The Requirements to Create and Modify an Employment Contract 105
Rejdak v. Fight Network Inc. offers three important lessons about the common law rules of contract. First, amendments to an employment contract are only enforceable if there has been mutual consideration.12 Second, a verbal offer by an employer to employ a job applicant can create an enforceable employment contract if the worker accepts the offer; a written contract is not necessary, and indeed, many employees in Canada have never signed a written contract.13 Third, if an employee commences work before having signed a written employment contract, then a written contract introduced afterward constitutes a proposed modification to the original verbal contract, and unless the parties had agreed otherwise, that verbal contract includes an implied requirement that the employer provide the employee with “reasonable notice” of termination. In the decision outlined in Box 7.6, the employee had signed an offer of employment one month before he commenced work and was then instructed to sign a written contract on his first day of work. The written contract limited the amount of notice the employer was required to give if it decided to terminate the contract. Notice that in both Francis v. CIBC and Rejdak v. Fight Network, the employees signed the new written contracts, yet the courts ruled that the notice of termination clauses in those contracts were unenforceable due to a lack of fresh consideration. An employee’s written agreement does not fix an absence of mutual consideration.
BOX 7.6 » CASE LAW HIGHLIGHT New Consideration Needed to Modify a Contract Francis v. Canadian Imperial Bank of Commerce 1994 CanLII 1578 (Ont. CA)
Issue: Was the amendment to the notice of termination provision in the employment agreement enforceable?
Key Facts: Francis was given an offer of employment letter from CIBC on June 9, 1978, which he accepted in writing several days later. That agreement included no provision about notice of termination, and, therefore, it included an implied contract term requiring “reasonable notice” of termination. On July 4, 1978, his first day of work, CIBC presented him with a new document entitled “Employment Agreement.” That document said that CIBC could terminate the contract by giving Francis three months’ notice. Francis signed it and commenced work. When Francis was dismissed in 1987, CIBC relied on the “three months’ notice” term in the written employment agreement. Francis sued for wrongful dismissal, arguing that the notice clause in that agreement modified the original contract that entitled him to “reasonable notice” and that he had received no new consideration.
Decision: No. The court ruled that the employment agreement signed on the first day of work in July 1978 modified the earlier contract reached by the parties in June. That modification granted the employer an important new benefit—the right to terminate the contract with three months’ notice rather than “reasonable notice,” which would be much longer than three months. There was nothing new in the written contract that benefited Francis that he was not already entitled to as per the original written employment offer that he accepted one month before his first day on the job. Francis was entitled to reasonable notice of termination, as per the original contract executed in June 1978. The court determined that notice period to be 12 months. Therefore, Francis was entitled to damages based on a period of 12 months from the date he was dismissed.
In a 2018 decision, the British Columbia Court of Appeal ruled that mutual consideration was no longer required to lawfully amend a contract, provided that both parties agreed, there was no “duress,” and there is no other policy reason why the amendment should not be
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106 Part II The Common Law Regime enforced.14 That decision, called Rosas v. Toca, did not involve an employment relationship, and as I write this in early 2019, there has been no decided case involving an employment contract that applies its reasoning. Regardless of whether the novel approach in Rosas v. Toca takes hold in other contexts, there is good reason to believe that courts will preserve the requirement for mutual consideration in the employment context owing to the inequality of bargaining power between employer and employee that courts have long recognized and that we will discuss throughout this book. This inherent inequality is discussed in Box 7.7.
BOX 7.7 » TALKING WORK LAW How Inequality of Bargaining Power Affects the Common Law The Francis v. CIBC ruling has been applied in many subsequent cases in which employers attempted to rely on amended terms of employment contracts even though the employee had received no new consideration in exchange for the amendment. In one such case, called Hobbs v. TDI Canada Ltd., the Ontario Court of Appeal referred to the inequality of bargaining power common in the employment relationship: The requirement of consideration to support an amended agreement is especially important in the employment context where, generally, there is inequality of bargaining power between employees and employers. Some employees may enjoy a measure of bargaining power when negotiating the terms of prospective employment, but once they have been hired and are dependent on the
remuneration of the new job, they become more vulnerable.* The court was recognizing here that employees often will not feel free to refuse an employer’s demand for a contract modification since a refusal could possibly lead to their dismissal. The theme of inequality of bargaining power is prominent in the law of work, as we discussed in Part I of this text. The requirement for the employee to receive something of value (consideration) in the amendment provides some small measure of protection for the employee. However, since the courts do not assess the value of consideration or insist that employees receive “fair” value in the exchange, the requirement for mutual consideration is not a very onerous hurdle for employers to overcome. * Hobbs v. TDI Canada Ltd., 2004 CanLII 44783 (Ont. CA) at para 42.
Some employers have argued that simply continuing to employ the employee constitutes new consideration in exchange for a contract modification. In other words, the employer says, “I could fire you right now, but I won’t if you agree to this amendment.” The problem with this argument is that the employer is already required to continue the employment contract, unless it provides the employee with the amount of notice to terminate it required in the contract. In Globex Foreign Exchange Corporation v. Kelcher, the Alberta Court of Appeal explained why continued employment alone is not fresh consideration: [C]ontinued employment alone does not provide consideration for a new [benefit to the employer] extracted from an employee during the term of employment because the employer is already required to continue the employment until there are grounds for dismissal or reasonable notice of termination is given.15
However, what if the employer goes further, and says, “If you agree to this modification, I promise not to exercise my contractual right to terminate the contract not only today, but also for some period of time into the future”? Could this exchange provide the employee with a new benefit: greater job security than they had the moment before they agreed to the modification? The courts call a promise not to exercise a right to terminate the contract for a future period of contract modification: A change to one or more terms of the contract during the term of the contract.
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time a forbearance. Forbearance can constitute new consideration to support a contract modification, as discussed in the decision in Box 7.8.16
BOX 7.8 » CASE LAW HIGHLIGHT Is a Promise Not to Terminate a Contract for a Specified Time Fresh Consideration? Techform Products Ltd. v. Wolda 2001 CanLII 8604 (Ont. CA) Key Facts: In 1989, Wolda signed a consultancy agreement with Techform to work on special projects at a fixed hourly rate that could be terminated with 60 days’ notice. In 1993, Techform asked Wolda to sign a new contract (the ETA contract) that granted ownership to Techform of inventions Wolda created while working for Techform. Wolda did not want to sign, but felt he had no choice because Techform made clear that it would terminate his consultancy contract if he refused to sign, and he needed the work. In 1997, Wolda invented a “3D hinge” and he requested that Techform pay him a royalty for each sale. This annoyed Techform, which claimed they owned the invention because of the ETA contract. After Techform terminated the consultancy contract, the two sides sued one another. Wolda argued that he owned the 3D hinge and that the ETA contract was unenforceable because he had received no fresh consideration when it was signed in 1993. Techform argued that Wolda received consideration in the form of an agreement by Techform not to exercise its right to terminate the consultancy agreement with 60 days’ notice for some period into the future.
Issue: Did Wolda receive fresh consideration in the form of an agreement by Techform to abstain from exercising its right to give 60 days’ notice of termination? Decision: Yes. The court ruled that it was clear that had Wolda not signed the ETA contract, Techform would have exercised its rights under the consultancy contract to terminate Wolda with 60 days’ notice. The court of appeal concluded that there was evidence that if Wolda did not sign the ETA his services would be terminated on 60 days’ notice. In presenting the ETA to Wolda in the circumstances of this case, Techform must be taken to have tacitly promised to forbear from dismissing the employee for a reasonable period of time thereafter. That promise was in fact fulfilled. The appellant retained the respondent’s services for a further four years and terminated those services only when he breached the ETA. In my view, therefore, there was consideration for the ETA. [Emphasis added]
In the cases we have considered so far, the worker agreed to the modification and the issue was whether there was consideration flowing back to the employee. Only in Wolda did the court find fresh consideration, and it took the form of a promise by Techform to not exercise its contractual right to terminate Wolda for some period of time into the future—a forbearance. More often, an employer will just give the employee something small of value, such as a signing bonus or a pay raise. For example, in the 2018 case Lancia v. Park Dentistry, the employer introduced a new, revised employment contract and, in consideration for employees signing, provided a one-time $2,000 bonus.17 The court ruled that this was valid consideration.
B. Modifications When the Employee Does Not Agree to the Change What if the employee does not agree to the employer’s proposed contract modification? What if the employer says, “We want you to agree to this change to the contract” and the employee says, “No thanks”? This scenario arose in the 1957 case of Hill v. Peter Gorman Ltd. The employer announced to salespeople that it was going to begin withholding part of their commissions to
forbearance: A promise by one party in a contract to another party to refrain from exercising a contractual right for a period of time. A forbearance by an employer to not exercise the contractual right to terminate the employment contract may constitute consideration flowing to an employee.
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108 Part II The Common Law Regime offset delinquent accounts. This act constituted a modification to the contract. Hill refused to accept the modification, but the employer nevertheless withheld his commissions. When the employee later quit, he sued and successfully recovered the withheld commissions. The court of appeal ruled that, when faced with an employee who does not agree to a proposed modification, the employer can terminate the contract in its entirety by giving proper notice, and then offer a new contract on revised terms, but it cannot unilaterally impose the modification: If the [employee] made it clear … that he did not agree to the change … the proper course for [the employer] to pursue was to terminate the contract by proper notice and to offer employment on the new terms. Until it was so terminated, the [employee] was entitled to insist on performance of the original contract.18
A similar situation arose in the more recent case of Wronko v. Western Inventory Service Ltd. (see Box 7.9). The basic lesson from Hill v. Gorman and Wronko v. Western Inventory is that an employer cannot simply impose a modification to an employment contract without the employee’s
BOX 7.9 » CASE LAW HIGHLIGHT When No Agreement Exists to Modify an Employment Contract Wronko v. Western Inventory Service Ltd. 2008 ONCA 327 Key Facts: The employment contract, dated December 2000, required the employer, Western, to provide Wronko with two years’ salary if he was terminated. In 2002, the president of Western approached Wronko with a new contract that required only 30 weeks’ pay to terminate the contract. Wronko refused to sign the new agreement. Western then gave Wronko two years’ notice that it would amend the notice of termination term in the contract from two years to 30 weeks. When the two years were up, in 2004, Western sent Wronko the revised contract with the 30 weeks’ notice term and told him if he did not sign it, he no longer had a job. Wronko did not sign. He took the position that he had been terminated, and he sued the employer for damages equal to two years’ wages as per the original 2000 contract. Western argued that it had the right to unilaterally modify a contract provided that it gave proper notice to Wronko and that Wronko had quit. Issue: Was the employer within its rights to unilaterally change the notice of termination clause provided it gave notice of the change to Wronko? Decision: No. Wronko was terminated when he was told that there would be no job for him unless he signed an agreement with the reduced notice of termination period. The court summarized the three options available to an employee when the employer attempts to unilaterally amend an employment contract:
First, the employee may accept the change in the terms of employment … in which case the employment will continue under the altered terms. Second, the employee may reject the change [quit] and sue for damages if the employer persists in treating the relationship as subject to the varied term. This course of action would now be termed a “constructive dismissal” …. Third, the employee may make it clear to the employer that he or she is rejecting the new term. The employer may respond to this rejection by terminating the employee with proper notice and offering re-employment on the new terms. If the employer does not take this course and permits the employee to continue to fulfill his or her job requirements, then the employee is entitled to insist on adherence to the terms of the original contract. The situation in this case fell under the third option. However, the employer did not terminate the original contract and offer Wronko a new contract on different terms. Rather, it waited two years and then attempted to unilaterally impose the modification on Wronko. Wronko was entitled to two years’ compensation, as per the term of the original 2000 contract (minus moneys he received from other employment during that two-year period, which is a result of a rule called mitigation that we will learn about in Chapter 14 in the discussion of damages for breach of the employment contract).
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Chapter 7 The Requirements to Create and Modify an Employment Contract 109
a greement. Absent agreement by the employee, the employer who insists on the amendment must provide the employee with the proper amount of notice required by the contract to terminate the contract and inform the employee that once that notice period is over, employment will only continue according to the modified contract terms. Table 7.1 summarizes what we have learned in this chapter about modifications to employment contracts. TABLE 7.1 The Modification of Employment Contracts Scenario
Action Required
1. The employment contract includes a clause describing the process for contract modification.
The employer and employee must comply with the specified rules for contract modification.
2. The employment contract does not include a clause describing the process for contract modification. a. Both employer and employee agree to the modification.
Both sides must receive new consideration as a result of the modification.
b. The employer and employee do not both agree to the modification.
The contract cannot be unilaterally modified by the employer. The employer must provide the employee with the amount of notice required to properly terminate the contract and inform the employee that, once the notice period is over, employment will only continue if the employee agrees to the modified contract terms.
IV. Chapter Summary In this chapter, we explored the requirements to create an employment contract: (1) the parties must have the legal capacity to contract; (2) the parties must have the intention to create a legally enforceable contract; and (3) the contract must comprise an offer, an acceptance of that offer, and mutual consideration. The absence of any of these requirements can prevent a court from enforcing an agreement between an employer and employee. We also learned how this requirement for mutual consideration applies to contract modifications. A modification to an employment contract that is not supported by “fresh” consideration flowing to both parties will most likely not be enforced by a court, even if both parties agreed to the amendment.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Is an employment contract between an employer and an “infant” or a worker who is mentally impaired always unenforceable? Explain. 2. What is the difference between an “objective test” and a “subjective test”? How does this distinction matter when the courts assess if there was an intention to create a legally enforceable employment contract? 3. Explain the significance of offer, acceptance, and mutual consideration in employment law. 4. Must an employment contract be in writing to be enforceable? 5. If a contract includes a written term allowing the parties to modify the contract as long as both parties agree to the modification in writing, must both parties receive new consideration for the modification to be enforceable? 6. What is “forbearance” in contract law? Explain how forbearance can constitute fresh consideration.
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110 Part II The Common Law Regime APPLYING THE LAW County Beer began as a small micro-brewery with just a handful of employees. The owners did not have a background in law or human resource management (HRM), and they did not require their employees to sign written employment contracts. The company grew, and the owners decided it was time to hire an HRM professional. Amanda Willow was hired. Amanda realized that employees did not have written contracts, and she remembered from her employment law class that this probably meant that the employer would be required to give those employees “reasonable notice” of termination, which could be quite long. She decides to ask the employees to sign new written contracts that provide the employees with the same wages and benefits they are getting now, but also permits the employer to terminate the employee by providing the minimum amount of notice required by employment standards legislation (which would be much less than “reasonable notice”).
She gives the new contract to the employees and asks them to sign. Some employees sign, but Mark and Ahmed refuse, saying they do not agree to the reduced notice of termination requirement. a. Would an employee who signed the new written contract have an argument later on that the notice of termination clause in that contract is unenforceable and that they should be entitled to a longer period of “reasonable notice”? b. If Amanda wants to ensure that the change she wants to make is legal and enforceable, how would you recommend she deal with the employees Mark and Ahmed who have refused to sign the new written contract? Assume Mark and Ahmed were hired the same day five years earlier and that a court would find that “reasonable notice” to terminate both of them is six months.
NOTES AND REFERENCES 1. See, e.g., British Columbia Infants Act, RSBC 1996, c. 223, s. 21. See discussion in M. Mahadeo, “Minor Matters: Ensuring the Enforceability of Contracts with Minors in the Entertainment Industry” (2015) 93:1 Can Bar Rev 277. 2. The roots of the exceptions are deep and begin with the concept that an “infant” contract for “necessaries” is enforceable. In Doyle v. White City Stadium Ltd., [1935] 1 KB 110, the court described the rule as follows (at 131): “An infant may bind himself to pay for his necessary meat, drink, apparel, and such other necessaries, and likewise for his good teaching or instruction, whereby he may profit himself afterwards,” and to that has been added in the course of years contracts of service that are to an infant’s benefit. Contracts for apprenticeships and employment contracts have been found to fall within a branch of the rule, provided that the contracts are generally “for the benefit” of the employee. Not all employment contracts meet this standard, as demonstrated in the case of Toronto Marlboro Major Junior “A” Hockey Club v. Tonelli, 1979 CanLII 1969 (Ont. CA) discussed in Box 7.1. See also De Francesco v. Barnum [1890] 45 Ch D 430; and Butterfield v. Sibbitt and Nipissing Electric Supply Company Ltd., [1950] OR 504 (Sup Ct J). 3. See J. Rinehart, The Tyranny of Work, 2nd ed (Toronto: Harcourt Brace, 1987) at 39-40; Karl Marx famously described conditions of work of children in British factories of the 19th century in K. Marx, Capital, vol 1 (New York: Penguin, 1976) at 356; J. Parr, Labouring Children: British Immigrant Apprentices in Canada, 1869 – 1924
(Montreal: McGill-Queen’s University Press, 1980); and M. Levine, Children for Hire: The Perils of Child Labour in the United States (Westport, CT: Praeger, 2003). 4. A contract involving a mentally impaired employee might also now be treated as an incident of unconscionable contract if it is considered to be grossly unfair to the employee. See S.M. Waddams, The Law of Contracts, 4th ed (Aurora, ON: Canada Law Book, 1999) at 487-88; Hardman v. Falk, 1955 CanLII 308 (BCCA); and Canadian Imperial Bank of Commerce v. Milhomens, 2004 SKQB 168. 5. Dalrymple v. Dalrymple (1811), 2 Hag. Con. 54, quoted in G. Chesire & C. Fifoot, The Law of Contracts, 7th ed (Sydney: Butterworths, 1969) at 94. 6. See Andrews v. Canada (Attorney General), 2019 NLSC 42 at paras 17-19. 7. Pichette v. Lumac Holdings Ltd., 2011 CanLII 80536 (NB LEB). 8. An offer to enter into an employment contract can be made conditional on a future event occurring; this is known as a “condition precedent” in contract law. In that case, the acceptance of the offer does not become valid until the condition precedent has been satisfied. For example, an offer of employment may be made conditional on approval by a board of directors: Bowen v. Canadian Tire Corp. (1991), 35 CCEL 113 (Ont. Gen Div). 9. J. McCamus, The Law of Contracts (Toronto: Irwin, 2012) at 226, 229. 10. Chappell & Company v. Nestle Co. [1960] AC 87.
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Chapter 7 The Requirements to Create and Modify an Employment Contract 111 11. See the discussion of the enforceability of expressed contract variation clauses in G. England, Individual Employment Law (Toronto: Irwin, 2008) at 41. See also the discussion in Long v. Delta Catalytic Industrial Services Inc., 1998 CanLII 18145 (Alta. QB). 12. Other cases in which a contract modification failed due to lack of mutual consideration include Francis v. Canadian Imperial Bank of Commerce, 1994 CanLII 1578 (Ont. CA); Holland v. Hostopia Inc., 2015 ONCA 762; Globex Foreign Exchange Corporation v. Kelcher, 2011 ABCA 240; Braiden v. La-Z-Boy, 2008 ONCA 464; Hobbs v. TDI Canada Ltd., 2004 CanLII 44783 (Ont. CA); McLean v. The Raywal Limited Partnership, 2011 ONSC 7330; Fasullo v. Investments Hardware Ltd., 2012 ONSC 2809; Singh v. Empire Life Ins. Co., 2002 BCCA 452; Orlan Karigan & Associates Ltd. v. Hoffman, 2001 CanLII 28293 (Ont. Sup Ct J); and Kohler Canada Co. v. Porter, 2002 CanLII 49614 (Ont. Sup Ct J). Cases in which a modification was found to be supported by consideration to the employee include Clarke v. Insight Components (Canada) Inc., 2008 ONCA 837; Techform Products Ltd. v. Wolda, 2001 CanLII 8604 (Ont. CA); Maguire v. Northland Drug Co. Ltd., [1935] SCR 412; and Lancia v. Park Dentistry, 2018 ONSC 751. 13. However, a statute may require some types of contracts to be in writing. For example, some fixed-term contracts of more than one year must be in writing by virtue of Statute of Frauds legislation in effect in some Canadian provinces (e.g., Ontario Statute of Frauds, RSO 1990, c. S.19), or by virtue of the original 17th-century British Statute of Frauds that applies under “received law.” See Campbell v. Business Fleets Limited, [1954] OR 87 (CA); Smith v. Mills, 1913 CanLII 147 (Sask. CA); and Lavallee v. Siksika Nation, 2011 ABQB 49. The scope of the Statute of Frauds has been read down by Canadian courts, which have ruled that a
fixed contract of more than one year is not governed by the statute if it “could be performed in less than one year.” The implied right to terminate a contract with “reasonable notice” makes most contracts potentially terminable within a year. 14. Rosas v. Toca, 2018 BCCA 191. 15. Globex Foreign Exchange Corporation v. Kelcher, 2011 ABCA 240. See also Techform Products Ltd. v. Wolda, 2001 CanLII 8604 (Ont. CA) at para 24; and McLean v. The Raywal Limited Partnership, 2011 ONSC 7330. 16. An early case recognizing that a forbearance to exercise the right to dismiss an employee for some period of time constitutes new consideration is Maguire v. Northland Drug Co. Ltd., [1935] SCR 412. An employee can also give consideration in the form of a forbearance: Ciric v. Raytheon Canada Limited, 2008 BCCA 241 (employee’s promise not to quit until laid off in exchange for a promise to pay severance would constitute new consideration from the employee). 17 Lancia v. Park Dentistry, 2018 ONSC 751. This case also involves an interesting application of the Wronko decision explained in Box 7.9. 18. Hill v. Peter Gorman Ltd., 1957 CanLII 393 (Ont. CA) at 132. See also Polard v. ARO Inc., 2016 BCSC 2277; Loyst v. Chatten’s Better Hearing Service, 2012 ONSC 1653; Russo v. Kerr, 2010 ONSC 6053; Wronko v. Western Inventory Service Ltd., 2008 ONCA 327; Lin v. Ontario Teachers’ Pension Plan, 2016 ONCA 619; and Kafka v. Allstate Insurance Company of Canada, 2012 ONSC 1035. See also Lancia v. Park Dentistry, 2018 ONSC 751 (suggesting that it is sufficient for an employer to provide “reasonable notice” of the modification rather than notice of “termination”).
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CHAPTER 8
Expressed Terms of Employment Contracts LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 113 II. Interpreting “Ambiguous” Contract Terms 114 III. Sources of Employment Contract Terms 115 A. Restrictive Covenant Clauses 116 B. Termination of Contract Clauses 118 IV. Chapter Summary 125 Questions and Issues for Discussion 125 Exercise 126 Appendix 127 Notes and References 129
• Explain how the parol evidence rule and the contra proferentem doctrine influence how judges interpret employment contracts. • Identify the three principal sources of employment contract terms. • Understand how judges decide whether a restrictive covenant clause is legally enforceable. • Explain the difference between a fixed-term, a fixed-task, and an indefinite-term employment contract and how they are terminated. • Identify and explain important situations in which the courts have refused to enforce contract terms relating to the termination of employment contracts. • Explain the “unconscionability” and “changed substratum” doctrines of contract law and how they apply to termination of employment contracts. • Explain how employment contracts can come to an end by agreement of the employee to retire at a defined date, and how mandatory retirement clauses are now subject to the prohibition on age discrimination found in human rights legislation.
I. Introduction Once we have an offer, an acceptance, and mutual consideration, we have an employment contract. The contract may be oral or written. Some contracts are complicated and lengthy, but many are quite sparse, like the one reproduced at the end of this chapter. Professor Hugh Collins of Oxford University has described the employment contract as “incomplete by design,” by which he means that the contracts are often left deliberately vague to allow for flexibility to deal with the many contingencies that could arise over the life of the relationship.1 This chapter introduces the employment contact, focusing on the sources of contract terms and on some common terms found in written employment contracts and the legal issues that can arise in relation to them. Employment contract terms arise from three sources, as depicted in Figure 8.1: • Expressed contract terms can be written and signed off on by both parties to create a written employment contract, or they can be agreed to orally. For example, if the employer offers to hire the employee at a rate of $20 per hour and the employee accepts that offer, then $20 per hour is the expressed contract term that governs the rate of pay, whether or not it is written down. expressed contract terms: Terms of a contract that the parties have explicitly agreed to, either orally or in writing. 113
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114 Part II The Common Law Regime • Ancillary contract terms are found in secondary documents such as human resource policy manuals, employee handbooks, company rules handbooks, and benefits handbooks. These documents are physically separate from the employment contract, but rules and terms found in them can sometimes form part of the employment contract. It is important to understand when that happens. • Implied contract terms are read into contracts by judges to deal with situations that have arisen and that are not specifically dealt with in any expressed contract terms. Implied contract terms fill voids in the expressed contract terms. They are important in the common law of employment because most employment contracts are so sparse. The history and development of implied contract terms in employment law is fascinating for what it tells us about judges’ perceptions of the employment relationship over time. This chapter will explore legal and policy issues related to expressed contract terms. In Chapter 9, we will consider ancillary and implied contract terms.
II. Interpreting “Ambiguous” Contract Terms Let’s begin our discussion of employment contract terms by considering some important tools that judges use as interpretative aids. Contract interpretation involves the search for the intention of the parties when they entered into the contract. Often that intention is clear from expressed language used by the parties in a written contract. Therefore, a judge will always begin the task of resolving employment contract disputes by reading the written contract, if one exists. If the language provides a clear answer, then not much difficulty should arise. Thus, if an employment contract includes a term providing that “the employee will be paid at a rate of $20 per hour worked,” then little dispute should exist about the hourly rate. The intention of the parties on the question of the wage rate is unambiguous. However, sometimes the terms of the written contract are not clear, and thus neither are the parties’ intentions. Contract terms can be ambiguous, which means that they are capable of multiple interpretations, all of which are possible. For example, while it might be clear that the employee is to be paid $20 per hour, what the parties intended by the words “hour worked” in the contract could give rise to disagreements. Consider a live-in nanny who both works and lives at her employer’s home, caring for two small children. Occasionally, when the children are sleeping, the parents (i.e., the employer) go out for the evening, knowing that the nanny is home in case the children wake up or something happens. While the parents are out, the nanny sometimes goes to sleep. Is the nanny “working” while she is sleeping? The answer will turn on how a judge interprets the words “$20 per hour worked.” Did the parties intend “worked” to include hours when both children and nanny are asleep? When a contract term is clear (unambiguous), a judge will not usually permit the employer or employee to present evidence that attempts to show they thought they were agreeing to something different than what the language says. In such instances, the judge is applying a rule of evidence known as the parol evidence rule.2 According to this rule, a judge must decide what a contract means by looking only at the clear words of the contract (i.e., they must “stay within
ancillary contract terms: Terms found in secondary documents, such as human resource policy manuals or employee handbooks, that have been incorporated into an employment contract by agreement of the employer and employee. implied contract term: A default contract term invented by common law judges and read into an employment contract when the written terms of the contract (if any) do not address the specific issue addressed by the implied term. ambiguous contract term: A contract term capable of multiple interpretations. parol evidence rule: A common law rule of evidence in which a judge is prohibited from hearing evidence that the parties intended a meaning different than what is indicated in the clear language of the written contract.
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Chapter 8 Expressed Terms of Employment Contracts 115
the four corners of the contract”).3 The assumption is that the parties intended what they clearly wrote down. So if the contract states that the hourly rate is $20 per hour, a judge will not listen to evidence from the employer that in fact the employee agreed verbally to $15 per hour. The contract is clear and unambiguous.
FIGURE 8.1 Sources of Employment Contract Terms ANCILLARY CONTRACT TERMS
EXPRESSED CONTRACT TERMS
IMPLIED CONTRACT TERMS
Terms in ancillary documents that may be incorporated into the employment contract
Terms that are stated in writing or explicitly agreed to orally
Terms that are read into the contract by judges to fill voids in expressed contract terms (see Chapter 9)
CONTRACT
_________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ ________
However, when a written contract term is ambiguous, a judge can hear evidence about what the parties intended the contract language to mean. That evidence can include what the parties said during negotiations of the contract term and how the contract term has been applied in the past. Contract ambiguity creates an exception to the parol evidence rule. To deal with the challenge of interpreting ambiguous contract terms, judges have also applied the contra proferentem doctrine. This doctrine provides that, where a contract term is ambiguous (capable of multiple meanings), the court will apply the interpretation that is most favourable to the party that did not write the contract.4 In employment law, this usually means that the court will apply the interpretation that is most favourable to the employee, since it is the employer that almost always writes the contract.5 We will see some examples of how these interpretive tools are used by judges to resolve employment contract interpretation disputes as we continue our discussion of the employment contract.
III. Sources of Employment Contract Terms The range of possible contract terms is as large as the imagination of the parties. In the appendix at the end of this chapter you will find a sample employment contract with some commonly seen contra proferentem doctrine: A rule of contract interpretation in which a judge interprets an ambiguous contract term in the manner most favourable to the party that did not draft the contract.
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116 Part II The Common Law Regime terms and a brief discussion of those terms. Disputes can, and often do, arise over the meaning of written provisions or how those provisions should be applied to different factual situations. We will encounter many expressed contract terms as we work our way through this text. For now, we will highlight two of the most commonly litigated expressed contract terms: (1) restrictive covenant clauses and (2) termination of contract clauses.
A. Restrictive Covenant Clauses Imagine that Christine is employed as a financial adviser by a large bank and has hundreds of clients. One day she quits the bank and opens up her own financial advisory firm down the street. She sends letters to all of her old clients from the bank to inform them of her move and is pleased when 80 percent of them transfer their accounts from the bank to her new business. Christine has done real business harm to her former employer. But has she done anything that is legally wrong? The answer depends on the language used in her former employment contract with the bank. Some contracts include clauses known as restrictive covenants. Restrictive covenants impose limitations on the actions of former employees. There are three main types: 1. A non-disclosure clause prohibits a former employee from disclosing information that has proprietary value to the employer. 2. A non-solicitation clause prohibits a former employee from attempting to persuade the employer’s customers to stop doing business with the employer and instead do business with the employee.6 3. A non-competition clause prohibits a former employee from entering into a competing business with the employer. See Box 8.1 for examples of each of these clauses.
BOX 8.1 » TALKING WORK LAW Sample Restrictive Covenant Clauses • Non-disclosure clause: “Upon termination of this contract, the Employee shall not retain, remove from the Employer’s property, or destroy any document or computer file containing confidential information, and shall not at any time disclose to any person any confidential information relating to the Employer.” • Non-solicitation clause: “The Employee agrees not to solicit business by any means from any existing or
former client of the Employer for a period of one year after the termination of this contract.” • Non-competition clause: “The Employee agrees not to establish a competing business or otherwise engage in competition with the Employer within a 20-kilometre radius of the Employer’s offices for a period of three years from the date of the termination of this contract.”
Restrictive covenant clauses, particularly non-competition clauses, are controversial because they put into tension two important and competing interests. On the one hand, there are important social and economic reasons why people ought to have the freedom to engage in whatever (non-criminal) commercial activities they wish. Christine needs to be able to support herself, and if she is an excellent financial adviser, then the community of investors has an interest in her being able to sell her services. On the other hand, employers may have legitimate restrictive covenant: A contract term that restricts the right of a former employee to engage in certain competitive practices against their former employer.
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Chapter 8 Expressed Terms of Employment Contracts 117
business interests that are threatened if their former employees are free to go off and engage in activities that pose a direct threat to those interests. Should the bank not be able to bargain a promise from Christine that she will refrain from competing against it for some period of time after she no longer works for the bank? The Supreme Court of Canada has summarized the tension like this: [R]estrictive covenants give rise to a tension in the common law between the concept of freedom of contract and public policy considerations against restraint of trade.7
Judges balance these competing interests by applying their common law right to void contract terms that are contrary to public policy (public policy illegality).8 In exercising this discretion, judges start with a presumption that restrictive covenant clauses are generally unenforceable because they are restraints on the right to engage in commercial activities (“restraint of trade”). Judges have expressed concern that, especially in the employment context, employees are vulnerable because there is an imbalance of power on the side of employers. Employees could be subjected to an oppressive restriction on their ability to earn a livelihood by a restrictive covenant written into the contract by the more powerful employer.9 However, not all restrictive covenant terms are void. Judges have carved out exceptions to permit “reasonable” covenants. This approach was summarized in an 1894 British House of Lords decision: The public have an interest in every person’s carrying on his trade freely: so has the individual. All interference with individual liberty of action in trading, and all restraints of trade themselves, if there is nothing more, are contrary to public policy and therefore void. That is the general rule. But there are exceptions …. It is sufficient justification … if the restriction is reasonable.10
In a leading decision from the 1978 case of Elsey v. J.G. Collins Insurance Agencies, the Supreme Court of Canada explained that a “reasonable”—and therefore lawful—restrictive covenant is one that satisfies the following conditions: 1. the covenant protects a real “proprietary interest” worthy of protection, such as trade secrets, confidential business information, or key business connections and customer lists, and is not simply an attempt to restrict healthy competition; 2. the covenant is reasonable as to geographical and temporal (time) scope, considering the specific type of work and the interests involved; 3. the covenant is reasonably necessary to protect the legitimate interests of the (former) employer, and no alternative measure that is less restrictive on the former employee could protect the employer’s interests; and 4. the covenant is unambiguous, such that its scope is clear and understandable.11 Applying this test, the courts have been more accepting of non-solicitation and non- disclosure clauses than of more sweeping non-competition clauses. If the employer’s business interests could have been protected by one of the former terms, then the court is likely to strike down as unreasonable a broader non-competition clause that effectively prohibits the former employee from working in the same field.12 If a non-solicitation clause would not adequately protect the employer’s legitimate interests, then a judge will enforce a non-competition clause only if the restrictions are reasonable in terms of how wide a geographical scope the ban covers and the length of the ban. In assessing whether a geographical and temporal scope is “reasonable,” the courts consider the type of work involved and what is reasonable to protect the employer’s legitimate business public policy illegality: A common law right of judges to void all or part of a contract because it is contrary to public policy.
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118 Part II The Common Law Regime interests.13 Each case has to be assessed according to its own facts. The same geographical scope and time limit may be reasonable in one circumstance and unreasonable in another. For example, in the case of Lyons v. Multari discussed in Box 8.2, the court found that a non- competition clause with a 5-mile radius and a three-year duration was reasonable for an oral surgeon in Windsor, although the non-competition clause was still struck down as unreasonable because a less intrusive non-solicitation clause would have sufficed to protect the employer’s interest. However, in another decision, a two-year, 5-kilometre radius restriction applied to a massage therapist in Winnipeg was ruled to be unreasonable in its geographical and temporal scope.14
BOX 8.2 » CASE LAW HIGHLIGHT The Enforceability of Restrictive Covenant Clauses Lyons v. Multari 2000 CanLII 16851 (Ont. CA) Key Facts: Lyons and Multari were surgeons. Lyons had worked in Windsor for 25 years by the time he hired Multari to work with him in the practice. They signed an employment contract that included a restrictive covenant clause prohibiting Multari from working as a surgeon anywhere within five miles of Lyons’s office for a period of three years after the end of their employment contract. After 17 months Multari quit, and 6 months afterward opened up a surgery practice within the five-mile range. Lyons sued to enforce the restrictive covenant.
Decision: The restrictive covenant was void and unenforceable. First, the court ruled that Lyons had a proprietary interest worthy of protection in the form of the relationships he held with dentists who had regularly referred him patients over the years. Second, for a dental surgeon who is reliant on referrals from local dentists, a five-mile radius and three-year period are not unreasonable. However, the non-competition clause failed to satisfy the third condition of a reasonable restrictive covenant. The court ruled that a less intrusive “non-solicitation” clause would have been sufficient to protect Lyons’s interests in preserving his relationships with his regular referring dentists.
Issue: Was the restrictive covenant term enforceable or void as contrary to public policy?
Finally, it is important to note that apart from its reasonableness, a restrictive covenant will not be enforced if the employer terminates the employment contract without providing the employee with the notice the contract required (a wrongful dismissal, discussed in Chapter 10). Since that employer repudiated the contract, it cannot then attempt to seek to enforce the restrictive covenant.15
B. Termination of Contract Clauses As explored in upcoming chapters, the default rule in the common law regime is that the parties must provide one another with “reasonable notice” when they terminate the employment contract, and the courts decide how much notice is “reasonable” (see Chapters 9 and 10). However, the parties can agree to waive this default requirement by including an expressed clause in the employment contract that provides for termination of the contract without having to provide “reasonable notice.” wrongful dismissal: A type of lawsuit by an employee against a former employer alleging that the employer terminated their contract without complying with the implied term in the contract requiring “reasonable notice.” repudiation of contract: A breach of contract that demonstrates an intention by the party to treat the contract as at an end and to no longer be bound by the contract.
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Chapter 8 Expressed Terms of Employment Contracts 119
BOX 8.3 » TALKING WORK LAW Sample Termination of Contract Clauses • Fixed-term clause: “This contract commences on January 1, 2020, and terminates on December 31, 2020.” • Fixed-task clause: “The employer agrees to employ the employee to dismantle and safely remove the shelving at the three facilities owned by the employer identified in Appendix A to this employment contract.” • Notice of termination clause in an indefinite-term contract: “The employer may terminate this contract at any
time and for any reason by providing the employee with three months’ notice, including benefits, which may be working notice or pay in lieu of work.” • Mandatory retirement clause: “The parties agree that the employee will retire and this contract comes to an end on the employee’s 65th birthday, unless the contract is terminated by one of the parties prior to this date.”
For example, the parties can agree that the contract only lasts for a fixed period of time (a fixed-term contract16), or that the contract expires upon completion of a defined task (a fixed-task contract), or they can expressly agree to the amount of notice that is required to terminate the contract and thereby remove the courts’ discretion to imply “reasonable notice” (a notice of termination clause17). The parties might also agree to a mandatory retirement clause that terminates the contract upon the employee reaching a specified age (although these clauses may now run afoul of modern-day human rights legislation). Box 8.3 provides examples of each of these types of contract clauses. By agreeing at the outset when or how the contract can be terminated, the parties hope to avoid litigation later about whether, and how much, reasonable notice is required. However, they are not always successful in avoiding disputes. A significant percentage of employment-related lawsuits that reach the courts involve disputes over fixed-term and, especially, notice of termination clauses.18 Let’s consider some legal issues that can arise in relation to expressed contract terms that apply to the termination of contracts.
1. Termination by Fixed-Term or Fixed-Task Clause A contract for a fixed term or fixed task ends when the term or task is done, and nothing more is required to bring about the termination. The contract simply ends by virtue of the agreement of the parties to end it at that moment, and no notice of termination is required.19 Some provinces have statutory restrictions on fixed-term contracts, but let’s leave those rather obscure statutes aside.20 In the common law regime, the parties are assumed to be free to bargain a fixedterm or fixed-task contract if they wish. Since the right to notice of termination that is required in the case of indefinite-term contracts is forfeited in the case of fixed-term and fixed-task contracts, the courts have demanded very clear evidence that both parties intended this result.21 If any uncertainty exists about whether both parties intended to create a fixed-term or fixed-task contract and thereby to eliminate the requirement for notice of termination, judges will revert to implied “reasonable notice.”22 The case discussed in Box 8.4 provides an example of this approach. fixed-term contract: A contract with a specific defined end date. fixed-task contract: A contract to perform a defined task that comes to an end when the task is complete. notice of termination clause: A clause in an employment contract that specifies how much notice is required to be given to the other party in order to lawfully terminate the contract. mandatory retirement: A legal rule in a statute or contract that terminates an employment contract upon the employee reaching a specified age. indefinite-term contract: A contract that has no specified end date.
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120 Part II The Common Law Regime
BOX 8.4 » CASE LAW HIGHLIGHT Abuse of Fixed-Term Employment Contracts Ceccol v. Ontario Gymnastic Federation 2001 CanLII 8589 (Ont. CA) Key Facts: Ceccol worked for Ontario Gymnastic Federation (OGF) for some 16 years pursuant to 15 one-year fixed-term contracts. Each contract stated that the contract was for one year, but was also subject to “renewal” or termination sooner if the employee acted improperly. After the 15th contract, OGF informed Ceccol that the contract would not be further renewed, and Ceccol’s employment ended when that contract expired. Ceccol sued for wrongful dismissal and sought damages arising from the failure of the employer to give her “reasonable notice” of termination. Issue: Was the employment contract for an indefinite term (therefore requiring reasonable notice of termination) or a one-year fixed term (in which case the contract just came to an end at the specified end date)? Decision: The Ontario Court of Appeal ruled that the contract was ambiguous. Although one clause said the contract was for a one-year period, other parts of the contract indicated that the contract could last more or less than that. Since the contract was ambiguous, the court was permitted to hear evidence about what the parties intended (the parol evidence rule, explained earlier in this chapter). The witnesses’ testimony indicated that when Ceccol was first hired, the intention and understanding of the parties was that she was being employed on a full-time, permanent basis, and not for a one-year fixed contract. The Ontario Court of Appeal concluded with the following observations:
Fixed-term contracts of employment are … legal. If their terms are clear, they will be enforced. … However, the consequences for an employee of finding that an employment contract is for a fixed term are serious: the protections … of the common law principle of reasonable notice do not apply when the fixed term expires. … It seems to me that a court should be particularly vigilant when an employee works for several years under a series of allegedly fixed-term contracts. Employers should not be able to evade the traditional protections of … the common law by resorting to the label of “fixed-term contract” when the underlying reality of the employment relationship is something quite different, namely, continuous service by the employee for many years coupled with verbal representations and conduct on the part of the employer that clearly signal an indefinite-term relationship. … I conclude that the employment contract was for an indefinite term, subject to renewal and termination in accordance with other provisions in the contract. Ultimately, the court ruled that Ceccol should have received 16 months’ reasonable notice of termination, and therefore ordered the employer to pay damages based on lost wages for that amount of time (minus four months’ pay because Ceccol had not properly mitigated her loss; we discuss mitigation in Chapter 14).
In Ceccol, the court ruled that the term clause was ambiguous and therefore relied on evidence of what the parties intended to happen to find that the contract was really one of indefinite term. In the case of Alguire v. Cash Canada Group Ltd., the Alberta Court of Appeal found that a term clause reading that the contract “is to run from February 1, 2002, to January 31, 2003” demonstrated an “unequivocal and explicit” intent to form a fixed-term contract, even though it was the last of several such one-year contracts.23 Thus, the lesson from Ceccol is not that the courts will always treat a series of short-term contracts as a single, indefinite-term contract requiring reasonable notice of termination, but that, depending on the facts of the case, they may do so. If either party terminates a fixed-term contract before the agreed-upon end date, that party will be in breach of the contract unless the contract expressly permits an early termination. Damages will then be assessed based on the loss the other party incurs as a result of being deprived of the right to perform the remainder of the contract, which is usually equal to lost wages and benefits for the remaining period.24 This scenario is considered in Box 8.5.
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BOX 8.5 » CASE LAW HIGHLIGHT Early Termination of a Fixed-Term Contract Howard v. Benson Group Inc. 2016 ONCA 256 Key Facts: The parties entered into a fixed-term employment contract for five years commencing in September 2012. Howard was terminated without cause after only 23 months. Clause 8.1 of the contract stated that the employer could terminate the contract early, in which case “any amounts paid to the employee shall be in accordance with the Employment Standards Act [ESA].” The employer gave Howard two weeks’ notice, which was the minimum amount of notice required by the ESA. Howard sued the employer and argued that he was entitled to damages based on lost wages for the remaining period of the fixed-term contract (37 months). Issue: Is the employer required to pay Howard the equivalent of his lost wages for the remainder of the five-year fixed-term contract?
Decision: Yes. The Ontario Court of Appeal noted that it is well-settled law that an employer that terminates a fixed-term contract early is liable for damages based on the remaining period of the contract, unless the contract allows for early termination. Clause 8.1 of the contract was found to be ambiguous, and therefore the court applied the contra proferentem doctrine explained earlier in this chapter, ruling that the interpretation most favourable to Howard would be applied. Clause 8.1 is not clear whether notice is limited to the ESA amount, or whether it simply states that whatever notice is given will be at least equal to the ESA amount. Since the contract did not include a clear term permitting the employer to terminate the contract early, the employer was liable for damages based on lost wages and benefits for a period of 37 months, equal to the remaining period of the five-year contract.
Finally, note that if an employee remains employed beyond the end of a fixed term, the contract becomes one of indefinite term and is subject to the implied obligation to provide reasonable notice of termination.25
2. Termination According to a Contractual Notice Clause (and Potential Pitfalls) Many indefinite-term contracts include notice of termination clauses, such as the one reproduced in Box 8.3. Employers often include the clauses because they want to override the common law implied obligation to provide “reasonable notice” of termination, which is unpredictable and potentially lengthy (see Chapter 10 to learn how courts determined reasonable notice). As with fixed-term and fixed-task contracts, courts require notice of termination clauses to be crystal clear in demonstrating the intention of the parties to replace “reasonable notice” with something else.26 Any ambiguity will result in the court preserving implied “reasonable notice,” but, assuming that the language is clear, a written notice of termination clause would normally replace the implied term requiring reasonable notice. However, a number of legal issues can arise that lead the courts to decline to enforce expressed notice of termination clauses. Three are briefly considered here: a. When the notice of termination clause violates statutory notice provisions. b. When the notice of termination clause is “unconscionable.” c. When changes to the employee’s job have rendered the original notice of termination clause unenforceable so that the “changed substratum doctrine” applies.
a. When the Notice of Termination Clause Violates Statutory Notice Provisions We saw in the case considered in Box 8.5 that employment standards legislation in Canada regulates the termination of employment contracts alongside the common law rules of contract. In
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122 Part II The Common Law Regime particular, employment standards statutes establish a minimum amount of notice of termination that employers must provide employees. Table 20.1 in Chapter 20 provides a quick look at notice requirements in Canadian employment standards legislation, which we will consider in Part III of the book. For now, it is sufficient to know that a contract term that contravenes an employment standards requirement is unlawful. What happens if the notice of termination clause in a contract permits the employer to terminate the contract with less notice to the employee than required by employment standards legislation? For example, what if an employment contract entitles an employer to terminate the contract by providing the employee with four weeks’ notice when the applicable employment standards legislation requires that at least six weeks’ notice be given to that employee? The Supreme Court of Canada was confronted with this scenario in the case discussed in Box 8.6.
BOX 8.6 » CASE LAW HIGHLIGHT Illegal Notice of Termination Clauses Machtinger v. HOJ Industries Ltd. [1992] 1 SCR 986 Key Facts: The employment contract between Machtinger and his employer, HOJ Industries, permitted HOJ to dismiss Machtinger without notice. That term violated the Ontario Employment Standards Act (ESA), which required that Machtinger receive at least four weeks’ notice of termination. In fact, HOJ recognized the error and paid Machtinger four weeks’ pay in lieu of notice and thereby complied with the ESA. However, Machtinger sued for wrongful dismissal, arguing that he was entitled to a much longer period of implied “reasonable notice.” Issue: Does the ESA minimum notice period or the implied reasonable notice period apply when a contract term allows less notice of termination than required by the ESA? Decision: The Supreme Court of Canada ruled that the illegal clause was void and is replaced by the implied term requiring reasonable notice of termination. The court explained that the implied obligation to provide reasonable notice is a “rebuttable presumption,” meaning that it applies unless the written contract includes clear language that some other period of notice applies. Such a clause existed here, but it was contrary to the ESA, rendering it legally void. In deciding how the law should deal with this situation, the court emphasized “policy considerations.” It set out the considerations noted in Box 7.7, which emphasize the vulnerability of employees. It then described the ESA as a “remedial statute,” the purpose of which is to extend protections to as many employees as possible.
With that purpose in mind, the court indicated that the proper interpretation is to require reasonable notice when contract terms violate the ESA, for the following reason: If the only sanction which employers potentially face for failure to comply with the [ESA] minimum notice periods prescribed by the Act is an order that they minimally comply with the Act, employers will have little incentive to make contracts with their employees that comply with the Act. As Swinton and Etherington suggest, most individual employees are unaware of their legal rights, or unwilling or unable to go to the trouble and expense of having them vindicated. Employers can rely on the fact that many employees will not challenge contractual notice provisions which are in fact contrary to employment standards legislation. Employers such as the present respondent can contract with their employees for notice periods below the statutory minimum, knowing that only those individual employees who take legal action after they are dismissed will in fact receive the protection of the minimum statutory notice provisions. Therefore, the court ruled that a contract clause that violates employment standards minimum notice requirements will be replaced by the common law presumption of reasonable notice. In this case, applying the Bardal factors we will discuss in Chapter 10, the amount of reasonable notice was set at seven months.
In the passage from Machtinger cited in Box 8.6, the Supreme Court of Canada acknowledged that employers usually write employment contracts and that most employees agree to them “unaware of their legal rights.” This is an important admission by the court, one that has influenced modern interpretations of employment contracts. Although the common law is still
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premised on the notion of “freedom of contract,” the court also acknowledges that employees often lack information about what they are agreeing to.27 And since most employees lack the power to negotiate up from the terms in the employer’s opening offer and the financial resources to hire lawyers to enforce the contract, they are vulnerable. These insights contributed to the court’s decision to choose the interpretive option that afforded the greatest level of protection for the employee. A few final points need to be made about notice of termination clauses that conflict with employment standards legislation flowing from the Machtinger decision. First, notice of termination clauses can run afoul of employment standards laws even if the employer ultimately complies with the statute. In the Machtinger case, the employer gave the employee four weeks’ notice as required by the employment standards legislation, but that did not matter because the contract language itself allowed the employer to terminate the contract with no notice.28 The employer cannot “cure” an illegal clause by giving the employee more than the clause requires. Second, a notice of termination that could at some point in the future permit the employer to terminate the employee in a manner that would violate employment standards legislation is unlawful, even if at the time the employee is terminated the employer complied with the legislation. For example, if the contract permits the employer to terminate the employee with two weeks’ notice, and at the time of the termination the employee is only entitled to two weeks’ notice under the employment standards legislation, then the employer would not be violating the legislation or the contract by providing two weeks’ notice. However, because employment standards’ notice increases over time in some jurisdictions (see Table 20.1), once the employee is employed longer than, say, five years, the contract term permitting termination with two weeks’ notice may become illegal; the legislation may require five weeks’ notice. Since the enforceability of the notice of termination clause is assessed as of the date the contract is formed, the term permitting termination with two weeks’ notice would be deemed unenforceable.29 Third, the notice of termination clause must not offend the employment standards legislation in any manner. Employment standards laws require not just that employers provide notice to the employee of a specified amount, but also that the employer continue to provide any benefits coverage that the employee was entitled to throughout that notice period. Therefore, an employment contract clause that requires that the employer provide the amount of notice required by the employment standards legislation and nothing else would violate the legislation and be rendered void as well.30 Finally, although we will discuss the law of damages more fully in Chapter 14, it is useful to flag that the inclusion in a contract of a notice of termination clause can have important implications for the rules involving the duty to mitigate damages. As we will learn, employees are required to “mitigate” the damages caused by an employer’s breach of the contract. In the case of a breach of the implied duty to give reasonable notice of termination, this means they need to take all reasonable steps to find another job. Income earned from their new job can then be deducted from the amount of damages their former employer would otherwise be required to pay. However, if the contract includes an expressed notice of termination clause, the duty to mitigate may not apply.31 We will return to this point when we look at damages.
b. When the Notice of Termination Clause Is “Unconscionable” Judges can refuse to enforce a contract term they believe is grossly unfair, or “unconscionable.”32 However, since ignoring the agreement of the parties runs so contrary to the concept of freedom duty to mitigate: A legal obligation on the victim of a breach of contract by the other party to make reasonable efforts to limit the amount of damages suffered as a consequence of the breach.
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124 Part II The Common Law Regime of contract, judges have been cautious in applying the unconscionability doctrine. For a term of a contract to be set aside as unconscionable, all of the following elements must be present: 1. A grossly unfair transaction; 2. A lack of independent legal advice or other suitable advice; 3. An overwhelming imbalance in bargaining power caused by the victim’s ignorance of business, illiteracy, ignorance of the language of the bargain, blindness, deafness, illness, senility, or similar disability; and 4. The other party knowingly taking advantage of this vulnerability.33 In the case of Stephenson v. Hilti (Canada) Ltd., a dismissed employee agreed to accept three months’ pay when reasonable notice would have been between 10 and 12 months.34 The employee sued, seeking damages for the failure of the employer to provide the longer period of reasonable notice, arguing that his agreement to accept three months’ pay was unenforceable due to unconscionability. The court agreed. It ruled that the employee was suffering from depression at the time he agreed to three months’ pay, and that he believed if he did not accept the deal he would incur dire financial repercussions. The three-month payment was substantially below what a court would find to be reasonable notice. However, the employer paid little attention to this point, or to the well-being of the employee, and instead based its offer on a substandard period of notice to benefit its own economic interests. This approach diverged from community standards of commercial morality. The court set aside the three-month period and assessed damages based on a period of 11 months’ notice.
c. When the “Changed Substratum Doctrine” Applies Finally, if an employee’s job functions have changed substantially since the date they originally agreed to a notice of termination clause, a court may refuse to enforce the original notice term. This refusal involves the application of what is known as the changed substratum doctrine. Imagine that Amanda was hired as a McDonald’s cashier in 1990 and signed a standard form one-page contract saying that the employer can dismiss her at any time by giving her the minimum amount of notice required by employment standards laws. Amanda is a fantastic worker and, over time, is promoted up the ranks. When she is ultimately fired in 2015, she is McDonald’s regional manager for eastern Canada, responsible for hundreds of stores, but the employer provides her with just eight weeks’ notice, as required by the employment standards laws. When an employee has been assigned much greater job responsibility over time, and the original contract does not contemplate this outcome, the court might rule that the “substratum” of the original employment contract has disappeared. In that case, the notice term in that contract is unenforceable, and reasonable notice is implied in its place.35
3. Termination by a Retirement Clause The mandatory retirement clause reproduced in Box 8.3 does not prevent the contract from being terminated earlier for cause or with notice, but if the contract is still in effect on the employee’s 65th birthday, it comes to an end by virtue of this clause. A mandatory retirement unconscionability doctrine: A contract or contract term that a court refuses to enforce because it is a result of inequality of bargaining power that was exploited by the more powerful party to obtain a contract that is substantially unfair considering community standards of commercial morality. changed substratum doctrine: A legal doctrine in employment law in which an employee’s job responsibilities have changed so substantially from the time the original contract was executed that the courts rule the original “substratum” of the contract has ceased to exist. In this case, the court may refuse to enforce a contract them in the original contract.
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Chapter 8 Expressed Terms of Employment Contracts 125
clause reflects the agreement of the parties that the contract will end upon the happening of a future, predictable event—the employee turning 65. Mandatory retirement clauses used to be common in Canada. For some workers, retirement is something to look forward to. For many others, retirement is a scary prospect full of uncertainty and financial instability, if not outright poverty. These workers would prefer to keep working, either because they lack sufficient retirement savings or because they value the personal fulfillment and social interaction that working provides. The average year in which Canadians retire has risen over the years: in 1998, it was approximately 60.9 years of age, while in 2018 the average age of retirement was 63.8.36 A recent poll found that about 30 percent of Canadians aged 18 to 34 have no retirement savings at all.37 People are working longer and having a harder time preparing for life after work. Concern about elder poverty and work-based discrimination based on age has led governments to legislate retirement in a number of ways, including mandatory deductions to the Canada Pension Plan and prohibitions against discrimination based on age in human rights legislation. Beginning in the early 2000s, Canadian governments began to abolish mandatory retirement by amending human rights legislation to make forced retirement clauses unlawful age discrimination. As a result of this change within the regulatory regime, mandatory retirement clauses in employment contracts are in most cases now unlawful in Canada, with some exceptions. For example, mandatory retirement may be permitted when retirement at a specific age is a requirement of a “bona fide” pension plan scheme (see Chapter 23).38 Other than when these narrow exceptions apply, it is now illegal in Canada for an employment contract to be terminated based purely on the employee reaching a specific age.
IV. Chapter Summary This chapter examined employment contract terms. It opened with a quick overview of interpretive devices used by judges to resolve complex contract disputes. There are three principal sources of contract terms: (1) expressed contract terms, (2) ancillary contract terms, and (3) implied contract terms. This chapter examined the first of these. It would be impossible to discuss every possible term that could appear in an employment contract, so we have focused on key expressed contract terms that produce the most litigation: (1) restrictive covenant clauses and (2) contract clauses that define how and when employment contracts terminate. In Chapters 10 to 15, we return to the topic of termination of contracts when we explore termination with reasonable notice, summary dismissal, constructive dismissal, and resignations.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Describe two legal tools used by judges to help them interpret an ambiguous contract term. 2. Identify and describe three types of restrictive covenant terms. What are the conditions in which a court will rule that a restrictive covenant is lawful? 3. Why do judges often not enforce restrictive covenant clauses in employment contracts? 4. If an employment contract term specifies that the contract operates from January 1, 2020, to December 31, 2020, must the employer provide notice of termination to terminate the contract? 5. On what basis did the court refuse to enforce the fixed-term contract clause in Ceccol v. Ontario Gymnastic Federation (Box 8.4)? 6. Explain the tests applied by the courts when considering the following two arguments for non-enforceability of a notice of termination clause: (1) unconscionable contract term and (2) the changed substratum doctrine. 7. How do the courts in the common law regime deal with an employment contract term that permits termination of the contract by provision of less notice than required by employment standards legislation?
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126 Part II The Common Law Regime APPLYING THE LAW 1. Last year, County Beer Company hired Bridget Dortman as a beer maker after she graduated from college with a diploma in Brewing Sciences. As a beer maker, Bridget learned the formula and process used to make the popular County Beer Ale. One day, Amanda Wellington, the new human resources manager, noticed when going through personnel files that there was no signed employment contract for Bridget. She asked the owners about this, and they told her they must have forgotten to get Bridget to sign. So Amanda prepared a standard employment contract and presented it to Bridget to sign. Bridget read the contract and noticed a non-competition clause (Article 8), which stated that Bridget could not work for another beer company in the province for a year after her employment ended with County Beer. Bridget thought that was unfair, but because Amanda told her that all employees must have a signed contract, she signed the contract. Two years later, Bridget quit County Beer and accepted a job as a beer maker at Northern Brewery, a small micro-brewery located in the north of the province, nearly 500 kilometres from County Beer. Assume that County Beer launches a lawsuit against Bridget for breaching the non-competition clause in the employment contract and that Bridget comes to you for legal advice. What would you argue on behalf of Bridgett in her defence? 2. Taylor is the human resources manager at a mediumsized retail company. Her boss tells her to prepare a standard form employment contract that will ensure the employer is not required to give employees “reasonable notice” if the employer decides to terminate the contract, because the boss has learned that “rea-
sonable notice” can be very lengthy. Taylor drafts up the following three contract terms. Drawing on the materials in this chapter that consider notice of termination clauses, explain whether the terms would likely achieve the result desired by the employer if an employee later sued the employer and argued that they are entitled to “reasonable notice”: A. The employer can terminate this contract at any time by providing the employee with two weeks’ notice, which can be working notice or pay in lieu of notice. B. The employer can terminate this contract at any time by providing the employee with the amount of notice required by employment standards legislation. The employer shall not be obliged to make any other payments to the employee. C. The employer can terminate this contract at any time by providing the employee with the full entitlements to which the employee is entitled under employment standards legislation. 3. Assume that Taylor opts for clause B in the preceding question. Later on, she terminates an employee who had five years’ service and had signed a contract that included that clause. By that point, Taylor realizes that the two weeks’ notice in clause B is less than the five weeks required by employment standards legislation in her province to terminate an employee with five years’ service. Therefore, Taylor provides the employee with five weeks’ notice rather than the two weeks outlined in the contract. However, the employee nevertheless sues the employer seeking a much longer period of “reasonable notice.” Do you think the employee will succeed?
EXERCISE Dozens of cases examine whether a restrictive covenant clause in an employment contract is “reasonable,” applying the tests discussed in this chapter. Try the following legal research exercise: 1. Go to the CanLII home page: . 2. Choose a jurisdiction (province) or, by default, search all of Canada. In the “Document text” search box, type “employment contract” and “restrictive covenant” and “reasonable.” 3. Choose one or two of the cases that result from this search and answer the following questions: a. What type(s) of restrictive covenant clauses were at issue in the case? What does the covenant restrict the employee from doing? b. Does the judge refer to the vulnerability of the employee?
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c. Does the court rule that the covenant is reasonable or unreasonable? d. Briefly explain how the court came to its conclusion. If you read enough of these cases, you can begin to get a clearer idea of how judges are likely to interpret a restrictive covenant clause.
APPENDIX
Sample Employment Contract Note the careful use of the words “consideration” and “valuable consideration.” (See the discussion of consideration in Chapter 7.) This clause refers specifically to an “Employee Handbook” and clearly states that the handbook is part of the contract.
THIS AGREEMENT made as of the 15th of August 2020, between County Beer Company (the Employer) and Jane Smith (the Employee).
This clause also gives the employer the right to modify the Employee Handbook and the employee’s job duties (see Chapter 7) without triggering a constructive dismissal (see Chapter 13).
IN CONSIDERATION of the promises and other good and valuable consideration (the sufficiency and receipt of which are hereby acknowledged) the parties agree as follows:
Even absent this sentence, the employee would have an implied obligation to perform competently and faithfully (see Chapter 9). This clause must be compliant with any vacation entitlements in applicable employment standards legislation (the same is true for the wage rate stated in the Compensation clause). These employment standards laws are considered in Part III of this text.
WHEREAS the Employer desires to obtain the benefit of the services of the Employee as a Beer Maker, and the Employee wishes to be employed as a Beer Maker.
1. Employment and Modifications The Employee agrees that she will at all times faithfully, industriously, and to the best of her skill, ability, experience and talents perform all of the duties required of her position. In carrying out these duties and responsibilities, the Employee shall comply with the Employee Handbook, which has been provided to the Employee prior to the execution of this contract and forms part of this employment contract. The Employee agrees and understands that the Employer may modify the terms of that Handbook from time to time and that such modification is within the Employer’s contractual rights. It is also understood and agreed to by the Employee that her assignment, duties and responsibilities and reporting arrangements may be changed by the Employer in its sole discretion without amounting to a breach of this contract or a constructive dismissal.
2. Compensation (a) As full compensation for all services provided, the Employee shall be paid at an annual rate of $40,000. This amount shall be paid out to the Employee proportionally on a bimonthly basis by means of direct deposit to the Employee’s personal bank account. Such payments shall be subject to normal statutory deductions by the Employer. (b) The salary mentioned in paragraph (2)(a) shall be reviewed on an annual basis. Any future increases to this pay rate are within the sole discretion of the Employer.
3. Vacation The Employee shall be entitled to vacations in the amount of two weeks per annum.
This clause does not indicate any specific level or content of benefits. It says simply that insofar as the employer continues to purchase a Health Plan for its employees, Jane Smith (the employee) shall be covered by it. This clause overrides the implied duty to provide reasonable notice of termination to short-term “probationary employees.” It is subject to any notice of termination requirements in applicable employment standards legislation.
4. Benefits The Employer shall at its expense provide the Employee with coverage under the Health Plan that is currently in place or as may be in place from time to time. The Employer may, at its sole discretion, amend or cancel the Health Plan or any benefits provided by it without breaching this contract.
5. Probation Period It is understood and agreed that the first ninety (90) days of employment shall constitute a probationary period during which period the Employer may, in its absolute discretion, terminate the Employee’s employment, for any reason without notice or cause.
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128 Part II The Common Law Regime In some jurisdictions, employment standards legislation does not require employees to give notice of termination (as we will see in Part III). Provided this term does not conflict with employment standards requirements, it would supplant the implied duty for the employee to provide reasonable notice of termination (see Chapter 15). In practice, few employers go to court to enforce this term because the damages they suffer from an employee quitting without notice are usually low (see Chapter 15). This “summary dismissal” term permits termination of an employee contract without notice for cause. The courts are often asked to interpret these types of “cause” terms. (See Chapter 12 for what constitutes “cause.”) By specifying an amount of notice —the amount required by employment standards legislation— this term attempts to oust the common law implied contract term requiring “reasonable notice” of termination, which would usually be much longer than the employment standards amount (see Chapter 10). The purpose of this clause is to demonstrate to a court that no undue duress was placed on the employee at the time of signing and that the contract was based on informed consent. This restrictive covenant clause includes both a non-disclosure and a non-competition component. The non-competition component could probably be challenged successfully by the employee as “unreasonable” if the employer later attempted to enforce it on the basis that a 100-kilometre restriction for a beer maker is probably overbroad.
6. Performance Reviews The Employee will be provided with a written performance appraisal at least once per year, and said appraisal will be reviewed at which time all aspects of the assessment can be fully discussed. 7. Termination (a) The Employer may at any time terminate this agreement and her employment by giving two weeks’ written notice to the Employer. (b) The Employer may terminate this agreement and the employment of the Employee at any time, without notice or payment in lieu of notice, for sufficient cause. (c) The Employer may terminate the employment of the Employee at any time by providing the Employee with written notice equivalent to the length of period required by applicable employment standards legislation along with any statutorily required benefits. 8. Independent Legal Advice The Employee acknowledges that the Employer has provided the Employee with a reasonable opportunity to obtain independent legal advice with respect to this agreement, and that either: (a) the Employee has had such independent legal advice prior to executing this agreement, or (b) the Employee has willingly chosen not to obtain such advice and to execute this agreement without having obtained such advice. 9. Restrictive Covenant The Employee shall not work for another beer company within 100 kilometres for a period of one (1) year after this contract is terminated by either party. The Employee shall not disclose at any time during or after this employment contract terminates any confidential information obtained during employment with the Employer, including brewing formulas or ingredients. 10. Entire Agreement This agreement contains the entire agreement between the parties, superseding in all respects any and all prior oral or written agreements or understandings pertaining to the employment of the Employee by the Employer.
Name of Employee Signature of Employee
Date
Name of Employer Representative/Title Signature of Employer Representative
Date
This clause is intended to avoid allegations of “negligent misrepresentation” arising from representation comments made by one of the parties prior to the execution of the contract (see Chapter 6).
Sample for educational purposes only. Not intended to serve as a template.
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Chapter 8 Expressed Terms of Employment Contracts 129
NOTES AND REFERENCES 1. H. Collins, The Employment Contract, 2nd ed (Oxford: Oxford University Press, 2010) at 10. 2. P. Perell, “The Ambiguity Exception to the Parol Evidence Rule” (2001) 36 Can Bus LJ 21; G.H.L. Fridman, The Law of Contract in Canada, 4th ed (Toronto: Carswell, 1999) at 480. However, see the discussion in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, clarifying that the “parol evidence rule” does not exclude evidence of “surrounding circumstances” known to the parties or that ought to have been known to the parties when the contract was formed as an aid to interpreting contracts. It is too soon to know how, if at all, this decision will change the way the courts deal with the interpretation of employment contracts. 3. For a good discussion of the “parol evidence rule” in the employment context and the many exceptions to the rule that have been developed by courts, see King v. Operating Engineers Training, 2011 MBCA 80. 4. See Johnson v. Top-Co LP, 2009 ABQB 731; Ceccol v. Ontario Gymnastic Federation, 2001 CanLII 8589 (Ont. CA); Oudin v. Le Centre Francophone de Toronto, 2015 ONSC 6494; Movati Athletic (Group) Inc. v. Bergeron, 2018 ONSC 7258; and Stefanec v. Robert Half Canada Inc., 2000 BCSC 1224 (notice of termination clause in contract is ambiguous, so court applies interpretation most favourable to employee). The doctrine is not applied if the employee played a meaningful role in the negotiation of the contract; it is reserved for ambiguous clauses in contracts drafted solely, or at least primarily, by the employer. See also McClelland & Stewart Ltd. v. Mutual Life, [1981] 2 SCR 6; and Gill v. Navigate Capital Corp., 2014 BCCA 462 (the contra proferentum doctrine does not apply to oust a well-known standard implied term in employment contracts). 5. See, e.g., Greenberg v. Meffert, 1985 CanLII 1975 (Ont. CA); but see Foreman v. 818329 Ontario Limited, 2003 CanLII 57401 (Ont. CA) (ambiguity is interpreted against an employee who had drafted the contract). 6. For discussion of how courts treat non-solicitation clauses, see Elsley v. J.G. Collins Ins. Agencies, [1978] 2 SCR 916; and MD Physician Services Inc. v. Wisniewski, 2018 ONCA 440. Non-solicitation clauses are interpreted narrowly: Veolia ES Industrial Services Inc. v. Brulé, 2012 ONCA 173 (bidding on a public tender is not solicitation); IBM Canada Ltd. v. Almond, 2015 ABQB 336; IT/Net Inc. v. Doucette, 2007 ONCA 52 (accepting a work offer from former client is not solicitation); Planet Paper Box Group Inc. v. McEwan, 2018 ONSC 6991. 7. Shafron v. KRG Insurance Brokers (Western), 2009 SCC 6 at para 16. See also EMW Industrial Ltd. v. Good, 2019 SKQB 47; Knight Archer Insurance Ltd. v. Dressler, 2019 SKCA 24; and Barton Insurance Brokers Ltd. v. Irwin, 1999 BCCA 73.
8. See the discussion of public policy contract illegalities in R.A. Buckley, Illegality and Public Policy (London: Sweet & Maxwell, 2002); J. McCamus, The Law of Contracts, 2nd ed (Toronto: Irwin Law, 2012) at chapter 12; S. Bhalloo & A. Parma, “Restrictive Covenants: When the Honeymoon Ends” (2016) 53 Alta L Rev 643, online: ; and O. Lobel, Talent Wants to Be Free: Why We Should Learn to Love Leaks, Raids, and Free Riding (New Haven: Yale University Press, 2013). 9. See the comments of the Supreme Court of Canada in Shafron v. KRG Insurance Brokers, supra note 7 at para 22; and Elsley v. J.G. Collins supra note 6 at 924: “A different situation, at least in theory, obtains in the negotiation of a contract of employment where an imbalance of bargaining power may lead to oppression and a denial of the right of the employee to exploit, following termination of employment, in the public interest and in his own interest, knowledge and skills obtained during employment.” See also IRIS The Visual Group Western Canada Inc. v. Park, 2017 BCCA 301. 10. Nordenfelt v. Maxim Nordenfelt Guns & Ammunition, [1894] AC 535 (HL), cited with approval more recently by the Ontario Court of Appeal in Lyons v. Multari, 2000 CanLII 16851 (Ont. CA). 11. Elsley v. J.G. Collins, supra note 6. The fourth factor was discussed explicitly in the more recent decision Shafron v. KRG Insurance Brokers, supra note 7, where the Supreme Court of Canada ruled that a restrictive covenant that is ambiguous will not be considered reasonable. In that case, the ambiguous term restricted competition in the “Metropolitan City of Vancouver.” See also on this point Globex Foreign Exchange Corporation v. Kelcher, 2011 ABCA 240; and Rhebergen v. Creston Veterinary Clinic Ltd., 2014 BCCA 97 (clause requiring a former employee to pay a large fee if they set up a competing business within three years was ruled an unreasonable restraint of trade on the basis of ambiguity). 12. H.L. Staebler Company v. Allan, 2008 ONCA 576; Mason v. Chem-Trend Limited Partnership, 2011 ONCA 344; Thienes v. Godenir, 2011 SKQB 271; Phoenix Restorations Ltd. v. Brownlee, 2010 BCSC 1749; Edward Jones v. Mirminachi, 2011 BCSC 295; Lyons v. Multari, supra note 10; Westpac Solutions Ltd. v. Morgan, 2018 BCSC 976; Telus Communications Inc. v. Golberg, 2018 BCSC 1825; Ceridian Dayforce Corporation v. Daniel Wright, 2017 ONSC 6763; Kohler Canada v. Porter, 2002 CanLII 49614 (Ont. Sup Ct J). 13. See Kohler Canada v. Porter, supra note 12. (non-competition clause covering all of North America is unreasonable); MacMillan Tucker MacKay v. Pyper, 2009 BCSC 694 (prohibition on lawyer from working within 5 miles of old law firm for three years is unreasonable); and Donaldson
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130 Part II The Common Law Regime Travel Inc. v. Murphy, 2016 ONCA 649 (no time limit at all is unreasonable). 14. Steinke o/a Muscle Mechanics Massage Therapy v. Barrett, 2012 MBQB 49. See also Renfrew Insurance Ltd. v. Cortese, 2014 ABCA 203 (six-month, 60-kilometre non- competition restriction is reasonable in the case of insurance salespeople). 15. The origins for the principle that a wrongfully dismissed employee is relieved of their obligations under a restrictive covenant clause is the case of General Billposting Co. Ltd. v. Atkinson, [1909] AC 118 (HL). See also Globex Foreign Exchange Corporation v. Kelcher, supra note 11; Cohnstaedt v. University of Regina, 1994 CanLII 4566 (Sask. CA); 961945 Alberta Ltd (Servicemaster of Edmonton Disaster Restoration) v. Meyer, 2018 ABQB 564; and Ims Health Canada Inc. v. Harbin, 2014 ONSC 4350. 16. Chambly (City) v. Gagnon, [1999] 1 SCR 8; and Ceccol v. Ontario Gymnastic Federation, supra note 4. 17. See the discussion in Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986 and Chapter 9. 18. Ibid. See also B. Etherington, “The Enforcement of Harsh Termination Provisions in Employment Contracts: The Rebirth of Freedom of Contract in Ontario” (1990) 35 McGill LJ 459.
21. Dwyer v. Mark II Innovations Ltd., 2006 CanLII 9406 (Ont. CA); Foreman v. 818329 Ontario Limited, supra note 5; Gibson v. Alberta, 2013 ABQB 695; Ceccol v. Ontario Gymnastic Federation, supra note 4; Kerzner v. American Iron & Metal Company Inc., 2018 ONCA 989; and Pakozdi v. B & B Heavy Civil Construction Ltd., 2016 BCSC 992. 22. Machtinger v. HOJ Industries Ltd., supra note 17; and Christensen v. Family Counselling Centre of Sault Ste. Marie and District, 2001 CanLII 4698 (Ont. CA). 23. Alguire v. Cash Canada Group Ltd., supra note 19. 24. Covenoho v. Pendylum Ltd., 2017 ONCA 284; Lovely v. Prestige Travel Ltd., 2013 ABQB 467; Mohamed v. Information Systems Architects Inc., 2018 ONCA 428; Howard v. Benson Group Inc. (The Benson Group Inc.), 2016 ONCA 256; Spark v. Generex Pharmaceuticals Inc., 2003 CanLII 52138 (Ont. CA); Canadian Ice Machine Co. v. Sinclair, [1955] SCR 777; Martins v. 601360 N.B. Inc., 2010 NBCA 16; Anderson v. Brouwer Claims Canada & Co. Ltd., 2002 BCSC 1043; Chilagan v. Island Lake Band No. 161, 1994 CanLII 4787 (Sask. QB); Gainer’s Inc. v. Paquin, 1991 ABCA 132; and Thompson v. Cardel Homes Limited Partnership, 2014 ABCA 242 (contract provided that in the event of early termination of a one-year fixed-term contract, the employer would pay 12 months’ pay). Note also that there is no duty to mitigate damages owing based on the remainder of a fixed-term contract, a point that will be discussed in Chapter 14.
19. Chambly (City) v. Gagnon, supra note 16; Alguire v. Cash Canada Group Ltd., 2005 ABCA 387; Ceccol v. Ontario Gymnastic Federation, supra note 4; and Dombrowski v. Board of Governors of Dalhousie University and College, 1974 CanLII 1290 (NSSC). Statutory notice of termination is usually also not required in the case of fixed-term contracts. For example, with a few special exceptions (listed in Regulation 288/01, s. 2(2)), the notice of termination and termination pay provisions in the Ontario Employment Standards Act do not apply to contracts for a fixed term or task: Regulation 288/01, s. 2(1)1.
26. See Nemeth v. Hatch Ltd., 2018 ONCA 7 (noting that the contract language need not expressly state that the parties agree to replace implied reasonable notice; it is sufficient if that intention “can be readily gleaned from the language”).
20. Provincial Statutes of Frauds legislation, or the original British statute from 1677 named An Act for Prevention of Frauds and Perjuries, made applicable in Canada through “received law,” prohibits fixed-term contracts of longer than one year that are not in writing. Provincial Statutes of Frauds legislation remain in effect in Ontario, Nova Scotia, Prince Edward Island, and New Brunswick. Courts have sometimes struck down fixed-term employment contracts of greater than one year applying this law: Smith v. Mills, 1913 CanLII 147 (Sask. CA). However, courts have weakened the application of the Statute of Frauds by ruling that it does not apply to employment contracts that could be performed within a year or that could be terminated by the employee within one year, which is most employment contracts: Annand v. Peter M. Cox Enterprises Ltd., 1992 CanLII 4666 (NSSC); Campbell v. Business Fleets Limited, [1954] OR 87 (CA); and Lavallee v. Siksika Nation, 2011 ABQB 49.
28. See also Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158 (clause limited the employer to paying notice pay only, while the ESA required continuation of benefits during the notice period. Even though the employer continued benefits coverage, the clause itself was illegal); and Wright v. The Young and Rubicam Group of Cos. (Wunderman), 2011 ONSC 4720.
25. Hale v. Innova Medical Ophthalmics Inc., 2018 ONSC 1551; Messer v. Barrett Co. (1927), 1 DLR 284 (Ont. CA); Hague v. St. Boniface Hospital, 1936 CanLII 193 (Man. QB); and Duxbury v. Training Inc., 2002 ABPC 24.
27. Studies have demonstrated that, contrary to the assumption of the neoclassical perspective’s axioms discussed in Chapter 3, workers have a very poor understanding of their legal rights in employment and information asymmetries are endemic in the employment relationship. See, e.g., J. Stiglitz, “Employment, Social Justice and Societal Well-Being” (2002) 141 Intl Lab Rev 9; and P. Kim, “Bargaining with Imperfect Information: A Study of Worker Perceptions of Legal Protection in an At Will World” (1997-98) 83 Cornell L Rev 105.
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Chapter 8 Expressed Terms of Employment Contracts 131 29. See Wright v. The Young and Rubicam Group of Companies (Wunderman)¸ supra note 28; Garreton v. Complete Innovations Inc., 2016 ONSC 1178; Waddell v. Cintas Corp., 2001 BCCA 717; Covenoho v. Pendylum Ltd., supra note 24; and Shore v. Ladner Downs, 1998 CanLII 5755 (BCCA). But see Kerzner v. American Iron & Metal Company Inc., 2017 ONSC 4352 (chance of the term becoming non-compliant with the ESA was too remote to render the clause unlawful); and Davies v. Canada Shineray Suppliers Group Inc., 2017 BCSC 304 (clause was not unlawful because it potentially restricted the employee’s right to bring a hypothetical human rights complaint). 30. See, e.g., Wood v. Fred Deeley Imports Ltd., supra note 28. 31. See Bowes v. Goss Power Products, 2012 ONCA 425. 32. The doctrine of unconscionability is sometimes argued in the context of “releases” presented to dismissed employees. A release is a contract that offers an employee certain benefits, such as continued payment of wages for a future period “in consideration” for an agreement from the employee to not bring any legal proceedings against the employer. Employees sometimes realize after they signed the release that they would have been entitled to a greater amount of damages had they brought a wrongful dismissal lawsuit. In order to set aside the release, they may argue that it was unconscionable. For a review of the origins and controversies associated with the doctrine of unconscionability, see McCamus, supra note 8 at 424-46; and S. Waddams, “Unconscionability in Contract” (1976) 39 Mod L Rev 369. 33. See Heller v. Uber Technologies Inc., 2019 ONCA 1 at para 60 (mandatory arbitration in Uber driver standard contract is unconscionable); Stephenson v. Hilti (Canada) Ltd., 1989 CanLII 191 (NSSC); Harry v. Kreutziger, 1978 CanLII 393 (BCCA); Lambert v. Digital Rez Software Corp., 2002 BCSC 481; Finlan v. Ritchie Bros. Auctioneers (Canada) Ltd., 2006 BCSC 291; White v. Corner Brook Pulp and Paper Ltd., 1996 CanLII 11710 (Nfld. SC); and Adamson v. Watts & Henderson (Atlantic) Ltd. (1987), 16 CCEL 74 (Ont. H Ct J); and Morrison v. Coast Finance Ltd., 1965 CanLII 493 (BCCA).
34. Stephenson v. Hilti (Canada) Ltd., supra note 33. 35. On the “change to the substratum of the contract” doctrine, see Lyon v. Canadian Acceptance Corp. (1983), 3 CCEL 220 (Ont. H Ct J) (24-year service vice-president was not bound by a notice clause in the contract he signed when originally hired as a junior clerk); Collins v. Kappele, Wright & MacLeod Ltd. (1983), 3 CCEL 228 (Ont. Co Ct); Rasanen v. Lisle-Metrix Ltd., 2002 CanLII 49611 (Ont. Sup Ct J); Sawko v. Foseco Canada Ltd. (1987), 15 CCEL 309 (Ont. Dist Ct); Schmidt v. AMEC Earth & Environment, 2004 BCSC 1012; and MacGregor v. National Home Services, 2012 ONSC 2042. See also Strench v. Canem Systems Ltd., 2005 BCSC 1736 (the doctrine does not apply when the contract term contemplates the changes that were eventually made). 36. Statistics Canada, “Retirement Age by Class of Worker, Annual,” Table 14-10-0060-01, online: . 37. See R. Luciw, “One-Third of Young Canadians Have No Retirement Savings,” Globe and Mail (1 August 2012), online: . 38. For discussion of retirement clauses, see, e.g., Foreman v. 818329 Ontario Limited, supra note 5; Vondette v. Vancouver Port Corp., 1987 CanLII 2411 (BCSC); Heslop v. Cooper’s Crane Rental Ltd., 1994 CanLII 7384 (Ont. Sup Ct J); Engel v. Krug Furniture Inc., 1994 CanLII 7388 (Ont. SC); Filiatrault v. Tri-County Welding Supplies Ltd., 2013 ONSC 3091; and Stock v. Best Form Brassière Canada Inc. (1986), 15 CCEL 298 (Que. SC). See also McLaren v. Pacific Coast Savings Credit Union, 2001 BCCA 388 (an employee’s comments that he intended to retire did not relieve the employer of the duty to provide notice of termination); and Magnan v. Brandt Tractor Ltd., 2008 ABCA 345.
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CHAPTER 9
Implied and Ancillary Employment Contract Terms LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 133 II. Implied Contract Terms 134 A. On What Basis Do Judges Imply Contract Terms? 134 B. How Judges Use Implied Terms to Shape Employment Contracts 136 C. Implied Terms That Regulate the Conduct of Employees 138 D. Implied Terms That Regulate the Conduct of Employers 142 III. Contract Terms Found in Ancillary Documents 145 IV. Chapter Summary 147 Questions and Issues for Discussion 147 Exercise 148 Notes and References 149
• Explain the difference between an implied contract term and an expressed contract term. • Explain the methods courts use to justify the implication of contract terms. • Describe how judges used implied terms to preserve the basic authority structures that existed under the old master and servant laws. • Describe the implied contract terms that regulate employee conduct. • Describe the implied contract terms that regulate employer conduct. • Explain when an ancillary document, such as an employee handbook or human resource policy manual, is legally enforceable.
I. Introduction In Chapter 7, we looked at the case of Rejdak v. Fight Network Inc., in which an employment contract was created during a telephone conversation. The judge ruled that the terms of that contract consisted of a job title, an annual salary, and a start date, all of which were agreed to during the phone call. The conversation included an oral offer, an oral acceptance, and an agreement that included mutual consideration. These elements formed a contract; nothing in writing was required. Oral contracts based on brief conversations and short written contracts are not uncommon in the employment setting, and they can govern the employment relationship between parties for years. Inevitably, the juxtaposition of sparse contract terms and long-term relationships often leads to many gaps in the coverage of a contract. Must the employee do whatever the employer asks? Can the employer add new tasks to the employee’s job or take away existing tasks? Is the employee’s behaviour outside of work any of the employer’s business? What is required to terminate the contract? Can the employee compete against the employer either during employment or after the employment relationship is over? These are just some of the many questions that can arise during employment that are not answered by the expressed terms of a contract. The law requires a method of resolving disputes that arise during the life of the employment relationship, but that the parties did not specifically address when they formed the contract. Implied contract terms often perform this role in the common law regime. Implied contract terms are made up by judges and inserted into (or “read into”) the contract. They are “default contract terms,” in the sense that they fill gaps left by the contracting parties and are subject to exclusion by the contracting parties.1 For example, one of the most important implied terms we implied contract term: A default contract term invented by common law judges and read into an employment contract when the written terms of the contract (if any) do not address the specific issue addressed by the implied term.
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133
134 Part II The Common Law Regime will learn about in this chapter is the requirement to provide “reasonable notice” before terminating an employment contract (Chapter 10 explains this implied term in detail). However, since “reasonable notice” is an implied term, it can be excluded by the contracting parties by the inclusion in the contract of an expressed agreement to provide some other defined amount of notice of termination, as we learned in Chapter 8. Understanding implied terms is crucial to understanding employment contracts. Common law judges have developed a set of standardized implied contract terms that form the bedrock of employment contracts in the common law regime. Note that implied terms are as real as expressed terms, as the Supreme Court of Canada has explained: The law has always treated express and implied contract terms as being equivalent in effect. Breach of an implied term is just as serious as breach of an expressed term.2
The implied terms discussed in this chapter form part of every (non-union) employment contract in Canada, unless the parties have expressly agreed (orally or in writing) to exclude or modify them. In Chapter 8, we noted that there are three potential sources of employment contract terms: expressed, implied, and ancillary contract terms. Ancillary contract terms are found in documents that are physically separate from the employment contract, such as employee handbooks and benefits manuals. This chapter will conclude with a discussion of these documents and the question of their legal significance. Is a promise found in an ancillary document legally enforceable?
II. Implied Contract Terms As noted in the introduction, implied contract terms are extremely important in the employment context. Many of the important rules that shape the employment relationship have their foundation in an implied term. Before turning to consider the most important of these terms, we will briefly consider how judges have justified their decision to imply terms into employment contracts and how they used implied terms to construct a distinctive form of employment relationship that carried over many of the basic authority structures that had existed in the era of master and servant law (discussed in Chapter 5).
A. On What Basis Do Judges Imply Contract Terms? Courts have recognized two methods for implying contract terms: (1) implication of terms “in fact” based on the presumed intentions of the parties; and (2) implication “in law” based on the judges’ belief that it makes good policy sense to imply the term. Tracing the origins of the first method takes us to the River Thames in London, England, in 1889 and the case of The Moorcock3 (see Box 9.1). The Moorcock decision relied on the “presumed intention of the parties” as the basis for implying the contract term. The idea is that, by implying the term, the judge is simply giving expression to the agreement the parties themselves intended all along. Courts have deployed various rhetorical devices to explain how they know what the parties intended. In The Moorcock decision, for example, the court referred to a business efficacy test. Applying this test, a contract term is deemed to be intended by the parties when, in the court’s opinion, the term is necessary to make the particular contract involved effective.4 Thus, when a contract is to provide safe mooring for ships, the parties surely must intend that the ship be safe for mooring. ancillary contract terms: Contract terms found in written materials that are physically separate from an employment contract but that include rules that relate to the employment relationship. Examples of ancillary documents include employee handbooks, benefits handbooks, and human resources policy manuals. business efficacy test: An approach used by common law judges to justify the implication of a contract term on the basis that the term is necessary to make the contract effective.
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Chapter 9 Implied and Ancillary Employment Contract Terms 135
BOX 9.1 » TALKING WORK LAW The Moorcock and the Origins of the Implied Contract Term The Moorcock was a cargo ship. Its owners contracted with a “wharfinger”—a person or business that operates slips at a wharf—to use one of its slips on the Thames. While moored on the slip, the tide went out, causing the hull of the ship to smash against a hard ridge, damaging the ship. The Moorcock owners sued the wharfinger for breach of contract in an attempt to recover damages. The court implied a contract term that required the wharfinger to take reasonable care not to endanger the ship and ruled that the wharfinger had breached it. Lord Justice Bowen explained when a judge can imply a contract term: I believe if one were to take all the cases … of implied warranties or covenants in law, it will be found that in all of them the law is raising an implication from the presumed intention of the parties, with the object of giving to the transaction such efficacy as both parties must have intended that at all events it should have. In business transactions such as this, what the law desires to effect by implication is to give such business efficacy to the transaction as must have been intended … by both parties.* [Emphasis added]
The Moorcock unloading its cargo at London Docks. Therefore, although the written contract itself was silent (said nothing) about whether the wharfinger was liable for damages caused to a ship while moored in its slip, the court implied a contract term making it so. According to the court, the parties must have intended that the ship would not be damaged or destroyed in the course of the very business (mooring and offloading) that the contract contemplated. * The Moorcock (1889), 14 PD 64.
In a 1939 decision, the British Supreme Court (known then as the House of Lords) introduced the officious bystander test to explain how courts can determine if a term was intended by the parties, described as follows: [T]hat which in any contract is left to be implied and needn’t be expressed is something so obvious that it goes without saying; so that, if while the parties were making their bargain an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common, “Oh, of course.”5
In Canada, the officious bystander test and business efficacy test have often been used interchangeably. Both tests involve courts assessing what the parties most likely intended to occur in the circumstances.6 The presumed intent of the parties can also be gleaned from standard industry practices, the facts in a particular case, the type of job involved, the parties’ conversations, and past practices at a particular workplace.7 If a practice has long been followed at a workplace, and both parties have accepted the practice, then a court may find that the parties intended that practice to be incorporated into the contract as an implied term.8 In this way, a workplace norm (see
officious bystander test: An approach used by common law judges to justify the implication of a contract term based on the presumed intention of the parties. The idea is that a contract term is implied if it would be obvious to an uninterested bystander that both parties intended the term to be part of the contract.
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136 Part II The Common Law Regime Chapter 2) can rise to the level of an enforceable expectation when judges look to past practice as an interpretive aid. For example, if changes to job duties have always been negotiated in the past, a court may treat the obligation to negotiate such changes in the future as an implied term of the contract.9 When terms are implied based on the presumed intention of the parties, they are referred to as contract terms implied “in fact.” The second method by which judges imply terms does not rely directly on the presumed intentions of the parties at all. Sometimes judges imply contract terms based on their own view of a legal duty that ought to be imposed because of the nature of the contract involved, including an assessment of how the courts have long treated that type of contract. Terms implied in this way are referred to as contract terms implied “in law.” Justice McLachlin of the Supreme Court of Canada explained the key distinction between terms implied “in fact” and “in law” as follows: The intention of the contracting parties is relevant to the determination of some implied terms, but not all. Intention is relevant to terms implied as a matter of fact, where the question is what the parties would have stipulated had their attention been drawn at the time of contracting to the matter at issue. Intention is not, however, relevant to terms implied as a matter of law.10
Many of the key implied terms in employment contracts are implied “in law” on the basis that they have become standard terms of employment contracts unless the parties expressly agree otherwise, including the implied term requiring reasonable notice of termination.11 In practice, however, judges often do not explain the basis for the implied term at all. The terms are just treated as standard implied terms of employment contracts, with little discussion of the origins or basis for the implication.
B. How Judges Use Implied Terms to Shape Employment Contracts The methods of implying contract terms confer a great deal of discretion on judges to shape employment contracts. What might seem “obvious” to a judge might not be obvious at all to a typical employee or employer. Does the hypothetical “officious bystander” take into consideration what judges themselves have long recognized—that by virtue of its superior bargaining power the employer can usually include almost any lawful term in the contract it likes? If so, then the officious bystander test is really little more than a question of whether the employer would have written the term into the contract had it thought to do so. The ability to imply terms based on policy justifications or on long-standing custom in relation to employment contracts in the case of terms “implied in law” casts the judge in the role of a pseudo-legislator, requiring no consideration of the parties’ intentions at all. Throughout the 19th and 20th centuries, British judges used the legal device of the implied term to design a distinctive form of employment contract that carried over the basic structures of authority that had defined the old master and servant regime (see Chapter 5), as described by Professor Hugh Collins of Oxford University: The economic relation between employer and worker was described in the same terminology, a contract between master and servant, and into this contract the courts implied legal obligations that preserved the authority relation.12
contract term implied “in fact”: A term implied into a contract by a judge that reflects the presumed intentions of the parties. contract term implied “in law”: A term implied into a contract by a judge as a matter of the legal duty that the judge believes ought to be imposed due to the nature of the particular type of contract.
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Chapter 9 Implied and Ancillary Employment Contract Terms 137
Professor Collins’ point is that the standard bundle of terms implied in employment contracts by judges ensured a model based on subordination: the employer was assumed to have all of the authority necessary to direct the employee as it deems fit, with a corresponding obligation on the employee to serve the employer loyally and to act in the employer’s best interests, both at work and sometimes outside of work too. Because the ability to imply contract terms leaves so much discretion in the hands of judges, we might theorize that the substance and application of implied terms would change as society’s and judges’ attitudes and values evolve. Referencing the law of work framework presented in Chapter 2, changes in the social, cultural, and religious subsystem would be expected eventually to infiltrate and influence the common law regime in the form of new or revised implied terms. Evidence exists that this does in fact occur. Professor Geoffrey England described this process: [T]he golden thread in the evolution of employment contract law is that courts are continually refashioning the legal rules in order to facilitate the operation of the prevailing standards of personnel management practice; they also strive to reflect society’s changing vision of what an employment relationship ought to resemble. The implied term is one of the main tools used by courts for this purpose.13
A recent example of such an evolution is the recognition of a new implied term in Canada since the late 1990s requiring employers to treat employees with “decency, civility, respect, and dignity,” which is considered below.14 That it took until the end of the 20th century for common law judges to recognize that the employment relationship should require decent and respectful treatment by both parties (and not just employees) might seem surprising. However, it reflects a current trend in employment law whereby judges are demonstrating more sensitivity to the vulnerability of employees than judges of prior generations, a point that will be discussed at various points in subsequent chapters. TABLE 9.1 Standardized Implied Terms of Employment Implied Terms That Regulate Employee Conduct
Implied Terms That Regulate Employer Conduct
The following are standardized implied terms of employment contracts in Canada unless the parties have agreed otherwise. • Obey lawful employer orders
• Provide a reasonably safe work environment
• Serve the employer faithfully and cooperate in advancing the employer’s commercial interests
• Not impede the ability of the employee to perform their assigned work
• Provide reasonable notice of resignation
• Treat employees with decency, civility, respect, and dignity (duty of fair dealing)
• Not compete against the employer or use information to harm the employer
• Provide reasonable notice of termination
• Report to work when instructed and avoid lateness and unauthorized absences
• Act in good faith and with decency in the manner in which employees are terminated
• Be honest
• To compensate employees for work performed
• Perform work competently and safely • Avoid intoxication at work • Avoid harassment of others
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138 Part II The Common Law Regime
C. Implied Terms That Regulate the Conduct of Employees Implied terms most often come before the courts in wrongful dismissal lawsuits filed by employees against employers. We will learn in Chapter 12 that in the common law system, an employer can dismiss an employee with no notice if the employee has committed a serious breach of contract (called summary dismissal). An employee dismissed in this way may sue their employer for wrongful dismissal, and in its defence, the employer will argue that the employee breached a term of the contract, including an implied term. The court must then decide whether the implied term exists and whether it was breached by the employee. Over the years, the courts have developed a long list of standardized implied terms that impose rules on employees and are assumed to apply to all employment contracts, unless the parties have expressly agreed otherwise. The most important of these are described below. Since employment contracts are usually drafted by employers primarily to their benefit, it is rare that expressed contract terms exclude these implied terms. As a result, most employment contracts in Canada include the following implied terms.
1. Implied Obligation to Obey the Lawful Orders of the Employer The foundation of the employment contract is the duty of fidelity owed by employee to employer. This duty is most clearly captured in the first two implied terms we will discuss. The first is the implied obligation of employees to obey the employer’s lawful orders. The leading authority for this implied term is the 1959 British case Laws v. London Chronicle (Indicator Newspapers) Ltd., in which the court stated: [W]ilful disobedience of an order will justify summary dismissal, since wilful disobedience of a lawful and reasonable order shows a disregard—a complete disregard—of a condition essential to the contract of service, namely, the condition that the servant must obey the proper orders of the master and that, unless he does so, the relationship is, so to speak, struck at fundamentally.15 [Emphasis added]
The implied obligation to obey the employer’s orders colours the entire employment contract, informing us that the consideration an employee gives an employer is the employee’s submission to the direction and control of the employer. When an employee breaches the implied term requiring obedience to the employer’s lawful orders, it is known as insubordination (see also the discussion in Chapter 12 on summary dismissal for cause).16 This implied term was explained succinctly by the BC Court of Appeal in the 1992 case Stein v. British Columbia Housing Management Commission:
wrongful dismissal: A type of lawsuit by an employee against a former employer alleging that the employer terminated their contract without complying with the implied term in the contract requiring “reasonable notice.” summary dismissal: Termination of an employment contract by an employer without notice to the employee in response to a serious breach of contract by the employee. insubordination: A breach by an employee of the implied or expressed term of an employment contract requiring the employee to obey an employer’s orders and instructions.
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Chapter 9 Implied and Ancillary Employment Contract Terms 139 I begin with the proposition that an employer has a right to determine how his business shall be conducted. He may lay down any procedures he thinks advisable so long as they are neither contrary to law nor dishonest nor dangerous to the health of the employees and are within the ambit of the job for which any particular employee was hired. It is not for the employee nor for the court to consider the wisdom of the procedures. The employer is the boss and it is an essential implied term of every employment contract that, subject to the limitations I have expressed, the employee must obey the orders given to him.17 [Emphasis added]
The duty of employees to follow their employer’s orders is not absolute, as this passage notes. An employee can refuse “unlawful” orders, such as those that would require the employee to violate a statute or commit a tort (see Chapter 12), or orders that would put the employee or someone else in physical peril. In addition, an employee is not required to obey an order that is fundamentally inconsistent with the terms of the contract. For example, an employee is not required to accept a demotion, which is a reassignment to a lower paying or less prestigious job.18 In many cases, an employee who refuses an employer’s order that the employee believes violates the contract—such as an order to accept a demotion—will quit and sue the employer for constructive dismissal, which we will explore in detail in Chapter 13. A constructive dismissal occurs when an employer commits a serious violation of the contract that the employee treats as a termination of the contract. However, courts have ruled that the implied term requiring employees to obey lawful employer orders encompasses an implied right of employers to make “reasonable” and nonfundamental changes to an employee’s job that do not amount to a demotion. As one judge put it recently, it is “an implied term of any contract of employment … that the employer has the right, if it sees fit to do so, to make a reasonable reassignment of an employee to other duties.”19 A reassignment of job duties is more likely to be considered “reasonable” if it is relatively minor, if it does not involve a reduction in pay, and if, due to the nature of the job or to a past practice of similar job reassignments, the employee would have expected that such changes might occur.20
2. Implied Obligation to Serve the Employer Faithfully and to Cooperate in Advancing the Employer’s Commercial Interests Employees have an implied obligation of “fidelity,” which basically means that they are required to serve the employer faithfully in a manner that advances the employer’s commercial interests.21 A classic example of this implied term can be seen in a 1972 case involving British train drivers who, in an attempt to apply pressure on their employer to agree to improved working conditions, engaged in what we now call a “work to rule.” That is, they complied meticulously with the terms of their employment contract. Doing so caused the rail system to come to a screeching halt. The interesting part of this case is that the workers were complying with the written terms of their employment contracts, but the court was asked to nevertheless rule that the “work to rule” was a breach of their contracts. And that is what the court did. Lord Justice Buckley ruled that “an employee must serve the employer faithfully with a view to promoting those commercial interests for which he is employed.”22 Hence, the train drivers were in breach of the implied term requiring them to serve their employer faithfully and to promote the employer’s commercial interests by strictly complying with the written contract terms!23 demotion: A reassignment of an employee’s position by an employer to another position with lower pay, less prestige, or less responsibility. constructive dismissal: A fundamental change to an employment contract by an employer that an employee may treat as an effective termination of the contract.
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140 Part II The Common Law Regime The overriding implied obligation on employees to serve the employer faithfully with a view to advancing the employer’s commercial interests, along with the related implied obligation on employees to obey lawful employer orders, confers on employers a substantial degree of control over their employees. This is what Professor Collins meant (page 136) when he said that judges used implied terms to carry over the basic authority structures from the master and servant model into the employment contract model. All of the implied terms described below that impose obligations on employees may be understood as corollaries of these first two implied terms. Indeed, with the exception of the implied term requiring employees to provide the employer with reasonable notice of termination, the following implied terms are often just lumped together by the courts under a general “implied duty of fidelity and faithful service” rather than singled out as separate implied terms.24 Not much turns on how we label the implied terms. However, it is useful to list them, and we will do so briefly here. We will come across some of these terms again later in this text when we discuss termination for cause (Chapter 12) and constructive dismissal (Chapter 13).
3. Implied Obligation to Provide Reasonable Notice of Resignation Employees are subject to an implied term requiring them to provide reasonable notice before terminating the employment contract. This obligation mirrors the employer’s implied obligation to provide reasonable notice (see Section D, “Implied Terms That Regulate the Conduct of Employers”), although the manner in which the courts calculate the amount of notice is different.25 The purpose of requiring employees to provide notice of resignation is to allow the employer time to find and train a replacement. Therefore, the length of notice required to resign varies according to the type of job involved, the practice in an industry, and the difficulty the employer will have replacing the employee. It will almost always be less than the amount of reasonable notice that courts order employers to provide employees. As is the case with all implied terms, the implied obligation to provide “reasonable notice” (the amount of which is determined by the courts) can be overridden by an expressed agreement of the parties that defines the amount of notice required. We consider the assessment of reasonable notice of resignation more fully in Chapter 15. 4. Implied Obligation to Not Compete and to Protect Confidential Information An obvious corollary of the implied obligation to advance the employer’s commercial interests is the implied term prohibiting employees from competing against their employer during the employment relationship.26 An employee who secretly earns income competing against their employer is in breach of the employment contract. Note that this obligation to avoid competition only applies while the employment contract subsists. There is no implied obligation on an employee to refrain from competing against a former employer, although as discussed in Chapter 8, there may be a written (expressed) non-competition clause. Absent an expressed noncompetition clause, an employee is entitled to compete against their employer any time after they have quit or given the employer notice that they are quitting. The Supreme Court of Canada explained this point as follows in RBC Dominion Securities v. Merrill Lynch Canada (see Box 9.2): Generally, an employee who has terminated employment is not prevented from competing with his or her employer during the notice period, and the employer is confined to damages for failure to give reasonable notice. To this general proposition [can be added] the qualification that a departing employee might be liable for specific wrongs such as improper use of confidential information during the notice period.27
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Chapter 9 Implied and Ancillary Employment Contract Terms 141
BOX 9.2 » CASE LAW HIGHLIGHT Implied Term Prohibiting Employees from Competing with Their Employer RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc. 2008 SCC 54 Key Facts: DD was branch manager of RBC Dominion Securities in Cranbrook, British Columbia. In 2000, DD quit RBC without notice and immediately commenced employment with RBC’s competitor, Merrill Lynch. While employed by RBC, DD had encouraged investment advisers under his supervision to follow him to Merrill and all but two did so, leaving the RBC office decimated. DD and the other advisers also copied confidential RBC client information several weeks before they quit RBC and gave this information to Merrill. As a result of the sudden departure of its investment advisers, RBC suffered significant financial losses. RBC sued DD and the other former investment advisers for breach of the implied terms in their contracts requiring them to serve RBC in good faith and to provide RBC with notice of termination. Issue: Did DD and the other investment advisers breach implied terms in their employment contracts to serve RBC faithfully and provide notice of termination? Decision: Yes. First, all of the RBC employees breached their implied duty to provide reasonable notice of termination to RBC. The court fixed that period of notice at two and a half
weeks based on industry norms. The court calculated damages based on the profit that the advisers would have earned for RBC during that period, which was determined to be $40,000 in total. Second, as branch manager, DD’s implied duty of good faith service to RBC included an obligation to retain the investment advisers and not to persuade them to join a competitor. DD also breached this term. Third, the employees breached the implied obligation in their contracts to not misuse confidential information to harm RBC when they copied and removed from RBC a list of RBC’s clients and gave it to Merrill. DD was ordered to pay damages amounting to nearly $1.5 million based on lost profits to RBC caused by the mass exodus of almost all of its investment advisers with no notice and the misuse of RBC’s confidential information. The court also ordered the investment advisers to pay $5,000 each and DD to pay $10,000 in punitive damages to RBC based on the misappropriation of RBC’s customer lists for the benefit of Merrill Lynch.* * The court also ordered significant damages against Merrill Lynch and a manager employed by it who helped orchestrate the departure of DD and the investment advisers from RBC. Note also that Merrill Lynch agreed to pay all of the damages ordered against DD and the investment advisers.
As the court notes at the end of this passage, an employee—even one who has quit—cannot use confidential information obtained from their employer to harm the employer’s commercial interests. Confidential information includes a trade secret or other confidential business information that is removed from the employer’s premises, including a list of customers (although, absent a non-competition clause, an ex-employee is permitted to contact former customers of the former employer if they do so from memory rather than from a document improperly removed from the workplace).28
5. Implied Obligation to Report to Work and to Avoid Lateness and Absenteeism The employer has the implied (and sometimes the expressed) right to determine the work schedule. Absenteeism and lateness can be a violation of the employee’s obligation to obey orders or, more specifically, an implied contract term recognized by judges requiring employees to attend work when scheduled.29 6. Implied Obligation to Be Honest An employee must be honest with the employer, which obviously includes avoiding deliberate dishonesty and theft.30 Some courts have added that this obligation also includes not concealing from the employer “facts which ought to be revealed.”31 That is vague language, and the scope of its possible application is uncertain, but it has been applied, for example, to a bank manager who kept secret from his employer an affair he was having with one of his subordinates.32
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142 Part II The Common Law Regime
7. Implied Obligation to Perform Competently and Safely Canadian courts have recognized an implied obligation on employees to perform their job competently.33 The effect of this implied term is that incompetent job performance by an employee is a breach of contract. However, as we will see in Chapter 12, the courts have also ruled that only serious or “gross” incompetence would normally justify a summary dismissal. 8. Implied Obligation to Avoid Intoxication Judges have long implied a term that intoxication at work is prohibited.34 Employees who report to work intoxicated are putting themselves, others, and employer property at risk. In practice, this implied term often becomes relevant when an employee is accused of breaching another term of the contract, such as the requirements of competent performance and proper attendance. In such cases, the intoxication causes absenteeism or performance problems. As we will see in Chapter 12, whether intoxication is grounds for summary dismissal usually depends on how seriously it undermines the employee’s job performance.35 It is notable too that when the employee involved is an alcoholic or addicted to drugs, human rights laws may impose obligations on the employer that may restrict the right of the employer to terminate the employee. We will consider that issue in Part III when we look at disability at work. 9. Implied Obligation to Avoid Harassment Many employers include anti-harassment provisions in the written terms of their employment contracts, and those terms have been found to have been breached by an employee in numerous decisions.36 However, even if this obligation is not an expressed term, common law judges have found harassing employees to be in breach of implied obligations to avoid harassment at work.37 Whether the harassment is serious enough to constitute grounds for summary dismissal depends on the seriousness of the harassment, whether the employer had a well-known harassment policy, whether the employee was in a position of authority, and a variety of other factors.38 We will consider this issue further in Chapter 12.
D. Implied Terms That Regulate the Conduct of Employers So far, this chapter has demonstrated the extent to which common law judges have used implied terms to shape employment contracts that ensure employees are subservient to their employers. The implied terms discussed above form part of every Canadian employment contract—unless the parties have bargained them out of the contract. Judges have not been completely one-sided, however. They have also implied terms that impose requirements on employers and benefit employees.
1. Implied Obligation to Provide Reasonable Notice of Termination of an Employment Contract Since the early 20th century, Canadian judges have implied a contract term requiring employers to give the employee “reasonable notice” of the termination of an indefinite-term employment contract. Judges decide how much notice is “reasonable” by applying factors we will consider at length in Chapter 10. Employers frequently attempt to avoid the implied obligation to provide reasonable notice by writing a notice of termination clause directly into the contract. However, as we noted in Chapter 8, disputes over the application of the implied term requiring reasonable notice of termination are the most frequently litigated issues in the common law regime. 2. Implied Obligation to Provide a Reasonably Safe Work Environment Long before modern workers’ compensation legislation came into effect, common law courts had implied a duty on employers to take reasonable care to ensure workers are not put in
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unreasonable danger in the performance of their job. Lord Herschell described the duty in an 1891 decision: “It is quite clear that the contract between employer and employed involves on the part of the former the duty of taking reasonable care to provide proper appliances and to maintain them in a proper condition and so to carry on his operations as not to subject those employed by him to unnecessary risk.”39 This implied term has mostly been overtaken by workers’ compensation legislation, which replaces the right of employees to sue for breach of this term in exchange for a no-fault insurance scheme, and by occupational health and safety legislation, which imposes workplace safety rules and a right to refuse unsafe work. We consider both types of legislation in Chapter 24.
3. Implied Obligation to Treat Employees with “Decency, Civility, Respect, and Dignity” and to Engage in “Fair Dealing” We noted earlier that judges sometimes develop new implied terms that reflect the evolution of social and cultural values. An example of this process is the development of the implied duty on employers to treat employees with “decency, civility, respect, and dignity.”40 This implied term has deep roots, but Canadian judges have only recently begun to apply it to employment situations involving verbal, physical, and psychological harassment at work.41 One of the earliest decisions to explicitly recognize and apply the implied term requiring decency, civility, respect, and dignity was Lloyd v. Imperial Parking Ltd., described in Box 9.3.
BOX 9.3 » CASE LAW HIGHLIGHT Implied Terms and Decent and Respectful Treatment of Employees Lloyd v. Imperial Parking Ltd. 1996 CanLII 10543 (Alta. QB) Key Facts: Lloyd quit his employment after being subjected to months of verbal abuse and constant threats to his employment by a superior at Imperial Parking Ltd. (his employer). He sued the employer for “constructive dismissal,” arguing that the employer’s abuse amounted to a fundamental breach of the employment contract. Issue: Did the employer commit a fundamental breach of the employment contract by engaging in a pattern of verbal abuse, giving rise to a constructive dismissal? Decision: Yes. Here is the key passage from the decision: It is well-recognized that in the absence of cause, any fundamental breach by the employer of a major term of the employment relationship allows the employee to take the position that a constructive dismissal has occurred. In order for a constructive dismissal to exist, the breach must be in relation to a fundamental term of the employment relationship rather than just a minor or incidental term. There must be a fundamental breach of a fundamental term of employment before one can claim to be constructively dismissed.
A fundamental implied term of any employment relationship is that the employer will treat the employee with civility, decency, respect, and dignity. The standard that has to be adhered to by the employer is dependent upon the particular work environment. This appears to be part of the trend to establish a duty upon an employer to treat employees “reasonably” in all aspects of the labour process. In this case, a fundamental implied term of the employer/employee relationship has been breached. Mr. Noiles, Mr. Lloyd’s superior, did not treat Mr. Lloyd with the civility, decency, respect, and dignity to which he was entitled. The abusive pattern of behaviour during 1993 was in contravention of this requirement. [Emphasis added] The breach of the implied duty on the employer to treat employees with decency, civility, respect, and dignity gave rise to a constructive dismissal. The court ruled that the employer was required to have given Lloyd four months’ notice of termination, and the employer was ordered to pay damages to Lloyd for moneys he would have earned during that fourmonth period (nearly $30,000).
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144 Part II The Common Law Regime The implied duty of decent treatment of employees has since been applied by Canadian courts to a range of bullying and unfair treatment by employers. The courts considered the term breached as a result of the following employer behaviour: failure to put an end to verbal harassment of an employee by a supervisor,42 being dishonest with an employee and offering the employee money to “go away,”43 engaging in “unrelenting criticism” of an employee,44 and locking an employee out of her office with no explanation.45 These situations are a few of the many in which the courts found that an employer had treated its employee harshly and unfairly. In 2014, the Ontario Court of Appeal recognized a similar, arguably broader implied obligation on the employer to treat the employee with “good faith and fair dealing.”46 The court ruled that Wal-Mart Canada had violated this term by failing to properly investigate and take steps to stop ongoing harassment of a female employee. Wal-Mart was ordered to pay $300,000 in aggravated and punitive damages.
4. Implied Obligation to Permit Employees to Work (or Not to Prevent Employee Performance) Employees have a right to come to work. This does not mean they have a “right” to their job— employees can be dismissed, and, as we saw earlier, an employer has an implied right to make “reasonable” work reassignments. However, an implied term in employment contracts requires employers to permit employees to perform the labour their contracts contemplated and to pay them for that labour. This is a corollary of the more general implied term in contracts that the parties will cooperate in the fulfillment of the objectives of the contract and not prevent performance.47 The implied obligation of an employer to not prevent the employee from performing their labour has important implications that often surprise employers. For example, an indefinite layoff and an unpaid suspension violate this implied term since both involve the employer refusing employees the opportunity to perform their end of the contract.48 The employer is essentially saying, “stay home until I decide to let you come back to work.” It is a breach of the contract for an employer to do that, unless the contract includes an expressed right to suspend or lay off employees, or there is a well-established history in the industry of temporary layoffs that the employee can be presumed to have agreed to.49 One judge explained why a layoff constitutes a fundamental breach of the employment contract as follows: In an employment contract, the essential elements are the offer by the employee to work and by the employer to provide work and to pay compensation. Absent a provision permitting the employer to suspend the obligation to provide work for an indefinite term, even with an undertaking to recall upon work being available, the effect on an employee is really no different than in a termination where the employer undertakes to rehire, if a position later becomes available.50
An employee who is laid off in the absence of a contract term permitting layoffs is probably entitled, if they so choose, to quit and sue the employer on the basis that they were “constructively dismissed” when the employer prevented them from coming to work. We will consider the application of this implied term again when we examine constructive dismissal in Chapter 13, including a case called Carscallen v. FRI Corporation later, in which an unpaid suspension is ruled to be a fundamental breach of the employment contract.51
5. Implied Obligation to Compensate Employees for Work Performed Modern employment standards legislation (Part III) includes a requirement for employers to pay employees wages and rules on what wages are acceptable (minimum wages, overtime pay, layoff: A non-disciplinary suspension imposed by an employer of the employee’s right to come to work, usually due to a lack of available work. unpaid suspension: A temporary suspension of an employee’s right to come to work imposed by the employer as a form of discipline for employee misconduct.
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etc.). However, even before such legislation, the common law recognized an obligation for employers to compensate workers for their labour.52 This implied obligation was either based on the presumed intention of the parties or flowed from an old legal concept known as quantum meruit. Quantum meruit (Latin for “the amount it deserves”) permits judges to order payment for services based on a fair assessment of the value of the services when a contract does not specify a rate of pay or where there was no formal contract entered into in relation to that labour.53
6. Implied Obligation to Act with Good Faith in the Manner of Dismissal of an Employee We will explore this final implied term at length in Chapter 14 when we consider how courts assess damages in cases involving the wrongful termination of employees. Therefore, we will provide just a quick introduction here. In two important cases, Wallace v. United Grain Growers (1997) and Honda v. Keays (2008), the Supreme Court of Canada recognized an implied obligation of fair dealing and good faith in the manner in which an employer terminates an employee.54 To be clear, this implied term does not prevent an employer from terminating an employee or even require an employer to have a reason to do so. Rather it requires an employer to treat employees professionally, sensitively, and with decency in the manner in which the termination is implemented. Employers who have been dishonest or just plain mean when they terminate employees have been ordered to pay large damage awards for breaching the implied obligation to act in good faith in the manner of dismissal. Examples are discussed in Chapter 14.
III. Contract Terms Found in Ancillary Documents Many workplaces have documents that describe rules that apply to the employment relationship, such as employee handbooks, human resource policy manuals, retirement plans, and benefits handbooks. These documents might stipulate rules relating to termination of employment, discipline, or benefits eligibility or entitlements, among other things. The courts are sometimes asked to decide whether the rules found in ancillary documents are legally enforceable. The answer depends on whether those documents constitute a separate legal contract or are part of the existing employment contract.55 If neither, then the terms of the ancillary document are not enforceable. The central point to recall is that an enforceable contract consists of a mutually agreed upon promise consisting of an intention to create legal relations, and an offer, acceptance, and mutual consideration, as we learned in Chapter 7. At a minimum, both parties need to know about the ancillary document, and there must also be clear evidence that both agreed to its terms and understood and intended that the document would be legally enforceable. A document prepared unilaterally by an employer but never actually provided to the employee will not be legally enforceable. How can an employee accept terms they are not even aware exist? If the ancillary document exists at the time the parties enter into the employment contract, then it can be expressly incorporated into the contract by clear language, such as, “The Employee Handbook attached to this contract forms part of this employment contract.” That sort of clear language would head off future disputes about whether the handbook is enforceable. Similarly, if the employee is provided with the ancillary document and advised orally at the time the contract is formed that the terms in it comprise part of the employment contract, then that too would have the effect of incorporating the document into the employment contract.56 In these scenarios, the requirement of mutual consideration is satisfied, since the terms in the ancillary document form part of the initial exchange of promises and benefits in the employment contract. quantum meruit: An entitlement to be paid a fair market rate for work performed when the amount is not stipulated in a contract.
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146 Part II The Common Law Regime However, in many of the reported court decisions, the ancillary document was introduced by the employer at some point during the employment relationship, rather than when the employment contract was initially negotiated.57 In that case, the terms in the ancillary document are legally enforceable only if two conditions are satisfied. First, it must have been made clear to the employee that the new document was intended to be legally enforceable, and the court must be satisfied that the employee understood and agreed to that condition. The employee’s agreement will not be assumed from the fact that the employee continues to work after the document is given to them. The employee was already required to come to work before the new document was introduced, so continuing to work afterward does not establish agreement to any changes found in the document, as explained in the Rahemtulla v. Vanfed Credit Union case in Box 9.4.58
BOX 9.4 » CASE LAW HIGHLIGHT Is an Ancillary Document Introduced During a Contract Enforceable? Rahemtulla v. Vanfed Credit Union 1984 CanLII 689 (BCSC) Key Facts: Rahemtulla was terminated from her job as a bank teller after 15 months’ employment. The employer accused her of theft of money, although at trial it argued that the termination was not for cause. The employment contract was indefinite in duration and did not include a notice of termination clause. However, the employer sought to rely on a term found in a policy manual that had been handed to the employee a few days after she commenced employment. The manual stated that the employer could terminate an employee by providing two weeks’ notice, which the employer had given the employee in this case. The employee argued that the policy manual was neither part of her employment contract nor a separate binding contract and therefore was not enforceable, and she was entitled to implied reasonable notice. Issue: Is the notice of termination provision found in the policy manual enforceable? Decision: No. The court explained: [I]f the terms of the policy manual are to be binding, it must be concluded that they have contractual force. The usual elements of a contract must be established: a concluded agreement, consideration, and contractual intention. Here, the employer provided the manual to Rahemtulla, but there is no evidence that she accepted it as part of her contract. The fact that she continued to work after she was given the manual and she did not verbally object to the manual’s terms cannot be treated as acceptance because she was already required to work under the original contract terms:
Communication of assent [to terms in an employee manual] cannot be inferred from the fact that the [employee] continued to work after being given the manual. She had contracted to work for the [employer] prior to receiving the manual. The fact that she continued to fulfil this obligation after being given the manual cannot be taken as an assent to its terms. Moreover, Rahemtulla had received no new consideration in exchange for the rights granted to the employer in the manual: [I]t may be questioned whether there was valid consideration for the promise the plaintiff is alleged to have made to be bound by the policy manual. Performance of an existing duty is no consideration: Stilk v. Myrick (1809) … . The defendant’s obligation to employ having arisen before delivery of the policy manual, its performance of that obligation cannot constitute consideration for any new terms imposed on the plaintiff by the manual. Since Rahemtulla had not agreed to the terms in the manual and, in any event, there had been no new consideration given to her in exchange for the right of the employer to terminate with two weeks’ notice, the term in the manual was not enforceable. Rahemtulla was entitled to reasonable notice, which the court fixed at six months. The employer was ordered to pay an amount equal to six months’ wages, plus an additional $5,000 in mental suffering damages for “recklessly” accusing Rahemtulla of theft. (See Chapter 14 for a discussion of mental suffering damages.)
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Second, even if the employee agreed to the new terms found in the ancillary document, perhaps signing the document, those terms will still not be enforceable unless both the employer and employee received “new consideration” when the ancillary document was introduced.59 Mutual consideration is required for an agreement to be legally enforceable, and this requirement applies to any modifications to the employment contract introduced through an ancillary document, as we saw in Chapter 7. In the case described in Box 9.5, the court ruled that the ancillary document was enforceable. See if you can identify what distinguishes the Johnson decision from the Rahemtulla decision.
BOX 9.5 » CASE LAW HIGHLIGHT Are Terms in Ancillary Documents Enforceable? Johnson v. Global Television Network Inc. (CH Vancouver Island) 2008 BCCA 33 Key Facts: About nine years into his oral employment contract, Johnson elected to participate in a voluntary pension plan offered by his employer, Global Television Network Inc. This required Johnson and Global to make regular contributions to the plan. Johnson never received a copy of the pension plan, but he did receive a brochure describing the plan, including a term of the plan that required Johnson to retire on his 65th birthday. When Johnson reached 65, the employer informed him that his employment was over, pursuant to the mandatory retirement term in the pension document. Johnson sued for wrongful dismissal, arguing that the mandatory retirement term in the pension plan was not enforceable and that he was entitled to “reasonable notice” of termination.
Issue: Was the term in the pension plan document requiring retirement at age 65 legally enforceable? Decision: Yes. At the trial, Johnson testified that he was made aware of the mandatory retirement requirement in the pension plan and that he believed it was part of his employment contract. Therefore, the court ruled that there was a common intention formed that the mandatory retirement term would be a legally enforceable contract term. In addition, Johnson had received new consideration in exchange for the introduction of the mandatory retirement term “in the form of contributions made to his pension plan by [the employer] for approximately 30 years.” As a result, the mandatory retirement term was enforceable, and Johnson was only entitled to wages and benefits up to his mandatory retirement date.
IV. Chapter Summary This chapter examined the origins and substance of the key standard implied terms that govern non-union employment contracts in Canada. As you can see, they are extensive. Many of these terms have their origins in old British case law, but some, such as the implied obligation on employers to treat employees with decency, civility, respect, and dignity, are of relatively recent vintage. Implied terms form the foundation of the employment contract in Canada, acting as the default distribution of rights and responsibilities. However, because implied terms fill gaps in the expressed language of the contract, they are subject to being overridden by the parties in a written or oral agreement. We will see more examples of implied terms and how they impact the employment relationship in Canada in later chapters. This chapter also explained the legal significance of promises and obligations that are found in ancillary documents that are physically separate from the employment contract. We learned that courts closely scrutinize ancillary documents to confirm that both parties understood and intended them to be legally enforceable.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Do all of the implied contract terms discussed in this chapter apply to every employment contract in Canada? 2. Explain the difference between contract terms implied “in fact” and contract terms implied “in law.”
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148 Part II The Common Law Regime 3. Identify and describe a standard implied term in employment contracts that has been recognized by Canadian courts only during the past 25 years. 4. “Insubordination” is the term used to describe a violation of which implied contract term? 5. Explain what Professor Hugh Collins meant when he wrote that judges used implied terms to preserve “the authority relation” that had existed under the old master and servant laws discussed in Chapter 5. 6. When is a term found in an ancillary document (such as an employee handbook) legally enforceable?
APPLYING THE LAW 1. Daphne has worked for a local florist for 10 years. She never signed an employment contract. The owner, Jill, asked her if she was looking for a job, and Daphne said she was. Daphne started the next day and has worked full time at the florist ever since. However, last month Jill told Daphne that business had slowed and that as a result she had to lay off Daphne until things picked up. Daphne was upset but understood. A couple of weeks into the layoff, Daphne decided she did not want to return to the flower shop even if she was recalled. Daphne assumes that she is not entitled to anything from the employer because she does not have a written employment contract and she was not actually terminated. Daphne hears that you have taken an employment law class and so she asks you whether she has any potential claim against the florist in these circumstances. Does she? 2. Seamus was a window cleaner employed by New View Windows. He had signed a simple employment contract that did not include a written non-competition clause. Seamus had been employed by New View for nearly eight years. Last year, Seamus and his cousin started a business called Spotless Windows. Seamus sometimes gave his Spotless Windows business card out to New View customers when he was out doing
their windows, telling them his company was cheaper than New View. Last week, Jim, the owner of New View Windows, found out about Seamus’ side business and he terminated Seamus for cause. Seamus is furious, and he points out to you that his contract with New View Windows says nothing about whether he can create a competing window cleaning business. Is Seamus correct that his employment contract with New View did not prohibit him from creating a competing business? 3. Maggie has also worked for New View Windows as a window cleaner for a few years. However, unlike Seamus, she never signed a written employment contract. Seamus persuades Maggie that she would be better off quitting New View and coming to work for Spotless Windows. Last week, Maggie quit New View with no notice and immediately began working for Spotless— she just didn’t show up for work one day, and as a result New View had to pay another window cleaner overtime pay (an extra $400 above what Maggie would have been owed had she reported to work) to cover her work for three days until a replacement could be hired. Jim asks you whether he has any potential legal action against Maggie for quitting and leaving him “high and dry” and then joining a competitor.
EXERCISE Try the following legal research exercise, which involves finding case law dealing with implied contract terms. 1. Go to the CanLII home page: . 2. In the “Document text” search box, type “employment contract” and “implied term.” This search should return hundreds of Canadian decisions. 3. Select three decisions that look interesting to you from the brief summary of the decision provided in the case header and read them. For each, identify the part of the decision that discusses “implied terms” and answer the following questions: a. What implied term is being discussed? Is it one that is identified in this chapter or some other implied term?
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Chapter 9 Implied and Ancillary Employment Contract Terms 149
b. Does the court find that the implied term was breached in the case? c. Does the judge explain the method by which the term was implied? d. Was there an expressed or written contract term that modified or overrode the implied term in the case? e. If the implied term was breached in the case, was a remedy ordered for that breach? If so, what was it?
NOTES AND REFERENCES 1. H. Collins, Employment Law, 2nd ed (New York: Oxford University Press, 2010) at 35. 2. BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1 SCR 12 at para 31. 3. The Moorcock (1889), 14 PD 64 at 68. 4. Another important early case applying the “business efficacy” test for implying contract terms is Reigate v. Union Manufacturing Co., [1918] 1 KB 892. See also the discussion in Hawkes v. Levelton Holdings Ltd., 2013 BCCA 306 para 63; and Carscallen v. FRI Corp., 2005 CanLII 20815 (Ont. Sup Ct J). 5. Shirlaw v. Southern Foundries (1926), Ltd., [1939] 2 KB 206 at 227. See also Merilees v. Sears Canada Inc. (1986) CanLII 723 (BCSC) at 169; aff ’d 1988 CanLII 3009 (BCCA). 6. J. McCamus, The Law of Contracts, 2nd ed (Toronto: Irwin, 2012) at 779-89. 7. For example, in RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., 2008 SCC 54 the court implied a term into the contract of an investment manager that he would retain investment managers under his supervision and not coordinate their mass exit to join a competitor; and in Bonsma v. Tesco Corporation, 2013 ABCA 367, applying the business efficacy test, there was no reason to imply a duty on the employer to provide minimum hours of work to an employee in a job that provides cyclical and sporadic work. 8. See Rose v. Shell Canada Ltd., 1985 CanLII 675 (BCSC), referring to a contract term implied by fact based on a long history of practice as a contract “term by conduct.” See also Sowden v. Manulife Canada Ltd., 2015 BCSC 629. 9. Elliott v. Southam Inc., 1998 CanLII 3482 (Alta. QB). 10. See Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986 at 1008. 11. Ibid. See also TCF Ventures Corp. v. The Cambie Malone’s Corporation, 2017 BCCA 129 at paras 19-20; and Liverpool City Council v. Irwin, [1977] AC 239. 12. Collins, supra note 1 at 34; and A. Fox, Beyond Contract: Work, Power, and Trust Relations (London: Faber, 1974) at 181-84.
13. G. England, Individual Employment Law (Toronto: Irwin, 2008) at 38. See also Wilson v. Racher, [1974] IRLR 114 (CA) at para 5, where Edmund-Davies LJ explains how judicial attitudes on the appropriate treatment of employees by employers has evolved over time to reflect changing “social conditions.” 14. See D. Doorey, “Employer Bullying: Implied Duties of Fair Dealing in Canadian Employment Contracts” (2005) 30 Queen’s LJ 500. 15. Laws v. London Chronicle (Indicator Newspapers) Ltd., [1959] 2 All ER 285 (CA). See also Hivac Ltd. v. Park Royal Scientific Instruments, [1946] 1 All ER 350 at 353. 16. Panton v. Everywoman’s Health Centre Society (1988), 2000 BCCA 621; Adams v. Fairmont Hotels & Resorts Inc., 2009 BCSC 681; Candy v. C.H.E. Pharmacy Inc., 1997 CanLII 4135 (BCCA); Staley v. Squirrel Systems of Canada, 2013 BCCA 201 (implied term that the employee work in British Columbia was violated when then employee insubordinately refused an employer order to return to BC after a short-term period in Quebec); and Streng v. Northwestern Utility Construction Ltd., 2016 BCPC 161 at para 57. 17. Stein v. British Columbia Housing Management Commission, 1992 CanLII 4032 (BCCA). 18. See discussion in Chapter 13; Mifsud v. MacMillan Bathurst Inc., 1989 CanLII 260 (Ont. CA). 19. Bolibruck v. Niagara Health System, 2015 ONSC 1595. 20. Ibid.; see also Marmon v. The Authentic T-Shirt Company, 2019 ONSC 205 (where the employee had been reassigned temporarily to different jobs with the same pay in the past, it was an implied term that the employer could do so); Gillespie v. Ontario Motor League Toronto Club (1988), 4 ACWS (2d) 87 (Ont. H Ct J); Tymrik v. Viking Helicopters Ltd. (1985), 6 CCEL 225 (Ont. H Ct J); Canadian Bechtel Ltd. v. Mollenkopf (1978), 1 CCEL 95 (Ont. CA); Dykes v. Saan Stores Ltd., 2002 MBQB 112; Farber v. Royal Trust Company, [1997] 1 SCR 846; and Tanton v. Crane Canada Inc., 2000 ABQB 837. 21. RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., supra note 7; Zoic Studios B.C. Inc. v. Gannon, 2015 BCCA 334; Altam Holdings Ltd. v. Lazette, 2009 ABQB 458; and
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150 Part II The Common Law Regime CRC-Evans Canada Ltd. v. Pettifer, 1997 CanLII 14943 (Alta. QB). 22. Secretary of State for Employment v. ASLEF (No. 2), [1972] 2 All ER 949 (CA). 23. Ibid. See also S. Honeyball, Employment Law, 12th ed (Oxford: Oxford University Press, 2012) at 63-64. 24. CRC-Evans Canada Ltd. v. Pettifer, supra note 21. 25. See RBC Dominion Securities Inc. v. Merrill Lynch Canada, 2003 BCSC 1773; rev’d on other grounds, supra note 7. See also Gill v. A & D Precision Ltd., 2010 ONSC 4646; Tree Savers International Ltd. v. Savoy, 1992 CanLII 2828 (Alta. CA); and Consbec Inc. v. Walker, 2016 BCCA 114 (the damages suffered due to the employee’s failure to give notice were offset by savings to the employer in not having to pay the employee’s wages during the notice period). 26. RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., supra note 7 at para 38; Hivac, Ltd. v. Park Royal Scientific Instruments, [1946] 1 All ER 350, c. 169; Imperial Sheet Metal Ltd. v. Landry and Gray Metal Products Inc., 2007 NBCA 51; McMahon v. TCG International Inc., 2007 BCSC 1003; Restauronics Services Ltd. v. Nicolas, 2004 BCCA 130 (making plans to compete against the employer after the employment ends is not a breach of the duty of fidelity); Cariboo Press (1969) Ltd. v. O’Connor, 1996 CanLII 1553 (BC CA); Amber Size & Chemical Co., Ltd., v. Menzel, [1913] 2 Ch. 239; Rupert v. Greater Victoria School District No. 61, 2003 BCCA 706; Tree Savers International Ltd. v. Savoy, supra note 25; Atlas Janitorial Services v. Germanis, 1994 CanLII 7522 (Ont. Sup Ct J); and Altam Holdings Ltd. v. Lazette, supra note 21. 27. RBC Dominion Securities v. Merrill Lynch Canada, supra note 7 at para 18. 28. Ibid. Partridge v. Botony Dental Corporation, 2015 ONSC 343; Quantum Management Services Ltd. v. Hann, 1992 CanLII 7720 (Ont. CA); Cinema Internet Networks Inc. v. Porter et al., 2006 BCSC 1843; Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 SCR 574; Zoic Studios BC Inc. v. Gannon, 2012 BCSC 1322; and Barton Insurance Brokers v. Irwin, 1999 BCCA 73. Sometimes courts refer to an implied “duty of confidence” that requires employees to protect an employer’s confidential information and not to use that information to harm the employer’s economic interests. See discussion on “Intellectual Property and Work” and other additional online content discussed on page xxiii in the preface of this book; and see Corona Packaging Inc. v. Singh, 2012 ONSC 2746. 29. Pereira v. The Business Depot Ltd., 2011 BCCA 361; Fleming v. J.F. Goode & Sons Stationers & Office Supplies Ltd., 1994 CanLII 4361 (NSSC); Riley v. Crown Trust Co. (1977), 5 AR 1 (QB); and S.S. v. Huang & Danczkay Property Management Inc., 1999 CanLII 14865 (Ont. Sup Ct J).
30. Pinto v. BMO Nesbitt Burns Inc., 2005 CanLII 18720 (Ont. Sup Ct J); McKinley v. BC Tel, 2001 SCC 38; Swidrovich v. Saskatchewan Place Association Inc., 2019 SKQB 50; Obeng v. Canada Safeway Ltd., 2009 BCSC 8 (employee has an implied obligation to provide an honest and candid explanation for his actions as part of an investigation into misconduct); and Bhasin v. Hrynew, 2014 SCC 71 (recognizing a general implied duty in Canadian contracts to perform with honesty and in good faith). 31. Atlas Janitorial Services Co. v. Germanis, supra note 26. 32. Carroll v. Emco Corporation, 2007 BCCA 186. The courts have not usually required employees to disclose misconduct by other employees; see Tyrrell v. Alltrans Express Ltd., 1976 CanLII 1181 (BCSC); Bhasin v. Best Buy Canada Ltd., 2005 CanLII 45965 (Ont. Sup Ct J); and Bell v. Computer Science Corp, 2007 ONCA 466. 33. R v. Arthurs, Ex p. Port Arthur Shipbuilding Co., 1967 CanLII 30 (Ont. CA): “If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with the 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.” See also Bridgewater v. Leon’s Manufacturing Co. Ltd., 1984 CanLII 2492 (Sask. QB); Burden v. Bank of Nova Scotia, 1997 CanLII 2125 (BCSC); Murrell v. Simon Fraser University, 1997 CanLII 2785 (BCCA); and Brown v. Sears Ltd., 1988 CanLII 153 (NSSC). See also the discussion in Honeyball, supra note 23 at 67. 34. Anstey v. Canadian National Railway Co., [1980] 74 APR 95 (Nfld. CA); and Rose v. Marystown Shipyard Ltd., 1985 CanLII 1829 (Nfld. CA). See also Dziecielski v. Lighting Dimensions Inc., 2012 ONSC 1877 (drinking and driving is also a violation of an implied term of the employment contract). 35. Examples of cases in which intoxication is not grounds for summary dismissal including the following: Wiebe v. Central Transport Refrigeration (Man.) Ltd., 1994 CanLII 6406 (Man. CA); Ditchburn v. Landis & Gyr Powers Ltd., 1997 CanLII 1500 (Ont. CA); and Patzner v. Piller Sausages & Delicatessens Ltd., [1990] 19 ACWS (3d) 536 (Ont. DC). Cases in which intoxication caused performance problems include the following: MacDonald v. Azar, 1947 CanLII 312 (NSSC) (intoxication led to poor performance); and Cox v. Canadian National Railway Company (1988), 84 NSR (2d) 271 (SC). 36. See, e.g., Bannister v. General Motors of Canada Ltd., 1998 CanLII 7151 (Ont. CA); Foerderer v. Nova Chemicals Corporation, 2007 ABQB 349; Fleming v. Ricoh Canada Inc., 2003 CanLII 2435 (Ont. Sup Ct J); and Clarke v. Syncrude Canada Ltd., 2013 ABQB 252.
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Chapter 9 Implied and Ancillary Employment Contract Terms 151 37. Simpson v. Consumers’ Assn. of Canada, 2001 CanLII 23994 (Ont. CA); and Gonsalves v. Catholic Church Extension Society of Canada, 1998 CanLII 7152 (Ont. CA). 38. Bannister v. General Motors of Canada, supra note 36; and Alleyne v. Gateway Co-operative Homes Inc., 2001 CanLII 28308 (Ont. Sup Ct J). 39. Smith v. Baker & Sons, [1891] AC 325. See also Ainslie Mining & Railway Co. v. McDougall, [1909] 42 SCR 420; Matthews v. Kuwait Bechtel Corp., [1959] 2 QB 57; Marshment v. Borgstrom, [1942] SCR 374; and Regal Oil & Refining Co. et al. v. Campbell (1937), 2 DLR 609. See also the discussion in E. Tucker, “The Law of Employer’s Liability in Ontario 1861 – 1900: The Search for a Theory” (1984) 22 Osgoode Hall LJ 213. 40. See Doorey, supra note 14. 41. In 1909, the Saskatchewan Court of Appeal ruled that employees are entitled to “decent treatment at the hands of the Master”: Berg v. Cowie, 1918 CanLII 319 (Sask. CA). In a 1974 British decision called Wilson v. Racher, supra note 13, Edmund-Davies LJ said that a “contract of service imposes upon the parties a duty of mutual respect.” 42. Sweeting v. Mok, 2015 ONSC 4154; Morgan v. Chukal Enterprises, 2000 BCSC 1163; Saunders v. Chateau Des Charmes Wines Ltd., 2002 CanLII 5114 (Ont. Sup Ct J); Stamos v. Annuity Research & Marketing Service Ltd., 2002 CanLII 49618 (Ont. Sup Ct J); and Ulmer Chevrolet Oldsmobile Cadillac Ltd. v. Kowerchuk, 2005 SKPC 18. See also Lamb v. Gibbs Gage Architects, 2011 ABPC 315; and Colistro v. Tbaytel, 2019 ONCA 197 at para 50 (noting the term could be applied to the employer’s decision to rehire an employee who years before had sexually harassed co-workers). 43. Hanni v. Western Road Rail Systems (1991) Inc., 2002 BCSC 402. 44. Vandooyeweert v. Jensten Foods Ltd., 2002 BCPC 442. 45. Prabhakaran v. Town of Fort Macleod, 2010 ABPC 35. 46. Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419. See also Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10, in which the Supreme Court of Canada recognized and developed an implied contractual obligation to perform the contract with honesty and in good faith; and Bhasin v. Hrynew, supra note 30 (the court recognized an “overriding principle,” not an implied term, that contracts will be performed in good faith and with honesty. Since this is not an implied term, the parties cannot contract out of it). See also Karmel v. Calgary Jewish Academy, 2015 ABQB 731; and D. Doorey, “Court of Appeal Confirms an Implied Obligation of Good Faith and Fair Dealing in Employment Contracts,” online, Law of Work (blog): .
47. McCamus, supra note 6 at 783-84. 48. On temporary layoffs, see McLean v. The Raywal Limited Partnership, 2011 ONSC 7330; Davies v. Fraser Collection Services Ltd., 2008 BCSC 942; Damery v. Matchless Inc., 1996 CanLII 5518 (NSSC); Trites v. Renin Corp, 2013 ONSC 2715; Stolze v. Addario, 1997 CanLII 764 (Ont. CA); Michalski v. Cima Canada Inc., 2016 ONSC 1925; Elsegood v. Cambridge Spring Service (2001) Ltd., 2011 ONCA 831; Bevilacqua v. Gracious Living Corporation, 2016 ONSC 4127; Collins v. Jim Pattison Industries Ltd., 1995 CanLII 919 (BCSC); Rodger v. Falcon Machinery (1965) Ltd., 2006 MBQB 216; and Vrana v. Procor Ltd., 2003 ABQB 98. On unpaid suspensions, see Carscallen v. FRI Corp., 2006 CanLII 31723 (Ont. CA); Henderson v. Saan Stores Ltd., 2005 SKQB 34; and Hanley v. Pease & Partners, [1915] 1 KB 698 (Div Ct). 49. See, e.g., Michalski v. Cima Canada Inc., supra note 48 (“The right to impose a layoff as an implied term must be notorious, even obvious, from the facts of a particular situation”). 50. Damery v. Matchless Inc., supra note 48; and Rodger v. Falcon Machinery, supra note 48. 51. Martellacci v. CFC/INX Ltd., 1997 CanLII 12327 (Ont. SC) at para 29: “It is difficult to imagine a more fundamental term of employment than that the employee be paid his or her salary.” 52. Carscallen v. FRI Corp., supra note 48. 53. See the discussion of quantum meruit in the employment context in Maver v. Greenheat Energy Corporation, 2012 BCSC 1139; O’Neill v. Rentokil Canada, 2000 BCSC 1520; Odo v. Island Publishers Ltd., 2000 BCSC 499; and O’Brien v. Buffalo Narrows Airways, 1998 CanLII 13764 (Sask. QB). 54. Honda Canada Inc. v. Keays, 2008 SCC 39; Wallace v. United Grain Growers Ltd., [1997] 3 SCR 701. See discussion and further cases in Chapter 14. 55. See Rahemtulla v. Vanfed Credit Union, 1984 CanLII 689 (BCSC) at para 22. 56. See Teskey v. Great West Life Assurance Co., 2001 ABQB 1060. 57. Some examples include Rahemtulla v. Vanfed Credit Union, supra note 55; Ellison v. Burnaby Hospital Society, 1992 CanLII 391 (BCSC); Starcevich v. Woodward’s Ltd., 1991 CanLII 330 (BCSC); Taylor v. Canada Safeway Ltd., 1998 CanLII 1472 (BCSC); McLaren v. Pacific Coast Savings Credit Union, 2001 BCCA 388; McLean v. The Raywal Limited Partnership, supra note 48; Corey v. Dell Chemists (1975) Ltd., 2006 CanLII 19435 (Ont. Sup Ct J); and Cheong v. Grand Pacific Travel & Trade (Canada) Corp., 2016 BCSC 1321. 58. See also Wiebe v. Central Transport Refrigeration (Man.) Ltd., supra note 35 at para 29; Starcevich v. Woodward’s
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152 Part II The Common Law Regime Ltd., supra note 57; Ellison v. Burnaby Hospital Society, supra note 57; Cheong v. Grand Pacific Travel & Trade (Canada) Corp., supra note 57. 59. Rahemtulla v. Vanfed Credit Union, supra note 55 at para 20. See also Fernandez v. The University of British
Columbia, 2018 BCSC 1993; Cheong v. Grand Pacific Travel & Trade (Canada) Corp., supra note 57; McLean v. The Raywal Limited Partnership, supra note 48; and Kohler Canada Co. v. Porter, 2002 CanLII 49614 (Ont. Sup Ct J).
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C H A P T E R 10
Termination by an Employer with “Reasonable Notice” LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 153 II. Employee Vulnerability and the Rules Governing Termination of Employment Contracts 155 III. A Brief History of the Origins of Implied Reasonable Notice 156 IV. How Modern Canadian Courts Assess an Employer’s Duty to Provide Reasonable Notice of Termination 158 A. The “Bardal Factors” 159 B. Summary of the Bardal Factors 160 C. Other Factors Affecting the Length of Reasonable Notice 165 IV. Chapter Summary 166 Questions and Issues for Discussion 166 Exercise 167 Notes and References 167
• Explain the development of the implied obligation on employers to provide employees with “reasonable notice” before terminating the employment contract. • Recognize the difference between the default model of termination of employment contracts in Canada and the United States. • Identify and explain the factors that judges consider in assessing how much notice is “reasonable.” • Recognize how changes in the economic and market subsystem can influence how judges assess reasonable notice.
I. Introduction Every employment contract must come to an end. In most cases, the termination of the contract gives rise to no legal disputes. For one reason or another, the parties decide to part ways, and the split is amicable. Maybe the employer even writes a nice reference letter to help the employee find a new job. Sometimes the employee retires, and there is a cake. However, most work-related disputes that reach the courts deal with issues arising from the termination of contracts. Over the next several chapters, we will explore how the common law regime deals with disputes about the termination of employment contracts. The end of the contract can come about in a variety of ways, as depicted in Figure 10.1, each of which can give rise to potential legal issues. In Chapter 8 we considered how the parties to an employment contract can define the conditions under which the contract terminates in expressed contract language, and how even then disagreements can arise that lead to lawsuits. In this chapter, we will consider the relatively common situation in which an employer terminates an employment contract by providing the employee with “reasonable notice” of termination. In the common law regime, an employer is presumed to have the right to terminate an employment contract at any time by giving the employee notice of the termination. There are exceptions, some of which we have considered already (fixed-term/fixed-task contracts) and some we will learn later (summary dismissal for cause in Chapter 12). However, most of the time employers terminate employment contracts by providing the employee with notice of that termination. As noted previously, notice can be working notice (the employee just keeps working until the notice period is over) or pay “in lieu of notice” (the employee goes home and the employer pays the employee what they would have earned had they kept working). 153
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154 Part II The Common Law Regime
FIGURE 10.1 Methods of Terminating Employee Contracts How the Contract Ends
Means of Termination
Common Legal Issues
Agreement of the parties in an expressed contract term (Chapter 8)
Fixed-term or fixed-task contract clause. Notice of termination clause. Retirement clause.
• Is the clause clear and unambiguous? • Does the clause violate a statute? • Is the contract term “unconscionable,” or does the changed substratum doctrine apply?
Frustration of contract (Chapter 11)
An unforeseen event makes performance of the contract impossible.
• Do circumstances fall within the doctrine of “frustration”?
Employer terminates with “reasonable notice” (Chapter 10)
The employer provides working “reasonable notice” of termination or “pay in lieu of that notice.”
Wrongful dismissal: • Did the employer provide enough notice? • How much notice is “reasonable notice”?
Summary dismissal: employer terminates for cause (Chapter 12)
The employer alleges the employee repudiated the contract, and so dismisses the employee with no notice.
Summary dismissal: • Did the employee breach the contract and if so was the misconduct serious enough to constitute repudiation of the contract?
Constructive dismissal (Chapter 13)
The employee alleges that the employer repudiated the contract, and so quits and claims damages for loss of entitlement to notice of termination.
• Did the employer repudiate the contract? If so, how much notice was required?
The employee terminates the employment contract.
• Did the employee really quit? • How much notice is required?
Resignations: Employee terminates with notice (Chapter 15)
The main legal question that arises is how much notice is required. The contract might provide the answer, as discussed in Chapter 8, in the form of a notice of termination clause, so we should always start by looking at the written contract if one exists. Provided that clause is unambiguous, does not run afoul of employment standards statutes, and is not unconscionable (see Chapter 8), the courts will enforce that clause. However, many employment contracts include no notice of termination clause, or they include a notice clause that is ruled to be unlawful by the courts for reasons discussed in Chapter 8. In these cases, the courts imply a term requiring “reasonable notice” of termination of the employment contract, as we learned in Chapter 9. This chapter examines how the courts determine what constitutes reasonable notice.
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Chapter 10 Termination by an Employer with “Reasonable Notice” 155
The question of whether an employer provided an employee with reasonable notice of termination is probably the most litigated issue in the common law of the employment contract.
II. Employee Vulnerability and the Rules Governing Termination of Employment Contracts Let’s begin our discussion with some brief but important observations about how concerns over employee vulnerability have influenced the approach of the courts to the termination of employment contracts. The legal rules that apply to the termination of employment contracts are derived from the rules of contract law more generally. Therefore, contract law concepts (such as repudiation of contract) are important, and we will need to learn about them. However, judges have also applied contract law concepts with an eye on the special nature of the employment relationship. A contract for human labour is not the same as a contract for renting or supplying goods, judges have stated, because work is so central to our sense of personal worth and identity. Moreover, workers are often in a position of vulnerability, both at the time the labour contract is initially created and particularly at the time when the contract is terminated. Box 10.1 describes important examples of how the Supreme Court of Canada has incorporated concerns over employee vulnerability in the work relationship into the exercise of interpreting employment contracts.1 The point is not that normal contract law principles are cast aside in employment contract disputes. It is subtler than that. Judges are mindful that, as the more powerful party, employers write most employment contracts, that little negotiation takes place when contracts are created, and that significant economic and social costs are often associated with job loss. This reality sometimes serves as a backdrop when judges are asked to assess whether an employment contract was terminated properly. Judges’ concern about protecting vulnerable employees, particularly in recent decades, has occasionally influenced judicial reasoning and outcomes, no more so than in their interpretations of contractual rules governing the termination of employment contracts.
BOX 10.1 » TALKING WORK LAW The Supreme Court of Canada and Employee Vulnerability Under Employment Contracts Comments by Supreme Court of Canada judges have had great influence on the development of the law of employment contracts. In a series of decisions over the past 30 years, the Supreme Court has emphasized the need for the common law of employment contracts to develop with consideration of the inherent vulnerability of employees. This outlook is perhaps most evident in cases relating to termination of the employment contract. For example, in Machtinger v. HOJ Industries Ltd. (see Box 8.6), the court referred to the “policy considerations” that ought to influence judges when interpreting employment contracts and made the following (now often-cited) observations:
Re Public Service Employee Relations Act (Alta.), [1987] 1 S.C.R. 313 …: Work is one of the most fundamental aspects in a person’s life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being. I would add that not only is work fundamental to an individual’s identity, but also that the manner in which employment can be terminated is equally important.*
[E]mployment is of central importance to our society. As [Chief Justice] Dickson … noted in Reference
Referring to the purpose of the Employment Standards Act, the Supreme Court in Machtinger also wrote:
repudiation of contract: A breach of contract that demonstrates an intention by the party to treat the contract as at an end and to no longer be bound by the contract.
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156 Part II The Common Law Regime The harm which the Act seeks to remedy is that individual employees, and in particular non-unionized employees, are often in an unequal bargaining position in relation to their employers. As stated by [Professor] Swinton …: [T]he terms of the employment contract rarely result from an exercise of free bargaining power in the way that the paradigm commercial exchange between two traders does. Individual employees on the whole lack both the bargaining power and the information necessary to achieve more favourable contract provisions than those offered by the employer, particularly with regard to tenure.† In Wallace v. United Grain Growers Ltd., decided five years after Machtinger, the Supreme Court again emphasized the inequality of bargaining power that defines employment contracts, citing with approval the following often-quoted passage from Oxford law professors Paul Davies and Mark Freedland, Kahn-Freund’s Labour and the Law: [T]he relation between an employer and an isolated employee or worker is typically a relation between a bearer of power and one who is not a bearer of
power. In its inception it is an act of submission, in its operation it is a condition of subordination.‡ The court then noted the following: The point at which the employment relationship ruptures is the time when the employee is most vulnerable and hence most in need of protection. In recognition of this need, the law ought to encourage conduct that minimizes the damage and dislocation (both economic and personal) that result from dismissal.§ As we work through the next several chapters that explore termination of employment contracts, notice how judges’ concern for employee vulnerability has shaped how the common law deals with termination of the employment contract. * Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986 at 1002. See also Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10 at para 83. † Ibid. at 1003. ‡ Wallace v. United Grain Growers Ltd., [1997] 3 SCR 701 at para 92. § Ibid. at para 95.
III. A Brief History of the Origins of Implied Reasonable Notice By the early 1890s, British judges had adopted the presumption that employment contracts were for an indefinite period, unless otherwise indicated in the contract or a statute.2 This replaced an earlier presumption that employment contracts were for a one-year fixed term, unless otherwise indicated. The 1911 edition of the leading British legal text Halsbury’s Laws of England summarized the state of employment law as follows: “If no custom nor stipulation as to notice exists, and if the contract of service is not one which can be regarded as a yearly hiring, the service is terminable by reasonable notice.”3 Canada inherited the British common law of the employment contract, but there was little “employment” and few employment contract lawsuits prior to the 1900s (see Chapter 5). Canada was a vast, underpopulated country with many opportunities for property ownership. When people performed work for others, they tended to do so only long enough to amass sufficient funds to purchase their own land. Although few employment contract lawsuits existed at the time, in 1898 the Supreme Court of Canada clarified that the presumption of annual hire (i.e., a contract duration of one year) did not exist in Canadian employment contracts, and that the matter of contract length was a factual issue to be decided based on the evidence in each case.4 In the 1908 decision Speakman v. City of Calgary, an Alberta judge ruled that an employee was entitled to reasonable notice of termination, and that the amount of notice depended on a variety of factors, including the employee’s “class” and “general standing in the community,” and “the probable facility or difficulty the employee would have in procuring other employment.”5 This reference to the “class” of employee may seem dated, but the idea that “lower classes” of workers deserve a lesser period of reasonable notice has played an important role in the development of the law in this area to modern times. So too has an assessment of the “difficulty the employee would have in procuring other employment,” as we will discuss shortly.
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Chapter 10 Termination by an Employer with “Reasonable Notice” 157
By the 1920s, the presumption that employment contracts were of indefinite duration and could be terminated by reasonable notice had taken root in Canada. This approach was confirmed in the 1936 decision Carter v. Bell, where the Ontario Court of Appeal ruled that “there is implied in the contract of hiring an obligation to give reasonable notice of an intention to terminate the arrangement.”6 It is important to emphasize again that the implied requirement to give reasonable notice only exists if the parties have not otherwise agreed to a different, lawful notice formula.
BOX 10.2 » TALKING WORK LAW The Divergent Approaches of Canada and the United States: “Reasonable Notice” Versus the “At Will” Employment Contract least not completely accurate, in his description of the law as An enduring mystery in comparative employment law is why it existed in the late 1800s.† Other scholars have rejected as Canada and the United States went in such diametrically opposed directions on the rules surrounding the termination of “myth” the claim that the courts adopted the “at will” presumpemployment contracts. tion because of a mistaken assumption that Wood was correct. Both countries inherited the British common law model. They argue that Wood was indeed correct, and American Canada ultimately adopted the presumption of indefinite-term courts had always treated employment contracts as “at will.”‡ employment contracts terminable by reasonable notice that Why the courts did so is a matter of debate among these had emerged in Britain by the late 1800s. However, American scholars. One argument is that the courts wanted to protect courts went in a different direction and developed a presumpemployers from attempts by the growing number of mid-level tion that employment contracts have a length of one second, managers in the late 19th century to claim their contracts terminable at any moment, with no notice required at all. This included some form of job security, either in the form of a fixed type of contract is known as an “at will” employment duration or a notice of termination requirement.§ contract. More than one theory exists on why Canada and the United States have taken such different paths. The predominant theory espoused by American legal scholars is that, until the late 1880s, American courts were either following the British presumption of annual hiring contracts or making no presumption of contract duration at all and treating duration of contract as a factual issue that turned on the facts in each case. Then, in 1877, lawyer Horace Wood published a book concluding that American law followed the presumption that employment contracts were “at will.”* Thereafter, American judges cited Wood’s text as the authority for the “at will” presumption, which requires no notice of termination. Many American scholars have since A threshing crew takes a break from their toil on a Saskatchewan farm, 1911. argued that Wood was in fact wrong, or at
“at will” employment contract: An employment contract in which either party may terminate the contract at any time, for any or no reason, with no notice to the other party. This is the default model in the United States. In Canada, employment standards legislation requires notice of termination and therefore prohibits at will contracts for employees covered by the legislation.
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158 Part II The Common Law Regime Another theory asserts that “free” workers or employers in 19th-century America made little demand for longer-term contracts or notice requirements. Due to labour shortages in agriculture, most workers preferred the flexibility of being able to leave at any time for a higher paying job or because they had earned enough to purchase their own land.** Employers were also happy not to have contractual obligations to keep workers when there was no work. This theory does not explain why Canadian courts adopted the reasonable notice rule under essentially the same labour market conditions. Another theory argues that US judges adopted “at will” to relieve the courts from having to deal with employment contract cases.# “At will” simplified employment contract law, reducing the need for court intervention. Finally, some scholars have argued that the British and Canadian courts adopted the reasonable notice rule as a means of controlling unions. If a contract included a requirement for employees to provide the employer with reasonable notice that they were quitting, then a sudden strike (walking off the job) was a breach of the contract. As a result, a notice requirement gave courts the option of punishing employees who struck as well as union organizers who encouraged workers to strike through the tort of “inducing breach of contract,” which we consider in Chapter 16.†† According to this theory, American unions used the “sudden strike” weapon far less frequently than British and Canadian unions and workers. As a result, little need existed for American employers and the courts to rely on notice provisions in contracts as a weapon to restrain the burgeoning labour movement. The “at will” rule in the United States has been subject to constant criticism over the years for leaving workers vulnerable
and without any job security. Many statutory and even judgemade restrictions on the rule have been developed over the years. Some scholars have argued that American law should move toward the Canadian/British system of requiring notice.‡‡ Others have supported the “at will” approach as being best for the economy and “individual liberty.”§§ * H. Wood, A Treatise on the Law of Master and Servant Covering the Relation, Duties, and Liabilities of Employers and Employees (Albany, NY: John D. Parsons Jr., 1877) at 272: “the rule is inflexible, that a general or indefinite hiring is prima facie a hiring at will, and if the servant seeks to make it out a yearly hiring, the burden is upon him to establish it by proof.” † See P. Shapiro & J. Tune, “Implied Contract Rights to Job Security” (1974) 26 Stan L Rev 335; S. Jacoby, “The Duration of Indefinite Employment Contracts in the United States and England: An Historical Analysis” (1982) 5 Comp Lab LJ 85; and B. Etherington, “The Enforcement of Harsh Termination Provisions in Personal Employment Contracts: The Rebirth of Freedom of Contract in Ontario” (1989 – 90) 35 McGill LJ 459. ‡ See, e.g., D. Ballam, “Exploding the Original Myth Regarding Employment-at-Will: The True Origins of the Doctrine” (1996) 17 Berkeley J Emp & Lab L 91; and J. Fienman, “The Development of the Employment-at-Will Rule Revisited” (1991) 23 Ariz St LJ 733. § Fienman, ibid. ** Ballam, supra note ‡ at 128-30. # A. Morriss, “Exploding Myths: An Empirical and Economic Reassessment of the Rise of Employment at Will” (1994) 59:3 Mo L Rev 683. †† Etherington, supra note † at 472-73; Jacoby, supra note † at 120-26. ‡‡ R. Arnow-Richman, “Mainstreaming Employment Contract Law: The Common Law Case for Reasonable Notice of Termination” (2013) 66 Fla L Rev 1513. §§ R. Epstein, “In Defense of the Contract at Will” (1984) 51 U Chicago L Rev 947.
IV. How Modern Canadian Courts Assess an Employer’s Duty to Provide Reasonable Notice of Termination A lawsuit by an employee alleging that an employer terminated an employment contract without providing the employee with reasonable notice is known as a wrongful dismissal lawsuit. How much notice is “reasonable,” and on what basis do judges make that decision? One option is to imagine what the parties themselves would have thought was reasonable, had they considered the issue, when they were making the contract. This approach was taken in the 1961 case of Lazarowicz v. Orenda Engines Ltd., in which the Ontario Court of Appeal stated: Opinions might differ as to what was reasonable, but in reaching an opinion a reasonable test would be to propound the question, namely, if the employer and the employee at the time of the hiring had addressed themselves to the question as to the notice that the employer would give in the event of him terminating the employment, or the notice that the employee would give on quitting, what would their respective answers have been?7
wrongful dismissal: A type of lawsuit by an employee against a former employer alleging that the employer terminated their contract without complying with the implied term in the contract requiring “reasonable notice.”
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Chapter 10 Termination by an Employer with “Reasonable Notice” 159
The court of appeal is saying here that the requirement to provide reasonable notice is a contract term implied “in fact” (see Chapter 9). On this approach, judges must (metaphorically) hop in a time machine and go back to the time of the formation of the contract to ask what the parties would have agreed to had they bothered to write down a term explaining how much notice should be given to the other party in the event of a termination of the contract.8 Judges still sometimes refer to the supposed intentions of the parties when they determine the amount of reasonable notice.9
A. The “Bardal Factors” However, the approach in Lazarowicz raises the obvious question: How does the judge know what the parties would have agreed to back when they bargained the contract? In most cases, as we have discussed before, the employer would probably draft a notice of termination clause that suits its own interests, and the employee would simply sign on the dotted line. Therefore, a judge might reasonably conclude that if the parties had bothered to write a notice term down, they would have written one requiring no notice at all—like an American “at will” contract—or at least very little notice. Although that outcome is fine from a purely contract law perspective, it would also leave employees with little or no opportunity to plan for the end of the contract by starting to look for new work. Most Canadian judges have preferred to approach the calculation of reasonable notice from a policy perspective, seeking to balance the interest of employers in workplace flexibility and employees’ interest in having a “cushion” to plan for the transition between jobs.10 That approach has been captured by the application of the Bardal factors. Bardal v. Globe & Mail Ltd. described the factors judges are to consider in calculating reasonable notice. Justice McRuer ruled that in assessing how much notice is “reasonable,” judges should use their judgment, keeping in mind a number of key criteria, which are presented in Box 10.3. Although the Bardal decision was issued by a lower level of court than Lazarowicz, the Bardal approach was later approved by appellant courts, and it has become the leading Canadian authority in guiding judges on the assessment of reasonable notice.11
BOX 10.3 » CASE LAW HIGHLIGHT Factors to Consider in Assessing Reasonable Notice Bardal v. Globe & Mail Ltd. 1960 CanLII 294 (Ont. Sup Ct J) Key Facts: Bardal was an advertising manager with 16.5 years of service when his contract was terminated. His employment contract was silent (it said nothing) about how much notice was required to terminate the contract. Issue: How much notice of termination was the employer obligated to provide Bardal? Decision: The court ruled that one year was “reasonable notice” considering how long Bardal had been employed, his
position, and other factors. Here is the passage from that decision, which is now cited in most Canadian cases in which the length of reasonable notice is being assessed: 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.
Bardal factors: Criteria considered by Canadian courts in assessing the length of time required by the implied obligation to provide “reasonable notice” of termination of an employment contract. The name comes from the leading decision called Bardal v. Globe and Mail Ltd., decided in 1960.
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160 Part II The Common Law Regime The Bardal approach makes no mention of the “intention of the parties.” Factors such as “availability of similar employment” and “length of service” are not even known at the time the parties are negotiating the contract.12 The Bardal factors require judges to survey the situation at the time of the termination and to calculate a reasonable period of notice based on what they see and think is fair and reasonable in the circumstances, considering a list of factors.13 The Ontario Court of Appeal has described the process of determining reasonable notice as “an art not a science” and therefore “there is no one ‘right’ figure for reasonable notice. Instead, most cases yield a range of reasonableness.”14
B. Summary of the Bardal Factors The purpose of requiring employers to provide the employee with reasonable notice is to give the employee an opportunity to prepare for job loss and to seek new employment.15 Therefore, the factors listed in the Bardal decision are intended to act as a proxy for assessing how long it might reasonably take the dismissed employee to find comparable alternative employment considering the employee’s circumstances. Reasonable notice assigns part of the social and economic costs of unemployment to employers, hopefully reducing the extent to which dismissed workers need to draw on public assistance schemes like Employment Insurance and welfare. This does not mean that the period of notice will match the precise time it actually takes the employee to find a new job. Rather, judges are supposed to consider the factors listed in Bardal and then decide “what appears to be logical, judicious, fair, equitable, sensible, and not excessive,” according to the judge.16 Table 10.1 provides a quick, cross-country sample of some recent wrongful dismissal lawsuits and the amounts of reasonable notice ordered. There is also an exercise at the end of the chapter that allows you to estimate reasonable notice periods. TABLE 10.1 Recent Examples of Reasonable Notice Periods Order in Canada Case Name
Details
Reasonable Notice Ordered
Saikaly v. Akman Construction Ltd., 2019 ONSC 799
Office manager, 12 years’ service, age 60
24 months
Spalti v. MDA Systems Ltd., 2018 BCSC 2296
Sales executive, 13.5 years’ service, age 55
16 months
Coppola v. Capital Pontiac Buick Cadillac GMC Ltd., 2011 SKQB 318
Account manager, 23 months’ service, age 38
6 months
Bohnet v. Rebel Energy Services Ltd., 2018 ABPC 131
Manager, rentals division, 3.5 years’ service, age 47
4 months
Salkeld v. 7-Eleven Canada, Inc., 2010 MBQB 157
Sales clerk, 27 years’ service, age 50
14 months
Welch v. Ricoh Canada Inc., 2017 NSSC 174
Service technician, 25 years’ service, age 47
18 months
MacKinnon v. Helpline Inc., 2015 NBQB 159
Manager/coordinator, 16 years’ service, age 51
18 months
1. Length of Service The most important factor in assessing the length of reasonable notice is the employee’s length of service.17 The longer an employee’s service with an employer, the longer the period of reasonable notice required to terminate the employment contract. One judge explained that “a longterm employee has a moral claim which has matured into a legal entitlement to a longer notice
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Chapter 10 Termination by an Employer with “Reasonable Notice” 161
period.”18 In practice, Canadian courts have imposed a “soft cap” on reasonable notice of a maximum of 20 to 24 months, and only in exceptional cases involving very long-service employees do courts order greater than 24 months’ notice.19 The majority of awards are for 12 months’ notice or less. Some judges have tried to simplify the exercise of assessing notice periods by applying a general “rule of thumb” approach based on one month’s notice for each year of employment, and then adjusting upward or downward if special factual circumstances are involved.20 However, appellant courts have rejected that approach for the reason presented in the 1999 Ontario Court of Appeal case of Minott v. O’Shanter Development Company Ltd.: “a rule of thumb that an employee is entitled to one month’s notice for every year worked should not be applied. To do so would undermine the flexibility that must be used in determining the appropriate notice period.”21 Employment lawyer Barry Fisher examined hundreds of Canadian reasonable notice cases and found evidence of the “rule of thumb” measure for employees dismissed within their first three years of employment, but little evidence of that pattern for employees with longer service.22
2. Age of the Employee The courts have noted that middle-aged and older workers often have a more difficult time finding alternative employment than younger workers.23 This observation appears to be reflected in reasonable notice awards. In a study of reasonable notice periods ordered by courts of appeal, Professor Kenneth Thornicroft (University of Victoria) found that the age of the employee is significant for employees over the age of 50, but not as important for employees younger than 50.24 He found that employees over age 50 received an additional three months’ notice. 3. Character of the Employment Managerial workers have traditionally been granted longer periods of notice than non- managerial workers. This distinction dates back to the British class system, in which the courts assumed that higher-ranking members of society deserve greater employment contract protections. Recall the words of the Alberta court in the 1908 Speakman case, cited above, about the length of notice being affected by the employee’s “class” and “general standing in the community.” In modern times, the distinction between managerial and non-managerial employees has been justified on the theory that managerial employees will have a harder time finding similar alternative employment than will lower‑level employees.25 This presumption took the form of a court-created soft cap on reasonable notice periods whereby non-managerial employees would usually not be entitled to a reasonable notice period longer than 12 months, whereas managerial employees could receive up to 24 months. However, in recent years this distinction has been questioned. The leading case that affirmed the practice of treating managerial and non-managerial employees differently is the 1995 Ontario Court of Appeal case of Cronk v. Canadian General Insurance Co.26 Cronk was a 55-year-old clerk who was dismissed after more than 29 years’ service. She argued that the period of reasonable notice should be 20 months, far more than the usual cap of 12 months applied by the courts for non-managerial employees. The lower court judge (Justice James MacPherson) concluded that it could not be assumed that non-managerial employees would always have an easier time finding alternative employment. He believed that Cronk would have a difficult time finding another job given her age and lack of transferrable skills. He ordered 20 months’ reasonable notice.27 The employer appealed, and the Ontario Court of Appeal overruled Justice MacPherson. It reaffirmed the “established principle that clerical employees are generally entitled to a shorter notice period than senior management or specialized employees who occupy a high rank in the
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162 Part II The Common Law Regime organization.”28 The court of appeal ruled that it would be too disruptive to employers to change the presumption that non-managerial workers receive less notice: The result arrived at [by Justice MacPherson] has the potential of disrupting the practices of the commercial and industrial world, wherein employers have to predict with reasonable certainty the cost of downsizing or increasing their operations, particularly in difficult economic times. As well, legal practitioners specializing in employment law and the legal profession generally have to give advice to employers and employees in respect of termination of employment with reasonable certainty.29
The court of appeal ruled that Cronk was entitled to 12 months’ notice, the maximum amount of notice “in her category.” However, a few years later, cracks again began to appear in the distinction. In the case of Minott v. O’Shanter Development Company Ltd., the Ontario Court of Appeal awarded a nonmanagerial maintenance worker 13 months’ reasonable notice.30 That employee had only 11 years’ service, compared with Cronk’s 29 years. In explaining the different outcomes, the court of appeal stated that Cronk dealt only with clerical workers and did not establish an upper limit for all non-managerial employees. The court of appeal also questioned whether having a cap for non-managerial workers “detracts from the flexibility of the Bardal test and restricts the ability of courts to take account of all factors relevant to each case and of changing social and economic conditions.” Finally, the issue came before the Ontario Court of Appeal again in the 2011 case of Di Tomaso v. Crown Metal Packaging Canada LP, which is discussed in Box 10.4. Justice MacPherson, now sitting on the court of appeal, wrote the decision.
BOX 10.4 » CASE LAW HIGHLIGHT Should Managerial Employees Get More Reasonable Notice Than Non-Managerial Employees? Di Tomaso v. Crown Metal Packaging Canada LP 2011 ONCA 469 Key Facts: Di Tomaso had worked 33 years as a non-managerial mechanic for Crown Metal Packaging Canada LP and was 62 years old at the time of his dismissal. The lower court judge awarded him 22 months’ notice. The employer appealed and argued that as a non-managerial employee, Di Tomaso was only entitled to a maximum of 12 months’ notice, as per the ruling in the Cronk case. (In a funny twist, Justice James MacPherson was by this time sitting on the court of appeal and wrote the decision for the court in Di Tomaso.) Issue: Should the amount of reasonable notice be capped at 12 months for a non-managerial employee?
Decision: No. No automatic cap exists on reasonable notice damages for non-managerial employees. Justice MacPherson cited Minott as authority for this conclusion. He then repeated what he stated in his original Cronk ruling: that there is no logical reason why the courts should assume that “unskilled employees deserve less notice because they have an easier time finding alternative employment. The empirical validity of that proposition cannot simply be taken for granted.” Each case must be assessed on its own with consideration of the facts and without reliance on presumptions about whether managerial employees will have a harder time finding alternative employment. The court of appeal upheld the lower court decision to award 22 months’ notice to Di Tomaso.
In the Di Tomaso decision, the court of appeal noted that the “character of employment” was of “declining relative importance” in assessing reasonable notice in Canada. Judges in Ontario are no longer to assume that non-managerial employees will automatically get new jobs quicker as a justification for awarding lesser reasonable notice periods, as recently confirmed by the Ontario Court of Appeal in a case called Oudin v. Le Centre Francophone de Toronto:
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Chapter 10 Termination by an Employer with “Reasonable Notice” 163 The parties exerted a significant amount of energy disputing the true nature of the plaintiff ’s employment and the precise degree to which he could be characterized as “managerial.” It would appear that there remains a suspicion among some that higher-level employees automatically receive greater notice periods than lower level employees. That suspicion is misplaced. Some highly placed managers are highly marketable and can reasonably expect to be placed quite quickly while some unskilled workers may find unemployment uncomfortably long if they find themselves in a community with few options. Character of employment is a factor, but is only one of several factors and there is no presumption that lower level employees necessarily have an easier time seeking re-employment than higher level employees.31
Since the Di Tomaso decision, courts have been more inclined to award periods of notice longer than 12 months to non-managerial employees, particularly in Ontario but in other provinces as well.32 While in theory the approach adopted in Di Tomaso could also lead courts to order lower notice awards for managerial employees, there is little evidence that this is happening (at least so far).
BOX 10.5 » TALKING WORK LAW The Law of Work Framework: Gender and Reasonable Notice Is it a coincidence that the clerical employee in Cronk was a woman, and the employees in both the Di Tomaso and Minott decisions were men? The employee’s gender is not listed as a factor in Bardal, and judges rarely list the employee’s gender as a relevant factor in assessing the length of reasonable notice. However, in a recent study, Professor Thornicroft found that women receive smaller reasonable notice awards: Although an employee’s gender should not be a relevant factor in assessing reasonable notice, I found a negative correlation between female gender and size of award. Female plaintiffs constituted slightly more than 20% (26 individuals) of the employees in my study, and the results suggest that female employees received about 1.5 to 1.7 months’ less notice than comparable male employees.* In the lower court decision in the Cronk case (considered above), Justice MacPherson ordered 20 months’ notice for a 56-year-old female clerk. In his reasons, he noted that women have a more difficult time finding employment than men as well as balancing family and career: The London Life Freedom 55 television commercial paints an attractive picture of the 55-year-old professional woman chucking it all and retreating, with Mustang convertible and surfboard in the rear, to a tropical paradise for a long and deserved retirement. Alas, for most women this commercial is a fantasy. The statistically average Canadian woman struggles to find a job, she receives about 60-70 per cent of the wages received by men doing the same work, she strives to balance family and career, she worries about losing her job, and if she does lose it she desperately seeks to obtain a new job. Edna Cronk
was 55 years old when she was fired. But after long years of clerical work at a very modest salary, it is almost certain that she was not able to contemplate the Freedom 55 Mustang convertible and surfboard. She needs another job.† Justice MacPherson’s comments and his decision in the Cronk case demonstrate how a judge can be influenced by developments and changing attitudes within the broader social, cultural, and religious subsystem, introduced in Chapter 2. Justice MacPherson recognized that women play a greater role than men in Canadian society in caring for family and that this commitment is reflected in women’s labour market experiences. This understanding was the basis for his rejection of the historical assumption that a woman in a non-professional job will more easily find new employment than a man in a managerial position. Justice MacPherson’s ruling in Cronk was overruled by the Ontario Court of Appeal in 1995, but in the 2011 case of Di Tomaso (see Box 10.4) the same court appears to have been persuaded by Justice MacPherson’s perspective. In wrongful dismissal cases, it is now relevant for an assessment of reasonable notice to consider whether a female employee’s potential to find new employment is affected by her need to balance the demands of family and work. This evolution in wrongful dismissal law reflects heightened social awareness of the challenges women face in meeting both work and family obligations. Only time will tell whether the gender gap in reasonable notice awards found by Professor Thornicroft will decrease. * K.W. Thornicroft, “The Assessment of Reasonable Notice by Canadian Appellate Courts from 2000 to 2011” (2013) 1 CLELJ 1 at 29. † Cronk v. Canadian General Insurance Co., 1994 CanLII 7293 (Ont. Sup Ct J) at para 20.
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164 Part II The Common Law Regime
4. Availability of Similar Employment The final factor listed in Bardal was the “availability of similar employment, having regard to the experience, training and qualifications of the servant.” That factor refers to the labour market into which the dismissed employee will be entering in the search for a new job, as well as the particular skill set the employee brings to the job search. An employee with skills that are in wide demand (like a cashier, for example) would be expected to have an easier time finding alternative employment in their field than someone with very specialized skills not widely in demand (like an astronaut). Judges have wrestled with how much weight to give labour market conditions in assessing reasonable notice. If reasonable notice is a proxy for how much time it should take a dismissed employee to find similar alternative employment, should employees be awarded longer periods of notice in poor economic times, and shorter periods when jobs are plentiful? The courts do not tend to order shorter periods of notice in periods of economic boom, but the “duty to mitigate” discussed in Chapter 14 may result in the employee receiving less money in reasonable notice damages if they get a new job quickly. The courts have more difficulty sorting out how to deal with employees dismissed during poor economic conditions. There are competing arguments. On the one hand, an employee dismissed in an economic downturn will likely have a harder time finding new employment than an employee dismissed in strong economic times. This view has led some judges to award longer notice periods during depressed economic periods. For example, in the case of Lim v. Delrina (Canada) Corp., an accountant was dismissed in 1992, a particularly bad time for the accounting profession. An Ontario court found that the depressed economic time was a relevant factor in assessing the length of notice required. The court ruled that three months’ notice would have been awarded in normal circumstances, but then it added one additional month’s notice “given the well known depressed economic conditions of the time.”33 On the other hand, employers may also be fighting for their survival in poor economic times, and reducing their payroll might be necessary to avoid bankruptcy. In the 1982 case of Bohemier v. Storwal International Inc., an Ontario court ruled that notice periods must consider the interests of both employers and employees.34 Extending notice periods in bad economic conditions could unreasonably restrict employers’ ability to reduce the workforce at a reasonable cost and would amount to the employer effectively insuring the employee against poor market conditions. Some judges interpreted Bohemier as authority for the proposition that notice periods should not be extended in difficult economic times or, more controversially, that notice periods should be reduced when the employer is facing economic difficulties.35
BOX 10.6 » CASE LAW HIGHLIGHT Should the Employer’s Financial Situation Be Considered in Assessing the Length of Reasonable Notice? Michela v. St. Thomas of Villanova Catholic School 2015 ONCA 801 Key Facts: Three teachers at a private school had been employed for between 8 to 13 years pursuant to a series of oneyear fixed contracts. In 2013, the employer informed them that due to falling enrolments at the school, their contracts would not be renewed. The employer claimed the employees were not entitled to notice of termination because they had been
employed on a one-year fixed-term contract that had simply come to an end. The employees argued that they had really been employed continuously pursuant to an indefinite-term contract that included an implied term requiring reasonable notice of termination. The lower court judge applied the reasoning from the case Ceccol v. Ontario Gymnastics (Box 8.4) and ruled that the one-year fixed-term contracts were ambiguous since they also suggested that the relationship would continue beyond one year, which they did. Considering all of the facts,
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Chapter 10 Termination by an Employer with “Reasonable Notice” 165 the court ruled that the teachers were employed under an indefinite-term contract and entitled to reasonable notice. The judge ruled that reasonable notice would be 12 months applying the normal Bardal factors, but he then reduced the amount to 6 months on the basis that the employer was in financial peril due to falling student numbers. He ruled that the “character of employment” included consideration of the employer’s circumstances. The employees appealed that ruling. Issue: Are the employer’s financial circumstances relevant to assessing the period of reasonable notice? Decision: No. The court of appeal discussed the meaning of “character of employment”: It suffices to say that the character of the employment, like the other Bardal factors, is concerned with the circumstances of the wrongfully dismissed employee. It is not concerned with the circumstances
of the employer. An employer’s financial circumstances may well be the reason for terminating a contract of employment—the event that gives rise to the employee’s right to reasonable notice. But an employer’s financial circumstances are not relevant to the determination of reasonable notice in a particular case: they justify neither a reduction in the notice period in bad times nor an increase when times are good. … Bohemier does not hold, and this court has never held, that an employer’s financial difficulties justify a reduction in the notice period. It does no more than to hold that difficulty in securing replacement employment should not have the effect of increasing the notice period unreasonably. … The court of appeal ordered the lower court judge’s original assessment of 12 months’ notice be reinstated.
Judges do still occasionally extend the notice period by a small amount when an employee is terminated during a serious economic downturn.36 However, in the 2015 decision described in Box 10.6, the Ontario Court of Appeal clarified that the employer’s economic circumstances are not a relevant factor in assessing reasonable notice.37
C. Other Factors Affecting the Length of Reasonable Notice The courts have said that the list of factors in Bardal is not exhaustive, meaning that judges could add new factors affecting the length of reasonable notice. One factor that has been added to the list is inducement. The courts have extended the period of reasonable notice when an employee had been induced to quit an existing job with promises of secure employment and is then dismissed from the new job. This is what happened in the case of Wallace v. United Grain Growers Ltd., in which the Supreme Court of Canada stated: [M]any courts have sought to compensate the reliance and expectation interests of terminated employees by increasing the period of reasonable notice where the employer has induced the employee to “quit a secure, well-paying job … on the strength of promises of career advancement and greater responsibility, security and compensation with the new organization.”38
Inducement may justify a longer notice period when the employee’s decision to quit a secure job is accompanied by expectations of future job security that do not turn out to be accurate and that can be attributed to words or conduct of the recruiting company.39
inducement: A factor considered in assessing the length of reasonable notice that should be awarded to an employee whose employment contract is terminated by employer A after employer A encouraged or enticed the employee to quit a prior job with company B to come to work for employer A.
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166 Part II The Common Law Regime Some attempts to introduce new factors to the list have ultimately failed. For example, the Supreme Court of Canada rejected a line of cases in which lower court judges had reduced the period of reasonable notice when they believed the employee had engaged in misbehaviour that was not quite serious enough to amount to cause for summary dismissal without notice (“near cause”).40
IV. Chapter Summary An employer can terminate an indefinite-term employment contract by giving the employee notice. The contract itself might indicate how much notice is required and, provided the amount does not violate applicable employment standards legislation, the expressed contract term would govern. However, absent a legally compliant notice clause, the courts imply a duty to provide “reasonable notice.” This chapter explored the origins and application of “reasonable notice” by common law judges. We learned that the courts are guided by a list of factors set down in the 1960 case of Bardal v. Globe & Mail Ltd. This approach gives judges considerable discretion and also adds uncertainty to the termination process, since neither employer nor employee knows for sure how much notice a court could order. However, by reading prior decisions, it is possible to estimate the range of possible notice by considering the factors in Bardal.
QUESTIONS AND ISSUES FOR DISCUSSION 1. What is the purpose of requiring employers to provide employees with reasonable notice? 2. Does every employment contract in Canada require the employer to provide the employee with reasonable notice of termination? Explain your answer. 3. What rationale has justified the courts granting longer periods of reasonable notice to managerial employees over non-managerial employees? Explain why in recent years courts have begun to question this rationale. 4. Do Canadian courts consider the employer’s financial situation when assessing the period of reasonable notice? 5. Explain the difference between the Canadian and American approach to the termination of employment contracts.
APPLYING THE LAW 1. Janice is the human resources manager for ABC Computers Inc., a small computer rental company with 25 employees. The company needs to downsize its workforce and has decided to terminate two non-union employees: Davidov, a 55-year-old technical worker with 15 years’ service, and Chloe, a 28-year-old middle manager with 5 years’ service. Neither employee had signed an employment contract. Janice has asked you to help her decide how much notice she is required to provide each employee. a. Based on what you have learned in this chapter, try to estimate what amount of reasonable notice a court might order for both employees and explain your thinking. b. Now go a website called “Severance Pay Calculator”: . This website is created by a Toronto law firm and it
uses a software program that estimates how the courts will apply the Bardal factors. Enter the information for both Davidov and Chloe in the program when prompted. You can skip the page that asks about the employee’s salary. What amount of reasonable notice does the severance calculator tell you that a court would order? Were you close in your estimate? c. Finally, turn to Table 20.1 in Chapter 20, which examines how termination of employment contracts is dealt with under employment standards legislation. Locate your province and identify how much notice would be required under the statute to terminate Davidov and Chloe. How does the amount of “reasonable notice” compare with the amount of minimum notice required by employment standards legislation?
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Chapter 10 Termination by an Employer with “Reasonable Notice” 167
EXERCISE 1. To better understand the factors that influence reasonable notice, try the following exercise: a. Go to the CanLII home page: . b. In the “Document text” search box, type “reasonable notice.” That search will produce thousands of cases in which employees have sued their former employers for failing to provide reasonable notice of termination. Select three of those cases and read them. c. Prepare a case summary for each case that includes the key facts, the issue, and the decision. In each case summary, be sure to describe the factors the court considered in assessing the amount of reasonable notice required.
NOTES AND REFERENCES 1. In addition to the cases cited in Box 10.1, see also the following cases, which emphasize employee vulnerability and the power imbalance that defines employment contracts: Bowes v. Goss Power Products Ltd., 2012 ONCA 425; Reference Re Public Service Employee Relations Act (Alta.), [1987] 1 SCR 313; and Braiden v. La-Z-Boy Canada Limited, 2008 ONCA 464. 2. Lowe v. Walter, [1892] 8 TLR 358. Much of the history recounted in this chapter is taken from C. Mummé, “That Indispensable Figment of the Legal Imagination: The Contract of Employment at Common Law in Ontario, 1890s – 1979” (PhD thesis, York University, 2013). 3. Earl of Halsbury, The Laws of England, vol 20 (London: n.p., 1911) at 96. 4. Bain v. Anderson & Co., [1898] 28 SCR 481. 5. Speakman v. City of Calgary (1908), 9 WLR 264 (Alta. CA). 6. Carter v. Bell & Sons (Canada) Ltd., 1936 CanLII 75 (Ont. CA). The earlier cases in which “reasonable notice” was applied include Pollard v. Gibson, 1924 CanLII 398 (Ont. CA); and Messer v. Barrett Co. Ltd. (1926), 59 OLR 566 (SC (AD)). The Supreme Court of Canada confirmed the presumption that Canadian employment contracts require reasonable notice for termination unless otherwise specified in Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986. See also Prozak v. Bell Telephone Co. of Canada, 1984 CanLII 2065 (Ont. CA). 7. Lazarowicz v. Orenda Engines Ltd., 1960 CanLII 151 (Ont. CA). 8. In her concurring judgment in Machtinger v. HOJ Industries Ltd., supra note 6 at 1012-13, Justice McLachlin of the Supreme Court of Canada wrote that the reasonable notice term is implied “in law as a necessary incident” of employment contracts rather than a term implied “in fact.” This would mean that the intention of the parties is not at issue. 9. See Pelech v. Hyundai Auto Canada Inc., 1991 CanLII 920 (BCCA), quashing an award of four months’ notice for a
shipping employee and substituting a notice period matching the statutory minimum: “If at the outset of his employment, the employer had been asked what notice must you give if you terminate him, I should think that the answer would have been ‘whatever the law requires.’ If the employee had been asked what notice must you give if you want to leave, he would be surprised to have been told he needed to give more than a week or two.” See also G. England, Individual Employment Law, 2nd ed (Toronto: Irwin Law, 2008) at 300-1. 10. England, supra note 9 at 311. See also Medis Health and Pharmaceutical Services v. Bramble, 1999 CanLII 13124 (NBCA). 11. The Bardal approach was approved by the Supreme Court of Canada in Machtinger v. HOJ Industries Ltd., supra note 6, and by various provincial courts of appeal: Wiebe v. Central Transport Refrigeration (Man.) Ltd., 1994 CanLII 6406 (MBCA); Giza v. Sechelt School Bus Service Ltd., 2012 BCCA 18; and Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469. 12. This point is made by Justice McLachlin in Machtinger v. HOJ Industries Ltd., supra note 6 at 1009. 13. Panimondo v. Shorewood Packaging Corporation, 2009 CanLII 16744 (Ont. Sup Ct J). 14. Minott v. O’Shanter Development Company Ltd., 1999 CanLII 3686 (Ont. CA) at para 62. 15. McKay v. Camco Inc., 1986 CanLII 2544 (Ont. CA) at 267; and Cronk v. Canadian General Insurance Co., 1995 CanLII 814 (Ont. CA). 16. Erskine v. Viking Helicopter Ltd. (1991), 35 CCEL 322 (Ont. Gen Div) at 326. 17. K.W. Thornicroft, “The Assessment of Reasonable Notice by Canadian Appellate Courts from 2000 to 2011” (2013) 17 CLELJ 1 at 29. 18. Ansari v. B.C. Hydro & Power Auth., 1986 CanLII 1023 (BCSC) at 39.
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168 Part II The Common Law Regime 19. Wallace v. United Grain Growers Ltd., [1997] 3 SCR 701; and Webster v. British Columbia (Hydro and Power Authority), 1992 CanLII 1087 (BCCA) at 109. 20. McKay v. Eaton Yale Ltd., 1996 CanLII 8234 (Ont. Sup Ct J); and Bullen v. Protor & Redfern Ltd., 1996 CanLII 8135 (Ont. Sup Ct J). 21. Minott v. O’Shanter Development Company Ltd., supra note 14. See also Kerfoot v. Weyerhaeuser Company Limited, 2013 BCCA 330; and Capital Pontiac Buick Cadillac GMC Ltd v. Coppola, 2013 SKCA 80. 22. B. Fisher, “Revisiting Reasonable Notice Periods in Wrongful Dismissal Cases: 2006 Edition,” online (pdf): . 23. McKinney v. University of Guelph, [1990] 3 SCR 229 at para 92; Thornicroft, supra note 17 at 27. 24. Thornicroft, supra note 17 at 20. See also K.W. Thornicroft, “Severance Pay and the Older Worker: Negotiated Versus Litigated Outcomes Under Canadian Common Law” (2015) 52-4 Alb L Rev 779. 25. Bohemier v. Storwal International Inc., 1983 CanLII 1956 (Ont. CA); Cronk v. Canadian General Insurance Co., supra note 15; and Ansari v. B.C. Hydro & Power Auth., supra note 18. 26. Cronk v. Canadian General Insurance Co., supra note 15. 27. Cronk v. Canadian General Insurance Co., 1994 CanLII 7296 (Ont. Sup Ct J). 28. Cronk v. Canadian General Insurance Co., supra note 15. 29. Ibid. 30. Minott v. O’Shanter Development Company Ltd., supra note 14. 31. Oudin v. Le Centre Francophone de Toronto, 2015 ONSC 6494 at para 61. 32. Cases in which non-managerial employees received greater than 12 months’ notice include the following: Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 (22 months); Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520 (20 months); AMEC Americas Limited v. MacWilliams, 2012 NBCA 46 (20 months); Systad v. Ray-Mont Logistics Canada Inc., 2011 BCSC 1202 (18 months); Patterson v. IBM Canada Limited, 2017 ONSC 1264 (18 months); Skov v. G&K Services Canada Inc., 2017 ONSC 6752 (18 months); and Welch v. Ricoh Canada Inc., 2017 NSSC 174 (16 months).
Thornicroft, supra note 17 at 20-21, notes that between 2000 and 2011, “character of employment” continued to influence the length of reasonable notice periods. Clerical/ labour employees received from 1.4 to 3.6 months’ less notice than higher level employees. However, the period of that study mostly pre-dates the move toward placing less influence on “character of employment” discussed in the series of cases mentioned in the chapter. 33. Lim v. Delrina (Canada) Corp., 1995 CanLII 7271 (Ont. SC) at para 31. Other cases that have considered poor economic conditions as a factor justifying extended notice periods include Squires v. Corner Brook Pulp & Paper Ltd. and Manuel, 1994 CanLII 10373 (Nfld. SC); Hunter v. Northwood Pulp and Timber Ltd., 1985 CanLII 443 (BCCA); Anderson v. Haakon Industries (Canada) Ltd., 1987 CanLII 2406 (BCCA); Valley Forest Products Ltd. v. Dey, 1995 CanLII 5582 (NBCA); Sicard v. Timminco Ltd. (1994), 3 CCEL (2d) 50 (Ont. Gen Div); Garcia v. Crestbrook Forest Industries Ltd., 1993 CanLII 1412 (BCCA); and Hampton Securities Limited v. Dean, 2018 ONSC 101. 34. Bohemier v. Storwal International Inc., supra note 25. 35. See, e.g., Shuya v. Azon Canada Inc., 1995 CanLII 9084 (Alta. QB); Heinz v. Cana Construction Co., 1987 CanLII 3203 (Alta. QB); Erskine v. Viking Helicopter Ltd., supra note 16; and Gristey v. Emke Schaab Climatecare Inc., 2014 ONSC 1798. 36. See authorities at supra note 33. 37. Michela v. St. Thomas of Villanova Catholic School, 2015 ONCA 801; and Nielsen v. Sheridan Chevrolet Cadillac Ltd., 2016 ONSC 1843. 38. Wallace v. United Grain Growers Ltd., supra note 19 at paras 83, 85. 39. Ibid.; see also Alcatel Canada Inc. v. Egan, 2006 CanLII 108 (Ont. CA); Craig v. Interland Window Mfg. Ltd., 1993 CanLII 1821 (BCSC); Nicholls v. Columbia Taping Tools Ltd., 2013 BCSC 2201; Wright v. Feliz Enterprises Ltd., 2003 BCSC 267 (it is not inducement if the employee and employer were equally interested in forming a new relationship); Pollock v. Cotter, 2005 BCSC 1799; Greenlees v. Starline Windows Ltd., 2018 BCSC 1457; and Dias v. Paragon Gaming EC Company, 2010 ABPC 390. 40. See Dowling v. Halifax (City), [1998] 1 SCR 22. See also Cicalese v. Saipem Canada Inc., 2018 ABQB 835; and Porter v. Fleischer, 2011 BCSC 389.
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C H A P T E R 11
Termination by “Frustration” LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 169 II. The Implications of a Finding of Frustration of Contract 169 III. The Test for Frustration of Contract 170 IV. Frustration Due to Illness or Disability 171 A. What Medical Evidence Is Relevant in Assessing Permanent Disability? 171 B. Does Frustration of Contract Apply When a Contract Provides for Sickness and Disability Benefits? 172 C. Is the Duty to Accommodate a Disabled Worker a Precondition for Frustration of Contract? 173 V. Chapter Summary 175 Questions and Issues for Discussion 175 Notes and References 176
• Define frustration of contract and identify the circumstances in which it can arise. • Describe the implications of a finding of frustration of contract. • Explain the test for frustration of contract. • Explain how an employee illness or disability can bring about frustration of contract. • Discuss the key controversies related to applying frustration of contract to employee illness or disability under an employment contract.
I. Introduction
Frustration of contract does not fit coherently into any of the other chapters dealing with termination of employment contracts, so it gets its own short chapter. A contract that is frustrated is terminated neither by agreement of the parties nor as a result of the actions of the employer or employee. Rather, a frustrated contract comes to an end because something unexpected happens that prevents one or both of the parties from doing what they promised in the contract to do.1 The classic examples of frustration of the employment contract include circumstances in which workplaces are destroyed by an “act of God,” such as a fire. Over time, frustration has been applied to other intervening events that make performance of the contract as originally envisioned impossible, including an employee injury or disability. This chapter examines the evolution of, application of, and controversies relating to frustration of contract in the Canadian employment setting.
II. The Implications of a Finding of Frustration of Contract The most important consequence of a finding of frustration of contract is that it instantly terminates the contract, relieving the parties of any future contractual obligations. It means most notably that both employer and employee are relieved of their contractual obligation to
frustration of contract: The termination of a contract caused by an unforeseen event that renders performance of the contract impossible.
169
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170 Part II The Common Law Regime provide notice of termination.2 In the common law regime, an employee who is dismissed without receiving the notice required by the contract is entitled to recover monetary damages calculated based on an assumption that the employee had worked through the notice period. However, the employer is not required to provide any notice of termination in the following scenarios: 1. When the employee terminates the contract (Chapter 15). 2. When the contract is a fixed-term or fixed-task contract, as opposed to an indefiniteterm contract (Chapter 8). 3. When the employee commits a fundamental breach of the contract, which the employer treats as cause for dismissal without notice (known as summary dismissal; Chapter 12). 4. When the contract is frustrated. Arguments about frustration of contract usually arise in the context of an employer who is defending a wrongful dismissal lawsuit: the employer announces that the contract is terminated by frustration and the employee sues for wrongful dismissal, asserting that they are entitled to receive notice of termination. The court then needs to decide if the conditions for frustration were satisfied. Professor Geoffrey England has argued that the “doctrine of frustration is concerned with who should bear the risk of the unforeseen events.”3 When frustration exists, the burden of the risk falls on the employee, who will lose out on any contractual entitlements to which they otherwise would have been entitled to as a consequence of losing their job. On the other hand, if the unforeseen event does not frustrate the contract, the employer shoulders the financial implications of the termination of the contract. As we consider the law of frustration in the remainder of this chapter, think about who bears the risk of the event that intervenes in the performance of the contract.
III. The Test for Frustration of Contract The modern-day test for contract frustration dates from the 1956 British House of Lords decision Davis Contractors Ltd. v. Fareham Urban District Council.4 The facts of that case are not important for our purposes, but the court’s statement of the legal test is: [F]rustration occurs whenever the law recognises 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. Non haec in foedera veni. It was not this that I promised to do.5
The Supreme Court of Canada later endorsed this test.6 It has been applied to employment contracts in a number of situations. The classic application of frustration of contract in the employment setting involves the destruction of the workplace by an unexpected event, such as a tornado, flood, or fire. That is what occurred in the early and often-cited British case of Taylor v. Caldwell, in which a music hall was destroyed by fire, resulting in the cancellation of several musical performances.7 The death of an employee during the term of a contract also frustrates the contract, since this intervening event obviously prevents further performance.8 A change in the law that would make it unlawful for the employee to continue to perform their job would also frustrate the contract. For example, the employment contract of a casino security guard with a prior criminal record (for breaking and entering) was frustrated when a new statute was enacted prohibiting security guards from having criminal records.9
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Frustration does not occur when the reason the original contract cannot be performed is due to the voluntary actions of one of the parties. This is known as self-induced frustration. Thus, an employer’s filing for bankruptcy does not frustrate an employment contract.10 Nor does the doctrine of frustration apply to terminations or layoffs caused by a business downturn, loss of customers,11 or a strike by some of an employer’s employees.12 These are normal events that occur within the ebb and flow of capitalist economies.
IV. Frustration Due to Illness or Disability Frustration of contract in the work context arises most often due to employee illness or disability. Common law judges long ago decided that absenteeism due to illness or disability (innocent absenteeism) is not “cause for summary dismissal” because the employee’s behaviour is not blameworthy.13 Employees unable to work due to illness or disability are still entitled to notice of termination, and since they cannot work the notice period through no fault of their own, the employer is obligated to provide pay in lieu of notice unless they can persuade the court that frustration applies.14 However, these general rules do not apply if the employee’s disability or illness “frustrates” the employment contract. The courts have found that an employee’s illness or disability can frustrate an employment contract if the evidence indicates that the medical condition is such that performance in the future will be impossible or “radically different” from what was contracted for.15 A variety of factors are relevant in making this assessment, and each case is decided on its own particular facts. For example, a contract that is for a short duration or that involves a senior employee without whom the employer cannot function for long will be more easily frustrated than an indefinite-term contract involving a worker who is more easily replaced.16 In practice, though, most decisions boil down to an assessment of whether the medical evidence indicates that the employee’s disability is permanent rather than temporary, such that it will forever, or for the foreseeable future, prevent the employee from returning to the job they were hired to perform.17 It is the responsibility of the party alleging that frustration has occurred (usually the employer) to persuade a court.18 Therefore, even a long absence from work due to illness will not frustrate an employment contract unless the employer can demonstrate that a return to work is unlikely in the foreseeable future.19 By contrast, where the evidence indicates that a disability is permanent, a finding of frustration can result, even if the employee had been absent for only a short period of time prior to the employer announcing the end of the contract.20 Applying the doctrine of frustration to employee illness or disability under an employment contract has given rise to a number of complex and interesting legal issues and debates. Three are worth noting briefly in this chapter.
A. What Medical Evidence Is Relevant in Assessing Permanent Disability? The first controversy relates to the medical evidence that judges should consider in deciding whether the illness will prevent the employee from performing their job for the foreseeable future. Medical conditions can change; people sometimes get better, or their condition can deteriorate over time. This point raises the question of the period of time judges should look at when assessing the employee’s prognosis and potential to return to work. Should judges look only at the evidence that was available at the time the employer decided to treat the contract as self-induced frustration: When the actions of the employer or employee make it impossible for the contract as originally envisioned to be performed. The courts have refused to apply the doctrine of frustration to self-induced frustration. innocent absenteeism: An employee’s absence from work due to reasons that are not blameworthy, such as illness, disability, or religious observance.
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172 Part II The Common Law Regime having been terminated? Or should judges consider “how things actually turned out,” as assessed at the date of the trial, which could be months or even years after the employment contract was initially terminated? As described in Box 11.1, judges have not always agreed on the answer.
BOX 11.1 » TALKING WORK LAW Assessing Whether an Employee’s Disability Is Permanent An employment contract can be frustrated by a permanent disability suffered by the employee. This requires employers and the courts to assess medical evidence about the prognosis of the employee’s ability to return to work. The courts have long debated whether that assessment should be based on medical evidence available at the moment the employer elects to treat the contract as having been terminated, or at the time of a trial, which could be months or even years later. For example, imagine that at the time the employer informs the employee that the contract is over, the evidence indicates that the employee will likely be unable to return to work for the foreseeable future. However, by the time the wrongful dismissal lawsuit reaches a judge months later, the employee’s condition has improved dramatically, and the employee could have returned to work after all. Which medical diagnosis should govern? Judges have disagreed on the answer. Approach One: Consider Only Medical Evidence Available on the Date of Termination One line of cases rules that only evidence known at the date of the employer’s decision to terminate the contract should be considered, since that is the point at which the employer was required to demonstrate frustration existed and that the employee would be unable to return to work for the
foreseeable future. Examples of this approach include Wilmot v. Ulnooweg Development Group Inc., 2007 NSCA 49; Altman v. Steve’s Music, 2011 ONSC 1480; Marshall v. Harland & Wolff Ltd., [1972] 1 WLR 899 (CA); White v. Woolworth (F.W.) Co., 1996 CanLII 11076 (Nfld. CA); and Ciszkowski v. Canac Kitchens, 2015 ONSC 73. Approach Two: Consider All Medical Evidence up to the Date of the Trial Another line of cases argues that post-termination medical evidence is relevant. This approach argues that insofar as medical evidence obtained after the termination of the contract can shed light on the question of whether the employee was able to return to work, it is relevant and should be considered by a court in assessing whether the contract was frustrated. Examples of this approach include Yeager v. R.J. Hastings Agencies Ltd., 1984 CanLII 533 (BCSC) and Demuynck v. Agentis Information Services Inc., 2003 BCSC 96. Whether one approach or the other benefits the employee or the employer will depend on the facts and circumstances of the case. Can you think of scenarios in which an employer would prefer the first line of argument and then other scenarios in which the employer would prefer the second approach?
B. Does Frustration of Contract Apply When a Contract Provides for Sickness and Disability Benefits? Another controversy relates to the relevance of contract terms that entitle an employee to receive disability benefits if they become ill or disabled. The doctrine of frustration usually applies to “unforeseen circumstances”21 that were not in the “reasonable contemplation of the parties” when the contract was formed and that have the effect of rendering performance as originally anticipated impossible.22 If the contract sets out in detail what happens when the employee becomes ill or disabled, then the parties clearly have contemplated the possibility that the employee may be felled by illness and unable to work. Consider the case of the factory that burns to rubble, leaving the factory employees with no work to perform. If their employment contracts specifically contemplate the possibility that the factory may be destroyed by fire, and also describes what will happen in that event, then the doctrine of frustration would not apply. Similarly, if an employment contract contemplates that an employee unable to work due to illness will remain employed throughout the absence while they receive sickness or disability insurance benefits, then frustration is unlikely to result from the illness.23 However, many employment contracts envision that an employee unable to work due to illness or disability can be terminated even if they are entitled to continue to receive insurance benefits after the termination. In those cases, courts have ruled that frustration can terminate the contract, as explained in the decision discussed in Box 11.2.24
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Chapter 11 Termination by “Frustration” 173
BOX 11.2 » CASE LAW HIGHLIGHT Frustration Caused by Employee Disability When the Contract Provides Long-Term Disability Benefits Wightman Estate v. 2774046 Canada Inc. 2006 BCCA 424 Key Facts: The employment contract between Wightman and 2774046 Canada Inc. (the employer) required the employer to provide “reasonable notice” of termination and provided for long-term disability benefits until age 65 or Wightman’s death, whichever came first. Wightman suffered from a series of medical problems and began to receive disability benefits. While he was receiving disability benefits, he was dismissed without notice. One year later, at the age of 61, Wightman died. His estate executor filed a lawsuit for wrongful dismissal on Wightman’s behalf, claiming damages for failure of the employer to give Wightman reasonable notice of termination. The employer argued that the contract was frustrated by Wightman’s illnesses. Issue: Can an employee disability cause frustration of contract when the contract itself contemplates that an employee may become permanently disabled? Decision: Yes. The court found that the proper test for frustration is not whether the parties contemplated the possibility that a long-term disability might occur—which here they
clearly did—but whether “the parties have provided that their contractual relationship will continue despite the radical change in circumstances brought about by the event” (emphasis added). The court must ask whether the disability is such that it will be impossible for the employee to perform his duties or the performance of those duties would be radically different than what was originally agreed. Frustration of contract will not result from a short-term illness or disability. However, when the evidence discloses that the employee will be unable to perform the job he was hired to do for the foreseeable future, the contract can become frustrated. In this case, the contract recognized the possibility that benefits could continue beyond the date at which the employment contract ends. For example, the benefits plan, which was part of the contract, referred to the possibility that the employee might “change employers” and provided for payment of benefits “[i]f … employment ends.” Therefore, the parties contemplated that the employment contract could come to an end for some reason even though the employee was disabled at the time of termination. The evidence indicated that Wightman would not be able to return to any job for the foreseeable future. Therefore, the contract had become frustrated as a result of Wightman’s illness.
C. Is the Duty to Accommodate a Disabled Worker a Precondition for Frustration of Contract? A third controversy that arises from the application of the doctrine of frustration of contract to ill or disabled employees raises an interesting question about the intersection of the three regimes of work law (the common law regime, the regulatory standards regime, and the collective bargaining regime) introduced in Chapter 1. Under Canadian human rights law, an employer cannot dismiss an employee for absenteeism due to a disability unless it can first demonstrate that it is not possible to accommodate the employee’s disability without incurring undue hardship.25 (Part III explores human rights legislation.) Volumes of human rights law decisions explore this standard. The Canadian Charter of Rights and Freedoms (Chapter 38), which governs the actions of government, similarly prohibits discrimination against workers on the basis of disability and requires accommodation of disabilities to the point of undue hardship.26 As we will learn in Part IV, unionized workers who are governed by collective agreements are also entitled to accommodation to the point of undue hardship if they become disabled and unable to perform their normal job. Most people have at least a vague awareness that Canadian law imposes on employers a requirement to accommodate employee disabilities, even if they are not aware of the specific legal source of the requirement. If disability prevents an employee from performing their original job, but the employer could modify the job or move the employee into a different vacant position that they could perform, the expectation is that the employer will take that step. Human rights statutes, collective agreements, and the Charter all require at least that much.
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174 Part II The Common Law Regime However, the common law regime has not yet recognized a parallel requirement for accommodation to be explored as a precondition for a finding of frustration due to disability. The job contemplated by the original contract is taken as fixed, and judges ask only whether the disability will for the foreseeable future prevent the employee from performing it or require that the job be performed in a “radically different” manner than originally envisioned. If so, then the contract is frustrated. The fact that the employee could return to work if the job were modified in some manner or if offered a different job has been treated as irrelevant in the application of the doctrine of frustration.27 The employer’s implied prerogative to decide what job an employee will perform is left untouched by the contract law doctrine of frustration. The result is that frustration of contract, a contract law doctrine with 19th-century roots, is today at odds with modern-day expectations and sentiments on the appropriate treatment of workers with a disability. A common law judge could agree with an employer that an employee’s disability frustrated the contract, even though the employer had ignored its statutory obligation to accommodate the employee’s disability.28 We noted in Chapter 2 that the three regimes of work law are not blind to developments in the other regimes. Sometimes legal rules developed in one regime can penetrate and influence the evolution of laws in the other regimes. An interesting question is whether the common law regime’s doctrine of frustration of contract will evolve to recognize a duty to accommodate employee disabilities that parallels the statutory duty to accommodate. As noted in Box 11.3, there has been movement in this direction already.
BOX 11.3 » TALKING WORK LAW Frustration of Contract and the Interaction of Legal Regimes Chapter 2 introduced a framework for analyzing the law of work. It noted that work law comprises three distinct regimes: the common law regime, the regulatory standards regime, and the collective bargaining regime. Those three regimes have their own legal rules, actors, and institutions and produce their own legal outputs. However, we noted too that through an internal feedback loop, legal rules and norms produced by one regime can influence developments in other regimes. The doctrine of frustration of contract offers an example of the complexity of interactions among regimes.
empted from these requirements when the employment contract has become “frustrated.”* In a 2005 decision, the Ontario Court of Appeal ruled that this exemption violated the Charter of Rights and Freedoms equality rights section (s. 15) insofar as it punished disabled workers.† As a result, today the “frustration” exemption in the Ontario ESA does not apply when the frustration is due to the employee’s illness or injury.‡ Therefore, the Ontario government has incorporated into the statute a modified version of the common law doctrine of frustration.
The Influence of the Common Law Regime on the Regulatory Standards Regime Frustration of contract is an output of the common law regime, a legal rule developed in 19th-century Britain, later adopted by Canadian common law judges and applied to employment contracts. As noted above, frustration brings a contract to an end without any need for the parties to give the usual common law notice of termination and without creating any liability arising from the termination. The contract just ends. This concept was later incorporated into employment standards statutes (in the regulatory regime). For example, in Ontario, the Employment Standards Act (ESA) requires employers to provide employees with notice of termination and sometimes an additional payment known as severance pay (see Chapter 20). However, employers are ex-
The Influence of the Regulatory Standards Regime on the Common Law Regime Canadian courts have found that an employee’s disability can frustrate a contract if, for the foreseeable future, that disability will prevent the employee from performing the job they were hired to do. In applying the doctrine of frustration to employee disabilities, common law judges have not usually considered whether the employee’s disability could have been accommodated in such a way that would enable the employee to return to work. Within the regulatory standards regime (as we will learn in Part III), human rights legislation prohibits an employer from treating the employment contract as frustrated unless the employer first establishes that there is no way to accommodate the employee’s disability without incurring undue hardship.
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Chapter 11 Termination by “Frustration” 175 In the 1998 decision Antonacci v. Great Atlantic & Pacific Co. of Canada, Justice Swinton appeared to modify the common law doctrine of frustration by incorporating the human rights statute concept of “accommodation.” The employer argued in that case that the employment contract had been frustrated by the employee’s disability. Justice Swinton rejected that argument, and in doing so introduced a duty to accommodate: Section 5 of the Ontario Human Rights Code prohibits discrimination on the basis of handicap … [Evidence indicated that the employee’s] job as a Store Manager could be modified to accommodate a worker with a back injury. Even if that did not turn out to be the case, given the extent of the plaintiff’s back problems, A & P, with 24,000 workers in Ontario, might well have been able to find alternative suitable work for him. Given these facts, it could not be said that the plaintiff’s contract was frustrated.§ It remains to be seen whether this approach requiring exploration of possible accommodation as a condition for
finding frustration of contract will take hold in Canadian common law. For example, the courts could conclude that before frustration can be made out, an employer must first exhaust accommodation efforts, including modifying the employee’s job or considering whether the employee could be offered a different job within their capabilities. This approach would produce a more coherent legal model than exists at present. It would also be consistent with the Supreme Court of Canada’s observation that the common law should evolve in a manner consistent with “Charter values.”# * See Ontario Regulation 288/01, ss. 2(1)4, 9(1)4. † Ontario Nurses’ Association v. Mount Sinai Hospital, 2005 CanLII 14437 (Ont. CA). ‡ Ontario Regulation 288/01, ss. 2(3), 9(2)b. § Antonacci v. Great Atlantic & Pacific Co. of Canada, 1998 CanLII 14734 (Ont. Sup Ct J) at para 41, aff’d 2000 CanLII 5496 (Ont. CA). # See RWDSU, Local 558 v. Pepsi-Cola Canada Beverages (West) Ltd., [2002] 1 SCR 156; and Lemesani v. Lowerys Inc., 2017 ONSC 1808 (judge finding a common law duty to accommodate a disabled worker in the context of a frustration argument).
V. Chapter Summary Frustration of contract terminates a contract through no fault of either party, extinguishing any future contractual obligations the parties owed one another. Frustration usually requires an intervening event that was not contemplated by the parties that makes it impossible for the contract to be performed as originally envisioned. The most noteworthy consequence of a finding of frustration is that the employer is relieved of its obligation to give the employee notice of termination. Since the implications are so serious, the courts have been cautious in applying the doctrine. However, they have been prepared to find frustration arising from employee illness or disability, provided that the evidence establishes the employee will be unable to perform the job they were hired to do for the foreseeable future. Traditionally, common law judges have not considered whether the employee’s disability can be accommodated as a precondition of a finding of frustration. This approach puts the common law regime in tension with human rights laws, which prohibit termination of employment contracts for disability-related absences unless accommodation would incur undue hardship on the employer.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Explain the test for frustration of contract, and provide some examples of how it might arise in the employment setting. 2. What must an employer prove in order to persuade a court that a contract has been frustrated due to the employee’s illness? 3. Why would an employer want to argue that an employment contract has become frustrated? 4. What is “self-induced frustration”? Provide examples. 5. Can an employment contract that entitles an employee to receive long-term disability benefits until the age of 65 be frustrated while the employee is collecting those benefits? How does the Wightman Estate case described in Box 11.2 affect your answer?
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176 Part II The Common Law Regime
APPLYING THE LAW 1. Bridget suffered a back injury that prevented her from performing her job with her employer ABC Plumbing Services. She has already missed eight months of work. Last week, Bridget’s doctor wrote a letter for the employer that states he does not expect Bridget to be able to return for the foreseeable future. The employer decides to terminate Bridget’s employment. The contract says nothing about notice of termination. Must
the employer provide Bridget with reasonable notice of termination? Explain your answer. 2. Would your answer to question 1 be different if you learned that the employment contract between Bridget and ABC Plumbing included a clause that entitled Bridget to long-term disability benefits if she becomes ill and that she may not be terminated while receiving those benefits?
NOTES AND REFERENCES 1. See Chilagan v. Island Lake Band No. 161, 1994 CanLII 12. St. John v. TNT Canada Inc., 1991 CanLII 420 (BCSC). See 4787 (Sask. QB); Wightman Estate v. 2774046 Canada Inc., also the discussion in R.S. Echlin and J. Fantini, Quitting for 2006 BCCA 424 at 24; and Davis Contractors Ltd. v. Good Reason (Toronto: Canada Law Book, 2001) at 118-19. Fareham Urban District Council, [1956] AC 696 at 728. The 13. See Yeager v. R.J. Hastings Agencies Ltd., 1984 CanLII 533 Supreme Court of Canada described the doctrine of frus(BCSC), at paras 71-72. tration in Naylor Group Inc. v. Ellis-Don Construction Ltd., 14. Sylvester v. British Columbia, [1997] 2 SCR 315 at paras 9, 2001 SCC 58; and Peter Kiewit Sons’ Co. v. Eakins Construc15; and McRae v. Dodge City Auto (1984) Ltd., 1994 CanLII tion Ltd., [1960] SCR 361. See also J. McCamus, The Law of 4955 (Sask. QB). See also the discussion in England, supra Contracts, 2nd ed (Toronto: Irwin Law, 2012) at chapter 14. note 3 at 420-21. 2. See the discussion in McLean v. City of Miramichi, 2011 15. Dartmouth Ferry Commission v. Marks 34 SCR 366; WightNBCA 80. man Estate v. 2774046 Canada Inc., supra note 1; Marshall 3. G. England, Individual Employment Law, 2nd ed (Toronto: v. Harland & Wolff Ltd., [1972] 1 WLR 899 (CA); Yeager v. Irwin Law, 2008) at 418. See also, McCamus, supra note 1 R.J. Hastings Agencies Ltd., supra note 13; Skopitz v. Interat 612-22. corp Excelle Foods Inc., 1999 CanLII 14852 (Ont. Sup Ct J); Ryhorski v. Commercial Industrial Manufacturing Ltd., 2019 4. Davis Contractors Ltd. v. Fareham Urban District Council, SKQB 85; Fraser v. UBS, 2011 ONSC 5448; Lemesani v. supra note 1. Lowerys Inc., 2017 ONSC 1808; Roskaft v. RONA Inc., 2018 5. Ibid. at 728-29. ONSC 2934; and Duong v. Linamar Corporation, 2010 6. Peter Kiewit Sons’ Co. v. Eakins Construction Ltd., supra ONSC 3159. note 1 at 368; and Naylor Group Inc. v. Ellis-Don Construc 16. The leading case that describes the factors courts should tion Ltd., supra note 1. consider in assessing whether an employment contract has 7. Taylor v. Caldwell, [1893] 122 ER 309 (QB). See also Polyco been frustrated is Marshall v. Harland & Wolff Ltd., supra Window Manufacturers Ltd. v. Saskatchewan (Director of note 15 at 718-19. See also Dragone v. Riva Plumbing Labour Standards), 1994 CanLII 5008 (Sask. QB). Limited, 2007 CanLII 40543 (Ont. Sup Ct J) at para 21. 8. McLean v. City of Miramichi, supra note 2 at para 25; Wing- 17. This distinction between temporary and permanent disfield Estate v. Conroy, [1996] BCJ No. 799 (QL) (SC); and ability has deep roots and was noted in Dartmouth Ferry MacDonald v. School District No. 39, 2004 BCSC 1611. Commission v. Marks, supra note 15.
9. Cowie v. Great Blue Heron Charity Casino, 2011 ONSC 18. Dragone v. Riva Plumbing Limited, supra note 16. 6357. See also Reilly v. The King, 1933 CanLII 379 (UK 19. For example, in Yeager v. R.J. Hastings Agencies Ltd., supra JCPC); and Thomas v. Lafleche Union Hospital, 1989 CanLII note 13, the employee had been absent for two years due to 5078 (Sask. QB); aff ’d. 1991 CanLII 8039 (Sask. CA) illness, but the contract was not frustrated since the evi(a nurse’s contract frustrated after her nursing licence was dence did not establish that illness would persist for the revoked). foreseeable future. Other cases in which courts found no 10. Optenia Inc. (In Bankruptcy) (Re), 2002 CanLII 5308 (Ont. frustration due to lack of evidence that the employee Sup Ct J). would be unable to return to work include Lippa v. 11. Smith v. Tamblyn (Alberta) Limited, 1979 CanLII 1036 Can-Cell Industries Inc., 2009 ABQB 684; Antonacci v. (Alta. QB). Great Atlantic & Pacific Co. of Canada, 1998 CanLII 14734
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Chapter 11 Termination by “Frustration” 177 (Ont. Sup Ct J), varied on other grounds 2000 CanLII 5496 24. See also: Duong v. Linamar Corporation, supra note 15; and (Ont. CA); Dragone v. Riva Plumbing Limited, supra note Fraser v. UBS, supra note 15. 16; Naccarato v. Costco, 2010 ONSC 2651; Altman v. Steve’s 25. Hydro-Québec v. Syndicat des employé-e-s de techniques proMusic, 2011 ONSC 1480; White v. Woolworth (F. W.) fessionnelles et de bureau d’Hydro-Québec, section locale Canada, 1996 CanLII 11076 (Nfld. CA); and Bishop v. 2000 (SCFP-FTQ), 2008 SCC 43. An example of a typical Carleton Cooperative Ltd. (1996), 21 CCEL (2d) 1 (NBCA). statutory requirement to accommodate employee disability 20. In McRae v. Dodge City Auto (1984) Ltd., supra note 14, frustration of contract was found when an employee had been absent for less than three months due to illness, but the court was persuaded that the disability was permanent. 21. G.H.L. Fridman, The Law of Contract in Canada, 4th ed (Scarborough, ON: Carswell, 1999) at 677. 22. Davis Contractors Ltd. v. Fareham Urban District Council, supra note 1; St. John v. TNT Canada Inc., supra note 12; O’Connell v. Harkema Express Lines Ltd., 1982 CanLII 3198 (Ont. Sup Ct J); and Polyco Window Manufacturers Ltd. v. Saskatchewan (Director of Labour Standards), supra note 7. 23. See England, supra note 3 at 421: “If an employee absent because of sickness is entitled to and is in receipt of longterm disability benefits under an employment contract, the contract almost certainly cannot be regarded as frustrated, since the parties will have foreseen the alleged frustrating event and have expressly contracted for it.” See also Antonacci v. Great Atlantic & Pacific Co. of Canada, which varied on other grounds, supra note 19.
is found in s. 17 of the Human Rights Code, RSO 1990, c. H.19.
26. Canadian Charter of Rights and Freedoms, Part I of the Contitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c. 11, s. 15(1). See Eldridge v. British Columbia (Attorney General), [1997] 3 SCR 624; Ontario Nurses’ Association v. Mount Sinai Hospital, 2005 CanLII 14437 (Ont. CA) (the section of the Ontario Employment Standards Act that excludes from severance pay employees whose contract has become frustrated violated Section 15 of the Charter). 27. See Wightman Estate v. 2774046 Canada Inc., supra note 1 at paras 55-56. 28. A human rights tribunal may accept that a contract was frustrated by an employee disability and was therefore not a violation of the statutory duty to accommodate, but it must first assess whether accommodation would have been possible. See Barboutis v. Singer Valve, 2012 BCHRT 244; Senyk v. WFG Agency Network (No. 2), 2008 BCHRT 376; and Gahagan v. James Campbell Inc., 2014 HRTO 14.
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C H A P T E R 12
Summary Dismissal: Termination for Cause Without Notice LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 179 II. The Basic Legal Principles Applied to Summary Dismissal Cases 180 A. The Proportionality Test: McKinley v. BC Tel 180 B. Can the Employer Rely on Evidence of Employee Misconduct Learned After the Decision to Terminate the Employee? 182 C. Single Wrongful Acts Versus “Cumulative Just Cause” 183 D. Employer Condonation of Employee Misconduct 185 E. Specific Penalty Clauses in Contracts 185 III. Common Grounds for Summary Dismissal 185 A. Dishonesty and Conflict of Interest 186 B. Gross Incompetence and Safety Violations 186 C. Breach of Faithful Service to the Employer 186 D. Insubordination and Insolence 188 E. Harassment 188 F. Violence and Threats of Violence 190 G. Absenteeism and Lateness 190 H. Off-Duty Conduct 191 I. Inappropriate Use of Employer Technology 192 J. Intoxication at Work 193 IV. Chapter Summary 193 Questions and Issues for Discussion 194 Exercise 195 Notes and References 195
• Define summary dismissal in the context of the common law of the employment contract. • Identify the factors that an employer must establish to prove grounds for summary dismissal. • Describe the principle of proportionality applied by the courts to determine whether cause for summary dismissal exists. • Describe the difference between cause based on a single isolated incident of wrongdoing and cumulative just cause. • Explain how the law of summary dismissal is applied to the most common forms of employee misconduct. • Research and understand case law dealing with summary dismissal arguments.
I. Introduction Imagine that Mitchell, an employee, steals thousands of dollars from his employer. The employer dismisses Mitchell and calls the police to have criminal charges laid. However, a term in Mitchell’s employment contract entitled him to notice of termination and says nothing about whether that requirement is waived if he steals money. Should Mitchell still be entitled to notice? Or has he forfeited that entitlement by stealing from his employer? We learn in this chapter that employers can terminate an employee’s employment contract without notice when the employee commits a serious, or fundamental, breach of contract. This type of termination of an employment contract is known as summary dismissal for cause. The summary dismissal: Termination of an employment contract by an employer without notice to the employee in response to a serious breach of contract by the employee. 179
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180 Part II The Common Law Regime Ontario Court of Appeal explained summary dismissal in the 1967 case of R v. Arthurs, Ex p. Port Arthur Shipbuilding Co.: 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.1
Since summary dismissal requires a fundamental breach of a term of the employment contract, the implied contract terms we learned about in Chapter 9 play a starring role in the law of summary dismissal. You might want to do a quick refresher of what those terms were, because employers often rely on them as the basis for their decision to summarily dismiss an employee. Of course, breach by an employee of an expressed (written) contract term can also give rise to summary dismissal. The issue of whether an employer had cause for summary dismissal usually arises in a wrongful dismissal suit filed by the employee. The employer will defend the employee’s claim of damages for failure to give notice of termination by arguing that it had cause and therefore was not required to give notice. It falls to judges to determine whether cause exists. Over the years, the courts have decided hundreds of these cases; entire books have been written summarizing the decisions.2 The objective of this chapter is to explain a basic framework that will allow you to assess whether an employee’s misconduct is likely to result in cause for summary dismissal.
II. The Basic Legal Principles Applied to Summary Dismissal Cases Summary dismissal extinguishes the employee’s entitlement to notice of termination and hence has been described as the “capital punishment” of employment law.3 Recall from Chapter 11 that a policy rationale for requiring employers to provide notice of termination is to ensure employees have time to plan for the loss of their job. An employee dismissed for cause loses that important benefit. In addition, being terminated for cause can tarnish the employee’s reputation and make finding new employment more difficult. It can also disqualify the employee from receiving unemployment insurance benefits (see the online chapter, “Regulating Unemployment”). Because of the harsh ramifications for employees, and in contrast to the approach of judges in the 19th and early 20th centuries, modern courts have developed a relatively high threshold for finding summary dismissal.4 Judicial recognition that employees are often in a vulnerable position (as discussed in Chapter 10) has coloured the approach to summary dismissal, as we will see. If the employer fails to persuade the court that it has cause for summary dismissal, the court will rule that a wrongful dismissal has occurred and order the employer to pay damages according to the rules we will consider in Chapter 14. Let’s now consider the basic elements of the law of summary dismissal.
A. The Proportionality Test: McKinley v. BC Tel The leading case setting out the modern approach to summary dismissal is described in Box 12.1. The case involved alleged employee dishonesty, but the test applied by the Supreme Court of Canada is now applied to all forms of employee misconduct.
implied contract term: A default contract term invented by common law judges and read into an employment contract when the written terms of the contract (if any) do not address the specific issue addressed by the implied term.
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Chapter 12 Summary Dismissal: Termination for Cause Without Notice 181
BOX 12.1 » CASE LAW HIGHLIGHT When Is Dishonesty Grounds for Summary Dismissal? McKinley v. BC Tel 2001 SCC 38 Key Facts: McKinley suffered from high blood pressure, and his doctor instructed him to take a leave from work. The doctor subsequently told him he could return to work if he took a drug known as a “beta blocker.” McKinley did not disclose this option to his employer, BC Tel, and instead asked his employer to accommodate him in a less stressful job. The employer declined to offer an alternative job and instead terminated McKinley’s employment contract without notice. McKinley sued for wrongful dismissal. At trial, the employer argued that it had cause to dismiss McKinley because he had not disclosed the doctor’s advice to return to his old job while taking the beta blocker. Issue: Did McKinley’s failure to disclose the option of returning to work using the beta blocker drug amount to dishonesty sufficient to justify summary dismissal without notice? Decision: No. This dishonesty was not sufficiently serious to constitute cause for summary dismissal. The Supreme Court of Canada rejected a line of earlier cases* in which the courts found that any dishonesty by an employee, no matter how trivial, was cause for summary dismissal. It noted that employees derive a “sense of identity and self-worth [as] individuals … from their employment” and are “in a vulnerable position vis-à-vis their employers.” This fact should influence how judges approach summary dismissal. An employee’s conduct should be assessed in a broader context, according to the decision:
I am of the view that whether an employer is justified in dismissing an employee on the grounds of dishonesty is a question that requires an assessment of the context of the alleged misconduct. More specifically, the test is whether the employee’s dishonesty gave rise to a breakdown in the employment relationship. This test can be expressed in different ways. One could say, for example, that just cause for dismissal exists where the dishonesty violates an essential condition of the employment contract, breaches the faith inherent to the work relationship, or is fundamentally or directly inconsistent with the employee’s obligations to his or her employer. The Supreme Court noted that it was applying a “principle of proportionality” that requires the courts to strike a balance “between the severity of an employee’s misconduct and the sanction imposed.” Here, while McKinley was not completely straightforward with the employer, his actions did not rise to the level of dishonesty inconsistent with the employment relationship. McKinley was awarded wrongful dismissal damages based on a long period of 26 months’ reasonable notice. * Authority for the position that any employee dishonesty amounts to cause for summary dismissal, rejected by the Supreme Court in the McKinley decision, includes Boston Deep Sea Fishing Co. v. Ansell, [1888] 39 Ch. D 339 (CA); and McPhillips v. British Columbia Ferry Corporation, 1994 CanLII 6416 (BCCA).
The contextual or “proportional” approach applied by the Supreme Court in McKinley requires the courts to apply a two-step test. The key legal principles applied in summary dismissal cases are summarized in Box 12.2. First, the courts decide whether the evidence establishes that the employee engaged in misconduct of some sort in breach of an implied or expressed term of the contract. In this task, the courts apply the standard of a balance of probabilities, which means essentially that the evidence confirms it is more likely than not that the employee committed the wrongful act.5 Second, if the court finds that the employee breached the contract, then it assesses the seriousness of the misconduct to determine whether summary dismissal was warranted. In McKinley, the Supreme Court described this part of the test as an assessment of whether the employee’s actions “gave rise to a breakdown in the employment relationship.” In other cases, judges have asked whether the employee’s actions were “such a violation of trust that a continuing relationship [is] impossible.”6 Still other judges have said that the test is whether the employee’s actions amount to a repudiation of the contract as a whole or of an “essential term” of the contract.7 balance of probabilities: An evidentiary standard of proof requiring evidence that it is more likely than not that an incident occurred.
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182 Part II The Common Law Regime
BOX 12.2 » TALKING WORK LAW Summary of the Law of Dismissal for Cause (Summary Dismissal) The courts apply a principle of proportionality to determine cause for summary dismissal: “in all the circumstances” is dismissal without notice an appropriate sanction given the nature of the employee’s breach of contract?* This approach involves a two-step test: Step One Did the employer establish on a “balance of probabilities” that the employee breached the contract? The employer can rely on evidence of employee misconduct learned after the employee was dismissed to answer this question. Step Two Is the employee’s misconduct sufficiently serious that it undermines the foundation of the employment contract? This second question is sufficiently malleable that it affords judges considerable discretion. In general terms, only serious employee misconduct that causes employers economic or
reputational harm will be found to meet the standard for summary dismissal. The courts consider all of the circumstances that surround the employee’s misconduct (mitigating circumstances or factors), including elements such as the employee’s length of service and past record, premeditation, provocation, the employee’s personal circumstances, and any other circumstances that might explain the employee’s behaviour. If the court answers the questions in steps one and two in the affirmative, then the employer is relieved of the obligation to provide notice of termination to the employee. However, if the answer at either step one or step two is negative, then the employer will fail in its attempt to prove cause for summary dismissal. In that event, the court will assess how much notice of termination should have been given to the employee and calculate damages owing to the employee based on that assessment. The calculation of damages for wrongful dismissal is considered in Chapter 14. * See McKinley v. BC Tel, 2001 SCC 38.
In practice, not much turns on how the test is described.8 Essentially, the courts ask whether the employee’s misconduct was so serious that the employment relationship has been irreparably undermined. In assessing this question, the courts look at all of the circumstances, including the seriousness of the misconduct and the harm to the employer’s business interests, as well as other mitigating factors, such as the employee’s past employment record and length of service, whether there was provocation, whether the employee was experiencing personal or physical difficulties at the time, whether the wrongful act was premeditated and planned or just a poor spur of the moment decision, and whether the employer had ignored the misconduct in question in the past.
B. Can the Employer Rely on Evidence of Employee Misconduct Learned After the Decision to Terminate the Employee? Imagine that our employee, Mitchell, is dismissed without notice, and he files a wrongful dismissal lawsuit. The employer originally alleged poor performance as the cause. However, prior to the trial, the employer discovers that Mitchell had stolen money from the employer in the weeks before his dismissal. Mitchell’s poor performance would not alone have been serious enough to justify summary dismissal without notice, but the theft sure would be. At the trial,
principle of proportionality: The test applied by the courts in summary dismissal cases that assesses whether the termination of an employee’s contract without notice is an appropriate response to the employee’s misconduct, considering all of the relevant facts. mitigating circumstances/factors: Personal or workplace-related factors that, while not directly the cause of an employee’s behaviour, help explain or justify an employee’s behaviour.
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Chapter 12 Summary Dismissal: Termination for Cause Without Notice 183
can the employer change the reason for the termination from poor performance to theft, even though theft was not the reason Mitchell was initially fired? The courts have said that the employer can do just that.9 The logic is that an employee’s fundamental breach of contract grants an employer the right to refuse to comply with its obligation to give notice, so it matters not that the employer only learns of that breach later on. Also, from a policy perspective, if an employee could avoid summary dismissal by concealing their misconduct, then the law would reward employees for their dishonesty. The Ontario Court of Appeal described this rule way back in 1889: It is now settled law that if a good cause of dismissal really existed, it is immaterial that at the time of dismissal the master did not act or rely upon it, or even did not know of its existence, or that he acted upon some other cause in itself insufficient. The main question always is, were there at the time of the dismissal facts sufficient in law to warrant it.10
The fact that the employer can rely on new facts learned after the decision to dismiss the employee creates an incentive for employers to keep investigating the employee right up to the date of the trial.
C. Single Wrongful Acts Versus “Cumulative Just Cause” A single breach of contract by an employee can meet the test for summary dismissal, but the incident must be very serious or a wilful breach of contract. For example, an outright refusal by the employee to perform their job may be treated as a fundamental breach of the contract that the employer may treat as having brought the contract to an end with no obligation on the employer to provide notice of termination.11 A single wrongful act that strikes at the foundation of the relationship of trust between employer and employee (e.g., theft, fraud, violations of privacy or confidentiality, secretly competing against the employer) may also constitute cause for summary dismissal, as can single serious acts of violence, harassment, or violations of safety rules that put employees or others at risk, as demonstrated in the case described later in Box 12.4.12 While a single serious incident can lead to summary dismissal, often employers rely on an accumulation of less serious employee misconduct (rather than a single wrongful act), which is known as cumulative just cause.13 A breach of contract that alone would not be cause for summary dismissal can serve as the proverbial straw that breaks the camel’s back if the employee has committed prior breaches of contract. That final breach of contract—the proverbial straw—is known as the culminating incident.14 The courts have applied the cumulative just cause doctrine cautiously. For an employer to win an argument based on cumulative cause, it must persuade the court that
1. 2. 3. 4.
the employee was given clear and express warnings about their performance; the employee was given a reasonable opportunity to improve after the warnings; the employee failed to improve notwithstanding being given a fair chance; and the cumulative failings of the employee prejudiced the employer’s business.15
wilful breach of contract: A deliberate, defiant, or premeditated violation of the requirement(s) of a contract. cumulative just cause: Grounds for summary dismissal based on an accumulation of wrongful acts by an employee over a period of time. culminating incident: The final breach of contract by an employee following progressive discipline that the employer relies on to justify termination of an employee for cause.
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184 Part II The Common Law Regime This test imposes on employers a duty to warn an employee if the employer intends to rely on cumulative just cause and to provide the employee with a period of time to alter their behaviour.16 The duty to warn incorporates a “corrective theory” of discipline based on the notion that employers should attempt to correct performance problems by progressive discipline before jumping to the ultimate sanction of termination without notice.17 For this reason, the presence and consistent application of a progressive discipline policy will improve the likelihood of summary dismissal based on cumulative cause being upheld by a court.18 Box 12.3 examines the origins of the duty to warn in the common law model.
BOX 12.3 » TALKING WORK LAW Internal Feedback Loop: How Collective Bargaining Law Influences the Common Law Regime: Progressive Discipline In Chapter 2 we noted that while the three regimes of work law are distinct legal systems, they also occasionally influence one another through an internal feedback loop. Legal principles developed in one regime can be adopted in whole or in part in another regime. An example of this influence can be seen in the application of progressive discipline in the common law regime. We will learn in Part IV that discipline and termination disputes in unionized workplaces are heard by labour arbitrators and not courts. Almost every collective agreement (the employment contract for unionized workers) includes a term providing that the employer can only discipline or dismiss an employee if there is “just cause.” Over the years, in interpreting “just cause” provisions, labour arbitrators have developed a doctrine of “progressive discipline,” which requires employers to apply lesser forms of discipline (warnings, suspensions) before terminating an employee’s employment contract. This arbitral case law forms an important output of the collective bargaining regime. Hardly any non-union employment contracts include “just cause” requirements. Therefore, labour arbitration law has no obvious or direct relevance to the common law of the nonunion employment contract. In fact, in the case of McGavin Toastmaster Ltd. v. Ainscough, the Supreme Court of Canada explained that the common law and the collective bargaining regimes are distinct, and the rules of termination in one have no application to the rules in the other.*
Nevertheless, in recent years common law judges have gazed into the collective bargaining regime to see how labour arbitrators have applied progressive discipline. Some judges have liked what they have seen. How did this occur? In the 2004 case of Cabiakman v. Industrial Alliance Life Insurance Co., the Supreme Court considered whether an employer governed by Quebec civil law could suspend an employee without pay. In that context, the Supreme Court stated, “There are factors that have been developed in the decisions of labour arbitrators that can guide the courts in determining whether an employer was justified in deciding to temporarily suspend an employee against whom criminal charges had been laid.”† The next year, an Alberta judge (who was formerly a labour lawyer who litigated collective agreement disputes before labour arbitrators) referenced that passage in a decision on whether an employee was unjustly dismissed for summary dismissal. In Henson v. Champion Feed Services Ltd., Justice Sheila Greckol wrote the following: The Supreme Court of Canada has recently affirmed that it is appropriate for courts to look to the decisions of labour arbitrators for guidance on the application of principles within their familiar terrain.‡ Justice Greckol then examined the “theoretical basis for the progressive discipline approach” in labour arbitration
duty to warn: A requirement in both the common law and collective bargaining law regimes for employers to warn employees that their behaviour or performance is unacceptable and to give them a reasonable opportunity to correct their performance. progressive discipline: The application in stages by employers of progressively more serious discipline to correct performance problems.
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Chapter 12 Summary Dismissal: Termination for Cause Without Notice 185 jurisprudence, citing labour arbitration decisions. Arbitrators have recognized that progressive discipline is a “fair” system that provides an employee with a warning and a chance to improve before being dismissed. Justice Greckol ruled that an employer relying on a cumulative breach to justify summary dismissal must demonstrate that it first applied progressive discipline. See also the earlier decision in Riehl v. Westfair Foods Ltd., where the court noted that the “corrective theory” developed initially by labour arbitrators has been adopted by the
courts in assessing whether employers have cause for summary dismissal.§ * McGavin Toastmaster Ltd. v. Ainscough, [1976] 1 SCR 718. † Cabiakman v. Industrial Alliance Life Insurance Co., [2004] 3 SCR 195 at para 64. ‡ Henson v. Champion Feed Services Ltd., 2005 ABQB 215 at para 53. § Riehl v. Westfair Foods Ltd., 1995 CanLII 6086 (Sask. QB). See also Barton v. Rona Ontario Inc., 2012 ONSC 3809.
D. Employer Condonation of Employee Misconduct An employer that learns of an employee’s misconduct but then allows an extended period of time to pass without sanctioning the employee may be prohibited from relying on that misconduct as the basis for summary dismissal. The courts call this condonation of the employee’s breach of contract. There is no precise amount of time that can pass between the wrongful behaviour by the employee and the termination before a court will rule that the employer condoned the employee’s actions. The court will consider all of the circumstances and decide whether the employer acted within a reasonable period of time.19 Misconduct that is condoned by the employer can still be considered if the employer later terminates the employee based on cumulative cause, provided that the employee engages in new misconduct—a new culminating incident—after the initial wrongful act.20
E. Specific Penalty Clauses in Contracts The discussion in this chapter so far assumes that the contract itself does not expressly define what constitutes cause for dismissal without notice. It is possible for a contract to include a specific penalty clause that determines what sorts of employee misconduct will constitute cause for dismissal without notice.21 For example, a contract might state that any theft, regardless of the amount, is cause for immediate termination without notice. Provided the contract language is clear and unambiguous, the effect of a specific penalty clause would be to oust the common law rules pertaining to cause for summary dismissal that we are discussing in this chapter.22 Few reported decisions involve the application of specific penalty clauses; relatively few employment contracts include them, and it may be that few employees challenge their employer’s application of those clauses.
III. Common Grounds for Summary Dismissal The preceding section provided an overview of the basic legal principles that are important in summary dismissal cases. Whenever an employer argues as its defence in a wrongful dismissal lawsuit that it had grounds for summary dismissal, the courts apply the proportionality test used in the McKinley decision, described above. Now let’s consider specific types of employee behaviour that can cause an employer to terminate the contract for cause.
condonation: When a party that could have treated the employment contract as having been repudiated (terminated) by the other party’s breach of the contract elects not to treat the contract as being repudiated. specific penalty clause: A term in a contract that defines the penalty that will result as a consequence of a specified breach of contract by one of the parties.
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A. Dishonesty and Conflict of Interest We have already considered dishonesty as a ground for summary dismissal in the McKinley decision (Box 12.1). We learned that while dishonesty is considered to be a serious wrong, not every dishonest act gives the employer grounds for summary dismissal. The courts assess the context and seriousness of the dishonesty in deciding whether it has irreparably undermined the trust necessary in an employment relationship.23 In applying this standard, the role of the employee in the business is relevant. Employees who work with significant autonomy and who are in positions of authority or positions requiring special trust (such as bank employees) are often held to a higher standard of ethical behaviour than are employees who are not in such positions.24 Theft and fraud are particularly serious forms of dishonesty, and if a court finds that an employee committed premeditated theft or deliberately schemed to defraud the employer or a customer, summary dismissal is the likely outcome.25 However, the employer must establish that the theft or dishonesty was intentional and not the result of innocent oversight or a mistaken belief that the behaviour in question was permissible.26 Other forms of intentional employee dishonesty can also give rise to summary dismissal as a breach of the implied obligation of fidelity and honesty (see Chapter 9), such as time theft and lying to the employer (including during the recruitment process, as we noted in Chapter 6).27 However, whether such actions will lead to summary dismissal depends on the degree of dishonesty involved, as well as other mitigating circumstances.
B. Gross Incompetence and Safety Violations A duty to perform one’s job competently and safely is an implied term of every employment contract, as we learned in Chapter 9, and in some cases it is also required by an expressed contract term. However, simply being a substandard employee is not grounds for summary dismissal. The courts have used the phrase gross incompetence to describe the standard necessary to justify summary dismissal.28 A single act of incompetence can meet this standard if it is particularly egregious or constitutes a serious violation of safe work practice that is known to the employee, as demonstrated in the decision in Box 12.4.29 Often employers that assert cause of dismissal based on incompetent performance rely on cumulative just cause, discussed earlier. The “duty to warn,” mentioned above, is crucial in these cases, as the decision discussed in Box 12.5 demonstrates.30
C. Breach of Faithful Service to the Employer Another implied contract term considered in Chapter 9 requires employees to act in furtherance of the employer’s economic interests. This term includes a duty of faithful service to the employer and a prohibition on competing with the employer. Breaches of these duties can give rise to summary dismissal. For example, the courts have found cause for summary dismissal where employees secretly engaged in competition with their employer or took secret profits from the employer by not reporting income.31 The obligation of faithful service is a flexible concept, granting judges considerable latitude to decide what sorts of employee conduct it governs. In the Middelkoop v. Canada Safeway Limited case, the summary dismissal of a retail store manager who violated a company policy prohibiting employees from purchasing marked-down products was upheld. The employee claimed he was not aware of the policy. The Manitoba Court of
time theft: When an employee falsely claims wages for time not actually worked. gross incompetence: A level of employee performance that falls far below that expected of a reasonably competent employee.
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Appeal ruled that the employee’s failure to learn the policies—and his “tuning out” of a subordinate who warned him his actions were in breach of the policy—violated the “obligation of faithful service,” which was an essential condition of all employment contracts.32
BOX 12.4 » CASE LAW HIGHLIGHT Violation of Safety Rules Gives Employer Grounds for Summary Dismissal Balzer v. Federated Co-operatives Limited 2018 SKCA 93
himself, others, and the environment. Balzer sued for wrongful dismissal.
Key Facts: Balzer was terminated for cause without notice after six years’ employment for serious violations of the employer’s safety rules. Balzer had no prior discipline. Balzer had received extensive safety training as a propane coordinator and knew violating the safety rules could lead to termination. One morning, while filling his truck with propane, Balzer violated several safety rules and as a result propane escaped into the air for nearly 30 minutes discharging an estimated 5,000 litres of propane into the environment. During the leak, Balzer left the property to find a wrench, leaving the gate unsecured. He did not report the leak to police, fire services, or management until a long period had passed. When the leak stopped, Balzer left for an hour lunch without reporting the problem to management, even though there continued to be a risk that the leak could resume. The employer terminated Balzer for cause on the basis that Balzer had violated five safety rules causing a serious risk to
Issue: Did the employer have cause for summary dismissal based on the violation of several safety rules during the propane leak incident? Decision: Yes. The court cited the McKinley decision for the point that the penalty must be proportional to the employee’s wrongful acts. Balzer’s actions violated known safety protocols and the resulting discharge of propane created an emergency situation that Balzer did not take sufficiently seriously, as confirmed by his casual response, including taking a one-hour lunch during the ordeal and not reporting the leak to authorities as require by safety protocols. The court did not find any mitigating circumstances that would explain or justify Balzer’s breach of several important safety rules. Even though the cause of the termination related to a single incident in an otherwise good six-year work record, the court found that Balzer’s actions were sufficiently serious to justify a finding of cause for summary dismissal.
BOX 12.5 » CASE LAW HIGHLIGHT Incompetence as Cause for Summary Dismissal Babcock v. C. & R. Weickert Enterprises Ltd. 1993 CanLII 3112 (NSCA) Key Facts: Babcock was hired as manager of a Canadian Tire store in April 1990. The store did well under his management. However, in October 1990 the owner of the store received a report from an external consultant indicating that other senior employees had “lost confidence” in Babcock. The employer confronted Babcock with this allegation and emphasized the need for Babcock to address the problems. The employer told Babcock that his performance would be reviewed in the new year. Babcock took a vacation in early January 1991. At a manager’s meeting held in Babcock’s absence, it was agreed that Babcock was not performing his job adequately and that he would be given a 45-day period to improve. However, when he returned several weeks later, Babcock was dismissed. Issue: Did the employer have cause to summarily dismiss Babcock for incompetence?
Decision: No. The court of appeal found that, in order to establish cause for summary dismissal, the onus was on the employer to demonstrate that (1) Babcock was duly warned that his performance must improve or his services would be terminated; (2) Babcock understood the warning; and (3) Babcock was given a reasonable opportunity to rectify his performance deficiencies. While both (1) and (2) were satisfied, the employer failed to demonstrate that Babcock had been given a reasonable time to improve. Only about two months passed between the time Babcock was warned and his dismissal, and that included the busy Christmas rush period during which Babcock would not have been able to take additional training. Moreover, the fact that the employer had initially decided to give Babcock a 45-day period to improve supported the conclusion that Babcock was not given a reasonable time to improve. Babcock was awarded damages based on a period of five months’ reasonable notice.
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D. Insubordination and Insolence It is an implied (if not expressed) term of every employment contract that the employee will obey lawful employer directions. A breach of this term is known as insubordination.33 As noted above, a court is likely to find that an employee’s absolute refusal to perform the core functions of the job amounts to a repudiation of the contract that demonstrates an intention by the employee to treat the contract as at an end. In that case, an employer can simply treat the contract as over and provide no notice to the employee. However, short of an absolute refusal to perform the core functions of their job, not every act of employee insubordination will be grounds for summary dismissal. That is the lesson that flows from the McKinley proportionality test discussed earlier. For insubordination to amount to cause for summary dismissal, it must involve a serious issue, be wilful, and demonstrate a defiant refusal to respect a clear and unambiguous order that was within the authority of the employer to make.34 But even an act of wilful disobedience by an employee will not be grounds for summary dismissal if it involves a relatively minor transgression or the employee had a “reasonable excuse” for not complying, such as a concern that the order was unlawful or that complying with it could expose the employee to harm.35 A less serious incident of insubordination that would not alone constitute cause for dismissal may nevertheless serve as the culminating incident warranting the dismissal of an employee who has been previously warned about their substandard performance.36 Employees must also avoid insolence, which involves vocal defiance such as verbal abuse or insults directed at the employer. Usually a single act of insolence will not amount to cause for summary dismissal;37 however, it may do so when it is so egregious that it effectively destroys the possibility of the employment relationship continuing or seriously harms the employer’s economic interests.38 Insolence is most likely to meet that latter standard when it occurs in front of other employees or customers and involves profanities, as that behaviour undermines the authority of the employer.39 The decision discussed in Box 12.6 demonstrates how the courts treat insolence as grounds for summary dismissal.
E. Harassment Employees are prohibited from harassing co-workers or customers either by expressed contract terms or by virtue of an implied term. Work-related sexual and racial harassment in particular are treated as serious employment offences that can give rise to cause for summary dismissal, but other forms of harassment and bullying are also serious.40 However, harassment, even of a sexual or racial nature, is not always grounds for summary dismissal. Once again, context matters. Harassment by a person in a position of authority is more likely to justify summary dismissal, even if it is an isolated incident, recognizing the power dynamic, the legal duty of the employer to prevent workplace harassment, and the vulnerability of the victims (see the decision examined in Box 12.7).41 On the other hand, relatively minor harassment may warrant a warning but not termination for cause, especially if evidence exists that the harassers did not realize their behaviour was offensive and they are contrite once informed that it is.42
insubordination: A breach by an employee of the implied or expressed term of an employment contract requiring the employee to obey an employer’s orders and instructions. insolence: An overt expression of defiance by an employee to the authority of the employer.
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BOX 12.6 » CASE LAW HIGHLIGHT Insolence as Cause for Summary Dismissal Henry v. Foxco Ltd. 2004 NBCA 22 Key Facts: Henry was fired for insubordination and insolence after seven years of employment with Foxco Ltd. One day, Henry’s supervisor, Graham, asked Henry why he was taking so long to remove decals from a vehicle and told him to hurry up. Henry became belligerent and asked Graham what his problem was. Graham responded by telling Henry that he could quit if he was not happy. To that, Henry yelled, “If you want to fire me, go ahead,” repeating this line multiple times. Finally, Graham said, “Okay, you’re fired.” Henry sued for wrongful dismissal. Issue: Did Henry’s behaviour amount to cause for summary dismissal? Decision: No. The court of appeal noted that a single, isolated case of insolence will justify summary dismissal only under three circumstances: (1) when it destroys the ability of the employee and supervisor to maintain a working relationship; (2) when the incident undermined the supervisor’s ability to
manage the workforce; or (3) when the incident caused the employer material financial or reputational loss. None of these circumstances existed in this case: [The employer] did not establish that Mr. Henry’s insolence led to irreparable harm to the working relationship. Specifically, [it] did not establish that this isolated incident rendered it impossible or impracticable for Mr. Henry and Mr. Graham to maintain a working relationship. … There is no evidence to suggest that the verbal confrontation had a prejudicial effect on Mr. Graham’s ability to supervise the work place effectively or that [the employer’s] financial or business interests were prejudiced as a result of the incident. … Many things are said and done in the heat of the moment that, on reflection, are regretted by all. This is one of those cases. Henry was entitled to damages based on an assessment of six months’ reasonable notice.
BOX 12.7 » CASE LAW HIGHLIGHT Sexual Harassment by a Manager van Woerkens v. Marriott Hotels of Canada Ltd. 2009 BCSC 73
Issue: Did VW sexually harass M and, if so, was this behaviour grounds for summary dismissal without a warning?
Key Facts: van Woerkins (VW) was employed as a director of sales and marketing. He had worked for Marriott for 22 years with no discipline. In December 2006, VW attended the company’s holiday party in Vancouver where he was expected to monitor alcohol consumption by employees and protect the company’s interests, including ensuring employees did not become too inebriated. A female employee, M, became very drunk. After the company function, a group of employees including M retired to a hotel room to continue an “after party.” VW attended and followed M into a bathroom where he groped her. A couple of weeks’ later, VW phoned M at work and invited her to meet him at a nearby bar to have their “special meeting.” M declined the invitation and reported the incidents to senior management. Management did an investigation and concluded that VW had sexually harassed M and that the behaviour was sufficiently serious to provide grounds for immediate summary dismissal. VW denied that he had followed M into the bathroom or touched her inappropriately. He sued for wrongful dismissal.
Decision: Yes, the employer had grounds to terminate VW without notice. VW had committed two serious employmentrelated offences. First, VW had followed an obviously drunk and vulnerable subordinate employee into the bathroom where he touched her in an inappropriate manner and afterwards attempted to contact her “for the purposes of determining whether there was an opportunity to pursue a sexual relationship with her.” This behaviour constituted serious sexual misconduct by a manager in a position of power. Second, when confronted with M’s allegations, VW was dishonest in denying that he went into the bathroom with M, even though there were witnesses. This dishonesty undermined the employer’s trust in VW. The fact that the employer had a “progressive discipline” policy does not prevent the employer from terminating VW without a record of prior warnings. Serious misconduct that involves dishonesty and sexual harassment can create grounds for immediate termination. That was the case here.
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F. Violence and Threats of Violence Acts of violence in the workplace are considered a serious breach of the employee’s obligations, and a single act of workplace violence can give rise to summary dismissal.43 So too can threats of physical violence made against an employee or the employer.44 However, in keeping with the proportionality test, the courts will also consider mitigating factors that might have contributed to the employee’s actions. A single incident of violence by an employee with an otherwise clean disciplinary record may not be cause for summary dismissal, especially if the incident was provoked in some manner. For example, in Shakur v. Mitchell Plastics, no cause existed for summary dismissal when an employee slapped a co-worker in the face after a verbal confrontation. Applying the proportional approach, the court ruled that the incident was a momentary outburst by an otherwise good employee with six years’ service and no prior disciplinary problems. A warning or other lesser form of discipline would have been sufficient, the court ruled.45
G. Absenteeism and Lateness There is an important difference in the law of work between “culpable” and “non-culpable” absenteeism and lateness. A non-culpable absence, known as innocent absenteeism, is one in which the employee is not blameworthy, such as absence due to a disability or religious reasons. An employee cannot be disciplined for innocent absenteeism since they are not at fault. However, as explored in Chapter 11, an employer may still terminate the contract of an employee based on the doctrine of frustration of contract if it can demonstrate to a court that the employee has (1) already been absent for a long period of time and (2) the medical evidence demonstrates that the employee is unlikely to be able to return to work in the foreseeable future.46 If a court finds that either of those two conditions have not been established, then it will order the employer to pay the employee damages based on the required period of notice even though the employee was not able to work due to disability during the notice period.47 A key point to understand at this juncture of the book is that when an employee’s absenteeism is due to a reason covered by human rights legislation, including disability, religion, and in some cases family status, then the regulatory regime considered in Part III of this text intervenes in the common law right of the employer to terminate the employee by giving notice. Human rights statutes impose a duty to accommodate on the employer as a precondition to terminating an employee for innocent absenteeism. We explore the duty to accommodate in Chapter 23. When the absenteeism or lateness is unrelated to protected human rights’ grounds, the courts’ approach is similar to that which we have already seen. As per the McKinley proportionality test, the courts consider all of the circumstances and decide if summary dismissal is a proportional response to the employee’s absenteeism. Most employers making a case for summary dismissal based on tardiness attempt to build a record of prior problems accompanied by clear warnings and a reasonable opportunity for the employee to correct the problem. The approach is similar to that taken with respect to incompetence. The courts expect employers to warn employees that their tardiness is unacceptable and to clearly explain that termination will result if the problem is not corrected. An employee who receives clear warnings that continued tardiness will result in termination and does not improve risks the court finding cause for summary dismissal.48 innocent absenteeism: An employee’s absence from work due to reasons that are not blameworthy, such as illness, disability, or religious observance. frustration of contract: The termination of a contract caused by an unforeseen event that renders performance of the contract impossible. duty to accommodate: A legal requirement in human rights law to take steps to remove discriminatory barriers to employment, including altering schedules, rules, or work patterns or changing the physical design of a workplace.
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Although being absent or late without permission is a breach of contract, a single incident of either would rarely constitute cause for summary dismissal unless accompanied by some other form of misconduct.49 For example, if an employee fails to come to work in deliberate defiance of an order to do so, then this may constitute cause, even as an isolated incident.50 Such defiance violates the contractual prohibition on absenteeism and also amounts to serious insubordination. Similarly, an employee who lies to the employer about the reason for an absence is violating the contractual requirement to be honest, as well as being absent without authorization.51 Moreover, persistent absenteeism or lateness combined with other performance problems can together comprise cause for summary dismissal.52
H. Off-Duty Conduct The implied obligation of employees to further the employer’s economic interests can reach beyond the employer’s gates and capture off-duty employee behaviour. That does not mean that every idiotic thing an employee does during their free time becomes the employer’s business and exposes the employee to summary dismissal.53 However, when the employee’s off-duty conduct potentially threatens the employer’s economic interests or the ability of the employee to perform their job, then it becomes the employer’s business. Therefore, in off-duty conduct cases, the courts assess whether a nexus (a link) exists between the employee’s behaviour and prejudice to the employer’s legitimate business interests.54 The strength of that nexus can be related to the particular job in question. For example, morally questionable behaviour by a teacher or child counsellor outside of working hours may have a greater negative impact on the employer’s interests or the employee’s capacity to perform their job than would similar behaviour by a forklift driver. The decision discussed in Box 12.8 provides an example of a context in which off-duty conduct is cause for summary dismissal.
BOX 12.8 » CASE LAW HIGHLIGHT Off-Duty Conduct as Cause for Summary Dismissal Kelly v. Linamar Corporation 2005 CanLII 42487 (Ont. Sup Ct J) Key Facts: Kelly was a long-service, well-respected management employee. He was arrested for possession of child pornography accessed off-hours on his home computer. Linamar Corporation, his employer, was very visible in the community, including in its support for local children’s organizations. The arrest was widely reported in local media. The employer dismissed Kelly, who sued for wrongful dismissal. Issue: Did the arrest of Kelly for possession of child pornography on his home computer constitute cause for summary dismissal? Decision: Yes. The court noted that the test is whether the employee’s behaviour threatened the employer’s business interests. In this case, the morally offensive nature of the misconduct and the “notoriety” it attracted in the local media, combined with the employer’s visible role in the community as an advocate of children’s activities, created a nexus to the employer’s legitimate business interests. The court summarized its decision as follows:
The [employer] argues that an employee in the position of Philip Kelly, who is required to work with the general public both acquiring product from suppliers and supplying product to customers, who is required to manage, instruct and discipline people working under him, and who is required to interact collegially with many peers at the management level, has a duty to ensure that his conduct does not adversely impact on any of those activities. It is argued that permitting himself to be placed in the position where he would be charged with possession of child pornography, which fact became almost immediately known to his management peers, co-workers and people who reported to him, and which ultimately became known to the general public when at a later stage the identity of his employer was disclosed, he has failed to discharge the duty that he has to his employer. I agree.
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192 Part II The Common Law Regime A relatively new area of potential concern for employees is whether comments they make on social media can be the basis for summary dismissal. The answer, applying the legal principles just discussed, is that they can if they prejudice the employer’s economic interests, undermine the employer’s trust and confidence in the employee, or poison the work environment.55 Some recent media stories discussing employees who have been terminated for off-duty social media posts are summarized in Box 12.9.
BOX 12.9 » TALKING WORK LAW Terminated for Off-Duty Social Media Posts Many Canadian employees have learned the hard way that they can be terminated for comments or photos they post on their social media accounts. Relatively few of these employees have sued their employers, so there are not yet a lot of decided court cases exploring terminations for social media posts. However, we know from other off-duty conduct scenarios that courts will consider whether the social media posts prejudice the employer’s legitimate economic and reputational interests or the ability of the employee to perform their job; in these cases, summary dismissal may be justified. Consider whether you think a court would uphold the employer’s decision to summarily dismiss the employees in these two recent news stories. Sportsnet Television Personality Terminated for Twitter Post On-air host Damian Goddard was terminated by Rogers Sportsnet in 2011 after he tweeted his support for a professional hockey agent named Todd Reynolds, who had criticized gay marriage. Goddard tweeted: I completely and wholeheartedly support Todd Reynolds and his support for the traditional and TRUE meaning of marriage. According to a Toronto Star article, Goddard “immediately came under attack. Hours later, Sportsnet was forced to react on its main Twitter feed. It ran several replies to angry viewers repeating the same formula: ‘Today’s tweet from Damian Goddard does not reflect the views of Rogers Sportsnet.’” Goddard tweeted in response that his tweets “reflect the views of Damian Goddard.” The following day, Goddard was terminated.* Insensitive Facebook Post about Amanda Todd Costs Man His Job An employee of retailer Mr. Big and Tall was fired after he posted an offensive comment on a memorial Facebook page
Damian Goddard. set up to mourn Amanda Todd, a 15-year-old girl who committed suicide after suffering years of bullying. The employee wrote, “It’s about time this bitch died.” A reader tracked down the author and found his employer’s name on his Facebook page. She then informed the employer of the comment. The employer immediately fired the employee, telling the media that the company has “zero tolerance for the mistreatment of others no matter what form it takes.” † * Kelly, C. “Fired Sportsnet Host Damian Goddard ‘Stands by’ Tweets,” Toronto Star (2011), online: † “Negative Amanda Todd Post Costs Man His Job,” CBC News (2012), online:
I. Inappropriate Use of Employer Technology To state the obvious, when employees are at work, they are usually expected to be working. When they are provided with a computer to perform their work, they are expected to work on the computer and not surf porn or Facebook. The viewing of pornographic images at work in
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particular exposes the employer to liability for allowing a poisoned work environment if the images can be viewed by other employees. However, given what we have learned so far in this chapter, it should not surprise you to learn that employee misuse of employer-provided technology is not always grounds for summary dismissal. It depends on a number of factors. One is whether the employer has a clear Internet policy that describes what is and is not permissible. Summary dismissal for viewing or distributing pornographic material or engaging in non-work-related Internet activity on employer computers is more likely justified when the employer has a clear policy prohibiting such activities that is known to the employee and consistently enforced by the employer. In that case, the employee is engaging in deliberate insubordination.56 The courts also hold employees in managerial positions to a higher standard, since they are responsible for policing company policies and for setting a positive example.57 If no clear and explicit policy prohibiting the viewing of pornography or using computers for personal use is in place, the courts usually require that the employee be warned before a dismissal for cause will be upheld. This requirement is especially relevant if the material viewed by the employee is, according to one judge, “perfectly legal adult pornography,” meaning that it is not a violation of the Criminal Code.58
J. Intoxication at Work By now, you should be an expert in assessing how a court will deal with employee misconduct. Let’s consider, lastly, an employee who reports to work intoxicated due to consumption of either alcohol or illegal or legal (e.g., marijuana) drugs. That employee is clearly breaching an implied (if not expressed) term of their contract. But can the employee’s employment contract be terminated for cause? The answer, of course, is “it depends”: Did the intoxication affect the ability of the employee to perform their job? What is the nature of the job? (Does the job normally entail some drinking?59 Is the job supervisory?60) Was the intoxication an aberration in an otherwise stellar work record?61 What was the extent of the intoxication and the employee’s behaviour while intoxicated?62 Is the employee’s job safety sensitive, so that the intoxication posed a substantial risk?63 Had the employee previously been warned that termination could result if the employee reported to work intoxicated?64 The situation becomes more complicated if the employee is an alcoholic or drug addict because of the intersection of the regulatory standards regime and human rights statutes. Alcoholism and drug addiction are disabilities under human rights statutes, and therefore the contractual right of an employer to dismiss an employee with a substance addiction is restricted. In addition to proving that the employee was intoxicated at work in violation of the employment contract, and that this breach of contract was sufficiently serious to warrant summary dismissal, human rights legislation requires an employer to establish that it has accommodated the employee’s addiction to the point of “undue hardship.”65 We will consider the treatment of employee addictions under human rights laws in Part III.
IV. Chapter Summary By this point in the text, we have learned that in the common law regime, an employer can dismiss an employee engaged under an indefinite-term contract at any time, for any or no reason at all, simply by giving the employee notice of termination. In this chapter, we learned that an employer can terminate the employment contract without notice when the employee commits a serious breach of contract. The loss of the right to notice of termination is a big blow to an employee, so the courts have insisted that the employee’s misconduct be of a serious nature, such that it undermines the foundation of the employment relationship. The “proportionality test” developed by the Supreme Court of Canada guides the parties and the courts as they assess whether the employee’s misconduct was grave enough to bring the contract to an effective end.
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194 Part II The Common Law Regime
QUESTIONS AND ISSUES FOR DISCUSSION 1. What is “summary dismissal”? 2. Describe the two-step proportionality test developed by the Supreme Court of Canada in the case of McKinley v. BC Tel. 3. Explain the concepts of “cumulative just cause” and “culminating incident.” What must an employer establish to justify summary dismissal of an employee based on cumulative just cause? 4. Prepare a list of “mitigating factors” a judge might consider in assessing whether an employer had cause for summary dismissal. 5. In what circumstances can an employee’s behaviour outside of the workplace and during non-working hours be grounds for summary dismissal?
APPLYING THE LAW 1. Jeremy had worked at County Beer Company as a forklift driver. Last week, he drove his forklift into a pallet of empty beer bottles, breaking about 30 bottles. Alison, the human resources manager decided to terminate Jeremy for cause without notice. What information, if any, would you like to know before assessing whether Alison’s decision is likely to hold up in a court if Jeremy challenged his termination? 2. Arisha was terminated for cause after she called in sick last Tuesday. She has been employed for five years. The employer pointed to the fact that Arisha had been absent for 13 days in the past year for a variety of reasons. Arisha had been given a written warning six months ago after her twelfth absence that if she missed another day of work without prior permission she would be terminated. Four months ago, after Arisha missed a Friday before a long weekend, the employer decided to terminate her. However, because the employer was very busy, the termination never took place. With this last absence, the employer decided that Arisha needed to go. Arisha sued the employer for wrongful dismissal and argued that the employer did not have cause to terminate her without notice. She argued that the employer had condoned her absence when it took no action four months’ earlier, and it could no longer rely on the earlier written warning. How do you think a court would respond to Arisha’s argument?
3. Jacqueline was terminated from her job as a food server at a local restaurant after her boss saw some of Jacqueline’s publicly available Facebook and Twitter posts. She had only been employed for six months. On Facebook, Jacqueline posted a series of photos of herself with friends in what was obviously a very inebriated state. She appeared to be at a party. In one photo she was dancing on a table in her underwear and in another she appears to be vomiting on the sidewalk. The only caption states, “What a party last night.” Nothing on her Facebook page identifies her as an employee of the restaurant, but her boss was repulsed by the photos and does not believe that Jacqueline is the sort of person he should employ. On Twitter, Jacqueline engaged in an extended discussion with unknown people in which she berated the restaurant where she works and named the restaurant. She called her boss “an idiot who knows nothing about running a bar” and claimed, falsely, that “the bar doesn’t even use real chicken” in their meals. The employer does not have a written social media policy. Considering the test for off-duty conduct examined in this chapter, do you believe Jacqueline’s employer has grounds for summary dismissal for the comments she made on Facebook? How about her comments on Twitter?
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Chapter 12 Summary Dismissal: Termination for Cause Without Notice 195
EXERCISE A large volume of case law considers whether an employer had cause for summary dismissal of an employee. Since 2001, judges have applied the proportionality test set out by the Supreme Court of Canada in McKinley v. BC Tel, discussed in Box 12.1. To learn how the courts have applied the proportionality test to employee misconduct, search for cases that specifically reference the McKinley case. In this exercise, we “note up” the McKinley case. Noting up means searching for cases that have considered and applied the reasoning in an earlier case. 1. Go to the CanLII home page: . 2. In the “Noteup” search box, type “McKinley v. BC Tel” and then choose “McKinley v. BC Tel, 2001 SCC 38” from the drop-down menu that appears. That search should result in more than 500 cases, most of which deal with disputes over whether an employer had cause for summary dismissal. Select two or three of those cases and read them. 3. Prepare a case summary for each case that includes the key facts, the issue, and the decision, as well as answers to the following questions: a. Did the employer rely on a single incident or cumulative just cause? b. Did the court find that the employee engaged in misconduct? If so, what was the misconduct? c. If the employer relied on cumulative just cause, what was the culminating incident? d. Did the court consider any mitigating factors and, if so, how did those factors influence the court’s ultimate decision on whether the employer had cause for summary dismissal? e. Did the employer have cause for summary dismissal? What factors persuaded the judge? f. If the employer did not have cause, what remedy was ordered?
NOTES AND REFERENCES 1. R v. Arthurs, Ex p. Port Arthur Shipbuilding Co., 1967 CanLII 30 (Ont. CA); aff ’d [1969] SCR 85.
decided differently today. We have by now come to realize that a contract of service imposes upon the parties a duty of mutual respect.
2. See R.S. Echlin & M. Certosimo, Just Cause: The Law of Summary Dismissal in Canada (Aurora, ON: Canada Law 5. F.H. v. McDougall, 2008 SCC 53. In this decision, the Book, 1997); and S. Rudner, You’re Fired! Just Cause for DisSupreme Court ruled that the “balance of probabilities” missal in Canada (Toronto: Carswell, 2011). standard applies to all civil cases, rejecting an earlier line of cases that applied a higher burden of proof in cases in 3. See Henry v. Foxco Ltd., 2004 NBCA 22 at para 109; Hall v. which employers accused employees of criminal behaviour, Boise Alljoist Ltd., 2006 NBCA 111; and Ogden v. Canadian such as theft. Imperial Bank of Commerce, 2014 BCSC 285 at para 216. 4. Ennis v. Canadian Imperial Bank of Commerce, 1986 CanLII 6. Plester v. PolyOne Canada Inc., 2013 ONCA 47 at para 11. 1208 (BCSC) (summary dismissal “can be justified only by 7. See, e.g., Henry v. Foxco Ltd., supra note 3 (employee who misconduct of the most serious kind”). See also the famous ignored an order [insubordinate] and swore at a supervisor note in the British decision Wilson v. Racher, [1974] ICR [insolent] had not “repudiated” the contract); Laws v. 428 at 430: London Chronicle, Ltd., [1959] 2 All ER 285 (CA) at 287; and Stein v. British Columbia Housing Management Com Many of the decisions which are customarily cited in mission, 1992 CanLII 4032 (BCCA). these cases date from the last century and may be wholly out of accord with the current social conditions. What would today be regarded as almost an attitude of Czar – serf, which is to be found in some of the older cases … would, I venture to think, be
8. A distinction exists between employee misconduct amounting to cause for summary dismissal and misconduct constituting a repudiation of the contract by the employee. A repudiation occurs when the employee refuses to
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196 Part II The Common Law Regime perform an essential requirement of the contract. An em(Ont. Sup Ct J); Gillam v. Waschuk Pipe Line Construction ployer can elect to accept the repudiation and treat the conLtd., 2011 SKQB 308 (ongoing harassment with culminattract as having been terminated by the employee’s actions. ing incident); and Parkinson v. Kemh Holdings Limited, Some courts have noted that if the employer asserts repusupra note 8. diation rather than just cause, then the issue is whether the 15. Atkinson v. Boyd, Phillips & Co. Limited, 1979 CanLII 478 refusal evinced an intention to treat the contract as at an (BCCA); Nossal v. Better Business Bureau of Metropolitan end, rather than whether the misconduct was sufficiently Toronto Inc., 1985 CanLII 1980 (Ont. CA); Lowery v. serious to amount to cause for summary dismissal. See Calgary (City of), 2002 ABCA 237; Henson v. Champion Roden v. Toronto Humane Society, 2005 CanLII 33578 Feed Services Ltd., 2005 ABQB 215; and Poliquin v. Devon (Ont. CA); and Parkinson v. Kemh Holdings Limited, 2013 Canada Corporation, supra note 13. SKQB 172. 16. Henson v. Champion Feed Services Ltd., supra note 15; 9. Lake Ontario Portland Cement Co. Ltd. v. Groner, [1961] Brown v. Sears Ltd., 1988 CanLII 153 (NSSC); Lowery v. SCR 553; Carr v. Fama Holdings Ltd., 1989 CanLII 240 Calgary (City of), supra note 15; Whitford v. Agrium Inc., (BCCA); and Universal Cargo Carriers Corp. v. Citati, 2006 ABQB 726; Riehl v. Westfair Foods Ltd., 1995 CanLII [1957] 2 QB 401. If the employer learns the new facts but 6086 (Sask. QB); Laszczewski v. Aluminart Products sits on them for an unreasonable period of time before Limited, 2007 CanLII 56493 (Ont. Sup Ct J); Webb v. Eaton raising them as grounds for termination, a court may afford Yale Ltd., 2003 CanLII 29770 (Ont. Sup Ct J); Weyland v. the facts less weight: Collette v. AMV Enterprises Ltd., 2014 Famous Players Inc., 1999 ABQB 556; Gillespie v. 1200333 BCSC 816. Alberta Ltd., 2011 ABPC 167; Oosterbosch v. FAG Aerospace Inc., 2011 ONSC 1538; Caskanette v. Bong-Keun Choi Den 10. McIntyre v. Hockin (1889), 16 OAR 498 at 501. tistry, 2016 ONSC 6448; Goncharova v. Marsh Lake Waste 11. MacFarlane v. Westfair Foods Ltd., 1994 CanLII 9048 Society, 2015 YKSM 4; Graf v. Saskatoon Soccer Centre Inc., (Alta. QB); Parkinson v. Kemh Holdings Limited, supra note 2004 SKQB 282; and Kim v. International Triathlon Union, 8 (refusal by mechanic to install tire rims amounted to a 2014 BCSC 2151. See also Duffett v. Squibb Canada Inc., repudiation of the contract); Roden v. Toronto Humane supra note 13 at 42 (warnings need not be in writing, but Society, supra note 8; Richards v. Rainy River Cattlemen’s they must be sufficiently clear that the employee underAssociation, 2012 ONCA 260. Note that there is no “duty stands and appreciates their significance). to warn” an employee who has repudiated the contract by 17. The “corrective theory of discipline” is well known in both refusing to perform the essential duties of their job. Rather, the labour arbitration setting in unionized workplaces the employer may simply treat the contract as at an end. (see Part IV) and in human resources literature and prac 12. See McKinley v. BC Tel, 2001 SCC 38 at para 51 (court tice. See M. Belcourt, G. Bohlander, & S. Snell, Managing noting that cause for summary dismissal is often found in Human Resources, 6th ed (Toronto: Nelson, 2011) cases of “theft, misappropriation or serious fraud”). See also at 532-34. Steel v. Coast Capital Savings Credit Union, 2015 BCCA 127 18. Oosterbosch v. FAG Aerospace Inc., supra note 16; Laszcze(improper access and use of confidential documents); wski v. Aluminart Products Limited, supra note 16; Dawson Manak v. Workers’ Compensation Board of British Columbia, v. FAG Bearings Ltd., 2008 CanLII 55459 (Ont. Sup Ct J); 2018 BCSC 182 (improper use of confidential documents); and Tracey v. Swansea Construction, 1964 CanLII 271 (Ont. Poirier v. Wal-Mart Canada Corp., 2006 BCSC 1138 Sup Ct J). (manager manipulating payroll documents); Steel v. Coast Capital Savings Credit Union, 2015 BCCA 127 (single breach 19. Crimi v. Sun Sun Holding, 2009 ABPC 394; McIntyre v. of privacy rules); and van Woerkens v. Marriott Hotels of Hockin, supra note 10 at 501; Jalan v. Institute of Indigenous Canada Ltd., 2009 BCSC 73 (harassment by a manager). Government, 2005 BCSC 590; Booton v. Synergy Plumbing and Heating Ltd., 2019 BCSC 276; Fleming v. J.F. Goode & 13. McIntyre v. Hockin, supra note 10 at 502; Ross v. Willards Sons Stationers & Office Supplies Ltd., 1994 CanLII 4361 White Chocolate Ltd. (1927), 2 DLR 461 (Man. KB) at 469; (NSSC); and Kirk v. Nanaimo Literacy Association, 2018 Matheson v. Matheson Industrial Trucks Ltd. (1984), BCSC 1217 (seven weeks’ delay between conduct and ter4 CCEL 271 (Ont. H Ct J); Daley v. Depco International Inc., mination was not condonation in light of the circumstances). 2004 CanLII 11310 (Ont. Sup Ct J); Poliquin v. Devon Canada Corporation, 2009 ABCA 216; Duffett v. Squibb Canada Inc., 1991 CanLII 7038 (Nfld. SC); Chopra v. Easy Plastic Containers Limited, 2014 ONSC 3666; and Ma v. Columbia Trust Co. Ltd., 1985 CanLII 686 (BCSC).
14. Grewal v. Khalsa Credit Union, 2012 BCCA 56; Daniels v. Canadian Gift and Tableware Assn., 2003 CanLII 25192
20. McIntyre v. Hockin, supra note 10; Nossal v. Better Business Bureau of Metropolitan Toronto Inc., supra note 15; and Backman v. Maritime Paper Products Limited, 2009 NBCA 62.
21. McRae v. Marshall, [1891] 19 SCR 10; Confederation Life Association v. Berry, [1927] SCR 595; Webster v. Excelsior
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Chapter 12 Summary Dismissal: Termination for Cause Without Notice 197 Life Insurance Company, 1984 CanLII 682 (BCSC); and Vasquez v. Delcan Corp., 1998 CanLII 14741 (Ont. Sup Ct J).
that the employee was working longer hours is cause for dismissal); Zerr v. North Vancouver (District), 2006 BCSC 1819 (deliberate falsification of mileage claims is cause); and Courchesne v. INCO Ltd., 2005 CanLII 20802 (Ont. Sup Ct J) (a scheme to misappropriate product from employer is cause).
22. The courts would likely interpret an ambiguous specific penalty clause against the interests of the employer, applying the contra proferentem doctrine we discussed in Chapter 8. See also Allman v. Yukon Consolidated Gold 28. Erlund v. Quality Communication Products Limited (1972), Field Co., [1908] 8 WLR 373 (YCA) (a contract term allow29 DLR (3d) 476 (Man. QB); Matheson v. Matheson Intering the employer to terminate the contract if it believed national Trucks Ltd., supra note 13; Duffett v. Squibb there was cause must be applied by the employer “in good Canada Inc., supra note 13; Rowe v. Keg Restaurants Ltd., faith and [in a] bona fide” manner). See also G. England, 1996 CanLII 1975 (BCSC); Cottrill v. Utopia Day Spas and Individual Employment Law, 2nd ed (Toronto: Irwin Law, Salons Ltd., 2017 BCSC 704; Brien v. Niagara Motors 2008) at 341-42. Limited, 2008 CanLII 41823 (Ont. Sup Ct J); and Kitcher v. The Royal Canadian Legion, 2003 MBQB 266. 23. McKinley v. BC Tel, supra note 12. See also MacNaughton v.
29. Balzer v. Federated Co-operatives Limited, 2018 SKCA 93 Sears Canada Inc., 1997 CanLII 9530 (NBCA) (a minor (single serious breach of well-known safety practices creatindiscretion by an employee that cost the employer $14 did ing risk to public and workers). not “break the camel’s back” and destroy the employment relationship). 30. The leading case describing the duty to warn in relation to incompetence in particular is Brown v. Sears Ltd., supra 24. For example, employees in the banking industry who have note 16. See also Jardine v. Hillside, 2005 NBQB 275; and access to financial information and funds are held to a very Babcock v. C. & R. Weickert Enterprises Ltd., 1993 CanLII high level of honesty and fidelity: Rowe v. Royal Bank of 3112 (NSCA) and comments and cases cited in note 11, Canada, 1991 CanLII 912 (BCSC) (summary dismissal was supra. affirmed for a bank employee who violated a rule against personal relationships with customers); and Steel v. Coast 31. Knowlan v. Trailmobile Parts & Services Canada Ltd., 2006 Capital Savings Credit Union, 2013 BCSC 527 (summary BCSC 337; and Fraser v. Proscience Inc., 2005 CanLII 21549 dismissal was affirmed for a bank employee who viewed (Ont. Sup Ct J). another employee’s personnel file without permission). 32. Middelkoop v. Canada Safeway Limited, 2000 MBCA 62. Senior employees with high levels of authority are also held 33. See supra note 11 and accompanying text. to a very high level of trust: Robson v. Thorne, Ernst, & Whinney, 1999 CanLII 2845 (Ont. CA) (summary dismissal 34. See Stein v. British Columbia Housing Management Comupheld for an account manager who engaged in tax fraud); mission, supra note 7; Kirk v. Nanaimo Literacy Association, Dowling v. Ontario (Workplace Safety and Insurance Board), supra note 19; Chaba v. Ensign Drilling Inc., 2002 ABPC 2004 CanLII 43692 (Ont. CA); Poliquin v. Devon Canada 131; Amos v. Alberta, 1995 CanLII 9287 (Alta. QB); Laws v. Corporation, supra note 13; and Bannister v. General Motors London Chronicle (Indicator Newspapers) Ltd., [1959] 2 All of Canada Ltd., 1998 CanLII 7151 (Ont. CA) (a supervisor ER 285 (CA) at 288, 270; Panton v. Everywoman’s Health is expected to stop sexual harassment, not engage in it). Centre Society (1988), 2000 BCCA 621; Karmel v. Calgary Jewish Academy, 2015 ABQB 731; Wilson v. KP Manufac 25. The Supreme Court of Canada indicated in the McKinley turers (Calgary) Ltd., 1998 CanLII 18141 (Alta. QB); Beaudecision that “theft, misappropriation or serious fraud” doin v. Agriculture Financial Services Corporation, 2018 would normally be grounds for summary dismissal: McKinABQB 627; and Marmon v. The Authentic T-Shirt Company, ley v. BC Tel, supra note 12 at para 51. See also Ducharme v. 2019 ONSC 205. England, 1999 CanLII 1107 (BCSC); Lane v. Canadian Depository for Securities Limited (1993), 49 CCEL 225 (Ont. 35. MacKinnon v. Lewis Energy Management Inc., 1999 CanLII Gen Div); Geluch v. Rosedale Golf Assn., 2004 CanLII 14566 2167 (Ont. CA); Honda Canada Inc. v. Keays, 2005 CanLII (Ont. Sup Ct J); Murphy v. Canadian Tire Corp. (1991), 39 8730 (Ont. Sup Ct J), partially rev’d on other grounds 2008 CCEL 205 (Ont. Gen Div); and Kong v. Oshawa Group Ltd. SCC 39 (refusal of an employer order to meet with the (1993), 46 CCEL 181 (Ont. Gen Div). company doctor is not cause for dismissal because the employee reasonably believed the order infringed his rights 26. Kreager v. Davidson, 1992 CanLII 198 (BCCA); Todd v. under a human rights statute). 7-Eleven Canada Inc., 2004 ABQB 86; Chapell v. Canadian Pacific Railway Company, 2010 ABQB 441; and Hill v. Dow Chemical Canada Inc., 1993 CanLII 7097 (Alta. QB).
27. Deacon v. Imperial Tobacco Company Limited, 2007 BCSC 1794 (falsification of time records to create the appearance
36. Parkinson v. Kemh Holdings Limited, supra note 8.
37. Bohay v. 567876 Saskatchewan Ltd., 2009 SKPC 128; Henry v. Foxco Ltd., supra note 3; Donovan v. New Brunswick Publishing Co. Ltd., 1996 CanLII 4832 (NBCA) (telling the boss
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198 Part II The Common Law Regime 46. Hydro-Quebec and Syndicat des employees techniques Professionnelles et de bureau d’Hydro-Quebec, 2008 SCC 43. Some courts have found that an employment contract is “frustrated” when an employee’s illness or disability will prevent the employee from performing their job for the foreseeable 38. Bennett v. Cunningham, 2006 CanLII 37516 (Ont. Sup Ct J) future: Wightman Estate v. 2774046 Canada Inc., 2006 at para 34; Henry v. Foxco Ltd., supra note 3 at para 111; BCCA 424. Claire v. Moore Corp. (1989), 29 CCEL 41 (Ont. DC); Fortier v. Kal Tire, 2006 BCPC 223; Rysstad v. Dependable 47. Sylvester v. British Columbia, [1997] 2 SCR 315; Lippa v. Turbines Ltd., 2007 BCSC 474; and Wise v. Broadway PropCan-Cell Industries Inc., 2009 ABQB 684; Sandhu v. North erties Ltd., 2005 BCCA 546 (employee compared his boss, Star Mills Ltd., 2007 BCSC 1222; and Whitford v. Agrium an elderly Jewish man, to a Nazi slave camp). Inc., supra note 16. See also Antonacci v. Great Atlantic & Pacific Co. of Canada, 1998 CanLII 14734 (Ont. Sup Ct J), 39. Henry v. Foxco Ltd., supra note 3 at paras 118-20; Regdos v. aff ’d 2000 CanLII 5496 (Ont. CA), noting that the doctrine Atlantic Dental Laboratories Ltd., supra note 37 (calling a of frustration requires consideration of the human rights’ supervisor a “piece of shit” does not justify summary disduty to accommodate. Contrast Novakowski v. Canadian missal when it occurs in private). Contrast with Codner v. Linen & Uniform Service Co, 2015 ABQB 53 at para 89, sugJoint Construction, 1989 CanLII 4852 (Nfld. SC) (calling a gesting that the duty to accommodate does not apply in the president a “fucking liar” justifies summary dismissal even common law regime. though it took place in private). to “shove it” is not grounds for summary dismissal); Regdos v. Atlantic Dental Laboratories Ltd., 2007 NBQB 188; and Streng v. Northwestern Utility Construction Ltd., 2016 BCPC 161.
48. Elliott v. Parksville (City of), 1990 CanLII 806 (BCCA); 40. Geluch v. Rosedale Golf Assn., supra note 25 at para 92; Fleming v. J.F. Goode & Sons Stationers & Office Supplies Gillam v. Waschuk Pipe Line Construction Ltd., supra note Ltd., supra note 19; S.S. v. Huang & Danczkay Property 14; Dotchin v. Saskatchewan (Workers’ Compensation Management Inc., 1999 CanLII 14865 (Ont. Sup Ct J); Board), 2002 SKQB 279; and Neigum v. Wilkie Co-operative Thompson v. Flemming, 2009 NBQB 340; Riley v. Crown Association Ltd., 1987 CanLII 4786 (Sask. QB). Trust Co., [1977] 5 AR 1 (TD); Pagnotta v. Read Jones 41. Bannister v. General Motors of Canada Ltd., supra note 24; Christoffersen Ltd., 1990 CanLII 5944 (Alta. QB) (excessive Simpson v. Consumers’ Assn. of Canada, 2001 CanLII 23994 absenteeism not cause for dismissal); and Rutkowski v. (Ont. CA); Fleming v. Ricoh Canada Inc., 2003 CanLII 2435 Edmonton Transit Mix & Supply Co. Ltd., 2007 ABQB 277. (Ont. Sup Ct J); Menagh v. Hamilton (City), 2007 ONCA v. O’Shanter Development Company Ltd., 1999 49. Minott 244; van Woerkens v. Marriott Hotels of Canada Ltd., supra CanLII 3686 (Ont. CA); and Bailey v. Service Corporation note 12; Leach v. Canadian Blood Services, 2001 ABQB 54; International (Canada) ULC, 2018 BCSC 235. Gonsalves v. Catholic Church Extension Society of Canada, 1998 CanLII 7152 (Ont. CA); Gillam v. Waschuk Pipe Line Construction Ltd, supra note 14; and Foerderer v. Nova Chemicals Corporation, 2007 ABQB 349.
50. Aeichele v. Jim Pattison Industries Ltd., 1992 CanLII 986 (BCSC); Riley v. Crown Trust Co., supra note 48; and Marmon v. The Authentic T-Shirt Company, supra note 34.
42. Fonceca v. McDonnell Douglas Canada (1983), 1 CCEL 51 51. Hunter v. Webcentrex Inc., 2007 NSSM 35. (Ont. H Ct J); MacDonald v. Valley Credits Ltd. (1988), 12 52. See, for example, Oosterbosch v. FAG Aerospace Inc., supra ACWS (3d) 358 (BCSC); Geluch v. Rosedale Golf Assn., note 16; and Gichuru v. Smith, 2013 BCSC 895. supra note 25; Brazeau v. International Brotherhood of Elec 53. Off-duty conduct not grounds for summary dismissal: trical Workers, 2004 BCCA 645; Tse v. Trow Consulting EnBackman v. Hyundai Auto Canada, 1990 CanLII 4087 gineers Ltd. (1995), 14 CCEL (2d) 132 (Ont. Gen Div); and (NSSC) (not cause for dismissal when an employee is Hodgins v. St. John Council for Alberta, 2007 ABQB 275, charged with drug trafficking, since there is no harm to the aff ’d 2008 ABCA 173. See the discussion of mitigating employer’s interests); Klonteig v. West Kelowna (District), factors to be considered in harassment cases in Alleyne v. 2018 BCSC 124 (no cause for dismissal when the assistant Gateway Co-operative Homes Inc., 2001 CanLII 28308 (Ont. fire chief was arrested for driving an employer vehicle while Sup Ct J). intoxicated in off-hours); Merritt v. Tigercat Industries, 2016 43. Izzard v. Cosmopolitan Industries Ltd., 2002 SKQB 200. ONSC 1214 (arrest for sexual assault against minors); and 44. Dilg v. Dr. D. Sarca Inc., 2007 BCSC 1716. Fleming v. Ricoh Canada Inc., supra note 41. 45. Shakur v. Mitchell Plastics, 2012 ONSC 1008. See also Ditch- 54. burn v. Landis & Gyr Powers, Ltd., 1997 CanLII 1500 (Ont. CA) (drunken fight with a client is not grounds for summary dismissal); and Phanlouvong v. Northfield Metal Products (1994) Ltd., 2014 ONSC 6585 (punching a coworker is not grounds for summary dismissal).
Cases in which off-duty conduct was found to be grounds for summary dismissal: Harrop v. Markham Stouffville Hospital, 1995 CanLII 7295 (Ont. Sup Ct J) (the relationship of a nurse with a former psychiatric patient); Canadian Imperial Bank of Commerce v. Boisvert (1986), 68 NR 355 (FCA) (a bank employee’s relationship with a bank robber);
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Chapter 12 Summary Dismissal: Termination for Cause Without Notice 199 Whitehouse v. RBC Dominion Securities Inc., 2006 ABQB 58. Asurion Canada Inc. v. Brown and Cormier, 2013 NBCA 13. 372 (investment adviser brought prostitute to his office after 59. See MacDonald v. Northern Breweries Ltd., [1989] OJ hours); Kelly v. Linamar Corporation, 2005 CanLII 42487 No. 3331 (QL) (DC) (the dismissal of a beer salesman who (Ont. Sup Ct J) (arrest for child pornography on home lost his licence after impaired driving was not just cause). computer); and Smith v. Kamloops and District Elizabeth 60. Rose v. Marystown Shipyard Limited, 1985 CanLII 1829 Fry Society, 1996 CanLII 2897 (BCCA) (social worker in a (Nfld. CA). relationship with a client). 61. Ditchburn v. Landis & Gyr Powers Ltd., 1995 CanLII 7290 55. There are surprisingly few cases to date in which a (Ont. Sup Ct J); and Robinson v. Canadian Acceptance non-union employee has challenged their termination for Corp., [1974] 9 NSR (2d) 226 (CA). comments made on social media. In Kim v. International Triathlon Union, 2014 BCSC 2151, the court ruled that no 62. Dziecielski v. Lighting Dimensions Inc., 2012 ONSC 1877 (a drunk employee caused a life-threatening vehicle crash cause for summary dismissal existed when a communicaon a busy highway, so termination for cause was upheld); tions employee made comments on social media that were and Whitehouse v. RBC Dominion Securities Inc., supra note potentially harmful to the employer’s interests in large part 54 (a drunk employee who brought a prostitute to the office because the employee had not been warned. Given the is dismissed for cause); van Woerkens v. Marriott Hotels of employee was a communications officer it is not clear that Canada Ltd., supra note 12 (manager’s intoxication affected this case involved “off-duty conduct.” There are numerous his poor judgment, which contributed to his termination cases involving unionized employees fired for social media for harassment). posts, which we will look at in Part IV of this book. The BC Labour Relations Board upheld the dismissal of 63. Anstey v. Canadian National Railway Co. (1980), 27 Nfld. two employees for Facebook comments that derided and and PEIR 95 (Nfld. CA) (summary dismissal of a drunk threatened supervisors: Lougheed Imports Ltd. boat captain is upheld); Murphy v. Sealand Helicopters Ltd., (West Coast Mazda) v. United Food and Commercial 1988 CanLII 5402 (Nfld. SC); and Birchall v. Canadian HeliWorkers International Union, Local 1518, 2010 CanLII copter Ltd., 1998 CanLII 4176 (BCSC) (dismissal is upheld 62482 (BCLRB). Racist or sexist comments, or comments of a helicopter pilot who reported to work with an alcohol that are derogatory to a particular religion, can also violate level above the lawful limit). human rights legislation: Perez-Moreno v. Kulczycki, 2013 64. Blomgren v. Jingle Pot Pub Ltd., 1999 BCCA 9 (an employee HRTO 1074. See also J. Teitel, “Fired over Facebook: had been given a clear warning that intoxication at work The Consequences of Discussing Work Online” (2012) would result in termination); and Volchoff v. Wright Auto 2:2 UWO J Legal Stud 3. Sales Inc., 2015 ONSC 8029 (employee was not warned that 56. Poliquin v. Devon Canada Corporation, supra note 13; and Backman v. Maritime Paper Products Limited, 2008 NBQB 219; aff ’d 2009 NBCA 62. 57. Foerderer v. Nova Chemicals Corporation, supra note 41; Poliquin v. Devon Canada Corporation, supra note 13; and Wong v. Lantic Inc., 2012 ABQB 716.
consumption of alcohol could lead to termination).
65. Chopra v. Syncrude Canada Ltd., 2003 ABQB 504; and Whitford v. Agrium Inc., supra note 16.
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C H A P T E R 13
“You Forced Me to Quit!”: The Special Case of Constructive Dismissal LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 201 II. The Legal Concept of “Constructive Dismissal” 202 A. Constructive Dismissal Based on Employer Behaviour That May Not Breach a Term of the Contract but That Makes Continued Employment “Intolerable” 203 B. Constructive Dismissal Based on Substantial Breach of an Essential Term of the Contract 204 III. Common Scenarios That Give Rise to a Constructive Dismissal 205 A. Changes to an Employee’s Compensation and Benefits 205 B. Changes to an Employee’s Job Assignment 206 C. Reassignment of an Employee to a Different Work Location 208 D. “Don’t Come to Work!”: Unpaid Disciplinary Suspensions, Temporary Layoffs, and Administrative Leaves or Suspensions 209 E. Employee Harassment or a Poisoned Work Environment 210 IV. Employee Acceptance and Condonation of the Employer’s Repudiation of Contract 211 V. Chapter Summary 212 Questions and Issues for Discussion 212 Exercise 213 Notes and References 213
• Define and explain constructive dismissal. • Recognize common situations in which constructive dismissal arises. • Explain the various tests used by the courts to decide whether a constructive dismissal has occurred. • Describe the legal options available to an employee confronted with a serious breach of the employment contract by an employer.
I. Introduction Andy Murray was excited to be hired as an assistant coach of the Winnipeg Jets of the National Hockey League. He agreed to a three-year fixed-term contract that paid him in excess of $100,000 per year. Murray was good at his job. However, as often happens with pro sports teams, the organization’s management decided to shuffle its coaching staff about halfway through the three-year period. Management reassigned Murray to the position of hockey scout. Murray would be paid the same salary, but being a hockey scout was much less desirable than being an assistant coach. Murray refused to accept the reassignment and insisted he remain in the assistant coach job he was hired to perform. Management refused, so Murray quit. As a result of the contract coming to an early end, Murray lost out on about $150,000 that would have been paid to him had the contract run for the full three-year term. What should happen in this situation? Murray brought the employment relationship to an end by quitting without notice. Therefore, maybe Murray should forfeit the money. Then again, it was the employer’s actions, in removing Murray from the job he was hired to perform and assigning him to a less desirable job, that really caused the breakdown of the relationship. Had the employer just left Murray in his coaching position, no problems would have arisen.
201
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202 Part II The Common Law Regime The question of whether an employee must tolerate a unilateral change in working conditions is at the core of the law of constructive dismissal. A constructive dismissal occurs when an employer commits a fundamental breach of contract or otherwise behaves in a manner that makes the workplace intolerable for the employee, and the employee responds by treating the contract as having been terminated by the employer.1 Since a constructive dismissal results in the termination of the employee’s employment contract, the employee can recover damages based on the failure of the employer to provide notice of termination. Therefore, constructive dismissal is a special type of wrongful dismissal. The word “constructive” refers to the fact that constructive dismissal is a legal invention (a legal “construct”): the court “constructs” a termination based on the employer behaving as if it no longer intends to be bound by the contract, even though the employer never utters the words “you are terminated.”2 In the Winnipeg Jets case described above, the court ruled that the employer had committed a constructive dismissal by reassigning Murray without his agreement. The judge wrote: The contract employed Murray as a coach and for no other purpose. The action of the Jets reflected a material change in Murray’s employment agreement. It went to the essence of the contract and amounted to a repudiation that entitled Murray to treat the agreement as at an end.3
The Jets were ordered to pay Murray close to $150,000 in damages, reflecting his lost wages for the remaining period of the three-year contract. In this chapter, we will review the basic principles and tensions that shape the law of constructive dismissal. We will also examine some of the most common sorts of employer behaviour that give rise to constructive dismissal.
II. The Legal Concept of “Constructive Dismissal”
Constructive dismissal is based on the doctrine of repudiation of contract. A repudiation of contract occurs when a party behaves in a manner that demonstrates they no longer intend to be bound by the terms of the contract. Usually this behaviour involves a substantial (sometimes called “fundamental” or “repudiatory”) breach of an essential term of the contract, but sometimes an intention to no longer be bound by a contract can be demonstrated by a pattern of behaviour that overall demonstrates this intention.4 The innocent party can elect to treat the contract as having been terminated, which entitles that party to damages for any loss resulting from that termination. In the case of constructive dismissal, the employer’s “repudiatory” conduct does not automatically bring the contract to an end. Rather, a constructive dismissal occurs only when the employee accepts an employer’s repudiation of contract by quitting and suing for constructive dismissal.5 The language of “acceptance” here can be confusing. It does not mean that the employee accepts the employer’s behaviour. Instead, it means that the employee is accepting that the employer has terminated the employment contract. The onus is on the employee to prove that a constructive dismissal has occurred. Often the constructive dismissal results from a single, substantial breach of contract by the employer. However, just as an employer may rely on an accumulation of wrongful acts by the employee to justify summary dismissal (see Chapter 12), so too can constructive dismissal be based on the
constructive dismissal: A fundamental change to an employment contract by an employer that an employee may treat as an effective termination of the contract. repudiation of contract: A breach of contract that demonstrates an intention by the party to treat the contract as at an end and to no longer be bound by the contract. acceptance of an employer’s repudiation of contract: When an employee responds to a repudiation of the employment contract by the employer by treating the contract as over and quitting.
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Chapter 13 “You Forced Me to Quit!”: The Special Case of Constructive Dismissal 203
cumulative effect of less serious breaches of contract by an employer (called cumulative effect constructive dismissal).6 In a 2015 decision called Potter v. New Brunswick Legal Aid Services, the Supreme Court of Canada recognized two types (or branches) of constructive dismissal:7 1. Constructive dismissal based on employer behaviour that may not breach a term of the contract but that makes continued employment “intolerable.” 2. Constructive dismissal based on substantial breach of an essential term of the contract. Most cases are decided applying the second branch of constructive dismissal. Let’s consider each branch separately.
A. Constructive Dismissal Based on Employer Behaviour That May Not Breach a Term of the Contract but That Makes Continued Employment “Intolerable” The origins of this branch of constructive dismissal are quite recent and date from a 2000 decision of the Ontario Court of Appeal in a case called Shah v. Xerox Canada Ltd.8 In that case, the court ruled that an employer had constructively dismissed the employee by engaging in a pattern of harassment and false allegations against the employee spanning a period of six months. The court ruled that it was not necessary for an employee to point to the breach of any particular clause of the contract in cases where the employer’s behaviour overall makes “continued employment intolerable.” In applying this branch of constructive dismissal, courts apply an objective test (see discussion in Chapter 7) and ask whether a “reasonable employee” in the circumstances would conclude that the employer no longer intended to be bound by the contract by making the employee’s continued employment “intolerable.”9
BOX 13.1 » CASE LAW HIGHLIGHT Did the Employer Constructively Dismiss the Employee by Hiring a Man Who Had Sexually Harassed Her Years Earlier? Colistro v. Tbaytel 2019 ONCA 197 Key Facts: C had been employed for 20 years by Tbaytel. In January 2007, the employer announced it was hiring Benoit as a vice-president. C was shocked and upset by this because in the mid-1990s, Benoit had been terminated from the company after sexually harassing C and others. C went on sick leave and was diagnosed with post-traumatic stress disorder. She demanded that the employer not hire Benoit. The employer refused and went ahead with Benoit’s hiring, offering to transfer C to another building. C refused to be transferred, quit, and filed a lawsuit for constructive dismissal. Issue: Did the hiring of Benoit make C’s continued employment intolerable and therefore amount to a constructive dismissal?
Decision: Yes. The Ontario Court of Appeal ruled that the employer’s behaviour made continued employment intolerable for the employee. The test is whether a “reasonable employee” in the employee’s situation would find that the employer’s behaviour made the workplace intolerable. The employer’s behaviour can take the form of a series of harmful actions (cumulative effect) or a single serious act by the employer. In this case, a reasonable employee would find that the employer’s decision to hire a man who had earlier been terminated for harassing C, knowing that this caused C trauma, would render continued employment intolerable for C. Therefore, the employer had constructively dismissed C. The employer was ordered to pay damages to C based on 12 months’ reasonable notice, plus additional damages of $100,000 for bad faith in the manner of dismissal (see Chapter 14 for a discussion of damages).
cumulative effect constructive dismissal: A constructive dismissal that is founded on an accumulation of breaches of the employment contract by the employer, none of which alone would be serious enough to constitute a constructive dismissal. objective test: A legal test used in interpretation of contracts and statutes that asks, “What would a reasonable person of normal intelligence think, if told about the circumstances?” Contrast with subjective test.
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204 Part II The Common Law Regime It is worth noting that in most cases in which the court has ruled that employer behaviour made continued employment “intolerable,” the employee could alternatively have argued the second branch of constructive dismissal (constructive dismissal based on a fundamental breach of the contract) on the basis that the employer committed a substantial breach of the implied contract term requiring decency, civility, respect, and dignity, discussed in Chapter 9.10
B. Constructive Dismissal Based on Substantial Breach of an Essential Term of the Contract Most constructive dismissal decisions apply the second branch of the test, which requires the courts to answer three questions: 1. What are the express and implied terms of the contract, and did the employer breach one of those terms? 2. If the employer breached a contract term, then was that breach “substantial” and detrimental to the employee? In answering this question, the courts again apply an “objective test” and ask whether a “reasonable employee” in the employee’s circumstances would conclude that the employer’s breach of contract has substantially altered an essential term of the contract.11 3. Did the employee “accept” the repudiation and treat the breach as having terminated the contract? Many constructive dismissal cases turn on how the court answers the second question. A relatively minor breach of contract by an employer will not be sufficient to repudiate the contract as a whole. An employee who treats a non-substantial breach of contract (i.e., a less serious breach that does not demonstrate an intention to treat the contract as at an end) by the employer as a constructive dismissal has simply resigned. As we discuss below, an employee must elect whether to “accept” the repudiation (question 3 in the list above) within a reasonable period of time. If the employee does not, then a court may rule that they have condoned the employer’s breach, the consequence of which is that an action for constructive dismissal would be barred (dismissed by the court). The leading case in Canada on the law of constructive dismissal based on a substantial breach of contract is Farber v. Royal Trust Co., summarized in Box 13.2. Since 1997, hundreds of decisions have been issued dealing with alleged constructive dismissal that cite Farber. The exercise at the end of this chapter focuses on researching these decisions. The remainder of this chapter explores various common scenarios that can give rise to a constructive dismissal based on a substantial breach of an expressed or implied term of the contract by the employer.
BOX 13.2 » CASE LAW HIGHLIGHT Change to Job Duties Resulting in What the Employee Believes Will Be a Substantial Pay Cut Farber v. Royal Trust Co. [1997] 1 SCR 846 Key Facts: Farber was employed by Royal Trust Co. as regional manager for western Quebec, responsible for supervising some 21 offices and over 400 employees. The employer restructured and eliminated that job. It offered Farber his old job, as manager of a single underperforming branch, and told him
his pay in that job would be based on commissions alone. Farber estimated that his compensation would be cut in half in this job. Rather than report to the new job, Farber quit and sued for constructive dismissal. It turned out that the branch Farber would have been transferred to did better than expected, and had Farber reported to that job, his loss of pay would not have been as great as he anticipated.
condonation: When a party that could have treated the employment contract as having been repudiated (terminated) by the other party’s breach of the contract elects not to treat the contract as being repudiated.
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Chapter 13 “You Forced Me to Quit!”: The Special Case of Constructive Dismissal 205 Issue: Was Farber constructively dismissed by his job reassignment? Decision: Yes. The Supreme Court of Canada explained the test for constructive dismissal based on a substantial breach of the employment contract as follows: [W]here an employer unilaterally makes a fundamental or substantial change to an employee’s contract of employment—a change that violates the contract’s terms—the employer is committing a fundamental breach of contract that results in its termination and entitles the employee to consider himself or herself constructively dismissed. The Supreme Court noted a number of prior decisions in which the courts had found that a demotion to a less pres-
tigious job warranted a finding of constructive dismissal. Applying this law, the court ruled that Farber’s reassignment “altered the essential terms of the employment contract” and that “at the time the offer was made, any reasonable person in the same situation as the appellant would have come to that conclusion.” Thus, the test is whether a “reasonable employee” would conclude that the employer is altering an essential term of the contract, given the facts as understood at the time the change is proposed. Therefore, what actually happened at the branch after Farber quit was irrelevant, since Farber could not have looked into the future to see that the branch would perform unexpectedly well. Farber was constructively dismissed and was entitled to damages based on a period of one year’s reasonable notice.
III. Common Scenarios That Give Rise to a Constructive Dismissal A. Changes to an Employee’s Compensation and Benefits For many employees—probably most—the compensation clause is the most important in the employment contract. After all, most of us work in order to be paid. Judges know this, and they have said that cuts to compensation go to the “root of the employment contract.”12 Therefore, when employers breach the compensation clause by cutting an employee’s pay, they are treading in dangerous waters. Any significant reduction in an employee’s pay that is not accepted by an employee will amount to a fundamental breach of the employment contract, giving the employee the right to quit and claim damages for constructive dismissal. The question that arises is whether the pay cut is substantial enough to amount to a fundamental breach, as opposed to a non-fundamental breach. A unilateral cut to an employee’s base pay of 15 percent or more will almost certainly constitute a substantial breach of the employment contract, which the employee can treat as a constructive dismissal.13 That type of case is clear-cut. More difficult to predict is how the courts will deal with smaller pay cuts amounting to less than 15 percent. The courts seem to be influenced in these close cases by the broader circumstances that surround the change. For example, in Pullen v. John C. Preston Ltd., a 10 percent cut in pay was found not to be grounds for a constructive dismissal where the judge believed that the company “was in serious difficulty.”14 In contrast, a 10 percent pay cut combined with other changes to a sales employee’s territory was found to be a constructive dismissal in the case of Benell v. William E. Coutts Co.15 Sometimes the employee does not know for sure how significantly a job change will affect them at the time they need to decide whether to “accept” the employer’s breach of contract and sue for constructive dismissal. That was the situation in the important Farber decision discussed in Box 13.2. When the cut is to the employee’s base pay, as opposed to supplemental benefits (health care, vacation time, etc.) or variable pay (such as a discretionary bonus), it is more likely to be considered a fundamental breach. An employer who says, “I will not pay you the base wage rate we agreed upon” is considered to be expressing the sentiment that it no longer intends to abide by an essential term of the contract.16 Variable pay, on the other hand, is expected to fluctuate, and the courts have long implied the right of employers to make relatively minor changes to supplevariable pay: A portion of an employee’s compensation that varies from time to time based on the employee’s or company’s performance or the discretion of the employer.
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206 Part II The Common Law Regime mental benefits.17 However, non-payment of a bonus that the employee had earned and that would reasonably be expected based on the contract and past practice can still amount to a constructive dismissal.18
B. Changes to an Employee’s Job Assignment In the course of the employment relationship, employers will sometimes want to move employees into different jobs for any number of reasons. Constructive dismissal lawsuits arise when the employee does not accept the move and instead elects to quit. The first question the courts must then consider is whether the contract confers a right on the employer to unilaterally reassign the employee. A contract could include an expressed right for employers to reassign employees, although few reported decisions rely on such clauses. However, we know from Chapter 9 that even if there is no clear, expressed contractual right for the employer to reassign the employee, this right may exist as an implied contract term. The courts have found that employers have an implied right to make “reasonable” reassignments and to shuffle job tasks.19 As an Ontario Court of Appeal justice wrote in the case of Canadian Bechtel Ltd. v. Mollenkopf: “[an employee has] no vested right in the particular job initially given to him. If the employer … acted in good faith and in the protection of its own business interests, the plaintiff would have no right to refuse the transfer.”20 This implied managerial right to move employees around is a holdover from the old master and servant law (detailed in Chapter 5) and a reminder that in the common law regime, the employer is the boss and entitled to a certain latitude in running its operation.21 As noted, the implied right of an employer to reassign job tasks is not unlimited. The courts have imposed a reasonableness requirement on this right. In practice, the reasonableness requirement can be described by reference to the following three factors: 1. The reassignment must be made for good-faith business reasons, and not as a guise to force the employee to quit.22 2. The reassignment or change in duties must be relatively minor, involve skills within the employee’s general capabilities, and not amount to a fundamental shift in the type of work the employee was hired to perform.23 The more substantial the change in duties, the more likely a court will find it amounted to a fundamental breach of contract. 3. If the reassignment results in a demotion, then it is far more likely to constitute a constructive dismissal.24 A demotion involves a reassignment to a less prestigious job with less responsibility and often, though not necessarily, less pay. In Farber, the Supreme Court of Canada observed that the courts have often held that a demotion “is a substantial change to the essential terms of an employment contract that warrants a finding that the employee has been constructively dismissed.”25 Usually a demotion will justify a finding of constructive dismissal, unless an expressed contractual right is given to the employer to demote26 or the demotion is very minor27 or temporary.28 In contrast, a lateral transfer or promotion, even in the face of an objection from the employee, will usually not be treated by the courts as a constructive dismissal. The case discussed in Box 13.3 considers whether a lateral transfer is grounds for a constructive dismissal. demotion: A reassignment of an employee’s position by an employer to another position with lower pay, less prestige, or less responsibility. lateral transfer: A reassignment of an employee’s position to another position that is roughly equal in terms of pay, prestige, and responsibility. promotion: A reassignment of an employee’s position by an employer to another position with higher pay, more prestige, and more responsibility.
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Chapter 13 “You Forced Me to Quit!”: The Special Case of Constructive Dismissal 207
BOX 13.3 » CASE LAW HIGHLIGHT When Is a Reassignment a Constructive Dismissal? Dykes v. Saan Stores Ltd. 2002 MBQB 112 Key Facts: Dykes was employed as manager of human resources for Saan Stores Ltd. He had no written employment contract with his employer. The employer received several complaints from employees about Dykes’s abrasive management style. In response, the employer decided to create a new position for Dykes: manager of human resources planning and development. The new position paid the same salary and was still a human resources management position. However, he would no longer supervise as many employees, and his role as manager of customer relations was removed. Dykes did not want the new position and also feared he was “being set up to fail” in the new position so that the employer could later dismiss him for cause. Dykes quit and sued for constructive dismissal.
Issue: Did the employer commit a fundamental breach of the employment contract in reassigning Dykes to a new management position? Decision: No. The court found that an implied term in Dykes’s employment contract permits the employer to reassign his duties within the human resources management function, provided that the duties he is assigned are within his abilities and skill set. Dykes’s compensation was not cut, nor was he demoted, since he remained a senior human resources manager at the same level. The reassignment was not based in bad faith, but was a response to legitimate concerns about conflict between Dykes and his subordinates in his old job. Therefore, the employer did not commit a fundamental breach of any contract term.
BOX 13.4 » TALKING WORK LAW Balancing Competing Interests in Constructive Dismissal Law The doctrine of constructive dismissal provides some protection to an employee who is being driven to quit by an employer that is hoping to avoid the legal requirement to give notice of termination. However, in most constructive dismissal cases, the employer has no intention of driving the employee out or of terminating the contract. Usually the employer is making changes for what it believes are legitimate business reasons. For example, the employer is restructuring to improve efficiency or to lower expenses in the face of competition. In these situations, the doctrine of constructive dismissal pits the employer’s legitimate business interests against the employee’s interests in preserving the bargain as set out in the original employment contract.* How do the courts balance these competing interests? Do they favour the employer’s economic interest in flexibility or the employee’s interest in preserving the status quo? The latter approach could be justified on the basis that employers are in a position of power and usually draft employment contracts, a fact the courts have long recognized, as noted in Chapter 10. If employers want a right to make unilateral changes to working conditions, including job functions and compensation schemes, then they could include an expressed contractual right to make those changes, perhaps with some amount of notice to the employee.† Moreover, as we learned in Chapter 8, an employer can always change working conditions by terminating the contract with proper working notice
(or pay in lieu of notice) and offering a new contract based on the revised terms. When employers opt not to pursue either of these courses of action, employees should be entitled to insist on maintenance of the past and existing arrangements. On the other hand, the option of terminating the contract with notice and offering a new contract can be costly and slow for an employer that needs to quickly adapt to market threats.‡ An alternative approach would be to grant employers wide latitude to make changes to working conditions, provided that those changes are made in good faith and without malice.§ This approach would give employers considerable flexibility, which could help improve efficiency, increase profits, and protect employers from market threats. However, this approach would leave employees vulnerable to sudden, unexpected changes to their jobs. The contemporary approach of Canadian courts falls somewhere in between the contrasting approaches just described. While the courts have restricted the right of employers to make significant changes without employee consent, they have also granted employers significant latitude to make less drastic changes to respond to economic challenges. Some authors have argued that the courts give employers wider latitude to make unilateral changes to working conditions in difficult economic conditions, as described in this passage from a casebook on constructive dismissal:
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208 Part II The Common Law Regime In prosperous economic times, courts may narrow an employer’s latitude to vary the employment contract. The “necessity” of changing the terms of employment without an employee’s consent may not be as evident in a positive business climate. Accordingly, when an employer is faced with difficult economic conditions, the need to reorganize in order to remain competitive or, in some cases, to merely survive is more often justified by the courts.# This passage suggests that developments in the broader economic and market subsystem (discussed in Chapter 2) influence the outcomes of constructive dismissal disputes. It implies also that judges are influenced by the employer’s motive in making a unilateral change rather than the pure contract question of whether the employer’s actions amount to a fundamental change to the original contract. However, in Farber (see Box 13.2), the Supreme Court noted that a “bad faith” motive by the employer, or an intention to force an employee to quit, is not a necessary component of a constructive dismissal. As we work through our discussion of the case law,
pay attention to how the courts have struck a balance between employer and employee interests in their reasoning. * See R.S. Echlin and J. Fantini, Quitting for Good Reason: The Law of Constructive Dismissal in Canada (Aurora, ON: Canada Law Book, 2001) at 197. † Many cases have taken this strict contractualist approach to the right of employers to make unilateral changes to the contract: Brown v. Canada Biscuit Co. Ltd., [1935] SCR 212; and Corker v. University of BC, 1990 CanLII 748 (BCSC). See also G. England, “Recent Developments in Individual Employment Law: Tell Me the Old, Old Story” (2002) 9 CLELJ 43 at 65-66, considering if a contract clause permitting an employer to make unilateral changes to any contract term would render the contract void since the content of the offer and acceptance would be too vague. ‡ See G. England, “Recent Developments in Individual Employment Law: Tell Me the Old, Old Story” (2002) 9 CLELJ 43 at 62. § This approach seems to rule the day in Black v. Second Cup Ltd., 1995 CanLII 7270 (Ont. Sup Ct J); Gillespie v. Ontario Motor League Toronto Club (1980), 4 ACWS (2d) 87 (Ont. H Ct J); and Purdy v. Vancouver Island Helicopters, [1988] BCJ No. 2157 (QL) (SC). # Echlin and Fantini at 197. See also Hamilton & Olsen Surveys Ltd. v. Otto, 1993 ABCA 233.
C. Reassignment of an Employee to a Different Work Location A reassignment to a different geographical location is treated in a similar manner to a reassignment of job duties. The courts begin by asking whether an expressed contract term exists permitting the employer to transfer the employee to a new location. If so, then that term will govern the transfer. For example, no constructive dismissal was found where an employer transferred an employee from Vancouver, British Columbia, to Thompson, Manitoba, when the contract included an expressed right for the employer to relocate the employee “in order to satisfy business conditions.”29 Alternatively, if a contract very clearly provides that the employee will remain in one location, then a transfer out of that location would constitute a fundamental breach of contract. Absent an expressed contractual right for employers to relocate employees, the courts consider whether an implied right exists governing relocation. Here again, the courts have struck a balance and implied a right for employers to require “reasonable” geographical relocations, as captured in this often-cited passage from the Ontario Court of Appeal in the case of Smith v. Viking Helicopter Ltd.: It has never been my understanding that an employee is entitled to a job for life in a place of his choosing. If he wishes to remain an employee of a given company, he must expect reasonable dislocations in that employment including the place where it is to be performed. There was no evidence in this case that Viking acted unreasonably in notifying the respondent of its intended move or of its desire that he and others should accompany it. The sole complaint was about its lack of timeliness and specificity as to what moving expenses it would be prepared to absorb.30 [Emphasis added]
Whether the relocation is “reasonable” depends on a number of factors. The relocation must be based on legitimate business reasons and not intended to punish the employee or drive them to quit. If the job in the new location would involve a demotion or a pay cut, then it is more likely to amount to a constructive dismissal, for the reasons discussed above. If the job is of a sort in which geographical transfers are common and expected, then it is more likely a court will find the right to relocate is implied in the contract. Thus, executives employed by companies with multiple locations and in jobs and industries where job mobility is common are often assumed
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Chapter 13 “You Forced Me to Quit!”: The Special Case of Constructive Dismissal 209
to have agreed that the employer may relocate them.31 In some cases, the courts have found relocations to be unreasonable, and therefore a fundamental breach of contract, when the move would impose a serious hardship on the employee’s economic or family life.32
D. “Don’t Come to Work!”: Unpaid Disciplinary Suspensions, Temporary Layoffs, and Administrative Leaves or Suspensions There are a variety of circumstances in which an employer refuses to permit an employee to work for a period of time. These include disciplinary suspensions, temporary layoffs, and administrative leaves or suspensions. The first two are usually unpaid, while an administrative leave may be with or without pay. In all of these circumstances, the question arises whether the employer is contractually permitted to refuse an employee the right to perform their job. Keep in mind that the basic exchange at the foundation of the employment contract is a promise by the employer to pay compensation to an employee in exchange for that employee coming to work and performing their job. Therefore, Canadian courts have ruled that, absent an expressed or implied term in the contract permitting layoffs, a layoff of an employee is a breach of contract that an employee may treat as a constructive dismissal. The Ontario Court of Appeal explained this point in the 2011 decision in Elsegood v. Cambridge Spring Service: At common law, an employer has no right to lay off an employee. Absent an agreement to the contrary, a unilateral layoff by an employer is a substantial change in the employee’s employment and would be a constructive dismissal.33
An employer could avoid constructive dismissal by including an expressed contract term permitting temporary layoffs, which is common in the case of collective agreements in unionized workplaces, but relatively few non-union employment contracts include layoff terms. Some Canadian courts have found that a short paid suspension for performance-related concerns does not give rise to grounds for a constructive dismissal.34 However, an unpaid disciplinary suspension of an employee will usually amount to constructive dismissal if the employee refuses to accept it.35 (See Box 13.5.) An unpaid suspension is only permitted in two situations. First, the contract could include an expressed or implied contractual right for the employee to be suspended without pay. An implied right to suspend could be based on a history of the employer issuing unpaid suspensions that is well known and accepted by the employee. Second, if the employee’s misconduct leading to the suspension was serious enough to justify summary dismissal for cause, then the employer may be permitted to opt instead to apply unpaid suspension, which is a lesser form of discipline.36 Thus, if the employer defends a constructive dismissal lawsuit based on an unpaid suspension by arguing that it had cause for summary dismissal, the court must consider the law of summary dismissal (see Chapter 12). An administrative leave or suspension occurs when an employer orders an employee to stay home for reasons other than a lack of work (i.e., a layoff) or discipline. For example, an employer might place an employee on administrative leave while it investigates whether the employee had done something wrong or while a criminal charge brought against the employee makes its way through the courts. In these cases, courts have generally ruled that an employer may temporarily place an employee on leave until the investigation concludes, but only if (1) there is a nexus between the allegations against the employee and the employer’s business interests (similar to the question considered in cases of termination for off-duty conduct considered in Chapter 12); administrative leave: A period of time during which an employer refuses an employee the right to report to work for reasons other than a lack of work (i.e., a layoff) or discipline (i.e., a suspension), usually during the period of an ongoing investigation into possible employee misconduct.
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210 Part II The Common Law Regime and (2) the leave is with pay.37 So, for example, in the 2018 case Filice v. Complex Services, the Ontario Court of Appeal ruled that an administrative suspension of a security guard accused of theft pending the outcome of an investigation was justified, but the decision of the employer to treat the suspension as unpaid constituted a constructive dismissal.38
BOX 13.5 » CASE LAW HIGHLIGHT Disciplinary Unpaid Suspensions as Constructive Dismissal Carscallen v. FRI Corp. 2006 CanLII 31723 (Ont. CA) Key Facts: Carscallen worked for FRI Corp. and was responsible for shipping certain materials to her boss who was attending a conference in Spain. She failed in this task, and her employer responded by suspending her indefinitely without pay. Carscallen quit and sued her employer for constructive dismissal. Issue: Did the disciplinary unpaid suspension of Carscallen amount to a fundamental breach of the employment contract and therefore a constructive dismissal when Carscallen quit in response to the suspension? Decision: Yes. The court noted that no expressed contractual right to suspend without pay existed in the employment con-
tract. Therefore, the court considered whether it should imply such a right. Applying the tests for implying contract terms (discussed in Chapter 9), the court ruled that there was no implied term permitting unpaid suspensions: such a term was not necessary to give “business efficacy” to the contract, and it was not obvious that both parties would have agreed that such a term was part of the contract. Absent a contractual right to suspend Carscallen without pay, the suspension amounted to a constructive dismissal, unless Carscallen’s actions were so serious that the employer had cause for summary dismissal without notice. The court considered the law of summary dismissal and found that Carscallen’s mistake was not serious enough to justify summary dismissal. Therefore, the employer had no right to dismiss Carscallen for cause and no right to suspend her without pay. Carscallen was entitled to damages based on a period of nine months’ reasonable notice.
In its recent decision in Potter v. New Brunswick Legal Aid Services Commission, mentioned earlier in the chapter, the Supreme Court of Canada considered whether an employer constructively dismissed an employee by placing the employee on a paid “administrative suspension” while it attempted to bargain a buyout of the employee’s fixed-term contract. The court ruled that an employer has an implied right to place an employee on paid administrative leave if it does so in good faith, and the suspension is both “reasonable and justified” in the circumstances. The court ruled that the suspension of Potter failed to meet this standard because the employer failed to communicate honestly with the employee about the reason for the suspension and was also secretly exploring whether they could terminate Potter for cause.39
E. Employee Harassment or a Poisoned Work Environment Recall from Chapter 9 that since the late 1990s, an implied contract term requires employers to treat their employees with “decency, civility, respect, and dignity.” An employee subjected to serious workplace harassment that violates that contract term could quit and sue for constructive dismissal.40 In addition, as we noted earlier in this chapter, courts have recently also found that harassment or unfair treatment of an employee can lead to a constructive dismissal finding if the court rules that a reasonable employee would conclude that the employer’s behaviour has made the workplace “intolerable” for the employee, even if the court does not rely on a breach of any particular contract term.41 Therefore, as noted above, harassment or bullying by an employer can result in a constructive dismissal finding applying either of the branches of constructive dismissal examined in this chapter. However, not every little criticism or negative comment by an employer will be enough to establish a constructive dismissal. For example, courts have said that the threshold must be high enough to permit legitimate expressions of concern and frustration by an employer.42
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Chapter 13 “You Forced Me to Quit!”: The Special Case of Constructive Dismissal 211
A court is most likely to find a constructive dismissal when a representative of management engaged in the harassment or the employer failed to take steps to investigate and stop harassment by a co-worker once it became aware of it. For a refresher on this point, look back at the case of Lloyd v. Imperial Parking Ltd.,43 discussed in Box 9.3 in Chapter 9.
IV. Employee Acceptance and Condonation of the Employer’s Repudiation of Contract The employer’s fundamental breach of contract does not itself bring the contract to an end. As noted earlier, the employee must “accept” the employer’s repudiation of contract and treat the contract as at an end by quitting.44 It is obvious why employees may not want to treat the employer’s breach of contract as a constructive dismissal. To do so means losing one’s job. Many employees just want the employer to comply with the contract; they do not want to quit. However, an employee faced with an employer breach of contract is in a difficult and vulnerable position.45 When an employer commits a fundamental breach of an employment contract, the employee essentially has three options, as summarized in Box 13.6.46
BOX 13.6 » TALKING WORK LAW Employee Options When an Employer Repudiates an Employment Contract When an employer “repudiates” an employment contract by committing a fundamental breach of the contract, the employee has the following three options:* Option 1: “Condone” the employer’s breach of contract The employee can condone the employer’s breach of contract. This means that the employee does not object to it. If an employee condones a breach, they are prohibited from later trying to argue a constructive dismissal based on that breach. However, an earlier breach of contract by an employer can still be relied upon later by an employee as forming part of a series of breaches that together amount to a cumulative effect constructive dismissal, a concept explained earlier in this chapter. Option 2: “Accept” the employer’s breach of contract, and treat the contract as terminated (constructive dismissal) The employee can “accept” the employer’s breach of contract by quitting and taking the position that the employer’s breach brought the contract to an end. This option treats the employer’s actions as a constructive dismissal. The employee must “accept” the breach—that is, quit—within a “reasonable” period of time, a malleable concept that is left to judges’ discretion.
Option 3: Protest the employer’s breach of contract, without quitting, and insist that the employer comply with the original contract terms The employee may choose not to quit in response to the employer’s substantial breach of contract and instead insist that the original terms of the contract be complied with. The employee must clearly indicate that they are not agreeing to the change or condoning the employer’s breach of contract. The employer then has the option of continuing to comply with the original contract terms or terminating the original contract by giving proper notice. If the employer allows an employee to continue to work, despite the employee’s objection to the employer’s breach, then the work is being performed according to the terms of the original contract. If the employer refuses to comply with those terms, the employee can later sue the employer to enforce the original contract terms. * These options are discussed in Hill v. Peter Gorman Ltd., 1957 CanLII 393 (Ont. CA); Wronko v. Western Inventory Service Ltd., 2008 ONCA 327; and Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10; as well as in Chapter 7.
In option two presented in Box 13.6, the employee must “accept” the employer’s repudiation of contract within a reasonable time period. If the employee does not quit within a reasonable time period, then the court may rule that the employee condoned the breach (option one) and is therefore prohibited from treating it as a constructive dismissal.47 (Recall that if the employer had unilaterally changed the contract terms for its own benefit, such as by reducing the employee’s compensation, the change must still be supported by mutual consideration to be enforceable, as we learned in Chapter 7.)
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212 Part II The Common Law Regime What constitutes a “reasonable” period of time depends on the facts in each case, and the courts’ decisions on this point have varied widely. For example, one court found that an employee who did not quit for 11 days after changes to his contract were made had condoned the breach.48 However, most judges have provided employees with a much longer period of time to elect whether to quit.49 The Ontario Court of Appeal noted in one case that allowing employees a reasonable time to reflect on their decision recognizes the vulnerability of employees and the “difficulty of making … life-altering decisions” and also “promotes stability and harmonious relations in the workplace.”50 Thus, for example, a seven-month delay before quitting was found not to amount to condonation in Tilbe v. Richmond Realty Ltd.51 Let’s demonstrate the three options described in Box 13.6 by considering the situation of an employee who shows up to work one day and is informed by their employer that their pay has been cut by 50 percent.52 As we learned above, that change clearly amounts to a substantial breach of contract. Now consider the three options available to the employee. First, they could condone the change by not objecting and just continue to work under the changed terms (option one). If they do that, then they cannot later quit and allege that they were constructively dismissed by virtue of the pay cut. Second, they could “accept” the breach of contract, quit, and sue for constructive dismissal (option two). Third, they could reject the pay cut by clearly advising their employer that they do not agree to the change (option three), but keep working. The employer could then respond by terminating the employee’s original contract with proper notice and offer a new contract at a lower pay rate, as we learned in Chapter 7. However, if the employer permits the employee to keep working, then that work is being performed under the terms of the original contract.53 Continuing to work does not amount to agreement to the pay cut if the employee has informed the employer that they do not agree to the change. If the employer starts paying them the reduced rate, the employee can later sue for breach of contract to recover any damages caused by that breach.
V. Chapter Summary Constructive dismissal is a branch of the law of wrongful dismissal. It occurs when an employer commits a fundamental or “repudiatory” breach of the employment contract that the employee elects to treat as having terminated the contract. Since a constructive dismissal results in the termination of the contract by the employer, the employee may be entitled to damages based on the failure of the employer to provide proper contractual notice of termination. Constructive dismissal law involves a complex balancing of the employer’s interest in flexibility and the interest of employees in stability under their contracts of employment. We saw that not every breach of contract is serious enough to justify a finding of constructive dismissal and that employees must elect whether to treat a fundamental or repudiatory breach of contract by the employer as a constructive dismissal within a reasonable amount of time.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Describe the two “branches” of constructive dismissal. 2. What three questions do the courts consider when dealing with constructive dismissal lawsuits involving an alleged substantial breach of the contract? 3. Describe the three options available to an employee confronted with an employer who commits a fundamental breach of the employment contract. 4. Explain the meaning of the following terms in the context of constructive dismissal law: (1) condonation, (2) acceptance, and (3) repudiation. 5. Why might an employee not want to treat a breach of contract by the employer as a constructive dismissal?
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Chapter 13 “You Forced Me to Quit!”: The Special Case of Constructive Dismissal 213
APPLYING THE LAW 1. In the summer of 2022, Lloyds Moving Company experiences a slowdown in customers, and the owners decide they need to temporarily lay off three workers for one month, including Mark Alexander. Mark comes to you for advice. He is considering a move to Britain and is not sure he wants to return to Lloyds Moving Company even if he is recalled to work next month. Mark has been employed for 10 years, and he has never been laid off before. He never signed a written employment contract. Advise Mark of his legal options if he decides to move to Britain. 2. For several months now, Lisa has experienced sexual harassment by her supervisor. The supervisor constantly makes jokes about Lisa’s body and touches her on the shoulder and back and invites her for drinks and to his apartment after work. She has asked him to stop talking to her and she has reported her concerns to the human resources manager, but no steps have been taken to ensure the supervisor’s behaviour changes. Lisa is fed up and suffering from anxiety and has decided she can no longer come to work. She wants to
move on and find another job. Lisa comes to you for advice. Explain whether Lisa could make a strong constructive dismissal argument. 3. The Great T-Shirt Factory is a large clothing company. Sherry has been employed in the accounting department as a financial auditor for five years. The company has decided to restructure the accounting department for business reasons and intends to transfer Sherry to a new position called “bookkeeper.” The new job will pay the same as the financial auditor job Sherry currently holds, and Sherry would report to the same manager of accounting. The tasks would change slightly, with Sherry doing less work on tax matters and more work on tracking inventory and accounts receivable. Sherry is angry because she believes that moving from the job of “financial auditor” to “bookkeeper” sounds like a demotion and will be perceived as such by her colleagues. She raises these concerns with management and management comes to you for advice. Do you think the change would give Sherry grounds for a constructive dismissal claim?
EXERCISE In Box 13.2, we considered the Supreme Court of Canada case of Farber v. Royal Trust Co. That case has become the leading authority on constructive dismissal in Canada and, as such, has been regularly cited in constructive dismissal cases since. To learn how the courts have dealt with constructive dismissal, search for cases that reference the Farber case. In this exercise, we “note up” the Farber case. 1. Go to the CanLII home page: . 2. In the “Noteup” search box, type “Farber v. Royal Trust Co.” and select “Farber v. Royal Trust Co., 1997 CanLII 387 (SCC)” from the drop-down menu that appears. That search should result in hundreds of cases from the period after 1997. Select one of those cases and read it. 3. Prepare a case summary that includes the key facts, the issue, and the decision as well as answers to the following questions: a. What contract term was alleged to be breached? b. Was the contract term breached? c. If so, was the breach found to be fundamental or repudiatory? d. Did the employee condone the breach? e. Did the constructive dismissal argument succeed? If yes, what damages were awarded?
NOTES AND REFERENCES 1. Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10; Farber v. Royal Trust Co., [1997] 1 SCR 846. (Although the Civil Code of Quebec applied to the contract in Farber, the Supreme Court of Canada noted that the law
of constructive dismissal in Quebec was essentially the same as in the common law model.) 2. Ibid. at para 30.
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214 Part II The Common Law Regime 3. Murray v. Jets Hockey Ventures, 1996 CanLII 18145 (Man. QB) at para 13. 4. Potter v. New Brunswick Legal Services, supra note 1; Farber v. Royal Trust Co., supra note 1. Classic early British cases that explain the doctrine of repudiation of contract based on behaviour evincing an intention to no longer be bound by the contract include Rubel Bronze & Metal Co. v. Vos, [1918] 1 KB 315; and Western Excavating (ECC) Ltd. v. Sharp, [1978] ICR 221 (CA). Repudiation of contract can also be established based on an indication of an intention to commit a fundamental breach of contract. When the employer announces to the employee that it intends to take action that would amount to a fundamental breach of contract, it is known as an “anticipatory breach of a fundamental term of the contract.” The employee can respond by advising the employer that they will accept the repudiation and treat the contract as at an end: Davies v. Canadian Satellite Radio Inc., 2010 ONSC 5628.
11. The Supreme Court preferred the word “substantial” over “fundamental” breach in Potter, supra note 1 at paras 34-35. On the application of an “objective test,” see also Farber v. Royal Trust Co., supra note 1 at para 26; Halifax Herald Limited v. Clarke, 2019 NSCA 31; Chapman v. GPM Investment Management, 2017 ONCA 227; Filice v. Complex Services Inc., 2018 ONCA 625; Orth v. Macdonald Dettwiler & Associates Ltd., 1986 CanLII 170 (BCCA); General Motors of Canada Ltd. v. Johnson, 2013 ONCA 502; and R.S. Echlin & J. Fantini, Quitting for Good Reason: The Law of Constructive Dismissal in Canada (Aurora, ON: Canada Law Book, 2001) at 20. Note that in the Potter decision, the Supreme Court ruled that courts can consider evidence of the employer’s behaviour that was not known to the employee at the time they quit in assessing whether the employer breached the contract, but cannot consider this evidence in relation to the second question, which is whether a reasonable employee would have considered the employer’s breach was “substantial.”
12. Farquhar v. Butler Brothers Supplies Ltd., supra note 5. 5. The importance of “acceptance” of the repudiation is explained in this often-cited passage from Howard v. Pick- 13. Farber v. Royal Trust Co., supra note 1 (change would lead to an estimated 50 percent pay cut); Davies v. Canadian ford Tool Co. Ltd., [1951] 1 KB 417 at 421: “An unaccepted Satellite Radio Inc., supra note 4 (60 percent pay cut was a repudiation is a thing writ in water and of no value to fundamental breach); Olsen v. Sprung Instant Greenhouses anybody: it confers no legal rights of any sort or kind.” See Ltd. (1985), 12 CCEL 8 (Alta. QB) (45 percent pay cut was also Farquhar v. Butler Brothers Supplies Ltd., 1988 CanLII fundamental); Evans v. Fisher Motor Co. Ltd., [1915] 8 185 (BCCA); and Lemay v. Canada Post Corp., 2003 CanLII OWN (H Ct J) (33 percent pay cut); Farquhar v. Butler 36637 (Ont. Sup Ct J). Brothers Supplies Ltd., supra note 5 (30 percent pay cut); 6. Kussmann v. AT & T Capital Canada Inc., 2002 BCCA 281; Ziten v. Sadie Moranis Realty Corporation, 2015 ONSC 7987 Luth v. Norwood Project Management Ltd., 1995 CanLII 853 (40 percent pay cut); Bisnar v. Caltec Scientific Ltd., [1995] (BCSC); and Drapeau v. Spielo Manufacturing Incorporated, BCJ No. 2915 (QL) (PC) (20 percent pay cut); Bergmann v. 2007 NBQB 113. CPT Canada Power Technology Ltd., 1997 CanLII 14843 7. Potter, supra note 1. (Alta. QB) (25 percent pay cut); Evangelista v. Number 7 Sales Limited, 2008 ONCA 599 (cut in commission sales 8. Shah v. Xerox Canada Ltd., 2000 CanLII 2317 (Ont. CA). person’s rate from 18 percent to 9 percent of gross profits); See also Whiting v. Winnipeg River Brokenhead Community and Luth v. Norwood Project Management Ltd., supra note 6 Futures Development Corp., 1998 CanLII 19422 (Man. CA); (15 percent pay cut). and Colistro v. Tbaytel, 2019 ONCA 197 (workplace rendered intolerable when employer hired a person who years earlier 14. Pullen v. John C. Preston Ltd. (1985), 7 CCEL 91 (Ont. H Ct sexually harassed an existing employee). The Supreme Court J); aff ’d (1987), 16 CCEL xxiii (CA) (reduction in a base of Canada affirmed the legitimacy of this branch in Potter v. salary from $30,000 to $27,000 was not a fundamental New Brunswick Legal Services, supra note 1 at paras 33, 42. breach). Other cases applying this approach can be located by “noting 15. Benell v. William E. Coutts Co. (1994), 50 ACWS (3d) up” Shah v. Xerox on the CanLII website. 241 (Ont. Sup Ct J). See also English v. Toyota Plaza Ltd., 9. See Potter, supra note 1 at paras 42, 47; and Colistro v. 1995 CanLII 10467 (Nfld. SC) (the imposition of a Tbaytel, supra note 8 at para 52. requirement for the employee to pay the $850 cost of a training program amounted to constructive dismissal); 10. Colistro v. Tbaytel, supra note 8 at para 50 (noting that in and Pulak v. Algoma Publishers Ltd., 1995 CanLII 7277 the case of harassment, the two branches overlap since the (Ont. Sup Ct J) (10 percent cut to base pay was a employee could rely on the implied term requiring civility constructive dismissal). and decency or the Shah v. Xerox approach requiring that the employee demonstrate that continued employment is 16. Poole v. Tomenson Saunders Whitehead Ltd., 1987 CanLII intolerable). See analysis in D. Doorey, “Employer Bullying: 2647 (BCCA); Hamilton & Olsen Surveys Ltd. v. Otto, 1993 Implied Duties of Fair Dealing in Canadian Employment ABCA 233; Pathak v. Jannock Steel Fabricating Company Contracts” (2005) 30 Queen’s LJ 500. (1996), 21 CCEL (2d) 12 (Alta. QB); Chapman v. Bank of
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Chapter 13 “You Forced Me to Quit!”: The Special Case of Constructive Dismissal 215 Nova Scotia, 2007 CanLII 18732 (Ont. Sup Ct J); Wylds v. Burns Fry Ltd., [1993] OJ No. 1042 (QL) (Gen Div); and Leversage v. Swan Valley Foods Ltd. (1982), 16 ACWS (2d) 223 (BCCA). 17. Poole v. Tomenson Saunders Whitehead Ltd., supra note 16; Chapman v. Bank of Nova Scotia, 2008 ONCA 769; and Brent Chapman v. GPM Investment Management and Integrated Asset Management Corporation, 2015 ONSC 6591 (failure to pay a 10 percent bonus not grounds for a constructive dismissal). 18. Wood v. Owen De Bathe Ltd., 1998 CanLII 6578 (BCSC), aff ’d 1999 BCCA 29; and Piron v. Dominion Masonry Ltd., 2013 BCCA 184. 19. MacKenzie v. Ralston Purina Canada Inc. (1981), 9 ACWS (2d) 110; and Tymrick v. Viking Helicopters Ltd. (1985), 6 CCEL 225 (Ont. H Ct J).
26. See, for example, Stacey v. Consolidated Foods Corp. of Canada Ltd. (1987), 15 CCEL 113 (NSSC) (express term allowing reassignment). 27. Holgate v. Bank of Nova Scotia, 1989 CanLII 4660 (Sask. QB) (a “very slight” demotion was not a fundamental breach); McColm v. Perth Services Ltd., 1998 CanLII 28136 (Man. QB) (a “minor reduction” in responsibilities did not constitute a constructive dismissal); and Longman v. Federal Business Development Bank, supra note 22 (a “partial diminution in the employee’s status” was not a constructive dismissal). 28. Corker v. University of BC, 1990 CanLII 748 (BCSC) at 253; Duggan v. Cowichan Family Life Assn., 1999 CanLII 5979 (BCSC); and Mackay v. Avco Financial Services Canada Ltd., 1996 CanLII 3752 (PE SCTD).
29. Karjanlathi v. Tamrock Canada Inc., 1993 CanLII 1536 (BCSC). 20. Canadian Bechtel Ltd. v. Mollenkopf (1978), 1 CCEL 95 (Ont. CA) at 98. See also Gillespie v. Ontario Motor League 30. Smith v. Viking Helicopter Ltd., 1989 CanLII 4368 (Ont. Toronto Club (1980), 4 ACWS (2d) 87 (Ont. H Ct J); and CA). See also Morris v. Int’l Harvester Canada Ltd. (1984), Black v. Second Cup Ltd., 1995 CanLII 7270 (Ont. Sup Ct J). 7 CCEL 300 (Ont. H Ct J); Canadian Bechtel Ltd. v. Mollen 21. See comments in Stein v. British Columbia Housing Mankopf, supra note 20; and Stefanovic v. SNC Inc. (1988), 22 agement Commission, 1992 CanLII 4032 (BCCA). CCEL 82 (Ont. H Ct) (transfer from Toronto to Montreal not a constructive dismissal). 22. Canadian Bechtel Ltd. v. Mollenkopf, supra note 20; Pullen v. John C. Preston Ltd., supra note 14; and Longman v. Federal 31. Jim Pattison Industries Ltd. v. Page, 1984 CanLII 2728 (Sask. Business Development Bank, 1982 CanLII 543 (BCSC). CA); Hermann v. ManAlta. Coal Ltd. (1978), 16 AR 322 (SC); Durrant v. Westeel-Rosco Ltd., 1978 CanLII 277 23. See, for example, Zifkin v. Axa Insurance (Canada), 1996 (BCSC); and Stefanovic v. SNC Inc., supra note 30. CanLII 10441) (Alta. QB); Murray v. Jets Hockey Ventures, supra note 3; Robinson v. Tingley’s Ltd. (1988), 20 CCEL 263 32. See, for example, Weselan v. Totten Sims Hubicki Associates (NBQB) (a long-service meat cutter was reassigned to the Ltd., 2001 CanLII 9431 (Ont. CA) (extra commuting time grocery department); Herrschaft v. Vancouver Community and the cost associated with driving from home in Simcoe College (1978), 91 DLR (3d) 328 (BCSC); and Blondeau v. to a new job in St. Catharines would result in substantial Holiday Ford Sales (1980) Ltd., 2005 CanLII 8672 (Ont. CA) change in conditions and therefore was a constructive dis(a customer service rep was reassigned to a job performing missal); Lukings v. I.M.A.W., Region 8, [1988] OJ No. 742 various “menial routine tasks”). See also Dykes v. Saan (Div Ct) (the cost of housing in Calgary made the refusal to Stores Ltd., 2002 MBQB 112. agree to a transfer from London, Ontario, reasonable, and the transfer was a constructive dismissal); and Antworth v. 24. Mifsud v. MacMillan Bathurst Inc., 1989 CanLII 260 (Ont. Fabricville, 2009 NBQB 54 (a change in job requiring much CA); Morgan v. Vitran Express Canada Inc., 2015 ONCA greater travel amounted to a constructive dismissal). 293; Clarke v. Halifax Herald Ltd., 2017 NSSC 337; Farber v. Royal Trust, supra note 1; Reber v. Lloyds Bank International 33. Elsegood v. Cambridge Spring Service, 2011 ONCA 831 at Canada, 1984 CanLII 712 (BCSC); Robinson v. H.J. Heinz para 14. Note too that the fact that employment standards Company of Canada LP, 2018 ONSC 3424; Roberts v. Versalegislation permits a temporary layoff does render a layoff tile Farm Equipment Company, 1987 CanLII 4764 (Sask. permissible under the common law. But see Trites v. Renin QB); Newsham v. Indal Limited, 1986 ABCA 101; Ally v. Corp., 2013 ONSC 2715, finding that a temporary layoff Institute of Chartered Accountants (1992), 92 CLLC 14,039 that complies with employment standards legislation (Ont. Sup Ct J); Chandran v. National Bank of Canada, cannot give rise to a constructive dismissal. This reasoning 2012 ONCA 205; and Fasenko v. Flag Chevrolet-Geohas not been adopted by other judges. See also Bevilacqua Oldsmobile (1994), 5 CCEL (2d) 82 (BCSC). But see Gillis v. v. Gracious Living Corporation, 2016 ONSC 4127; Gent v. Sobeys Group Inc., 2011 NSSC 443 (court ruling that the Strone Inc., 2019 ONSC 155; Martellacci v. CFC/INX Ltd., elimination of an employee’s management job at the head 1997 CanLII 12327 (Ont. Gen Div); Janice Wiens v. Davert office and reassignment to a lower-paying assistant store Tools Inc., 2014 CanLII 47234 (Ont. Sup Ct J) (court finds manager position was not a constructive dismissal). an implied term allowing for temporary layoffs based on
25. Farber v. Royal Trust Co., supra note 1 at 197.
the industry norm, but not “indefinite” layoffs); Chevalier v.
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216 Part II The Common Law Regime Active Tire & Auto Centre Inc., 2012 ONSC 4309; Collins v. Jim Pattison Industries Inc. (1995), 11 CCEL (2d) 74 (BCSC); McLean v. The Raywal Limited Partnership, 2011 ONSC 7330; Pryor v. Taylor’s Feed, 2009 NBQB 346; and Turner v. Uniglobe Custom Travel Ltd., 2005 ABQB 513. 34. Mackay v. Avco Financial Services Canada Ltd., supra note 28; and Pierce v. Canada Trust Retailer (1986), 11 CCEL 64 (Ont. H Ct J). 35. This principle has deep roots. See, for example, Hanley v. Pease and Partners Ltd., [1915] 1 KB 698 at 705. See also Haldane v. Shelbar Enterprises Limited, 1999 CanLII 9248 (Ont. CA); and Carscallen v. FRI Corp., 2006 CanLII 31723 (Ont. CA). 36. Kellas v. CIP Inc., 1990 CanLII 412 (BCSC). 37. Cabiakman v. Industrial Alliance Life Insurance Co., 2004 SCC 55; Potter, supra note 1.
Brokenhead Community Futures Development Corp., supra note 8. 42. Danielisz v. Hercules Forwarding Inc., 2012 BCSC 1155; and Baraty v. Wellons Canada Corp., 2019 BCSC 33. 43. Lloyd v. Imperial Parking Ltd., 1996 CanLII 10543 (Alta. QB). 44. Gunton v. Richmond-upon-Thames London Borough Council, [1981] 1 Ch. 488 (CA). 45. See comments in Belton v. Liberty Insurance Co. of Canada, 2004 CanLII 6668 (Ont. CA) at para 25. 46. See, for example, Russo v. Kerr, 2010 ONSC 6053; Hill v. Peter Gorman Ltd., 1957 CanLII 393 (Ont. CA); and Wronko v. Western Inventory Service Ltd., 2008 ONCA 327. 47. Farquhar v. Butler Brothers Supplies Ltd., supra note 5. 48. Polo v. Calgary (City), 1994 ABCA 359.
38. Filice v. Complex Services Inc., 2018 ONCA 625 (court notes 49. that while it is possible that an administrative suspension without pay pending the outcome of an investigation into wrongdoing could be justified, that would be “exceptional”). 39. Potter, supra note 1. 40. Morgan v. Chukal Enterprises Ltd., 2000 BCSC 1163; Saunders v. Chateau Des Charmes Wines Ltd., 2002 CanLII 5114 (Ont. Sup Ct J); Stamos v. Annuity Research & Marketing Service Ltd., 2002 CanLII 49618 (Ont. Sup Ct J); Ulmer Chevrolet Oldsmobile Cadillac Ltd. v. Kowerchuk, 2005 SKPC 18; Lamb v. Gibbs Gage Architects, 2011 ABPC 315; Hanni v. Western Road Rail Systems (1991) Inc., 2002 BCSC 402; Vandooyeweert v. Jensten Foods Ltd., 2002 BCPC 422; Prabhakaran v. Town of Fort Macleod, 2010 ABPC 35; Rothberger v. Concord Excavating & Contracting Ltd., 2015 BCSC 729; Sweeting v. Mok, 2015 ONSC 4154; and Colistro v. Tbaytel, supra note 8. In Colwell v. Cornerstone Properties Inc., 2008 CanLII 66139 (Ont. Sup Ct J), the court described the implied term as a mutual duty to “treat the other in good faith and fairly” (the installation of hidden cameras in a manager’s office was a constructive dismissal). In Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419, the court dealt with harassment of a female employee. It found a constructive dismissal based on a breach of an implied term requiring “good faith and fair dealing.” 41. Potter, supra note 1; Shah v. Xerox Canada Ltd., supra note 8. See also Whiting v. Winnipeg River
See, for example, Campbell v. MacMillan Bloedel Limited, 1978 CanLII 2602 (BCSC) (the employee could quit two months after the employer’s breach); Pathak v. Jannock Steel Fabricating Company, supra note 16 (a three-month delay was not condonation); Kussmann v. AT & T Capital, 2000 BCSC 268 (a two-month delay was not condonation); and Streight v. Dean, 2002 BCSC 399 (a two-month delay was not condonation). Contrast these decisions to Wedding v. Motorola Canada Limited, 1999 BCCA 752 (an 11-month delay before quitting amounts to condonation); and Anstey v. Fednav Offshore Inc. (1990), 34 FTR 190 (TD) (a two-year wait under changed terms amounted to condonation).
50. Belton v. Liberty Insurance Co. of Canada, supra note 45 at para 26. 51. Tilbe v. Richmond Realty Ltd., 1995 CanLII 738 (BCSC). 52. See Russo v. Kerr, supra note 46. 53. Wronko v. Western Inventory Service Ltd., supra note 46. In Russo v. Kerr, supra note 46, the employee’s lawyer had written to the employer advising that the employee’s position was that the unilateral pay cut was a constructive dismissal. The court relied on this letter as the evidence to prove that the pay cut had been “accepted” as a constructive dismissal by the employee notwithstanding the employee’s continuation in the job. However, in that case the employee claimed and the court accepted that when the employee continued to work after objecting to the pay cut, he was in fact mitigating his loss. This is explained in Chapter 14 when we consider the duty to mitigate damages in wrongful dismissal cases.
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C H A P T E R 14
Damages in Wrongful Dismissal Lawsuits LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 217 II. General Theory of Damages and Absence of “Specific Performance” 217 III. Categories of Damages in Wrongful Dismissal Lawsuits 219 A. Compensatory (or Ordinary) Damages 219 B. Aggravated Damages for Bad Faith in the Manner of Dismissal 222 C. Punitive Damages 225 IV. The Duty to Mitigate Compensatory Damages 226 A. The Standard of Mitigation Required 227 B. Mitigation with a Job Offered by the Former Employer 227 V. Chapter Summary 229 Questions and Issues for Discussion 230 Exercise 230 Notes and References 231
• Describe the three categories of damages that can be awarded in wrongful dismissal lawsuits. • Explain the legal tests applied by the courts to determine which (if any) category of damages applies in a wrongful dismissal lawsuit. • Define specific performance and how it is applicable to wrongful dismissal lawsuits. • Describe how an employee’s “duty to mitigate” affects wrongful dismissal damages.
I. Introduction If an employee wins a “wrongful dismissal” lawsuit, what do they win? The key to answering this question is to remember what the employer did wrong: it breached the term in the employment contract requiring it to provide the employee with notice of termination. It was not the termination itself that was illegal, since the employer can dismiss an employee by providing notice unless the contract states otherwise. Therefore, the courts ask what loss the employee suffered as a consequence of not receiving notice, and then order the employer to pay damages (money) to the employee to compensate for that loss. This chapter explains how the courts approach that task.
II. General Theory of Damages and Absence of “Specific Performance” When an employer dismisses an employee without giving proper notice (and absent cause for summary dismissal), this action repudiates the contract and the contract comes to an end.1 The employee can then sue the employer for wrongful dismissal to recover damages incurred as a result of the employer’s failure to provide proper notice.2 The Supreme Court of Canada has damages: An amount of money a party guilty of a contract or tort violation is ordered to pay the innocent party to compensate the person for the harm incurred. repudiation of contract: A breach of contract that demonstrates an intention by the party to treat the contract as at an end and to no longer be bound by the contract. wrongful dismissal: A type of lawsuit by an employee against a former employer alleging that the employer terminated their contract without complying with the implied term in the contract requiring “reasonable notice.” 217
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218 Part II The Common Law Regime explained that damages for breach of contract should “as far as money can do it, place [the innocent party] in the same position as if the contract had been performed.”3 Therefore, in a wrongful dismissal lawsuit, the courts assess what money and benefits employees would have received had they worked the notice period. Imagine that Jacqueline’s contract entitled her to three months’ notice of termination, but she is dismissed without notice. What has Jacqueline lost by being dismissed without that notice? Well, she has lost the opportunity to physically perform work for the employer for those three months. Her lawsuit will not likely come before a judge until those three months have long passed. However, in theory, the judge could order the employer to rehire Jacqueline for an additional three months to put her back into the position she would have been in had the contract been complied with. A court order requiring someone to perform their obligations under a contract is known as specific performance. In the context of wrongful termination of an employment contract, this remedy would mean that either the employer must re-employ a dismissed employee or the employee who quit in a manner that breached the contract must return to work. However, the courts do not, except in very rare circumstances,4 order specific performance of an employment contract.5 If one of the parties to the employment contract wants the employment relationship to end, then the common law courts have reasoned that it makes little sense to order it to continue. Justice Lambert of the British Columbia Court of Appeal captured this sentiment: It is not consistent with our respect for human dignity and freedom of choice to enforce an employment relationship against the wishes of one of the parties.6
The inability to obtain specific performance of an employment contract means that dismissed employees who win wrongful dismissal lawsuits will not get their job back.7 Their job is gone, unless the employer voluntarily decides to offer a new employment contract. We should pause here to note that the notion that forcing an employment relationship to continue against the wishes of one party is inconsistent with human dignity and freedom is not universally applied throughout the law of work. For one thing, as we will see later in this chapter, the common law courts have not applied this same logic when the situation is flipped: the courts do expect employees to return to work against their wishes in the context of the “duty to mitigate.” Also, as we will learn in Parts III and IV of the text and as summarized in Box 14.1, in both the regulatory and collective bargaining regimes, expert administrative tribunals regularly reinstate employees against the wishes of employers.
BOX 14.1 » TALKING WORK LAW Reinstatement of Dismissed Employees Under the Three Regimes of Work Law In the common law regime, judges do not, except in rare circumstances, order the reinstatement of employees who have been dismissed without notice (wrongfully dismissed). Even if an employer fires an employee for theft but it turns out that no theft occurred, all that the employee will be awarded is damages of the sort discussed in this chapter. This approach stands in sharp contrast to that of the other two regimes of work law considered in this text: in the regu-
latory standards regime and the collective bargaining regime, employees can be reinstated when they are dismissed improperly. In the regulatory standards regime, employers are restricted from dismissing employees for certain reasons. For example, human rights legislation prohibits dismissal of an employee for reasons related to prohibited grounds of discrimination, such as race, gender, and religion. Other employment-related
specific performance: An order by a court requiring a party found to have breached a contract to carry out its obligations as specified in the contract.
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Chapter 14 Damages in Wrongful Dismissal Lawsuits 219 legislation, such as employment standards and occupational health and safety legislation, prohibits dismissal of employees who attempt to enforce their statutory rights (anti-reprisal laws). The remedy for dismissals that violate protective employment legislation can include reinstatement of the employee to their former job. In a few Canadian jurisdictions (federal, Nova Scotia, and Quebec), non-union employees who have been dismissed have access to a statutory unfair dismissal process that can lead an adjudicator to reinstate them to their jobs.* We will consider these statutory rules in Chapter 20 in Part III. In the collective bargaining regime, unions bargain clauses into collective agreements that prohibit employers from dismissing employees without “just cause.”† No right exists to dismiss a unionized employee without cause simply by giving notice, as is the case for non-union employees in the common law regime. In labour arbitration, the forum that decides collective agreement disputes, the presumption is that reinstatement is the appropriate remedy in cases of “unjust dismissal” of a unionized employee. The availability of reinstatement for
improper dismissal of an employee is one of the key features that distinguishes the common law from the collective bargaining regime. We will learn about this law in Part IV. The use of varying approaches to reinstatement as a remedy in employment termination cases creates a mishmash of rights and remedies for Canadian employees that depends on (1) where and for whom the employee works, and (2) the reason for the termination. Only in the common law regime is the remedy for termination of an employment contract restricted to monetary damages. * See the discussion of these statutory unfair dismissal schemes in G. England, Individual Employment Law, 2nd ed (Toronto: Irwin Law, 2008) at 364-92. † See D. Brown & D. Beatty, Canadian Labour Arbitration, 4th ed (Aurora, ON: Canada Law Book, 2006) at chapter 7. See the discussion of the origins of the arbitral presumption that reinstatement is the appropriate remedy in unjust dismissal cases in the unionized setting in M. Mitchnick & B. Etherington, Labour Arbitration in Canada (Toronto: Lancaster House, 2006) at 118-19.
III. Categories of Damages in Wrongful Dismissal Lawsuits Three general categories of damages are available to employees in wrongful dismissal lawsuits: 1. Compensatory damages (sometimes called “ordinary” damages). 2. Aggravated or “moral” damages for bad faith in the manner of dismissal. 3. Punitive damages. Each serves a distinct purpose. The first two compensate employees for harms suffered as a result of the employer’s wrongful behaviour. Punitive damages, on the other hand, serve the broader purpose of retribution, deterrence, and denunciation in cases where employers have behaved so reprehensibly that the courts believe punishment is necessary. A summary of these three “heads of damage” (categories of damages) appears in Table 14.1.
A. Compensatory (or Ordinary) Damages The financial losses that flow naturally from the fact that the employee was not permitted to work the notice period are known as compensatory damages. The courts determine the proper length of notice by applying the Bardal factors we discussed in Chapter 10, and then calculate what payments and benefits the employee would have received had they worked through that period.8 The British Columbia Court of Appeal nicely summarized the approach of Canadian courts: If the employer terminates the employment contract without just cause and without giving reasonable notice of termination, the employee is considered to have been wrongfully dismissed and is entitled to damages equal to the employee’s salary and benefits that would have accrued during the period of notice that should have been given by the employer.9
compensatory damages: Damages that compensate the innocent party for the direct loss of benefits they would have earned had the contract not been violated by the guilty party.
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220 Part II The Common Law Regime TABLE 14.1 Damages in Wrongful Dismissal Cases Category of Damages
Basis for Recovery
Test for Recovery
Compensatory damages*
The employee lost contractual benefits that would have been received had they worked through the notice period, including wages and other benefits.
What losses would reasonably have been contemplated by the parties had they considered what the employee would lose if the employer terminated the contract without giving proper notice?
Aggravated or “moral” damages for bad faith in the manner of dismissal
The employee experienced mental pain and suffering or hurt feelings as a result of harsh, insensitive, or dishonest behaviour by the employer in the manner in which the employee’s contract was terminated.
Since Wallace v. United Grain Growers Ltd. (1997), the courts assume that the parties contemplated that employees will suffer mental pain and suffering if terminated in a harsh, insensitive, or dishonest manner. However, the employee must demonstrate that real physical or psychological harm occurred and that harm was caused by the manner of dismissal (as opposed to the dismissal itself ).
Punitive damages
The employer’s behaviour was so reprehensible and outrageous that the law should punish the employer beyond the mere ordering of compensatory and aggravated damages. The goal is to advance the objectives of “denunciation, deterrence, and retribution.”
Leading case: Hadley v. Baxendale (1854)
Leading case: Honda Canada Inc. v. Keays (2008) The employer’s outrageous behaviour must amount to an “independent actionable wrong” beyond the breach of the notice of termination clause. Often this independent wrong will be breach of an expressed or implied term of the contract requiring the employer to treat the employee with decency and in good faith. The court must also find that the goals of “denunciation, deterrence, and retribution” are not sufficiently addressed by other damages. Leading case: Honda Canada Inc. v. Keays (2008) * Subject to the employee’s “duty to mitigate.”
In assessing compensatory damages, judges apply the reasonable contemplation test originally developed in 1854 in the famous case of Hadley v. Baxendale.10 The rule is that damages are recoverable for a breach of contract to the extent that the parties would reasonably have contemplated that the damages would result if, at the time the contract was formed, they had considered what harms the employee would suffer if dismissed without notice. Consider a silly example. If an employee who has just been dismissed without notice finds himself suddenly with time on his hands and goes golfing, during which his leg is bitten off by an alligator hiding in a sand trap, he cannot recover damages for the lost leg from the employer in a wrongful dismissal lawsuit. Although he would not have been golfing that day “but for” his sudden and wrongful dismissal, neither party would reasonably have contemplated an alligator attack in the event that the employer dismissed the employee without notice. We call damages that could not have been reasonably contemplated by the parties too “remote” to be recoverable.11 Some losses arising from a failure of the employer to give proper notice to the employee are easily contemplated. Obviously, an employee dismissed without notice will lose out on the wages and other benefits that would have been earned had they worked the notice period. Provided that the employee can prove they suffered those losses, damages would be awarded to compensate the employee—to put the employee back into the financial position they would have been in had they worked the notice period.12 Lost wages for the notice period are usually easy to reasonable contemplation test: The test of contract damage “remoteness” from the 1854 case of Hadley v. Baxendale. It provides that damages for breach of contract are available only for harms that the parties would reasonably have contemplated at the time the contract was formed.
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Chapter 14 Damages in Wrongful Dismissal Lawsuits 221
calculate. If the evidence establishes that the employee would have received a raise or worked overtime at an additional rate of pay during the notice period, then those amounts will also be included in the calculation of lost wages.13 An employee may also have been entitled to payments or benefits other than wages during the notice period. For example, the value of pension contributions or pension benefits that would have been earned or accrued during the notice period is usually recoverable.14 So would the value of other benefits the employee would have received during the notice period, such as vacation pay or vacation time;15 a car allowance, provided that the benefit was a component of the employee’s compensation and not simply a reimbursement of actual expenses incurred in the course of working;16 and the value of stock options that the employee would have been entitled to exercise within the notice period.17 If the employer cancelled health, dental, and life insurance benefits coverage during the notice period, the lost value of those benefits is recoverable in a successful wrongful dismissal case. Cancelling a dismissed employee’s benefits before the notice period expires could prove costly for an employer. For example, if an employee becomes disabled during the notice period, but disability insurance benefits have been cut off, the employer will be liable for the amounts the employee would have received from the insurance company.18 Similarly, if a dismissed employee pays out of pocket for dental visits or other medical costs that would have been covered by the employer’s benefits plan, the employer would be ordered to reimburse the employee for such costs. A dismissed employee with employer-provided dental benefits should rush to the dentist and get all that expensive work done before the notice period expires!19 If a payment such as a commission or bonus was payable at the discretion of the employer, or the evidence establishes that the employee would not have qualified for such a payment even if they had worked through the notice period, then it likely will not be ordered by a court in the damage award.20 However, if the contract language or the facts confirm that the employee would have received the commission or bonus had they worked the notice period, then that loss will also be included in the damage award.21 Box 14.2 examines the relationship with the assessment of reasonable notice and damages for lost benefits.
BOX 14.2 » CASE LAW HIGHLIGHT Damages for Benefits That Would Have Vested During the Notice Period Gillies v. Goldman Sachs Canada Inc. 2001 BCCA 683 Key Facts: Gillies was dismissed on April 30, 1998, from his job as a securities salesman for Goldman Sachs Canada Inc. with just under five years’ service. He had been paid by a combination of salary and an annual bonus. In May 1999, the company submitted an initial public offering (IPO) to take the company public. Any employee employed as of March 1999 and still employed on May 3, 1999, was entitled to receive stocks in the new company. The lower court fixed the period of reasonable notice at 12 months. Since that period ended three days prior to May 3, 1999, the court ruled that Gillies would not have qualified for the IPO shares. Gillies appealed.
Issue: Did the trial judge make an error in fixing the period of reasonable notice at 12 months, thereby leaving Gillies outside the vesting date of the IPO shares? Decision: Yes. The court of appeal explained that if Gillies would have satisfied the qualifying conditions had he worked out the notice period, then he would be entitled to the value of the IPO shares. To qualify, the notice period would need to continue until at least May 3, 1999, the date of vesting for Goldman Sachs employees. The court of appeal found that 12 months’ notice was “on the low end,” considering the Bardal factors we learned about in Chapter 10. Moreover, the fact that 12 months left Gillies just three days short from qualifying for the IPO shares served an injustice. The court of appeal extended the notice period to 13 months, with the result that Gillies qualified for the IPO shares. The calculation of damages was sent back to the trial judge to decide.
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222 Part II The Common Law Regime In short, calculating general damages arising from a wrongful dismissal requires identification of what the employee has lost by not working through the entire notice period, and then an assessment of the financial cost of that loss.
B. Aggravated Damages for Bad Faith in the Manner of Dismissal The Supreme Court of Canada has recognized that being fired is a stressful event, and that sudden job loss can negatively impact the employee’s self-esteem, confidence, and personal dignity.22 Dismissed workers often suffer distress, hurt feelings, and psychological harm (including anxiety and depression) as a result of the termination, harm that is not easily quantifiable. Should an employee be able to recover money from the employer for these harms, in addition to the compensatory damages they suffered from the failure of the employer to give proper notice? Historically, the courts said that they should not. The general rule was that an employee cannot recover damages for the hurt feelings or mental pain and suffering—known as aggravated damages—they experience as a result of being terminated.23 Since the parties agreed that the contract could be terminated with notice, the possibility of the employee losing their job was anticipated. Therefore, damages for hurt feelings arising from that inevitability were not recoverable. However, the courts’ approach has evolved in recent years. In 1997, the Supreme Court decided in the case of Wallace v. United Grain Growers Ltd. that damages for mental suffering or hurt feelings could be awarded to a dismissed employee if the employer engages in “bad faith in the manner of dismissal.”24 The court ruled that an employer should be “candid, reasonable, honest and forthright” with employees in the manner in which they terminate the employment contract.25 A failure to meet this standard would be treated as bad-faith discharge. Damages for bad-faith discharge would be awarded by extending the period of reasonable notice. For example, an employee who would otherwise be entitled to eight months’ reasonable notice, applying the Bardal factors we discussed in Chapter 10, might be awarded ten months’ notice if the court ruled that the manner in which the employee was dismissed was in bad faith. Bad faith in the manner of dismissal became a new factor, added to the Bardal factors, that judges consider in assessing the period of reasonable notice. In the years that followed Wallace, many employees included claims for “Wallace damages” in their wrongful dismissal lawsuits. In dozens of cases, judges extended the notice periods when they felt employers were unduly insensitive in the manner in which they dismissed employees.26 When Wallace damages were ordered, they tended to be in the range of an additional one to four months added to the period of reasonable notice.27 Wallace damages became common in the years following the release of the decision—so much so that judges began to question whether the Wallace approach to aggravated damages was working.28 When the issue of damages for bad faith in the manner of dismissal again came before the Supreme Court a decade after the Wallace decision in the 2008 case of Honda Canada Inc. v. Keays, the Supreme Court altered its approach, as Box 14.3 explains.29 aggravated damages: Damages awarded to the innocent party that compensate for mental or psychological pain and suffering caused by the guilty party’s wrongful act. bad-faith discharge: When an employer dismisses an employee in a manner that is dishonest, harsh, or insensitive to the feelings and vulnerability of the employee. Wallace damages: A phrase commonly used in wrongful dismissal decisions in Canada to describe damages ordered against an employer for acting in bad faith in the manner in which it terminated an employment contract. Wallace v. United Grain Growers Ltd. (1997) was the Supreme Court of Canada decision in which these damages were first ordered.
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Chapter 14 Damages in Wrongful Dismissal Lawsuits 223
BOX 14.3 » CASE LAW HIGHLIGHT Damages for Bad-Faith Discharge Honda Canada Inc. v. Keays 2008 SCC 39 Key Facts: Keays had been employed by Honda Canada Inc. for 11 years when he became ill. The employer requested medical letters explaining his absences, but was unsatisfied with the letters prepared by Keays’s doctor. Therefore, the employer demanded that Keays be evaluated by a doctor chosen by the employer. Keays refused to see the employer’s doctor unless the employer first explained the purpose and methodology that would be used by the doctor. In response, Honda terminated Keays for cause (summary dismissal; see Chapter 12) for refusing the employer’s request. Keays sued for wrongful dismissal, seeking compensatory damages for failure to provide reasonable notice, as well as aggravated and punitive damages. Issue: Was Keays wrongfully dismissed? If yes, what were his damages? Decision: Yes, Keays was wrongfully dismissed. His refusal to see the employer’s doctor was not cause for summary dismissal. Given Keays’s history of being misdiagnosed in the past, he had a reasonable excuse to refuse a one-on-one appointment with the employer’s doctor in the circumstances and, in any event, terminating Keays for expressing reservations about the medical referral was not proportional to any misconduct Keays may have engaged in. The Supreme Court of Canada accepted the trial judge’s conclusion that 15 months was reasonable notice in his case. Therefore, Keays
was entitled to compensatory damages based on 15 months’ notice. On the question of aggravated damages arising from the manner in which Keays was dismissed, the Supreme Court reconsidered its earlier Wallace approach. While damages are still recoverable for bad faith in the manner of dismissal, those damages will no longer be assessed simply by extending the period of reasonable notice. Instead, such damages would be assessed according to the general rule we learned about earlier in this chapter, from Hadley v. Baxendale. That case found that contract damages are only recoverable if they were within the “reasonable contemplation” of the parties when the contract was formed. According to the Supreme Court, since the Wallace decision “there has been [an] expectation by both parties … that employers will act in good faith in the manner of dismissal. Failure to do so can lead to foreseeable, compensable damages.” Therefore, an employee can recover aggravated damages for bad faith in the manner of dismissal if the court is persuaded that the harsh manner of dismissal, rather than the fact that the employee was dismissed, actually caused the employee real physical or psychological harm. If so, the courts must assign a dollar amount to that harm. In this case, the Supreme Court ruled that the employer had not acted in bad faith in the manner of dismissal. There was nothing malicious or unduly insensitive in the manner in which the employer requested independent medical evidence. Therefore, Keays was not entitled to aggravated or punitive damages.
There are now dozens of Canadian wrongful dismissal decisions in which courts have ordered aggravated damages for bad faith in the manner of dismissal. The sorts of employer behaviour that courts have found to constitute bad-faith discharge include the following: • Being dishonest about the reason for dismissal.30 • Making unwarranted attacks on the employee’s job performance or honesty, such as by falsely accusing the employee of misconduct.31 • Communicating the termination in an insensitive manner.32 • Handling the complaint in a procedurally unfair manner, such as by refusing the employee an opportunity to explain alleged wrongful acts.33 • Refusing to pay statutory benefits, to file documents necessary to permit the employee to access government benefits, or to provide a reference letter.34 • Harassing the employee.35 • Threatening the employee with a large counter lawsuit if the employee dares to file a wrongful dismissal lawsuit, or needlessly dragging out the litigation to impose further costs on the employee.36
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224 Part II The Common Law Regime It is more difficult for an employee to obtain aggravated damages for bad-faith discharge under the Honda approach than it was under the Wallace approach.37 Under Wallace, the employee was not required to prove that they suffered actual physical harm as a result of the manner in which the dismissal took place. The employee had only to present evidence that the employer acted in an unduly insensitive manner when it fired the employee, and if the judge agreed, the judge would extend the notice period and therefore the amount of damages owed.38 Under the Honda approach, the employee must now present some evidence that establishes that they suffered physical or psychological harm caused by the employer’s insensitive behaviour rather than the fact of being dismissed.39 That causal connection is often difficult to establish.40 However, if the employee can persuade the court that they suffered serious psychological or physical harm as a result of the manner of dismissal, the recoverable damages can be larger than under the Wallace approach.41 That is because in the Honda approach, the court will not simply extend the notice period by a month or two but instead compensate the employee for the actual harm suffered. For example, if the employee cannot work due to depression caused by the employer’s bad faith in the manner of dismissal, then the employer could be liable for lost wages damages going far beyond the notice period under the former contract.42 In the 2019 decision Colistro v. Tbaytel (see Box 13.1), the Ontario Court of Appeal awarded $100,000 in “Honda aggravated damages” for mental suffering experienced by a female employee who was constructively dismissed when the employer rehired a man who years earlier had sexually harassed her. The court ruled that the employer had “placed its business interests above the expectations and concerns of a valued, long-time employee” and downplayed the psychological trauma the hiring caused the employee.43 In the decision summarized in Box 14.4, the same court ordered $200,000 in aggravated damages for Walmart Canada’s behaviour leading to a constructive dismissal, along with an additional $100,000 in punitive damages.
BOX 14.4 » CASE LAW HIGHLIGHT Aggravated and Punitive Damages for Failing to Stop Managerial Harassment of an Employee Boucher v. Wal-Mart Canada Corp. 2014 ONCA 419 Key Facts: Boucher was an assistant manager. After she refused her manager’s order to falsify a temperature log, the manager (Pinnock) commenced a six-month campaign of verbal harassment and intimidation directed at Boucher. Boucher complained to upper management, which only increased the intensity of Pinnock’s abuse. Pinnock routinely swore at Boucher, called her stupid in front of colleagues, and attempted to drive Boucher to quit. A human resources manager told Pinnock to back off on his treatment of Boucher, but Pinnock responded, “not until she [f-ing] quits.” Nevertheless, after an “investigation,” management told Boucher that her “complaints were unsubstantiated,” and they warned her to stop undermining Pinnock. Boucher quit and sued for constructive dismissal. She received medical treatment for abdominal pain and bloating,
which a doctor attributed to stress. Walmart continued to pay Boucher’s salary and benefits for eight months (even though her contract entitled her to only 20 weeks’ notice of termination). A jury awarded punitive damages against Pinnock in the amount of $150,000 as well as another $100,000 for committing the tort of intentional infliction of mental suffering. Walmart was vicariously liable for these damages (meaning Walmart is required to pay the damages ordered against Pinnock) because Pinnock was its employee at the time. (We will discuss this tort and the concept of vicarious liability in Chapter 16). The jury ordered $200,000 in aggravated damages against Walmart plus an additional $1,000,000 in punitive damages. Both Pinnock and Walmart appealed those orders. Issue: Did the jury make an error in awarding large aggravated and punitive damages against Pinnock (the manager) and Walmart?
vicarious liability: A legal rule under which an employer is liable for damage caused to a third party by one or more of its employees.
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Chapter 14 Damages in Wrongful Dismissal Lawsuits 225 Decision: The court of appeal upheld the tort award against Pinnock but reduced the punitive damages award against him from $100,000 to $10,000. The court ruled that Pinnock’s behaviour was a “marked departure from the ordinary standards of decent human behaviour” and therefore warranted a punitive damages order. However, when combined with the $150,000 tort award, the jury’s punitive damages award was excessive to serve the function of punishment and deterrence. The court found that $10,000 punitive damages combined with $150,000 tort damages award was more than sufficient against an individual person. The court of appeal upheld the aggravated damages award of $200,000 against Walmart. The court ruled that the constructive dismissal occurred as a result of Walmart’s complete failure to take Boucher’s complaints about Pinnock seriously.
Not only did Walmart not ensure the harassment stopped, it effectively took Pinnock’s side by threatening Boucher that complaints against Pinnock would lead to her discipline. Walmart’s behaviour left Boucher with no choice but to quit, and this constitutes bad faith in the manner of dismissal. The court of appeal reduced the punitive damages award from $1,000,000 to $100,000. It found that Walmart had committed a separate legal wrong, as required to award punitive damages, by breaching the “implied duty of good faith and fair dealing” in employment contracts. However, the amount of $1 million was unnecessarily high and not rationally connected to the objective of deterrence and denunciation given that Walmart was already liable to pay $200,000 in aggravated damages plus the $100,000 tort damages ordered against Pinnock, plus Boucher’s legal expenses in the trial.
C. Punitive Damages The final type of damages potentially available in wrongful dismissal cases is known as punitive damages. These damages are not intended to compensate the employee for actual harm suffered (like compensatory and aggravated damages). Rather, they are intended to punish the employer for its reprehensible conduct. The Supreme Court of Canada has described punitive damages this way: “punitive damages are restricted to … wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own.”44 The goals of punitive damages are “denunciation, deterrence and retribution,” and they are only awarded when the court believes that other damages will not satisfy those goals.45 To obtain punitive damages in a wrongful dismissal lawsuit, the employee must point to an “independent actionable wrong,” such as a tort or breach of a contract term other than the term requiring notice of termination.46 For this reason, implied terms requiring “fair dealing” or decent treatment of employees play an especially important role in the assessment of punitive damages. The very high legal threshold for ordering punitive damages means that they are ordered relatively infrequently. However, in recent years, Canadian courts have been more willing to order large punitive damage awards against employers who act in a manner that the courts believe is high-handed and insensitive to the employee. The Walmart case in Box 14.4 is one example.47 In a second more recent case, Galea v. Wal-Mart Canada, Walmart was again ordered to pay $200,000 in aggravated damages plus a whopping $500,000 in punitive damages! In that case, Walmart demoted a vice-president to a lower-ranking executive job but refused to define her new position or assign a clear role for 10 months before they eventually terminated her. After the employee was terminated, Walmart failed to abide by the clear contract language requiring payment of wages for two years and then used delay tactics to stall the litigation. The lower court ruled that Walmart’s conduct violated the implied duty of good-faith dealing in a high-handed manner.48 In the 2018 decision Bailey v. Service Corporation, a British Columbia court ordered $110,000 in punitive damages against an employer that terminated a long-serving, 60-year-old employee when he was off work sick. The employee found out he had been terminated when his wife was told by an insurance company. The employer then falsely maintained that the employee had been terminated for cause.49 punitive damages: Damages ordered against a party who engages in outrageous or egregious behaviour deserving of special denunciation and retribution.
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226 Part II The Common Law Regime
IV. The Duty to Mitigate Compensatory Damages Finally, we need to consider the duty of employees to mitigate avoidable losses when they have been dismissed. This task requires that we distinguish between two types of contractual promises dealing with termination found in employment contracts. The first is a promise by the employer to pay the employee a predetermined amount of money at the time of termination, such as the following: The employer shall provide the employee with three months’ notice of termination or pay in lieu of notice.
This clause creates a binding obligation on the employer to either give the employee three months’ working notice or pay the employee three months’ wages when it terminates the contract. In either case, the employer has promised to pay the employee three months’ pay if and when it terminates the contract.50 When a contract spells out a specific amount of notice or pay in lieu of notice to which an employee is entitled as a condition of termination, the employee is under no obligation to try and reduce their losses unless the contract includes an expressed term requiring the employee to do so. So even if the employee immediately gets a new job, the previous employer still has to pay the full three months’ pay despite the fact that this means the employee receives somewhat of a windfall. This result applies as well in the case of a fixed-term contract that is terminated early by the employer. The employee could sit on the couch and watch The Simpsons reruns and still collect the pay required by the contract.51 The second type of clause does not define a specific amount of notice or pay in lieu of notice that is required but instead requires the employer to provide the employee with reasonable notice of termination. As we have seen, a failure of the employer to comply with the contractual obligation to give reasonable notice “repudiates” the contract and entitles the employee to recover damages for wrongful dismissal. A promise to give reasonable notice is not the same thing as a promise to pay three months’ wages as a condition of termination. The importance of the distinction rests in a rule of contract law that requires the innocent party to minimize their losses. This rule is known as the duty to mitigate. It requires an employee dismissed without reasonable notice to do their best to limit the damages incurred from not having received reasonable notice. Consider the following example: A court rules that Stephen’s contract required the employer to provide three months’ reasonable notice of termination. The employer dismissed him with no notice. Stephen’s wages amounted to $2,000 per month. After one month of unemployment, Stephen got a new job that paid him $1,500 per month. His damage award in the wrongful dismissal lawsuit would be calculated as follows: Lost wages arising from wrongful dismissal (3 months’ pay at $2,000/mo.)
$6,000
Deduct earnings from new employment (2 months’ pay at $1,500/mo.)
$3,000
Total amount of damages employer must pay
$3,000
The employer benefits from the employee’s successful mitigation efforts in this example. Moreover, if Stephen had just sat on the couch watching television and had not searched for a new job, the court could also deduct from the damages owing whatever amount the court thinks Stephen would have earned had he made reasonable efforts to find a job. Therefore, in a lot of wrongful dismissal lawsuits, the courts are asked to decide whether the employee has satisfied the duty to mitigate. duty to mitigate: A legal obligation on the victim of a breach of contract by the other party to make reasonable efforts to limit the amount of damages suffered as a consequence of the breach.
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Chapter 14 Damages in Wrongful Dismissal Lawsuits 227
A. The Standard of Mitigation Required The burden is on the employer to persuade the court that the employee could have mitigated their losses but failed to do so.52 That means demonstrating that the employee did not make reasonable efforts to seek new employment and also that, if the employee had done so, they probably would have gotten a new job.53 In practice, therefore, the duty to mitigate usually boils down to two key obligations imposed on the dismissed employee: 1. To make reasonable efforts to look for a new job. 2. To accept a job offer that a reasonable person in their position would accept (including, as we will see, a job offer from the very employer who has just fired the person!). Employers will present evidence that job vacancies were available during the notice period for which the employee was reasonably qualified (e.g., through ads posted on job boards or in newspapers). Employees are usually given a brief period—one court said up to two to three months—of recovery time immediately after dismissal during which time they are not expected to be actively looking for work.54 Thereafter, employees are expected to take reasonable steps to mitigate the damage resulting from the wrongful dismissal. An employee is not required to accept any job that comes up. The legal test asks whether the employee acted “reasonably” in their efforts to find new work, as described by the British Columbia Court of Appeal: The duty to “act reasonably” … must be a duty to take such steps as a reasonable person in the dismissed employee’s position would take in his own interests—to maintain his income and his position in his industry, trade or profession. The question whether or not the employee has acted reasonably must be judged in relation to his own position, and not in relation to that of the employer who has wrongfully dismissed him. The former employer cannot have any right to expect that the former employee will accept lower-paying alternate employment with doubtful prospects.55
It is difficult to describe concrete rules that apply to mitigation, since each case is decided on its own unique facts. However, a perusal of the many cases considering mitigation allows for some general statements. For example, in applying the “reasonableness” test, the courts have ruled that employees can decline job opportunities that would amount to a substantial step backward from their previous job, including much lower pay and status.56 Also, employees are not required to apply for jobs they are clearly not qualified for57 or to accept a part-time job rather than hold out for a full-time position.58 If job opportunities in the employee’s field are scarce, then reasonable mitigation may include returning to school or taking new training programs.59 A dismissed employee may be required to accept a job in a different geographical location if no local jobs are available; however, the extent to which an employee is required to uproot and move depends on the employee’s age and personal circumstances.60 In one case, an employee was considered to have failed to mitigate when he declined a job offer in the same field as his former job to pursue a new career as a self-employed real estate agent, a decision the court believed was too “risky.” The court ruled that it is unreasonable, and a failure of the duty to mitigate, for an employee to pursue self-employment rather than a new job in their field, unless the evidence discloses that the employee would not have been able to find a job in their traditional field.61 It is also unreasonable for an employee to hold out for a job with a specific employer when reasonable opportunities are available with other employers in their field.62
B. Mitigation with a Job Offered by the Former Employer A controversial issue involves the duty of an employee to mitigate with a job offered by the same employer who has just illegally fired them. The courts have long stated that the employment relationship is defined by mutual trust and confidence, and for this reason (among others)
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228 Part II The Common Law Regime judges have declined to order specific performance of employment contracts, as noted earlier in this chapter. Moreover, the courts have also recognized that employees are in a position of vulnerability. Therefore, we might think that an employee ought not to be required to accept a job with the employer who has just illegally dismissed them, under threat of forfeiting entitlement to damages arising from that termination. As the BC Court of Appeal once noted, it is “almost amusing, and highly artificial” to expect that an employer will work nicely and respectfully with an employee who is in the process of suing that employer for wrongful dismissal.63 Nevertheless, the Supreme Court of Canada ruled in the case of Evans v. Teamsters Local Union No. 31 that the duty to mitigate requires an employee to accept a job offer from the former employer if “a reasonable person in the employee’s position would have accepted the employer’s offer.” The court wrote that a reasonable person would likely accept a job offer from the former employer when the following conditions are met: 1. The salary offered is the same, the working conditions are not substantially different or the work demeaning, and the personal relationships are not acrimonious. 2. Returning to the old workplace would not place the employee in an “atmosphere of hostility, embarrassment or humiliation.”64 Since Evans, employers frequently offer dismissed employees job opportunities during the notice period in an attempt to reduce the damages payable. Some employees who refuse those offers have been found to have failed in their duty to mitigate (see Box 14.5). In the majority of cases, though, courts have ruled that employees were not required to accept mitigation with their former employer on the basis that the offered job was not substantially similar or that it would be humiliating or unreasonable to expect the employee to return to their old workplace.65 However, when the circumstances of the termination were not hostile or contentious, and the terminated employee is offered a job of similar status and pay, courts have found that the employee was required to accept the offer of mitigation with the former employer.66
BOX 14.5 » CASE LAW HIGHLIGHT Meet the New Boss, Same as the Old Boss Chevalier v. Active Tire & Auto Centre Inc. 2013 ONCA 548
Issue: Did Chevalier fail to mitigate when he refused the employer’s offer to re-employ him in his former position?
Key Facts: Chevalier was 55 years old and had 33 years’ service with Active Tire & Auto Centre Inc., including 18 years as a manager, when a temporary layoff led to his constructive dismissal. Chevalier filed his lawsuit a couple of weeks into the layoff. A few days after that lawsuit was filed, the employer offered Chevalier the opportunity to return to his old job. Chevalier refused the offer because he felt harassed and disrespected by the employer. At the trial, the court assessed the period of reasonable notice at 24 months. However, the employer argued that Chevalier had failed to mitigate his losses when he declined the employer’s offer to return to work.
Decision: Yes. Applying the Supreme Court’s reasoning in Evans v. Teamsters Local Union No. 31, the court ruled that the employer’s job offer was at the same rate of pay and in the identical position, and that returning to this job would not have caused Chevalier embarrassment or humiliation. The employer had not treated Chevalier in a demeaning manner during the ordeal. A “reasonable person” in Chevalier’s position would have accepted the job offer. Therefore, the employer had met the burden of proving that Chevalier failed in his duty to mitigate his damages. No damages were ordered, even though the employer had wrongfully dismissed Chevalier.
The Evans approach requiring employees to sometimes mitigate in a job with the employer who just fired them has been criticized because it allows an employer to avoid the consequences of its wrongful actions by simply offering the dismissed employee another job. Justice Abella of the Supreme Court noted in her dissenting judgment in Evans that the requirement to mitigate
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Chapter 14 Damages in Wrongful Dismissal Lawsuits 229
in the job from which you have just been wrongfully dismissed permits the employer “to unilaterally transform their unlawful treatment” of the employee “into a lawful dismissal” in which the employee is entitled to no notice.67 Let’s conclude this chapter with a fun decision that ties together several legal issues we have considered so far in our review of the common law regime, including modifications to employment contracts (Chapter 7), constructive dismissal (Chapter 13), and the duty to mitigate. Recall from those earlier chapters that an employer seeking to reduce an employee’s pay cannot just unilaterally impose the change over the employee’s objection. In the decision outlined in Box 14.6, the employee expressly objected to a pay cut but kept working anyway, receiving the lower wages imposed by the employer. Pay attention to the argument the employee makes, relying on the Evans v. Teamsters decision.
BOX 14.6 » CASE LAW HIGHLIGHT Is it Condonation or Mitigation? Russo v. Kerr 2010 ONSC 6053 Key Facts: Russo had worked for Kerr for 37 years. A new president hired in 2009 decided that significant cost reductions were necessary to keep the company economically viable and that Russo was earning far more than market forces dictated. He informed Russo that he would be cutting his base pay and bonus by nearly 50 percent. Russo hired a lawyer who informed the employer that Russo did not agree to the pay cut and that the cut amounted to grounds for constructive dismissal. Afterwards, Russo continued to work for Kerr, receiving the reduced pay, and then sued to recover the difference between his old pay and the new reduced pay. The employer argued that by continuing to work with the reduced pay, Russo had “condoned” the pay cut (see Chapter 13). Russo argued that when he continued to work after the pay cut, he was simply mitigating his damages that resulted from the constructive dismissal that had occurred when his pay was cut by nearly 50 percent.
Issue: Did Russo condone the pay cut and thereby surrender his right to claim constructive dismissal, or was Russo mitigating his losses by continuing to work in his old job with reduced pay? Decision: Russo was constructively dismissed when the employer cut his pay substantially. Russo clearly informed the employer that he was not accepting or condoning the pay cut and that it was his position that the pay cut amounted to a constructive dismissal. Therefore, there was no condonation of the pay cut. Russo could have argued that the pay cut was a breach of contract and sued for the difference in pay while keeping the contract alive. But instead, he opted to argue that the pay cut was a constructive dismissal and that by continuing to work, he was simply mitigating his losses as per the Supreme Court’s direction in the Evans v. Teamsters’ decision. The court ruled that Russo was entitled to take that position. The court ruled that 22 months was reasonable notice in this case. Damages were ordered based on that period of time calculated on the basis of the difference in pay between what Russo would have earned before the pay cut and what he actually earned working for Kerr during the period of notice.
V. Chapter Summary The goal of damages in wrongful dismissal lawsuits is to place the employee back into the position they would have been in had the employee worked through the proper notice period. This goal is achieved by ordering monetary damages. Aggravated damages are sometimes available for mental suffering experienced by a dismissed employee as a result of bad faith in the manner in which they are dismissed. Punitive damages are only ordered when an employer engages in particularly reprehensible behaviour that the court believes is deserving of additional punishment. In the common law regime, courts do not order the reinstatement of employees to their former jobs. This approach stands in sharp contrast to that of the other two regimes of work law: the regulatory standards regime and the collective bargaining regime. If an employer dismisses an employee in contravention of a requirement to give reasonable notice, the employee must make efforts to mitigate damages by seeking new employment and maybe even by accepting re-employment in a job offered by the former employer.
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230 Part II The Common Law Regime
QUESTIONS AND ISSUES FOR DISCUSSION 1. What are “compensatory damages” in a wrongful dismissal action, and how do judges determine their amount? 2. What is the difference between compensatory and aggravated damages? Explain the circumstances under which a court might order aggravated damages in a wrongful dismissal lawsuit and provide some examples. 3. Explain the difference between the Supreme Court’s approaches to “bad-faith discharge” in the Wallace and Honda decisions. 4. What is “specific performance”? Do courts apply it in breaches of employment contracts? 5. What are the conditions in which an employee will be expected to accept a job with the employer that has just dismissed them as part of an employee’s duty to mitigate?
APPLYING THE LAW 1. Eileen is terminated after 10 years’ service. Her employment contract included a clause that requires the employer to provide Eileen with three months’ notice or pay in lieu of notice in the event she is terminated without cause. Her pay is $3,000 per month, plus $200 per month contributed to a pension plan by the employer, plus a $2,000 bonus paid out to every employee who has been employed for a least one year and who is employed on December 31. Eileen is terminated on November 1. The employer falsely alleged cause and told Eileen’s co-workers that Eileen had been fired for stealing money, when in fact there was no evidence of this. The employer maintained its position that Eileen had stolen money right up to the beginning of the trial, at which point it dropped that position and admitted that there was no cause. Assume that the court rules there was no cause for ter-
mination and the employer fabricated the false allegation about theft. The employer’s false allegations of dishonesty caused Eileen to suffer severe depression that required her to take medication. a. Discuss what damages you believe a court would order in these circumstances. If you believe a court might order aggravated or punitive damages, explain the tests courts apply when considering those damages. (You are not expected to know the precise amount a court would order in aggravated or punitive damages, as these are decided on a caseby-case basis.) b. Assume now that the employer argues that Eileen failed to mitigate her losses because she did not actively look for work during the period of notice. What argument(s) would you make on Eileen’s behalf in response to that argument?
EXERCISE Every decision in a successful wrongful dismissal lawsuit will include a discussion and assessment of the damages that the employer must pay to the employee. Many will also include a discussion of whether the employee has properly mitigated their losses. This exercise encourages you to find and read some of these decisions and consider how the principles discussed in this chapter were applied to the facts of those cases. To learn how the courts have dealt with wrongful dismissal and the duty to mitigate, search for cases that reference the Evans v. Teamsters case. In this exercise, we “note up” the Evans v. Teamsters case. 1. Go to the CanLII home page: . 2. In the “Noteup” search box, type “Evans v. Teamsters Local Union No. 31” and choose “Evans v. Teamsters Local Union No. 31, 2008 SCC 20” from the drop-down list that appears. That search should give you over 100 cases that cite the Evans decision.
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Chapter 14 Damages in Wrongful Dismissal Lawsuits 231
3. Select two cases that involve wrongful dismissal actions in which the matter of the employee’s mitigation efforts was considered and read them. Answer the following questions for each case: a. Were compensatory damages ordered? If so, what was the amount ordered? b. Were either aggravated or punitive damages ordered? If so, describe the employer’s behaviour that led the court to order such damages. c. Did the court find that the employee failed to mitigate damages? If so, by how much was the damages award reduced?
NOTES AND REFERENCES 1. The employee cannot elect to keep the contract alive, as is the case with other types of contract breach by the employer. See Canadian Ice Machine v. Sinclair, [1955] SCR 777 at 4; and Gunton v. Richmond-upon-Thames London Borough Council, [1982] Ch. 448.
Will” (1984) 51 U Chicago L Rev 947 (reinstatement should not be permitted, and there should be no requirement to give notice of termination).
3. Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30. See also Nygard International Ltd. v. Robinson, 1990 CanLII 1991 (BCCA) at 106; Robinson v. Harman, [1848] 154 ER 363; and Wertheim v. Chicoutimi Pulp Co., [1911] AC 301.
Island), 2008 BCCA 33 at para 23. See also Wallace v. United Grain Growers Ltd., [1997] 3 SCR 701 at para 61; and Sylvester v. British Columbia, supra note 8. The assumption is that the employee would have worked during the notice period. An employee who would have remained in receipt of disability benefits throughout the notice period will have those benefits deducted from damages for lost wages if the employer pays both the wages and the benefits directly. However, if the insurance benefits are paid by a third-party insurer, then the disability benefits are not deductible from the wages award: McNamara v. Alexander Centre Industries Ltd., 2001 CanLII 3871 (Ont. CA); and Sills v. Children’s Aid Society of the City of Belleville, 2001 CanLII 8524 (Ont. CA).
8. Nygard International Ltd. v. Robinson, supra note 3 at 106; Michaels v. Red Deer College (1974), 44 DLR (3d) 447 (Alta. SC (AD)); Roe, McNeill & Co. v. McNeill, 1998 CanLII 6230 2. See the discussion of these basic principles of wrongful dis(BCCA); Davidson v. Allelix Inc., 1991 CanLII 7091 (Ont. missal law in Merrill Lynch Canada Inc. v. Soost, 2010 CA); Sylvester v. British Columbia, [1997] 2 SCR 315; and ABCA 251; Taggart v. Kwikasair Express Ltd., 1980 CanLII 382 (BCCA) at 353; and Vorvis v. Insurance Corporation of Paquette v. TeraGo Networks Inc., 2016 ONCA 618. British Columbia, [1989] 1 SCR 1085. 9. Johnson v. Global Television Network Inc. (CH Vancouver
4. An example is the British decision Hill v. C.A. Parsons and Co. Ltd., [1972] Ch. 305. A key factor in cases where reinstatement has been ordered is the absence of animosity between the parties and continued mutual trust and confidence that survived the act of terminating the contract. 5. International Brotherhood of Electrical Workers, Local Union 2085 et al. v. Winnipeg Builders’ Exchange et al., [1967] SCR 628.
6. Philp v. Expo 86 Corp., 1987 CanLII 2476 (BCCA) at para 45. See also DeFrancesco v. Barnum, [1890] 45 Ch. D 430 at 10. Hadley v. Baxendale, [1854] 156 ER 145 at 151, applied by 438. The traditional justifications for the refusal of common the Supreme Court of Canada in Honda Canada Inc. v. law courts to order specific performance include the diffiKeays, 2008 SCC 39 at paras 54-56. culty courts would have supervising a reinstatement order 11. Note that the test for remoteness and reasonable contemof a non-union employee and that there should be “mutualplation in Hadley v. Baxendale also applies to a contractual ity” in contract remedies, and since a mandatory order for breach by an employee that causes an employer to suffer an employee to return to work would amount to a form of monetary loss. For a good discussion of this scenario, see slavery, the courts should not order employers to take back RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., employees against their will. See the discussion in S. Hon2008 SCC 54 at para 12. eyball, Employment Law, 12th ed (Oxford: Oxford Univer 12. See Garcia v. 1162540 Ontario Inc., 2013 ONSC 6574 (the sity Press, 2012) at 84. employee called no evidence to establish he suffered a loss 7. Whether the common law should revisit its opposition to as a result of the termination and therefore no damages reinstatement as a remedy for breach of the employment were ordered). See also Red Deer College v. Michaels, [1976] contract is a hotly debated question. See, for example, D. 2 SCR 324 at para 11. Brodie, “Specific Performance and Employment Contracts” (1998) 27 Indus LJ 37 (specific performance should be allowed); and R. Epstein, “In Defense of the Contract at
13. See, for example, Rieta v. North American Air Travel Insurance Agents Ltd., 1998 CanLII 6540 (BCCA) (evidence
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232 Part II The Common Law Regime established that overtime pay would have been earned during the notice period); Alishah v. 1582557 Ontario Ltd., 2007 CanLII 243 (Ont. Sup Ct J); Lewis v. Lehigh Northwest Cement Limited, 2009 BCCA 424 (even though the employee had received annual raises in the past, evidence was unclear that he would have received a raise during the notice period); Olivares v. Canac Kitchens, 2012 ONSC 284; and Kwasnycia v. Goldcorp Inc., 1995 CanLII 7276 (Ont. Gen Div) (lost overtime was payable). 14. Lewis v. Lehigh Northwest Cement Limited, supra note 13; and Durrant v. British Columbia (Hydro and Power Authority), 1990 CanLII 271 (BCCA). See also Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10 (pension payments made to employee were not to be deducted from wrongful dismissal damages).
bonus during the notice period). Where a payment is within the employer’s discretion, it will not be recoverable in damages because the courts assume that employers exercise their discretion in a manner that maximizes their own financial interests. However, the employer’s discretion to deny a bonus to a dismissed employee must not be exercised in bad faith or unreasonably: Burns v. Oxford Development Group Inc. (1992), 128 AR 345 (QB); and Lippa v. Can-Cell Industries Inc., 2009 ABQB 684. 21. See, for example, Devlin v. NEMI Northern Energy & Mining Inc., 2010 BCSC 1822 (the contract made payment of bonus mandatory); Hobbs v. TDI Canada Ltd., 2004 CanLII 44783 (Ont. CA) (the contract required payment of commissions); Prozak et al. v. Bell Telephone Co. of Canada, 1984 CanLII 2065 (Ont. CA); Noble v. Principal Consultants Ltd. (Bankrupt), 2000 ABCA 133; Hyland v. Advertising Directory Solutions Inc., 2014 ABQB 336; and Paquette v. TeraGo Networks Inc., supra note 8.
15. Stauder v. BC Hydro & Power Authority, 1988 CanLII 3037 (BCCA) (assessing the value of loss of vacation time at $2,500); Kwasnycia v. Goldcorp Inc., supra note 13 (the 22. Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986; and value of lost paid vacation was estimated at 10 percent of Reference Re Public Service Employee Relations Act (Alta.), income); Dussault v. Imperial Oil Limited, 2019 ONCA 448; [1987] 1 SCR 313 at 368. and Paquette v. TeraGo Networks Inc., supra note 8. 23. The leading cases on this point are Peso Silver Mines Ltd. v. 16. Baumgart v. Convergent Technologies Canada (1989), 28 Cropper, [1966] SCR 673; Vorvis v. Insurance Corporation of CCEL 250 (BCSC); McDonald v. GBC Canada Inc., 2004 British Columbia, supra note 2; and Addis v. Gramophone BCSC 1029; and Wood v. BBC Brown Boveri Canada Inc., Co., [1909] AC 488 (HL). For criticisms of the courts’ his1986 CanLII 1215 (BCCA). torical approach to damages for mental suffering arising 17. Mothersele v. Gulf Canada Resources Ltd., 2003 ABQB 2; from breach of the employment contract, see J. Swan, Veer v. Dover Corp. (Canada) Ltd., 1997 CanLII 12429 “Extended Damages and Vorvis v. Insurance Corporation of (Ont. Gen Div); Kieran v. Ingram Micro Inc., 2004 CanLII British Columbia” (1990) 16 Can Bus LJ 213; R.B. Schai, 4852 (Ont. CA); and Saalfeld v. Absolute Software Corpora“Aggravated Damages and the Employment Contract” tion, 2009 BCCA 18. (1991) 55 Sask L Rev 345; and D. Doorey, “Employer Bully 18. Alcatel Canada Inc. v. Egan, 2006 CanLII 108 (Ont. CA). ing: Implied Duties of Fair Dealing in Canadian Employ 19. It is more complicated if the employer terminated benefits ment Contracts” (2005) 30 Queen’s LJ 500. Justice Binnie of coverage during the notice period and the employee does the Supreme Court explained that “aggravated damages” not actually incur any financial costs as a result. In British are intended to compensate the victim for “the additional Columbia, the courts have ruled that an employee can harm caused to the plaintiff ’s feelings by reprehensible or recover money for a loss of benefits coverage during the outrageous conduct on the part of the defendant”: Whiten notice period only if they can demonstrate an actual finanv. Pilot Insurance Co., 2002 SCC 18 at para 116. cial loss resulting from the absence of the coverage, such as 24. Wallace v. United Grain Growers Ltd., supra note 9 at the purchase of replacement insurance coverage: Sorel v. para 102. Tomenson Saunders Whitehead Ltd., 1987 CanLII 154 25. Ibid. at para 95. (BCCA); and Matheson v. Canadian Freightways Ltd., 2003 BCSC 1728. In other provinces, including Ontario, Alberta, 26. The Wallace decision has been examined exhaustively by academics and practitioners. Some examples include and Manitoba, the courts have ruled that an employee can Doorey, supra note 23; L. Stuesser, “Wrongful Dismissal— be reimbursed the amount the employer would have paid Playing Hardball: Wallace v. United Grain Growers” (1997for the benefits for the duration of the notice period, 98) 25 Man L Rev 547; J. Fudge, “Limits of Good Faith in regardless of whether the employee had purchased new the Contract of Employment: From Addis to Vorvis to insurance or incurred actual financial loss due to the Wallace and Back Again” (2007) 32 Queen’s LJ 529. absence of insurance: Davidson v. Allelix Inc., 1991 CanLII 7091 (Ont. CA); Kapitany v. Thomson Canada Ltd., 2001 27. B. Curran, “Honda v. Keays: Employer Shield or Employee MBCA 167; and Christianson v. North Hill News Inc., 1993 Sword? An Empirical Analysis” (unpublished manuscript, ABCA 232. 2013). 20. See, for example, Alguire v. Cash Canada Group Ltd., 2007 28. See the observations of Justice Echlin in Yanez v. Canac ABCA 351 (the employee would not have qualified for the Kitchens, 2004 CanLII 48176 7 (Ont. Sup Ct J), which
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Chapter 14 Damages in Wrongful Dismissal Lawsuits 233 decried the routine pleading of “specious ‘Wallace claims’” by employees.
38. See the discussion in Veel, supra note 29 at 149.
39. The employee is not required to present medical or expert evidence to demonstrate harm, but there must be some evidentiary basis to demonstrate a link between the employer’s bad faith in the manner of discharge and harm suffered: Lau v. Royal Bank of Canada, 2017 BCCA 253; and 30. Capital Pontiac Buick Cadillac GMC Ltd. v. Coppola, 2013 Cottrill v. Utopia Day Spas and Salons Ltd., 2018 BCCA 383. SKCA 80; Hughes v. Gemini Food Corp., 1997 CanLII 1267 See also discussion in Saadati v. Moorhead, 2017 SCC 28; (Ont. CA); Noseworthy v. Riverside Pontiac-Buick Ltd., 1998 and Galea v. Wal-Mart Canada Corp., supra note 35. CanLII 2751 (Ont. CA); and Wallace v. United Grain Growers Ltd., supra note 9. 40. See, for example, Fox v. Silver Sage Housing Corporation, 2008 SKQB 321 (the employer’s behaviour met the standard 31. Price v. 481530 B.C. Ltd., 2016 BCSC 1940; Davies v. of bad-faith dismissal, but the employee failed to prove that Canada Shineray Suppliers Group Inc., 2017 BCSC 304; he suffered damages as a result of the conduct). Other cases Valle Torres v. Vancouver Native Health Society, 2019 BCSC where the employee failed to demonstrate damage include 523; Pate Estate v. Galway-Cavendish and Harvey (TownBeggs v. Westport Foods Ltd., 2011 BCCA 76; Kelly v. Norseship), 2013 ONCA 669; Pagliaroli v. Rite-Pak Produce Co. mont Mining Inc., 2013 BCSC 147; Brien v. Niagara Motors Limited, 2010 ONSC 3729; Antonacci v. Great Atlantic & Limited, 2009 ONCA 887; Chan v. Dencan Restaurants Inc., Pacific Company of Canada, 2000 CanLII 5496 (Ont. CA); 2011 BCSC 1439; and Elgert v. Home Hardware Stores and Geluch v. Rosedale Golf Assn., 2004 CanLII 14566 (Ont. Limited, 2011 ABCA 112. Sup Ct J). 29. See the discussion in P. Veel, “Clarity and Confusion in Employment Law Remedies: A Comment on Honda Canada Inc. v. Keays” (2009) 67 UT Fac L Rev 135.
32. Simmons v. Webb, 2008 CanLII 67908 (Ont. Sup Ct J) (handing a 20-year employee a termination letter with no explanation and telling him to leave the property immediately); Chapell v. Canadian Pacific Railway Company, 2010 ABQB 441 (the employer engaged in a case-building exercise to get rid of the employee); Rae v. Attrell Hyundai Suburu, 2005 CanLII 42475 (Ont. CA) (a termination letter was sent two weeks before the employee was to give birth); Kaiser v. Dural, 2003 NSCA 122 (dismissing an employee who recently recovered from illness in a restaurant without any care for the employee’s circumstances); and Vernon v. British Columbia (Liquor Distribution Branch), 2012 BCSC 133 (employee’s wife learned of the termination when an insurance company told her). 33. Baughn v. Offierski, 2001 CanLII 28291 (Ont. Sup Ct J); Middleton v. Highlands East (Municipality), 2013 ONSC 763. 34. Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520; Marshall v. Watson Wyatt & Co., 2002 CanLII 13354 (Ont. CA); and McCulloch v. Iplatform Inc., 2004 CanLII 48175 (Ont. Sup Ct J).
41. Curran, supra note 27 at 24 (“employees who can prove high levels of psychological distress will enjoy higher returns … in terms of moral damages”).
42. See, for example, Bru v. AGM Enterprises Inc., 2008 BCSC 1680 (a low-wage employee who was entitled to just three months’ reasonable notice was awarded an additional $17,000 for bad-faith discharge, roughly equivalent to ten months’ pay). 43. Colistro v. Tbaytel, supra note 35. 44. Honda Canada Inc. v. Keays, supra note 10 at para 62; Whiten v. Pilot Insurance Co., supra note 23; Pate Estate v. Galway-Cavendish and Harvey (Township), supra note 31; and Elgert v. Home Hardware Stores Limited, supra note 40. 45. Whiten v. Pilot Insurance Co., supra note 23 at para 94. 46. In Honda Canada Inc. v. Keays, supra note 10, the court ruled that the independent actionable wrong cannot be an alleged violation of human rights legislation, such as discrimination on the basis of disability, because Seneca College v. Bhadauria, [1981] 2 SCR 181 (which we considered in Chapter 6) foreclosed that option. In any event, the court did not believe that Keays had been discriminated against. Therefore, Keays’s claim for punitive damages failed.
35. Prinzo v. Baycrest Centre for Geriatric Care, 2002 CanLII 45005 (Ont. CA); Doyle v. Zochem Inc., 2017 ONCA 130; Strudwick v. Applied Consumer & Clinical Evaluations Inc., supra note 34; Colistro v. Tbaytel, 2019 ONCA 197 (rehiring 47. Boucher v. Wal-Mart Canada Corp., supra note 35. See also Kelly v. Norsemont Mining Inc., supra note 40 ($100,000 in an employee who formerly harassed a current employer); punitive damages for breach of implied obligation of “good Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419; and faith and fair dealing” was owed by the employer to the emGalea v. Wal-Mart Canada Corp., 2017 ONSC 245. ployee); Nishina v. Azuma Foods (Canada) Co., Ltd., 2010 36. Galea v. Wal-Mart Canada Corp., supra note 35. BCSC 502. See also the discussion in D. Doorey, “Boucher 37. See Curran, supra note 27 at 23, finding that bad-faith disv. Walmart: Court of Appeal Confirms an Implied Obligacharge damages are “about 10 percentage points less probtion of Good Faith and Fair Dealing in Employment Conable” in the post-Honda era compared with during the tracts,” online, Law of Work (blog): .
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234 Part II The Common Law Regime 48. Galea v. Wal-Mart Canada Corp., supra note 35. 49. Bailey v. Service Corporation International (Canada) ULC, 2018 BCSC 235. See also Vernon v. British Columbia (Liquor Distribution Branch), supra note 32 ($50,000 punitive damages awarded when employer refused to provide a reference letter unless the employee quit rather than be terminated). 50. The courts call contract terms that promise the payment of a predetermined amount “liquidated damages” or “contractual amounts.” These amounts are payable and not subject to the duty to mitigate. See Bowes v. Goss Power Products Ltd., 2012 ONCA 425 (Ontario Court of Appeal ruled that a contract that specified the right of the employer to terminate the employment contract with “six months’ notice or pay in lieu” was a promise to pay a fixed amount and therefore that amount was not subject to a duty to mitigate. Note that a contract requiring liquidated damages could also include a separate requirement for the employee to seek new employment and to mitigate their loss. However, there is no implied duty to mitigate in the case of liquidated damages.) 51. See ibid.; Howard v. Benson Group Inc. (The Benson Group Inc.), 2016 ONCA 256 (not duty to mitigate damages when employer terminates a fixed-contract early). See also Maxwell v. British Columbia, 2014 BCCA 339; Covenoho v. Pendylum Ltd., 2017 ONCA 284; Philp v. Expo 86 Corp., supra note 6; Duxbury v. Crook, 2018 SKQB 353; Halischuk v. Color Ad Packaging Ltd., 2015 MBQB 4; Brown v. Pronghorn Controls Ltd., 2011 ABCA 328; Freudenberg Household Products Inc. v. DiGiammarino, 2012 ONSC 5725; and Allen v. Ainsworth Lumber Co. Ltd., 2013 BCCA 271. 52. Red Deer College v. Michaels, supra note 12 at 331. 53. Evans v. Teamsters Local Union No. 31, 2008 SCC 20 at para 30; and Robinson v. Team Cooperheat—MQS Canada Inc., 2008 ABQB 409 at para 122. 54. Robinson v. Team Cooperheat—MQS Canada Inc., supra note 53 at para 120. See also Chand v. Craftsman Collision Ltd., 2007 BCPC 11; and Christianson v. North Hill News Inc., supra note 19. 55. Forshaw v. Aluminex Extrusions Ltd., 1989 CanLII 234 (BCCA); and Dussault v. Imperial Oil Limited, supra note 15. 56. Fillmore v. Hercules SLR Inc., 2017 ONCA 280; Rienzo v. Washington Mills Electro Minerals Corporation, 2005 CanLII 44668 (Ont. CA); Fleet v. EPC Industries Ltd., 2004 NBQB 433; Schamborzki v. North Shore Health Region, 2000 BCSC 1573; Carter v. 1657593 Ontario Inc. (The Olde Angel Inn), 2015 ONCA 823; and Dussault v. Imperial Oil Limited, supra note 15. 57. Christianson v. North Hill News Inc., supra note 19 at para 16: “[t]o apply for jobs for which one is on their face
unqualified is an amateur approach which we cannot say that the reasonable person would follow, or that a plaintiff must follow to mitigate.” 58. Christianson v. North Hill News Inc., supra note 19 at para 15. 59. Ibid. (the employee did not fail to mitigate when she took a six-month training program). 60. Ariss v. NORR Limited Architects & Engineers, 2019 ONCA 449 (an employee in his 60s is entitled to limit mitigation efforts to the Kingston area where he lived); Maasland v. Toronto (City), 2016 ONCA 551 (no duty to accept a job 50 kilometres from home); and Peet v. Babcock & Wilcox Industries Ltd., 2001 CanLII 24077 (Ont. CA). If mitigation results in the employee moving, the costs of the move may be added to the wrongful dismissal damages: Carbone v. Syncrude Canada Ltd., 1997 CanLII 14863 (Alta. QB). See the discussion, including the summary of contrasting opinions on the recoverability of moving expenses, in Porta v. Weyerhaeuser Canada Ltd., 2001 BCSC 1480 at paras 153-65. 61. Hart v. EM Plastic & Electric Products Ltd., 2008 BCSC 228. See similarly Hyland v. Advertising Directory Solutions Inc., supra note 21 (the employee’s decision to pursue a career as a securities trader was not considered reasonable mitigation). Cases in which the pursuit of self-employment was found to be reasonable mitigation include Peet v. Babcock & Wilcox Industries Ltd., supra note 60; and Beglaw v. Archmetal Industries Corp., 2004 BCSC 1369. 62. Coutts v. Brian Jessel Autosports Inc., 2005 BCCA 224 (the employee failed to mitigate when he held out for a job selling Ferraris, when opportunities with other luxury car dealers existed). 63. Cox v. Robertson, 1999 BCCA 640 at para 16. 64. Evans v. Teamsters Local Union No. 31, supra note 53 at para 30 (the employee failed to mitigate when he refused to continue to work for the employer during the notice period even though he had earlier proposed doing exactly that; continuing in his job as a form of mitigation would not have caused the employee humiliation or embarrassment, and the workplace was not hostile). See also Mifsud v. MacMillan Bathurst Inc., 1989 CanLII 260 (Ont. CA). 65. Cases in which the employee was not required to mitigate in a job offered by the former employer include Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402; Chandran v. National Bank of Canada, 2012 ONCA 205; Patrick Bannon v. Schaeffler Canada Inc./FAG Aerospace Inc., 2013 ONSC 603; Turner v. Inndirect Enterprises Inc., 2011 ONCA 97; Farwell v. Citair, Inc. (General Coach Canada), 2014 ONCA 177; Colwell v. Cornerstone Properties Inc., 2008 CanLII 66139 (Ont. Sup Ct J); Sifton v. Wheaton Pontiac Buick GMC (Nanaimo) Ltd., 2010 BCCA 541; Magnan v. Brandt
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Chapter 14 Damages in Wrongful Dismissal Lawsuits 235 Tractor Ltd., 2008 ABCA 345; Stewart v. Keary Coyle Motors 67. Evans v. Teamsters Local Union No. 31, supra note 53 at para Ltd., 2011 NBQB 297; Renard v. Facet Decision Systems Inc., 92. The requirement to mitigate in a job with the former 2010 BCSC 1908; and Piron v. Dominion Masonry Ltd., employer also creates some conceptual challenges for con2013 BCCA 184. tract law, which I have discussed in a couple of longer posts on the Law of Work blog. See D. Doorey, “Chevalier v. 66. Cases in which the employee was required to mitigate in a Active Tire: The Mystery of Mitigating in the Job from job offered by the former employer include Silva v. Leippi, Which You’ve Just Been Fired,” online, Law of Work (blog): 2011 BCCA 495; Davies v. Fraser Collection Services ; and D. Doorey, “Silva v. Limited, 2008 BCSC 942; Besse v. Dr. A.S. Machner Inc., Leippi: Is Employment Law Losing Touch with Common 2009 BCSC 1316; Ghanny v. 498326 Ontario Limited, 2012 Sense?” online, Law of Work (blog): . Inc., 2014 BCSC 335.
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C H A P T E R 15
“I Quit!”: Termination of the Employment Contract by the Employee LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 237 II. The Test for Assessing Whether an Employee Has Resigned 238 III. The Requirement for an Employee to Give an Employer Notice of Termination 239 IV. Calculating Damages When an Employee Fails to Give Proper Notice of Termination 242 V. Chapter Summary 243 Questions and Issues for Discussion 243 Notes and References 244
• Describe the test used to assess whether a resignation has occurred. • Explain how the courts assess the “reasonable notice” employees are required to provide employers when they resign. • Explain how damages are calculated if an employee resigns without giving proper notice.
I. Introduction After arguing with a passenger and getting hit in the head with a piece of luggage, JetBlue flight attendant Steve Slater grabbed the plane’s microphone, cursed at the passenger, grabbed a beer, announced “it’s been great,” opened the plane’s emergency exit, and slid down the emergency chute to unemployment.1 Now that is a quit! Slater had had enough, and he left little doubt that he was resigning his employment. He did not return to work (in fact, he faced criminal charges). However, as we will learn in this chapter, it is not always clear whether an employee really intends to quit. Even if an employee yells “I QUIT!” and storms out of the workplace, a judge might rule that a resignation has not occurred. The courts demand clear evidence of an intention to resign and allow employees the occasional temper tantrum. When an employee does wish to resign, they usually must provide the employer with notice of termination. An employee who resigns without providing the employer with the notice required by the contract may be sued by the employer for wrongful quitting. How much notice is required may be specified in the expressed terms of the contract or, in some provinces, in employment standards legislation (see discussion in Chapter 20), or the courts may imply the standard term requiring “reasonable notice” that we learned about in Chapter 9. The manner in
resignation: When an employee terminates the employment contract by engaging in conduct that evinces a clear intention to terminate the contract. wrongful quitting: A term sometimes used to describe a lawsuit filed by an employer alleging that an employee resigned without providing the employer with the proper amount of notice of resignation. 237
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238 Part II The Common Law Regime which the courts assess the reasonable notice required of an employee is different than that required of an employer because the purpose of the notice is different. This chapter explores various legal issues that arise when employees terminate the employment contract.
II. The Test for Assessing Whether an Employee Has Resigned How do we know a resignation when we see one? Slater’s flamboyant exit via the plane’s emergency chute sure looked like a resignation. But most employees are not so dramatic, and the circumstances are not always so straightforward. Imagine that an employer says to its employee, “Jen, you should quit, and if you don’t, I’m going to fire you.” For many reasons, Jen might prefer to quit rather than be fired, so she says, “Fine, I quit.”2 The benefit to the employer of an employee quitting rather than being fired is obvious: the employer is relieved of the obligation to give notice of termination and the potential costs associated with that notice. However, the news gets worse for the employee. In addition to losing her job and entitlement to notice of termination, if Jen quits she may lose her entitlement to other statutory benefits, such as severance payments under employment standards legislation and employment insurance benefits (see the online chapter, “Regulating Unemployment” referenced on p. xxi in the preface of this book). It matters significantly in our legal model whether the employer or employee terminates an employment contract. To shield employees from forfeiting the contractual and statutory benefits in place to protect dismissed employees, the courts have required that employees express a “clear and unequivocal” intention to resign from their job. An objective test is applied that asks whether a “reasonable person” of normal intelligence looking at what happened would conclude that the employee had unequivocally and voluntarily resigned from their job.3 Applying this test, for example, courts have found that it is not a resignation when an employee tells the employer that they are looking around for another job, provided that the employee keeps performing their assigned duties in the meantime.4 An employee who resigns after being given an ultimatum to quit or be fired (a forced resignation), like Jen mentioned above, will similarly not be found to have quit because the resignation is not a voluntary expression of a desire to terminate the relationship.5 Probably the best example of how courts insist on a clear demonstration by employees of their intention to terminate the employment contract is the manner in which they treat sudden, uncharacteristic outbursts by employees. Even when a frustrated employee utters something like “I quit” or “I’m done” and then storms out of the workplace, courts have ruled that the employee did not resign. Employers are expected to pause and allow the employee to cool down before jumping to the conclusion that the employee intended to terminate the employment relationship.6 A typical example is provided by the decision in Box 15.1.
BOX 15.1 » CASE LAW HIGHLIGHT When Is a Quit Not a Quit? Upcott v. Savaria Concord Lifts Inc. 2009 CanLII 41348 (Ont. Sup Ct J) Key Facts: Upcott was a manager with eight years’ service at Savaria Concord Lifts Inc. On May 8, several things occurred at work to put Upcott in a foul mood. He was told to fill in for an
absent employee and had a run-in with a co-worker who complained about him to the human resources manager. When the human resources manager asked Upcott what had happened, he responded with a frustrated “I’m done,” threw his keys on the manager’s desk, and left the workplace (after
objective test: A legal test used in interpretation of contracts and statutes that asks, “What would a reasonable person of normal intelligence think, if told about the circumstances?” Contrast with subjective test. forced resignation: When an employer puts pressure (directly or indirectly) on an employee to resign or face being fired.
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Chapter 15 “I Quit!”: Termination of the Employment Contract by the Employee 239 clearing off his desk and telling several other employees he was “done”). In a telephone call a couple of hours later, management told Upcott that the employer had “accepted his resignation.” Upcott claimed he had not resigned and sued for wrongful dismissal, arguing that he had been dismissed. Issue: Did Upcott quit? Decision: No. The court ruled that Upcott had not resigned and, therefore, found that the employer had dismissed him when it refused to allow Upcott back in the workplace. In summarizing the law, the court wrote: The law is clear that where an emotionally upset and angry employee exclaims “I quit,” the issue of whether he/she has resigned is not clear cut.
The law recognizes that such utterances may not constitute a valid resignation. Nor should such a declaration be accepted without question by the employer. Rather the onus is on the employer to not accept such a spontaneous declaration without proper deliberation. The employer rushed to treat Upcott’s actions as a resignation, whereas it should have recognized that Upcott was “having a juvenile fit of anger” and that he would soon calm down and express a desire to return to work. For a 54-year-old management employee with eight years’ service, the appropriate period of reasonable notice that the employer should have given was 7.5 months. Damages were ordered based on that amount.
However, if an employee expresses a clear intention to resign and then acts consistent with that intention, a court will find that the employee has resigned.7 So an employee who steadfastly refused to report to a new job assignment was found to have resigned, since it was within the employer’s contractual rights to reassign the employee.8 Yet, even when judges find that the employee intended to resign, they have nevertheless sometimes permitted the employee to change their mind (“resile” from their resignation), provided that the employer has not yet 1. informed the employee that the resignation is accepted; or 2. acted on the resignation to its detriment, such as, for example, by hiring a replacement.9 The fact that employees who appear to have resigned might be found not to have done so, and that courts permit employees to change their minds, places employers in a difficult position. If the employer treats the employee as having resigned and refuses the employee the right to return to work, it could be found liable for wrongful dismissal if a court later finds that the employee had not resigned, as we saw in the Upcott decision.
III. The Requirement for an Employee to Give an Employer Notice of Termination If an employee does intend to resign, then they probably need to give the employer notice of that termination to avoid breaching the contract. That obligation may be found in an expressed term of the employment contract, but if there is no such term, the common law courts imply a requirement that employees provide “reasonable notice” of termination, as we learned in Chapter 9. Note though that there are important differences between the rules that govern employee and employer reasonable notice (we explored the employer’s obligation to provide “reasonable notice” in Chapter 10). First, the requirement for an employee to give notice to terminate an employment contract does not appear in employment standards legislation in every Canadian jurisdiction. This matter is explored in greater detail in Part III when we look at employment standards regulation, but briefly, only the legislation of Alberta, Saskatchewan, Nova Scotia, Newfoundland and
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240 Part II The Common Law Regime abrador, and Manitoba require employees to provide L their employer with notice of termination, whereas every jurisdiction in Canada requires employers to provide notice to employees.10 Where there is no statutory requirement for employees to give notice of termination, the amount of notice required depends solely on what the contract requires. In theory, that contract could require no notice at all, though in practice it would be rare for a contract to include an expressed term allowing an employee to quit at any time with no notice to the employer. Most contracts in Canada either set out the amount of notice the employee must provide to terminate the employment contract or say nothing at all about notice. A written contract term might look like this: The Employee may at any time terminate this Contract by providing the Employer with two weeks’ written notice.
Failure by the employee to comply with this term would result in a breach of contract, possibly entitling the employer to damages. We will discuss what those damages might be later in this chapter. If no contract term exists requiring the employee to give notice to terminate the contract, then the courts imply a term requiring reasonable notice of termination. This leads us to the second main difference between the legal duties of employees and employers to provide notice: the manner in which judges assess the amount of reasonable notice required differs for employees. The Bardal factors we learned about in Chapter 10 do not guide the calculation of employee notice.11 To understand why, recall what those factors were intended to do. They act as a proxy for the approximate amount of time the employee could be expected to take to secure reasonable alternative employment. That rationale makes little sense when applied to an employee’s obligation to provide notice. What is the rationale for requiring an employee to give notice of termination to an employer? Here is how one judge answered that question: Although what is reasonable must be regarded from the point of view of both parties, I do not think it necessarily follows that the amount of notice which it would be reasonable for an employee to give is identical to that which it is reasonable to expect an employer to give. The principal reason why an employer must give reasonable notice is to enable an employee to find new employment. Similarly an employee is required to give notice in order to enable an employer to find a replacement.12 [Emphasis added]
Often, the time it will take an employer to find a replacement employee will be short. Think of a relatively low-skill factory worker who stocks shelves or a cashier at a retail store. A replacement for that employee can probably be easily found. Maybe the employer can call a temporary placement agency and get a substitute worker immediately, until it can hire a permanent replacement. Maybe an existing employee has a friend looking for a job, or maybe a stack of completed application forms is sitting in a folder in the manager’s office. The period of reasonable notice required of employees is usually much less than that required of an employer. In a 2007 decision from Alberta, Torcana Valve Services v. Anderson, the court wrote that the “usual” period of reasonable notice that an employee must provide an employer is two weeks for an “ordinary” employee and four weeks for a more senior management
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Chapter 15 “I Quit!”: Termination of the Employment Contract by the Employee 241
employee. The court wrote that if the employer believes these amounts are insufficient then, “it is incumbent on [the] employer … to immediately tell the employee what notice is appropriate. If the employer legitimately needs the employee for a longer period, that should be put on the table right away.”13 In RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc. et al., a BC court assessed the period of notice required by a senior manager of an investment business at only two and a half weeks based on the fact that the industry norm was that relatively little notice was expected from employees.14 In Engineered Sound Systems Ltd. v. Klampfer, an Ontario court found that two weeks’ notice of resignation was reasonable for a non-managerial employee with 15 years’ service.15 However, the courts have occasionally assessed long periods of reasonable notice. In the Tree Savers International Ltd. v. Savoy decision discussed in Box 15.2, the Alberta Court of Appeal found that “reasonable notice” was a period of greater than one year.16 In another Ontario decision, the court found that a management employee should have given between 10 and 12 months’ notice.17 These cases can be considered outliers, but they also serve as a warning of the unpredictability of courts when it comes to assessing reasonable notice required of employees.
BOX 15.2 » CASE LAW HIGHLIGHT Wrongful Quitting: The Employee’s Requirement to Provide Reasonable Notice of Termination Tree Savers International Ltd. v. Savoy 1992 CanLII 2828 (Alta. CA) Key Facts: Two important employees of Tree Savers International Ltd. (TSI) suddenly quit with two weeks’ notice and set up a new business to compete against TSI. No restrictive covenant clause was included in their original contracts with TSI prohibiting such competition. However, TSI sued the employees for breaching the requirement to provide reasonable notice of termination. It argued that, as a result of the abrupt departure of the employees, they incurred substantial costs finding competent replacements. Issue: Was two weeks “reasonable notice” of resignation? If not, what damages did the employer incur as a result of the failure of the employees to provide such notice?
Decision: The Alberta Court of Appeal ruled that “given their seniority and status,” the appropriate period of reasonable notice for the employees was much longer than two weeks. The lower court had assessed the amount at nine months’ notice. The court of appeal thought that the notice period should be greater than one year, although it did not decide exactly how much greater. The court of appeal calculated the damages incurred by the employer as a result of the employees providing inadequate notice. An expert witness estimated that TSI incurred substantial extra costs in travel, management expenses, and recruitment costs as a direct result of the failure to give proper notice. The court of appeal estimated the damages to TSI caused by the breach of the requirement to provide notice at $73,100 per employee. The employees were ordered to compensate the employer by that amount.
The application by the courts of the Bardal factors in assessing the amount of reasonable notice required of employers creates a measure of predictability for both parties. No such predictability exists in the courts’ assessment of the reasonable notice required of an employee. Indeed, it is difficult to make sense of the large disparities in the assessed notice periods in the cases referred to in the preceding list. The fact that judges rarely explain their rationale for assessing the periods of notice only adds to the unpredictability. It can create the appearance that judges are just pulling numbers out of the air. The uncertainty surrounding the length of reasonable notice is probably a good reason for the parties to ensure that a written notice term is included in an employment contract if the intention is that the employee should provide notice of termination. If an employee gives reasonable notice of resignation effective at some date in the future and the employer responds by telling the employee to leave immediately, the quit is transformed into
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242 Part II The Common Law Regime a dismissal.18 In this case, the employer must give the employee reasonable notice of termination, which is equal to the time remaining until the employee’s original notice of resignation would have expired.19
IV. Calculating Damages When an Employee Fails to Give Proper Notice of Termination We learned in Chapter 14 that the theory of damages for breach of contract requires that damages should be ordered that place innocent parties in the same financial position they would have found themselves in but for the contractual breach. When an employee is dismissed without notice, it is relatively easy to see what they lost as a result of the contract breach: the chance to earn the wages and benefits that would have been received had they been given the proper notice of termination. But what loss does an employer suffer when an employee quits without giving notice? Damages are assessed based on the actual harm caused to the employer as a result of lack of notice, and not the harm incurred due to the decision of the employee to leave.20 Some of the costs employers incur when an employee quits will be incurred regardless of whether notice is given or not.21 For example, an employer will need to recruit and train a new employee no matter what, so these costs cannot usually be attributed to a failure to give notice. The recoverable damages flowing from a breach of an employee’s duty to give notice could include those resulting from the employer’s sudden loss of the employee’s production during the notice period until such time as a replacement is hired, and other costs that an employer incurs directly as a result of the failure to give notice. For example, if the sudden departure of an employee requires the employer to pay a temporary placement agency a fee to quickly send over a “temp” worker, or to temporarily transfer an existing employee from another location, then that cost could be recoverable. Had the employee given notice, the employer may not have incurred those expenses. In practice, the damages employers incur as a result of an employee’s failure to provide notice of resignation are usually so small that employers do not bother to sue the employee. The cost of bringing the lawsuit and paying lawyers may be greater than the amount the employer will recover in damages. Or, as demonstrated in the decision discussed in Box 15.3, the savings from not having to pay the employee’s wages during the notice period may offset any losses from the employee’s failure to provide notice, in which case the court will not order any damages to be paid at all. This reality explains why employers bring far fewer wrongful quitting lawsuits against employees than employees bring wrongful dismissal lawsuits against employers.
BOX 15.3 » CASE LAW HIGHLIGHT Assessing Damages for Employee’s Failure to Provide Reasonable Notice Consbec Inc. v. Walker 2016 BCCA 114 Key Facts: Walker quit without notice after five years’ service and started his own competing business. As a result of Walker’s sudden resignation, the employer had another employee (“Trevor”) drive from Sudbury, Ontario, to Kamloops, British Columbia, to cover for Walker for one month. Several months later, the employer assigned another employee (“Richard”) to permanently assume Walker’s old job.
Richard sold his house in Sudbury and drove his family to Kamloops. The employer sued Walker for breach of contract for failure to provide reasonable notice of termination, arguing that Walker should be ordered to pay for all expenses incurred by the employer to send Trevor to Kamloops for one month and to move Richard and his family to Kamloops. Issue: How much notice was Walker required to give, and what damages should he be ordered to pay?
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Chapter 15 “I Quit!”: Termination of the Employment Contract by the Employee 243 Decision: The BC Court of Appeal found that in assessing the amount of notice required, courts must consider “the employee’s duties and responsibilities, salary, length of service, and the time it would reasonably take the employer to have others handle the employee’s work or to hire a replacement.” Considering all of the facts here, the court assessed the amount at one month’s notice. Next, the court addressed what damages were incurred “as a result Walker’s failure to give notice.” The court found that the employer needed to demonstrate that it suffered losses as a result of Walker not giving notice that exceeded the amount of money it saved from not paying Walker’s wages for the one-month notice period. Walker
earned $6,000 per month. The expenses incurred as a result of the failure to give notice included transportation costs to get Trevor to Kamloops and back, as well as his hotel and food costs while in Kamloops, totaling $5,875. Walker was not liable for the expenses of moving Richard to Kamloops, since those costs were not a result of the failure of Walker to give notice; they were the normal costs of having to replace an employee who quit and would have been incurred even if Walker had given one month’s notice. Since the damages ($5,875) were less than the amount the employer saved in Walker’s wages ($6000), the court found that Walker did not owe any damages for breach of the notice term.
However, sometimes an employee’s failure to give notice of termination does have serious financial consequences for the employer, such as in the Tree Savers decision in Box 15.2. In the RBC Securities case mentioned above, several investment advisers who quit without giving notice were assessed damages of $40,000 each based on an estimate of the employer’s lost revenues for the period of 2.5 weeks’ notice they should have given the employer.22 In these cases, where the employer can demonstrate substantial losses due to the failure of the employee to give notice, it may make sense for an employer to sue the employee.
V. Chapter Summary This chapter explored legal issues that arise in relation to employee resignations. A resignation requires a clear intention by the employee to terminate the relationship. A frustrated “I quit!” may not indicate such an intention, especially if the employee soon afterward recants and expresses a desire to return to work. Therefore, an employer must not be too hasty in assuming that an employee has quit, or it may be found to have terminated the employee’s employment contract. Employees must usually give notice of their intention to terminate the employ ment contract. The manner in which the courts calculate the reasonable notice required of employees differs from that applied in assessing the reasonable notice required of employers. The reasonable notice required of employees is more difficult to predict because the courts are not guided by a clear formula or set of principles. In assessing damages for a failure of an employee to give proper notice, the courts assess the harm suffered by the employer due to the employee’s failure to give notice. Often this harm is nominal, so employers often do not bother suing employees, but not always.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Explain the legal test the courts apply when considering whether an employee has terminated the employment contract. 2. Explain two important differences in the law’s treatment of the notice of termination required of employees versus employers. 3. What is the rationale for requiring employees to provide employers with reasonable notice of termination?
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244 Part II The Common Law Regime 4. Can the employer and employee agree to a period of notice required of an employee to terminate the contract that is different from that of implied “reasonable notice”? 5. On what basis do the courts assess damages for a breach by an employee of the contractual requirement to give notice of termination?
APPLYING THE LAW Marnie had worked as a sales manager for Advance Furniture for 10 years. She’s a good employee with no prior discipline. She has no written employment contract. Yesterday, the employer announced that it was moving to shift work because it wants to build up its Asian business. It needs salespeople to be available for phone calls and online inquiries 24 hours a day to align with different time zones. Marnie has always worked 9 – 5, and she is angry that she will be required to work evenings. She storms into her boss’s office and yells, “I’m not working nights! Either leave me on full-time days or don’t bother assigning me any more shifts.” Her boss responds that everyone will be working some evenings from now on, so Marnie will need to adapt or leave. Marnie yells, “I choose the latter,” throws down her keys, and leaves. Scenario One Two days later, Marnie wakes up very upset. She loves her job, and the job market is tough right now. She calls her boss and tells him that she has reconsidered, and she will work the shift work. The boss tells Marnie that it is “too late” and he already accepted her resignation. If Marnie sues the employer for wrongful dismissal, do you think she would be successful?
Discuss the arguments that Marnie and the employer might make. Scenario Two Marnie had been contemplating for some time whether to quit and start her own company that would compete with Advance Furniture. She sees this change in her shift times as a sign that it is time to leave Advance. After she left her boss’ office yesterday, Marnie immediately put her business plans into action. She sent emails to her former Advance customers informing them that she is leaving Advance and that in the coming weeks she will be opening her own business that provides similar services to Advance but at a lower price point. Within three weeks, her business is operating and many of her former Advance customers have placed orders. Advance estimates that it has lost at least 25 percent of its weekly orders to Marnie’s new business, amounting to about $75,000 over the threeweek period it took to hire a replacement for Marnie. Advance comes to you for advice on whether it has any legal basis to sue Marnie and recover lost profits resulting from Marnie opening her new business and luring Advance customers. What would you advise her?
NOTES AND REFERENCES 1. A. Newman & R. Rivera, “Fed-Up Flight Attendant Makes Sliding Exit,” New York Times (August 9, 2010), online: . 2. See Chan v. Dencan Restaurants Inc., 2011 BCSC 1439. 3. Kieran v. Ingram Micro Inc., 2004 CanLII 4852 (Ont. CA); Palumbo v. Research Capital Corp. 2004 CanLII 21628 (Ont. CA); Skidd v. Canada Post Corp. (1993), 47 CCEL 169 (Ont. Sup Ct J); aff ’d [1997] OJ No. 712 (CA); Moore v. University of Western Ontario (1985), 8 CCEL 157 (Ont. H Ct J); and Avalon Ford Sales (1996) Limited v. Evans, 2017 NLCA 9. In Beggs v. Westport Foods Ltd., 2011 BCCA 76, the court of appeal said that the test is actually a mixed objective and subjective test.
4. Moore v. University of Western Ontario, supra note 3; Tolman v. Gearmatic Co., 1986 CanLII 1212 (BCCA); Widmeyer v. Municipal Enterprises Ltd., 1991 CanLII 4413 (NSSC); Mosher v. Twin Cities Co-operative Dairy Limited, 1984 CanLII 63 (NSSC); Turner v. Westburne Electrical Inc., 2004 ABQB 605; and Carroll v. Purcee Industrial Controls Ltd., 2017 ABQB 211 (it is not a clear indication of an intention to quit when the employee offers to negotiate new terms of employment). 5. Chan v. Dencan Restaurants Inc., supra note 2; Ramsay v. Terrace (City), 2014 BCSC 1292; Deters v. Prince Albert Fraser House Inc., 1991 CanLII 7933 (SKCA); and Backman v. Hyundai Auto Canada, 1990 CanLII 4087 (NSSC).
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Chapter 15 “I Quit!”: Termination of the Employment Contract by the Employee 245 6. Lelievre v. Commerce and Industry Insurance Company of Canada, 2007 BCSC 253; Widmeyer v. Municipal Enterprises Ltd., supra note 4; Robinson v. Team CooperheatMQS Canada Inc., 2008 ABQB 409; Bishop v. Rexel Canada Electrical Inc., 2016 BCSC 2351; Avalon Ford Sales (1996) Limited v. Evans, supra note 3; Bru v. AGM Enterprises Inc., 2008 BCSC 1680; and Upcott v. Savaria Concord Lifts, 2009 CanLII 41348 (Ont. Sup Ct J).
12. Moore v. Zurich Insurance Co. (1984), 4 CCEL 188 at 192 (Ont. Co Ct). See also Consbec Inc. v. Walker, 2016 BCCA 114 at para 73; Sure-Grip Fasteners Ltd. v. Allgrade Bolt & Chain Inc. (1993), 45 CCEL 276 (Ont. Sup Ct J); Oxman v. Dustbane Enterprises Ltd. (1986), 13 CCEL 209 (Ont. H Ct J); Carlsen v. Physique Health Club Ltd. (Physique Fitness Store), 1996 ABCA 358; and GasTOPS Ltd. v. Forsyth, 2009 CanLII 66153 (Ont. Sup Ct J).
7. Kerr v. Valley Volkswagen, 2015 NSCA 7 (an employee who told his employer to give him a raise or “I’m gone” was found to have quit when the raise did not happen); and Gould v. Hermes Electronics Ltd. (1978), 34 NSR (2d) 321 (SC).
13. Torcana Valve Services Inc. v. Anderson, 2007 ABQB 356 at para 79.
8. Crouch v. Securitas Canada, 2008 CanLII 201 (Ont. Sup Ct J). Note also Palumbo v. Research Capital Corp., supra note 3 (an employer cannot say “accept this change to your job or we will consider you to have resigned”). 9. Kieran v. Ingram Micro Inc., supra note 3 (an employee can resile from a resignation as long as the employer has not relied upon it to its detriment); Kerr v. Valley Volkswagen, supra note 7 (if an employer has accepted the resignation, then detrimental reliance isn’t needed); Carroll v. Purcee Industrial Controls Ltd., supra note 4; Johal v. Simmons da Silva LLP, 2016 ONSC 7835; Tolman v. Gearmatic Co., supra note 4 at para 14; Movileanu v. Valcom Manufacturing Group Inc., 2007 CanLII 48989 (Ont. Sup Ct J); Avalon Ford Sales (1996) Limited v. Evans, supra note 3; Reis v. Stratford General Hospital (2007), 163 ACWS (3d) 259 (Ont. Sup Ct J) (after the employer accepted a voluntary resignation the employee could not resile); and English v. Manulife Financial Corporation, 2018 ONSC 5135 (employee could not resile resignation after it was accepted by the employer). 10. Alberta Employment Standards Code, RSA 2000, c. E-9, s. 58(1); Manitoba Employment Standards Code, CCSM c. E110, s. 62.1; Newfoundland & Labrador Labour Standards Act, RSNL 1990, c L-2, s. 52; and Labour Standards Code, RSNS 1989, c 246, s. 7. A range of exceptions and conditions apply in each legislation. 11. See discussion in RBC Dominion Securities v. Merrill Lynch Canada, 2003 BCSC 1773 at paras 70-75. But see Woodlock v. Novacorp International Consulting Inc., 1990 CanLII 915 (BCCA), per Southin JA, stating that the notice period for an employee and employer are the same. That latter position has not prevailed.
14. RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., supra note 11. 15. Engineered Sound Systems Ltd. v. Klampfer (1994), 3 CCEL (2d) 105 (Ont. Gen Div). 16. Tree Savers International Ltd. v. Savoy, 1992 CanLII 2828 (Alta. CA). 17. GasTOPS Ltd. v. Forsyth, supra note 12 (10 to 12 months’ notice required for senior managerial employees); Clayburn Industries Ltd. v. Recor Services Inc., 1998 CanLII 6544 (BCSC) (manager required to give six months’ notice of resignation); and Sanford Evans List Brokerage v. Trauzzi, 2000 CanLII 22741 (Ont. Sup Ct J) (6 months’ notice required of a top manager was reasonable). 18. If the employee gives notice that is less than “reasonable,” that may constitute a repudiation of the contract as a whole, which the employer can treat as a quit: GasTOPS Ltd. v. Forsyth, supra note 12. 19. Oxman v. Dustbane Enterprises Ltd. (1988), 23 CCEL 157 (Ont. CA). See also Valley First Financial Services Ltd. v. Trach, 2004 BCCA 312 at paras 90-103; and RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc. et al., supra note 11 at para 70. See also Zaraweh v. Hermon, Bunbury & Oke, 2001 BCCA 524 (on the effect of a repudiation of contract during a notice period). 20. Bradley v. Carleton Electric Ltd., 1998 CanLII 7140 (Ont. CA) at para 2; and Consbec Inc. v. Walker, supra note 12 at para 75. 21. Gill v. A & D Precision Ltd., 2010 ONSC 4646 (an employee failed to give notice, but the employer suffered no damages as a result). 22. RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., supra note 11.
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C H A P T E R 16
Tort Law and the Employment Relationship LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 247 II. What Is a Tort? 248 III. An Employer’s Vicarious Liability for Tort Damages Caused by an Employee 248 IV. Common Torts That Apply to Work 250 A. Intentional Torts 250 B. Non-intentional Torts (known as “Negligence”) 254 V. Tort Remedies 258 VI. Chapter Summary 259 Questions and Issues for Discussion 260 Exercise 260 Notes and References 260
• Define tort. • Define vicarious liability and explain how it applies in the employment context. • Describe the elements of the torts that arise most often in lawsuits relating to work law. • Distinguish between intentional torts and non-intentional torts. • Understand when the right to sue for damage caused by tortious acts is barred by workers’ compensation legislation. • Describe the types of damages that can be awarded by the courts when a tort liability is determined.
I. Introduction In Chapters 1 and 2, we learned that the common law regime encompasses both contract law and tort law. To this point, we have focused on the law of the employment contract. Tort law has been addressed a few times over the preceding chapters. For example, we noted in Chapter 14 (on the damages available in wrongful dismissal lawsuits) that a tort could satisfy the requirement for an “independent actionable wrong” necessary for the awarding of punitive damages in wrongful dismissal lawsuits. In Chapter 6 (recruitment and hiring), we introduced the tort of deceit and the tort of negligent misrepresentation in the context of the job recruitment process. In this final chapter on the common law regime, we consider the law of tort as it affects the work relationship in greater detail. The relationship between tort law and the other parts of the legal system that govern work is among the most fascinating stories in the law of work. In particular, the manner in which judges extended the use of tort law to restrain collective worker action, including strikes and picketing, was richly debated by many of the great labour law scholars of the 20th century.1 Judges applied existing torts or made up new ones to restrain collective worker action so that they could grant
deceit: A tort in which party A makes a false statement with the intention of misleading party B; party B relies on the false statement and, as a result, party B suffers a loss. Damages can be recovered for that loss. negligent misrepresentation: A tort in which party A, owing a duty of care, makes an untrue statement to party B without sufficient care as to the statement’s accuracy, which party B then relies upon and suffers loss as a result.
247
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248 Part II The Common Law Regime injunctions to order an end to the action. Tort law and injunctions still play an important role in the law’s treatment of collective worker activities, which we discuss further in Part IV. In that part of the text, we also examine the special application of certain torts—such as nuisance, conspiracy to injure, and trespass to property—to collective worker activities, as well as “economic torts,” created specifically to deal with trade union activities. We consider the tort of passing off in the online supplemental chapter, “Intellectual Property Law and Work,” referenced on p. xxi in the preface of this book. This chapter focuses on other applications of tort law to work. It begins with an introduction to torts and to vicarious liability, a legal mechanism through which an employer is held liable for damages resulting from torts committed by its employees. It then reviews some of the most important torts that have application to the work context, concluding with a discussion of damages in tort cases.
II. What Is a Tort?
Torts are types of wrongful acts done by one person to another (or to another’s property) that judges have recognized as legally actionable. The word “tort” comes from the Latin tortum, which means, roughly, “wrong.”2 Tort law regulates conflicts that arise in everyday life, often between complete strangers. It attempts to assign the costs of harmful behaviour to those who are at fault, even when there is no contract between the perpetrator and the victim. Its origins rest in judges’ attempts to resolve lingering arguments over property and other disputes through legal means rather than open warfare and violence. As Professor Daniel Shuman puts it, tort law is “rooted in the legal system’s search for an alternative to the blood feud.”3 Not every perceived wrong is a tort. Over time, judges have developed a list of torts that involve harmful conduct thought to be deserving of legal liability. Some of these torts involve intentional wrongful acts, while others are based on accidental conduct that the court believes was avoidable with basic precautions.
III. An Employer’s Vicarious Liability for Tort Damages Caused by an Employee In many tort cases involving harm caused by an employee, the victim seeks to hold the employer liable for damages. The victim takes this approach because the employer has money and the employee who actually caused the harm does not. Law students learn early in tort class that when you represent the victim, you should always go after the party with “the deep pockets.” An employer often has insurance to cover the risk of being sued, and the victim wants to access those funds. Much of the legal strategy in tort law involves attempts to access insurance benefits. injunction: A legal order issued by a judge prohibiting a person from engaging in a particular course of action, such as breaching a contract, committing a tort, or violating a statute. nuisance: A tort in which the activities of one person unreasonably interfere with the use or enjoyment of the property of another person. conspiracy to injure: A tort that involves two or more people acting in combination with the intention of causing harm to another party and actually causing that harm. trespass to property: A tort in which one person intentionally enters another person’s property without the property owner’s permission; as well, it can involve a refusal to leave a property when instructed by the property owner to leave. passing off: A tort that involves deceiving consumers into believing that the good, service, or business of one company or person is really that of another, thereby misrepresenting the source. tort: A type of wrongful act done by one person to another (or to another’s property) that judges have recognized as legally actionable. Examples are nuisance, trespass, negligence, and conspiracy.
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Chapter 16 Tort Law and the Employment Relationship 249
Vicarious liability is the legal mechanism through which an employer is held liable for torts committed by its employees.4 Vicarious liability holds one person (or company) liable for damage caused by the misconduct of another person when it is fair to do so because of the close nature of their relationship. The Supreme Court of Canada has noted that the employment relationship is “the most common one to give rise to vicarious liability” while also cautioning that companies will not generally be vicariously liable for the acts of independent contractors (recall the discussion of the distinction between an employee and an independent contractor in Chapter 4).5 Holding employers vicariously responsible for the wrongful actions of their employees is controversial because it assigns responsibility to the employer, who is not personally at fault. However, the courts have defended vicarious liability on three grounds. First, since employers put “in the community an enterprise which carries with it certain risks,” it is fair that they should bear the loss when those risks materialize and create harm.6 Second, holding employers responsible for the wrongs committed by their employees produces a deterrent effect that will encourage employers to take all reasonable precautions to reduce the risk of harm. And third, employers have a greater capacity to bear financial loss than do their employees through commercial insurance and actions such as raising product or service prices. Employers are not vicariously liable for every tort committed by their employees. The wrongful act must have been done “in the course of employment.” If the wrongful act occurs while employees are performing their usual duties or are on work business, then it is obvious that the act was done in the course of employment.7 However, sometimes that link is not so clear. For example, when an employee commits a tort at work without the knowledge or authorization of the employer, and perhaps against the direct orders of the employer, is the employee acting “in the course of employment”? The case discussed in Box 16.1 addresses this question.8
BOX 16.1 » CASE LAW HIGHLIGHT Employer’s Vicarious Liability for Wrongful Acts Committed by Its Employees Bazley v. Curry [1999] 2 SCR 534 Key Facts: Curry was employed by the Children’s Foundation in a care facility for treatment of emotionally troubled children. His job included bathing kids and putting them to bed. In time, Curry began a campaign of sexual assault against Bazley, a young boy in the care of the foundation. When the employer learned of the abuse, it immediately fired Curry, and later Curry was convicted of 19 counts of sexual abuse. Bazley sued Curry (who had since died) and sought to hold the employer (the Children’s Foundation) vicariously liable for damages caused by Curry. Issue: Was the Children’s Foundation vicariously liable for assaults committed by its employee, Curry? Decision: Yes. The Supreme Court of Canada reviewed the rules on when employers should be held vicariously liable for the acts of their employees and summarized them as follows:
[T]here must be a strong connection between what the employer was asking the employee to do (the risk created by the employer’s enterprise) and the wrongful act. It must be possible to say that the employer significantly increased the risk of the harm by putting the employee in his or her position and requiring him to perform the assigned tasks. A wrongful act that just happens to occur during working hours will not alone be sufficient grounds for vicarious liability. However, when the employee’s actions are closely connected to the job the employee is expected to perform, then it is fair to hold the employer vicariously liable. In this case, the assaults took place while the employee was performing duties that fell within the scope of his job (bathing, bedtime, etc.). By giving Curry those duties, the employer increased the risk of the assaults, even if it was not aware that Curry was a pedophile. The Supreme Court found that the Children’s Foundation was vicariously liable for damages caused by its employee, Curry.
vicarious liability: A legal rule under which an employer is liable for damage caused to a third party by one or more of its employees.
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250 Part II The Common Law Regime If the employee’s wrongful act is completely unrelated to the business of the employer and the scope of work assigned to the employee,9 or takes place during the employee’s personal time and outside the workplace with no connection to the employer’s enterprise,10 then the employer will not be vicariously liable.
IV. Common Torts That Apply to Work Torts can be divided into two categories: (1) intentional torts and (2) non-intentional torts (negligence). The principal difference between the two categories is the manner in which fault is assigned. An intentional tort is one in which the perpetrator engages in conduct that is intended to produce the harm that results, or at least conduct in which harm was an obvious outcome. A negligence or non-intentional tort involves harm that was not intended but that would have been avoided had reasonable precautions been taken. Torts comprise multiple “elements,” or parts, that the victim must establish in evidence before the court. Each element of the tort must be proven. The elements of the most common torts that arise in work-related disputes appear at the beginning of each of the tort descriptions that follow.
A. Intentional Torts 1. Intentional Infliction of Mental Suffering Elements:
1. A engaged in flagrant or outrageous conduct toward B. 2. A desired to produce the kind of harm that was actually suffered by B, or A knew that the harm was substantially certain to follow. 3. The conduct by A resulted in a provable illness to B.11 The tort of intentional infliction of mental suffering derives from an 1897 decision in which a cruel practical joker told a woman that her husband had broken both of his legs in an accident, which was not true. The woman suffered shock and became seriously ill. The court ruled that a person who wilfully does something intended to psychologically harm another person is committing a tort.12 In more modern times, this tort has been applied to employers who engage in behaviour toward an employee that the court finds outrageous and that causes the employee mental suffering.13 For example, in a 2014 decision, Boucher v. Wal-Mart Canada, the Ontario Court of Appeal approved a jury award of $100,000 for the tort of intentional infliction of mental suffering where a manager engaged in deliberate, flagrant harassment of an employee designed to force the employee to quit.14 A leading case involving this tort is discussed in Box 16.2.
BOX 16.2 » CASE LAW HIGHLIGHT Intentional Infliction of Mental Suffering by an Employer Prinzo v. Baycrest Centre for Geriatric Care 2002 CanLII 45005 (Ont. CA) Key Facts: Prinzo had worked for Baycrest for over 17 years when she fell in the parking lot, injuring herself. She was un-
able to work for several months. During her absence, a manager routinely and persistently called Prinzo at home, asking when she would be returning to work. The calls caused Prinzo emotional distress, and it was clear that the manager believed Prinzo was not really as injured as she claimed. At one point,
intentional infliction of mental suffering: A tort in which a person or employer engages in outrageous harmful conduct toward another with the intention to cause harm that actually occurs.
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Chapter 16 Tort Law and the Employment Relationship 251 the employer sent Prinzo a letter that suggested her doctor had said she was able to return to work. That was not true. Later, the employer told her to return to work on modified duties, but Prinzo said her doctor had not advised that she could do that. Prinzo’s lawyer asked the employer to contact him rather than Prinzo because the calls were upsetting her, but the employer kept calling Prinzo. The employer threatened Prinzo with termination if she did not return. Soon after she returned to work, she was given notice of termination. Issue: Did the employer’s conduct amount to the tort of intentional infliction of mental suffering?
Decision: Yes. By harassing Prinzo through repetitive phone calls about returning to work (when Baycrest knew the calls were causing her emotional distress) and by falsely claiming that Prinzo’s doctor had said she could return to work, the employer’s actions satisfied the elements of the tort. The employer was aware that its behaviour was causing emotional distress, and because it continued to engage in that behaviour it desired that result. Evidence showed that the harassment caused Prinzo real physical harm. The court of appeal awarded Prinzo $15,000 damages for intentional infliction of mental and physical harm.
2. Assault and Battery The tort of assault involves making threats of physical violence that causes someone to reasonably fear they are in danger of imminent harm. Battery involves actual unwanted physical contact that either causes the victim harm or is offensive or insulting to the victim. Often the torts of assault and battery are pleaded together when there has been physical contact, but they are distinct torts. In Piresferreira v. Ayotte, the Ontario Court of Appeal found that a manager committed the tort of assault and battery when he screamed at and then shoved an employee in the shoulder, causing her to stumble backwards. The court ordered the employer to pay $15,000 in damages for the assault in addition to other damages for wrongful dismissal.15 3. Intimidation Elements: 1. A threatened B that they would commit an unlawful act (such as a crime, tort, or breach of a contract) unless B did as A wished. 2. As a result of the threat, B did not do something that they were legally entitled to do. 3. As a result of B not doing that something, either B or another party suffered damages.16 Intimidation involves an attempt to coerce another person to do something or to refrain from doing something they are entitled to do by the threat of an unlawful act. In the famous case of Rookes v. Barnard, several officials of a British union threatened to cause an unlawful strike against an employer in violation of a collective agreement unless the employer fired an employee with whom the union had a beef.17 The employee (Rookes) was dismissed when the employer acceded to the threat. The House of Lords ruled that the union officials had committed the tort of intimidation by threatening an unlawful act (breach of a contract) that led Rookes to suffer damage (loss of wages). Rookes involved an unusual factual scenario. However, the tort of intimidation would apply, for example, to an employer who threatened an employee with
assault: A tort that involves a threat of imminent physical harm. battery: A tort that involves unwanted physical contact that either causes the victim harm or is offensive or insulting to the victim. intimidation: A tort that involves an attempt to coerce another person to do something or to refrain from doing something they are entitled to do by the threat of an unlawful act.
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252 Part II The Common Law Regime summary dismissal if the employee did not agree to quit, provided that the employer was not legally entitled to dismiss the employee for cause.18
4. Defamation Elements: 1. A made untrue comments about B that would tend to lower B’s reputation in the eyes of a reasonable person. 2. The comments were communicated to at least one person (other than B).19 The tort of defamation involves false statements about a person that tend to harm the person’s reputation. It can take the form of spoken comments (slander) or written statements (libel). It is often pleaded when an employer or employee makes derogatory comments about the other. For example, an employer may accuse an employee of being a thief, or an employee may post derogatory comments about the employer on a social media site, such as Facebook. The party claiming defamation must prove the elements of the tort listed above, at which point the onus shifts to the other party to argue one of the defences that the courts have recognized. One defence is justification, which means that the plain meaning of the comments, as well as the normal implications associated with those words, are “substantially true.”20 In one case, an employee stood outside his ex-employer’s premises wearing a sandwich board that read “Teacher fired for asking [employer] to stop breaking the law.” The court ruled that the employee defamed the ex-employer, and the employee had failed to make out the defence of justification since in fact he had not been fired for asking the employer to stop breaking the law; he had been fired for cause for violating the employer’s code of conduct. The employee was ordered to pay $1,500 in damages for harm to the employer’s reputation.21 In the case of Hawley v. Webb, the employer defamed an ex-employee when it told a third party that the employee was dishonest and incompetent. Since the court found no factual basis for those conclusions, it ordered damages amounting to $50,000 for defamation.22 Another defence is qualified privilege. A defamatory statement is presumed to be motivated by malice and is therefore unlawful. The “qualified privilege” defence rebuts that presumption in situations where, for policy reasons, the courts wish to encourage the expression of frank opinions.23 One such situation involves employee job references written by employers. Qualified privilege protects the right of an employer to give a negative employee reference, provided that the employer is not acting with malice. For example, in the case of Mejia v. LaSalle College a former employer informed a business that was considering hiring one of its ex-employees that the employee was not a team player, that he had personality problems, and that his mental state was questionable. The defamation action was dismissed, because the court ruled that the defence of qualified privilege applied. The employer had stated his personal opinion when asked, and that opinion was not tainted by malice.24
5. Inducing Breach of Contract Elements: 1. A had a contract with B. 2. C was aware of the contract between A and B. defamation: A tort that involves false statements about a person that tend to harm the person’s reputation; written defamation statements are called libel, and spoken defamation statements are called slander. justification: A defence to a defamation lawsuit based on the claim that the comments are “substantially true.” qualified privilege: A defence to a defamation lawsuit based on the claim that public policy supports frank and honest opinions in the circumstances, and the comments are made without malice.
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Chapter 16 Tort Law and the Employment Relationship 253
3. C intentionally caused the breach of that contract. 4. As a result, A suffered damages.25 The tort of inducing breach of contract involves wrongful acts by a third party that cause a breach of contract between two other parties. This tort has played an important historical role in the courts’ attempts to restrict collective actions of employees, such as strikes and picketing. For example, imagine that union leaders organize a picket line in front of a business for the purpose of preventing the company’s employees or suppliers from getting into the workplace and, as a result, the employees or suppliers breach their contract with the company. Can you see how that behaviour by the union leaders could satisfy the elements of the tort of inducing breach of contract?26 We will look more closely at the role of torts in collective bargaining law in Part IV of the text.
Canadian judges have long used tort law creatively to restrict collective worker actions such as picketing.
In the case considered in Box 16.3, Cogeco refused to allow an employee of a contractor retained to install cable to work on Cogeco projects and, consequently, the contractor wrongfully dismissed the employee. The issue in the case was whether Cogeco induced the contractor to breach its employment contract by denying the employee the right to work on Cogeco projects.
inducing breach of contract: A tort that involves wrongful acts by a third party that are intended to cause a breach of contract between two other parties.
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BOX 16.3 » CASE LAW HIGHLIGHT Inducing Breach of Contract Drouillard v. Cogeco Cable Inc. 2007 ONCA 322 Key Facts: Drouillard was hired by Mastec as a cable installer in Windsor, Ontario. Mastec assigned Drouillard to work on a project for Cogeco, Mastec’s largest customer. However, just hours after Drouillard began work at one of Cogeco’s worksites, he was sent home and then informed by Mastec that Cogeco would not permit him to work on its projects. Mastec then terminated Drouillard’s employment contract without the proper contractual notice. Drouillard sued Mastec in contract for wrongful dismissal and sued Cogeco in tort for inducing the breach of the employment contract between Mastec and himself. Issue: Did Cogeco commit the tort of inducing Mastec to breach its employment contract with Drouillard?
Decision: Yes. All of the elements of the tort were established. First, Drouillard had an employment contract with Mastec. Second, Cogeco was aware of that contract. Third, Cogeco “intentionally” caused the breach of that contract. The court ruled that this element is made out if Cogeco either desired that a breach occur, acted with the knowledge that its actions would likely cause a breach of the contract, or acted with indifference to whether or not its actions would likely cause Mastec to wrongfully dismiss Drouillard. The facts disclosed that a representative of Cogeco suggested “ominously” to Mastec that it was in the best interests of Mastec to get rid of Drouillard. This action demonstrated that Cogeco was indifferent to whether Mastec complied with its contract with Drouillard, as long as Drouillard was fired. Fourth, Drouillard lost his job. The court ordered Cogeco to pay damages amounting to $137,535 for lost wages plus $62,465 for additional damage done to a promising career.
B. Non-intentional Torts (Known as “Negligence”) Elements: 1. A had a legal duty of care to B. 2. A behaved in a manner that fell short of the applicable standard of care required. 3. B suffered damages that were caused by A’s behaviour.27 Negligence involves an unintended breach of a legal duty recognized by the courts that results in damage to another person. Since almost any action by a person could conceivably start a chain of events that leads another to be harmed, the courts have constructed boundaries to identify when a person ought to be held liable for harm caused by their actions. We do not want people rushing to court every time someone else’s actions harm them in some manner. However, people ought to be held responsible at least sometimes for damage caused by their actions. The law of negligence is the mechanism through which the courts define the boundary between legal responsibility for unintended harm and purely accidental damage for which a person ought not to be held responsible. As we will see, the ability to sue for negligence for acts done in the course of employment has been restricted by passage of workers’ compensation and occupational health and safety legislation. However, the tort of negligence is still a relevant and important part of the law of work.
1. The Duty of Care and the Standard of Care The law of negligence is extremely complicated. We will introduce only the main aspects of negligence as it applies to the work setting in broad brush strokes.28 First, we need to understand when negligence applies. As the elements listed in the preceding section describe, negligence negligence: A tort that involves a non-intentional, careless, or reckless act that breaches a legally recognized duty of care and results in damage to another person.
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requires both (1) the existence of a legal duty of care and (2) a failure to meet the legal standard of care applicable to the relationship involved. The duty of care defines the types of relationships that can give rise to negligence claims. If I do not owe you a legally recognized duty of care, then I cannot be guilty of negligence toward you, even if my actions cause you harm.29 The courts decide when a duty of care exists by considering whether the damage that occurred was “reasonably foreseeable” and, if so, whether the relationship between the actor and the victim is sufficiently close (or “proximate”) that a duty to take care not to injure the victim should be recognized.30 A legal duty of care has been found to exist in a number of relationships relevant to us. For example, employers have been found to owe a duty of care to their employees (although as we will discuss shortly, legislation has restricted the range of negligence lawsuits employees can bring against their employers).31 For policy reasons, the courts have been reluctant to find that a duty of care is owed by employees to their employers.32 Employers are presumed to understand that employees make mistakes that create the potential for damage, and that employees rarely have the financial means to reimburse aggrieved parties in negligence lawsuits. Employers are “in a better position than the employee to internalize the cost of ordinary employee negligence” by taking out insurance, for example.33 In addition, the inherent power imbalance between employer and employee we noted earlier in the text has mitigated against the courts recognizing a duty of care owed by employee to employer, as noted by the Ontario Court of Appeal: “there is a power imbalance inherent in most employment relationships. An employee is usually not in a position to bargain at the outset of the employ ment relationship regarding the terms of his or her potential liability for an act of negligence.”34 However, although the courts have resisted recognizing a general duty of care on employees to avoid all mistakes, they have recognized that employees owe a duty of care to their employers to avoid “gross negligence.”35 The courts have also found that employees owe a duty of care to their employer’s customers when the work they perform involves the “very essence” of the service the customer contracted with the employer to perform. For example, employees of a dry cleaner would have a duty of care to not ruin customers’ clothes, and if they do so, the customer could sue the employees for the tort of negligence (and probably the employer for vicarious liability, as discussed earlier).36 Most professional employees owe a duty of care to their patients or clients, and an entire field of legal practice is devoted to professional negligence lawsuits filed against doctors, lawyers, engineers, and other professionals.37 If a duty of care exists, then the court must decide on the standard of care expected. That standard depends on the relationship in question, but it is assessed based on the application of an objective test (the “reasonable person” test), which was discussed in Chapter 7. For example, in the employment context, a court would ask how a reasonable employer or employee would be expected to behave in the circumstances. A leading Canadian tort text describes the employer’s standard of care toward its employees as follows: “The employer is under a common law obligation to use reasonable care to prevent injury or harm from foreseeable danger of which the employer is aware or of which he ought, as a reasonable man, to be aware.”38 For a professional, the standard of care expected is that of a “reasonably competent” person within that profession.39 Finally, if a duty of care exists and the defendant failed to meet the necessary standard of care, the court must assess whether the conduct in question actually caused (“causation”) the injury duty of care: A special close relationship between two parties that creates an obligation in tort law to take reasonable steps to avoid harming the other party. standard of care: In the application of the tort of negligence, the level of care expected of a party that has a legal duty of care to not harm others. professional negligence: The special application of the tort of negligence to professionals, such as doctors, lawyers, and engineers.
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256 Part II The Common Law Regime or damages suffered by the victim, and whether those damages were “reasonably foreseeable.” Only reasonably foreseeable damages are recoverable in negligence cases.
2. The Limited Availability of Negligence Actions Related to Workplace Injuries Negligent acts that occur in the performance of employment can lead to serious injuries or even death. An employer who assigns an employee to work on an unsafe machine might be negligent if that employee is injured or killed.40 An employee may act negligently in performing their job and injure another person. However, the ability to sue for negligence for injuries or death resulting from an accident occurring “in the course of employment” was restricted by the passage of workers’ compensation legislation by Canadian governments beginning in the early 20th century.41 The Alberta Workers’ Compensation Act provides an example of a typical Canadian statutory provision barring negligence lawsuits for injuries or death resulting from any employment-related accident. “Accident” is defined as one that “arises out of and occurs in the course of employment” (s. 1(1)(a)), and then section 21(2) reads: This Act and the regulations apply instead of all rights and causes of action, statutory or otherwise, to which a worker, the worker’s legal personal representatives or the worker’s dependants are or might become entitled against the employer of the worker by reason of any accident happening to the worker, and no action in respect of that accident lies against the employer.42
Workers' compensation legislation today restricts the right of workers to sue their employer for the tort of negligence when they are injured "in the course of employment.” Instead, the employee can claim compensation under the workers' compensation insurance system.
Other provinces similarly exclude the right to sue in negligence for employment-related injuries, transferring these claims to the regulatory standards regime. Workers’ compensation legislation invokes a trade-off: allowing employees to recover damages for lost wages for workrelated injuries through a no-fault insurance scheme in exchange for eliminating the right to sue
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for damages in tort law. Workers’ compensation will be examined in Chapter 24. However, it is important to note that the trade-off only applies when the employer and the accident itself fall within the scope of the workers’ compensation legislation. Therefore, if the employer is exempted from the legislation, or the accident did not occur “in the course of employment,” then people injured by an employee’s actions can still sue the employee for negligence and possibly the employer for vicarious liability, as the case discussed in Box 16.4 demonstrates.43
BOX 16.4 » CASE LAW HIGHLIGHT Negligence Causing Work Accident Rudd v. Hamiota Feedlot Ltd. 2006 MBQB 22 Key Facts: Rudd was employed by Hamiota in a job requiring skilled horse riding (she was a pen rider). The horse she was riding on the day in question was missing a shoe on one of its front legs. The absence of the shoe led to an accident in which the horse fell while navigating a corner, seriously injuring Rudd when she fell off the horse. The employer was exempt from the Manitoba Workers Compensation Act, so Rudd could not claim benefits under that legislation, but she was not prohibited from suing the employer for negligence, which she did. Issue: Was the employer negligent and, if so, what damage to Rudd did that negligence cause? Decision: Yes, the employer was negligent. The court found that the employer owed a duty of care to Rudd: “That an employer owes a duty of care to their employees is well established law.” In summarizing the evidence that the employer breached that duty, the court wrote: There is no evidence that any representative of the Defendant discussed the dangers of pen riding or how to avoid them with the Plaintiff. There was no
evidence the employees were given any instruction on the proper care of their horses. There is no evidence the head pen-rider supervised the Plaintiff in any way. The evidence establishes that once [the horse] lost his shoe, [Rudd] notified [a supervisor] of her situation. The Defendant called no evidence of any actions taken to assist the Plaintiff by providing another horse for her to ride or of advising her not to ride [the horse] until [the horse had been re-shoed]. On the question of whether the negligence caused that injury, the court concluded that the employer’s conduct “created a risk of harm and that the injury occurred within the area of risk.” The court found that Rudd was also negligent, because she knew it was dangerous to ride a horse with a missing shoe. Therefore, the court ruled that she was one-third responsible for the injury (a concept known as contributory negligence). The court calculated the damages as follows: $125,000 for “non-pecuniary” damages (loss of enjoyment of life and happiness); $296,000 for loss of future earnings due to her permanent disability; and $42,000 for lost income up to the date of the decision (special damages); for a total of $463,000. The employer was ordered to pay two-thirds of those damages.
If an employee is injured in a manner that is not “in the course of employment,” but is still the result of the employer’s negligence, then the employee can sue for negligence. For example, in the case of Jacobsen v. Nike Canada Ltd., the employer was found to be negligent in offering a large volume of alcohol to an employee during working hours and then failing to monitor and take reasonable steps to ensure the employee did not drive home in an impaired state.44 The employee crashed his car on the way home and became a quadriplegic. The court ordered damages against Nike amounting to over $2.7 million. The courts have recognized special categories of negligence that apply to employment. Negligent hiring is an example, which can occur if an employer ignores evidence that a job a pplicant contributory negligence: Negligence of an injured party that contributes to the loss suffered or damage incurred due to the negligence of another party. negligent hiring: A claim made by an injured party against an employer or job recruiter stating that reasonable steps were not taken to investigate the background of an employee who caused harm.
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258 Part II The Common Law Regime poses a risk to co-workers or customers or fails to take steps a reasonable employer would take to limit that risk.45 And as discussed in Chapter 6, the courts have applied the tort of negligent misrepresentation to representations made during the recruitment stage (recall the case of Queen v. Cognos Inc., discussed in Box 6.2).46 However, for various policy reasons, the courts have also refused to apply some categories of negligence to employment settings. As demonstrated in Box 16.5, policy concerns have played an important role in the development of negligence torts in the realm of work law.
BOX 16.5 » TALKING WORK LAW The Role of Policy in the Law of Negligence Earlier in this chapter, we noted that the courts have defended the right of victims of work-related accidents to sue employers under the doctrine of vicarious liability on policy grounds. Holding employers liable for harm caused by their employees in the course of their employment makes good policy sense because it encourages employers to emphasize safe work practices, and employers are better able than employees to absorb the risks and costs of those harms by purchasing insurance or passing on costs to consumers.* The courts have also declined to recognize a duty of care owed by employees to their employer for similar policy reasons, and also because they recognize that inequality of bargaining power ensures most employees will be unable to negotiate contract terms that adequately protect them from tort liability.† At the same time, the courts have also relied on policy reasons to reject attempts by employees to expand the reach of tort law to some types of employer conduct. For example, in the case of Wallace v. United Grain Growers Ltd., discussed in Chapter 14, the Supreme Court of Canada refused to recognize a tort of “bad faith discharge” on the basis that it would “constitute a radical shift in the law,” which the court ruled was “a step better left to be taken by the legislatures.”‡ In the case of Piresferreira v. Ayotte, the Ontario Court of Appeal ruled that the tort of “negligent infliction of mental suffering” does not apply to the employment setting. The court ruled that imposing a tort-based duty of care on employers to protect employees from all unintended harms throughout the employment relationship was unnecessary and unwarranted (since there are often contract law ‑ based remedies). The court added that doing so “would be a considerable
intrusion by the courts into the workplace” and would have “a real potential to constrain efforts to achieve increased efficiencies.”§ In the case of Correia v. Canac Kitchens, the Ontario Court of Appeal ruled that an employee could sue a private investigator retained by the employer for “negligent investigation” after the investigator wrongfully accused the employee of theft, leading to the employee’s wrongful dismissal and arrest.** However, the court ruled that the employee could not sue the employer for “negligent investigation,” again relying on policy concerns. The court wrote that allowing employees to sue their employers in tort for negligent investigations of suspected employee wrongdoing might discourage employers from reporting suspected crimes to the police. Finally, in the recent decision in Merrifield v. Canada (A.G.), the Ontario Court of Appeal refused to recognize a new “tort of harassment” that would apply in the employment context on the basis that other remedies already exist, including the tort of intentional infliction of mental suffering, and that tort law should evolve slowly and there is no need to recognize a similar tort of harassment that would drop the requirement for the actions to be “intentional.”# * Bazley v. Curry, [1999] 2 SCR 534. † Douglas v. Kinger, 2008 ONCA 452 at para 61. ‡ Wallace v. United Grain Growers Ltd., [1997] 3 SCR 701 at para 77. § Piresferreira v. Ayotte, 2010 ONCA 384. ** Correia v. Canac Kitchens, 2008 ONCA 506. # Merrifield v. Canada (Attorney General), 2019 ONCA 205.
V. Tort Remedies The victim of a tort can recover damages from the person who commits the tort (known as the “tortfeasor”), and in some cases obtain an injunction. An injunction is a court order that tortfeasor: A person who commits a tort.
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requires a person or company to stop committing a tort. For example, an injunction might order a person to stop publishing something that is defamatory, or it might order picketers to stop picketing in a manner that constitutes a tort such as inducing breach of a contract. An injunction can be temporary (interlocutory injunction) or permanent. The interlocutory injunction is the most important tort remedy used by the courts to restrict labour strikes and picketing, as we will discuss in Part IV. A refusal to obey an injunction order can result in a finding of contempt of court, which can lead to a fine or even imprisonment. The objective of compensatory damages is to assess a monetary amount that as much as possible places the victim in the same position they would have found themselves in had the tort not occurred.47 Courts divide these damages into (1) pecuniary damages and (2) non- pecuniary damages. Pecuniary damages are assessed based on a calculation of the financial loss incurred by the victim as a result of the tort. They can include reimbursement for financial expenses and losses already incurred by the victim, such as medical expenses and lost wages (sometimes called “special damages”), as well as for future anticipated expenses that the victim will incur as a result of the harm caused by the tort, such as future medical expenses and loss of future income from jobs that the victim can no longer perform (sometimes called “general damages”). Non-pecuniary damages are not based on financial expenses and losses but instead compensate the tort victim for personal harms like anxiety, emotional distress, and loss of enjoyment of life (similar to “aggravated damages” in contract law, discussed in Chapter 14). In a negligence (non-intentional) claim, the damages that can be awarded are limited to those that were a “reasonably foreseeable” outcome of the wrongful act.48 In the case of intentional torts, on the other hand, damages are not so restrained; the intentional wrongdoer is liable for the damage their actions cause, whether foreseeable or not.49 In this way, intentional torts are treated more harshly than negligence torts in terms of damages.50 Finally, as discussed in Chapter 14, in order for a court to award punitive damages— damages intended to punish an employer for egregious, malicious, and high-handed behaviour51—in a wrongful dismissal lawsuit, a court must find that the employer committed an “independently actionable wrong” separate and apart from the failure to provide the employee with reasonable notice. Torts such as intentional infliction of mental suffering and defamation can satisfy this requirement. Therefore, employees sometimes sue their employers for wrongful dismissal (breach of contract) and in tort to recover both damages for breach of contract (based on failure to give notice of termination) and tort damages.52
VI. Chapter Summary This chapter summarizes some of the most important torts that have application to the employment setting. Torts are either intentional or non-intentional (known as negligence), and both types have been applied to disputes arising from employment relationships. Torts are judgecreated legal wrongs that permit people (or businesses) to recover damages suffered as a result of the misconduct of another. We noted in this chapter that the development of tort law in the
interlocutory injunction: A temporary court order prohibiting conduct that is potentially unlawful until a decision is released by the court on whether the conduct is unlawful. pecuniary damages: Damages awarded in a tort case that are quantifiable in monetary terms (i.e., financial losses such as medical bills, lost wages, loss of future earnings, costs of future medical care). non-pecuniary damages: Damages awarded in a tort for losses that are intangible or non-financial in nature, such as hurt feelings, emotional distress, or loss of enjoyment of life. punitive damages: Damages ordered against a party who engages in outrageous or egregious behaviour deserving of special denunciation and retribution.
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260 Part II The Common Law Regime context of employment has been heavily shaped by the courts’ policy concerns about what makes sense in the employment setting. We will revisit tort law in Part IV when we explore how the courts have used torts to regulate and restrain collective worker activities, including unionization, picketing, and strikes.
QUESTIONS AND ISSUES FOR DISCUSSION 1. What is vicarious liability? In what circumstances will a court impose it on an employer? Describe the policy reasons the courts have relied on to justify applying vicarious liability on employers. 2. Explain two defences to a defamation lawsuit. 3. In what circumstances can an employee sue an employer for negligence that results in the employee’s injury? 4. Explain the various types of remedies available to the victim of a tort. 5. Describe how policy concerns have influenced the development of tort law as it applies to work.
APPLYING THE LAW 1. Would any of the following hypothetical factual scenarios give rise to a tort action in your opinion? If so, which tort? If you think more information is required to make a judgment, what information would you need? a. An employer tells a prospective employer of an exemployee that the employee was fired for cause when that is not the case. b. Microsoft offers two employees of Apple a signing bonus of $10,000 if they quit Apple immediately and come to work for Microsoft.
c. Employees Jeanot and Christine are angry with their employer. One day they stand at the front door of the workplace and ask other employees to join them in not going to work that day. Jeanot tells employees that if they walk past him and go to work, he will be very angry with them. Christine tells the employees that if they walk past her and go to work, she will slash their car tires.
EXERCISE In Box 16.1, we considered the case of Bazley v. Curry. In that case, the Supreme Court of Canada held that an employer was vicariously liable for the tort of battery and sexual assault committed by an employee. Review the summary of that case. On the same day that Bazley was released, the Supreme Court released a companion case in which it ruled that a boys and girls club was not vicariously liable for the sexual abuse committed by an employee. That case is called Jacobi v. Griffiths. To understand the different outcomes, try the following exercise: 1. Go to the CanLII home page: . 2. In the “Case name” search box, type “Jacobi v. Griffiths” and retrieve the Supreme Court decision. 3. The majority decision begins at paragraph 29. Read the decision, or at least the discussion of how the test for vicarious liability developed in Bazley v. Curry (referred to by the court as “Children’s Foundation”) applies to the facts in Jacobi v. Griffiths (paragraphs 79 to 87). 4. Why did the two cases lead to different decisions on the tort of vicarious liability?
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NOTES AND REFERENCES 1. See, for example, W. Wedderburn, “Strike Law and the Labour Injunction: The British Experience, 1850 – 1966” in A.W.R. Carrothers, Report of a Study on the Labour Injunction in Ontario (Toronto: Ontario Department of Labour, 1966) at 603-84; B. Laskin, “Picketing: A Comparison of Certain Canadian and American Doctrines” (1937) 15 Can Bar Rev 10; and I.M. Christie, The Liability of Strikers in the Law of Tort (Kingston, Ont.: Queen’s University Industrial Relations Centre, 1967) at 55. For a classic example of the courts’ creative use of tort law to restrain collective worker action, see Hersees of Woodstock Ltd. v. Goldstein et al., 1963 CanLII 151 (Ont. CA) (secondary picketing of a third-party company is “illegal per se”). 2. V. Beringham & C. Brennan, Tort Law (Oxford: Oxford University Press, 2010) at 2. 3. D. Shuman, “The Psychology of Compensation in Tort Law” (1994) 43 Kan L Rev 39. See Correia v. Canac Kitchens, 2008 ONCA 506 at para 107 (intentional torts were created to allow a victim of the harmful acts of another to recover damages when no other legal action exists). 4. P.S. Atiyah, Vicarious Liability in the Law of Torts (London: Butterworths, 1967). A government can be liable for a contractor’s negligence where a statute delegates responsibility for maintaining public safety on a government office: see Lewis (Guardian ad litem of) v. British Columbia, [1997] 3 SCR 1145 (government ministry liable for the negligence of a contractor retained to protect a highway from falling rocks when a rock fell and killed a driver). 5. 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59; Ivic v. Lakovic, 2017 ONCA 446 at para 9; and Heikkila v. Apex Land Corporation, 2016 ABCA 126. See also R. Flannigan, “Enterprise Control: The Servant- Independent Contractor Distinction” (1987) 37 UTLJ 25. 6. Bazley v. Curry, [1999] 2 SCR 534 at para 31; and 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., supra note 5. 7. Cecilio v. Turnberry Green Homes Inc., 2010 ONSC 7077 (negligent installation of a kitchen island by an employee); and Collings v. Jew, 2009 ONCA 18 (a car accident by an employee who was in Toronto for a business meeting). 8. See also Boothman v. Canada, [1993] 3 FC 381; and Cimpean v. Payton, 2008 CanLII 32808 (Ont. Sup Ct J) (professional basketball team can be vicariously liable for torts committed by players during personal time when the employment contract includes rules about off-duty behaviour). 9. See, for example, Inform Cycle Ltd. v. Rebound Inc., 2007 ABQB 319 (employer not vicariously liable for a tort committed by an employee who secretly used the employer’s Internet connection to create a domain name later used in commission of a tort); Ivic v. Lakovic, supra note 5 (taxi
company not liable for sexual assault committed by one of its drivers on a passenger); Solis v. Workers’ Compensation Board (Millard Health), 2015 ABCA 227 (employer not liable for fraudulent behaviour of employee); and Plains Engineering Ltd. v. Barnes Security Services Ltd., 1987 CanLII 3222 (Alta. QB). 10. See, for example, Jacobi v. Griffiths, [1999] 2 SCR 570 (sexual assault by an employee of a kids’ club that took place outside of work time and was beyond the control of the employer). See also S. Wildeman, “Vicarious Liability for Sexual Assault: The Two New Tests for Scope of Employment in B.(P.A.) v. Curry and T.(G.) v. Griffiths” 1998 7 Dal J Legal Stud 1. 11. All three elements must be made out by the plaintiff: Merrifield v. Canada (Attorney General), 2019 ONCA 205 (employer behaviour not flagrant and outrageous); and Colistro v. Tbaytel, 2019 ONCA 197 (there was no desire to produce the kind of harm produced). 12. Wilkinson v. Downton, [1897] 2 QB 57. 13. Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520 (harassment of an employee who is deaf); Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419; Piresferreira v. Ayotte, 2010 ONCA 384; Prinzo v. Baycrest Centre for Geriatric Care, 2002 CanLII 45005 (Ont. CA) at para 61; Boothman v. Canada, supra note 8 (supervisor verbally harassed an employee who he knew was emotionally fragile); Bogden v. Purolator Courier Ltd., 1996 CanLII 10572 (Alta. QB) (harassment of a worker resulted in an order of $20,000 for intentional infliction of mental suffering); Rahemtulla v. Vanfed Credit Union, 1984 CanLII 689 (BCSC); and Clark v. Canada, [1994] 3 FC 323. 14. Boucher v. Wal-Mart, supra note 13 15. Piresferreira v. Ayotte, supra note 13. See also Tannous v. Donaghue, 1998 CanLII 4627 (Ont. CA) (aggravated damages of $15,000); and Mainland Sawmills Ltd. et al v. IWA – Canada et al., 2006 BCSC 1195. 16. Tran v. University of Western Ontario, 2015 ONCA 295 at para 23; and Central Canada Potash Co. Ltd. et al. v. Government of Saskatchewan, [1979] 1 SCR 42 (the unlawful means threatened by a party may include a tort or criminal offence and, possibly, a breach of contract). In the British decision of Rookes v. Barnard, [1964] AC 1129, the House of Lords ruled that a threat to breach a contract satisfies the unlawful means element of the tort. See also Morgan v. Fry et al., [1968] 3 All ER 452 (CA). However, a threat to quit unless some action is taken is not intimidation, since quitting with proper notice is not unlawful: Roehl v. Houlahan (C.A.), 1990 CanLII 6781 (Ont. CA).
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262 Part II The Common Law Regime 17. Rookes v. Barnard, supra note 16. 18. Yu-Ming Sui v. Westcoast Transmission Co. Ltd., 1984 CanLII 497 (BCSC). 19. Grant v. Torstar Corp., 2009 SCC 61. 20. Ibid. at paras 32-33; Mann v. International Association of Machinists and Aerospace Workers, 2012 BCSC 181 at para 73; Canuck Security Services Ltd. v. Gill, 2013 BCSC 893; and Meszaros v. Hendry, Swinton, McKenzie Insurance Services (Westshore) Inc., 2015 BCSC 1423 (statements substantially true).
Division No. 4 et al., 1989 CanLII 4616 (Sask. QB); and Rudd v. Hamiota Feedlot Ltd., 2006 MBQB 22 at para 26: “That an employer owes a duty of care to their employees is well established law.” 32. See the discussions in Douglas v. Kinger, 2008 ONCA 452; Portage LaPrairie Mutual Insurance Company v. MacLean, 2012 NSSC 341; and Shamac Country Inns Ltd. v. Sandy’s Oilfield Hauling Ltd., 2015 ABQB 518. 33. Douglas v. Kinger, supra note 32 at para 61. 34. Ibid. at 59.
21. Mejia v. LaSalle College International Vancouver Inc., 2014 BCSC 1559.
35. Ibid. See also Viktoria Granite and Marble Ltd. v. Franczuk, 2010 SKPC 166.
22. Hawley v. Webb, 2002 BCSC 244.
36. London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 SCR 299 (employees were negligent in handling the customer’s transformer).
23. Franchuk v. Schick, 2014 ABQB 249. 24. Mejia v. LaSalle College International Vancouver Inc., supra note 21. See also Meszaros v. Hendry, Swinton, McKenzie Insurance Services (Westshore) Inc., supra note 20. 25. Lumley v. Gye (1853), 2 E & B 216; Drouillard v. Cogeco Cable Inc., 2007 ONCA 322; and Correia v. Canac Kitchens, supra note 3 (there was no intention to cause a breach). 26. “Inducing breach of contract” was first developed in the case of Lumley v. Gye, supra note 25, and later applied against union organizers: South Wales Miners’ Federation v. Glamorgan Coal Co. Ltd., [1905] AC 239; Quinn v. Leathem, [1901] AC 495; and D.C. Thomson & Co. Ltd. v. Deakin and others, [1952] 2 All E.R. 361 (C.A.). See discussion of the current application of the law to labour picketing in Prince Rupert Grain Ltd. v. Grain Workers’ Union, Local 333, 2002 BCCA 641. 27. Mustapha v. Culligan of Canada Ltd., 2008 SCC 27. 28. For greater detail, read any number of excellent tort texts available in Canada: A. Linden, L. Klar, & B. Feldthusen, Canadian Tort Law, 13th ed (Markham, ON: LexisNexis, 2009); and E.J. Weinrib, Tort Law: Cases and Materials, 4th ed (Toronto: Emond Montgomery, 2014). 29. See Jenkins v. Muir, 2012 ABQB 352 (an employer is not vicariously liable when the negligence of an employee on her drive home from work caused injury to a third party, since the employer owed no duty of care to that third party). 30. The leading case on the test for whether a duty of care arises is Anns v. Merton London Borough Council, [1978] AC 728, affirmed by the Supreme Court of Canada in Kamloops v. Nielsen, [1984] 2 SCR 2 along with the classic decision read by every law student: Donoghue v. Stevenson, [1932] AC 562 (HL). 31. See, for example, Christie v. London Electric Co., 1915 CanLII 527 (Ont. CA); Lanteigne v. Vienneau, 1999 CanLII 14719 (NBCA); Fox v. Board of Education of Regina School
37. See the extensive discussion of professional negligence in Linden, Klar, & Feldthusen, supra note 28 at 217-44. 38. G.H.L. Fridman, The Law of Torts in Canada, 2nd ed (Toronto: Carswell, 2002) at 603. 39. On medical negligence, see Wilson v. Swanson, [1956] SCR 804 at 817: “the medical man must possess and use that reasonable degree of learning and skill ordinarily possessed by practitioners in similar communities in similar cases, and it is the duty of a specialist such as appellant, who holds himself out as possessing special skill and knowledge, to have and exercise the degree of skill of an average specialist in his field.” On legal negligence, see Central Trust Co. v. Rafuse, [1986] 2 SCR 147 at para 58: the reasonably competent solicitor, the ordinary competent solicitor, and the ordinary prudent solicitor. 40. See the discussion of the early application of employer negligence in workplace safety cases in T. Ison, “A Historical Perspective on Contemporary Challenges in Workers’ Compensation” (1996) 34 Osgoode Hall LJ 807; and E. Tucker, “The Law of Employer’s Liability in Ontario 1861 – 1900: The Search for a Theory” (1984) 22 Osgoode Hall LJ 251. Cases in which employers were found negligent for harm caused to workers due to unsafe working conditions include Badcock v. Freeman (1894), 21 OAR 633; Wilson v. Boulter (1898), 26 OAR 184; and Rudd v. Hamiota Feedlot Ltd., supra note 31. 41. See, for example, the Ontario Workmen’s Compensation Act, SO 1914, 4 Geo V., c. 25; and the British Columbia Workmen’s Compensation Act, SBC 1916, c. 77. 42. The Alberta Workers’ Compensation Act, RSA 2000, c. W-15, s. 21(2). See also the Manitoba Workers Compensation Act, CCSM c. W200, s. 13(1); and the Ontario Workplace Safety and Insurance Act, 1997, SO 1997, c. 16, Sched. A, ss. 13(1) and 28. Similar provisions are found in the other provinces’ workers’ compensation legislation. A large volume of case law considers whether workers were
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Chapter 16 Tort Law and the Employment Relationship 263 injured “in the course of employment.” Workers’ compensation legislation also excludes benefits for some harms occurring at work, so lawsuits can move forward on those harms. For example, s. 13(4) of the Ontario Workplace Safety and Insurance Act excludes damages for mental stress in most cases, enabling an employee to sue for mental stress under the common law. See, for example, Decision No. 962/14, 2014 ONWSIAT 1175. 43. See also Street v. Ontario Racing Commission, 2008 ONCA 10 (employee could sue the employer for negligence when the employer failed to take out the required workers’ compensation premiums to cover the employee for injuries at work); Dyck v. Lohrer, 2000 BCCA 219 (plaintiff who was injured in a car crash when the car was driven by an employee can sue the non-employer owner of the car for vicarious liability for the actions of the driver). 44. Jacobsen v. Nike Canada Ltd., 1996 CanLII 3429 (BCSC). Contrast Jenkins v. Muir, supra note 29 (employer not negligent when employee drank at work and then was killed in a car crash since the employer’s representatives were not aware of the employee’s impairment and had no reason to
know or foresee her impairment). See also John v. Flynn, 2001 CanLII 2985 (Ont. CA). 45. Wilson v. Clarica Life Insurance Co., 2002 BCCA 502. 46. Queen v. Cognos Inc., [1993] 1 SCR 87. See also Treaty Group Inc. v. Drake International Inc., 2005 CanLII 45406 (Ont. Sup Ct J) (placement agency committed negligent misrepresentation in referring a convicted thief to a client). 47. Linden, Klar, & Feldthusen, supra note 28 at 713. 48. Piresferreira v. Ayotte, supra note 13; Mustapha v. Culligan of Canada Ltd., supra note 27. 49. See Bettel et al. v. Yim, 1978 CanLII 1580 (Ont. Sup Ct J); and Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24 at 99. See also the discussion in Linden, Klar, & Feldthusen, supra note 28 at 63-67. 50. Piresferreira v. Ayotte, supra note 13 at para 75. 51. See Hill v. Church of Scientology of Toronto, [1995] 2 SCR 1130 at para 196. See also Whiten v. Pilot Insurance Co., [2002] 1 SCR 595. 52. See Boucher v. Wal-Mart, supra note 13.
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Selected Cases: Part II Cases with boldface page numbers appear as Case Law Highlights. 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261 Antonacci v. Great Atlantic & Pacific Co. of Canada, 1998 CanLII 14734 (Ont. Sup Ct J) . . 175, 176, 198, 233 Babcock v. C. & R. Weickert Enterprises Ltd., 1993 CanLII 3112 (NSCA) . . . . . . . . . . . . . . . . . . . . . . . 187, 197 Balzer v. Federated Co-operatives Limited, 2018 SKCA 93 ������������������������������������������������������������������������ 187, 197 Bannister v. General Motors of Canada Ltd., 1998 CanLII 7151 (Ont. CA)���������������������������� 150, 151, 197, 198 Bardal v. Globe & Mail Ltd., 1960 CanLII 294 (Ont. Sup Ct J) . . . . . . . . . . 122, 159, 160, 163, 164, 165, 166, 167, 219, 221, 222, 240, 241 Bazley v. Curry, [1999] 2 SCR 534 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249, 258, 260, 261 Berg v. Cowie, 1918 CanLII 319 (Sask. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Bohemier v. Storwal International Inc., 1983 CanLII 1956 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . 164, 165, 168 Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419 . . . . . . . . . . . . . . 151, 216, 224, 225, 233, 250, 261, 263 Bowes v. Goss Power Products Ltd., 2012 ONCA 425 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131, 167, 234 Braiden v. La-Z-Boy, 2008 ONCA 464 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111, 167 Carscallen v. FRI Corp., 2005 CanLII 20815 (Ont. Sup Ct J); aff ’d 2006 CanLII 31723 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144, 149, 151, 210, 216 Carter v. Bell & Sons (Canada) Ltd., 1936 CanLII 75 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157, 167 Ceccol v. Ontario Gymnastic Federation, 2001 CanLII 8589 (Ont. CA) . . . . . . . . . . . . . 120, 125, 129, 130, 164 Chambly (City) v. Gagnon, [1999] 1 SCR 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 Chevalier v. Active Tire & Auto Centre Inc., 2013 ONCA 548 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215, 228, 235 Clark v. Coopers & Lybrand Consulting Group, 2002 CanLII 45050 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . 92, 95 Colistro v. Tbaytel, 2019 ONCA 197 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151, 203, 214, 216, 224, 233, 261 Colwell v. Cornerstone Properties Inc., 2008 CanLII 66139 (Ont. Sup Ct J) . . . . . . . . . . . . . . . . . . . . . . . 216, 235 Consbec Inc. v. Walker, 2016 BCCA 114 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150, 242, 245 Cronk v. Canadian General Insurance Co., 1995 CanLII 814 (Ont. CA) . . . . . . . . . . . . 161, 162, 163, 167, 168 Davies v. Fraser Collection Services Ltd., 2008 BCSC 942 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151, 235 Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 . . . . . . . . . . . . . . . . . . . 162, 163, 167, 168 Ditchburn v. Landis & Gyr Powers, Ltd., 1997 CanLII 1500 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . 150, 198, 199 Drouillard v. Cogeco Cable Inc., 2007 ONCA 322 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254, 262 Dykes v. Saan Stores Ltd., 2002 MBQB 112 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149, 207, 215 Evans v. Teamsters Local Union No. 31, 2008 SCC 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228, 229, 230, 234, 235 Farber v. Royal Trust Company, [1997] 1 SCR 846 . . . . . . . . . . . . . . . . . . 149, 204, 205, 206, 208, 213, 214, 215 Farquhar v. Butler Brothers Supplies Ltd., 1988 CanLII 185 (BCCA) ������������������������������������������������������� 214, 216 Foreman v. 818329 Ontario Limited, 2003 CanLII 57401 (Ont. CA) ���������������������������������������������� 129, 130, 131 Francis v. Canadian Imperial Bank of Commerce, 1994 CanLII 1578 (Ont. CA)���������������������������� 105, 106, 111 General Billposting Co. Ltd. v. Atkinson, [1909] AC 118 (HL)��������������������������������������������������������������������������� 130 Gillies v. Goldman Sachs Canada Inc., 2001 BCCA 683 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Globex Foreign Exchange Corporation v. Kelcher, 2011 ABCA 240 . . . . . . . . . . . . . . . . . . . . . 106, 111, 129, 130 Greenberg v. Meffert, 1985 CanLII 1975 (Ont. CA)��������������������������������������������������������������������������������������������� 129 Gunton v. Richmond-upon-Thames London Borough Council, [1981] 1 Ch. 488 (CA) . . . . . . . . . . . . . 216, 231 Hadley v. Baxendale, [1854] 156 ER 145 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220, 231 Haldane v. Shelbar Enterprises Limited, 1999 CanLII 9248 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 Hanni v. Western Road Rail Systems, 2002 BCSC 402 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151, 216
265
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266 Part II The Common Law Regime Hedley Byrne & Co. v. Heller & Partners, [1964] AC 465 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90, 91, 95 Henry v. Foxco Ltd., 2004 NBCA 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189, 195, 197, 198 Hersees of Woodstock Ltd. v. Goldstein et al., 1963 CanLII 151 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 261 Hill v. C.A. Parsons and Co. Ltd., [1972] Ch. 305 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 Hill v. Peter Gorman Ltd., 1957 CanLII 393 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107, 111, 211, 216 Hivac, Ltd. v. Park Royal Scientific Instruments, [1946] 1 All ER 350 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149, 150 Hobbs v. TDI Canada Ltd., 2004 CanLII 44783(Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106, 111, 232 Honda Canada Inc. v. Keays, 2008 SCC 39 . . . . . . . . . . . . . . . . . . . . 145, 151, 197, 220, 222, 223, 231, 232, 233 Howard v. Benson Group Inc., 2016 ONCA 256 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121, 130, 234 Islip v. Coldmatic Refrigeration of Canada Ltd., 2002 BCCA 255 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 James Totterdale Case (1850) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Johnson v. Global Television Network Inc. (CH Vancouver Island), 2008 BCCA 33 . . . . . . . . . . . . . . . . 147, 231 Kelly v. Linamar Corporation, 2005 CanLII 42487 (Ont. Sup Ct J) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191, 199 Kohler Canada v. Porter, 2002 CanLII 49614 (Ont. Sup Ct J) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111, 129, 152 Laws v. London Chronicle (Indicator Newspapers) Ltd., [1959] 2 All ER 285 (CA) . . . . . . . . 138, 149, 195, 197 Lloyd v. Imperial Parking Ltd., 1996 CanLII 10543 (Alta. QB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143, 211, 216 Lyons v. Multari, 2000 CanLII 16851 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118, 129 Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986 . . . . . . . . . . . . . . . . 122, 123, 130, 149, 155, 156, 167, 232 McKinley v. BC Tel, 2001 SCC 38 . . . . . . . . . . . . 150, 180, 181, 182, 185, 186, 187, 188, 190, 194, 195, 196, 197 Medis Health and Pharmaceutical Services Inc. v. Bramble, 1999 CanLII 13124 (NBCA) . . . . . . . . . . . . . . 167 Michela v. St. Thomas of Villanova Catholic School, 2015 ONCA 801 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164, 168 Mifsud v. MacMillan Bathurst Inc., 1989 CanLII 260 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 149, 215, 235 Minott v. O’Shanter Development Company Ltd., 1999 CanLII 3686 (Ont. CA) . . . . 161, 162, 163, 167, 168, 198 Morgan v. Chukal Enterprises, 2000 BCSC 1163 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151, 216 Piresferreira v. Ayotte, 2010 ONCA 384 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251, 258, 261, 263 Prinzo v. Baycrest Centre for Geriatric Care, 2002 CanLII 45005 (Ont. CA) . . . . . . . . . . . . . 233, 250, 251, 261 Queen v. Cognos Inc., [1993] 1 SCR 87 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90, 91, 93, 94, 95, 258, 263 R v. Arthurs, Ex p. Port Arthur Shipbuilding Co., 1967 CanLII 30 (Ont. CA) . . . . . . . . . . . . . . . . 150, 180, 195 R v. Barton-Upon-Irwell, [1814] 2 M. & S. 328 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Rahemtulla v. Vanfed Credit Union, 1984 CanLII 689 (BCSC) . . . . . . . . . . . . . . . . . . . . 146, 147, 151, 152, 261 RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., 2008 SCC 54 . . . 140, 141, 149, 150, 231, 241, 245 Rejdak v. Fight Network Inc., 2008 CanLII 37909 (Ont. Sup Ct J) . . . . . . . . . . . . . . . . . . . . . . . . . . 104, 105, 133 Rubel Bronze & Metal Co. v. Vos, [1918] 1 KB 315 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 Rudd v. Hamiota Feedlot Ltd., 2006 MBQB 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257, 262 Russo v. Kerr, 2010 ONSC 6053 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111, 216, 229 Sarmiento v. Wilding & Rampage Entertainment, 2008 BCPC 232 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Secretary of State for Employment v. ASLEF (No. 2), [1972] 2 All ER 949 (CA) . . . . . . . . . . . . . . . . . . . . . . . 150 Seneca College v. Bhadauria, [1981] 2 SCR 181 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88, 89, 233 Shah v. Xerox Canada Ltd., 2000 CanLII 2317 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203, 214, 216 Shirlaw v. Southern Foundries (1926), Ltd., [1939] 2 KB 206 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 Simpson v. Consumers’ Assn. of Canada, 2001 CanLII 23994 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . 151, 198 Spain v. Arnott, [1817] 171 ER 638 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75, 82 Speakman v. City of Calgary (1908), 9 WLR 264 (Alta. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156, 161, 167 Stamos v. Annuity Research & Marketing Service Ltd., 2002 CanLII 49618 (Ont. Sup Ct J) . . . . . . . . . 151, 216 Stein v. British Columbia Housing Management Commission, 1992 CanLII 4032 (BCCA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138, 149, 195, 197, 215 Stephenson v. Hilti (Canada) Ltd., 1989 CanLII 191 (NSSC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124, 131 Stilk v. Myrick (1809), 170 ER 1168 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102, 103
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Chapter 16 Tort Law and the Employment Relationship 267 Sylvester v. British Columbia, [1997] 2 SCR 315 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176, 198, 231 Techform Products Ltd. v. Wolda, 2001 CanLII 8604 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107, 111 Toronto Marlboro Major Junior “A” Hockey Club v. Tonelli, 1979 CanLII 1969 (Ont. CA) . . . . . . . . . 98, 99, 110 Tree Savers International Ltd. v. Savoy, 1992 CanLII 2828 (Alta. CA) . . . . . . . . . . . . . . . . . . 150, 241, 243, 245 Turner v. Mason, [1845] 153 ER 411 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Upcott v. Savaria Concord Lifts Inc., 2009 CanLII 41348 (Ont. Sup Ct J) . . . . . . . . . . . . . . . . . . . . 238, 239, 245 van Woerkens v. Marriott Hotels of Canada Ltd., 2009 BCSC 73 . . . . . . . . . . . . . . . . . . . . . . . 189, 196, 198, 199 Vorvis v. Insurance Corporation of British Columbia, [1989] 1 SCR 1085 . . . . . . . . . . . . . . . . . . . . . 231, 232, 233 Wallace v. United Grain Growers Ltd., [1997] 3 SCR 701 . . . . . . . . . . . . . . . . . . . . . . . 145, 151, 156, 165, 168, 220, 222, 223, 224, 230, 231, 232, 233 Wightman Estate v. 2774046 Canada Inc., 2006 BCCA 424 . . . . . . . . . . . . . . . . . . . . . . . 173, 175, 176, 177, 198 Wilson v. Racher, [1974] IRLR 114 (CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149, 151, 195 Wronko v. Western Inventory Service Ltd., 2008 ONCA 327 . . . . . . . . . . . . . . . . . . . . . . . . . . 108, 111, 211, 216
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Copyright © 2020 Emond Montgomery Publications
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Part III
The Regulatory Regime CHAPTER 17 Introduction to the Regulatory Regime
Employment Protection Regulation CHAPTER 18 Wage Regulation and Pay Equity CHAPTER 19 Regulating Hours of Work, Time Off, and Overtime CHAPTER 20 Regulating the End of Employment Contracts CHAPTER 21 Introduction to Human Rights at Work CHAPTER 22 The Two-Step Human Rights Model and the Prohibited Grounds of
Discrimination
CHAPTER 23 The Bona Fide Occupational Requirement, the Duty to
Accommodate, and Other Discrimination Defences
CHAPTER 24 Occupational Health and Safety and Workers’ Compensation
Broader Labour Market Regulation CHAPTER 25 The Right to Work: Immigration and Mobility Law CHAPTER 26 Privacy Law at Work CHAPTER 27 Globalization and the Law of Work: International Labour Law and
Trade Law
Selected Cases: Part III
Online Supplemental Chapters* Regulating Unemployment Intellectual Property Law and Work Pensions, Insolvencies, Bankruptcies, and the Worker *For information on how to access these online supplemental chapters, see p. xxiii in the preface of this book.
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C H A P T E R 17
Introduction to the Regulatory Regime LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 271 II. Jurisdiction: The Power to Regulate Work 273 III. The Process of Law Making: Statutes and Regulations 274 IV. Expert Administrative Tribunals 277 V. What Regulatory Standards Are of Interest in the Law of Work? 279 VI. Chapter Summary 281 Questions and Issues for Discussion 281 Exercise 281 Notes and References 282
• Describe how employment protection legislation is “mandatory” and “remedial” and therefore how it must be interpreted generously in favour of employees. • Describe which levels of government have jurisdiction to regulate work and employment. • Describe the basic process through which statutes and regulations are enacted in Canada. • Define and explain the difference between legislation, statutes, and regulations. • Describe the role of expert administrative tribunals. • Identify which types of legislation fall within the scope of the law of work.
I. Introduction Over the decades, politicians have looked out of their office windows at the world that results when individual workers are left to bargain their own working conditions with employers. They have frequently disliked what they saw. They saw employers exploit their superior bargaining power to impose unacceptably poor working conditions on workers, including very low wages, long working hours, and extremely dangerous workplaces. They saw young children employed in dingy and loud sweatshops. They saw wage grids that determined workers’ pay on the basis of gender, skin colour, or religion. As public opposition to these practices grew, politicians responded by passing regulatory standards legislation to protect workers, who were perceived to lack the bargaining power necessary to protect themselves. The central premise underlying most employment regulation is that the common law regime explored in Part II frequently produces unacceptably poor working conditions. Regulatory standards are the mechanism through which governments inject public policy into labour markets when they perceive that market forces alone are producing unacceptable outcomes. The work relationship has been the subject of extensive regulatory intervention for centuries, as described by Professor David Beatty: As any history of work relations will show, every community, acting in its own self-interest, has subjected this activity to extensive social regulation. Given its importance to the vitality of the individual and the community alike, work has always been one of the most intensely regulated of human activities. Whenever a society, or more accurately its rule-makers, has perceived that the individual or the social order was threatened by the patterns and processes of work, it has consistently acted to preserve what it thought was in its most vital interest.1
271
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272 Part III The Regulatory Regime More recently, Professor Harry Arthurs described the function of regulatory standards as follows: In their inception in the United Kingdom, early in the Industrial Revolution, labour standards reflected widespread public sentiment, given force by legislation, that no employer should be allowed to impose, and no worker should be obliged to endure, working conditions that fell below the standard that a decent society would tolerate.2
According to Arthurs, the objective of the regulatory standards regime is to “ensure that no matter how limited his or her bargaining power, no worker … is offered, accepts or works under conditions that Canadians would not regard as ‘decent.’”3 Whether regulatory standards actually do encourage or produce “decent” working conditions is a matter of ongoing debate and a central defining issue in the study of the law of work. Even among those who agree on the need for legislation to protect workers, a wide range of opinions exist on what form that legislation should take. Regulatory standards laws function by imposing mandatory rules on contracting parties. In other words, they restrict freedom of contract. As a general principle—there are some exceptions we will consider in future chapters—employers, employees, and unions cannot contract out of or waive the rights and responsibilities imposed by employment protection legislation.4 A contract term that violates human rights legislation is illegal and unenforceable, even if the employee agreed to it. An employee cannot agree to waive their right to a safe workplace, which they are entitled to under occupational health and safety legislation. Similarly, if an employer pays an employee less than the minimum wage established in employment standards legislation, then the employer is violating the statute, even if the employee agreed to that wage. In the case of employment standards legislation, the parties can agree to contract terms that provide employees with greater entitlements or a greater benefit than what is required by the legislation, but they cannot agree to lessor entitlements.5 The minimum wage is a well-known example of a mandatory floor: it says to employers and employees that they cannot agree to a wage rate less than the statutory minimum and that any attempt to do so is illegal, although they can agree to a wage rate that is higher than the minimum wage. An example of a mandatory ceiling is the maximum hours of work rules found in employment standards legislation. Some regulatory standards laws, such as human rights legislation, restrict employer discretion by prohibiting decisions based on the personal characteristics or actions of workers. Others impose positive obligations on parties to take certain steps, such as the requirements in health and safety legislation to ensure safe workplaces. Still others provide a safety net for workers who find themselves without work, such as unemployment insurance and workers’ compensation legislation. The Supreme Court of Canada has ruled that because employment protection legislation is “remedial” and intended to protect vulnerable workers, it must be interpreted “broadly” and “generously” in favour of employees. In practice, this tends to mean that (1) where there are multiple possible interpretations of legislation, the one most favourable to the person claiming entitlement based on the legislation should be favoured; and (2) exemptions from protective legislation should be interpreted narrowly so that the greatest number of people are covered by the legislation.6 As we work our way through Part III, we will keep an eye out for how this rule of interpretation effects the scope and application of employment legislation. mandatory floor: A law that establishes a mandatory minimum condition that can be included in a contract; for example, a minimum wage law. mandatory ceiling: A law that establishes a mandatory maximum condition that can be included in a contract; for example, a law that fixes the maximum number of hours an employee can work in a day or week.
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The employment relationship is among the most regulated in society. Statutes and regulations govern virtually every aspect of this relationship, from the hiring stage, through the life of the employment relationship, right to the end of the relationship (and sometimes beyond!). Part III explores many (although certainly not all) of these laws, as well as some of the central debates that have shaped their development. This chapter introduces some key concepts and processes that we need to understand before we proceed further in our discussion of the regulatory standards regime.
II. Jurisdiction: The Power to Regulate Work
The Constitution Act, 1867 divides the jurisdiction to legislate between the federal government and the provincial governments. The federal government cannot regulate or apply its laws to a business, contract, or activity that falls outside of its jurisdiction, and the same is true for provincial governments. If an act of government is found to have been outside of its jurisdiction, that act is said to be ultra vires (Latin for “beyond the powers”) and is void. Understanding which level of government has authority to regulate employment is crucial in the law of work. We need to know whether the provincially or federally enacted laws apply, since the legal rules and the processes for enforcing those rules can be very different. Section 91 of the Constitution grants the federal government jurisdiction over a variety of subject matters and industries, including the following, which are particularly relevant to the law of work: • the regulation of trade and commerce (s. 91(2)); • unemployment insurance (s. 91(2A)); • postal service (s. 91(5)); • militia, military and naval service, and defence (s. 91(7)); • navigation and shipping (s. 91(10)); • banking, incorporation of banks, and the issue of paper money (s. 91(15)); • bankruptcy and insolvency (s. 91(21)); and • the criminal law (s. 91(27)).7 Section 91 also grants the federal government jurisdiction to make laws “for the Peace, Order, and good Government of Canada” (known as the “POGG power”). The courts have applied this general POGG power to grant the federal government jurisdiction over the aeronautics (airlines) industry.8 This means, for example, that employees of Air Canada and WestJet are governed by employment legislation enacted in Ottawa by the federal government and not by provincial employment legislation. Section 92 of the Constitution sets out the jurisdiction of the provinces, including the following, which are particularly relevant to the law of work: • local works and undertakings that do not extend beyond provincial borders (s. 92(10)); • property and civil rights in the province (s. 92(13)); and • generally all matters of a merely local or private nature in the province (s. 92(16)).9 Section 92(10) grants authority over “Local Works and Undertakings” to provinces, but businesses that regularly cross provincial or national borders fall within federal jurisdiction. For example, interprovincial railway, bus, and trucking companies, as well as communications
jurisdiction: The scope of authority over which a government, court, or expert administrative power has the power to govern. ultra vires: Beyond one’s jurisdictional powers.
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274 Part III The Regulatory Regime (radio, television, phone) companies that operate in multiple provinces, are legislated by the federal government. Some interesting cases have involved transportation companies that operate almost exclusively within one province but occasionally do business that takes employees across provincial borders. The courts and expert administrative tribunals have ruled that such companies fall within federal jurisdiction if the cross-border work is “regular and continuous,” even if it amounts to only a very small percentage of the companies’ overall activity.10 Until 1925, confusion existed over whether the federal or the provincial governments had general authority over the regulation of employment and collective bargaining in those industries that are not specifically assigned to federal jurisdiction by section 91. That year, in the case of Toronto Electric Commissioners v. Snider, it was ruled that this authority fell under “property and civil rights in the province,” a power granted to the provinces in section 92.11 As a result of the Snider decision, since 1925 the principal jurisdiction in Canada over laws that govern employment rests with the provinces. Approximately 92 percent of Canadian workers are subject to provincial regulatory standards legislation.12 Canada’s regulatory standards regime is fragmented, since each province (and the three territories) enacts its own legislation governing employment. The remaining 8 percent of Canadian workers are employed in jobs that fall within federal jurisdiction. These workers belong to one of the following three categories: 1. They are employees of the federal government. 2. They are employed by an employer that operates in an industry that is specifically assigned to federal jurisdiction by the Constitution, such as Canada Post, the chartered banks, airlines, and national telecommunications companies. 3. They are employed by a company whose ordinary business is to provide a “vital” or “integral” service to a federally regulated business. Some interesting cases have explored the third category of federally regulated employees.13 For example, the Empress Hotel in Victoria was owned and operated by the Canadian Pacific Railway, a federally regulated national railway company, but was ruled to be governed by provincial employment standards laws because the operation of the hotel was not considered vital to the operation of the railway.14 But a company in Toronto that provided stevedoring services (the loading and unloading of ships) to a federally regulated shipping company was subject to federal employment laws because stevedoring is vital and integral to the operation of the shipping company.15 The sheer volume of employment-related legislation at both provincial and federal levels is daunting. It would be impossible to delve too deeply into the nuts and bolts of every statute. Instead, we will examine the regulatory standards regime with an issue-based focus. Although the details of employment legislation in different parts of Canada vary (for the most part), all provincial governments seek to respond to the same pressing labour market issues. In our examination, we will consider both provincial and federal laws, emphasizing common strategies and noting interesting differences in legislative approaches.
III. The Process of Law Making: Statutes and Regulations When we introduced the law of work framework in Chapter 2, we noted that governments play two roles within the framework. First, they act as employers within the work law subsystem. In this capacity, they negotiate employment contracts and collective agreements, adopt human resource policies, and hire and fire workers, just as non-government employers do. Second, governments are lawmakers: they debate, enact, and enforce the laws of Canada. In Part III, we are mostly concerned with governments’ law-making role.
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The law-making process is complex, but we can summarize it relatively succinctly for our purposes.16 An elected government is given authority by the Constitution of Canada to enact laws to govern areas that fall within the government’s jurisdiction. A new law begins with the introduction of a bill in Parliament, which is a draft proposal of a law. Ministers of the government introduce most bills that become law (government bills). A minister is an elected politician17 who belongs to the political party that won the most seats in the previous election and who has been designated to lead a ministry. Most laws that govern the employment relationship begin as bills introduced by the Minister of Labour. Sometimes, a politician who is not a minister introduces a bill, which is known as a private member’s bill (the process for debating and enacting a private member’s bill is slightly different from that described in the next paragraph).
In 2019, the United We Roll convoy drove from Alberta to Ottawa to protest the federal government’s carbon tax and urge support for pipeline construction. Source: Canadian Press.
bill: A draft of a proposed law to introduce a new statute or to amend an existing one. government bill: A bill introduced by a minister of the elected government. private member’s bill: A bill introduced by an elected politician who is not a minister.
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276 Part III The Regulatory Regime The bill then goes through a series of “readings.” At first reading, the bill is introduced in the legislature. At second reading, the bill is debated by elected politicians and is sent to a committee of elected politicians that can hear from witnesses about the bill and propose amendments to the bill. At third reading, the elected politicians vote on whether to approve the final version of the bill. If the vote passes, the final stage of the law-making process is known as royal assent. This approval is a formality in which the English sovereign (the “Crown”) or their representative (the governor general or lieutenant governor) gives formal consent to the bill passed by the legislature. At the federal level, bills must also pass through three readings in the Senate before royal assent. We are concerned with two primary types of government legislation: statutes and regulations (sometimes called “subordinate legislation”). Statutes are bills that have been successfully enacted by provincial legislatures or the federal Parliament. A statute may grant a right to create regulations that fill in details of how the legislation will actually function and who it will (and will not) cover. Usually, the statute will grant the power to create regulations to the lieutenant governor in council, which in practice means that the elected government can make regulations that are given to the lieutenant governor in council’s office for signature. Imagine that we want to know if there is a minimum wage in British Columbia. We might guess that the answer is most likely found in the British Columbia Employment Standards Act. That Act creates a long list of legal rules that govern employment contracts in the province, including section 16(1), which reads: An employer must pay an employee at least the minimum wage as prescribed in the regulations.18
This section tells us that the province has a mandatory minimum wage, but it does not tell us what that wage rate is. Near the end of the Act, we find the following provision: 127(1) the Lieutenant Governor in Council may make regulations … establishing minimum wages for employees or classes of employees.19
To learn that rate, we must consult the regulations that have been enacted under (pursuant to) the BC Employment Standards Act. Specifically, the regulation that contains this information is the Employment Standards Regulation, BC Reg. 396/95. Sections 15 to 18 of this regulation provide minimum wage information. Excerpts of those sections are presented in Box 17.1 to demonstrate the high level of detail often found in regulations.
BOX 17.1 » TALKING WORK LAW Important Legal Details Are Often Found in Regulations Many of the legal rules that governments use to regulate work are found in highly detailed regulations. Regulations can create
exemptions from legal rules found in a statute or provide complex details about how a general rule in a statute is to be
royal assent: A largely symbolic process through which the English sovereign (the “Crown”) or their representative formally approves of a new law passed by a Canadian Parliament. legislation: Laws enacted by governments, including both statutes and regulations. statute: A law, or legislation, produced by a government that includes rules that regulate the conduct of business and people. An example is the Ontario Employment Standards Act, 2000. regulations: Government-made detailed rules introduced as a supplement to, and pursuant to authority created in, a statute. For example, the Ontario Employment Standards Act, 2000 requires that employers pay at least “the prescribed minimum wage,” but does not say what that wage rate is. That Act gives the government the right to introduce regulations (in s. 141), and one regulation (O. Reg. 285/01) sets out the precise amount of the minimum wage.
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Chapter 17 Introduction to the Regulatory Regime 277 applied. The following excerpt from the BC Employment Standards Regulation is a good example of the kind of regulation language used to define the substance and scope of a requirement in a statute—in this case, the British Columbia Employment Standards Act rule that employers pay “at least the minimum wage.”* Part 4—Minimum Wages Minimum hourly wage 15. Subject to sections 16 to 18.1, the minimum wage is $13.85 an hour. Minimum daily wage 16(1) The minimum daily wage for a live-in home support worker is $113.50 for each day or part day worked. (2) The minimum daily wage for a live-in camp leader is $110.87 for each day or part day worked. Minimum wage—resident caretakers 17. The minimum wage for a resident caretaker is, (a) for an apartment building containing 9 to 60 residential suites, $831.45 a month plus $33.32 for each suite, and (b) for an apartment building containing 61 or more residential suites, $2,832.11. Minimum wage—farm workers 18(1) The minimum wage, including 4% of gross earnings vacation pay, for farm workers who are employed on a piece work basis and hand harvest the following berry, fruit or vegetable crops, is, for the gross volume or weight picked, as follows:
(a) apples (b) apricots (c) beans (d) blueberries
$21.06 a bin (27.1 cu. ft.); $24.23 a 1/2 bin (13.7 cu. ft.); $0.289 a pound; $0.488 a pound;
… Minimum wage—liquor servers 18.1(1) In this section, “liquor server” means an employee (a) whose primary duties are as a server of food or drink or both, and (b) who, as a regular part of his or her employment, serves liquor directly to customers, guests, members or patrons in premises for which a licence to sell liquor has been issued under the Liquor Control and Licensing Act. (2) The minimum wage for a liquor server is $12.70 an hour. Other sections in this regulation detail the occupations excluded from the Employment Standards Act, and thus from the minimum wage law.† If we only read the requirement in the Act imposed on employers to pay a minimum wage, we would mistakenly conclude that all employees in British Columbia are entitled to the minimum wage. * BC Reg. 396/95 (as of July 2019). † See BC Reg. 396/95, s. 31 (Professions and Occupations Excluded from the Act) and s. 32 (Employees Excluded from the Act). Also see ss. 33 to 44, which detail the occupations excluded from parts of the Employment Standards Act.
Regulations are important in the law of work. Governments like regulations because they can be amended quickly and periodically without having to go through the complex, often adversarial, and time-consuming process of passing a new bill to amend a statute. The main legal rule may be described in a general way in a statute (“An employer must pay at least the minimum wage as prescribed in the regulations”), and then detail is provided in the regulations. Whenever a statute includes the words “as prescribed,” it is signalling that regulations exist that fill in the detail associated with the legal rule. Both statutes and regulations can be found on government websites as well as on CanLII. The exercise at the end of this chapter focuses on searching for laws and associated regulations.
IV. Expert Administrative Tribunals Government statutes (and regulations) are enforced and administered by an army of inspectors, investigators, mediators, conciliators, expert administrative tribunals, and adjudicators employed by the government. We will meet many of these people and institutions throughout Parts III and IV. Sometimes, government inspectors proactively enforce laws by going out to workplaces and demanding that employers demonstrate their legal compliance. However, that is an expensive and time-consuming method of enforcement because of the large number of
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278 Part III The Regulatory Regime businesses in Canada. As a result, the regulatory standards model is mostly a complaint-based model; it depends on workers (and unions) or employers filing complaints alleging that a statute or regulation has been violated. Statutes include a process enabling people to file complaints, which initiates a government-led inquiry into whether the law has been violated. That inquiry often includes attempts by government employees to resolve the dispute without the need for expensive and time-consuming litigation. However, if the parties cannot resolve a complaint voluntarily, it may end up before an expert administrative tribunal. Tribunals are created by a statute for the purpose of administering and enforcing the legislation.20 The government may create a new tribunal or assign authority (or jurisdiction) over any statute to an existing administrative tribunal. In Ontario, for example, the Ontario Labour Relations Board has jurisdiction over a variety of statutes in addition to the Labour Relations Act, 1995, including the Employment Standards Act, 2000 and the Occupational Health and Safety Act. Tribunals are staffed by adjudicators who hear cases and write decisions, as well as mediators and lawyers who give legal advice to the adjudicators. The government appoints one chair to lead the adjudicative arm of the tribunal, along with a group of “vice-chairs” who conduct hearings and write decisions interpreting and enforcing the legislation. Unlike judges in the court system who are usually appointed for life, the chair and vice-chairs of tribunals are appointed for a limited time period, usually three to five years, with the possibility of renewal at the discretion of the government. The chair and vice-chairs are usually, though not always, lawyers with expertise in the field. We will read about decisions of tribunals in the remainder of this text. Governments create expert administrative tribunals for two principal reasons. The first reason is to ensure that the people administering the legislation have expertise in the field. Many judges lack expertise in employment-related matters because their backgrounds are in other areas of the law. In addition, the objectivity and neutrality of judges have long been questioned by employees, their advocates, and work law scholars, who have asserted that judges’ sentiments align more closely with the interests of employers than workers.21 Expert administrative tribunals staffed by professionals who have experience resolving employment-related disputes are expected to attract a higher level of respect and the confidence of all the parties that come before them.
Bernard Fishbein (left), chair of the Ontario Labour Relations Board, leads a hearing. Source: Steve Russell/GetStock.
complaint-based model: A statutory model that depends on people filing complaints alleging that their legal rights have been violated, which initiates a government-led investigation into whether there has been a violation of the statute. expert administrative tribunals: Decision-making bodies created by a government statute and given responsibility for interpreting and enforcing one or more statutes and any regulations pursuant to that statute.
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The second reason is to keep employment-related disputes from clogging up the courts. Disputes relating to the dozens of statutes in Canada that regulate employment are diverted to tribunals in the regulatory standards regime. The courts play a smaller role in the regulatory standards regime than in the common law regime we considered in Part II. That role is mostly to ensure that tribunals do not exceed the jurisdiction they have been granted by statute. The courts perform this role through a legal process known as judicial review (introduced in Chapter 1). A losing party before a tribunal can apply for judicial review of the tribunal’s decision and ask the court to ensure that the tribunal did not act beyond its statutory authority. In practice, most judicial review applications fail because courts grant tribunals a considerable amount of “deference” because they are staffed by experts in the field.
V. What Regulatory Standards Are of Interest in the Law of Work? Given the vast range of regulation that exists in Canada, how do we decide which laws are of interest to us in a text on the law of work? We need to know where our subject begins and ends. The law of work framework discussed in Chapter 2 recognizes the role of the state (government) as a lawmaker in different legislative categories: 1. Protective standards regulation (Chapters 18 – 24; see also online supplemental chapter, “Regulating Unemployment”). Governments enact regulatory standards legislation that is primarily aimed at protecting employees, who are assumed to be vulnerable. 2. Broader labour market regulation (Chapters 25 – 27; see also online supplemental chapters referenced on p. xxi in the preface of this book). Governments enact legislation that is not primarily concerned with protecting employees, but that nevertheless substantially impacts how labour markets operate in practice. 3. Collective bargaining legislation (Part IV, Chapters 28 – 38). Governments regulate the processes of unionization, collective bargaining, and dispute resolution processes applicable to unionized workplaces. We are obviously interested in regulation that is part of the government’s response to the imbalance of bargaining power in the employment relationship and designed to protect vulnerable employees (category one, protective regulatory standards, shown in orange in Figure 17.1). The statutory outputs in this category are those most commonly associated with the law of work: employment standards, occupational health and safety, workers’ compensation, employment insurance, and human rights. We are also interested in statutes in the broader legal subsystem that, while not primarily directed at protecting vulnerable employees, are nevertheless an important part of the story of how governments regulate labour markets (category two, broader labour market regulation, which is an output of the broader legal subsystem, shown in purple in Figure 17.1).22 Examples include immigration laws that restrict who can work in Canada; intellectual property laws that define who owns the product of work; insolvency laws that determine the rights of employees in relation to their struggling or defunct employers; pension laws; privacy laws; and trade laws that affect employment investment decisions and bargaining strategies.23 Some scholars have lumped the statutes in categories one and two together under the label “labour market regulation.”24
judicial review: The process through which a decision of an expert administrative tribunal is appealed to a court on the basis that the tribunal exceeded its authority (or jurisdiction) as defined in the statute that created it or that the tribunal’s decision was wrong. How much deference a court must give to the expert tribunal’s decision is a complex question that is considered in a field of law known as administrative law.
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280 Part III The Regulatory Regime FIGURE 17.1 The Boundaries of the Regulatory Regime THE WORK LAW SUBSYSTEM The Common Law Regime (Part II of the text) KEY ACTORS Employers • Individual employees
INTERNAL INPUTS Power • Values • Goals
KEY LEGAL INSTITUTION Judges/courts
RULE-MAKING PROCESSES Individual negotiations • Civil litigation
OUTPUTS Employment contracts • Torts • Workplace norms
The Regulatory Regime (Part III of the text, Chapters 18-24) KEY LEGAL INSTITUTIONS Government inspectors • Administrative tribunals • Judges/courts
RULE-MAKING PROCESS Legislative process
OUTPUTS Protective regulatory standards legislation
The Collective Bargaining Regime (Part IV of the text) KEY ACTORS Government Employers and their associations • Employees and their associations
EXTERNAL INPUTS
ECONOMIC AND MARKET SUBSYSTEM Labour and other market forces at local, regional, and global levels
INTERNAL INPUTS Power • Values • Goals
RULE-MAKING PROCESSES Legislative process Collective bargaining, strikes, and lockouts • Arbitration • Civil litigation
BROADER LEGAL SUBSYSTEM Legal rules governing tax, trade competition, immigration, business associations, welfare, property, and constitutional law (among other fields) (Part III of the text, Chapters 25-27, online supplemental chapters)
KEY LEGAL INSTITUTIONS Labour tribunals • Labour arbitrators • Judges/courts
POLITICAL SUBSYSTEM Party politics, political values, and political systems
OUTPUTS Collective bargaining legislation • Collective agreements • Torts/labour injunctions • Workplace norms
SOCIAL, CULTURAL, AND RELIGIOUS SUBSYSTEM Social and cultural norms, religion, family, language, social group dynamics, and identity politics (class, race, gender, etc.)
EXTERNAL FEEDBACK LOOP
INTERNAL INPUTS Power • Values • Goals
INTERNAL FEEDBACK LOOP*
KEY ACTOR Government
ECOLOGICAL/ ENVIRONMENTAL SUBSYSTEM Climate, access to natural resources, geography
* Legal rules produced by each of the three regimes of work law feed back into the subsystem as information and experience and can provoke changes and adaptations by the actors in all three regimes, which can produce new outputs.
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We will explore the outputs of the first and second legislative categories in Part III and in several online supplemental chapters (referenced on p. xxi in the preface of this book). The outputs of the third legislative category will be examined in Part IV. Figure 17.1 depicts the boundaries of the regulatory standards regime of interest to us in Part III, based on the law of work framework.25
VI. Chapter Summary In Part III of the text, we will explore the ways in which Canadian governments regulate work. They do so to address perceived inadequacies in the outcomes produced by the common law regime, which we explored in Part II of this text. This chapter provided an introduction to some key foundational components or elements of the regulatory standards regime.
QUESTIONS AND ISSUES FOR DISCUSSION
1. Why do governments enact employment legislation? 2. What is the difference between a statute and a regulation? 3. Describe the process through which a law is enacted in Canada. 4. What categories of employers are governed by protective employment legislation passed by the federal government in Ottawa? 5. What type of legal body is authorized to interpret and enforce statutes and regulations in Canada? What is the primarily role of courts in the regulatory regime?
APPLYING THE LAW 1. Would federal or provincial employment standards and human rights legislation apply to the following workplaces? a. Employees of a branch of Scotiabank in Saskatoon, Saskatchewan b. Employees of a Starbucks store in Winnipeg, Manitoba
c. Mail delivery people employed by Canada Post d. Employees of the Toronto Transit Commission (TTC) e. Employees of WestJet Airlines f. Employees of an Ottawa-based bus company that has a small percentage of routes that regularly cross the provincial border into Quebec
EXERCISE The Internet has made it much easier today than it was in the past to find and access government regulations and statutes. In this short exercise, you are asked to locate a provincial employment standards statute and the associated regulations enacted pursuant to it using CanLII. 1. Go to the CanLII home page: . 2. Under “Primary Law,” select the province of your choice. 3. You will now see a list of links applicable to that province under the headings “Legislation,” “Courts,” and “Boards and Tribunals.” Select either the link “Statutes” or the link to “Regulations” under the heading “Legislation.” 4. You can search in one of two ways: in the search box, type “employment standards” or select the letter E (for “employment standards”) and select the province’s employment standards statute. (Note: For Quebec’s Act Respecting Labour Standards, look under the letter L, where the statute is listed as Labour Standards, Act Respecting.) 5. Near the top of the employment standards statute webpage, under the title of the statute, select the tab labelled “Regulations.” How many regulations are listed?
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NOTES AND REFERENCES 1. D. Beatty, Putting the Charter to Work: Designing a Constitutional Labour Code (Montreal, QC: McGill-Queen’s University Press, 1987) at 22. See also M. Thomas, Regulating Flexibility: The Political Economy of Employment Standards (Montreal, QC: McGill-Queen’s University Press, 2009) at 30. 2. H. Arthurs, Fairness at Work: Federal Labour Standards for the 21st Century (Ottawa, ON: Human Resources and Development Canada, 2006) at 5. 3. Ibid. at 47. 4. See, for example, Employment Standards Act, S.O. 2000, c. 41, s. 5(1): “no employer or agent of an employer and no employee or agent of an employee shall contract out of or waive an employment standard and any such contracting out or waiver is void.” See, for example, Machtinger v. HOJ Industries, [1992] 1 SCR 986 (a contract clause requiring less notice of termination than the ESA mandates is void). 5. See, for example, Ontario’s ESA, s. 5(2): “If one or more provisions in an employment contract or in another Act that directly relate to the same subject matter as an employment standard provide a greater benefit to an employee than the employment standard, the provision or provisions in the contract or Act apply and the employment standard does not apply.” For examples of the application of “greater benefits,” see Stan Seidenfeld Professional Corporation v. Huihua (Linda) Peng, 2016 CanLII 26939 (Ont. LRB); and Re Queen’s University and Fraser et al., 1985 CanLII 2260 (Ont. Sup Ct J). 6. Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 SCR 27.
11. Toronto Electric Commissioners v. Snider, 1925 CanLII 331 (UK JCPC). 12. Canada, Commission on the Review of Federal Labour Standards (citing statistics from 2005). 13. See the discussions in Construction Montcalm Inc. v. Min. Wage Com., [1979] 1 SCR 754 (a company retained to build runways at a Montreal airport is provincial, since its ordinary business is construction); and Northern Telecom v. Communications Workers, [1980] 1 SCR 115. 14. Reference re Application of Hours of Work Act (BC) to Employees of CPR in Empress Hotel, Victoria, [1950] AC 122. 15. Validity and Applicability of the Industrial Relations and Disputes Investigation Act, [1955] SCR 529. 16. For a good summary of the law-making process at the federal level, see Canada, Privy Council, “Guide to Making Federal Acts and Regulations,” online: . See also Legislative Research Service, Legislative Assembly of Ontario, “How an Ontario Bill Becomes Law,” online (pdf): . 17. They are called a member of Parliament (MP) at the federal level or a member of provincial Parliament (MPP) at the provincial level (this title varies across the provinces; for example, in Quebec, elected representatives are called members of the National Assembly, and in Alberta they are called members of the Legislative Assembly).
7. Constitution Act, 1867, 30 & 31 Vict., c. 3, reprinted in RSC 1985, Appendix II, No. 5, s. 91.
18. Employment Standards Act, RSBC 1996, c. 113.
8. Johannesson v. Municipality of West St. Paul, [1952] 1 SCR 292.
20. For example, the Ontario Labour Relations Board (Ont. LRB) was created by s. 2 of the Labour Relations Act of 1948 to administer that Act. Section 110 of today’s Ontario Labour Relations Act states simply that “[t]he board known as the Ontario Labour Relations Board is continued” and then describes in detail the powers of the board. For a history of the Ont. LRB, see Ontario Labour Relations Board, “About Us,” online: .
9. Constitution Act, 1867, s. 92. 10. See, for example, Re Ottawa-Carleton Regional Transit Commission and Amalgamated Transit Union, Local 279 et al., 1983 CanLII 1936 (Ont. CA) (an Ottawa-based bus company that regularly crosses into Quebec is federally regulated, even though the percentage of work done in Quebec was less than 5 percent of the company’s business); and Re Tank Truck Transport, [1963] 1 OR 272 (CA) (a trucking company is federally regulated when 6 percent of its business derives from regular trips outside of the province). Contrast with Agence Maritime Inc. v. Conseil Canadien des Relations Ouvrières et al., [1969] SCR 851 (the fact that boats crossed provincial borders three times in a twoyear period was insufficient to bring the company under federal jurisdiction).
19. Ibid.
21. H. Arthurs, “National Traditions in Labor Law Scholarship: The Canadian Case” (2002) 23 Comp Lab L & Pol’y J 645 at 660; and J. Fudge & E. Tucker, Labour Before the Law (Toronto: Oxford University Press, 2001). 22. Demarcating category one and category two laws is not a precise science. Some types of statutes could be placed into either category. For example, although human rights statutes govern discrimination in the employment
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Chapter 17 Introduction to the Regulatory Regime 283 relationship, they also regulate discrimination in housing and the provision of services to the public (among other areas). Therefore, human rights laws are not entirely concerned with the employment relationship and protecting vulnerable workers. However, we treat human rights legislation as an output of the work law subsystem because it is a fundamental component of government’s legislative strategy to protect workers and pursue “decent” working conditions. Moreover, the vast majority of human rights complaints in Canada relate to alleged discrimination in the employment relationship. For example, nearly threequarters of complaints (74 percent) heard by the Human Rights Tribunal of Ontario in 2013 – 14 were related to employment: see Social Justice Tribunals Ontario, “2013 – 14 Annual Report,” online: . 23. H. Arthurs, “Charting the Boundaries of Labour Law: Innis Christie and the Search for an Integrated Law of Labour Market Regulation” (2011) 34 Dal LJ 1 at 14-15. 24. Ibid. See also the discussion in D. Doorey & R. Dukes, “Labour Law and Its ‘Last Generation,’” in P. Zumbansen, D. Drache, & S. Archer, eds, Liber Amicorum Festschrift: In Tribute to Harry Arthurs (Montreal, QC: McGill-Queen’s University Press, 2017) 307. 25. The question of where the boundaries of work law should be drawn is one of the great, enduring debates in labour law scholarship. My approach in this text is heavily influenced by Arthurs, supra note 23.
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C H A P T E R 18
Wage Regulation and Pay Equity LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 285 II. The Scope of Wage Regulation 286 A. Wage Regulation Applies to Employment Contracts 286 B. Many Employees Are Excluded from Wage Regulation 286 C. Wage Laws Vary by Occupation 287 III. Minimum Wage, Wage Freeze, and Maximum Wage Legislation 288 A. Minimum Wage Legislation 288 B. Wage Freeze or Restraint Legislation 290 C. Maximum Wage Legislation 292 IV. Regulating Wage Discrimination 292 A. Equal Pay for the Same Job (Equal Pay Laws) 294 B. Equal Pay for Equal Work and Equal Value 295 V. Chapter Summary 299 Questions and Issues for Discussion 300 Exercise 300 Notes and References 301
• • • • •
Explain why governments regulate wages. Describe the different types of wage regulation in Canada. Discuss the origins of Canadian minimum wage regulation. Describe the profile of minimum wage earners in Canada. Describe debates over the effectiveness of a minimum wage as a poverty-reduction strategy. • Explain how governments regulate wage freezes and impose wage restraints, and describe some of the challenges of doing so. • Discuss recent debates about whether laws should be enacted to regulate very high wages as a way to address growing income inequality. • Explain the different approaches used in Canada to address the persistent gender wage gap.
I. Introduction At different times, in different places, and for a variety of public policy reasons, governments around the world have felt the need to regulate wages. For example, in our discussion of the old British master and servant law in Chapter 5, we learned about early legislation that fixed wages after the Black Death killed millions in Europe during the 14th century and left a vast labour shortage. Wage-fixing laws were implemented to ensure workers could not use their bargaining leverage to drive wages up. Modern Canadian governments have also occasionally used wage freeze or wage-fixing legislation to tackle wage inflation or reduce the government’s payroll. But the most common forms of wage regulation today focus on protecting a wage floor—a minimum wage to prevent employers from using their bargaining power to drive wages too far down—and on addressing gender wage discrimination. Canadian governments have demonstrated little confidence that unregulated labour markets will produce acceptable wage levels. The neoclassical perspective (see Chapter 3), which favours wage setting by unregulated market forces and negotiations between employers and individual employees, has not won the day. Yet many aspects of wage regulation remain controversial. Do minimum wage laws actually reduce poverty? Should governments interfere in labour markets by fixing wage rates? Should governments impose a “maximum wage” to slow growing income inequality in Canada? Should governments attempt to use statutory intervention to close the
285
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286 Part III The Regulatory Regime gender wage gap, and if so, what should those laws look like and will they work? These are some of the most fascinating debates within the regulatory standards regime, and we begin to consider them in this chapter.
II. The Scope of Wage Regulation Wage laws can be difficult to understand because they rarely apply uniformly. There are exclusions, special rules, and varying occupational rates; sometimes mandatory wage rates are found in statutes, other times they are in regulations. Let’s begin our discussion with a quick overview of the scope of wage regulation.
A. Wage Regulation Applies to Employment Contracts Wage regulation governs employment contracts. Governments generally do not regulate the price at which independent contractors sell their services. We considered the difference between an employee and an independent contractor in Chapter 4. If a worker does not meet the definition of an employee in the statute, then the laws governing wages do not apply. Independent contractors can agree to work for $2 per hour if they want, even if the minimum wage is $10 per hour, since employment standards legislation does not apply to them.1 As discussed in Chapter 4, the recent rise of “gig” work and other forms of non-standard work characterized by workers who exhibit many indications of entrepreneurship, but who nevertheless remain economically precarious, has led to policy debates in Canada and abroad about the continued appropriateness of limiting wage protections to “employees.”2
B. Many Employees Are Excluded from Wage Regulation Even if a worker meets the definition of an employee, they may nevertheless still be excluded from all or part of wage regulation. Exclusions from wage regulation can apply to an entire occupation (e.g., lawyers or real estate agents) or to a specific job (e.g., wild boar farmer). For example, in Ontario a person employed on a farm whose employment is directly related to the production of ratites or wild boar is excluded from the minimum wage law, but not employees on a farm that raises alpacas!3 In Alberta, farm employees, extras in films, and real estate brokers, among others, are not entitled to the provincial minimum wage.4 Articling students training to be lawyers are usually excluded from minimum wage laws, as are many other workers performing mandatory on-the-job training necessary to qualify for professional status.5 Students working at a business as part of a practicum or experiential education component of their college or university program are often excluded from employment standards legislation and, therefore, are not covered by wage laws.6 Each Canadian jurisdiction has its own list of wage law exemptions, which can make wage regulation challenging for employers and employees alike to sort out. As noted in Chapter 4, a recent challenge in Canadian employment law has been the mischaracterization of employees as “unpaid interns” or “unpaid trainees” by some employers.7 Administrative tribunals have resisted this strategy by ruling that there is no legal category in the regulatory regime of “unpaid” intern or trainee, other than students working as part of an educational program.8 Ontario recently passed a law that makes it an offence for an employer to treat “a person who is an employee of the employer as if the person is not an employee” under employment standards gender wage gap: The difference in earnings between males and females. regulations: Government-made detailed rules introduced as a supplement to, and pursuant to authority created in, a statute. For example, the Ontario Employment Standards Act, 2000 requires that employers pay at least “the prescribed minimum wage,” but does not say what that wage rate is. That act gives the government the right to introduce regulations (in s. 141), and one regulation (O. Reg. 285/01) sets out the precise amount of the minimum wage.
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Chapter 18 Wage Regulation and Pay Equity 287
legislation. This law similarly attempts to address the growing problem of employers seeking to avoid wage laws by artificially rebranding their employees as “non-employees.”9
C. Wage Laws Vary by Occupation A final point to note about the scope of wage regulation is that different rules can apply to different occupations. For example, employment standards laws usually fix a general minimum wage rate that applies to most employees, and then list occupations that require rates different from the general rate. Some occupations may be entitled to a fixed minimum wage, such as “live-in home support workers” in British Columbia, who are entitled to a minimum wage of at least $113.50 for each day or part day worked.10 Some occupations are entitled to a minimum wage that is lower than the standard rate, such as liquor servers.11 The rationale for permitting liquor servers to be paid a lower minimum wage is that they earn tips, although curiously most provinces do not guarantee that liquor servers be permitted to keep their tips. As a result, some restaurants and bars collect (and sometimes take) a portion of tips earned and then create a tip pool that is divided among other employees.12 This practice is known as tipping out. Some provinces, including New Brunswick and Prince Edward Island, have prohibited employers from taking tip money from servers.13 It is worth noting, because lots of people misunderstand this point, that employees earning a salary (and not employed in an occupation excluded from the minimum wage) are also entitled to earn at least the minimum wage. Their hourly wage rate, which must be at least as much as the minimum wage, is determined by dividing their salary by the number of hours worked. The minimum wage for some occupations is established based on piecework pay. For example, in British Columbia, an apple picker is entitled to at least $17.06 per 27.1 cubic foot bin of apples picked, while the minimum rate for a Brussels sprout picker is $0.163 per pound. How is that for a detailed law? To make matters even more challenging, many of the numerous special rules and exemptions are buried deep in regulations, which can make them difficult to locate. This quick summary is enough to give you a flavour for the complexities that often arise when studying wage laws. The exercise at the end of this chapter focuses on how to locate wage regulation rules. The goal of this chapter is to introduce key areas of wage regulation in Canada and some of the central debates that shape wage laws. It would be impossible in the space we have to describe every law in Canada applicable to wages.14 Thankfully, Canadian governments have prepared helpful guides describing many of the laws, which you can find on Ministry of Labour websites, as described in Box 18.1.
BOX 18.1 » TALKING WORK LAW Making Use of Government Resources Every Canadian government produces documents to explain their laws. These documents are a great place to start if you have specific questions about work regulation. To access this content, do an Internet search of [“Ministry of Labour” and
“employment standards” and [your province]. For example, if I do this search for Ontario, I find a link to the Ontario Ministry of Labour website that includes links to a large variety of guides, resources, and calculation tools.
tipping out: The practice by some restaurant or bar employers of collecting (and sometimes taking) a portion of servers’ tips and dividing the tip pool among other employees. piecework pay: Wages calculated based on the number of pieces produced by an employee.
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288 Part III The Regulatory Regime
III. Minimum Wage, Wage Freeze, and Maximum Wage Legislation Wage laws are always driven by some underlying public policy concern. A government might be worried that wages are too low or too high, given a range of public policy objectives. This section explores three key types of wage regulation: minimum wage legislation, wage freeze or restraint legislation, and maximum wage legislation.
A. Minimum Wage Legislation In the early 20th century, when Canadian governments first began to seriously contemplate enacting mandatory wage floors, both unions and the business community resisted. Business leaders argued that a minimum wage would cause layoffs, attract a flood of foreign workers (which would increase unemployment), and encourage laziness in workers, who would no longer work as hard to win raises from their employers.15 Many union leaders believed that a statutory minimum wage would either act as a downward pressure on the higher rates that unions had bargained for their members or reduce demand for unionization. They preferred to leave wage setting to collective bargaining between unions and employers. However, unions generally did support minimum wage laws for women, whom they considered to be especially susceptible to exploitation at the hands of employers.16 Unions also supported a minimum wage for women to protect their male members’ wages from cheap competition. In the years after World War I, by which time women had started to work in factories doing “men’s work,” unions lobbied for laws to ensure “equal pay for equal work” between men and women. Employers’ groups too were less hostile to a minimum wage for women workers, provided that it was fixed very low. The paternalistic notion that men could look after themselves, sometimes with the help of unions, but that women required government protection shaped early minimum wage laws in Canada. The earliest minimum wage law in Canada appeared in the Alberta Factories Act of 1917.17 For a 10-hour day, it required that employees be paid at least $1.50, a very low amount even for 1917. Other provinces quickly followed. In 1918, Manitoba and British Columbia enacted minimum wage legislation, followed by Saskatchewan and Quebec (1919), and Ontario, Nova Scotia, and Alberta (1920). Prince Edward Island was the final holdout; it did not enact minimum wage legislation until 1959. Early wage legislation applied to women, but not to men or boys. Initially, the minimum wage level was usually set by wage-setting boards, which fixed rates by industry and, sometimes, geographical location, taking into account the local cost of living.18 Not until 1925 was minimum wage legislation finally extended to male workers, first in British Columbia and then later in other jurisdictions.19 In the beginning, male minimum wage rates were often higher than female minimum wage rates because it was assumed that men were supporting a family while women were just earning “pin money.”20 The gender gap in minimum wage laws did not disappear completely in Canada until the early 1970s. Today, every Canadian jurisdiction has a minimum wage that applies equally to men and women. Federally regulated employees are governed by the minimum wage applicable in the province or territory in which they perform their work. It makes little sense to list those wages here, since they regularly change, but it is easy to find the rates with a basic Internet search.21 At the time of writing in fall 2019, the standard minimum hourly wage rates varied in Canada from a high of $15 in Alberta to a low of $11.06 in Saskatchewan. In 2017, 10 percent of Canadian employees earned the minimum wage.22 A profile of those employees is summarized in Table 18.1. Some provinces still use minimum wage boards that periodically recommend minimum wage rates to the government, while others rely on the government to decide the matter without a board. Ontario, Saskatchewan, Nova Scotia, and Yukon link the minimum wage to the consumer price index, an economic formula that estimates the cost of living.23 Whether the minimum wage is good policy has been debated for over a century. Box 18.2 summarizes some of the main arguments in the debate.
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Chapter 18 Wage Regulation and Pay Equity 289
TABLE 18.1 Percentage Distribution of Minimum Wage Workers in Canada, March 2018 Percentage of Minimum Wage Workers in This Category Age Group
Life Arrangement
Sex
Student, Age 15–24
31.6
Not Student, Age 15–24
17.2
Age 25–34
16.3
Age 35–54
21.8
Age 55–64
9.6
Age 65 and over
3.6
Age 15–24, living with parents
33.2
Age 15–64, single lone parent or in single-income couple
16.6
Age 15–64, in a dual-earner relationship
18.2
Women, Age 15–24, living with parents
54.1
Women, Age 15–64, single lone parent or in single-income couple relationship
60.4
Women, Age 15–64, in a dual-earner relationship
65.8
Source: R. Morisette & D. Dionne-Simard, “Recent Changes in the Composition of Minimum Wage Workers” (13 June 2018), online: Statistics Canada, .
BOX 18.2 » TALKING WORK LAW Is the Minimum Wage a Good Policy? Although minimum wage laws in some form have been part of the Canadian employment law landscape for a century now, the question of whether a statutory mandatory wage floor is a good labour policy remains among the most hotly contested questions in labour policy. On one side of the debate is the anti-minimum wage camp, armed with the neoclassical perspective’s economic claim (described in Chapter 3) that a statutory minimum wage causes unemployment by driving wages above market rates.* Moreover, this camp argues, the negative unemployment effects are felt mostly by the very people the law intends to help—lowskilled workers, the young and old, and new immigrants—since they are the first ones to lose their jobs when the minimum wage is implemented. The Canadian Manufacturers’ Association made these arguments in 1917 when Canada was first debating whether to enact minimum wage laws, and minimum wage opponents present the same arguments today whenever an increase is being considered.† This camp argues too that minimum wage laws are a “blunt instrument” for alleviating
poverty, because a high proportion of people receiving the minimum wage are not poor—they are students living with their parents or workers who have spouses earning more than the minimum wage.‡ The pro-minimum wage camp relies on different economic studies that purport to show that minimum wage laws help the poor break from the cycle of poverty and reduce income inequality by increasing the disposable income of the working poor.§ This camp doubts that raising the minimum wage has much impact on overall employment levels. Canadian economist Jim Stanford captures this argument succinctly when he claims “the effect of minimum wages on employment is probably a wash.”# Since economists cannot agree on the effects of minimum wage laws on employment levels, the prominimum wage camp looks beyond economics and relies on basic fairness and justice arguments. They assert that a wealthy, modern country such as Canada should strive to pay workers a living wage that promotes self-dignity and decency, and that a minimum wage law is a key aspect of that
living wage: Different measures exist but, in general, it is a measure of the wage level that would be necessary to enable a full-time employee to earn enough money to meet basic needs, such as food, clothing, child care, and shelter.
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290 Part III The Regulatory Regime policy. Professor Harry Arthurs (York University) captured this sentiment in his recent report on federal employment standards: In the end … the argument over a national minimum wage is not about politics and economics. It is about decency. Just as we reject most forms of child labour on ethical grounds, whatever their economic attractions, we recoil from the notion that in an affluent society like ours good, hard-working people should have to live in abject poverty.**
1995). See also D. Doorey, “The Two Sides of the Minimum Wage Debate: Friedman v. Kennedy,” online: Law of Work (blog), . # J. Stanford, “The Non-Simple Economics of the Minimum Wage,” online, The Progressive Economics Forum (blog) (February 22, 2011): . ** H. Arthurs, Fairness at Work: Federal Labour Standards for the 21st Century (Ottawa: Human Resources and Skills Development Canada, 2006) at 247. See also the work of Toronto-based Workers’ Action Centre, which advocates for a higher minimum wage: .
* See R. Posner, Economic Analysis of Law, 5th ed (New York: Aspen, 1998) at 361; and A. Davies, Perspectives on Labour Law, 2nd ed (Cambridge, UK: Cambridge University Press, 2009) at 139-42. † M.E. McCallum, “Keeping Women in Their Place: The Minimum Wage in Canada, 1910-25” (1986) 17 Lab 29 at 34. For contemporary representations of these anti-minimum wage arguments, see the regular reports of the neoclassical-inspired think tank the Fraser Institute, including A. Karabegovic & N. Veldhuis, “Minimum Wages Don’t Help the Poor,” Fraser Forum, May/June 2011. ‡ See the discussion of the Canadian literature in M. Gunderson, Minimum Wages: Issues and Options for Ontario (Toronto: Ministry of Finance, February 2007), online: . § An often-cited study that found little to no employment-level impacts of small minimum wage increases is D. Card & A. Krueger, Myth and Measurement: The New Economics of the Minimum Wage (Princeton, NJ: Princeton University Press,
Tim Hortons’ employees demonstrate in Cobourg, Ontario, in response to a 2018 letter from a franchise owner stating that employees will have reduced benefits and lose paid breaks as a result of minimum wage increases in Ontario.
Governments frequently express concern over a minimum wage that is higher than the rate in effect in other “competing” jurisdictions for fear that businesses could pack up and move. In this way, the political subsystem and the economic and market subsystem interact in complex ways that affect debates about minimum wage laws.
B. Wage Freeze or Restraint Legislation
A wage freeze is a practice (or law) that holds wages at their existing level for a period of time. In the private sector, employers often impose wage freezes, and when they do, unhappy workers can respond by quitting. In a unionized workplace, the employer would need the union and employees to agree to a wage freeze, and workers could strike to resist one. Governments mostly stay out of these disputes and let private sector employers work things out with their employees (and their unions). In 1975, the Liberal government, led by Prime Minister Pierre Elliott Trudeau, imposed wage controls on private sector companies with 500 or more employees and construction companies as a strategy to tackle high inflation.24 However, that was an unusual exception to the more general rule that Canadian governments do not impose wage restraints on the private sector. wage freeze: A law or employer practice that holds wage rates at existing levels for a period of time.
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The public sector is a different matter. Governments have imposed wage freezes or controls on their own employees on a fairly regular basis over the years. Freezing wages of non-unionized public sector employees is easy enough: the government can just refuse to include money for raises in its budget, order its managers not to grant any raises, or pass wage-fixing legislation that expressly freezes wages or restrains the level of raises. Consider the federal Public Sector Compensation Act of 1991 as an example of wage freeze legislation: [N]o employee shall be entitled to the incremental increases, including those based on the attainment of further qualifications or the acquisition of skills, merit or performance increases, in-range increases, performance bonuses or other similar forms of compensation that would, but for this subsection, form part of their compensation plan, during the period of twenty-four months beginning on the day on which this subsection comes into force.25
Sometimes governments do not freeze wages but legislate a fixed-wage increase instead. For example, the 2009 federal Expenditure Restraint Act fixed wage increases for some government employees at a rate of 1.5 percent for three consecutive years.26 The process of legislatively freezing wages is trickier when public sector workers are unionized. Their wages are set by a collective agreement that is bargained on their behalf by their union. Therefore, if a government wants to freeze its unionized employees’ wages, it must bargain a wage freeze with the union, legislatively void a collectively bargained raise, or enact a law stripping the union of the right to bargain regarding wages. Any one of these routes can prove challenging for a government. Unionized workers rarely voluntarily agree to a wage freeze in bargaining, so a government demand for a wage freeze usually provokes the threat of a labour stoppage (a strike or a lockout), which neither the government nor the employees want. As a result, collectively bargained wage freezes are rare. More often, a government legislates a wage freeze or a cap on raise levels. Doing so angers unions and unionized employees, harms workplace morale, and can provoke disruptive worker protests. Moreover, for reasons we will explore in greater detail in Part IV the Canadian Charter of Rights and Freedoms’ protection of “freedom of association” and the right to collective bargaining imposes some limits on the right of governments to impose wage freezes or restraints on unionized employees. The Charter does not necessarily prohibit statutory wage freeze or restraint legislation, but it does impose limitations on the right of governments to take this course of action.27
BOX 18.3 » TALKING WORK LAW The Internal Feedback Loop: How Legislative Wage Freezes Can Encourage Unionization In Chapter 2, we described the internal feedback loop, part of the work law subsystem. The internal feedback loop demonstrates how the three work law regimes interact and influence one another. An example is provided by a decision of the Ontario government to freeze the wages of its non-union employees but not its unionized employees. In 2009, the Ontario government froze the wages of all of its non-union employees, while it requested that its unionized employees voluntarily accept a wage freeze, which did not happen. Some of its unionized employees later received raises that had been collectively bargained or awarded by interest arbitrators. This outcome caused resentment among many non-union employees whose wages had been frozen. Some of these non-union government employees responded by joining unions themselves, an outcome that surely
was unintended by the Ontario government.* The output of the regulatory standards regime (wage freeze legislation targeting only non-union government employees) provoked a response by some non-union workers affected by the wage freeze that included joining unions to have their working conditions determined under the collective bargaining regime rather than a combination of the common law regime and the regulatory standards regime. * K. Howlett, “Ontario Health-Care Workers Unionize in Face of McGuinty Wage Freeze,” Globe and Mail (2012), online: .
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292 Part III The Regulatory Regime
C. Maximum Wage Legislation While reasonable people can disagree on whether it achieves its stated purpose, it is clear that minimum wage laws are intended to reduce poverty among the working poor and restrict competition based on very low wages. It is meant to protect vulnerable workers who are deemed incapable of protecting their own economic interests because of a lack of bargaining power. Workers who are at the other end of the wage scale—the rich and powerful—present a different sort of challenge. Highly paid executives are certainly not vulnerable, and they usually have considerable bargaining power. Therefore, while low wages have long been considered a social and economic problem requiring state intervention in the form of statutory wage floors, high wages have not attracted much government attention. High wages have not been completely ignored, though. Salary disclosure laws for executives and public sector workers were once believed to be a means of applying downward pressure on high salaries.28 However, some studies indicate that disclosure laws actually have an inflationary impact on salaries, because workers use the information to bargain up their salaries.29 Recently, growing income inequality and the ballooning gap between executive pay and average worker pay have led to calls for new forms of maximum wage legislation.30 In Canada, the ratio of CEO pay to average workers’ pay was about 30 to 1 in the 1970s. By 2016, it was 209 to 1.31 This concentration of wealth is an indication of economic inequality, yet it is not obvious how work law might produce a more egalitarian distribution of income. Switzerland recently held a referendum on a proposed law that would restrict CEO compensation to a ratio of 12 to 1 in relation to the wage of the lowest-paid employee, but voters rejected it.32 The United States passed a law in 2010 that requires public corporations to report the ratio of their CEO’s total compensation to the pay of the median employee.33 No mandatory compensation ratio laws exist in Canada yet. However, some Canadian governments have recently passed laws that regulate the compensation levels of executives of public sector corporations.34
IV. Regulating Wage Discrimination Female employees earn less than male employees. They always have. In 1911, women earned about 53 percent of what men earned. By 2018, that gender wage gap had shrunk and women earned about 87 percent of what men earned, according to Statistics Canada.35 These numbers are based on a comparison of average wages for a full-time worker. If you dig deeper, you find a variety of variances based on occupation, education level, employment status (full time versus part time), union status, family status, and age, among other factors. For example, the wage gap for women who have children exceeds that for childless women, suggesting that a “child wage penalty” exists in Canada.36 Women with a post-secondary education in Canada earn on average only 63 percent of what similarly educated men earn.37 A significant racial wage gap exists in Canada, too. A study of Ontario wages found that racialized men earn about 74 percent of what non-racialized men earn, and racialized women earn about 84 percent of what non-racialized women earn. For first-generation immigrants, the gap is even wider: racialized women earn 47 cents for every dollar non-racialized men earn.38 Disabled workers also earn considerably less than able-bodied workers. Historically, blatant wage discrimination, such as separate wage schedules for men and women, was either condoned by Canadian governments or, in the case of early minimum wage laws that fixed women’s wages lower than men’s, expressly legislated. Today, legislation that directly discriminates in wage levels is rare, though some examples still exist. For example, in
statutory wage floor: A law that fixes a minimum wage below which an employer cannot pay an employee. racial wage gap: The difference in earnings between the dominant racial group in a society and racialized groups.
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Saskatchewan it is still permissible for employers to pay disabled workers less than able-bodied workers in certain circumstances, presumably on the theory that employers will not hire them otherwise.39 Human rights statutes have long prohibited employers in Canada from discriminating in wages based on race, ethnicity, disability, gender, and other designated grounds (see Chapter 21). These statutes discourage the most blatant types of direct wage discrimination. However, they have proved inadequate for addressing less obvious forms of wage discrimination, such as systemic discrimination that perpetuates wage differences. Human rights legislation is complaint based, so it requires employees to learn their legal rights, file a complaint against their employer (which few do), and prove that their lower pay rate is related to discrimination on a prohibited ground listed in the legislation. These hurdles are difficult to overcome. Nowadays, the racial wage gap and the gender wage gap are mostly a result of occupational divisions in our labour markets and other non-discriminatory factors related to productivity differences (such as length of service, education, or work experience). For reasons we will discuss next, a bare human rights prohibition against discrimination in employment is ill-equipped to address the more complex causes of wage differentials. TABLE 18.2 Laws Used to Address Gender Wage Discrimination in Canada Type of Wage Discrimination Law
Example of Wage Discrimination It Covers
Where the Law Is in Effect
Equal pay laws: The employer must not maintain differential pay rates for men and women performing the same job, unless some other non-gender-related explanation exists for the difference.
A bank has two rates of pay for tellers, one for men and a lower rate for women.
All jurisdictions: This type of direct discrimination violates human rights statutes as well as employment standards and pay equity statutes.
Equal pay for equal work laws: The employer must pay the same wages to men and women who perform “substantially similar work”—work in which the evaluation score of each of the following factors is substantially the same: skill, effort, responsibility, and working conditions.
A female bank teller earns less than a male accounting clerk who works in the same office. The two jobs require substantially similar skill, effort, and responsibility, and share similar working conditions.
The private sector: All jurisdictions except Quebec and the federally regulated private sector.
Equal pay for work of equal value laws: Employer must identify male- and female-dominated jobs and then evaluate each job based on skill, effort, responsibility, and working conditions. If the total score (value) of a femaledominated job is equal or approximately equal to that of a higher-paying maledominated job, the employer must raise the wage of the female-dominated job.
A female-dominated job class of secretary earns less than a male-dominated job class of machine operator, even though their total aggregate job evaluation scores are approximately equal.
The private sector: The federally regulated private sector, Ontario, and Quebec.
The public sector: Alberta, British Columbia, Newfoundland and Labrador, and Saskatchewan.
The public sector: The federal level, Manitoba, New Brunswick, Nova Scotia, Ontario, Prince Edward Island, and Quebec.
systemic discrimination: Practices, behaviour, norms, or policies within an organization that may be unintentional and unobserved yet perpetuate disadvantages for certain individuals because of a personal attribute or characteristic (e.g., race, gender, age, disability, or religion). complaint-based statutes: Statutes that are enforced entirely or predominantly by means of individual complaints of statutory violations filed by victims.
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A. Equal Pay for the Same Job (Equal Pay Laws) Canadian governments have gone much further in their legislative efforts to address the gender wage gap than they have the racial wage gap and wage discrimination against disabled workers. It should be noted, though, that legal measures that reduce the gender wage gap could also affect the racial wage gap insofar as racialized groups are overrepresented in “traditionally femaledominated jobs.” A law that raises wages in those jobs would benefit all employees in those jobs.40 Table 18.2 summarizes the three models of laws enacted in Canada to address gender wage discrimination over the years. We will discuss each, beginning with the most straightforward (and limited) model: equal pay laws. As noted earlier, gender wage discrimination was once official government policy in Canada. Minimum wage laws fixed female wages at a lower level than male wages on the assumption that men were supporting families and women were just earning “pin money.” However, in 1951, Ontario enacted the Female Employees Fair Remuneration Act, which banned blatant gender wage discrimination, and other Canadian jurisdictions soon followed. These equal pay laws worked well enough in addressing direct gender wage discrimination, such as when an employer adopted a two-tier wage grid divided purely on the basis of gender. A bank could no longer have one wage for male tellers and a lower wage for female tellers. Explicit gender-based wage grids have (we will assume) been abolished in Canada. However, the explanation for the persistence of a gender wage gap is far more complex than just blatant sexism. Economists have observed that women tend to “crowd” into relatively lower-paying jobs (e.g., retail, sales, and other service sector jobs; clerical work; and child care), and more often than men they tend to select jobs that involve lower risk, less travel, and fewer working hours (all factors that tend to be associated with lower wages).41 The segregation of women and men into different types of jobs is called occupational crowding, and the influx of women into lowerpaying jobs lowers their wages even further.42 Since more women are employed in lower-paying job sectors, it is hardly surprising that women’s wages would on average be lower than men’s.43 Many women choose those lower-paying jobs to balance their paid jobs with their unpaid jobs in the home. Women shoulder a much greater responsibility for domestic work than do men.44 Although child care and other unpaid domestic work is essential to the functioning of all societies, it is largely ignored in economic measures of work activity because it is considered to be a non-market activity. Feminist law scholars (writing from the critical reformist perspective described in Chapter 3) have long argued that unpaid domestic work should be measured and valued as an economic activity in both our economic indicators (e.g., gross domestic product) and our legal doctrines.45 For example, in recent years, common law judges have begun to award injured women tort damages for “loss of homemaking capacity,” recognizing the economic value of unpaid work in the home.46 However, like most work laws, pay discrimination laws are directed at pay differentials based on gender discrimination in paid employment only. Wage equality laws can do little, if anything, to alter wage differentials based purely on differences in skill, training, education, and labour market supply. A surgeon will always earn more money than a retail store cashier because the skills, education, responsibility, and labour supply are so vastly different. The fact that the surgeon is male and the cashier is female does not signify improper wage discrimination. It makes sense that an employer would pay a male forklift driver with 15 years’ experience more than a female driver hired directly out of forklift school. A male equal pay laws: Laws or rules that require employers to pay women the same wage rate as men for “equal work” (which usually means “the same job”). occupational crowding: A term used to describe the segregation of women and men into different types of jobs. It is usually used to explain how women tend to be much more highly represented in lower-paying jobs (e.g., retail, sales, and other service jobs; clerical work; and child care) than are men.
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software designer with a PhD in computer science would expect to start at a higher pay rate than an employee, male or female, with no post-secondary education. Economists estimate that 85 to 90 percent of the gender wage gap is due to occupational crowding and other factors such as differences in education, training, and experience.47 The remainder of the wage gap is often attributed to wage discrimination: a difference in pay because of direct gender bias or systemic discrimination in which traditionally female jobs—“women’s work”—are undervalued relative to traditionally male jobs. More sophisticated laws were needed to tackle this discrimination.48
B. Equal Pay for Equal Work and Equal Value Equal pay laws that targeted gender-based, two-tier wage grids in the same job were not up to the task of tackling the more complicated problem of wage discrimination based on the undervaluing of “women’s work” more generally. Therefore, Canadian governments introduced two additional legal models to address the matter.
1. Equal Pay for Equal Work Laws (Comparable Worth) Equal pay for equal work (EPEW) requirements, which are found in either or both of employment standards or human rights legislation in Canada, require equal pay for “substantially similar work.” Americans refer to the EPEW model as the “comparable worth” approach to achieving equal pay between women and men. The EPEW model recognizes that sometimes women are paid less by employers because they work in traditionally female jobs that have been undervalued because of their gender dimension. EPEW laws are violated if a woman is paid less than a man who performs substantially the same kind of work for an employer in the same establishment. In order to determine whether two jobs are “substantially similar,” EPEW laws require an assessment of certain job evaluation criteria, which are usually skill, effort, responsibility, and working conditions, as Box 18.4 describes.49 If the two jobs are substantially similar in terms of these factors, and the woman earns less than the man, the law requires that the woman’s wage rate be increased to the man’s wage rate (a male employee’s wage cannot be reduced to achieve equality). However, there may be a limitation on how far back the order to pay covers, such as 12 months from the date the complaint was filed. The statutes also provide exceptions if employers can demonstrate that the different pay rate is due to a reason other than gender. The BC Human Rights Code language is typical. It says that a differential pay rate is not a violation of the code if it is based on “a factor other than sex” and that factor “would reasonably justify the difference.”50
BOX 18.4 » CASE LAW HIGHLIGHT Determining Whether Two Jobs Are “Substantially Similar” Re Leisure World Nursing Homes Ltd. and Director of Employment Standards 1980 CanLII 1681 (Ont. H Ct J) Key Facts: A collective agreement between Leisure World Nursing Homes Ltd. and the union provided a higher pay rate for orderlies compared with nurses’ aides employed at a private
nursing home. Orderlies’ jobs were staffed by men, while nurses’ aides’ jobs were staffed by women. Both jobs involved providing around-the-clock care to elderly patients. The job responsibilities were very similar, although the orderlies performed more heavy lifting of patients, whereas the nurses’ aides did more rehabilitative physiotherapy. The nurses’ aides filed a complaint under the equal pay for equal work provision
equal pay for equal work (EPEW): A statutory model that requires equal pay for men and women who perform “substantially similar work” in the same establishment.
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296 Part III The Regulatory Regime in the Ontario Employment Standards Act (s. 43 in the current act), alleging they were being paid less than the orderlies even though the two jobs were “substantially similar.” The employer argued that the jobs were not “substantially similar” because the greater amount of heavy lifting by orderlies required greater effort and the fact that the pay rates were the result of collective bargaining with a union meant that the difference in pay was due to a “factor other than sex.” Issue: Did the employer violate the EPEW requirement to pay female nurses’ aides and male orderlies equally for performing substantially similar work? Decision: Yes. The employment standards referee ruled that although the two jobs were not identical, they were substantially similar in terms of skill, effort, responsibility, and working
conditions. The Ontario Divisional Court agreed. Orderlies did not do heavy lifting every shift, while sometimes nurses’ aides were required to do heavy lifting. Overall, the effort required of the two jobs was “substantially similar.” The skill, responsibility, and working conditions were also substantially similar. The referee found that the wage differential was “on the basis of a stereotype misconception of the value of woman’s [sic] work.” The fact that the different wage rates were fixed through collective bargaining did not prove that the different wage rates were based on a “factor other than sex.” If employers and unions could avoid the EPEW requirement in the statute by simply bargaining different wage rates, they would be effectively contracting out of the Employment Standards Act, which is not allowed. The employer was ordered to raise the wages of the nurses’ aides to remedy the discrimination.
The EPEW approach has limited scope. It only allows for a comparison of jobs that require identical or “substantially similar” skill, effort, responsibility, and working conditions at a single workplace, where at least one man and one woman are employed in each job. It also tends to suffer from the deficiency noted earlier in the chapter related to complaint-based justice models—that is, it depends on a woman learning the complex legal rules related to EPEW laws and then having the means and willingness to file a complaint against her employer. Economists have found that the EPEW model has had virtually no impact on the gender wage gap, despite the fact that EPEW laws have been in existence in Canada for half a century.51
2. Equal Pay for Work of Equal Value Laws (Pay Equity) Equal pay for work of equal value laws, or pay equity, are designed to tackle the systemic wage discrimination in female-dominated jobs, a matter not addressed by the EPEW model. The pay equity model requires that women and men receive equal pay for work of “equal value.” Only seven Canadian jurisdictions have introduced pay equity legislation (the federal jurisdiction, Ontario, Quebec, Manitoba, New Brunswick, Prince Edward Island, and Nova Scotia), and only three (the federal jurisdiction, Ontario, and Quebec) apply the model to all or parts of the private sector. Pay equity legislation is complex and fascinating legal engineering, so we cannot begin to do a full exploration in this chapter. However, we will introduce the basic pay equity model and explain how it differs from the EPEW model.52 The pay equity model recognizes that men and women often do not perform “substantially similar” jobs, which is a big reason why EPEW laws do little to address the gender wage gap. Men and women often perform different types of jobs, and jobs that are female dominated tend to be valued less and are therefore paid less. A vivid example of this insight was presented by the Ontario Coalition for Better Child Care during debates about a new pay equity law in Ontario during the 1980s. The organization pointed out that farmhands, who are mostly male, were paid around $22,000 per year in 1983, whereas child-care workers, who are mostly female, were pay equity: A statutory model designed to address systemic gender wage discrimination by comparing lower-paying femaledominated job classes to higher-paying male-dominated job classes when the total score is the same or substantially the same in an evaluation of the skill, effort, responsibility, and working conditions of the two job classes.
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paid only about $13,000. This prompted the coalition to ask whether we value pigs more than children.53 The pay equity model assumes that a farmhand earns more than a child-care worker because a farmhand is traditionally a male job, and male jobs pay more than female jobs. The pay difference is not due to the superior bargaining skills or specialized skills of the farmhand or to a labour scarcity for farmhands, but to a systemic gender bias in our labour markets. The EPEW model would not require a comparison of a farmhand to a child-care worker because those two jobs are not “substantially similar” in terms of all four factors: skill, effort, responsibility, and working conditions. However, if we evaluated and scored the skill, effort, responsibility, and working conditions of the two jobs, and then added those four scores for each job to obtain a total value, we might find that child-care workers score 90 and farmhands 80. Those scores might demonstrate a systemic bias in how employers fix wages—that a child-care worker earns less than a farmhand because the former job is female dominated. This example shows how the pay equity model operates, although usually it entails a comparison of jobs within the same establishment only. It requires employers to compare not only the same or “substantially similar” jobs, but also dissimilar jobs that nevertheless produce the same aggregate evaluation scores. Therefore, the pay equity model is broader in scope than the EPEW model. The pay equity model (everywhere it is in effect except in the federal jurisdiction, which is a complaint-based model) also adopts a more proactive enforcement mechanism. Pay equity legislation still permits individual complaints to be filed, but it also imposes on employers a positive, proactive obligation to achieve pay equity. As always, details vary across jurisdictions, but in general pay equity legislation in Canada requires an employer (and unions, where present) to take the following series of proactive steps to achieve pay equity. Legal disputes can arise at any of these steps, and specialized tribunals may be asked to resolve them. 1. Identify the scope of the pay equity evaluation: The employer must first determine what units will be included in the pay equity evaluation. Will it be the entirety of the employer’s operations? Or will it be just some parts or units of the employer’s operations, such as one factory or one office? Usually, the larger the employer, the greater the number of jobs that can be compared. 2. Identify the “job classes” that will be used in the evaluation: The employer divides the workplace to be evaluated into “job classes.” Job classes can include a variety of job titles, provided that the jobs included in the class are similar in terms of duties and required qualifications or fall within the same salary grade. 3. Identify male- and female-dominated job classes: The employer can usually rely on the pay equity statute for detailed guidance on identifying male- and female-dominated job classes. For example, in Ontario the Pay Equity Act defines a job class as female if 60 percent or more employees in that class are female, and male if 70 percent or more members of that class are male.54 4. Evaluate the job classes: Once the workplace has been divided up into male- and femaledominated job classes, the employer must assess each job class using a gender neutral job evaluation system that assigns a score for skill, effort, responsibility, and working conditions. A total score for each job class is then tabulated. 5. Compare the evaluation scores and search for comparators: The employer reviews the aggregate scores of male- and female-dominated job classes to identify comparators. gender neutral job evaluation system: A job evaluation system used in pay equity assessments that measures a job’s skill, effort, responsibility, and working conditions and that is free of explicit and systemic gender discrimination. comparator: In pay equity, the male job class to which a female job class is compared and found to be of equal or comparable value.
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298 Part III The Regulatory Regime A variety of methods are used in the legislation to perform this task. The most straightforward is the job-to-job comparison method, which involves comparing the score of a female-dominated job to a male-dominated job with the same or similar score. However, sometimes no direct comparator exists for a job class. More complicated is the proportional value method, which involves calculating a “wage line” that tracks the relationship between job scores and pay rates for male-dominated job classes and then assessing whether that relationship is the same or comparable for female-dominated job classes.55 A third method, used only in Ontario (in the public sector) and Quebec, is known as the proxy method of comparison.56 This method applies only when it is not possible to find a male job comparator for a female-dominated job class using either of the first two methods. The proxy method requires the employer to compare a female job class with a male job class at another organization. In Ontario, that organization must be in the public sector, whereas in Quebec it can be in the public or private sector. 6. Prepare and post a pay equity plan: The employer may be required to prepare and post in the workplace a pay equity plan that describes the evaluation system used and the results of the exercise, including any upward adjustments in wages required to achieve pay equity. 7. Make upward pay adjustments to achieve pay equity: Finally, the employer must make any necessary pay adjustments to female job classes to ensure that their pay rate is the same as that of comparable, higher-paid male job classes. Pay equity statutes allow for certain permissible wage differences. Such differences must be attributable to factors other than gender discrimination, such as seniority systems, merit pay systems, or temporary labour market shortages that required the employer to inflate wages to attract qualified employees.57 If an employer can demonstrate that all or part of a wage difference between a male job class and a female job class is due to a permissible wage difference, then it is not required to adjust the female job class wages for that difference. Even this very general overview demonstrates the complexity of pay equity statutes. Experts are often needed to perform or assist with job evaluations, and when a dispute arises, litigation is complex and time consuming. A pay equity complaint is heard first by an expert tribunal— either a human rights tribunal or an even more specialized pay equity tribunal. If either party is unhappy with the decision, they can seek judicial review (see Chapter 17) by a court. The case described in Box 18.5 is an extreme example of the complexity of pay equity disputes and of how these disputes can drag on for years. Scholars and policy experts continue to debate the extent to which pay equity laws achieve their objective of eliminating or even reducing systemic discrimination in wages. Ontario’s Equal Pay Coalition argues that “no other single law in Canada has resulted in such concrete results for so many working women.”58 Yet others, such as Professors Jan Kainer and Patricia McDermott (York University), question whether pay equity laws have been successful; they point to the “complex and unpredictable legal hurdles” in the pay equity model “that may actually end up resulting in few gains for women.”59 Pay equity provides an example of how work law—legal signals and legal rules—have great difficulty changing deeply ingrained practices and norms that have roots outside of the work law subsystem, in broader social and cultural norms, and in complex labour market divisions and forces. permissible wage difference: An explanation for a wage difference between a male and female job class that is accepted as valid and non-discriminatory in a pay equity statute. judicial review: The process through which a decision of an expert administrative tribunal is appealed to a court on the basis that the tribunal exceeded its authority (or jurisdiction) as defined in the statute that created it or that the tribunal’s decision was wrong. How much deference a court must give to the expert tribunal’s decision is a complex question that is considered in a field of law known as administrative law.
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BOX 18.5 » CASE LAW HIGHLIGHT The 30-Year-Long Pay Equity Fight at Canada Post Public Service Alliance of Canada v. Canada Post Corp. 2011 SCC 57 Key Facts: In 1983, the Public Service Alliance of Canada, the union for a group of Canada Post employees, filed a pay equity complaint under the Canadian Human Rights Act. It alleged that the female-dominated job class of clerical and regulatory employees (CR) was paid less than the comparable male-dominated class of postal operations employees (PO). A job evaluation concluded that 34 percent of the CR group had total scores equal to or greater than the lowest-scoring job in the PO group when skill, effort, responsibility, and working conditions were measured. The CR group performed mostly clerical work, whereas the PO group consisted mostly of mail sorters and mail carriers. The Human Rights Tribunal ruled in 2005 that the CR and PO groups were comparable job classes, of equal value, and that the CR group was paid less than the PO group. It ordered Canada Post to make payments to bring the wages of the lower-paid CR group up to the wage levels of the PO group. That decision was appealed to the Federal Court of Appeal, which overturned the tribunal’s decision, and eventually the case went all the way to the Supreme Court of Canada. Issue: Did the Human Rights Tribunal err in ruling that Canada Post discriminated against employees in the female-dominated CR job class by paying them less than employees in the male-dominated PO job class? Decision: No. The tribunal’s decision was upheld, and Canada Post was ordered to adjust the pay of the employees in the CR group (both men and women) upward toward that of the PO group, based on a mathematical formula described in the tribunal’s decision. Perhaps in light of the shocking amount of time this case took to resolve (nearly 30 years!), the Supreme Court of Canada issued a rare oral decision immediately after the appeal had been ordered.* It ruled that Justice Evans, the dissenting judge in the court of appeal ruling, had gotten it right, and the Supreme Court adopted his reasons. In his ruling,
Gisele Morneau of Quebec City, one of the original complainants who filed the pay equity complaint in 1983 against Canada Post, displays the bottle of champagne she intends to open when she receives her money. Source: Jacques Boissinot/GetStock. Justice Evans wrote that “the resolution of pay equity claims involves a mix of art, science, human rights, and labour relations.” Tens of thousands of Canada Post employees were eligible for the wage adjustments, and the estimated cost of complying with the tribunal’s order was in the range of $150 to $250 million.† * You can watch the Supreme Court’s argument and ruling, and read the parties’ written arguments (the factum), by following links on this blog entry: D. Doorey, “Took 30 Years, but Canada Post Employees Win Pay Equity Complaint!” online, Law of Work (blog): . † V. Lu, “Canada Post Says 10,000 Have Received Pay Equity Cheques,” Toronto Star (January 2015), online: .
V. Chapter Summary This chapter explored the government regulation of wages in Canada and some of the debates relating to it. Wage laws target compensation levels in pursuit of public policy objectives. Minimum wage legislation is intended to tackle poverty and reduce the number of working poor. Wage freeze or restraint legislation seeks to reduce public spending and fight inflation. Wage discrimination legislation is a response to the absence of any common law rules prohibiting discrimination in employment. However, the complexity and range of variables that contribute to the gender wage gap and the racial wage gap have challenged lawmakers’ efforts to design an
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300 Part III The Regulatory Regime effective legal response. Whether, or to what extent, wage laws achieve their objectives is a matter of perennial debate.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Describe arguments for and against minimum wage laws. 2. Why did Canadian unions initially oppose minimum wage laws for men but not for women? 3. Why might a Canadian government be more reluctant to impose a wage freeze on its unionized employees than its non-union employees? 4. Why have some countries attempted to regulate high wages in recent years? If a Canadian government wanted to introduce a law that regulated high wages, what might such a law look like? 5. Describe the three types of legal models used in Canada to address gender wage discrimination. Be sure to identify how they differ from one another in terms of the type of wage discrimination they govern. 6. What are some factors that might explain why a woman earns less than a man in the same or similar job other than pay discrimination on the basis of sex?
APPLYING THE LAW Mark, Jerome, and Jessica all work for Big Apple Grocery Store, a large national grocery chain with over 1,000 employees. They are non-union employees who were hired at the same time when the store opened 10 years ago. 1. Mark is an inventory clerk who is paid $450 per week on a salary for a 24-hour workweek. He is paid biweekly (every two weeks). For the past two weeks, to cover off vacationing co-workers, Mark worked 35 hours per week. His paycheque for those two weeks is the usual $900 minus statutory deductions. The minimum wage applicable to Mark’s employment is $15 per hour. Mark asks you if the employer has complied with the employment standards legislation for these two weeks, and if not what he can do about it. What would you tell Mark? 2. Jessica has the title of head cashier. She earns $20 per hour and works a 40-hour workweek. Her job entails working the cash and also supervising the other six
cashiers, including scheduling, ensuring breaks are covered, authorizing voids, and dealing with other issues that arise at the cash registers. Jerome is head stocking manager. He earns $30 per hour and also works a 40-hour workweek. Jerome stocks and organizes shelves and also supervises seven other inventory clerks, including scheduling, ensuring breaks are covered, checking and signing off on deliveries of product, and ensuring the store shelves are clean and neat. Jessica believes it is unfair that Jerome earns so much more than her because their jobs are “pretty similar” in terms of workload, according to Jessica. Explain to Jessica what she would need to prove if she were to file an equal pay for equal work complaint. If she won this argument, what remedy would be ordered? See if you can locate the statute and section in the legislation of your province that requires equal pay for work of equal value. (Hint: it will be in employment standards or human rights legislation.)
EXERCISE This chapter noted that locating wage laws can be difficult due to the large number of special rules and exemptions found in Canadian employment standards statutes and associated regulations. Thankfully, governments have developed numerous wage guides and tools to help employees and employers understand the legal rules. This exercise uses these sources to help you answer the following question: When, if ever, can an employer deduct money from an employee’s pay? 1. Go to a search engine such as Google. Type “deductions from wages” and the province you are interested in (e.g., “deductions from wages Manitoba”).
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2. Look through the search results for an official government website for that province. For example, in my search, the first result was entitled “Deductions from Wages—Government of Manitoba.” Go to the official government website you find in your search. 3. Now look for a summary that explains when deductions from wages are permitted. 4. Finally, locate the actual section of the provincial legislation that includes the government’s rules on deductions from wages. The government website where you found the summary may include a link to the legislation, but if not, go to the CanLII home page () and find it. The rules may be located in the main employment standards statute or in a related regulation. Once you have the statute or regulation on screen, search for “deductions” in the document. What is the answer to our question?
NOTES AND REFERENCES 1. While all human rights statutes in Canada regulate discrimination in employment contracts, some also regulate discrimination in contracts generally, including contracts for the sale of services by an independent contractor. So, if a business paid different rates to its independent contractors based on a contractor’s sex, race, skin colour, or other designated ground in the human rights statute, then a human rights complaint could challenge that discriminatory practice. See, for example, Human Rights Code, RSO 1990, c. H.19, s. 3. However, when we talk about wage regulation, we are usually referring to how governments regulate the payment of employee wages by employers. 2. See, for example, J. Fudge, E. Tucker, & L. Vosko, “Employee or Independent Contractor? Charting the Legal Significance of the Distinction in Canada” (2003) 10 CLELJ 193. 3. Ontario Employment Standards Act, Reg. 285/01, s. 2. See also D. Doorey, “This Blog Entry Is about the Lunacy of Employment Standards Exemptions,” online, Law of Work (blog): . 4. Alta. Reg. 14/1997, s. 8. 5. See, for example, Ontario Employment Standards Act, Reg 285/01, s. 2 6. See, for example, Ontario Employment Standards Act, 2000, SO 2000, c. 41, s. 3(5). 7. See the discussion in D. Doorey, “Unpaid Intern Scams Continue to Flourish in Ontario. What Can Be Done?” online, Law of Work (blog): ; D. Doorey, “Are Unpaid Interns Illegal in Ontario?” online, Law of Work (blog): ; K. Tomlinson, “Bell Accused of Breaking Labour Law with Unpaid Interns,” online: CBC News, June 24, 2013, ; and Girex Bancorp Inc. v. Hsieh, 2004 CanLII 24679 (Ont. LRB). 8. See, for example, Pichette v. Lumac Holdings Ltd., 2011 CanLII 80536 (NBLEB).
9. Ontario ESA, s. 5.1. 10. BC Employment Standards Act, Reg. 396/95, s. 16. 11. See, for example, Ontario ESA, s. 23.1(ii). Section 14.2 of the ESA prohibits employers from withholding tips for some purposes, but does not prohibit tip pooling. For a decision discussing when the liquor server exemption applies, see 1180240 Ontario Inc. (Joey’s Only Seafood) v. Wilks, 2012 CanLII 52482 (Ont. LRB). 12. See K. Leslie, “Restaurant Tip Out Policy: Ontario NDP Want Employers to Stop Taking Servers’ Gratuities,” online: Huffington Post, October 4, 2013, . 13. New Brunswick Employment Standards Act, SNB 1982, c. E-7.2, s. 13; and Prince Edward Island Employment Standards Act, RSPEI 1988, c. E-6.2, s. 17.1. 14. The book that comes closest to providing a comprehensive summary of all Canadian employment regulation is Canadian Labour Law Reporter—Employment Standards, Labour Relations and Labour Law Cases (Markham, ON: LexisNexis, 2003). See also G. England, Individual Employment Law, 2nd ed (Toronto: Irwin Law, 2008), chapter 6. 15. M.E. McCallum, “Keeping Women in Their Place: The Minimum Wage in Canada, 1910-25” (1986) 17 Lab 29 at 34. 16. Cited in J.W. Macmillan, “Minimum Wage Legislation in Canada and Its Economic Effects” (1924) 9 Intl Lab Rev 507 at 509. 17. Ibid. Although the Alberta Factories Act applied to both men and women, the rate was set so low that in practice it affected few if any men. 18. McCallum, supra note 15 at 31-33. 19. The British Columbia Men’s Minimum Wage Act was enacted in 1925. Men’s minimum wage laws were enacted in Manitoba and Saskatchewan in 1934, Alberta in 1936, Ontario and Quebec in 1937, and Prince Edward Island in 1960.
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302 Part III The Regulatory Regime 20. See the discussion on the Government of Canada website, “Labour Program: Minimum Wage Database Introduction,” . 21. A number of websites list the provincial and territorial minimum wage rates. See, for example, Province of Manitoba, “Historical Summary of Minimum Wage Rates in Manitoba,” ; and D. Clément, “Equality Deferred: The Origins of the Newfoundland Human Rights State” (2012) 41:1 Acadiensis 102 at 103, . 22. R. Morisette & D. Dionne-Simard, “Recent Changes in the Composition of Minimum Wage Workers” (June 13, 2018), online: Statistics Canada . 23. See the Ontario Employment Standards Act, s. 23.1; and Saskatchewan Minimum Wage Regulations, 2014, RRS c. S-15.1, Reg. 3. 24. Anti-Inflation Act, SC 1974-75, c. 75. See the discussion in C. Nelson, “The Anti-Inflation Act: A Golden Opportunity for Labour” (1976) 14 Osgoode Hall LJ 727; and D. Morton, Working People, 5th ed (Montreal, QC: McGillQueen’s University Press, 1997) at 300-7. 25. Public Sector Compensation Act, SC 1991, c. 30, s. 5(1.1). 26. Expenditure Restraint Act, SC 2009, c. 2, s. 393, s. 16. 27. See discussion in Meredith v. Canada (Attorney General), 2015 SCC 2. 28. Public Sector Salary Disclosure Act, 1996, SO 1996, c. 1, Sched. A. 29. R. Gomez & S. Wald, “When Public-Sector Salaries Become Public Knowledge: Academic Salaries and Ontario’s Public Sector Salary Disclosure Act” (2010) 53:1 Can Pub Admin 107. 30. On the harmful effects of income inequality, see D. Hardoon, Wealth: Having It All and Wanting More (January 2015), online: OXFAM International ; R. Wilkinson and K. Pickett, The Spirit Level (London: Penguin, 2009); M. Lynk, “Labour Law and the New Inequality” (2010) 15 Just Lab 125; and J. Simpson, “Do We Care That Canada Is an Unequal Society?” Globe and Mail (July 2011), online: . 31. D. Macdonald, “Climbing Up and Kicking Down: Executive Pay in Canada” (January 2018) at 7, online (pdf): Canadian Centre for Policy Alternatives . 32. See the discussion in D. Doorey, “Is It Time to Regulate ‘Maximum’ Pay in Canada?” online, Law of Work (January 2012) (blog): . 33. Dodd-Frank Wall Street Reform and Consumer Protection Act, 124 Stat. 1376 (2010). Companies began reporting in 2018. See A. Edgecliffe-Johnson, “US Companies Reveal Pay Gap Between Bosses and Workers,” Financial Times (April 2019), online: . 34. See, for example, Broader Public Sector Executive Compensation Act, 2014, SO 2014, c. 13, Sched. 1. 35. Statistics Canada, “The Gender Wage Gap and Equal Pay Day, 2018,” online: . 36. X. Zhang, “Earnings of Women With and Without Children,” Perspectives (March 2009), Statistics Canada, online (pdf): . 37. A. Morrow & C. Alphonso, “Women at Work: Still Behind on the Bottom Line,” Globe and Mail (August 2012), online: . 38. S. Block, Ontario’s Growing Gap: The Role of Race and Gender (2010), Canadian Centre for Policy Alternatives, online: . 39. The Employment Standards Regulations, RRS c. S-15.1, Reg. 5, s. 3(2). Wage laws that discriminate on a prohibited ground are susceptible to a section 15 Charter challenge (see Chapter 39). Manitoba and Alberta recently repealed laws permitting lower wages for disabled workers. See the discussion in D. Doorey, “Manitoba to Repeal Two-Tier Law That Allowed Paying Disabled Workers Less,” online, Law of Work (blog): . 40. D. Figart & J. Lapidus, “Will Comparable Worth Reduce Race-Based Wage Discrimination?” (1998) 30:3 Rev of Radical Pol Econ 14. 41. M. Gunderson, “Discrimination, Equal Pay, and Equal Opportunities in the Labour Market,” in W.C. Riddell, ed, Work and Pay: The Canadian Labour Market (Toronto: University of Toronto Press, 1985); and England, supra note 14 at 166-85. 42. The term occupational crowding was coined by B.R. Bergmann in “Occupational Segregation, Wages, and Profits When Employers Discriminate by Race or Sex” (1974) 1 E Econ J 103.
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Chapter 18 Wage Regulation and Pay Equity 303 43. This point is emphasized by critics of pay equity laws: R. Posner, “An Economic Analysis of Sex Discrimination Laws” (1989) 56 U Chicago L Rev 1311. 44. K. Brooks, “Valuing Women’s Work in the Home: A Defining Moment” (2005) 17:1 CJWL 177.
Various Canadian Jurisdictions 2018,” online: . See also England, supra note 14 at 169-85; and P. McDermott, “Pay Equity in Ontario: A Critical Legal Analysis” (1990) 28 Osgoode Hall LJ 381.
45. See the discussion in ibid. and M. Waring, If Women Counted: A New Feminist Economics (San Francisco: Harper and Row, 1988).
53. Cited in C. Cuneo, Pay Equity: The Labour-Feminist Challenge (Toronto: Oxford University Press, 1990) at 13.
46. Brooks, supra note 44; Morris v. Budnarchuk, 1998 ABCA 390; and Fobel v. Dean, 1991 CanLII 3965 (Sask. CA).
55. Ontario’s Pay Equity Commission has developed a proportional value tool to help employers use this method. See Pay Equity Commission, “Tool: Regression Line Calculator: Proportional Value Method,” online: .
47. Ontario’s Pay Equity Commission has written that “statisticians estimate that as much as 10 to 15% of the gender wag gap is due to discrimination.” See Pay Equity Commission, “What Is the Gender Wage Gap?” online: . 48. See J. Fudge & P. McDermott, “Conclusion: Pay Equity in a Declining Economy: The Challenge Ahead,” in J. Fudge & P. McDermott, eds, Just Wages: A Feminist Assessment of Pay Equity (Toronto: University of Toronto Press, 1991) 281 at 283: “Pay equity is not designed to close the entire wage gap; rather, it is designed to reduce that part of the gender wage gap that is attributable to the systemic undervaluation of women’s work.” 49. See, for example, Alberta Human Rights Act, RSA 2000, c. A-25.5, s. 6; and Employment Standards Act, 2000, SO 2000, c. 41, s. 42. In British Columbia, the Human Rights Code, RSBC 1996, c. 210, s. 12, lists only skill, effort, and responsibility (not working conditions). 50. Human Rights Code, supra note 49, s. 12(3). 51. M. Gunderson, “Spline Function Estimates of the Impact of Equal Pay Legislation: The Ontario Experience” (1985) 40 Indus Rel 775; and England, supra note 14 at 169. 52. A good summary of pay equity laws in Canada appears in Pay Equity Commission, “An Overview of Pay Equity in
54. Pay Equity Act, RSO 1990, c. P.7, s. 1.
56. For a history and explanation of the Ontario proxy model, see Pay Equity Commission, “Proxy Comparison Method,” online: . Note that the proxy model was repealed in 1996 by the Ontario Conservative Party, but an Ontario court ruled in 1997 that the repeal violated s. 15 of the Charter, the equality section. See Service Employees International Union, Local 204 v. Ontario (Attorney General), 1997 CanLII 12286 (Ont. Gen Div). 57. See, for example, Pay Equity Act, RSO 1990, c. P.7, s. 8. 58. Equal Pay Coalition, “History of Pay Equity Advocacy in Ontario,” online: . See also P. Singh & P. Peng, “Canada’s Bold Experiment with Pay Equity” (2010) 25 Gender in Mgmt 570. 59. J. Kainer & P. McDermott, “Pay Equity in the Sky” (2004) 23 Can Woman Stud 78 at 78; and K. England & G. Gad, “Social Policy at Work? Equality and Equity in Women’s Paid Employment in Canada” (2002) 56 GeoJournal 281.
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C H A P T E R 19
Regulating Hours of Work, Time Off, and Overtime LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 305 II. A (Very) Brief History of Working Time Laws in Canada 306 III. The Justifications for and Limitations of Contemporary Working Time Regulation 308 IV. Contemporary Working Time Regulation in Canada 309 A. Hours of Work and Overtime Pay 309 B. Statutory Holidays, Paid Time Off (Vacation Pay), and Food Breaks 313 C. Leaves of Absence 316 V. Chapter Summary 317 Questions and Issues for Discussion 317 Notes and References 318
• Describe the origins of working time regulation in Canada. • Discuss the policy objectives that drive working time regulation. • Describe the basic legal approach to hours of work regulation, overtime pay, statutory holidays, paid time off, and statutory leave entitlements in Canada.
I. Introduction We could leave the setting of working time purely to market forces. Employers and employees could bargain hours of work and the right to take occasional leaves of absence, and the state could stay out of it. That is what the neoclassical perspective (see Chapter 3) argues should happen. Yet that is not the approach taken in Canada. The old master and servant law (see Chapter 5) conferred on “masters” almost complete control over their “servants” lives, including when they would work, rest, and play. The industrialization of the Canadian economy in the late 19th century and the accompanying transition from master and servant law to the common law of the employment contract precipitated some of the greatest labour battles of the 20th century, as workers sought to gain greater control over their working hours. Regulating working time involves persistent challenges because it engages so many competing interests. Employers want flexibility and the ability to assign longer hours when needed to meet business deadlines, without incurring large labour costs. Employees want to work enough hours to earn a decent standard of living for themselves and their families, but not so many hours that they never get to see those families or have too little time for rest, sleep, and some fun. Governments are concerned with encouraging a distribution of available work among the population that produces optimal employment levels, including low unemployment rates. How best to use legal rules to achieve a sensible balance between all of these competing interests is one of the biggest issues in the law of work. This chapter explores this issue and the ways in which Canadian governments have responded to it.
305
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306 Part III The Regulatory Regime
II. A (Very) Brief History of Working Time Laws in Canada Like much of the story of employment regulation in Canada, hours of work regulation followed on the heels of improvements bargained by unions for their members. Unions first bargained reduced hours, vacations, leaves, and paid holidays into their collective agreements and then, eventually, governments enacted hours of work legislation of more general application.1 Throughout the 1800s, many employees worked 12- to 16-hour days, sometimes seven days a week. Canadian workers in early unions went on strike in the 1830s, seeking a standard tenhour workday. As the Canadian economy industrialized in the late 19th century, union-led Nine-Hour Leagues formed to pressure employers and governments to introduce a nine-hour workday. That demand by the Typographical Union at the Toronto Globe newspaper in 1872 led to one of the most important labour strikes in Canadian history.2 The Globe’s editor, George Brown, refused the shorter workweek and charged the union leaders with criminal conspiracy. A mass public protest in support of the strikers marched through Toronto’s streets that year, starting an annual tradition that continued until 1894, the year that Labour Day was formally recognized as a national holiday.3
As the result of the 1872 Printers’ Strike, the Trade Union Act was passed, which established the legality of labour organizations.
Nine-Hour Leagues: Organizations active in the late 19th century that attempted to pressure and persuade employers and governments to implement a mandatory maximum nine-hour workday.
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Chapter 19 Regulating Hours of Work, Time Off, and Overtime 307
Professors Eric Tucker and Judy Fudge described the guiding philosophy of Canadian governments of the 19th and early 20th century as “liberal voluntarism,” a belief that governments should intervene only minimally in the operation of labour markets.4 Women and children were considered special cases. They were perceived to be particularly vulnerable to market-based exploitation because they were unlikely to join unions. Moreover, women’s reproductive role in society was thought to require state protection, including protection from long working hours. As well, cheap female labour threatened higher male union wages.5 For these reasons, the late 19th-century Factories Acts enacted in Ontario and Quebec fixed maximum hours of work for women and children at 60 hours per week and ten hours per day. Legislators gave male workers the odd day off: the 1906 federal Lord’s Day Act declared Sundays a day of rest, and by the 1920s some provinces had begun to legislate mandatory days off from work, such as the descriptively named One Day’s Rest in Seven Act of Ontario. However, it would be decades later before governments regulated men’s working hours. In 1919, the Royal Commission on Industrial Relations observed high levels of worker discontent with long working hours and recommended an eight-hour day. That recommendation was consistent with an important convention of the newly formed International Labour Organization (ILO): the Hours of Work (Industry) Convention (1919), which encouraged governments to legislate an eight-hour day and a 48-hour week (see Chapter 27).6 By the 1920s, full-time Canadian employees worked an average of 48 to 56 hours per week.7 However, an eight-hour workday was already common in the unionized skilled trades.8 Although Canada did not ratify the ILO’s Hours of Work (Industry) Convention until 1935, in 1923 the BC government enacted legislation implementing the ILO’s core recommendation of an eight-hour workday and a 48-hour workweek for non-managerial employees in industrial workplaces, the first Canadian province to do so.9 The effects of the Great Depression of the 1930s overtook much of the momentum toward working time legislation. However, during World War II and in its aftermath, Canadian governments moved to restrict working time in a number of ways. Ontario’s Hours of Work and Vacations with Pay Act of 1944 exemplified this development.10 That act, like the earlier BC legislation, introduced a standard eight-hour workday and a 48-hour workweek to sectors of the economy that were already heavily unionized. The Ontario government explained that the hours of work rules reflected those already bargained for by unions in those sectors and were intended to “spread employment over a greater number of employees and also to prohibit an employer from requiring his employees to work excessive hours.”11 The new idea of mandatory paid vacation spread to other provinces thereafter. In 1965, the federal government consolidated several existing statutes into the Canada Labour (Standards) Code, which provided for a standard 40-hour workweek, an eight-hour workday, and mandatory overtime pay at a rate of 1.5 times the regular rate for hours worked above the standard. The code also included eight statutory holidays. Again, the idea of statutory holidays reflected provisions that unions had bargained into collective agreements for years. Over time, and to this day, the standard workweek has varied from province to province, ranging from 40 to 48 hours per week. Statutory leaves of absence prohibit employers from dismissing employees who take time off work for reasons the state feels deserving of protection; they also require that the employers reinstate the employees to their previous job once the leave is over. The leaves are unpaid, but ratify: A term used to describe the process in which a national government endorses and agrees to implement into its legal system the requirements of an international legal convention or other legal instrument. overtime pay: A premium above the normal wage rate of an employee that must be paid for every hour worked above the threshold of standard working hours. The premium is usually 1.5 times the normal wage rate, but sometimes it is higher than that.
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308 Part III The Regulatory Regime over time the federal government has amended employment insurance laws to permit workers to claim employment insurance benefits during some periods of leave (maternity and parental). In this way the costs of statutory leaves are publicly funded rather than imposed on individual employers.12 As discussed later in the chapter, maternity leave came first (originally in British Columbia in 1921), followed by parental leave protections, and then a list of other leaves to deal with a variety of situations governments have felt deserving of protection, including leaves for bereavement, jury duty, family care or responsibility, compassionate care, emergencies, and military reserve service. The details of these laws vary, but all involve a right to unpaid leave from work without reprisals for a designated period of time.
III. The Justifications for and Limitations of Contemporary Working Time Regulation From this brief history, it is possible to identify common justifications for working time regulation.13 First, maximum hours of work laws are part of the government’s pursuit to make the lives of working people safer and healthier. Long working hours are associated with greater incidence of workplace accidents, higher stress, poorer physical health, and a less cohesive family life.14 Second, governments have used working time regulation and overtime pay rules to fight unemployment: by limiting working hours and imposing a financial penalty (overtime pay) on employers for assigning long hours, the intention is to encourage employers to hire more workers rather than retain fewer workers who work long hours.15 Third, working time regulation is a tool by which governments seek to balance competing social and economic values. Governments want efficient and flexible labour markets that will attract and benefit employers, but also recognize the need to ensure people can balance work with other valuable activities, such as caring for children and the infirm, enjoying leisure time, and performing important civic duties, such as jury duty and military service. The contemporary Canadian labour market produces difficult policy challenges for working time regulation. On the one hand, many workers complain about working too many hours.16 These workers want more leisure/family time, but the demands of their job or fears of employer reprisals leave them unable to cut back. On the other hand, millions of Canadians are underemployed or precarious workers who work part-time or temporary jobs, who perform unpaid work, or who are self-employed and want more work. Many of these workers piece together multiple low-wage jobs just to get by. Studies indicate that this division is not gender, age, or race neutral. Proportionately, more middle-aged white men fall into the former category (long hours in full-time jobs), and more women, youth, and racialized minorities fall into the latter category (too few working hours).17 Then there are the unemployed—people who want paid employment but cannot find it (the unemployment rate has hovered between approximately 5 and 9 percent in the past decade). Lawmakers are aware of this problem of work distribution, and many of the legal rules we discuss in this chapter are intended, at least in part, to address it. The extent to which those legal rules achieve this goal is debatable. Recall that employment standards legislation applies to employment contracts only (see Chapter 2). A concerning trend in recent years is the reclassification by businesses of workers from employee status to non-employee status (i.e., independent contractor or “self-employed”) to avoid employment-related laws, including working time laws. A study by the Organisation for Economic Co-operation and Development (OECD) found that 25 percent of the increase in income inequality in Canada over the past 30 years is due to the rise in “self-employment,” since the self-employed generally earn less than the employed.18 precarious worker: A worker whose labour market participation is characterized by low pay, job insecurity, lack of job tenure, or multiple part-time or temporary jobs. income inequality: A measure of the extent to which income in a country is unevenly distributed.
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Chapter 19 Regulating Hours of Work, Time Off, and Overtime 309
Many self-employed workers today are really “disguised employees” in the sense that they tend to be completely dependent on the work provided to them by one “customer” and lack the usual traits of entrepreneurs.19 Yet that disguise may oust them from regulatory coverage if the definition of employee in the statute is narrowly applied.
IV. Contemporary Working Time Regulation in Canada The precise details of working time regulation in all of Canada’s jurisdictions are far too diverse and complex to recount in detail here. Our mission is to paint in broad strokes the general approach taken in Canada to balancing work and leisure time. This section summarizes the main components of that strategy.
A. Hours of Work and Overtime Pay Every Canadian jurisdiction attempts to control working hours in some manner. Three primary approaches are used, as summarized in Table 19.1. The “market-based approach” does not impose a hard cap on the number of hours an employee can work, but discourages long hours by requiring employers to pay a premium (overtime pay) at a higher rate than the usual pay rate to employees who have exceeded the standard working hours threshold fixed by the government.20 The standard working hours threshold can be either a daily or weekly number of hours (or both), and that threshold varies across the country. For example, in British Columbia and Manitoba, employers must pay the overtime rate after an employee works eight hours per day or 40 hours per week, in Ontario after 44 hours in a week, and in Nova Scotia, overtime pay is not triggered until an employee works more than 48 hours per week.21 The overtime rate is usually 1.5 times the regular hourly rate of pay (“time and a half ”), although in some situations in some provinces it rises to 2 times the regular rate.22 TABLE 19.1 Methods of Regulating Hours of Work Market-Based Approach
The law defines a number of hours in a “standard” workday or workweek and then requires the employer to pay a premium (overtime pay) for every hour worked above the standard. No maximum hours of work is legislated, but the law requires mandatory time off between shifts or weekly rest periods.
Regulatory Approach
The law requires the employer to pay a premium (overtime pay) above a defined number of hours in a day or week, and in addition fixes a maximum number of hours the employee can work in a day or week.
Averaging Agreements
The law permits an employee and employer to agree to average out the number of hours worked over a defined period of time (i.e., two weeks), and overtime pay at a premium is only payable when the average number of hours worked in a week over the period is greater than the threshold number of hours required to qualify for overtime pay.
Although in the “market-based approach” there is not maximum hours of work imposed, the law prevents employers from working employees 24 hours a day by requiring mandatory time off from work between shifts or over the course of week. For example, in British Columbia, employees are entitled to at least eight consecutive hours free from work between shifts and 32 hours off per week.23 In Newfoundland and Labrador, overtime is payable after 40 hours per week and employees must be given at least eight consecutive hours off per day and 24 hours off per week.24 Effectively, that could mean a work day of 16 hours and a six-day workweek, which sounds a lot like 19th-century hours! standard working hours: The number of working hours in a day or week after which overtime pay is required, as defined in an employment standards law. mandatory time off: A provision in employment standards legislation requiring that employees be given a specified amount of time off work in a day or week.
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310 Part III The Regulatory Regime The “regulatory approach” also requires employers to pay employees overtime pay after they have worked a defined number of hours, but in addition it includes a fixed cap on the number of hours that can be worked per day or week. For example, in Ontario, while overtime is payable after 44 hours worked per week, the Employment Standards Act, 2000 also caps the number of hours an employee can be required to work per week at 48 hours. In Alberta, 12 hours is the maximum workday. Exceptions exist to all of these rules, which makes hours of work legislation complicated to apply in practice. Also, employers and employees can usually agree that paid time off will be given in lieu of overtime pay, calculated as one and half hours of paid time off for each hour of overtime worked.25 An interesting question that sometimes arises in applying hours of work and overtime pay requirements is whether an employer must pay overtime pay for overtime hours worked in contravention of a workplace rule that employees receive prior approval to work overtime. This issue is critical in a series of class action lawsuits filed recently by bank tellers against some of Canada’s largest chartered banks, including Scotiabank and Canadian Imperial Bank of Commerce (CIBC), alleging millions of dollars in unpaid overtime pay. The banks defended the actions by arguing, among other things, that the overtime work was unauthorized and contrary to the banks’ policy of requiring pre-approval for overtime work.
Scotiabank recently settled a claim by employees for unpaid overtime by agreeing to pay out up to $95 million in payments to the employees.
class action: A lawsuit in which a group of people join together and act as one common plaintiff on the basis that they all allege to have suffered the identical or a similar legal wrong at the hands of the same defendant. A class action must be approved by a court before it can proceed.
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Chapter 19 Regulating Hours of Work, Time Off, and Overtime 311
The Canada Labour Code, which applies to banks, says that overtime pay is payable if an employee is “required or permitted” to work more than the standard hours.26 In the CIBC litigation, the Ontario Court of Appeal wrote in a preliminary decision, without yet deciding the issue, that it is “arguable that the pre-approval requirement in CIBC’s Current Policy served as an institutional impediment to claims for overtime that would otherwise have been compensable” under the code.27 Scotiabank recently settled its case by agreeing to pay upwards of $95 million in damages for unpaid overtime.28 Some jurisdictions, like Ontario, have legislated a clearer answer to the problem of whether overtime pay can be conditioned on the employer’s pre-approval, as explained in the decision in Box 19.1.
BOX 19.1 » CASE LAW HIGHLIGHT Must an Employer Pre-Approve Overtime Work for Overtime Pay to Be Owing? TCS Express Inc. v. Yasin 2006 CanLII 19423 (Ont. LRB) Key Facts: Yasin was hired as a customer service representative on a salary of $1,800 per month. Her regular hours were 9 a.m. to 6 p.m., Monday to Friday, but in practice she worked varied hours and her time cards indicated that she had worked close to 90 hours of overtime in her nine months of employment. However, the employer argued that its policy prohibited overtime unless it was pre-approved by a manager. Yasin’s manager had approved only 3.5 hours of overtime pay. Yasin filed a complaint under the Employment Standards Act seeking payment for the remaining overtime hours worked. Issue: Is Yasin entitled to overtime pay for overtime hours worked that had not been pre-authorized by the employer? Decision: Yes. The Ontario Labour Relations Board (OLRB) ruled that the legislation provided a “complete answer.” The ESA requires that overtime pay be paid to an employee who works greater than 44 hours in a week. The Regulations to the
ESA then clarify when an employee is deemed to have performed work. Section 6 (now s. 1.1) of Regulation 285/01 provides the following guidance: 6. … work shall be deemed to be performed by an employee for the employer, (a) where work is (i) permitted … to be done by the employer, or (ii) in fact performed by an employee although a term of the contract of employment expressly forbids or limits hours of work or requires the employer to authorize hours of work in advance; … According to the OLRB, this section “deems whatever work Yasin did for TCS to be work performed,” even if TCS had not granted pre-authorization for Yasin to work the hours. The OLRB concluded that TCS could discipline Yasin for working unauthorized hours, but once the hours have been worked, it could not refuse to pay her. The employer was ordered to pay Yasin the outstanding amount of overtime owed.
The third approach to regulating hours of work and overtime pay involves the use of averaging agreements, which are now permitted in most Canadian jurisdictions (but not in Quebec, Newfoundland and Labrador, or Prince Edward Island). The details of averaging agreement schemes vary by jurisdiction. In general terms, the averaging agreement approach can operate in tandem with either the market-based or regulatory approach, but it adds a new element of flexibility, essentially allowing the parties to contract out of the general rule on payment of overtime. An averaging agreement is an agreement between an employer and employee to average out the number of hours worked over a longer period than the standard workweek. The usual purpose of an averaging agreement is to avoid the payment of overtime pay when an employee works sporadic hours over multiple weeks. To demonstrate, consider the following example: Jean works 50 hours in week one and only 24 hours in week two. He works in a province in which overtime is payable after 44 hours worked per week. Therefore, he would normally be entitled to six
averaging agreement: A legislative device designed to facilitate flexibility in the calculation of an employee’s entitlement to overtime pay. An averaging agreement permits an employer and employee to agree to average hours worked over a period longer than the standard period of time used to calculate overtime pay entitlement.
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312 Part III The Regulatory Regime hours’ overtime pay in week one and zero overtime pay in week two. However, he entered into an averaging agreement with his employer that provides that hours would be averaged over a two-week period. The average hours worked per week is 37 (74 / 2), and since 37 is less than 44, Jean is not entitled to overtime pay.
Proponents of averaging agreements argue that the flexibility they introduce benefits employers and employees alike. Employees sometimes want variable hours, and averaging agreements allow them to work additional hours during some weeks in exchange for more leisure time in other weeks without imposing a financial burden on the employer. Employers obviously benefit from the reduction in overtime pay required when working hours vary widely from week to week. However, averaging agreements also introduce the potential for employers to exploit their position of power to avoid overtime pay requirements. Although averaging agreements require employee consent, in practice many employees may be afraid to refuse their employer’s request for an averaging agreement for fear of irritating their boss. In an effort to protect employees from feeling compelled to sign averaging agreements, such agreements have sometimes been made conditional on government approval.29 A maddening feature of Canadian hours of work and overtime pay law—similar to wage regulation discussed in the preceding chapter—is the large number of exemptions and special rules. Many occupations are excluded from the legal rules altogether, such as certain professions and agricultural workers. Some occupations are excluded from a few of the legal rules. In Ontario, for example, a person employed in a job related to mushroom growing is excluded from both maximum hours of work and overtime pay provisions, but a person employed in landscape gardening or pool maintenance is excluded only from overtime pay requirements!30 In some cases, it is also possible for an employer to obtain government consent to entirely avoid compliance with hours of work and overtime law or to enter into an agreement with the employee to waive certain employment standards in whole or in part.31 A popular misconception is that salaried employees are not entitled to overtime pay, the assumption being that the salary includes payment for all hours worked. That is false. Employment standards rules apply equally to salaried and hourly employees. Canadian employment standards laws do often exempt “managers” from some statutory protections, including hours of work and overtime pay requirements. “True” managerial employees, who have effective power to hire, fire, discipline, or control budgets, are presumed to be an arm of the employer and to be paid at a level that recognizes the potential for longer hours. However, it is important to pay close attention to the language in the statute that defines the “managerial exemption.” The managerial exception is much narrower than most people appreciate. For example, in British Columbia, a “manager” is not covered by hours of work and overtime laws. “Manager” is defined as (a) a person whose principal employment responsibilities consist of supervising or directing, or both supervising and directing, human or other resources, or (b) a person employed in an executive capacity.32 Applying this definition, it is not enough that the employee has some supervisory powers; supervision must be the employee’s “principal” responsibility.33 Ontario’s legislation similarly defines the “managerial exclusion” narrowly, as the decision described in Box 19.2 illustrates, a case that also serves as a useful reminder that a person’s job title is not determinative of whether someone is a “manager” in a legal sense.34
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Chapter 19 Regulating Hours of Work, Time Off, and Overtime 313
BOX 19.2 » CASE LAW HIGHLIGHT Overtime Pay and the Managerial Exclusion 1748271 Ontario Inc. v. Patterson 2015 CanLII 26117 (Ont. LRB) Key Facts: Patterson worked initially as a customer retention specialist (CRS) at a small furniture and appliance store, but was later promoted to the position of store manager when the existing manager took a leave of absence. Patterson claimed overtime pay, but the employer argued that the store manager was a manager in the truest sense of the word—the store manager essentially “runs the store in every respect.” Issue: Is Patterson exempted from the entitlement to overtime pay because he exercises managerial functions? Decision: No, Patterson is entitled to overtime pay. The OLRB explained that an employer needs to demonstrate two requirements in order to establish that an employee falls within
the managerial exemption from hours of work and overtime pay entitlements: (1) that the employee’s work is supervisory and managerial in character; and (2) that the person performs non-supervisory or non-managerial tasks only on an irregular or exceptional basis, if at all. Although Patterson held the position of store manager and was responsible for running the store, in practice the store was so small (only 4 or 5 employees) that Patterson was required to perform non-managerial and non-supervisory tasks regularly. At least one day per week he was the only person at the store, and on those days he was required to deal with any customer who came into the store. He also continued to perform duties associated with his old CRS job. Therefore, Patterson’s performance of non-supervisory and non-managerial tasks was regular and non-exceptional.
B. Statutory Holidays, Paid Time Off (Vacation Pay), and Food Breaks All Canadian jurisdictions designate a list of dates as statutory holidays on which employees must either be given the day off work or be paid at a premium rate if they do work. Some holidays are grounded in the Christian roots of the early English and French settlers, such as Christmas Day, Good Friday, and Easter Monday. Others celebrate key moments in Canadian, British, or French history, such as Labour Day, Canada Day, Remembrance Day, Quebec’s Journée nationale des patriotes, and Victoria Day. Some holidays, like Civic Holiday and Family Day, celebrate little more than a day off work (for many) to rest and hang out with friends and family. Table 19.2 lists Canada’s statutory holidays. Statutory holidays are immensely popular with workers. However, proponents of the neoclassical perspective (see Chapter 3) and many employer-based organizations (e.g., the Retail Council of Canada, chambers of commerce) routinely argue against them on the basis that statutory holidays impose costs on employers with no corresponding productivity increase.35 The details of the statutory holiday provisions and the conditions under which an employee qualifies vary across jurisdictions. Generally, the laws assume that most employees will get the day off work but still be paid their usual daily rate. The intention of the holiday pay laws is to encourage employers to shut down for the day, or at least minimize the number of employees scheduled that day. However, some employers want to open on a holiday and, therefore, employees and employers are permitted to agree that the employee will work but be paid a premium rate, sometimes up to as much as 2.5 times the regular hourly rate of pay.36 Sometimes, employees and employers are permitted to agree that when an employee works on a statutory holiday, that employee will receive another paid day off in the future.
statutory holiday: A day designated in employment standards legislation on which employees are entitled to receive either time off with pay or a wage premium if they work.
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314 Part III The Regulatory Regime
Federal (9)
Prince Edward Island (7)
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Quebec (8)
✓
Saskatchewan (10)
✓ ✓ ✓ ✓ ✓
Alberta (9) British Columbia (10) Manitoba (8) New Brunswick (7) Newfoundland and Labrador (6) Northwest Territories (10) Nova Scotia (6) Nunavut (12) Ontario (9)
Yukon (9)
✓* ✓*
✓ ✓ ✓ ✓ ✓
✓ ✓
Boxing Day
Christmas Day
Remembrance Day
Thanksgiving
Labour Day
Civic Holiday
Canada Day
Victoria Day
Easter Monday
Good Friday
Family Day
New Year’s Day
TABLE 19.2 Canada’s Statutory Holidays
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Other
• British Columbia Day • Louis Riel Day • New Brunswick Day
• National Aboriginal Day • Nova Scotia Heritage Day • Nunavut Day
• Islander Day • Journée nationale des patriotes • Fête nationale du Québec • Saskatchewan Day • Discovery Day
* In Quebec, either Good Friday or Easter Monday must be treated by the employer as a statutory holiday.
Ontario was the first province to introduce mandatory paid vacation, in 1944, and over the next two decades the other jurisdictions followed. The legal rights to statutory vacation time and statutory vacation pay are separate but related entitlements. Statutory vacation time refers to the amount of time an employee is legally entitled to take off work during a year. Again, the details vary, but generally the laws require employers to provide employees with a specified amount of paid time off work in a year. Two weeks’ vacation is a common standard, although relatively new employees are sometimes excluded, and in some provinces paid vacation time increases to three or four weeks after a certain period of service, such as five or ten years.37 Statutory vacation pay refers to the amount of pay a vacationing employee is legally entitled to receive while taking vacation time. That amount is usually calculated according to a formula designed to approximate the employee’s average weekly pay, such as 4 to 6 percent of the employee’s gross annual pay.38 statutory vacation time: The amount of time an employee is legally entitled to take off work during a year. statutory vacation pay: The amount of pay a vacationing employee is legally entitled to receive while taking vacation time.
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Chapter 19 Regulating Hours of Work, Time Off, and Overtime 315
A 2013 study by the Center for Economic and Policy Research found that Canada (using the federal legal model) ranked third last among nations within the OECD in terms of the amount of paid time off workers receive (see Box 19.3).39 European nations are most generous with employee time off. The United States, where the neoclassical perspective is most influential, is the outlier—it guarantees its workers no paid time off. Most jurisdictions in Canada permit employees to waive their vacation time, and a Canadian study based on 2010 data found that about 36 percent of full-time Canadian workers do not use their full statutory vacation time, and 19.3 percent use none of it at all.40
BOX 19.3 » TALKING WORK LAW Canada Lags Behind Most Western Nations on Paid Time Off According to a 2013 study by the Center for Economic and Policy Research, Canada has not kept pace with most of the Western world in terms of the number of legislated holidays and paid vacation it guarantees employees. The chart below
40
Paid Holidays
Number of Working Days
35 30
shows the paid holidays and paid vacation of the OECD’s wealthiest nations. The Canadian figures are based on federal entitlements in the Canada Labour Code.
Statutory Minimum Annual Leave
1
30 0 28 13 2 0 0 0 25 10 25 25 25 25 25 24 13 12 22 22 11 10 10 9 8 6 0 0 20 20 20 20 20 20 20 20 20
15 9 0 0 10 10 0
10 5 0
l s s k y y y a a e e a n n n d d d nc om stri wa de lan ar an uga Spai alan Ital lgium land trali reec rlan land nad apa tate J dS Fra ingd Au Nor Swe Fin enm erm Port e Ire Aus G itze her Ca Ze B e G D K t w it d Sw Ne Ne Un ite
Un
Source: Center for Economic and Policy Research, Washington, DC, .
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316 Part III The Regulatory Regime Finally (and briefly), Canadian employment standards legislation also requires employers to provide employees with a break (usually of at least a half hour) when they can rest and eat, usually at a time that will ensure the employee does not work more than five hours without taking a break.41
C. Leaves of Absence A statutory leave grants an employee a defined period of time off work, without pay, and requires that the employer save the employee’s job until they return, provided the employee returns within the allowed time period.42 British Columbia’s Maternity Protection Act of 1921 was Canada’s first legislation granting maternity leave.43 It granted the right to employees to take six weeks off after giving birth. Most other jurisdictions waited to follow British Columbia’s lead until the 1970s, in tandem with a significant expansion of female labour force participation that began in the 1960s.44 The details of the various contemporary Canadian maternity laws vary, but generally they require employers to grant a pregnant employee a leave from work without pay ranging from 15 weeks (Alberta) to 18 weeks (British Columbia, Quebec, and Saskatchewan), with most jurisdictions requiring 17 weeks. Statutory rules specify when leaves may begin, usually based on a period of time before the due date and extending to a period after the birth, and in some provinces the employee must have worked a minimum period of time in order to qualify.45 We noted in Chapter 17 that the Constitution grants the federal government jurisdiction over unemployment insurance. The federal government has used that power to provide funding for some workers who take statutory maternity or parental leave (see the online chapter “Regulating Unemployment”). Employment standards legislation grants employees the right to take leave without reprisals, and the federal employment insurance scheme provides eligible workers with a source of income during the leave.46 In 1990, paid parental leave benefits were introduced for up to 10 weeks at a rate of 55 percent of the employee’s regular earnings, which could be taken by one parent or split between both. In 2019, paid parental benefits available under the Employment Insurance Act are available for either 40 weeks based on a benefit rate of 55 percent or 69 weeks based on a lower rate of 33 percent.47 Many other types of leave are recognized in Canadian law. Each type functions in a similar manner, although the details vary in terms of eligibility requirements and duration. The following protected leaves are recognized in some or all Canadian jurisdictions: • Family medical, family caregiver, and critically ill child leaves to care for critically or seriously ill family members. • Organ donor leave to undergo and recover from surgery due to an organ donation. • Bereavement leave to attend funerals or be with family when an immediate family member dies. • Crime-related child death or disappearance leave to allow a parent to recover from the trauma of a crime-related death or disappearance of a child.
maternity leave: A statutory rule requiring an employer to grant a pregnant woman time off from work without pay in the weeks immediately before or after giving birth (also known as pregnancy leave). parental leave: A statutory rule that requires an employer to grant the parents of a newborn or newly adopted child a period of time off work without pay to care for the child. parental benefits: A rule in employment insurance legislation that entitles new parents to receive benefits (financial assistance) while caring for a newborn or newly adopted child.
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Chapter 19 Regulating Hours of Work, Time Off, and Overtime 317
• Personal emergency leave to deal with select, sudden, and defined personal emergencies. • Sick leave to recover from short-term illnesses. • Reservist leave to permit an employee enlisted in a military reserve to attend to reservist responsibilities.
V. Chapter Summary This chapter described the extensive scope of legal intervention into working hours in Canada. Modern working time legislation is deeply tied to its historical roots and the struggles of workers and unions to win back from employers greater control over their non-working lives. For governments, complex and sometimes competing policy objectives drive the design of working time regulation. On the one hand, governments want employers to have flexibility to respond to economic contingencies. On the other hand, governments are aware that economic and social benefits are associated with avoiding very long working hours. The laws described in this chapter reflect governments’ attempts to strike a balance between these competing concerns.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Describe the market-based approach and the regulatory approach to regulating working time in Canada. 2. What is an averaging agreement? Describe one argument in favour of and one against a law permitting averaging agreements. 3. Explain the difference between statutory vacation time, statutory vacation pay, and a statutory holiday. 4. Is an employee who has just given birth entitled to time off with pay in Canada? Explain your answer. 5. What competing policy objectives are Canadian governments balancing when they enact working time legislation?
APPLYING THE LAW 1. Agnus worked 35 hours two weeks ago and 50 hours last week in her job at McDonald’s. In the province where she works, overtime pay is required for every hour worked above 44 in a week, and there is no maximum number of hours permitted per week. She is paid $16 per hour. a. How much overtime pay is Agnus entitled to under this scenario? b. Now assume that Agnus had entered into an averaging agreement with McDonald’s that required working hours to be averaged over a period of two weeks. How much overtime is Agnus entitled to under this scenario? 2. Jim works alongside Agnus at the same McDonald’s. Jim worked the same amount of hours over the past two weeks as Agnus. However, Jim does not believe that he is entitled to overtime pay because his title is
“assistant food manager” and the employer told him managers do not get overtime pay. Jim’s job entails scheduling the kitchen staff and ensuring that the kitchen runs efficiently, so he spends much of his time supervising the cooks. He has the power to hire kitchen staff, and his comments about employees to the store manager has on one occasion led to a cook being terminated. When the store is busy, Jim helps prepare food. This happens at least twice per shift, including around lunch and dinner rushes. Using the CanLII website (), locate the language in the employment standards legislation or regulation in your province that explains whether managers are excluded from receiving overtime pay. Considering that language, do you believe that Jim is excluded from receiving overtime pay because he is a manager?
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318 Part III The Regulatory Regime
NOTES AND REFERENCES 1. P. Malles, Canadian Labour Standards in Law, Agreement, and Practice (Ottawa: Economic Council of Canada, 1977). 2. J. Battye, “The Nine Hour Pioneers: The Genesis of the Canadian Labour Movement” (1979) 4 Lab 25; and D. Morton, Working People, 5th ed (Montreal, QC: McGillQueen’s University Press, 2007) at 21-25. 3. The arrest of the strike organizers also resulted in the enactment of the Trade Unions Act in 1872, which repealed the application of criminal conspiracy laws to union organizing (more on this in Part IV of this text). See an interesting discussion of this history in P. Craven, “Workers’ Conspiracies in Toronto, 1854 – 72” (1984) 14 Lab 49. 4. J. Fudge & E. Tucker, Labour Before the Law: The Regulation of Workers’ Collective Action in Canada, 1900 – 1948 (Toronto: Oxford University Press, 2001). 5. M. Thomas, “Setting the Minimum: Ontario’s Employment Standards in Postwar Years, 1944 – 1968” (2004) 54 Lab 49 at 57. 6. International Labour Organization, “C001—Hours of Work (Industry) Convention, 1919 (No. 1),” online: . 7. M. Altman, “New Estimates of the Hours of Work and Real Income in Canada from the 1880s to 1930” (1999) 45:3 Rev of Income and Wealth 353. 8. “Reports and Enquiries: Hours of Work in Canada” (1924) 9 Intl Lab Rev 387 at 388. 9. An Act Limiting the Hours of Work in Industrial Undertakings, 1923, 14 Geo. 5, c. 22. 10. Thomas, supra note 5 at 65. 11. Ibid. 12. This approach is consistent with that of the International Labour Organization as reflected in ILO “Convention No. 103, Maternity Protection Convention (Revised), 1952,” online: . 13. See A. Donner, Working Times: Report of the Ontario Task Force on Hours of Work and Overtime (Toronto: Ontario Ministry of Labour, 1987). 14. H. Arthurs, Fairness at Work: Federal Labour Standards for the 21st Century (Ottawa: Human Resources and Skills Development Canada, 2006) at 110-11. 15. Donner, supra note 13 at 108. Whether working hour caps and overtime pay rules actually do affect employment levels is debatable. See J. Friesen, “Overtime Pay and Weekly Hours of Work in Canada” (2002) 8 Lab Econ 691. 16. J. O’Kane, “Canada’s Work-Life Balance More Off-Kilter Than Ever,” Globe and Mail (October 2012), online:
; and M. Bittman, J. Brown, & J. Wajcman, “The Mobile Phone, Perpetual Contact, and Time Pressure” (2009) 23 Work, Employment & Soc 673. 17. C. Cranford & L. Vosko, “Conceptualizing Precarious Employment: Mapping Wage Work across Social Location and Occupational Context,” in L. Vosko, ed, Precarious Employment: Understanding Labour Market Insecurity in Canada (Montreal, QC: McGill-Queen’s University Press, 2006) 43 at 43; and S. Procyk, W. Lewchuk, & J. Shields, Precarious Employment: Causes, Consequences, and Remedies (Winnipeg, MB: Fernwood, 2017). 18. Organisation for Economic Co-operation and Development, “Divided We Stand: Why Inequality Keeps Rising: Canada” (December 2011), online (pdf): . 19. J. Fudge, E. Tucker, & L. Vosko, “Changing Boundaries in Employment: Developing a New Platform for Labour Law” (2003) 10 CLELJ 329. 20. See Donner, supra note 13 at 56. See also I. Christie, G. England, & W.B. Cotter, Employment Law in Canada, 2nd ed (Toronto: Butterworths Canada, 1993) at 212-14. 21. In British Columbia, however, an employer is prohibited from assigning “excessive hours or hours detrimental to the employee’s health or safety.” See Employment Standards Act, RSBC 1996, c. 113, s. 39. 22. See, for example, Employment Standards Act, supra note 21, s. 40 (double pay required for hours worked over 12 hours per day). 23. Employment Standards Act, supra note 21, s. 36. An employee can agree to take overtime pay for some hours that would cut into that 32-hour rest period. 24. Labour Standards Act, RSNL 1990, c. L-2, part III. 25. See, for example, Ontario’s Employment Standards Act, 2000, SO 2000, c. 41, s. 22(7); and Alberta’s Employment Standards Code, RSA 2000, c. E-9, s. 23. 26. Canada Labour Code, RSC 1985, c. L-2, s. 174. 27. Fresco v. Canadian Imperial Bank of Commerce, 2012 ONCA 444 at para 75. 28. Fulawka v. Bank of Nova Scotia, 2014 ONSC 4743. See also V. Lu, “Settlement Reached in Scotiabank Overtime Case Involving Retail Branch Workers,” Toronto Star (24 July 2014), online: . 29. M. Thomas, Regulating Flexibility: The Political Economy of Employment Standards (Montreal, QC: McGill-Queen’s University Press, 2009). The trend is toward dropping the
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Chapter 19 Regulating Hours of Work, Time Off, and Overtime 319 requirement for government approval of averaging agreements. 30. See O. Reg. 285/01, When Work Deemed to Be Performed, Exemptions and Special Rules. D. Doorey, “This Blog Entry Is about the Lunacy of Employment Standards Exemptions (and it has alpacas, emus, and minks too!)” online, Law of Work (blog): . 31. See the discussion in B. Arai, “Re-Organizing Flexibility and the Employment Standards Act in Ontario” (2007) 7 J Change Mgmt 89; and Thomas, supra note 29. 32. BC Employment Standards Regulation 36/2019, ss. 1, 34. 33. See J.P. Metal Masters 2000 v. Director of Employment Standards, 2006 BCSC 928. 34. See O. Reg. 285/01, s. 8(b). Also Newrick v. 2439436 Ontario Ltd., 2015 CanLII 78646 (Ont. LRB); Glendale Golf and Country Club Limited v. Sanago, 2010 CanLII 4265 (Ont. LRB); Tri Roc Electric Ltd. v. Butler, 2003 CanLII 11390 (Ont. LRB); and Tsakiris v. Deloitte & Touche LLP, 2013 ONSC 4207. 35. See, for example, N. Veldhuis & A. Karabegovi, “BC Family Day Will Cost BC Families,” Fraser Forum (September/October 2012), online: . 36. See, for example, Ontario Employment Standards Act, 2000, supra note 25, s. 27. 37. See, for example, BC Employment Standards Act, supra note 21, s. 57. 38. Ontario Employment Standards Act, 2000, supra note 25, s. 35.2: based on 4 percent for employees with less than five years’ service and 6 percent for employees with five or more years’ service. 39. R. Ray, M. Sanes, & J. Schmitt, No-Vacation Nation Revisited (Washington, DC: Center for Economic and Policy Research, 2013) at 2, online (pdf): . 40. Canadian Index of Wellbeing, “All Work and No Play” (July 2014), online: .
41. See, for example, Alberta Employment Standards Code, supra note 25, s. 18. 42. Ontario ESA, supra note 25, s. 53 (reinstatement duty) and s. 104 (reinstatement order). 43. See A. ten Cate, “The Impact of Provincial Maternity and Parental Leave Policies on Employment Rates of Women with Young Children in Canada” (McMaster University, Department of Economics Working Paper, 2003-03), online (pdf): . 44. New Brunswick enacted maternity leave provisions in 1964, but other jurisdictions did not take this step until the 1970s. The rate of married women in the labour force increased from 11 percent in 1951 to about 50 percent in 1980. See S. Crompton & M. Vickers, “One Hundred Years of Labour Force” (2000) 57 Can Soc Trends 2 at 8. 45. For example, in Ontario an employee must have worked for at least 13 weeks before her due date to qualify for pregnancy leave, and she must start her leave no earlier than 17 weeks before her due date. See Employment Standards Act, 2000, supra note 25, s. 46. 46. In 1971, unemployment insurance legislation was reformed to permit 15 weeks’ entitlement to paid maternity benefits at a rate of 67 percent of the employee’s pay rate (today the rate is 55 percent). For a discussion of the development of maternity and parental leave in Canada, see J. Pulkingham & T. Van Der Gaag, “Maternity/Parental Leave Provisions in Canada: We’ve Come a Long Way, but There’s Further to Go” (2004) 23:3/4 Women’s Lab Rts J 116; and K. Meehan, “Falling Through the Cracks: The Law Governing Pregnancy and Parental Leave” (2004) 35 Ottawa L Rev 211. 47. For a summary of current (2019) employment insurance benefits for leaves, see . Although fathers can take parental leave, and many do, studies show that parental leave is overwhelming claimed by women: K. Marshall, “Fathers’ Use of Paid Parental Leave” (2008) 9:6 Perspectives, online (pdf): .
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CHAPTER 20
Regulating the End of Employment Contracts LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 321 II. Statutory Minimum Notice of Termination Requirements 322 A. Common Features of Statutory Notice of Termination Provisions in Canada 322 B. The Interrelationship Between Statutory and Contractual Notice of Termination Requirements 327 III. Severance Pay (Ontario and Federal) 330 IV. Statutory Protection Against Unfair Dismissal 330 A. Laws That Prohibit Dismissals Contrary to Public Policy 330 B. Unjust Dismissal Laws 331 V. Chapter Summary 332 Questions and Issues for Discussion 333 Notes and References 333
• Explain how Canadian governments legislate the end of employment contracts. • Describe the rules related to statutory notice of termination and severance pay. • Discuss the interrelationship between the statutory requirements and the common law rules of employment contract termination. • Discuss why employees might prefer to accept the statutory minimum notice of termination entitlements rather than pursue the potentially much greater contractual entitlements available under the common law rule of “reasonable notice.” • Describe the laws that protect employees from unfair dismissal in the federal jurisdiction, Nova Scotia, and Quebec.
I. Introduction Dylan, a manager of a large grocery store in Ontario for 20 years, was dismissed without notice for stealing a box of cereal. The problem is that he did not steal a box of cereal, and after spending $60,000 on lawyer fees, enduring the stress of a trial, and waiting almost two years for a decision, a judge finally agreed with him. Dylan was 55 years old when he was fired and has been unable to find a new job since his wrongful dismissal. He is realistic about his slim chances of ever getting another job, especially a management job, given his age. What company will hire a person over 55 years old to work in retail management? The court ordered Dylan’s former employer to pay him wrongful dismissal damages, but Dylan cannot understand why he will not just get his job back. If not for the employer’s mistake and faulty investigation, he would likely still have his job and probably could have eventually retired with dignity and a pension. In Part II, we learned that in the common law model, employees who have been dismissed are not reinstated, even when the employer was clearly wrong and the dismissal has had devastating effects on the employee. Unions have addressed this situation by negotiating just cause provisions in their collective agreements that require employers to prove that an employee was dismissed for a valid business reason. In Part IV, we will learn that Canadian governments supplemented this collectively bargained model of employment termination law by granting labour arbitrators the power to reinstate employees who have been dismissed without just cause, a power that arbitrators exercise regularly. A vast divide exists between the job security rights of just cause provision: A term in a collective agreement between a union and an employer that requires the employer demonstrate “just cause,” or a good business reason, to discipline or dismiss an employee. 321
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322 Part III The Regulatory Regime unionized and non-union employees in Canada. If Dylan had been unionized, he would almost certainly have gotten his job back, with full back pay. About one-third of Canadians (mostly the unionized ones) enjoy just cause protection. In theory, non-union employees could bargain their own just cause provisions, but few do, either because they believe (wrongly) that the law already requires the employer to have a good reason to fire them, because they are not aware that they could, or because they lack the bargaining power to do so. Governments could intervene and legislate a requirement for employers to show a valid business reason to take away an employee’s livelihood, comparable to the just cause provisions unions negotiate in collective agreements. The International Labour Organization called for governments to do so in its Termination of Employment Convention, 1982, which states that the “employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements” of the business.1 Canada has not ratified that convention, but some Canadian governments have introduced a form of legislated just cause protection, albeit a much narrower version of the just cause protection found in most collective agreements. Most jurisdictions have elected not to require employers to justify why they dismiss employees or to reinstate wrongfully dismissed employees. A legal model that permits employers to dismiss employees without cause is justified by its advocates as the best means of promoting freedom of contract as well as labour market flexibility and efficiency. Yet, as noted in Chapter 10, Canadian governments have not gone as far as American governments in this regard. In the United States, employment contracts are presumed to be “at will”—which gives an employer the right to dismiss an employee at any time for any reason with no notice—while in Canada, employment standards legislation requires that most employees be given at least a minimum amount of warning. Since bringing a lawsuit in court for breach of an employment contract is so expensive and time consuming, many if not most Canadians treat the statutory termination provisions found in employment standards legislation as the full extent of their legal entitlements. This chapter considers that legislation.
II. Statutory Minimum Notice of Termination Requirements As described in Chapter 10, the implied obligation for employers and employees to give “reasonable notice” to terminate an indefinite-term employment contract had crystalized in Canadian common law by the 1920s. Later, as unions expanded their reach in the post-World War II period, they bargained collective agreement terms that require employers to give employees warning of terminations and layoffs.2 Therefore, when governments finally introduced statutory minimum notice of termination provisions in the early 1960s, they were mimicking developments already long entrenched in the common law regime and the collective bargaining regime. These regulatory initiatives are an outcome of the internal feedback loop, discussed in Chapter 2. Like the common law implied term of reasonable notice, the statutory minimum notice provisions are intended to supply a cushion to employees to enable them to plan for unemployment and seek alternative employment. Studies have found that employees who receive notice of termination have an easier time finding alternative employment.3
A. Common Features of Statutory Notice of Termination Provisions in Canada Absent a statutory notice of termination requirement, employers and employees would be able to agree to zero notice contracts similar to American “at will” employment contracts. Therefore, Canada’s statutory notice provisions reflect governments’ rejection of “at will” employment contracts for those employees eligible for statutory notice. Employers can choose either to prostatutory notice of termination: The requirement found in employment standards legislation for employers (and sometimes employees) to provide a defined amount of notice that they are terminating the employment contract.
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Chapter 20 Regulating the End of Employment Contracts 323
vide working statutory notice of termination or to pay an amount equal to the amount of wages and benefits the employee would have received had they worked the statutory notice period (called termination pay). Notice of termination must be in writing so that disputes over whether notice was given and when it was given are reduced or eliminated. Termination pay (and severance pay, discussed later in this chapter) is not subject to the common law rule of the duty to mitigate, which we considered in Chapter 14, because it does not constitute damages for breach of contract.4 It is a statutory entitlement that an employee has the right to receive, regardless of whether they earn new income during the notice period. Although Canada’s statutory notice of termination provisions vary from one jurisdiction to another, they share some common features.
1. Minimum Notice of Termination: Qualifying Periods and Length of Notice Each Canadian jurisdiction includes a minimum notice of termination qualification period—a period of time from the date the employee was hired—ranging from 30 days in Manitoba, to three months in Ontario, to six months in several other provinces. This qualification introduces a form of statutory probationary period, which allows an employer to dismiss an employee without any notice until the employee has been employed long enough to meet the qualification threshold.5 The employment standards legislation in each jurisdiction also stipulates the minimum amount of notice of termination required, which ranges from one week’s notice to eight weeks’ notice, depending on the length of time the employee was employed and the jurisdiction (see Table 20.1). 2. Greater Notice Period for Mass Terminations All provinces (except Alberta) and the federal jurisdiction require a greater period of notice in the case of “mass terminations” that occur within a finite period of time (such as two, four, or six months) based on the presumption that it will be harder for a large group of dismissed employees to find new employment and mass terminations can impose heavy costs on the government and the community. The number of dismissed employees required to trigger the higher notice periods varies from 10 in some provinces to 50 in others. For example, in Ontario, an employer that dismisses from 50 to 199 employees in a four-week period must provide at least eight weeks’ notice to each employee; for 200 to 499 employees, notice rises to at least 12 weeks; and for 500 or more employees, notice rises to at least 16 weeks.6 3. Definition of Termination of Employment Only an employee who has been terminated is entitled to statutory notice of termination, and what constitutes a termination of employment is defined in the statutes. In most cases, it is obvious when a termination occurs—the employer tells the employee that they are fired and that is that. However, as we learned in the common law part of this text, sometimes it is less clear when a termination has occurred. Constructive dismissals are an example. Recall from Chapter 13 that a constructive dismissal occurs when the employer commits a fundamental breach of the employment contract that the employee treats as having terminated that contract. Employment standards legislation incorporates the common law doctrine of constructive dismissal into the definition of termination, so that a constructive dismissal triggers the employee’s entitlement
termination pay: The payment owing to a dismissed employee under employment standards legislation that is in lieu of working statutory notice. probationary period: A period of time at the beginning of an employment contract during which the employer evaluates an employee’s suitability for further employment.
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1 week (after 30 days)
2 weeks (after 6 months)
1 week (after 3 months)
2 weeks (after 3 months)
1 week (after 3 months)
2 weeks (after 3 months)
1 week (after 3 months)
1 week (after 6 months)
1 week (after 3 months)
1 week (after 13 weeks)
1 week (after 6 months)
Manitoba
New Brunswick
Newfoundland and Labrador
Northwest Territories
Nova Scotia
Nunavut
Ontario
Prince Edward Island
Quebec
Saskatchewan
Yukon
2 weeks
2 weeks
2 weeks
1 week
2 weeks
2 weeks
1 week
2 weeks
1 week
2 weeks
2 weeks
1 week
1 week
2 weeks*
1–2 years
2 weeks
2 weeks
2 weeks
1 week
2 weeks
2 weeks
2 weeks
2 weeks
2 weeks
2 weeks
2 weeks
2 weeks
2 weeks
2 weeks*
2–3 years
3 weeks
4 weeks
2 weeks
1 week
3 weeks
3 weeks
2 weeks
3 weeks
2 weeks
2 weeks
4 weeks
3 weeks
2 weeks
2 weeks*
3–4 years
* Severance pay is required for qualifying employees in addition to notice of termination.
1 week (after 3 months)
1 week (after 3 months)
Alberta
British Columbia
2 weeks
Federal
Less than 1 year
4 weeks
4 weeks
2 weeks
1 week
4 weeks
4 weeks
2 weeks
4 weeks
2 weeks
2 weeks
4 weeks
4 weeks
4 weeks
2 weeks*
4–5 years
5 weeks
6 weeks
4 weeks
4 weeks
5 weeks*
5 weeks
4 weeks
5 weeks
3 weeks
4 weeks
6 weeks
5 weeks
4 weeks
2 weeks*
5–6 years
Time Employed
TABLE 20.1 Statutory Minimum Notice of Termination Provisions in Canada
6 weeks
6 weeks
4 weeks
4 weeks
6 weeks*
6 weeks
4 weeks
6 weeks
3 weeks
4 weeks
6 weeks
6 weeks
5 weeks
2 weeks*
6–7 years
7 weeks
6 weeks
4 weeks
4 weeks
7 weeks*
7 weeks
4 weeks
7 weeks
3 weeks
4 weeks
6 weeks
7 weeks
5 weeks
2 weeks*
7–8 years
8 weeks
6 weeks
4 weeks
4 weeks
8 weeks*
8 weeks
4 weeks
8 weeks
3 weeks
4 weeks
6 weeks
8 weeks
6 weeks
2 weeks*
8–9 years
8 weeks
8 weeks
8 weeks
6 weeks
8 weeks*
8 weeks
8 weeks
8 weeks
4 weeks
4 weeks
8 weeks
8 weeks
8 weeks
2 weeks*
10–15 years
8 weeks
8 weeks
8 weeks
8 weeks
8 weeks*
8 weeks
8 weeks
8 weeks
6 weeks
4 weeks
8 weeks
8 weeks
8 weeks
2 weeks*
15+ years
324 Part III The Regulatory Regime
Chapter 20 Regulating the End of Employment Contracts 325
to statutory notice.7 Look at the definition of termination in the Ontario Employment Standards Act as an example: An employer terminates the employment of an employee … if, (a) the employer dismisses the employee or otherwise refuses or is unable to continue employing him or her; (b) the employer constructively dismisses the employee and the employee resigns from his or her employment in response to that within a reasonable period; or (c) the employer lays the employee off for a period longer than the period of a temporary lay-off.
Applying this language, the Ontario Labour Relations Board ruled in the case of 1542335 Ontario Inc. v. Tuka that an employer that unilaterally changed an employee’s compensation from a base salary plus commission to commissions alone (resulting in a significant pay cut) and reduced the employee’s job status was found to have terminated the employment contract, entitling the employee to statutory notice of termination.8 The inclusion of constructive dismissal in the definition of termination of employment in employment standards legislation is another example of how the regulatory standards regime mimics rules developed in the common law regime. However, sometimes the regulatory standards and common law regimes diverge. One example is the treatment of temporary layoffs. We saw in Chapter 13 that in the common law regime, a temporary layoff can be treated by the employee as a constructive dismissal, thereby entitling the employee to notice of termination, unless the contract includes a right of the employer to temporarily lay off the employee.9 In Canadian employment standards legislation, in contrast, temporary layoffs are not considered a constructive dismissal (or a termination), at least not initially.10 That’s because the statutes define when a “temporary layoff ” becomes a permanent layoff, or a “termination” for the purposes of the legislative entitlement to notice of termination. For example, in the Alberta legislation, a temporary layoff is considered to last 60 consecutive days or less, while in the Ontario and BC statutes, a temporary layoff is considered to last no more than 13 weeks in any period of 20 consecutive weeks. The right of an employee to statutory notice is not triggered until a layoff lasts longer than a temporary layoff. Once that occurs, most statutes deem the termination to have taken place on the first date of the layoff.11 All of this can get confusing, because it means that a temporary layoff may be a termination under the common law (a constructive dismissal), even though it does not meet the definition of a “termination” under employment standards legislation. The employer may be breaching the employment contract by temporarily laying off the employee and yet not be in violation of the employment standards legislation.12 The employee may be entitled to “reasonable notice” of termination in the common law because they have been constructively dismissed, but not entitled to statutory notice of termination in the regulatory regime because they have not yet been “terminated” according to the definition in the legislation. This is an example of why it is important to keep the two regimes distinct in your mind when thinking about legal questions. Ask first whether the employer’s actions violate the contract according to the common law rules we considered in Part II of the book, and then whether they violate a statute. The fact that an action may be lawful under one regime does not mean that it is also lawful under another.
4. The Exemption of Certain Employees from Statutory Notice Entitlements Finally, consistent with the pattern we have identified previously in Part III, many employees are exempt from the legal entitlement to statutory notice. Some occupations are excluded from the statutory notice provisions altogether—construction workers, for example, who often work on discrete projects with no predetermined end date or who regularly move between job sites. Some of the exemptions mirror those found in common law contract rules we learned about earlier, such as employees whose contracts have become “frustrated” (see Chapter 11) and employees who are employed under a fixed-term or fixed-task contract whose contract ends as
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326 Part III The Regulatory Regime agreed (see Chapter 8).13 An employee who has been lawfully laid off and then is recalled to work forfeits the entitlement to statutory notice if they do not return to work. These are just a few examples. Exemptions from statutory notice vary across jurisdictions, and it is a good idea to be aware of the exemptions for your jurisdiction. In every jurisdiction, an employee is disqualified from statutory notice when they have engaged in serious misconduct leading to termination for cause.14 This rule closely parallels the common law doctrine of summary dismissal considered in Chapter 12. If an employee’s misconduct would allow the employer to dismiss the employee for cause, without notice, in the common law regime, then the odds are that the statutory requirement to provide minimum notice is also exempted. So, for example, an employee who repeatedly refused a direct order to remove her earrings for safety reasons was denied statutory notice of termination because she had been fired for cause (insubordination).15 Similarly, an employee who was terminated for “continuing and flagrant disregard” for the employer’s rules regarding punctuality, and an employee who was terminated for long-standing poor performance and a failure to improve, had both forfeited their right to statutory notice.16 However, in some provinces the employment standards statute imposes a standard of just cause that it is more difficult for the employer to satisfy than the test for summary dismissal in the common law. For example, in Ontario, the legislation disqualifies from statutory notice (and severance pay) “an employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”17 The element of “wilfulness” means that conduct that could justify summary dismissal under the common law test may not meet the test for disqualifying an employee from statutory entitlements.18 This situation is demonstrated in the case discussed in Box 20.1.
BOX 20.1 » CASE LAW HIGHLIGHT Disqualification from Statutory Notice for Wilful Misconduct Oosterbosch v. FAG Aerospace Inc. 2011 ONSC 1538 Key Facts: Oosterbosch was dismissed by FAG Aerospace Inc. after 19 years of employment for cause, without notice. The employer relied on its progressive discipline policy as grounds for dismissal, pointing to a series of four disciplinary warnings for shoddy job performance and lateness. The employee filed a lawsuit for wrongful dismissal and included in that action as well a claim for statutory notice.* Issue: Did the employer have cause to dismiss Oosterbosch without providing contractual notice or statutory notice? Decision: Yes, and no. The court ruled that the employer had satisfied the common law standard of cumulative just cause, which we considered in Chapter 12. A pattern of wrongful acts by Oosterbosch had led to clear warnings and a failure to improve. Therefore, Oosterbosch was not entitled to contractual notice. However, the court found that Oosterbosch’s misconduct did not rise to the level of “wilfulness,” which is required to forfeit entitlement to statutory notice and severance pay:
It is my opinion that the plaintiff demonstrated a sustained course of casual and careless conduct that was inconsistent with the continuation of his employment but I do not accept the defendant’s submission that his conduct was wilful. All of the leaders who testified indicated that the plaintiff was an experienced, competent machine operator with an apparent attitude problem but none suggested his misconduct was intentional. … He was undoubtedly careless and the persistence of that carelessness justified his dismissal. I would not, however, characterize his offending behaviour as “wilful misconduct, disobedience or wilful neglect of duty” that would disentitle him to receipt of termination and severance payments under the provisions of the Employment Standards Act, 2000. Therefore, Oosterbosch was entitled to statutory notice and severance pay. * In Ontario, an employee can claim employment standards damages as part of a larger wrongful dismissal lawsuit, which is what happened in this case. See also Stewart v. Park Manor Motors Ltd., 1967 CanLII 243 (Ont. CA).
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Chapter 20 Regulating the End of Employment Contracts 327
5. An Employee’s Statutory Obligation to Provide Notice of Termination We learned in Chapter 15 that a common law implied term requires that employees provide reasonable notice of termination to their employer. We noted that relatively few employers seek damages when employees breach that term, since the harm an employer suffers when an employee quits without proper notice is often small. Since employment standards legislation is principally designed to protect vulnerable employees, and there is already a contractual duty to provide reasonable notice of termination, it is not obvious why governments would statutorily require employees to provide notice to their employers. And indeed, many governments have not. However, a few provinces (Manitoba, Saskatchewan, Alberta, Newfoundland and Labrador, and Nova Scotia) do require employees to provide a small amount of notice to their employer, ranging from one to two weeks, depending on the employee’s length of service. Newfoundland and Labrador is the only jurisdiction in which the length of notice required is the same for both employers and employees, ranging from one week’s notice to six weeks’ notice, depending on the length of employment.19
B. The Interrelationship Between Statutory and Contractual Notice of Termination Requirements The statutory notice of termination requirements found in employment standards legislation across Canada operate alongside the contractual requirement to provide notice of termination. We can use an example to demonstrate how the two regimes relate. Consider Dylan’s case, which appeared in the introduction of this chapter. Figure 20.1 describes Dylan’s contractual and statutory entitlements. It’s easy to figure out how much statutory notice is required because minimum notice requirements are tied directly to length of service. In Ontario, for example, Dylan would be entitled to a “minimum” of eight weeks’ notice because the Ontario Employment Standards Act requires that employers give employees with eight years’ or more service eight weeks’ notice.20 If the employer fails to provide at least that amount, then it would be in violation of the legislation, and Dylan could file a complaint with the Ontario Ministry of Labour seeking damages based on a failure of the employer to provide eight weeks’ worth of wages.
BOX 20.2 » TALKING WORK LAW How to File an Employment Standards Complaint While it is possible for workers to file common law “wrongful dismissal” lawsuits in court on their own behalf, in practice, due to the complexities of the law and judicial processes, most of the time they retain lawyers to represent them. In contrast, it is common for workers to file their own employment standards complaints. This can be done by obtaining a complaint form in hard copy from the provincial Ministry of Labour website or offices and then completing and submitting it to the government. Alternatively, nowadays it is possible and quicker to complete the complaint form online. In some provinces, the worker is required to serve the employer with a copy
of the complaint, sometimes as a precondition of filing the complaint with the government. You can find the details of how to file a complaint in your province by searching “employment standards complaint” and the jurisdiction in which you are interested on the Internet. For example, a search of “employment standards complaint Ontario” leads you the Ministry of Labour’s website with the electronic complaint form: . Once the form is submitted, the government will investigate whether a statutory breach has occurred and make an order if any is justified.
Dylan’s contractual notice entitlements depend on what his contract states, if anything. Four possible scenarios are described in Figure 20.1. In all but scenario two, Dylan is entitled to more notice under the notice term in the employment contract than under the statute. An employer can be in compliance with the statutory minimum notice of termination provisions and yet still be in breach of the contractual notice of termination provisions. In scenarios 1 and 3, the con-
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328 Part III The Regulatory Regime tract requires common law reasonable notice, which, as we learned in Chapter 10, judges determine by applying the Bardal factors (length of service, age of the employee, character of the employment, availability of similar work, etc.). An employee in Dylan’s situation—a 55-year-old manager with 20 years’ service—could easily be entitled to 18 to 24 months’ reasonable notice, far more than the eight weeks’ statutory minimum notice. FIGURE 20.1 An Example of the Interplay Between Statutory and Contractual Notice of Termination Entitlements Dylan is dismissed without cause and without notice after 20 years’ employment as a grocery store manager in Ontario. He was 55 years old when he was fired.
How much notice is Dylan entitled to?
Contractual Entitlement Scenario
1 2 3 4
Statutory Entitlement Entitlement
The employment contract does not include a notice of termination clause.
Reasonable notice, likely in the range of 18–24 months, applying the Bardal factors (see Chapter 10).
The employment contract permits termination with notice equal to the statutory minimum.
Eight weeks’ notice (see Chapter 8 for a discussion of conditions for a legal notice of termination contract clause).
The employment contract permits termination with no notice or less notice than required by statute.
Reasonable notice (likely in the range of 18–24 months) because the contract term is void. See the discussion of Machtinger v. HOJ Industries Ltd. in Box 8.6).
The employment contract permits termination with an amount of notice that is greater than the maximum amount of notice required in the statute (i.e., six months’ notice).
The amount of notice in the contract term.
Ontario Eight weeks’ notice (Employment Standards Act, 2000) Means of Enforcement To enforce his statutory notice entitlement, Dylan could file a complaint under the Employment Standards Act, 2000. An employment standards officer (ESO) employed by the government would investigate and decide if proper notice was given. If not, the ESO can issue an order for the employer to pay Dylan the wages he would have earned during the eight weeks. Either party can appeal the ESO’s decision to an expert administrative tribunal called the Ontario Labour Relations Board.
Means of Enforcement To enforce his contractual notice entitlement, Dylan would need to file a lawsuit in a court for wrongful dismissal.
So why would Dylan accept only the eight weeks’ notice required by the statute when he is entitled to so much more notice under his employment contract? The answer is probably
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Chapter 20 Regulating the End of Employment Contracts 329
twofold. First, Dylan may not be aware of his contractual entitlement, especially in scenarios 1 and 3, since most people know little about implied contract terms such as “reasonable notice.” Second, even if Dylan is aware that his contract entitles him to more than statutory notice, he may not want to incur the cost, stress, and time required to litigate a wrongful dismissal lawsuit to recover the additional contractual notice. A lawyer’s fees in a relatively straightforward wrongful dismissal lawsuit can easily start at $50,000, and it can take years to get a decision. If Dylan wins the lawsuit, the court may order the employer to pay a portion of his lawyer’s fees, usually around 60 percent of the actual fees. If he loses, he may be ordered to pay a large share of the employer’s legal costs in addition to paying his own lawyer’s fees. Wrongful dismissal lawsuits are usually only prudent for employees with very long service who are entitled to reasonable notice (because the difference between the contractual notice and the statutory minimum notice will be largest for these employees) and high-income employees (since the damages for each week added to the period of notice are relatively high). For the vast majority of employees, a wrongful dismissal lawsuit makes little economic sense. Governments recognize this and also want to limit the number of wrongful dismissal lawsuits filed in the courts. The statutory minimum notice requirements were enacted to provide a cheaper, quicker, and less complex legal notice model accessible to employees who are disinclined to pursue their often much more extensive contractual notice entitlements. The prohibitive cost of litigating wrongful dismissal lawsuits puts the common law courts out of reach for many workers, which, as Box 20.3 describes, creates an access to justice concern.
BOX 20.3 » TALKING WORK LAW Access to Justice and the Interplay Between Statutory and Contractual Entitlements If employees cannot afford to enforce their contractual notice of termination entitlements, they are left to rely on the employer’s integrity to comply with the contract or statutory minimum notice, even if their contract entitles them to much more notice than that. Applying the law of work framework introduced in Chapter 2, we can observe that the employer’s internal inputs (its power, values, and goals) play an important role in determining whether the employer complies with notice of termination provisions in the employment contract. Many employers comply with their contractual obligations to provide employees with reasonable notice of termination, or at least offer an amount of notice that is “in the ballpark” of what a judge would order in a wrongful dismissal lawsuit. However, some employers use the high cost of litigation to their tactical advantage. They give their employees only the statutory minimum notice, even if the employment contract requires considerably more notice. This type of employer assumes that most employees will not sue them, and if some occasionally do, the employer can absorb whatever damages it is ordered to pay. In the case of Moldovanyi v. Kohler Ltd., an
Ontario judge described one such employer’s approach to dismissing employees: It is obvious that [the employer] has adopted a corporate policy that it will only pay the statutory minimum to employees dismissed without cause, compelling the employees to commence actions to seek any further amounts.* The employer’s strategy of giving only the statutory minimum amount of notice when the employment contract requires much more reflects an ethical or value choice—cost savings over contractual compliance. The employer’s goal is to minimize the cost of terminations, and the high cost to employees of enforcing notice of termination clauses in employment contracts confers considerable power on the employer. A challenge for the legal system is how to make access to justice—the ability to recover contractual entitlements— available to all workers and not just to those with considerable economic means. * Moldovanyi v. Kohler Ltd., 2009 CanLII 7094 (Ont. Sup Ct J) at para 15. See also Brito v. Canac Kitchens, 2011 ONSC 1011.
III. Severance Pay (Ontario and Federal) Ontario and the federal jurisdiction require employers to pay additional money beyond whatever is required in terms of statutory notice obligations to qualifying employees.21 These pay-
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330 Part III The Regulatory Regime ments are called severance pay. The amount of severance pay is tied to length of service, so it is a benefit targeted at longer service employees. In Ontario, only employees with at least five years’ service are eligible for severance pay, whereas in the federal jurisdiction the minimum threshold is 12 consecutive months’ service. Section 64(1) of the Ontario Employment Standards Act, 2000 also restricts severance pay to employers who meet one of the following two conditions: (a) the severance occurred because of a permanent discontinuance of all or part of the employer’s business at an establishment and the employee is one of 50 or more employees who have their employment relationship severed within a six-month period as a result; or (b) the employer has a payroll of $2.5 million or more.
These requirements are designed to limit severance pay costs to larger employers or employers who undertake mass terminations flowing from workplace closures. There remains some debate in Ontario about whether the $2.5 million threshold is to include only payroll for employees working in Ontario, or whether it includes total company payroll, including payroll for employees working outside of Ontario.22 The amount of severance pay an employee is entitled to receive in Ontario is one week’s pay per year of service (or part thereof) up to a maximum of 26 weeks’ pay. In the federal jurisdiction, the formula is two days’ pay for each complete year of service, with no maximum but with a minimum benefit of five days’ pay.23 The exemptions that disqualify an employee from statutory notice tend to be mirrored in the severance pay provisions. For example, an employee who quits or is dismissed for cause, as defined in the legislation, is disqualified from severance pay. Severance payments (as well as termination pay) made by an employer are deducted from a wrongful dismissal damage award so that the employer does not pay twice.24
IV. Statutory Protection Against Unfair Dismissal Notice of termination and severance pay laws do not restrain employers from dismissing employees, although they do impose costs on termination. However, statutory protection against unfair dismissal does exist in Canada, and it restricts employers from dismissing employees by regulating the reason for termination. There are two types of statutory protection against unfair dismissal in Canada: laws that prohibit dismissals contrary to public policy and unjust dismissal laws.
A. Laws That Prohibit Dismissals Contrary to Public Policy A number of statutes prohibit the dismissal of employees for reasons contrary to public policy. A prime example is human rights legislation, which prohibits a dismissal based on certain discriminatory grounds (see Chapters 21 – 23). Collective bargaining legislation makes it unlawful for an employer to dismiss an employee for joining a union or engaging in lawful union activities (see Part IV). These sorts of statutes restrict freedom of contract by prohibiting termination for reasons that the government believes should not be relevant to employment decisions. The available remedies for dismissals contrary to public policy usually include reinstatement as well as back wages and reimbursement for lost benefits.
severance pay: Compensation that an employer must pay to a qualifying employee who has been dismissed; this compensation is in addition to what is required by statutory notice obligations. unjust dismissal law: A statutory law that imposes restrictions on the contractual right of employers to dismiss employees for any reason at all.
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Chapter 20 Regulating the End of Employment Contracts 331
Most employment-related statutes also include anti-reprisal provisions that make it unlawful to dismiss an employee for attempting to enforce their statutory rights.25 For example, an employee who asserts their legislative employment standards or occupational health and safety rights cannot be dismissed in retaliation. This makes sense, because if an employee could be terminated for insisting on their statutory rights, then those rights would be hollow. In recent years, attention has turned to protecting whistle-blowers—employees who disclose information about wrongdoing committed by their employer.26 Most of this legislation applies to government employees only. For example, Manitoba’s Public Interest Disclosure (Whistleblower Protection) Act creates a legal right for a government employee who “reasonably believes that he or she has information that could show that a wrongdoing has been committed or is about to be committed” to report that wrongdoing to a supervisor, a senior official, or an ombudsperson appointed by the government. If the disclosure is made, then the statute prohibits any reprisal against the employee, including dismissal, and grants the power to the labour board (an expert tribunal) to reinstate a dismissed employee.27 Other jurisdictions have enacted similar legislation.28
B. Unjust Dismissal Laws Employment standards legislation in only three jurisdictions—federal, Nova Scotia, and Quebec—prohibits the dismissal of certain non-union employees without good or “just” cause.29 Nova Scotia was the first to enact the just cause protection, in 1975, followed by the federal government in 1978 and Quebec in 1979. These laws were modelled after Recommendation 119 of the International Labour Organization’s Termination of Employment Recommendation, 1963 (see the ILO’s influence on Canadian work law in Chapter 27).30 To qualify for this protection, a non-union employee must have been employed for a specific time period: at least 12 consecutive months in the federal jurisdiction, ten years in Nova Scotia, and two years in Quebec. Beyond that qualification, other differences exist in the details of the unjust dismissal laws of the three jurisdictions, but we will not explore those details in this brief summary.31 Unjust dismissal laws do not prohibit a dismissal for valid business reasons, such as a permanent layoff due to lack of work. They apply mostly to terminations in which the employer alleges there was cause for dismissal. The employee can challenge that decision and, if they win, the law provides for the possibility of reinstatement with back pay, among other remedies.32 This statutory reinstatement power marks a fundamental change from the common law model of wrongful dismissal considered in Chapter 12. Here again we see an example of the regulatory regime learning from and adopting legal rules developed in another regime—in this case, from the collective bargaining regime and “just cause” provisions negotiated by unions into collective agreements.33 However, while it might seem fair to provide non-union workers with parallel rights to protection from unfair dismissal that are enjoyed by unionized employees, only the three jurisdictions mentioned have taken this step. Many politicians fear that a general unfair dismissal law will prove too expensive to administer and impose costs and rigidities on employers that will lead to job losses.34 The standard of cause applied by adjudicators and courts when enforcing statutory protection against unfair dismissal is similar to that applied by labour arbitrators who interpret “just cause” for termination clauses in collective agreements (see Part IV) and by courts that assess whether the employer had cause for summary dismissal (see Chapter 12).35 If the employer alleges cause for termination, an employee covered by the legislative protection can anti-reprisal provisions: A statutory rule that prohibits an employer from dismissing or otherwise punishing an employee for attempting to enforce their statutory rights. whistle-blower: An employee who discloses information about harmful or illegal conduct of their employer or co-workers.
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332 Part III The Regulatory Regime file an unfair dismissal complaint, and the employer must then demonstrate that it had a good reason to dismiss the employee. Dylan, in the story that opened this chapter, would probably get his job back if his contract were governed by one of the laws that protects employees from unfair dismissal, since the employer’s reason for termination (alleged theft) was unfounded.36 In 2016, the Supreme Court of Canada considered whether the unjust dismissal provision in the Canada Labour Code prohibited an employer from terminating an employee without cause but with a lengthy period of notice. Section 240 of the code states that a non-union employee with at least 12 consecutive months of continuous employment “may make a complaint in writing to an inspector if the employee has been dismissed and considers the dismissal to be unjust.” The Supreme Court ruled that section 240 eliminated the employer’s common law right to terminate employees without cause and with notice, as explained in Box 20.4.37
BOX 20.4 » CASE LAW HIGHLIGHT Is Dismissal Without Cause and With Notice an “Unjust Dismissal” Under the Canada Labour Code? Wilson v. Atomic Energy of Canada Limited 2016 SCC 29 Key Facts: Wilson was terminated without cause after fourand-a-half years’ service at Atomic Energy of Canada Limited, a company that is regulated by federal employment legislation. Atomic Energy offered Wilson a severance package of six months’ pay if he signed a release promising not to bring any legal action against the Crown corporation. Wilson refused to sign the release and instead filed an “unjust dismissal” complaint under section 240 of the Canada Labour Code. An adjudicator appointed under the code ruled that Wilson had been unfairly dismissed, but before he issued a remedy, the employer applied to the court for judicial review of that decision. The case ended up at the Supreme Court of Canada. Issue: Is dismissal without cause and with notice an “unjust dismissal” according to section 240 of the Canada Labour Code? Decision: Yes. The Supreme Court ruled that the purpose of the unfair dismissal section of the Canada Labour Code was to
protect employees from termination without good cause, similar to “just cause” applied in the unionized setting. While the section does not prohibit terminations due to a legitimate lack of work (i.e., a permanent layoff ), it does prohibit an employer from terminating an employee for other reasons simply by giving them notice, as is permitted in the common law regime. The unfair dismissal law overrides the common law right of employers to terminate by giving notice and requires the employer to demonstrate “just cause” for the termination. In assessing what constitutes just cause, adjudicators have correctly looked to guidance from labour arbitrators interpreting “just cause” provisions in unionized collective agreements (see Chapter 36). Arbitrators have long applied the concept of “progressive discipline,” requiring employers to demonstrate that the employee had been warned of problems and given a fair opportunity to improve. In this case, the employer did not allege cause but instead insisted it could terminate Wilson simply by giving him notice. That course of action is prohibited by section 240 of the Canada Labour Code. The adjudicator’s decision was therefore correct.
V. Chapter Summary This chapter reviewed the manner in which governments have intervened in the common law regime’s model of employment contract termination. Most Canadian governments have refused to legislate a requirement for employers to have a reason to terminate an employment contract and, instead, have settled for a requirement for employers (and sometimes employees) to provide at least a minimum amount of notice of termination. This refusal has left unionized employees with considerably greater job security than non-union employees, since unions usually successfully bargain “just cause provisions” for termination into their collective agreements, as we will learn in Part IV. Moreover, it has left non-union employers with greater flexibility to dismiss employees at a lower cost than is the case for unionized employers.
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Chapter 20 Regulating the End of Employment Contracts 333
QUESTIONS AND ISSUES FOR DISCUSSION 1. What came first, the common law implied term requiring “reasonable notice” of termination or statutory notice requirements in Canadian legislation? 2. Is an “at will” employment contract—a contract that can be terminated with no notice for any or no reason—ever lawful in Canada? 3. What is the difference between notice of termination, termination pay, and severance pay? Does every jurisdiction in Canada require that employers provide both termination and severance pay? 4. Is it possible for an action by an employer to amount to a termination of the employment contract in the common law regime but not in the regulatory standards regime? Explain. 5. What two types of statutory protection against unfair dismissal exist in Canada? Describe each.
APPLYING THE LAW 1. Jonas was dismissed without cause from his job as a data processor at IBM after 20 years’ employment. He was 58 years old at the time of his dismissal. Assume that none of the exemptions from notice and severance pay apply. Jonas was earning $2,000 per week. Applying the employment standards legislation in your home province, determine the amount of statutory notice of termination to which Jonas is entitled. Is he entitled to severance pay in your province? Why or why not? If Jonas is entitled to severance pay, how much severance pay is he entitled to? 2. Think back to Chapter 10, when we examined the requirement of employers to provide “reasonable notice” of termination. Assume Jonas had no notice of termin-
ation clause in his employment contract and that his employer provided him only with the amounts to which he was entitled under the employment standards legislation in your province. a. Estimate how much reasonable notice a court would order if Jonas sued IBM for wrongful dismissal. Based on your assessment, approximately how much more money would Jonas be entitled to under his contract as compared to under employment standards in your province? b. Considering your estimates, discuss why Jonas might nevertheless decide not to sue IBM for wrongful dismissal.
NOTES AND REFERENCES 1. International Labour Organization, “C158—Termination of Employment Convention, 1982 (No. 158),” Part II, Division A, Article 4, online: .
5. In theory, an employee with less service length than needed to qualify for statutory notice could still be entitled to “reasonable notice” under the common law or an expressed contract term, but that notice period would likely be very short.
2. P. Malles, Canadian Labour Standards in Law, Agreement, and Practice (Ottawa: Economic Council of Canada, 1977).
6. Employment Standards Act, 2000, SO 2000, c. 41, s. 58; and O. Reg. 288/01, s. 3(1).
3. C. Ruhm, “Advance Notice and Post Displacement Job Losses” (1992) 10 J Lab Econ 1.
7. The language used in the Employment Standards Act, 2000, supra note 6, is typical of the language used in Canadian employment standards statutes. Section 56(1)(b) provides that a termination occurs when “the employer constructively dismisses the employee and the employee resigns from his or her employment in response to that within a reasonable period.”
4. Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402; Theberge-Lindsay v. 3395022 Canada Inc. (Kutcher Dentistry Professional Corporation), 2019 ONCA 469; and Boland v. APV Canada Inc., 2005 CanLII 3384 (Ont. Sup Ct J (Div Ct)).
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334 Part III The Regulatory Regime 8. See 1542335 Ontario Inc. v. Tuka, 2004 CanLII 29576 (Ont. LRB). 9. Collins v. Jim Pattison Industries Ltd., 1995 CanLII 919 (BCSC); McLean v. The Raywal Limited Partnership, 2011 ONSC 7330; Pryor v. Taylor’s Feed, 2009 NBQB 346; and Davies v. Fraser Collection Services Limited, 2008 BCSC 942. 10. Note that an indefinite-term layoff is a termination. See Stolze v. Addario, 1997 CanLII 764 (Ont. CA) 11. See Alberta Employment Standards Code, RSA 2000, c. E-9; Ontario Employment Standards Act, 2000, supra note 6, s. 56(5); and British Columbia Employment Standards Act, RSBC 1996, c. 113, s. 63(5). 12. Collins v. Jim Pattison Industries Ltd., supra note 9; Janice Wiens v. Davert Tools Inc., 2014 CanLII 47234 (Ont. Sup Ct J); Besse v. Dr. A.S. Machner Inc., 2009 BCSC 1316; Style v. Carlingview Airport Inn (1996), 90 OAC 83 (Ont. Ct J (Gen Div)); and Turner v. Uniglobe Custom Travel Ltd., 2005 ABQB 513, but see Vrana v. Procor Ltd., 2003 ABQB 98; aff ’d on other grounds in Vrana v. Procor Limited, 2004 ABCA 126: finding that the statutory right to temporarily layoff an employee in Alberta usurps the common law doctrine of constructive dismissal. On the flip side, a contract term permitting a temporary layoff to extend beyond the date it would become a termination under employment standards legislation is void: Elsegood v. Cambridge Spring Service (2001) Ltd., 2011 ONCA 831. 13. See, for example, O. Reg. 288/01, s. 2. See Ontario Nurses’ Association v. Mount Sinai Hospital, 2005 CanLII 14437 (Ont. CA), which ruled that the law that excludes from statutory severance pay employees whose contracts become frustrated due to pay received during illness violates s. 15 of the Charter. That decision led to an amendment, creating new sections 9(1)2 and 9(2) of O. Reg. 288/01. 14. See, for example, BC ESA, supra note 11, s. 63(3); Alberta ESC, supra note 11, s. 55(2); O. Reg. 288/01, s. 2(1)3; Manitoba The Employment Standards Code, CCSM, c. E110, s. 62(1)(h). 15. Scherling v. Martin Pet Foods, 2002 CanLII 20640 (Ont. LRB). 16. Lawrence v. StarTek Canada Services Ltd., 2009 CanLII 9265 (Ont. LRB); and Services Plus Aquatics Inc. v. Clarke, 2006 CanLII 39099 (Ont. LRB). See also North Perimeter Service Centre, Inc. v. JH, 2013 CanLII 18602 (Man. LB) (applying common law standard to statutory “just cause” provision, finding no just cause for repeated absenteeism). 17. See O. Reg. 288/01, s. 2(1)3 (notice exemption) and s. 9(1)6 (severance pay exemption). See also Newfoundland and Labrador, Labour Standards Act, RSNL 1990, c. L-2, s. 53(1)(a): “wilfully refused to obey a lawful instruction … .”
18. See Plester v. Polyone Canada Inc., 2011 ONSC 6068; aff ’d 2013 ONCA 47 (statutory test of wilful misconduct is more rigorous than the common law test, essentially “being bad on purpose”); Khashaba v. Procom Consultants Group Ltd., 2018 ONSC 7617; and Oosterbosch v. FAG Aerospace Inc., 2011 ONSC 1538. 19. Newfoundland, Labour Standards Act, supra note 17, s. 52. 20. Ontario ESA, supra note 6, s. 57. 21. See Ontario ESA, supra note 6, s. 64; and Canada Labour Code, RSC 1985, c. L-2, division XI. 22. Doug Hawkes v. Max Aicher (North America) Limited, 2018 CanLII 125999 (Ont. LRB) (includes only Ontario payroll). Contrast with Paquette c. Quadraspec Inc., 2014 ONCS 2431 (calculation not limited to Ontario payroll). 23. For more details on the severance pay provisions, see Canada, Labour Program, “Terminations: Pamphlet 10— Labour Standards,” online (pdf): ; and Ontario Ministry of Labour, “Severance Pay,” online: . 24. Stevens v. Globe and Mail, 1996 CanLII 10215 (Ont. CA). 25. See, for example, Ontario ESA, supra note 6, s. 74 (antireprisal section) and s. 104 (power to reinstate a terminated employee). 26. For a good summary of whistle-blower laws in Canada, see Y. Saint-Cyr, “The State of Whistleblowing in Canada,” Slaw (June 2013), online: . See also Manitoba’s The Public Interest Disclosure (Whistleblower Protection) Act, CCSM c. P217, s. 10 (disclosure) and s. 28 (remedies for reprisals, including reinstatement to employment). 27. The Public Interest Disclosure (Whistleblower Protection) Act, supra note 26. 28. Including the federal jurisdiction, Ontario, Alberta, Saskatchewan, and New Brunswick. Only Saskatchewan and New Brunswick have whistle-blower protection legislation that protects private sector employees from reprisals for reporting illegal behaviour of the employer: The Saskatchewan Employment Act, SS 2013, c. S-15.1, s. 2-42, and New Brunswick Employment Standards Act, SNB 1982, c. E-7.2, s. 28. See Merk v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 771, 2005 SCC 70. 29. Canada Labour Code, supra note 21, s. 240; Nova Scotia Labour Standards Code, RSNS 1989, c. 246, s. 71; and Quebec An Act Respecting Labour Standards, CQLR c. N-1.1, s. 124.
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Chapter 20 Regulating the End of Employment Contracts 335 30. International Labour Organization, “R166 - Termination of Employment Recommendation, 1982 (No. 166),” online: . See also G. England, Individual Employment Law, 2nd ed (Toronto, ON: Irwin Law, 2008) at 364. 31. For a fuller discussion of the unjust dismissal laws of the three jurisdictions, see England, supra note 30 at 364-91. 32. In Slaight Communications Inc. v. Davidson, [1989] 1 SCR 1038, the Supreme Court of Canada dismissed an employer’s freedom of expression Charter challenge against an order by an adjudicator for the employer to prepare a reference letter for a dismissed employee drafted by the adjudicator. 33. I. Christie, G. England, & B. Cotter, Employment Law in Canada, 2nd ed (Toronto, ON: Butterworths, 1993) at 669: the unfair dismissal laws were intended to “provide the non-unionized employee with substantially similar protections against unjust discharge as the unionized employee enjoys under a collective agreement.” See also G. England, “Section 240 of the Canada Labour Code: Some Current Pitfalls” (1999) 27 Man LJ 17; Champagne v. Atomic Energy of Canada Limited, 2012 CanLII 97650 (CALA); and Roberts v. Bank of Nova Scotia (1979), 1 LAC (3d) 259. 34. In this area of the law, the neoclassical view (see Chapter 3) that government intervention in employment
relationships results in labour market disruptions and inefficiencies has proven highly influential. See R. Epstein, “In Defense of the Contract at Will” (1984) 51 U Chicago L Rev 947. See also the discussion in R. ArnowRichman, “From Just Cause to Just Notice in Reforming Employment Termination Law” in M.L. Wachter & C. Estlund, eds, Research Handbook on the Economics of Labor and Employment Law (Cheltenham, UK: Edward Elgar, 2012). 35. England, supra note 30; and Sutherland v. Advance Furniture Distribution Inc., 2010 NSLST 12. 36. A review of the “‘Unjust Dismissal’ Provisions in the Canada Labour Code” appears in P. Neumann & J. Sack’s eText on Wrongful Dismissal and Employment Law, online: . 37. In Wilson v. Atomic Energy of Canada Ltd., 2016 SCC 29, the court rejected a small line of contrary authority that had ruled that the common law right to terminate with notice only survived the passage of section 240. The leading decision in this contrary line of authority was Knopp v. Westcan Bulk Transport, [1994] CLAD No. 172.
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C H A P T E R 21
Introduction to Human Rights at Work LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 337 II. A (Very) Brief History of Human Rights Law in Canada 338 III. Common Features of the Canadian Human Rights Model 340 A. Anti-Discrimination Provisions Apply to the Entire Life Span of the Employment Relationship 340 B. Human Rights Commissions 342 C. The Process for Filing, Investigating, and Litigating Human Rights Complaints 343 D. The Remedial Powers of Human Rights Tribunals 343 E. The Limits on Raising Human Rights Complaints in Multiple Legal Forums 345 IV. What Is Discrimination? 345 V. Chapter Summary 347 Questions and Issues for Discussion 347 Notes and References 348
• Describe the history and development of human rights law in Canada. • Explain how events at the international level following World War II influenced the development of human rights law in Canada in the 1940s and 1950s. • Explain how Canadian human rights laws regulate job advertisements, application forms, and job interviews. • Describe the origins and role of human rights commissions in Canada. • Describe how human rights complaints are filed, investigated, and litigated. • Describe the broad range of remedies available to human rights tribunals to redress workplace discrimination. • Describe the limits on pursuing human rights - based complaints in multiple legal forums. • Define “direct” and “indirect” discrimination.
I. Introduction We considered Seneca College v. Bhadauria in Chapter 6, a case in which the Supreme Court of Canada refused to recognize a new tort of discrimination in the formation of employment contracts.1 If Bhadauria believed that she had been denied employment because of her ethnicity, the court explained, then her legal means for redress were under provincial human rights legislation, not in the common law courts. It’s now time to explore that legislation, and that is the task of the next three chapters. In this chapter, we look at Canadian human rights law from a highlevel vantage point by considering some common features of the Canadian human rights model before diving into the important question of what exactly constitutes “discrimination.” Like all work-related legislation, human rights statutes impose restrictions on the rights of buyers and sellers of labour power. While an employer in a system based on freedom of contract might be able to hire all the workers it needs from within a homogeneous category of applicants—such as all-white or all-male workers—modern human rights statutes make it unlawful to choose workers based on skin colour or sex. Human rights statutes are an attempt by governments to inject public policy into contract law by prohibiting distinctions among workers that the state believes are, or should be, irrelevant. Which distinctions the state chooses to prohibit and the extent to which human rights statutes actually prevent discrimination are among the most interesting questions that arise from this area of the law. 337
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338 Part III The Regulatory Regime
II. A (Very) Brief History of Human Rights Law in Canada Let’s begin with a short history lesson. Consistent with the idea introduced in Chapter 2 that law influences and is influenced by changes and developments in social and cultural values (external feedback loop), human rights statutes reflect the evolution of social values over time; as society comes to abhor a discriminatory practice, pressure grows on governments to enact statutes to prohibit that discrimination. Among the earliest examples of anti-discrimination statutes in Canada was Ontario’s Racial Discrimination Act, 1944. It prohibited advertisements or notices from being published that discriminated against or indicated an intention to discriminate against a person or group on the basis of “race or creed.”2 That law sought to abolish the infamous “Whites Only” job advertisements common in Canada into the 1940s.3 But the real push for rights-based legislation in Canada arose from the atrocities of World War II and the rise of fascism that preceded it. Indeed, we cannot understand the history of Canada’s human rights statutes in isolation from these broader international developments, as Box 21.1 describes.
BOX 21.1 » TALKING WORK LAW The Law of Work Framework: How the Broader Political and Legal Subsystems Influence Canadian Work Law Prior to the 1940s, Canadian governments intervened in labour markets minimally. The prevailing political orthodoxy aligned most closely with what we described in Chapter 3 as the neoclassical perspective, which is the view that labour practices are best left to market forces, with limited state intervention. However, the atrocities of the Nazi regime demonstrated to the victorious allied forces, including Canada, that democracy alone “could not guard against the rise of tyranny and oppression.”* In the aftermath of World War II, a broad international consensus emerged in favour of greater state intervention in the form of human rights statutes to protect people against injustices, persecution, and discrimination by governments and private actors—including employers—possessing economic power. A number of important international instruments were developed immediately after World War II that would heavily influence the direction of Canadian human rights law. The most important was the United Nations’ 1948 Universal Declaration of Human Rights (UDHR), a non-binding statement of fundamental human rights that national governments were encouraged to implement through national human rights statutes. John Humphrey, a McGill University law professor, alongside Eleanor Roosevelt, activist and former First Lady of the United States, played an integral role in drafting the document. Article 2 of the UDHR declared that “everyone” was entitled to the rights and freedoms described in the document “without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.”† Among the fundamental rights and freedoms listed in the UDHR were several for workers, including the following:
John Humphrey and Eleanor Roosevelt.
• the right to work … to just and favourable conditions of work and to protection against unemployment (article 23(1)); • without any discrimination … the right to equal pay for equal work (article 23(2)); • the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection (article 23(3)); • the right to form and to join trade unions for the protection of his interests (article 23(4)); and • the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay (article 24).‡
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Chapter 21 Introduction to Human Rights at Work 339 Canada signed the UDHR in 1948, and in the decade that followed the federal government and the provinces enacted Canada’s early human rights statutes targeting discrimination in employment practices, as well as formative collective bargaining statutes (discussed in Part IV).§ * A. Davies, Perspectives on Labour Law, 2nd ed (Cambridge, UK: Cambridge University Press, 2009) at 39.
† United Nations General Assembly, “Universal Declaration of Human Rights” (1948), online: . ‡ Ibid. § W.A. Schabas, “Canada and the Adoption of the Universal Declaration of Human Rights” (1998) 43 McGill LJ 403.
In 1951, Ontario enacted the Fair Employment Practices Act, which prohibited discrimination in employment based on race, creed, colour, nationality, ancestry, and place of origin.4 That legislation referenced in its preamble the desire of the province to observe the UDHR. Other jurisdictions followed with similar legislation, including Manitoba (1953), the federal government (1953), Nova Scotia (1955), British Columbia (1956), New Brunswick (1956), and Quebec (1964). The structure of these statutes was similar.5 They forbade discrimination by employers (with some exceptions, such as small employers or some non-profit organizations), unions, and employment agencies on the basis of a small list of prohibited grounds. They also permitted employees to file complaints to a government-appointed commission, which could investigate and determine whether an “offence” had been committed.6 The remedial powers in these statutes were weak; for example, the Ontario Fair Employment Practices Act included the authority to order a limited fine, but not to reinstate an employee dismissed as a result of discrimination. The number and content of prohibited grounds of discrimination have also expanded to reflect evolution within the social, cultural, and religious subsystem (see Chapter 2). An obvious example is the introduction in the 1990s of “sexual orientation” as a prohibited ground (see Chapter 22), a legal development that would have been unimaginable in 1950s Canada. The 1950s Canadian legislation did not prohibit employment discrimination based on sex, political opinion, or language, all grounds listed in the UDHR. Some jurisdictions had legislated equal pay for women and men by the 1950s (see Chapter 18), but it was still lawful to refuse to hire women altogether. Not until the late 1960s and early 1970s, when the women’s rights movement gained momentum, did “sex” (and “marital status”) enter the list of prohibited grounds in Canadian employment discrimination legislation, accompanied by an exemption that allowed discrimination on these grounds when sex or marital status was a “bona fide occupational requirement” of a job, an exemption still found in our human rights statutes, as we will discuss in Chapter 23.7 Other prohibited grounds of discrimination were added to human rights statutes over time and with some variation among the jurisdictions, including family status (in the 1960s and 1970s), record of offences (in the 1970s), disability/handicap (in the 1970s), sexual orientation (in the 1990s), and gender identity and expression (in the 2000s). “Age” was added to human rights statutes beginning in the late 1960s, although the definition of “age” differed according to place and time. For example, in Ontario, “age” was initially defined in 1966 as “40-65,” so that it was lawful to discriminate against workers of other ages.8 Years later the definition was changed to “18-64,” and then in 2006 to its current “18 or older.” Certain grounds are included in some jurisdictions and not others (e.g., “political opinion” is a prohibited ground in nine jurisdictions only), reflecting different political beliefs and priorities across the country. We explore the prohibited grounds of discrimination in Canadian human rights law in detail in Chapter 22. In the 1960s (led by Ontario in 1962), Canadian governments began to consolidate the various anti-discrimination statutes dealing with employment, housing, and other services into
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340 Part III The Regulatory Regime comprehensive human rights codes and acts, the basic models of which remain in effect today.9 Governments established new expert human rights tribunals and human rights commissions to administer the legislation and promote human rights compliance.10 The tribunals were granted broad remedial powers to redress unlawful discrimination, including the power to reinstate dismissed workers, to order damages or workplace reorganization to eliminate discriminatory barriers, and to order offenders to complete human rights awareness training. Among the most significant developments in human rights law over the past 40 years was the introduction of a duty to accommodate as a central pillar in the pursuit of discrimination-free workplaces. The duty to accommodate was borrowed from the United States and was first recognized by the Supreme Court of Canada in the 1985 case of Ont. Human Rights Comm. v. Simpsons-Sears (“O’Malley”) that we will discuss later in this chapter.11 The duty to accommodate imposes substantive and procedural duties on employers to alter workplace schedules, rules, or physical impediments, and sometimes to build new structures or introduce new technologies to remove barriers to employment, unless taking those steps would cause undue hardship (see Chapter 23). This quick tour of historical developments in Canadian human rights at work is sufficient for now. As we work our way through our discussion of human rights, we will note other important events in the development of human rights law.
III. Common Features of the Canadian Human Rights Model Human rights legislation has been enacted in every Canadian jurisdiction governing discrimination in various spheres of life, including in housing and the provision of services and, of course, employment, which is our concern. As always, the details of the human rights regimes in Canada’s various jurisdictions vary. However, if we survey the map from above, we can identify four common features of the Canadian human rights legal model. We consider these features in this section.
A. Anti-Discrimination Provisions Apply to the Entire Life Span of the Employment Relationship All Canadian human rights statutes include a general prohibition on discrimination in employment (among other areas, such as in housing and services). Section 5(1) of the Ontario Human Rights Code is typical: Every person has a right to equal treatment with respect to employment without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, age, record of offences, marital status, family status or disability.
That section, and others like it in human rights statutes across the country, creates a legal right to “equal treatment with respect to employment without discrimination.” That language is human rights tribunal: An expert administrative tribunal created by a government to hear and decide human rights complaints and interpret and apply human rights statutes. human rights commission: An organization created by a government to investigate human rights complaints and promote human rights compliance through education, public outreach, and training. duty to accommodate: A legal requirement in human rights law to take steps to remove discriminatory barriers to employment, including altering schedules, rules, or work patterns or changing the physical design of a workplace. undue hardship: The legitimate defence that an employer may raise to justify why it could not provide an accommodation to an employee. This standard is demanding and requires the employer to demonstrate that significant difficulties—beyond mere inconvenience—would result if it had to accommodate the employee.
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Chapter 21 Introduction to Human Rights at Work 341
broad: it covers all employment-related decisions, from the recruitment and hiring decision to termination of the contract and everything in between, including decisions about promotions and job assignments. Human rights statutes regulate the recruitment process by imposing rules relating to the content of job advertisements and the questions employers ask in job interviews and on job application forms, as summarized in Box 21.2.
BOX 21.2 » TALKING WORK LAW Human Rights Law and the Recruitment Process Since the early 1950s, human rights statutes in Canada have prohibited discriminatory job advertisements. For example, section 23(1) of the current Ontario Human Rights Code, which has barely changed since 1951, reads as follows: The right … to equal treatment with respect to employment is infringed where an invitation to apply for employment or an advertisement in connection with employment is published or displayed that directly or indirectly classifies or indicates qualifications by a prohibited ground of discrimination. This section was violated, for example, when an employer advertised for “female” servers and another for a “maintenance man.”* The BC Human Rights Code (s. 11) similarly prohibits discriminatory job ads, but also creates an expressed exception
when the discriminatory preference listed “is a bona fide occupational requirement,” which is a human rights defence we consider in Chapter 23 that permits some types of discrimination when the discrimination is justified for business reasons and there is no way to accommodate the worker without the employer suffering “undue hardship”: A person must not publish or cause to be published an advertisement in connection with employment or prospective employment that expresses a limitation, specification or preference as to race, colour, ancestry, place of origin, political belief, religion, marital status, family status, physical or mental disability, sex, sexual orientation, gender identity or expression, or age unless the limitation, specification or preference is based on a bona fide occupational requirement. [Emphasis added]
Restaurants can no longer advertise gender-specific employment opportunities.
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342 Part III The Regulatory Regime An employer that advertised for a “young apprentice” on the basis that the job required heavy lifting violated this section and was ordered to pay a 40-year-old complainant $2,500 in damages for injury to dignity, feelings, and self-respect.† There was no evidence that being young was a requirement to be able to do the lifting involved. Canadian human rights statutes (except in British Columbia) also prohibit employers from asking questions on application forms or in job interviews that elicit information related to prohibited grounds. Consider section 8(1) of the Alberta Human Rights Act as an example: No person shall … make any written or oral inquiry of an applicant … (b) that requires an applicant to furnish any information concerning race, religious beliefs, colour, gender, physical disability, mental disability, age, ancestry, place of origin, marital status, source of income, family status or sexual orientation. The language in this section, which is similar to that found in other provinces, prohibits questions that directly ask about prohibited grounds, such as the question posed by the employer in Bouraoui v. Ottawa Valley Cleaning and Restoration, who asked an applicant in a telephone interview if he was black.‡ Asking a job applicant for their date of birth is also unlawful, since that question clearly seeks the applicant’s age. Asking a gay applicant how he would respond if a customer raised concerns about his sexual orientation and whether he believed in God also violated section 8(1) of the Alberta act cited above.§ More often, though, the questions that run afoul of human rights statutes involve more subtle attempts to elicit information related to prohibited grounds, such as these: • What does your husband think of you moving to take this job? [marital status] • Oh, you just got married, that’s great. So do you think you want to have children? [family status] • Where did you grow up? [origin, citizenship, ethnicity] • Is your surname Croatian or Serbian? [ethnicity]
A legal rule barring questions that elicit information about prohibited grounds is distinct from a legal rule that regulates the hiring decision. An employer might ask a job applicant an unlawful question, but then make a hiring decision that is lawful because it is untainted by the information about the prohibited ground. However, once an employer receives information relating to a prohibited ground, either because it asks the employee for that information or it found the information on social media,# it must be prepared to persuade a human rights tribunal that its hiring decision was completely untainted by it. Damages, which is the usual remedy in cases of unlawful ads or questions, can be awarded as a remedy for an unlawful question even if the tribunal rules that the hiring decision itself was not discriminatory. Note finally that sometimes it is lawful for some employers to ask questions about prohibited grounds because the human rights statute creates an exception that permits those questions. We will look at the various exceptions carefully in Chapter 23, but to provide a quick example, human rights statutes sometimes permit religious institutions to give hiring preference to people who adhere to that religion.** In that case, the religious institution may be permitted to ask a job applicant about their religion, because the law permits that particular employer to discriminate on the basis of religion. However, most employers would be breaking the law by asking applicants about their religion. * Cenanovic v. 2332489 Ontario Inc., 2014 HRTO 1811; and Wedley v. Northview Co-operative Homes Inc., 2008 HRTO 13. † Miu v. Vanart Aluminum and Tam, 2006 BCHRT 219. ‡ Bouraoui v. Ottawa Valley Cleaning and Restoration, 2014 HRTO 1303. § Landry v. Vegreville Autobody (1993) Ltd., 2017 AHRC 1. # See the discussion of employer use of social media to research job applicants in this “Fact Sheet” prepared by the Ontario Human Rights Commission: “Interview Questions and Facebook (Fact Sheet)” (2012), online: . ** See, for example, Ontario Human Rights Code, RSO 1990, c. H-19, s. 24(1)(a).
B. Human Rights Commissions Human rights commissions play a prominent role in preventing discrimination and promoting and protecting human rights in their jurisdiction. Between 1963 and 1977, the provinces and the federal government established human rights commissions (British Columbia abolished its commission in 2002, and today only British Columbia and Nunavut do not have one).12 The work of human rights commissions includes promoting compliance with human rights legislation and the abolition of illegal discrimination through education, public outreach, and training. Human rights commissions are also granted statutory power to investigate and sometimes settle
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Chapter 21 Introduction to Human Rights at Work 343
human rights complaints. In some jurisdictions, they act as gatekeepers, deciding which cases are sufficiently meritorious to proceed to a tribunal hearing if not settled, and then act as a litigant representing the complainant.13 In recent years, commissions have been criticized by some commentators for a variety of reasons, including for being too slow, too costly, too one-sided, or altogether unnecessary.14
C. The Process for Filing, Investigating, and Litigating Human Rights Complaints Canadian human rights statutes are primarily complaint based. People who believe they have experienced unlawful discrimination can file a complaint alleging a violation of one or more sections of the jurisdiction’s human rights statute. In some jurisdictions, the human rights commission can file its own complaint.15 In British Columbia, Ontario, and Nunavut, complaints can be filed directly to a human rights tribunal, like filing a lawsuit directly to a court. However, in the rest of Canada complaints are filed and initially vetted and investigated by a human rights commission. The commission may decide not to proceed with a complaint, in which case the complaint is dismissed without a hearing.16 The commission may also attempt to reach a settlement of a complaint. In some jurisdictions, both the commission and the tribunal are authorized to dismiss a complaint if a complainant refuses to accept a reasonable settlement offer.17 If a complaint is not dismissed or settled, it may proceed to litigation. In every jurisdiction except Saskatchewan (where complaints are referred directly to the courts),18 complaints are referred to a human rights tribunal. Tribunals conduct hearings and issue binding legal decisions.
D. The Remedial Powers of Human Rights Tribunals The objective of human rights statutes is to eliminate discrimination based on prohibited grounds. If all discrimination arose from the deliberate, isolated, bad acts of rogue individuals, then a legal model that sanctioned those bad apples for their discriminatory acts might be sufficient. However, governments understand that discrimination is often a more complex problem, resulting from ignorance of the laws and from processes and norms that are deeply embedded within organizations and society more generally. Thus, Canadian human rights statutes confer broad remedial powers on human rights tribunals not only to compensate victims of discrimination but also to take proactive steps to promote future compliance with the law.19 All Canadian human rights statutes grant human rights tribunals the power to order four main types of remedies, as described in Box 21.3.
BOX 21.3 » TALKING WORK LAW The Broad Remedial Powers of Human Rights Tribunals Governments have conferred on human rights tribunals broad remedial powers so that they can resolve claims of discrimination. In general, all Canadian human rights tribunals have the authority to order the following types of remedies: • Compensatory (or pecuniary) damages for lost employment-related income suffered by victims of unlawful discrimination. • General damages for harm suffered by the victim in the form of hurt feelings, injury to dignity and self-respect, and loss of the right to be free from discrimination.
• Reinstatement and hiring orders to place an employee unlawfully denied employment back into the position they would have been in but for the unlawful discrimination. • Broader-based remedial orders intended to eliminate or discourage future discrimination and promote future compliance, including mandatory human rights training and, in some jurisdictions, mandatory hiring quotas or other orders intended to correct systemic discrimination.
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344 Part III The Regulatory Regime Human rights tribunals have the authority to compensate victims of human rights violations by crafting a “make whole” remedy. This type of remedy attempts to put the victim back into the position they would have been in had the discrimination not taken place. In practice that means compensating the victim for “reasonably foreseeable” financial losses due to the discrimination.20 Those losses would include forgone wages and benefits if a worker is denied employment or promotion, dismissed, or forced to resign as a result of the unlawful discriminatory actions of the employer. Human rights damages are not restricted to lost income for a period comparable to what a court would order in a wrongful dismissal lawsuit. They also compensate the victim for the loss they actually suffered as a result of the discrimination.21 In some provinces, the amount of lost wages that can be recovered is capped by the statute. For example, in Alberta the damages for lost wages are capped at two years.22 A duty to mitigate (see Chapter 14) applies, so income earned from alternative sources or income that could have been earned had the employee engaged in reasonable efforts to find alternative employment is deducted from the monetary damages award.23 General damages to compensate a victim for hurt feelings, loss of self-esteem and selfrespect, pain and suffering, and the loss of the right to be free from discrimination are regularly ordered in human rights violation cases.24 In some jurisdictions, a statutory cap is imposed on the amounts that can be awarded under this head of damages. For example, in the federal jurisdiction, the Canadian Human Rights Act provides that an award can be given for “pain and suffering” that is not to exceed $20,000.25 However, in most jurisdictions, there is no statutory cap.26 A tribunal can order an employer to hire (a hiring order) or reinstate an employee who has been denied a job for discriminatory reasons. A hiring order will not be issued unless the tribunal is persuaded that the victim of discrimination would have been hired but for the discrimination.27 An employer might be ordered to either reinstate an employee to the next available position (if there is no vacancy at the time of the tribunal’s reinstatement order) or create a new position.28 In the 2016 decision Fair v. Hamilton-Wentworth District School Board, the Ontario Court of Appeal upheld a decision of the Human Rights Tribunal ordering the employer to reinstate an employee who had been fired in violation of the Human Rights Code even though almost a decade had passed since she was fired. Because her skills had lapsed over this time, the employer was also ordered to provide the employee with up to six months’ training so that she could perform her job. The employer was ordered to pay her nearly ten years’ worth of lost wages, which was in the range of $400,000, and general damages in the amount of $30,000 for injury to dignity, feelings, and self-respect.29 Finally, human rights tribunals have broad powers to order remedies intended to overcome systemic problems that contribute to discrimination. In some provinces, the tribunals are granted the authority to order a guilty party to “do or refrain from doing anything” in order to achieve compliance with the legislation.30 A common remedy ordered in employment discrimination cases involves ordering managers to take human rights training.31 In some jurisdictions (federal, British Columbia, Manitoba, Saskatchewan, and Nunavut), the legislation grants the tribunal authority to order the implementation of an employment equity program to redress a pattern of systemic discrimination at a workplace.32
hiring order: An order issued by a human rights tribunal or court requiring an employer to offer employment to a person previously denied employment for discriminatory reasons. employment equity: A legal model or remedial order that creates a positive obligation on an employer to redress historical discrimination by giving preference in hiring to designated groups, such as women, visible minorities, Indigenous peoples, or people with disabilities.
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E. The Limits on Raising Human Rights Complaints in Multiple Legal Forums We learned in the Bhadauria decision back in Chapter 6 that an employee cannot sue their employer in court for violating human rights legislation. However, sometimes the employer’s wrongful action can amount to both a violation of human rights legislation and a breach of a “no harassment” contract clause or a tort, such as intentional infliction of mental suffering (see Chapter 16). In that case, the legal model grants workers the option to select the forum. Provided that the employee alleges the discrimination amounts to a tort or a contract breach, and does not rely exclusively on human rights legislation, then a court will allow the case to proceed.33 However, the law also protects employers from having to defend their actions in multiple forums.34 Generally, an employee cannot pursue complaints relating to the same allegation of discrimination in multiple legal forums (a strategy called forum shopping). For example, if an employee elects to sue their employer for constructive dismissal, alleging sexual harassment that made continued employment intolerable (see Chapter 13), that employee will not also be permitted to proceed with a human rights complaint based on the same allegations.35 Human rights tribunals in Canada are provided with a general right to dismiss complaints when the substance of the complaint has already been dealt with in another legal proceeding, including in a court or before a different administrative tribunal.36
IV. What Is Discrimination? We know by now that human rights legislation prohibits “discrimination” in employment. But what is discrimination? If your professor asked you to define discrimination, what would you say? Consider the following scenario: Jaspinder is Sikh and wears a turban. He applied for a job as a security guard with Bulldog Security Inc. and got the job. He was assigned to provide security at a construction site. When he arrived at the work site, he was told by his employer to wear a hard hat. Jaspinder protested that he could not wear the hard hat because it would not fit over his turban. His supervisor told him to just remove the turban for the shift, since the hard-hat rule was a mandatory safety rule at the work site; everyone must wear a hard hat, even visitors to the work site. There were no exceptions. Jaspinder said that removing his turban would conflict with his religious beliefs and he could not do it. The supervisor told Jaspinder that he would need to leave the work site unless he wore the hard hat.37
Is Jaspinder a victim of discrimination in this scenario? To answer this question, we need to unpack what we mean by “discrimination.” Maybe you answered your professor by saying that discrimination means treating people differently. For example, if an employer adopted a pay scale that paid men more than women, then it would be discriminating based on sex; the rule is treating men and women differently. The discriminatory rule is benefiting men, but disadvantaging women. When an employer intentionally applies different rules or standards to employees in this manner, it is engaging in direct discrimination. Direct discrimination used to be quite common in Canada, and early human rights statutes were enacted to prohibit it. When employers used to hire “Whites Only” or paid men more than women for identical jobs, they were directly discriminating on the basis of skin colour and sex. Nowadays, blatant direct discrimination of this sort is less common, although direct discrimination still occurs. It is not uncommon to see forum shopping: The practice whereby a litigant attempts to litigate the same legal issue or the same facts in multiple legal forums to find the most favourable outcome. direct discrimination: A type of discrimination in which a rule, standard, or practice distinguishes an individual or group based on a personal characteristic, such as separate pay scales for men and women or the practice of hiring people of only one gender or one skin colour.
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346 Part III The Regulatory Regime big signs in the windows of restaurants that read “Waitresses Wanted” like that in the photo in Box 21.2. That type of sign qualifies as direct discrimination. Direct discrimination is usually fairly easy to spot because it involves singling out a person or a group based on a personal attribute. But that is not what is happening to Jaspinder. The workplace rule causing Jaspinder problems does not single him out for special adverse treatment. Jaspinder’s problem is that he is being treated the same as everybody else when he is not like everybody else. He has an attribute or characteristic—his religion—that leaves him in a different, less favourable, situation than other workers whose religion (or lack thereof) does not similarly require the wearing of a turban. Jaspinder is experiencing a type of discrimination known as indirect discrimination (also known as adverse impact, disparate impact, or constructive discrimination). Indirect discrimination occurs when a rule or requirement treats everyone the same on its face, yet has an adverse impact on some people because of a personal attribute or characteristic. Indirect discrimination is usually unintentional. The rule requiring all people to wear hard hats at the work site indirectly discriminates against Jaspinder because it adversely impacts him because of his religion. The concept of indirect discrimination was first applied to the employment context in the 1971 American case of Griggs v. Duke Power Co., where the employer’s requirement that all employees have a high school diploma was found to have a much greater adverse effect on black workers than white workers.38 In Canada, the scope of indirect employment discrimination contrary to human rights statutes was confirmed and developed in several important Supreme Court of Canada decisions in the 1980s and early 1990s, including the decision described in Box 21.4.39
BOX 21.4 » CASE LAW HIGHLIGHT What Is Indirect Discrimination? Central Alberta Dairy Pool v. Alberta (Human Rights Commission) [1990] 2 SCR 489 Key Facts: Christie became a member of the World Wide Church of God during his employment with Central Alberta Dairy Pool. He requested to be absent on days that conflicted with the religion’s Sabbath, and the employer granted some of these requests. However, the employer refused to give Christie Easter Monday off because operational needs required employees to be at work that day. When Christie did not report to work on Easter Monday, he was fired. He filed a complaint under Alberta’s human rights statute alleging discrimination on the basis of religion. The human rights tribunal found a violation of the statute and ordered the employer to pay partial lost wages. The employer appealed, and the case eventually made it before the Supreme Court of Canada. Issue: Was the employer’s refusal to grant Christie a regularly scheduled workday off to observe a religious holiday indirect discrimination on the basis of religion, contrary to the Alberta Individual’s Rights Protection Act?
Decision: Yes. The Supreme Court of Canada explained that this was a case of indirect (adverse impact) discrimination. The rule requiring Easter Monday work applied to all employees, and was based on legitimate business concerns: Mondays were particularly busy days, and the employer required all employees to be present. However, an intention to discriminate is not necessary for a finding of unlawful discrimination. In the case of indirect discrimination, the workplace rule is not struck down as unlawful. However, the onus shifts to the employer to demonstrate (1) that the rule is rationally connected to the performance of the job; and (2) that it cannot accommodate the employee’s religion without suffering “undue hardship.” In this case, the rule requiring Monday work was rationally connected to the performance of the job, but the employer failed to demonstrate that giving Christie the day off would cause it undue hardship. People call in sick on Mondays or take vacations, and the employer has contingencies to deal with that possibility. Therefore, it could have allowed Christie the day off for religious observance.
indirect discrimination: A type of discrimination in which a rule, standard, or practice treats everyone the same on its face, yet has an adverse impact on some people because of a personal characteristic.
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Chapter 21 Introduction to Human Rights at Work 347
Most work-related human rights cases today involve indirect discrimination. Sometimes the discriminatory effect on the worker is obvious, such as in Christie’s situation in the Central Alberta Dairy Pool case. However, in other situations, the question of whether a workplace rule, standard, or practice indirectly discriminates is less clear and the worker must present evidence to establish a prima facie case of discrimination. For example, in the landmark case of British Columbia (Public Service Employee Relations Commission) v. BCGSEU that we will consider more fully in Chapter 23, in order to establish that a physical fitness standard indirectly discriminated against women, a female complainant entered expert evidence demonstrating that because of natural physiological differences between men and women, males were, on the whole, more likely to meet the standard than females.40 In another case, a requirement to lift 50-pound boxes was found to indirectly discriminate against female employees because females failed the test 16 times more often than males.41 The Supreme Court of Canada has read the concept of indirect discrimination into the definition of discrimination in human rights legislation, and statutes in some jurisdictions now expressly prohibit indirect discrimination.42 So, to summarize, when a Canadian human rights statute prohibits “discrimination,” it prohibits both direct and indirect forms of discrimination. The fact that the employer does not intend to discriminate is not a defence, because intention is not required in human rights law. This does not mean that every instance of discrimination at work is unlawful. As we will discuss in following chapters, only some types of discrimination are prohibited—discrimination based on “prohibited grounds”—and even discrimination based on prohibited grounds may not be unlawful. That’s because Canadian human rights statutes also include a variety of defences or exemptions that permit discrimination in some circumstances.
V. Chapter Summary The story of human rights regulation in Canada begins primarily at the end of World War II. Before that, Canadian governments did not perceive discrimination in employment as a problem requiring legal intervention. Over time, the range of discriminatory conduct prohibited by human rights statutes has evolved to reflect changes in social and cultural values. Human rights legislation is complex, and in this chapter we considered the Canadian human rights legal model at a high level of generality, focusing on four of its common features: (1) human rights commissions; (2) the process for filing, investigating, and litigating human rights complaints; (3) the remedial powers of human rights tribunals; and (4) the limits on pursuing human rights complaints in multiple legal forums. We then considered the meaning of “discrimination” and its two forms, direct and indirect discrimination. The following chapters dive deeper into the application of human rights law to the Canadian workplace.
QUESTIONS AND ISSUES FOR DISCUSSION 1. What events precipitated the enactment of human rights legislation in Canada in the middle years of the 20th century? 2. What is the role of human rights commissions in Canada? 3. Describe the range of remedial powers available to human rights tribunals in Canada. Why is it considered necessary to grant the tribunals such broad remedial powers? 4. What is “forum shopping,” and how does the human rights model in Canada regulate it? 5. Explain the difference between “direct” and “indirect” discrimination.
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348 Part III The Regulatory Regime
APPLYING THE LAW 1. Which of the following scenarios are examples of direct discrimination, and which are examples of indirect discrimination? What prohibited ground(s) might apply in each case? a. A rule requires all employees to stand for their entire seven-hour shift. b. A women’s prison advertises jobs for “female prison guards.” c. A bar hires only women to be servers and only men to be kitchen staff. d. An airline requires pilots to retire at age 60. e. An employer stipulates that all employees must be able to carry 20-kilogram boxes from one side of the factory to the other several times per day. 2. Amanda is the human resources manager for a large manufacturing company that is hiring warehouse workers to perform a variety of jobs that require heavy lifting and strength.
a. She places an ad on a popular electronic job board seeking “Warehouse Men.” Does her job ad raise any human rights issues in your opinion? Would the ad be unlawful if only the common law applied? b. Amanda interviews three applicants, including a female applicant who assumed the reference in the ad to “men” was just a typo. Before the interviews, Amanda does social media searches of all three applicants. She learns on Facebook that the female applicant is recently married and that her husband is an airline pilot with Air Canada. Amanda knows from past personal experience that pilots often get relocated to different hubs. At the interview, Amanda asks the female applicant what type of work her husband does, and when she answers that he is a pilot, Amanda asks whether there’s any chance he might be transferred. She also asks the applicant if she has any children or plans to have children. Has Alison behaved unlawfully in your opinion?
NOTES AND REFERENCES 1. Seneca College v. Bhadauria, [1981] 2 SCR 181. This finding was more recently affirmed in Honda Canada Inc. v. Keays, 2008 SCC 39 at paras 63-67.
8. See Age Discrimination Act, 1966, SO 1966, c. 3, s. 1(a); and Human Rights Code, 1981, SO 1981, c. 53, s. 9(1).
2. Racial Discrimination Act, 1944, SO 1944, c. 51, online (pdf): .
10. See D. Johnson & B. Howe, “Human Rights Commissions in Canada: Reform or Reinvention in a Time of Restraint?” (1997) 12 CJLS 1.
3. A. Hunter, “Human Rights Legislation in Canada: Its Origin, Development and Interpretation” (1976) 15 UWO L Rev 21 at 24. 4. Fair Employment Practices Act, SO 1951, c. 24. The legislation applied to employers with five or more employees and provided for a commission to investigate complaints and convict offenders. 5. Hunter, supra note 3 at 26. 6. The Fair Employment Practices Act, supra note 4, exempted domestic workers, employers with fewer than five employees, and any “exclusively religious, philanthropic, educational, fraternal or social organizations not operated for private profit” as well as non-profit organizations operated primarily to “foster the welfare of a religious or ethnic group” (s. 2(b)). 7. See Human Rights Code, SO 1972, c. 119, s. 4 (now RSO 1990, c. H.19).
9. Human Rights Code, SO 1961 – 62, c. 93.
11. Ont. Human Rights Comm. v. Simpsons-Sears, [1985] 2 SCR 536. 12. See G. Brodsky & S. Day, “Opinion: B.C. Only Province Without a Human Rights Commission,” Vancouver Sun (December 2014), online: . 13. For example, in Alberta, Manitoba, and Saskatchewan the human rights commission decides whether human rights complaints can proceed to a tribunal hearing, but in Ontario a complainant can file a complaint directly with the Human Rights Tribunal of Ontario. 14. See G. England, Individual Employment Law, 2nd ed (Toronto: Irwin Law, 2008) at 246; C. Rootham, “Are Human Rights Commissions Still Relevant?” (2005) 12 CLELJ 199; Canadian Human Rights Review Panel, Promoting Equality: A New Vision—Report of the Canadian
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Chapter 21 Introduction to Human Rights at Work 349 Human Rights Review Panel (Ottawa: Department of Justice, 2000); P. Eliadis, Speaking Out on Human Rights: Debating Canada’s Human Rights System (Montreal, QC: McGill-Queen’s University Press, 2014); A. Pinto, Report of the Ontario Human Rights Review 2012 (Toronto: Queen’s Printer for Ontario, 2012), online: . 15. See, for example, Manitoba’s Human Rights Code, CCSM, c. H175, s. 22(3). Other jurisdictions in which the commission can file its own complaints include federal, Nova Scotia, Saskatchewan, Ontario, and the Northwest Territories. 16. See the discussion in Slattery v. Canada (Human Rights Commission) (1996), 205 NR 383 (FCA) (the federal commission was granted broad discretion to vet and dismiss complaints it considered to be not meritorious and, provided that the commission complies with its duty of fairness in processing the complaint, courts will not intervene). 17. See, for example, the Alberta Human Rights Act, RSA 2000, c. A-25.5, s. 22(1)(b); and Manitoba’s Human Rights Code, supra note 15, s. 37.1. A similar right to dismiss a complaint for failure to accept a reasonable offer exists in Saskatchewan, Prince Edward Island, Nunavut, and Yukon. 18. The Saskatchewan Human Rights Tribunal was abolished in 2011. Human rights complaints now proceed to the Court of Queen’s Bench. See Saskatchewan Human Rights Code, SS 1979, c. S-24.1, s. 29.6. 19. Ontario Human Rights Code, RSO 1990, c H.19, s. 45.2. On the objective of human rights law to eliminate discrimination, see Robichaud v. Canada (Treasury Board), [1987] 2 SCR 84 at 92. 20. England, supra note 14 at 254; and Ontario Human Rights Commission v. Impact Interiors Inc., 1998 CanLII 17685 (Ont. CA). 21. Piazza v. Airport Taxicab (Malton) Assn., 1989 CanLII 4071 (Ont. CA); and Ontario Human Rights Commission v. Impact Interiors Inc., supra note 20. 22. Alberta Human Rights Act, supra note 17, s. 34. In Prince Edward Island, damages for lost wages are capped at one year from the date the discriminatory act occurred: Human Rights Act, RSPEI 1988, c. H-12, s. 29.6. 23. Moore v. B.C. (Ministry of Social Services) (1992), 17 CHRR D/426; and Morgan v. Canada (Armed Forces) (1991), 85 DLR (4th) 473 (FCA). The onus is on the employer to prove that mitigation efforts were inadequate. 24. Sanford v. Koop, 2005 HRTO 53; and Seguin v. Great Blue Heron Charity Casino, 2009 HRTO 940. 25. Canadian Human Rights Act, RSC 1985, c. H-6, s. 53(2)(e). See also Saskatchewan Human Rights Code, supra note 18, s. 31.4(b).
26. See the discussion in ADGA Group Consultants Inc. v. Lane, 2008 CanLII 39605 (Ont. Sup Ct J). 27. See, for example, Chapdelaine v. Air Canada, 1991 CanLII 553 (CHRT) at para 17.031; and Ontario (Human Rights Commission) v. Ontario (Liquor Control Board) (1987), 8 CHRR D/4076. 28. See Hamilton-Wentworth District School Board v. Fair, 2016 ONCA 421; and Carasco v. University of Windsor, 2010 HRTO 2090 and 2010 HRTO 1968 (tribunal has the authority to order the employer to hire the complainant to the position of dean of the law school if it later ruled that she had been denied the job unlawfully, even if an interim dean had already been appointed; this case was settled, so the tribunal was not asked to decide the case on its merits). 29. Hamilton-Wentworth District School Board v. Fair, supra note 28. 30. See, for example, Manitoba’s Human Rights Code, supra note 15, s. 42(2)(a); and Ontario Human Rights Code, supra note 19, s. 45(2). 31. Islam v. Big Inc., 2013 HRTO 2009. 32. See, for example, BC’s Human Rights Code, RSBC 1996, c. 210, s. 37(2)(c). See the discussion in CN v. Canada (Canadian Human Rights Commission), [1987] 1 SCR 1114. 33. See L’Attiboudeaire v. Royal Bank of Canada, 1996 CanLII 1411 (Ont. CA); MacDonald v. 283076 Ontario Inc., 1979 CanLII 1947 (Ont. CA); Jaffer v. York University, 2010 ONCA 654; and Sparrow v. The Manufacturers Life Insurance Company, 2004 MBQB 281 (the court distinguished the Bhadauria decision on the basis that, unlike the legislation under consideration in Bhadauria, the Manitoba human rights statute did not confer exclusive jurisdiction on the tribunal to decide human rights matters). In Ontario, the human rights legislation now expressly permits a court to interpret human rights legislation and award human rights remedies in a lawsuit, provided the lawsuit alleges a breach of contract or a tort and is not based solely on a violation of the human rights legislation: Ontario Human Rights Code, supra note 19, s. 46.1. See Wilson v. Solis Mexican Foods Inc., 2013 ONSC 5799 (in addition to damages for wrongful dismissal, an employee dismissed for reasons related to disability was awarded $20,000 for injury to dignity, hurt feelings, and self-respect pursuant to the code). See also Madadi v. British Columbia College of Teachers, 2014 BCSC 1062 (BC courts have jurisdiction to determine human rights issues in the province, but no authority to grant human rights remedies). 34. See discussion in British Columbia (Workers’ Compensation Board) v. Figliola, 2011 SCC 52. 35. Ontario Human Rights Code, supra note 19, s. 34(11). See, for example, Lloyd v. Novopharm, 2009 HRTO 377; and Kinkley v. Home Depot Canada, 2009 HRTO 1551.
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350 Part III The Regulatory Regime 36. See, for example, BC’s Human Rights Code, supra note 32, s. 27(1)(f); Ontario Human Rights Code, supra note 19, s. 45.1; and the Alberta Human Rights Act, supra note 17, s. 22(1.1). See also Young v. Coast Mountain Bus Company Ltd., 2003 BCHRT 28; Stuart v. Navigata Communications and Others, 2006 BCHRT 562; and Laframboise v. Adam Doyle Pharmacy Ltd., 2013 HRTO 866. 37. These were roughly the facts in the case of Loomba v. Home Depot Canada, 2010 HRTO 1434. See also Bhinder v. CN, [1985] 2 SCR 561. The Supreme Court of Canada ruled in Bhinder that the hard-hat rule did not violate the Canadian Human Rights Act because the rule fell within the statutory defence of “bona fide occupational requirement.” The court ruled that the employer had no duty to accommodate. In subsequent decisions, the court ruled that Bhinder was wrongfully decided and the employer should have been required to accommodate Bhinder’s religion: see Central Alberta Dairy Pool v. Alberta (Human Rights Commission), [1990] 2 SCR 489.
38. Griggs v. Duke Power Co., 401 US 424 (1971). See the discussion in Ont. Human Rights Comm. v. Simpsons-Sears, supra note 11 at paras 16-18. 39. See also Ont. Human Rights Commission v. Simpson-Sears, supra note 11. 40. British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3 SCR 3 (expert evidence was admitted to demonstrate that owing to physiological differences, women were less likely to be able to meet an aerobic standard in a job test than men, and therefore the standard indirectly discriminated against women). 41. CUPE, Local 4400 and Toronto District School Board (2003), OLAA No. 514 (Arbitrator Howe). 42. See, for example, Manitoba’s Human Rights Code, supra note 15, s. 9(3); Canadian Human Rights Act, supra note 25, s. 10; and Ontario Human Rights Code, supra note 19, s. 11.
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CHAPTER 22
The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 351 II. A Two-Step Model for Analyzing Human Rights at Work 352 III. The Prohibited Grounds of Discrimination 354 A. Disability 357 B. Sex 359 C. Race, Colour, Ethnic Origin (or Place of Origin), Nationality, Ancestry 361 D. Age 362 E. Religion or Creed 363 F. Marital Status, Family Status (and Civil Status in Quebec) 364 G. Sexual Orientation, Gender Identity, and Gender Expression 366 H. Political Opinion or Belief 366 I. Language 366 J. Source of Income, Social Condition, or Receipt of Public Assistance 366 K. Record of Offence 367 IV. Chapter Summary 367 Questions and Issues for Discussion 367 Notes and References 368
• Describe and apply the two-step model for evaluating human rights cases in the workplace. • Explain what an employee must demonstrate in order to establish a “prima facie” case of discrimination. • Identify and explain the various prohibited grounds of discrimination in Canadian human rights statutes.
I. Introduction In the last chapter, we described the basic structure and some important features of the human rights model in Canada. Now it is time to take a closer look at how human rights statutes regulate work-related discrimination. This chapter introduces the two-step framework for analyzing human rights issues in the workplace. To apply this framework, we need to first grasp some key human rights concepts. One concept is the meaning and scope of “discrimination” in Canadian law, which we explored in the preceding chapter. Recall that discrimination encompasses both direct and indirect discrimination. Keep this in mind as we move forward. In this chapter, we move onto another important concept: the prohibited grounds of discrimination. It is crucial to remember that not all forms of discrimination are unlawful. prohibited grounds of discrimination: Personal characteristics that are protected from discrimination in human rights statutes, including but not limited to sex, age, race, skin colour, and religion. 351
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352 Part III The Regulatory Regime Employers are perfectly free to make distinctions on all sorts of grounds when assessing job applicants or employees in hiring and firing decisions, or with respect to the distribution of other job-related benefits, and they do so every day. Human rights law is only concerned with discrimination that is based upon grounds that the government has decided are inappropriate in the context of employment-related decisions. Therefore, in order to know whether discrimination is unlawful, we need to know not only what discrimination means, but also which types of discrimination our governments have decided to outlaw. This is the central mission of this chapter. First, though, the chapter will introduce and explain the standard “two-step model” that is used in the application of human rights law to employment situations in Canada.
II. A Two-Step Model for Analyzing Human Rights at Work An endless range of complex scenarios can give rise to human rights concerns at work. We require a model to help manage and organize how the law applies to these scenarios. The two-step model we are about to discuss should guide your approach to human rights problems you encounter in your course and in your working career. To begin, think back to the story of Jaspinder from the last chapter. Jaspinder, who is Sikh, was terminated from his job as a security guard after he refused the employer’s order to wear a hardhat at work. The requirement to wear a hardhat was based on a legitimate safety concern, but Jaspinder refused because to comply with the rule he would need to remove his turban. The workplace rule put into direct conflict Jaspinder’s job and his religion, and Jaspinder felt compelled to choose his religion with the result that he lost his job.1 In Chapter 21, we discussed how the rule requiring that all employees wear hardhats indirectly discriminates against Jaspinder on the basis of his religion. The rule had an adverse effect on Jaspinder because of his religious beliefs. However, as we will now see, that conclusion does not end the matter as far as human rights law is concerned. What if the rule is actually necessary in order to perform the job? What if the workplace is so dangerous that Jaspinder could be killed if he goes to work without protective head gear? Should the employer not be entitled to insist on rules that will protect workers from dying on the job? In fact, shouldn’t the law actually require employers to have such rules? Is the legal rule that employers must not discriminate on the basis of religion absolute? Or are there exceptions, situations in which the law permits discrimination? The answer is that there are indeed exceptions. Sometimes, human rights legislation permits discrimination on a prohibited ground. We need to know when that is. Human rights tribunals and courts apply a two-step analysis when dealing with human rights complaints. The first step involves assessing whether the employer has “discriminated” based on a “prohibited ground.” If the answer is yes, then the second step requires an assessment of whether the human rights legislation carves out an exception or creates a defence to that sort of discrimination in the circumstances. This two-step analysis is described in Box 22.1.
BOX 22.1 » TALKING WORK LAW A Two-Step Model for Analyzing Human Rights Cases at Work Human rights statutes are complex and must apply to a vast array of factual scenarios. Human rights tribunals and courts
organize this complexity by applying a two-step analysis to cases involving alleged work-related discrimination:
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Chapter 22 The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination 353
QUESTION ONE (Chapter 22) Does a rule, standard, or practice discriminate against the complainant on the basis of a prohibited ground in the human rights statute?
NO
Human rights legislation does not apply.
NO
The discrimination is a violation of the human rights statute.
YES
QUESTION TWO (Chapter 23) Is that discrimination nevertheless permitted by a statutory defence or an exemption in the human rights statute?
YES
The discrimination is not a violation of the human rights statute.
The model presented in Box 22.1 looks straightforward, but it is actually quite complex. In assessing Question One, human rights tribunals and courts require that the individual alleging discrimination establish, on a “balance of probabilities,” a prima facie case of discrimination based on a prohibited ground. As the Supreme Court of Canada explained recently in Stewart v. Elk Valley Coal Corporation (see Box 22.4), that means that the individual must demonstrate the following: 1. that he or she has a characteristic that is protected by a prohibited ground in the human rights legislation; 2. that they have experienced an adverse impact; and 3. that the protected characteristic was at least a factor in the adverse impact (it does not need to be the only factor).2 The adverse impact can result from either direct or indirect discrimination. If the applicant establishes a prima facie case of discrimination, the burden shifts to the party accused of the discrimination to establish that one of the exemptions or defences in the human rights legislation applies and, therefore, that their actions were lawful. So, in order to apply the two-step model, we need to learn not only the meaning of “discrimination” (considered in Chapter 21), but also the identity and scope of the prohibited prima facie case of discrimination: In human rights law, when a complainant provides sufficient evidence that they have been the victim of discrimination on a ground prohibited in a human rights statute, which shifts the burden to the employer to establish that no unlawful discrimination occurred.
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354 Part III The Regulatory Regime grounds (next), and the various statutory defences and exemptions and when they apply (examined in Chapter 23). While the meaning of “discrimination” is relatively consistent across Canada,3 both the prohibited grounds and the statutory defences or exemptions to discrimination occasionally vary across the jurisdictions. What follows is a cross-country tour of the prohibited grounds of discrimination in Canada.
III. The Prohibited Grounds of Discrimination In a recent story in a Toronto newspaper, a former manager of a restaurant chain claimed that he was instructed by his employer to ensure that “no uglies” were hired as servers (see Box 22.2). He described a recruitment system in which managers made secret notes during interviews that indicated whether an applicant was “attractive.”4 The most attractive female applicants were hired. Assume that the manager is telling the truth, and that the restaurant hired job applicant Jacqueline instead of Christine because, although Christine had more job experience, the manager doing the interviewing thought Jacqueline was more attractive.
BOX 22.2 » TALKING WORK LAW Can Employers Discriminate Based on Physical Appearance? Human rights statutes do not prohibit all types of discrimination. They only prohibit discrimination that is based on a ground that the government has chosen to include in human rights legislation (“prohibited grounds of discrimination”). Canadian governments have elected not to prohibit discrimination based on “physical appearance.” Therefore, people denied employment based on their appearance need to point to another prohibited ground if they wish to challenge the decision under human rights laws. This story describes an alleged employer practice of hiring based on physical appearance. As you read the story and the rest of this chapter, think about whether the practice would violate human rights statutes. Trendy restaurants across the country are known for more than their tapas. Their employees, gorgeous, long-legged waitresses who strut over to tables like they’re on the catwalk, are not there by accident. Just like each menu item is intricately plated, staff members are screened for their busts and rearends, says a former restaurant manager. Darren Hawker, 40, a former assistant general manager at Yorkdale Moxie’s Classic Grill in Toronto, said he was directed by upper management to hire busty and thin applicants, regardless of whether or not they were qualified. “If I wanted to hire someone the immediate question was about their look …,” said Hawker, a 24-year restaurant industry veteran. “They had to have a good figure because that’s what attracted the men in to come drink.” But what if by the luck of the gene pool you’re not blessed with a perky chest and firm behind?
Stacey Ball, a Toronto-based employment lawyer, said a case could be made for job-seekers who are refused employment for being ugly. “A case could definitely be made under the human rights code. It’s a live issue,” Ball said. According to human rights law in Ontario, similar to elsewhere in Canada, employers cannot discriminate when hiring based on age, religion, ethnic background, sexual orientation or physical disability. “Let’s say you’re simply ugly due to your luck of the gene pool—is that a medical condition? That could be argued. That’s your genetic composition,” Ball said. To be sure no “uglies” even got an interview, Hawker said he and other front of house staff were directed to screen applicants coming through the door at Moxie’s, and mark resumes with a “110” (oneten) if they were unattractive. It’s an internal code for “do not call,” he said. … Similar practices are allegedly in place at other restaurants across the country. … Spokespeople for … Moxie’s … denied hiring for looks. “It is possible that people who have come from other companies have used (the 1-10 rating code), but it is not something we endorse or teach,” said Sue Thomson, vice president of marketing at Moxie’s.* * Excerpt from K. Brownlee, “Uglies Need Not Apply,” Toronto Sun (March 22, 2011), online: . Reprinted by permission.
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Chapter 22 The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination 355
In that scenario, the manager is certainly discriminating against Christine by selecting Jacqueline based on her physical appearance. But is it unlawful discrimination? The answer depends on whether the human rights legislation protects against this type of discrimination. Consider section 5(1) of the Ontario Human Rights Code: Every person has a right to equal treatment with respect to employment without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, age, record of offences, marital status, family status or disability.5
Physical appearance (or attractiveness) is not listed among the prohibited grounds of discrimination in section 5. Therefore, if Christine brought a human rights complaint for being denied the job, she would need to fit her situation into one of the other listed grounds. The lawyer cited in the article in Box 22.2 suggests that the ground could be ancestry, based on genetics—“I look this way because of my gene pool.” Maybe. If the manager’s opinion of attractiveness is really a proxy for skin colour, race, or ethnicity, then an applicant denied employment for those reasons would have a case. However, if we assume that Christine and Jacqueline are the same skin colour, race, and ethnicity, then those grounds would not help Christine. Can it be sex discrimination, even though the competition was between two women? Perhaps it can, especially if the attractiveness criterion is only applied to female applicants and not to male applicants.6 What if the employer hires only “attractive” men, too, so the company policy is really to hire only attractive employees, male or female? Would that undermine the sex discrimination argument? This example is useful because it reminds us again that only discrimination based on prohibited grounds is regulated by human rights statutes. The prohibited grounds are the means by which governments distinguish between acceptable and unacceptable distinctions at work. As discussed in Chapter 21, the list of prohibited grounds has evolved over time in step with changes in social and cultural attitudes. Within the context of the law of work framework (see Chapter 2), this evolution reflects how changes in the social, cultural, and religious subsystem influence the regulatory standards regime. Table 22.1 presents prohibited grounds of discrimination in Canada by jurisdiction. The grounds expressly prohibited in every jurisdiction are disability, sex, race, colour, ethnic origin, age, creed or religion, marital status, family status, and sexual orientation. Other prohibited grounds are listed in some jurisdictions but not others, including record of offence, ancestry, income source or public assistance, gender identity or expression, political opinion or belief, social disadvantage or condition, citizenship or nationality, language, and disfigurement. These differences represent varying political views on what types of distinctions should be permissible in the employment setting. Sometimes human rights statutes define the prohibited grounds they include, so we should always begin our assessment of whether a prohibited ground is involved by looking at the definitions section of the human rights legislation. For example, the Alberta Human Rights Act provides the following definitions, which are similar to others found across the country: (a) “age” means 18 years of age or older; … (f) “family status” means the status of being related to another person by blood, marriage or adoption; (g) “marital status” means the state of being married, single, widowed, divorced, separated or living with a person in a conjugal relationship outside marriage.7
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356 Part III The Regulatory Regime TABLE 22.1 Prohibited Grounds of Discrimination in Employment in Canada Grounds Prohibited in Every Jurisdiction All Canadian jurisdictions prohibit discrimination on the grounds of disability, sex, race, colour, ethnic origin, age, creed or religion, marital status, family status,* and sexual orientation.
Additional Prohibited Grounds of Discrimination, by Jurisdiction Record of Offence
Ancestry
Income Source/ Public Assistance
Gender Identity/ Expression
Political Opinion/ Belief
Social Disadvantage/ Condition
• •
• • • • •
• • •
• •
•
•
•
•
•
•
• (in definition of social conditions)
•
•
•
•
•
•
•
•
Federal Alberta British Columbia
•
Manitoba New Brunswick
• • • •
Newfoundland and Labrador Northwest Territories
•
•
Nova Scotia Nunavut
•
•
Ontario
•
•
Prince Edward Island
•
•
•
public assistance)
•
Quebec
•
Saskatchewan Yukon
•
•
• (receipt of public assistance)
•
Other
Disfigurement
Irrational fear of contracting an illness or disease
• • (receipt of
Citizenship/ Nationality
• •
•
•
•
•
•
•
•
Language, civil status
• •
Linguistic origin
* In Quebec, “civil status” has been interpreted to include family status and marital status. See, for example, Brossard (Town) v. Quebec (Commission des droits de la personne), [1988] 2 SCR 279.
However, often human rights statutes do not define the prohibited grounds, and so it falls to tribunals and the courts to develop the meaning of those grounds through case law. The Supreme Court of Canada has affirmed that, since human rights statutes have the important public policy purpose of protecting people from discrimination, they should be interpreted broadly or “liberally” to protect as many people as their language can reasonably bear. This sentiment is caught in the following passage from the Supreme Court’s decision in B. v. Ontario (Human Rights Commission): [T]his Court has repeatedly reiterated the view that human rights legislation has a unique quasiconstitutional nature and ought to be interpreted in a liberal and purposive manner in order to advance the broad policy considerations underlying it.8
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Chapter 22 The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination 357
Those policy considerations include the elimination of discriminatory barriers to employment. The remainder of this chapter describes the prohibited grounds of discrimination in relation to employment, as developed in Canadian jurisprudence.
A. Disability Disability is the ground of discrimination most frequently raised in human rights complaints. Table 22.2 breaks down the number of complaints by prohibited ground received by the Canadian Human Rights Tribunal in 2018. At a general level, disability includes both physical and mental disabilities, although definitions vary across jurisdictions. Not every ailment constitutes a disability. A disability requires “substantial ongoing limits on one’s activities” and does not include temporary impairments of the type most people experience at one time or another, such as the flu, a simple cold, allergies, or a sprained ankle.9 In some provinces, a physical disability is defined narrowly as one caused by “bodily injury, birth defect, or illness.”10 That language excludes conditions that restrict performance but that cannot be said to arise from injury, birth defect, or illness, such as obesity (unless the obesity is caused by an “illness”).11 Newfoundland and Labrador includes “disfigurement” as a separate ground. In British Columbia, where the human rights statute does not define “disability,” the termination of a female employee due to her height (she was 4 foot 11 inches) was ruled to be disability discrimination.12 However, if the same case were adjudicated in Ontario, “height” would only be treated as a disability if it were caused by an injury, a birth defect, or an illness.
TABLE 22.2 Complaints Received by the Canadian Human Rights Tribunal Prohibited Ground
Number of Complaints Filed
Disability
55
Sex
43
National or ethnic origin
16
Race
9
Family status
18
Colour
2
Age
11
Religion
6
Marital status
8
Sexual orientation
3
Pardoned conviction
0
Source: Canadian Human Rights Tribunal, Annual Report 2018, online: .
The prohibition against disability discrimination also captures discrimination based on the perception that a person is disabled (perceived disability) or was disabled in the past (past disability). Thus, even a worker who is not disabled can win a disability discrimination lawsuit, provided the employer treated the worker as if they were disabled, as the case in Box 22.3 demonstrates.13
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358 Part III The Regulatory Regime
BOX 22.3 » CASE LAW HIGHLIGHT Disability Includes the Perception of a Disability Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Montréal (City) 2000 SCC 27 Key Facts: Mercier was denied a job with the City of Montréal because the employer learned that Mercier had a minor spinal anomaly. This condition did not restrict Mercier’s ability to perform the job, but the employer believed it could cause her problems in the future. The Quebec human rights legislation prohibits discrimination on the basis of “handicap” but does not define that term. The Quebec Human Rights Tribunal ruled that Mercier had not been discriminated against on the basis of disability, since she was not disabled. That decision was appealed up to the Supreme Court of Canada.
Decision: Yes. The Supreme Court ruled that the purpose of human rights legislation is to “eliminate exclusion that is arbitrary and based on preconceived ideas concerning personal characteristics.” Arbitrary and preconceived ideas include an employer’s perception that someone suffers from a limiting disability, even if the person does not. Therefore, for the purposes of interpreting human rights legislation, a handicap (or disability) includes not only discrimination based on a person’s actual disability but also discrimination based on the employer’s perception that a person has a disability. In this case, the employer discriminated against Mercier when it refused her employment based on the perception that she had a disability.
Issue: Is an employer’s refusal to hire a worker that it believes to be disabled, even if the worker is able to perform the job, an act of discrimination on the basis of “handicap”?
Alcohol and drug addiction are disabilities.14 Therefore, employer policies, decisions, or practices that adversely impact alcoholic or drug-addicted employees can run afoul of human rights statutes. For example, if an alcoholic is terminated for reporting to work intoxicated or for alcohol-related absenteeism, the employee may be able to establish prima facie discrimination based on disability.15 Similarly, where a drug addict is terminated for stealing drugs, a prima facie case of discrimination may be established if the employee can show that the addiction influenced the decision to steal.16 However, this does not mean that an employer can never dismiss a substance-addicted employee for work-related problems. The employer may still have a defence (Step 2 of the human rights model) that will permit the discrimination in the circumstances, or the employee may not be able to establish that the termination is linked to the disability, as in the case described in Box 22.4.17
BOX 22.4 » CASE LAW HIGHLIGHT Being Terminated for Failing to Abide by a Drug Policy Not the Same as Being Fired for Drug Addiction Stewart v. Elk Valley Coal Corp. 2017 SCC 30 Key Facts: Stewart (S) worked in a dangerous job driving a loader at a coal mine. To ensure workplace safety, the employer adopted a policy requiring employees to disclose if they have a drug addiction. If they disclosed an addiction, the employer would offer the employee treatment options. However, if they did not disclose the addiction and were later in a workplace incident and tested positive for drugs, they would be terminated. S did not disclose that he used cocaine on his days off. He was later involved in an accident, and he tested positive for
drugs and was terminated. S filed a human rights complaint arguing that he was addicted to cocaine (i.e., it was a disability) and was unlawfully terminated because of this disability. The employer argued that S was terminated for breaching the drug policy, not because of his disability. Issue: Was S’s disability a cause of his termination? Decision: No. The Supreme Court explained that S must first establish a prima facie case of discrimination. This required him to demonstrate that (1) he has a disability; (2) that he suffered an adverse impact; and (3) that the adverse impact was related
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Chapter 22 The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination 359 to his disability. The first two were satisfied here: he had a disability (drug addiction) and he lost his job (adverse impact). However, the third requirement was not satisfied. S was terminated because he failed to comply with the employer’s policy requiring him to disclose his addiction, not due to his
disability. S had the same opportunity as all other employees to comply, but he elected not to. Expert evidence established that although a symptom of addiction is denial of the addiction, S nevertheless retained the capacity to comply with the policy.
Since substance addiction, and the perception that someone suffers from an addiction, are included within the meaning of disability, a mandatory drug- and alcohol-testing policy may discriminate on the basis of disability. A mandatory random drug and alcohol policy will constitute prima facie discrimination on the basis of disability if there are adverse employment impacts associated with failing the test and the employer treats the employee who fails as if they are substance addicted.18 This does not mean that all mandatory alcohol and drug testing is unlawful discrimination. As we will see in Chapter 23 when we look at employer defences, sometimes random testing, particularly in safety-sensitive jobs, is justified as a bona fide occupational requirement (which is one of the defences we will learn about).
B. Sex Sex discrimination includes treating employees of one sex less favourably than the other (such as by refusing employment or advancement based on sex), physical touching, or other conduct or words of a sexual nature, including gender-based name calling.19 It also includes sexual solicitation, such as promises or threats in exchange for sexual favours. Sex discrimination can also take the form of standards or workplace rules that, while applying to both men and women, have an adverse impact on women (see the discussion of indirect discrimination in Chapter 21). For example, physical fitness standards that women are less likely than men to meet have been found to be discriminatory on the basis of sex.20 A dress code that sexualizes women, such as a requirement to wear a bikini top to work at a bar, can constitute sex discrimination, especially if men are not required to similarly expose their bodies.21 Workplace practices can produce systemic discrimination against women; that is, they can produce an overall pattern of discrimination that perpetuates disadvantages for female workers. Systemic discrimination is usually unintentional, but it results from long-standing practices and norms within organizations that tend to favour men over women. To prove systemic discrimination, a complainant usually needs to present aggregate evidence of barriers faced by women in an organization. For example, in CN v. Canada (Canadian Human Rights Commission), the Supreme Court of Canada found systemic sex discrimination based on evidence that only 0.7 percent of blue-collar jobs in a region where the employer operated were filled by women, compared with 13 percent nationally.22 The employer was ordered to hire at least one female for every four new hires until such time as 13 percent of employees in the job class were female. Discrimination based on pregnancy, including the possibility that a woman may become pregnant, falls within the scope of sex discrimination as only women can become pregnant.23 In the leading case on this point, Brooks v. Canada Safeway Ltd., the Supreme Court wrote: Combining paid work with motherhood and accommodating the childbearing needs of working women are ever-increasing imperatives. That those who bear children and benefit society as a whole
systemic discrimination: Practices, behaviour, norms, or policies within an organization that may be unintentional and unobserved yet perpetuate disadvantages for certain individuals because of a personal attribute or characteristic (e.g., race, gender, age, disability, or religion).
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360 Part III The Regulatory Regime thereby should not be economically or socially disadvantaged seems to bespeak the obvious. It is only women who bear children; no man can become pregnant. … It is difficult to conceive that distinctions or discriminations based upon pregnancy could ever be regarded as other than discrimination based upon sex.24
Discrimination on the basis of pregnancy occurs when an employer dismisses an employee for her pregnancy, refuses to hire a pregnant worker or a woman who the employer believes might become pregnant, or otherwise disadvantages an employee because of her pregnancy— such as by assigning her to less desirable shifts, denying her a promotion, or denying her benefits that are available to other non-pregnant workers.25 See the case discussed in Box 22.5.
BOX 22.5 » CASE LAW HIGHLIGHT Discrimination Based on Pregnancy Weihs v. Great Clips and Others (No. 2) 2019 BCHRT 125 Key Facts: Weihs (W) was hired in mid-January 2017 on a three-month probationary period as a hair cutter. W was assigned nine shifts between January 15 and March 15. Her performance during the first two months was acceptable but not great, and she lacked skills in some areas. There were a couple of customer complaints about her cutting. On March 15, 2017, W informed the employer she was pregnant. The employer congratulated her and made a comment to another employee that she hoped none of the other employees were pregnant. After the announcement, W was assigned only four more shifts. She was terminated on March 23. The employer claimed the termination was due to W’s poor performance, and they told W she could reapply once her skills were upgraded. W filed a human rights complaint alleging that she was fired because of her pregnancy. Issue: Did the employer unlawfully discriminate against W on the basis of her pregnancy?
Decision: Yes. The tribunal found that W had a characteristic (pregnancy) that was protected by a prohibited ground and that she had suffered an adverse effect (termination). The more difficult issue was whether the termination was related to the pregnancy. The tribunal accepted the employer’s argument that W’s skills were deficient and that this was the reason for the termination. However, the tribunal ruled that the employer was also influenced in part by the fact that W was pregnant. The timing of the termination, eight days after W announced she was pregnant and still a few weeks short of the end of the three-month probationary period, was suspicious. Also, the employer’s comment that she hoped no one else was pregnant confirms that the employer was not enthusiastic about employees taking pregnancy leave. All that is required for a finding of discrimination is that some part of the decision was influenced by the pregnancy, and that threshold was met here. The employer was ordered to pay lost wages and tips from the date of termination to the end of the probationary period, since the tribunal believed W would have been fired once the probation was over due to poor performance. W was also entitled to $9,000 for injury to her feelings, dignity, and self-respect.
In the case of Janzen v. Platy Enterprises Ltd., the Supreme Court ruled that sexual harassment is sex discrimination. The court also ruled that an employer could be held vicariously responsible, under human rights legislation, for the sexual harassment committed by its employees and that employers have an obligation to redress harassment once they learn of it.26 Chief Justice Dickson provided the following often referenced definition of sexual harassment: “sexual harassment in the workplace may be broadly defined as unwelcome conduct of a sexual nature that detrimentally affects the work environment or leads to adverse job-related consequences for the victims of the harassment.”27 The requirement that the conduct be “unwelcome” and “detrimental” introduces a legal test that attempts to distinguish between harmful harassment and consensual banter that sometimes takes place in a workplace. Human rights tribunals and courts have been careful not to apply sexual harassment: Unwanted conduct of a sexual nature that detrimentally affects the work environment or leads to jobrelated consequences for the victim.
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Chapter 22 The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination 361
human rights legislation so broadly as to make unlawful every rude comment or flirtatious conduct, recognizing that adults sometimes engage in sexual banter or consensual conduct and that the law should not attempt to prohibit all such behaviour.28 In deciding whether conduct is “unwanted,” tribunals and courts apply an objective test: Would a reasonable person know that the conduct is unwanted in the circumstances?29 When the conduct involves milder forms of sexual innuendo or banter, or the complainant has actively participated in the sexual conduct or banter, complaints have often failed on the basis that the conduct was neither detrimental nor unwanted.30 The conduct is more likely to be considered “unwanted” when the perpetrator holds a position of power over the complainant, since tribunals and courts recognize that lack of power can cause someone not to resist.31
C. Race, Colour, Ethnic Origin (or Place of Origin), Nationality, Ancestry As we reviewed in Chapter 21, the first human rights statutes in Canada, dating from the 1950s, prohibited discrimination in employment based on race, creed, colour, nationality, ancestry, and place of origin, reflecting Canada’s growing multiculturalism and concerns that racial minorities were experiencing labour market discrimination.32 These prohibited grounds are all distinct, in the sense that discrimination may be based on just one, or some, but does not have to include all of them at once. However, in many cases, these grounds intersect in a single episode of discriminatory conduct. A racial slur or stereotype often engages colour, ethnicity, nationality, ancestry, or all of these grounds at once. These prohibited grounds (along with creed) tackle discrimination based on a person’s ethnic identity, background, blood line, or lineage.33 For example, in the decision considered in Box 22.6, the complainants, most of whom were recent immigrants from Central African nations, alleged discrimination on the basis of race, colour, ancestry, and place of origin.
BOX 22.6 » CASE LAW HIGHLIGHT Discrimination Based on Race, Colour, Ancestry, and Place of Origin Balikama obo Others v. Khaira Enterprises and Others 2014 BCHRT 107 Key Facts: Over 50 Black employees of Khaira Enterprises alleged they had worked as tree planters for the employer in conditions of near servitude in an isolated area of British Columbia. The allegations included deplorable living conditions and continuous racial harassment and verbal abuse by management that was not directed at white or Asian workers. The Black workers were called “lazy dogs,” among other derogatory epithets. The employer denied some allegations and argued that while conditions may have been poor, they were poor for everyone and that the Black workers called each other derogatory names, so that was just the culture of the workplace. Issue: Did the employer engage in discrimination based on race, colour, ancestry, or place of origin? If so, what is the appropriate remedy? Decision: Yes. The complainants established a prima facie case of discrimination. They demonstrated that they experienced
adverse impacts with respect to their employment, and that their common background as workers from Central Africa was a factor in this adverse impact. Conditions were worse at the worksite where these workers comprised almost the entire workforce. The workers of African origin were not always paid their full pay, whereas non-Black workers were. Racial slurs were used, and it is no defence for an employer to argue that Black workers sometimes called each other racially derogatory names. With the complainants having made out a prima facie case of racial discrimination, the onus shifted to the employer to provide a recognized defence for its behaviour. It provided none. The employer was ordered to pay each complainant a minimum of $10,000 for general damages for injury to dignity and self-respect (some received slightly more than this), and conditions were attached to any future bids made by the employer on new contracts, including a requirement to provide each worker with a “rights document” in their mother tongue, explaining their legal entitlements and how to enforce them.
objective test: A legal test used in interpretation of contracts and statutes that asks, “What would a reasonable person of normal intelligence think, if told about the circumstances?” Contrast with subjective test.
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362 Part III The Regulatory Regime Discrimination on the basis of race, colour, ethnic origin (or place of origin), nationality, or ancestry can take the form of offensive comments, harassment, jokes, and graffiti; in one case, a refusal to hire an immigrant from India because he was “overqualified” was ruled to be discrimination on the basis of ethnicity.34 In Perez-Moreno v. Kulczycki, a 2013 decision of the Human Rights Tribunal of Ontario, an employee was found to have engaged in unlawful racial discrimination against her manager when she posted a comment on her Facebook page calling him a “dirty Mexican.”35 The reach of human rights legislation has expanded to social media communications that relate to co-workers or management.
D. Age The treatment of age discrimination in human rights statutes reflects ongoing and complex policy tensions. When governments in Canada first prohibited age discrimination in the 1960s, they protected only middle-aged workers. For example, in British Columbia “age” was defined as 45 to 64, while in Ontario it was 40 to 64.36 Beginning in the 1980s, the protected age range began to expand. The 1981 Ontario Human Rights Code defined “age” as 18 to 64, while the definition in the BC Human Rights Act of 1992 was 19 to 64. Permitting discrimination against workers under 18 (or 19) years of age was (and is) permitted on the basis that Canadian age of majority statutes treat people under 18 as “infants,” still under the authority of their parents.37 More recently, the exclusion of workers age 65 and older from the definition of age in human rights statutes—and the employment practice of mandatory retirement it enabled—came under scrutiny.38 When the cut-off employment age of 65 was adopted in the 1960s, relatively few people actually worked until that age. Sixty-five was also the age that government-sponsored pension plans, such as the Canada Pension Plan, and most private pension schemes fixed as the typical retirement date.39 In the 2000s, Canadian governments repealed the upper parameter (age 64) found in the “age” definitions in human rights statutes.40 As the baby boomer generation (people born from 1946 to 1965) aged, the percentage of Canadian workers approaching their 60s grew exponentially, and their life expectancy was much longer than previous generations. Governments across Canada, uneasy about possible labour shortages, falling income tax revenues, and drains on pension plan funds if mass numbers of baby boomers were all to retire at 65, repealed the upper cap on the definition of “age” in human rights statutes.41 As a result, today an employment policy that forces employees over the age of 18 out of their job simply because of their age is prima facie discriminatory, and an employer would need to defend the policy by pointing to one of the statutory defences (see Chapter 23). However, in most cases, the alleged discrimination is not that obvious, and the employee must establish a link between their age and an adverse impact in order to demonstrate discrimination.42 In the debates leading to the expansion of age discrimination protections to workers aged 65 and older, the concern was raised that employers who would have permitted aging workers to retire with dignity in the past would now “be obliged to manage performance and even terminate older workers who are having difficulty performing job duties.”43 Consider whether this concern materialized in the decision described in Box 22.7.
mandatory retirement: A legal rule in a statute or contract that terminates an employment contract upon the employee reaching a specified age.
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Chapter 22 The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination 363
BOX 22.7 » CASE LAW HIGHLIGHT Is the Dismissal of an Older Worker Who Cannot Meet Performance Standards Age Discrimination? Riddell v. IBM Canada 2009 HRTO 1454 Key Facts: Riddell was dismissed at 59 years of age for poor performance after 39 years’ service at IBM Canada. He filed a human rights complaint, alleging age discrimination. He claimed that prior to his termination, the employer offered him “early retirement” packages on multiple occasions, all of which he refused. In response, Riddell alleged, the employer initiated a campaign to assign him to jobs and apply job evaluation measurements it knew he could not meet so that it could fire him for poor performance. The employer argued that it had offered packages to many poor performers as part of a company strategy to reduce the workforce. Riddell was assigned to various jobs in an attempt to find something he could perform well, and the measurement standards were the same as, or lower than, those applied to other IBM employees.
Issue: Did the employer discriminate against Riddell on the basis of his age by offering him retirement packages and then by “setting him up to fail” in jobs after he refused to accept any of them? Decision: No. The Ontario Human Rights Tribunal noted that it is not age discrimination to offer employees an early retirement package. Nor is it discriminatory to dismiss an older worker who is unable to meet performance standards, as long as those standards are not discriminatory. In this case, both the early retirement offer and the job performance standards applied to Riddell were consistent with broader company policies and practices and did not single out older workers. Riddell was unable to meet the standard, which was based on the average performance of all Canadian workers performing that job, and his performance standard fell far below that average. Therefore, the dismissal was based on performance and not age discrimination.
E. Religion or Creed Employers cannot discriminate on the basis of religion, which includes distinctions because a person may adhere to the doctrine of one of the major recognized religions, believe in a newer spiritual belief system (e.g., Falun Gong), or believe in the absence of all spiritual deities (atheism).44 Human rights tribunals and courts have declined to engage in debates over the meaning and application of religious doctrine. Rather, they have applied a test of sincerely held belief: provided that the complainant holds a sincere and deep belief that a practice or obligation has a relationship—or nexus—to religion, then that is sufficient to bring it within the scope of creed or religion.45 As we saw in the case Central Alberta Dairy Pool (Box 21.4), an employer that insists that an employee work on a religious Sabbath or holiday is engaging in prima facie discrimination on the basis of religion that the employer would need to demonstrate is permitted by the legislation (Step 2 of the human rights model).46 Employer dress codes can discriminate on the basis of religion if they prohibit the wearing of religious clothing, as we discussed earlier when we considered Jaspinder’s refusal to remove his turban.47 The decision in Box 22.8 considers a variety of other examples of religious and ethnic origin discrimination.
sincerely held belief: A legal test applied to determine whether a person has a religious belief that qualifies for protection against discrimination on the basis of religion or creed. The test is met if the person holds a sincere and deep belief that a practice (e.g., not working on Saturdays) has a relationship—or nexus—to religion.
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364 Part III The Regulatory Regime
BOX 22.8 » CASE LAW HIGHLIGHT Is a Requirement for a Muslim Chef to Taste Pork Religious Discrimination? Islam v. Big Inc. 2013 HRTO 2009; aff’d 2015 ONSC 2921 Key Facts: The employer was a French restaurant. It hired three employees to work in the kitchen, all of whom had immigrated to Canada from Bangladesh and were Muslim. The employees filed human rights complaints alleging a number of incidents they claimed amounted to religious discrimination, including that the employer forced them to eat pork in violation of their religion, including during the Ramadan fast, and refused them time off work to observe Eid (a religious holiday); that the employer adopted an “English-only” rule in the kitchen and made derogatory and discriminatory comments about the use of Bengali in the kitchen; and that the employer threatened on multiple occasions to replace them all with “white staff.” The employees argued they had been constructively dismissed because the employer’s actions made continued employment intolerable. The employer denied the allegations and argued that they had long hired Muslim employees and had not acted in a discriminatory manner toward them. Issue: Did the employer discriminate against the Muslim kitchen staff on the basis of religion? Decision: Yes. The employees had a characteristic protected by a prohibited ground (creed/religion), and they had suffered
adverse effects relating to that prohibited ground (harassment and constructive dismissal). The requirement to eat pork and to eat during Ramadan were obvious cases of religious discrimination. So was the refusal to permit time off for Eid, and the employer presented no argument that it could not accommodate the request. The rule requiring employees to primarily speak English in the kitchen was justified in some respects for safety reasons and because non-Bengali-speaking employees felt uncomfortable when the three employees made jokes and laughed in Bengali. However, the rule was applied inconsistently, and the owner of the restaurant made mocking comments about Bengali, saying “blah, blah, blah.” The tribunal found that the application of the English-only rule discriminated on the basis of ethnic origin. The employer’s comments about replacing the Muslim staff with “white staff” also constituted unlawful harassment based on prohibited grounds. As a remedy, the tribunal ordered the employer to pay lost wages from the date the employees left the employer until they found new work, plus additional payments ranging from $12,000 to $37,000 to the employees to compensate them for the loss of the right to be free from discrimination and for injury to dignity, feelings, and self-respect. In addition, the employer was ordered to complete a human rights training program offered by the Ontario Human Rights Commission.
In jurisdictions such as Ontario, where the Human Rights Code refers to “creed” rather than “religion,” issues can arise as to whether the prohibited ground extends beyond formal recognized religions to other non-religious systems of belief, such as political opinions or philosophies. The Ontario Court of Appeal concluded in Jazairi v. Ontario (Human Rights Commission) that “mere” political opinion—such as which political party one supports, or one’s thoughts on conflict in the Middle East—is not included within the meaning of creed, but it left open the possibility that a non-religious “cohesive belief system,” such as communism, could be.48 A case before the Ontario Human Rights Tribunal at the time of writing argues that a firefighter was discriminated against on the basis of creed when he was denied vegan food when on an assignment in the northern wilderness. It remains to be seen whether veganism or vegetarianism will be recognized as falling within the scope of “creed.”49
F. Marital Status, Family Status (and Civil Status in Quebec) Marital status has been recognized as a prohibited ground in Canada since the 1970s; family status was introduced as a prohibited ground slightly later.50 In B. v. Ontario (Human Rights Commission), the Supreme Court ruled that the prohibited grounds of “family status” and “marital status” apply to discrimination based not only the status of the employee (i.e., being married or having children) but also the particular identity of the employee’s spouse or family member.51 In this case, Mr. B was fired after his wife and daughter accused his boss of sexually assaulting
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Chapter 22 The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination 365
the daughter when she was a young child. Mr. B won his human rights complaint because the court ruled that Mr. B’s dismissal constituted discrimination based on family and marital status. Family status focuses on the relationship between parent and child.52 Therefore, it prohibits an employer from refusing employment to an applicant because the person is (or is not) a parent. More difficult is the question of whether family status also applies to work schedules that interfere with parents’ obligations to care for their children or aging or ill family members.53 Is it discrimination on the basis of family status for an employer to schedule employees to work during times when they should be home caring for their children or elderly parent, or attending their child’s sports event or school concert?54 Tribunals and courts have recognized that work schedules regularly conflict with family, but that not every such conflict can amount to unlawful discrimination. Where to draw the line is an ongoing source of legal uncertainty. The Federal Court of Appeal considered this issue in the decision in Box 22.9.
BOX 22.9 » CASE LAW HIGHLIGHT Does “Family Status” Include Child-Care Responsibilities? Canada (Attorney General) v. Johnstone 2014 FCA 110 Key Facts: Johnstone was an employee of the Canada Border Services Agency with two small children. Both she and her spouse worked at Toronto Pearson International Airport for the same employer. To qualify as a full-time employee, they were required to work at least 37.5 hours per week. Start times varied and covered hours in the mornings, afternoons, and evenings, with no predictable pattern. Johnstone requested a fixed schedule that would enable her to be home with her children during times when she could not find alternative child-care arrangements. The employer offered to let her work a fixed schedule as a part-time employee, but not as a full-time employee. She worked part time for a period, but then filed a human rights complaint alleging discrimination on the basis of family status. Issue: Did the employer discriminate on the basis of family status by refusing Johnstone’s request for a fixed-hour full-time schedule that would enable her to care for her children? Decision: Yes. The Federal Court of Appeal upheld the human rights tribunal’s decision that the employer had discriminated on the basis of family status. The court explained that not every work schedule that makes child care difficult is discriminatory. Rather, in order to make out a prima facie case of family status discrimination, the employee must demonstrate the following:
(i) that a child is under his or her care and supervision; (ii) that the childcare obligation at issue engages the individual’s legal responsibility for that child, as opposed to a personal choice; (iii) that he or she has made reasonable efforts to meet those childcare obligations through reasonable alternative solutions, and that no such alternative solution is reasonably accessible; and (iv) that the impugned workplace rule interferes in a manner that is more than trivial or insubstantial with the fulfillment of the childcare obligation. In this case, Johnstone satisfied all of the conditions. She was responsible for two small children, and it would be illegal for her to leave them alone, since both the Criminal Code and child welfare statutes impose care obligations on parents. She made extensive efforts to find child care, but neither family nor paid services were available to cover the sporadic scheduling hours both she and her spouse were required to work. And, lastly, the scheduling conflict was not trivial: it created a situation in which Johnstone would either have to give up her full-time job or leave her children alone. The employer did not argue that it had a defence, so Johnstone won her case. The employer was ordered to pay lost wages based on the difference between the hours Johnstone worked and the hours she would have worked had she been assigned to a fixed 37.5-hour schedule as requested.
Some human rights tribunals have refused to follow the test in Johnstone, arguing that the test imposes a more rigorous standard of discrimination than is applied in respect of other prohibited grounds. For example, the Johnstone test requires the employee to “self-accommodate” by exhausting all reasonable alternatives before discrimination is found and limits
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366 Part III The Regulatory Regime discrimination to cases where scheduling would conflict with a legal obligation.55 These more stringent requirements to establish prima facie discrimination do not apply to other prohibited grounds.
G. Sexual Orientation, Gender Identity, and Gender Expression In 1977, Quebec became the first jurisdiction to add sexual orientation to the list of prohibited grounds, but other jurisdictions did not add this ground until the 1990s, and some did not do so until forced by the Supreme Court’s Charter-related decision in Vriend v. Alberta in 1998 (as explained in Chapter 39).56 This prohibited ground captures blatant discrimination against someone because they are gay, lesbian, bisexual, or heterosexual, or perceived to be so. It also protects against harassment in the form of derogatory comments derived from stereotypes of gay men, lesbians, and bisexuals, even if the target of the harassment is heterosexual.57 Since 2012, most Canadian jurisdictions (Nunavut and Yukon remained the sole outliers as of the time of writing in summer 2019) have added “gender identity” and, in some cases, “gender expression” to the list of prohibited grounds applicable to employment. These grounds target discrimination based on differences in how people experience and express their gender58 and protect transgendered and transsexual workers from employment discrimination. Gender expression does not apply to personal fashion and grooming choices, such as hair and beard styles or tattoos.59
H. Political Opinion or Belief Political opinion or belief is protected in every jurisdiction except Ontario, Nunavut, Alberta, Saskatchewan, and the federal jurisdiction. The omission of political opinion or belief from the list of prohibited grounds in these jurisdictions leaves workers vulnerable to employmentrelated discrimination based on those grounds—for example, for supporting a particular political party or by engaging in political activities. Where “political opinion” is protected, human rights tribunals have applied a broad scope, ruling that it covers comments and beliefs related to government policy and legislative reform as well as formal political affiliation and comments in support of political parties.60
I. Language Only Quebec prohibits discrimination on the basis of language, although Yukon prohibits discrimination on the basis of “linguistic background or origin.” However, in some situations, language requirements may actually be a substitute for other prohibited grounds, such as ancestry, ethnicity, or place of origin. Thus, in Gajecki v. Surrey School District (No. 36), an employer who failed to assign jobs to a substitute teacher in English schools because of his Polish accent was found to have discriminated on the basis of ancestry or place of origin.61 The complainant must establish that a “nexus” exists between the negative treatment experienced due to the complainant’s language skills and their place of origin, ethnicity, or ancestry.62 In the application of this test, a requirement to speak proficient English or French is generally not found to be discriminatory in jurisdictions that do not include language as a prohibited ground, on the theory that anyone can learn to speak a new language. However, a refusal to hire based on accented English and French by a worker from non-English-speaking or non-French-speaking backgrounds has been found to discriminate based on ethnicity, ancestry, or place of origin.
J. Source of Income, Social Condition, or Receipt of Public Assistance Some jurisdictions prohibit discrimination in employment on the basis of source of income, social condition, or receipt of public assistance. Little case law applies these grounds to the
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employment setting. However, the intention of these grounds appears to be to prohibit adverse treatment of workers for reasons related to social conditions that often attract social stigma, such as being (or having been) in receipt of public assistance, or in the case of “social condition,” being poor or living in subsidized housing.
K. Record of Offence Six jurisdictions prohibit discrimination based on past criminal convictions, although the definitions of what this ground means varies across jurisdictions. In Ontario, for example, the prohibited ground applies only to offences for which the worker has received a pardon (now called a “record suspension”) and to “provincial offences,” which are less serious offences (e.g., traffic offences).63 In British Columbia, on the other hand, the legislation protects from discrimination “a person [who] has been convicted of a criminal or summary conviction offence that is unrelated to the employment or to the intended employment of that person.”64 In Yukon, both “criminal charges” and “criminal record” are listed as prohibited grounds.65 These differences mean that the scope of the protection against discrimination based on having committed criminal offences is tied closely to the specific statutory language.
IV. Chapter Summary This chapter introduced the two-step model for assessing human rights issues in employment. The first step requires the complainant (usually the worker) to establish that they have a characteristic protected by a prohibited ground and that they suffered an adverse impact at the hands of the responding party (usually an employer) that is related to that characteristic. If a “prima facie” case of discrimination is made out, the onus shifts to the responding party to point to a defence or exemption that applies. This chapter examines the scope of prohibited grounds in Canada. Although many of the same prohibited grounds apply across Canada, variations exist across jurisdictions, reflecting differences of political opinion over the types of grounds that should be subject to legal regulation in employment.
QUESTIONS AND ISSUES FOR DISCUSSION 1. What must an employee demonstrate in order to establish a “prima facie” case of discrimination? If an employee is able to demonstrate this, does it mean that the employer had violated the human rights legislation? 2. Refer to Table 22.1 and review the list of prohibited grounds found in your provincial human rights statute. Which prohibited grounds not included in your provincial statute are included in that of another province? Choose one and provide an example of employer conduct that could violate the missing prohibited ground. 3. How did Canadian governments make the practice of mandatory retirement unlawful? By doing so, did they make it unlawful for an employer to ever dismiss a 66-year-old worker? Explain. 4. Is every comment made in a workplace that has sexual overtones sex discrimination? Explain.
pardon: A legal order that removes a person’s record of a criminal conviction from their formal criminal convictions file. It may be granted by the federal government if the person has served their sentence and demonstrated good behaviour in society for a period of time. A pardon is now known as a “record suspension.”
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APPLYING THE LAW 1. A local restaurant has a policy of hiring only tall, blonde-haired, female servers. Identify hypothetical job applicants who would not be hired under this policy and any argument they could make that would establish a prima facie case of discrimination. 2. Markus’ spouse gave birth to a baby girl last month. Markus is occasionally required to travel for work, but his employer rarely sends him away for longer than a couple of nights. However, last week the employer advised Markus that he had been assigned to work on an out-of-province project for several months. When Markus informs his employer that he did not want to be away from his wife and daughter that long, he is terminated. Discuss whether Markus would be capable of establishing discrimination on the basis of a prohibited ground. 3. Lisa-Marie is the human resources manager at a local retail store. She is looking to hire a new sales clerk. She receives three applications, one each from applicants A, B, and C. All of the applicants look comparable in terms of work experience. Lisa-Marie decides to search the Facebook profiles of each of them. She learns from
this search that applicant A is in her 40s, applicant B likes to party a lot, and applicant C was recently married. Lisa-Marie thinks someone in their 40s is a little old for the image of the store, that partiers are prone to miss or be late for morning shifts, and that newlyweds tend to get pregnant. None of the applicants are hired, and they learn these reasons. Explain whether any of the applicants could establish a prima facie case of discrimination on the basis of a prohibited ground. 4. Now that it is legal, Martha likes to smoke marijuana in a park near her workplace while on her lunchbreak. One day, her boss sees her doing this. When Martha returned to work after lunch, she was called into the boss’s office. Her boss asked whether Martha is using the marijuana for medical reasons or whether she is addicted. Martha says no to both and confirms that she is just a casual user because it helps her relax. The employer then terminates Martha’s employment, giving her the amount of notice required by her contract. Does Martha have a human rights complaint?
NOTES AND REFERENCES 1. These were roughly the facts in the case of Loomba v. Home Depot Canada, 2010 HRTO 1434. 2. Stewart v. Elk Valley Coal Corp., 2017 SCC 30 at para 24. See also Moore v. British Columbia (Education), 2012 SCC 61. 3. In some jurisdictions, “discrimination” is a defined term in human rights statutes, whereas in others its meaning is derived from tribunal and court case law. For an example of a statutory definition of discrimination, see Manitoba’s Human Rights Code, CCSM, c. H175, s. 9. 4. See D. Doorey, “Moxies: Where ‘Uglies’ Need Not Apply?” online, Law of Work (blog): . 5. Human Rights Code, RSO 1990, c. H.19 [Ontario HRC], s. 5 6. See Janzen v. Platy Enterprises Ltd., [1989] 1 SCR 1252, a case involving sexual harassment, where Justice Dickson of the Supreme Court of Canada wrote: “To argue that the sole factor underlying the discriminatory action was the sexual attractiveness of the appellants and to say that their
gender was irrelevant strains credulity.” See also Yanowitz v. L’Oreal USA, Inc., 106 Cal. App. 4th 1036 (2003) (employer committed sex discrimination by insisting that an employee be fired for not being sexually attractive enough for his liking); Wilson v. Southwest Airlines Co., 517 F. Supp. 292 (1981) (airline’s practice of hiring only attractive women was found to be sex discrimination, and being an attractive woman was not a bona fide occupational requirement since the airline was not in the business of providing a sex-oriented service). 7. Alberta Human Rights Act, RSA 2000, c. A-25.5, s. 44(1). 8. B. v. Ontario (Human Rights Commission), 2002 SCC 66 at para 44. See also Ont. Human Rights Comm. v. SimpsonsSears, [1985] 2 SCR 536 at 546-47. 9. See, for example, Ouimette v. Lily Cups Ltd. (1990), 12 CHRR D/19 (Ont. Bd Inq) (the flu is not a disability); Anderson v. Envirotech Office Systems, 2009 HRTO 1199 (bronchitis is not a disability); Moulton v. Leisureworld Caregiving Centre, 2009 HRTO 1575 (a cold is not a disability); Kalam v. Brick Warehouse, 2011 HRTO 1037
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Chapter 22 The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination 369 (a sprained ankle is not a disability); and Nielson v. Sandman Four Ltd. (1986), 7 CHRR D/3329 (BCCHR) (a temporary sciatica ailment is not a disability). 10. Ontario, Prince Edward Island, New Brunswick, Northwest Territories, and Alberta. 11. For example, in Saskatchewan see Saskatchewan (Human Rights Commission) v. St. Paul Lutheran Home of Melville, 1993 CanLII 6669 (Sask. CA); and in Ontario see Ontario (Human Rights Commission) v. Vogue Shoes (1991), 14 CHRR D/425 (Ont. Bd Inq), where “physical disability” was restricted to that caused by injury, birth defect, or illness, and obesity was found not to be a disability. In British Columbia, where no such restrictive language exists, the tribunal has accepted that obesity may be a disability. See Dunlop v. Find and Kutzner (No. 4), 2009 BCHRT 277; and Hamlyn v. Cominco Ltd. (Re) (1989), 11 CHRR D/333 (BCCHR). 12. Poulter v. JACI Enterprises Inc. (1989), 10 CHRR D/6141 (BCHRC). 13. In some jurisdictions, “perceived disability” is expressly included in the statute, whereas in others the tribunal has read the prohibition on disability discrimination broadly to include perceived disability. See, for example, Dumais v. Speedy Auto and Window Glass, 2004 BCHRT 47; Gill v. Royal Canadian Legion Charlottetown Branch No. 1, 2006 CanLII 61046 (PEHRC); Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Montréal (City), 2000 SCC 27; Bahlsen v. Canada (Minister of Transport), [1997] 1 FC 800; and Davis v. Toronto (City), 2011 HRTO 806. 14. Entrop v. Imperial Oil Limited, 2000 CanLII 16800 (Ont. CA); and Watson v. Lawdell Services, 2013 BCHRT 82 at para 48. 15. Francoeur v. Capilano Golf & Country Club (No. 2), 2008 BCHRT 171. 16. See, for example, Ontario Nurses’ Association v. Cambridge Memorial Hospital, 2019 ONSC 3951; Regional Municipality of Waterloo (Sunnyside Home) v. Ontario Nurses’ Association, 2019 CanLII 433 (Ont. LA); and Krieger v. Toronto Police Services Board, 2010 HRTO 1361 (violent conduct of employee was related to an undiagnosed mental disability). For cases where no linkage between a disability and the employee’s misconduct was found, see British Columbia (Public Service Agency) v. British Columbia Government and Service Employees Union, 2008 BCCA 357 (termination of an alcoholic who stole alcohol is not discriminatory), decided prior to the Elk Valley decision, supra note 2; Watson v. Lawdell Services, supra note 14; and Fleming v. North Bay (City), 2010 HRTO 355. 17. See also Burton v. Tugboat Annie’s Pub and Others, 2016 BCHRT 78 (no link between termination for smoking marijuana at work and the termination).
18. Entrop v. Imperial Oil Limited, supra note 14 (random alcohol testing violates the Ontario Human Rights Code and is not a bona fide occupational requirement). But see Alberta (Human Rights and Citizenship Commission) v. Kellogg Brown & Root (Canada) Company, 2007 ABCA 426 (random drug and alcohol testing in safety-sensitive jobs is not prima facie discriminatory because the employer did not perceive the employee to be disabled). Note that the tests regarding the right of employers to implement random alcohol- and drug-testing policies differ in the unionized setting, where labour arbitrators have developed their own approach: see Communications, Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp & Paper, Ltd., 2013 SCC 34. 19. Janzen v. Platy Enterprises Ltd., supra note 6; Ratzlaff v. Marpaul Construction and another, 2010 BCHRT 13; Cunningham v. Royal Canadian Legion Branch 594 (1993), 20 CHRR D/239 (Ont. Bd Inq); Rodley v. Barclay (1993), 19 CHRR D/503 (Ont. Bd Inq); Miller v. Sam’s Pizza House (1995), 23 CHRR D/433 (NS Bd Inq); Costigane v. Nyood Restaurant & Bar, 2015 HRTO 420; and Valle v. Faema Corporation 2000 Ltd., 2017 HRTO 588. See also A. Aggarwal, Sexual Harassment in the Workplace (Toronto: Butterworths, 1987). 20. British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3 SCR 3 (women have more difficulty meeting a physical fitness test than men); and Chapdelaine v. Air Canada, 1987 CanLII 102 (CHRT) (the height requirement for pilots indirectly discriminates against women). 21. Mottu v. MacLeod and Others, 2004 BCHRT 67; Bil v. Northland Properties, 2010 BCHRT 234, and see discussion in Re O.H.R. Com’n and Chrysalis Restaurant, 1987 CanLII 5266 (Ont. Sup Ct J). 22. CN v. Canada (Canadian Human Rights Commission), [1987] 1 SCR 1114. 23. Brooks v. Canada Safeway Ltd., [1989] 1 SCR 1219. Brooks overruled a previous decision, Bliss v. Attorney General of Canada, [1979] 1 SCR 183, in which the Supreme Court ruled that pregnancy was not included in “sex” discrimination. See Ontario HRC, s. 10(2). 24. Brooks v. Canada Safeway Ltd., supra note 23 at 1243-44. 25. McIlwraith v. Eva’s Restaurant and Lounge, 2006 CanLII 61048 (PEHRC) (termination, shift change); Mann v. JACE Holdings, 2012 BCHRT 234; Meldrum v. Astro Ventures, 2013 BCHRT 144; Ontario Cancer Treatment and Research Foundation v. Ontario (Human Rights Comm.), 1998 CanLII 14955 (Ont. Sup Ct J) (the refusal of sick benefits to a pregnant employee was discriminatory); and Weihs v. Great Clips and Others (No. 2), 2019 BCHRTA 125. 26. Janzen v. Platy Enterprises Ltd., supra note 6. Ontario Human Rights Commission v. Farris, 2012 ONSC 3876; J.D.
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370 Part III The Regulatory Regime v. The Ultimate Cut Unisex, 2014 HRTO 956; Robichaud v. Canada (Treasury Board), [1987] 2 SCR 84; Bannister v. General Motors of Canada Ltd., 1998 CanLII 7151 (Ont. CA); and Anderson v. Law Help Ltd., 2016 HRTO 1683. 27. Janzen, supra note 6. 28. Québec (Commission des droits de la personne) v. Habachi, 1992 CanLII 1 (Que. TDP). 29. Dutton v. British Columbia (Human Rights Tribunal), 2001 BCSC 1256; Rampersadsingh v. Wignall, 2002 CanLII 23563 (CHRT); and Wigg v. Harrison (1999), CHRR Doc. 99-188e (NS Bd Inq). 30. See, for example, Kafer v. Sleep Country Canada and another (No. 2), 2013 BCHRT 289 (the female complainant regularly participated in sexual banter, and therefore the tribunal found such banter not “unwelcome”). 31. McIntosh v. Metro Aluminum Products and another, 2011 BCHRT 34; and Cugliari v. Telefficiency Corporation, 2006 HRTO 7. 32. See, for example, Fair Employment Practices Act, SO 1951, c. 24. 33. See the discussion in CSWU Local 1611 v. SELI Canada and Others (No. 8), 2008 BCHRT 436 at paras 237, 238; Chieriro v. Michetti, 2013 AHRC 3; Francis v. BC Ministry of Justice (No. 3), 2019 BCHRT 136; and Eva obo Others v. Spruce Hill Resort and Another, 2018 BCHRT 238. 34. See Hadzic v. Pizza Hut, 1999 BCHRT 44; Dhillon v. F. W. Woolworth Co. (1982), 3 CHRR D/743 (Ont. Bd Inq); Islam v. Big Inc. 2013 HRTO 2009 (derogatory comments about employees’ native language discriminates on basis of ethnic origin); and Sangha v. Mackenzie Valley Land and Water Board, 2007 FC 856 (a denial based on overqualification is discriminatory). 35. Perez-Moreno v. Kulczycki, 2013 HRTO 1074. 36. See, for example, Human Rights Act, SBC 1969, c. 10, s. 5(b); and Age Discrimination Act, SO 1966, c. 3, s. 1. 37. See Age of Majority Act, RSBC 1996, c. 7; and Age of Majority and Accountability Act, RSO 1990, c. A.7, s. 1. 38. For a review of the arguments for and against allowing discrimination against workers 65 and older, see M. Gunderson & J. Pesando, “The Case for Allowing Mandatory Retirement” (1988) 14 Can Pub Pol’y 33; M. Krashinsky, “The Case for Eliminating Mandatory Retirement: Why Economics and Human Rights Need Not Conflict” (1988) 14 Can Pub Pol’y 40; and C.T. Gillin, D. MacGregor, & T. Klassen, eds, Time’s Up! Mandatory Retirement in Canada (Toronto, ON: Lorimer, 2005). 39. Canada Pension Plan, RSC 1985, c. C-8, s. 44. 40. See the discussion in A. Sheppard, “Mandatory Retirement: Termination at 65 Is Ended, but Exceptions Linger On” (2008) 41 UBC L Rev 139. Age definitions that
permitted forced retirement were challenged as violations of the equality provision in the Charter of Rights and Freedoms on a number of occasions. We will discuss these cases in Chapter 39 which examines the Charter. See, for example, McKinney v. University of Guelph, [1990] 3 SCR 229; Harrison v. University of British Columbia, [1990] 3 SCR 451; and Stoffman v. Vancouver General Hospital, [1990] 3 SCR 483. 41. See, for example, Ontario Human Rights Commission, Time for Action: Advancing Human Rights for Older Ontarians (Toronto, ON: Ontario Human Rights Commission, 2001), online: . 42. Link found when employee in her 60s denied a posting for which she was obviously qualified: Cowling v. Her Majesty the Queen in Right of Alberta as represented by Alberta Employment and Immigration, 2012 AHRC 12. No link between age and adverse effect: Ouellette v. IBM Canada Limited, 2017 HRTO 391; Lunar v. Canadian Real Estate Investment Trust, 2012 HRTO 28; and Riddell v. IBM Canada, 2009 HRTO 1454. 43. Riddell v. IBM Canada, supra note 42 at para 117. 44. Huang v. 1233065 Ontario Inc. (Ottawa Senior Chinese Cultural Association), 2006 HRTO 1 (Falun Gong); and R.C. v. District School Board of Niagara, 2013 HRTO 1382 (atheism). In Saskatoon Board of Police Commissioners v. Saskatoon Police Association, 2018 CanLII 128218 (Sask. LA), the employee claimed that her religion prohibited her from carrying a gun, and this was accepted as a religious belief. 45. Syndicat Northcrest v. Amselem, 2004 SCC 47. 46. Central Alberta Dairy Pool v. Alberta, [1990] 2 SCR 489. See also Henry v. Consumer Contact ULC, 2013 HRTO 994; Islam v. Big Mac, supra note 34; and Ont. Human Rights Comm. v. Simpson-Sears, supra note 8. 47. Loomba v. Home Depot Canada, supra note 1. 48. Jazairi v. Ontario (Human Rights Commission), 1999 CanLII 3744 (Ont. CA). 49. See “Employee Cites Ethical Veganism as a Creed,” Law Times (May 2019), online: . 50. See, for example, Mark v. Porcupine General Hospital (1984), 6 CHRR D/2538; and Brossard (Town) v. Quebec (Commission des droits de la personne), [1988] 2 SCR 279. 51. B. v. Ontario (Human Rights Commission), supra note 8. 52. For a history of “family status” as a prohibited ground, see the discussion in Garrod v. Rhema Christian School (1991), 15 CHRR D/477 (Ont. Bd Inq). 53. In Devaney v. ZRV Holdings Limited, 2012 HRTO 1590, the tribunal found prima facie discrimination on the basis of
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Chapter 22 The Two-Step Human Rights Model and the Prohibited Grounds of Discrimination 371 “family status” when an employee was dismissed for absenteeism due to elder-care responsibilities. Contrast Misetich v. Value Village Stores Inc., 2016 HRTO 1229 (no discrimination when schedule interfered with employee’s care for her elderly mother). 54. Simpson v. Pranajen Group Ltd. o/a Nimigon Retirement Home, 2019 HRTO 10; Canada (Attorney General) v. Johnstone, 2014 FCA 110; and Canadian National Railway Company v. Seeley, 2014 FCA 111. See also Health Sciences Assoc. of B.C. v. Campbell River and North Island Transition Society, 2004 BCCA 260; Rawleigh v. Canada Safeway Limited, 2009 AHRC 6; Clark v. Bow Valley College, 2014 AHRC 4; and Envirocon Environmental Services, ULC v. Suen, 2019 BCCA 46 (in British Columbia, the test requires that there be a change in work rules and a serious interference with a substantial parental obligation). 55. See, for example, Misetich v. Value Village Stores Inc., supra note 53; Durikova v. BC Ministry of Justice, 2018 BCHRT 258; and SMS Equipment Inc. v. Communications, Energy and Paperworkers Union, Local 707, 2015 ABQB 162. 56. Vriend v. Alberta, [1998] 1 SCR 493. See also Haig v. Canada, 1992 CanLII 2787 (Ont. CA). 57. Selinger v. McFarland, 2008 HRTO 49. 58. See the discussion of the scope of these grounds by the Ontario Human Rights Commission in “Gender Identity and Gender Expression” (2014), online: . See also F. Durnford, “The Mirror Has Many Faces: Recognizing Gender Identity in Canadian AntiDiscrimination Law” (2005), CanLII Docs 10.
60. See, for example, Fraser v. BC Ministry of Forests, Lands and Natural Resource Operations (No. 4), 2019 BCHRT 140; and Wali v. Jace Holdings, 2012 BCHRT 389 (comments about regulation of a profession is political). But see Prokopetz and Talkkari v. Burnaby Firefighters’ Union and City of Burnaby, 2006 BCHRT 462 (complaints about human resource policies are not “political”). 61. Gajecki v. Surrey School District (No. 36) (1989), 11 CHRR D/326 (BCCHR). See also Liu v. Everlink Services Inc., 2014 HRTO 202 (discrimination against an employee of Chinese descent was due to the employee’s accent); and Ontario Human Rights Commission, “Policy on Discrimination and Language” (2009), online: . 62. Arnold v. Stream Global Services, 2010 HRTO 424; and Clarke v. Garderie Tunny’s Daycare, 2013 HRTO 325. 63. Ontario HRC, supra note 5, s. 10(1). See also de Pelham v. Mytrak Health Systems, 2009 HRTO 172 (“record of offences” does not apply to a person merely charged with a crime). The code still refers to “pardons,” although amendments to the federal Criminal Records Act, RSC 1985, c. C-47, in 2012 changed the name of a pardon to a “record suspension.” 64. Human Rights Code, RSBC 1996, c. 210, s. 13(1). This language has been interpreted to include people merely charged with an offence. See Clement v. Jackson and Abdulla, 2006 BCHRT 411. 65. Human Rights Act, RSY 2002, c. 116, s. 13(1).
59. Browne v. Sudbury Integrated Nickel Operations, 2016 HRTO 62.
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CHAPTER 23
The Bona Fide Occupational Requirement, the Duty to Accommodate, and Other Discrimination Defences* LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 373 II. The Bona Fide Occupational Requirement (BFOR) Defence 374 A. The 1999 “Meiorin Test” for the BFOR 375 B. The Duty to Accommodate 376 III. The Special Interest Organization Defence 384 IV. Other Defences to Prima Facie Discrimination 386 A. The Nepotism Defence 386 B. The Personal Care Attendant Defence, Homeworker Defence, and Domestic Worker Defence 387 C. The Bona Fide Pension or Insurance Plan Defence 387 D. The Special Program Defence 387 V. Chapter Summary 388 Questions and Issues for Discussion 388 Notes and References 389
• Describe the bona fide occupational requirement (BFOR) defence to a finding of prima facie discrimination and when it applies, including the duty to accommodate to the point of undue hardship. • Explain the “Meiorin test” for the BFOR. • Understand how the duty to accommodate affects employers, unions, the employee seeking accommodation, and co-workers. • Describe the key factors considered when determining whether an accommodation causes “undue hardship.” • Describe additional defences available in Canadian human rights legislation, including the special interest organization defence, the nepotism defence, the personal care worker defence, and the defence for bona fide pension or insurance plans.
I. Introduction In Chapter 22 we introduced a two-step model for analyzing human rights cases at work. In the first step, the complainant (usually an employee) must demonstrate a prima facie case of discrimination on the basis of a prohibited ground. If the complainant can satisfy this test, the onus shifts to the respondent (usually the employer) to defend that discrimination. In order to justify discrimination, the employer must prove that a defence available in the jurisdiction’s human rights statute is applicable. This chapter examines the types of defences available to employers who have been accused of discrimination based on a prohibited ground. The most applied defence is the bona fide occupational requirement (BFOR) defence. It permits some types of discrimination on prohibited grounds when the purpose of the offending rule, standard, or practice is related to a legitimate business concern. Other defences apply in more specific and narrow circumstances. Box 23.1 reproduces the model from Chapter 22 and incorporates these defences and exemptions.
* This chapter was authored by Michael Lynk, Western University, and David Doorey.
373
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374 Part III The Regulatory Regime
BOX 23.1 » TALKING WORK LAW A Two-Step Model for Analyzing Human Rights Cases, Including Statutory Defences When applying the two-step analysis to cases involving alleged work-related discrimination, human rights tribunals and courts may encounter a number of defences to that discrimination.
QUESTION ONE (Chapter 22) Does a rule, standard, or practice discriminate against the complainant on the basis of a prohibited ground in the human rights statute?
NO
Human rights legislation does not apply.
NO
The discrimination is a violation of the human rights statute.
YES
QUESTION TWO (Chapter 23) Is that discrimination nevertheless permitted by a statutory defence or an exemption in the human rights statute? Statutory defences/exemptions: • Bona fide occupational requirement (BFOR) defence (includes a duty to accommodate) • Special interest organization defence • Nepotism defence • Personal care attendant defence, homeworker defence, and domestic worker defence • Bona fide pension or insurance plan defence • Special program defence
YES
The discrimination is not a violation of the human rights statute.
The range of possible defences available to an employer accused of unlawful discrimination depends on the nature of the discrimination involved. Some defences (e.g., the nepotism defence) apply to a precise type of discrimination. By contrast, the BFOR defence is more versatile and has potential application to a wide range of employment rules, standards, and practices that give rise to a prima facie case of discrimination on a prohibited ground. As we will learn, an important element of the BFOR defence is the “duty to accommodate” to the point of undue hardship. We will begin with a discussion of the BFOR defence before turning to the additional situational defences.
II. The Bona Fide Occupational Requirement (BFOR) Defence The main lesson to take away from this chapter is that the right not to be discriminated against is not absolute. Human rights statutes attempt to strike a balance between potentially competing rights. In the employment context, this balancing sometimes pits the employer’s business and efficiency interests against the interests of individual workers to engage in paid labour without discrimination. The tension that can arise from this balancing exercise is nowhere more clearly
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Chapter 23 The Bona Fide Occupational Requirement, the Duty to Accommodate 375
evident than in relation to the bona fide occupational requirement (commonly known by its acronym, BFOR).1 Employers rely on the BFOR more than any other defence. This defence permits discrimination on a prohibited ground when that discrimination is based on an honest good-faith belief that it is necessary for a legitimate business reason. The BFOR defence appears in human rights statutes as an expressed exemption from the general rule that discrimination in employment based on prohibited grounds is unlawful. For example, the British Columbia Human Rights Code provides that the rules prohibiting discrimination in employment “do not apply with respect to a refusal, limitation, specification or preference based on a bona fide occupational requirement.”2 Similar language is found in other Canadian human rights statutes. The Ontario Human Rights Code’s BFOR defence model is the most complicated because it is divided into several sections, as summarized in Box 23.2.
BOX 23.2 » TALKING WORK LAW The Bona Fide Occupational Requirement Defence in the Ontario Human Rights Code The Ontario Human Rights Code divides up the BFOR defence into three distinct sections that deal with different types of discrimination, as follows: • Section 11: Indirect discrimination based on all prohibited grounds. • Section 17: Direct discrimination based on disability when a disabled employee cannot perform the essential duties of a job.* • Section 24(1)(b): Direct discrimination based on age, sex, record of offence, and marital status. In practice, the BFOR defence is applied in a similar manner under all three sections, although it is important to pay atten-
tion to which section applies to a particular situation and, equally, when the defence does not apply. For example, in Ontario the BFOR defence is only available in cases of direct discrimination if the grounds involved are disability (s. 17), sex, age, record of offence, and marital status (s. 24(1)(b)). * The Ontario Court of Appeal has ruled that s. 17 of the code applies to direct discrimination on the basis of disability and s. 11 applies to indirect discrimination: Ontario Nurses’ Association v. Orillia Soldiers Memorial Hospital, 1999 CanLII 3687 (Ont. CA); and Entrop v. Imperial Oil Limited, 2000 CanLII 16800 (Ont. CA).
A. The 1999 “Meiorin Test” for the BFOR The leading case on the BFOR defence was decided by the Supreme Court of Canada in 1999, as described in Box 23.3.
BOX 23.3 » CASE LAW HIGHLIGHT The Scope of the Bona Fide Occupational Requirement Defence British Columbia (Public Service Employee Relations Commission) v. BCGSEU (The Meiorin Decision) [1999] 3 SCR 3 Key Facts: Meiorin was hired as a firefighter in 1992 by the British Columbia Ministry of Forests and performed well in her first couple of years on the job. In 1994, the BC government introduced new aerobic fitness standards for firefighters and required all employees to take a fitness test. Meiorin passed
three of the tests, but was unable to meet a fourth test standard that required running 2.5 kilometres in 11 minutes. She was 49 seconds late. She was fired for failing to meet the standard. She filed a grievance, and her union argued before an arbitrator that the standard was discriminatory against women because women were much less likely to be able to meet the standard. Evidence bore this out: 65 to 70 percent of men passed the test compared with only 35 percent of women. The arbitration tribunal ruled that the aerobic standard discriminated against
bona fide occupational requirement (BFOR): A defence to discrimination that an employer may use to prove that a discriminatory rule, standard, or practice was enacted for legitimate business reasons; it requires that the employer prove that it cannot accommodate the complainant’s needs without causing itself undue hardship.
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376 Part III The Regulatory Regime women and ordered Meiorin to be reinstated to her job. That ruling was overturned by the BC Court of Appeal, and the case came before the Supreme Court of Canada. Issue: Did the aerobic fitness standard discriminate against women and, if so, was that discrimination justified as a BFOR? Decision: Yes and no. The Supreme Court found that the standards in the test discriminated on the basis of sex. It introduced a new test that is to be used to decide whether a workplace standard that is prima facie discriminatory (either directly or indirectly) justifies as a BFOR. That test requires the employer to establish the following: 1. that the employer adopted the standard for a purpose that is rationally connected to the performance of the job; 2. that the employer adopted the standard in an honest and good-faith belief that it was necessary to the fulfillment of that purpose; and 3. that the standard is reasonably necessary to the accomplishment of that legitimate purpose, which requires
the demonstration that it is impossible to accommodate the employee without imposing undue hardship on the employer. Applying this new test, the Supreme Court ruled that the employer had failed to establish a BFOR defence. The government satisfied the first and second elements: (1) the fitness standards were adopted to help the employer identify those employees who are most fit and therefore best able to perform the job safely and efficiently, and (2) there was no suggestion that the employer acted in bad faith in adopting the standard. However, the employer had failed to show that running 2.5 kilometres in 11 minutes, as opposed to 11 minutes and 49 seconds, was reasonably necessary to the safe and efficient performance of firefighting. The evidence did not establish that if a different standard were applied to all firefighters, or to just female firefighters, the safe performance of the job would not be possible. Therefore, the employer could not rely on the BFOR defence. The original decision to reinstate Meiorin to her job with back pay was ordered.
The so-called “Meiorin test” includes both a subjective and an objective component: • Objective component (steps one and three of the Meiorin test): This component focuses on whether the standard is truly necessary to achieve a legitimate business-related objective. It asks whether the purpose of the standard is “rationally connected” to the performance of the job and, if so, whether it is “reasonably necessary” to apply the standard to the complainant to achieve that purpose, considering the duty to accommodate to the point of undue hardship. • Subjective component (step two of the Meiorin test): This component examines the employer’s motive and state of mind when it adopted the standard being challenged. Was the employer acting in good faith (trying to improve performance) rather than acting on some other motive inconsistent with human rights legislation? This branch of the test is usually satisfied. A BFOR defence can fail at any one of the three steps in the Meiorin test, although most cases come down to the question of whether the standard is “reasonably necessary,” and that inquiry in turn focuses on whether it is possible for the employer to accommodate the worker without undue hardship. For this reason, the legal duty to accommodate to the point of undue hardship has emerged as one of the most important legal requirements in Canadian human rights law.
B. The Duty to Accommodate The duty to accommodate to the point of undue hardship is likely the most litigated issue in human rights law. Since its inception in Canadian law in 1985, this duty has embedded human duty to accommodate: A legal requirement in human rights law to take steps to remove discriminatory barriers to employment, including altering schedules, rules, or work patterns or changing the physical design of a workplace. undue hardship: The legitimate defence that an employer may raise to justify why it could not provide an accommodation to an employee. This standard is demanding and requires the employer to demonstrate that significant difficulties—beyond mere inconvenience—would result if it had to accommodate the employee.
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Chapter 23 The Bona Fide Occupational Requirement, the Duty to Accommodate 377
rights values into the core of the employment relationship, transformed industrial relations practices, and broadened the reach of the law of work. The duty to accommodate is guided by the following objectives: removing barriers, eradicating prejudices and stereotypes, ending discrimination in all its forms, broadening opportunities, enhancing diversity, and entrenching equality at work. Most significantly, it has required employers to proactively ensure that barriers to employees’ equal participation in the workplace are removed. According to the Supreme Court, “employers designing workplace standards owe an obligation to be aware of both the differences between individuals, and differences that characterize groups of individuals. They must build conceptions of equality into workplace standards.”3 There is hardly a workplace in Canada that has not been touched by the duty to accommodate. At times, the required accommodation is relatively simple. An employer might need to reschedule the employee from the night shift to the day shift because overnight child-care options for the employee’s young child are limited. It might need to purchase adaptive software and hardware for a sight-impaired bookkeeper. Or it might need to rearrange work hours to allow a Muslim employee to attend noon prayers at the local mosque. Other times, the required accommodation can be more complex. A hospital might need to modify the job of a nurse returning to work after major back surgery, perhaps requiring the other nurses on her shift to assume her heavy duties, such as lifting patients. A fire department might need to revise its height, weight, and aerobic standards if those standards unnecessarily hinder women from becoming firefighters. An employer with offices in an older building can be mandated to construct elevators, build ramps around stairs, create wider aisles, and purchase lower work tables to accommodate an employee in a wheelchair.
1. What Is “Undue Hardship”? The threshold to satisfy the duty to accommodate, “undue hardship,” is rigorous and not easy to satisfy. Undue hardship recognizes that some hardship is anticipated.4 The threshold of “undue” hardship is reached only when all reasonable measures of accommodation have been attempted and exhausted, and providing any more accommodation would impose an unnecessarily demanding level of hardship on the employer.5 The Supreme Court listed six factors to consider when determining undue hardship, recognizing that the list was not exhaustive (more factors could be added later).6 These factors and their content have been fleshed out through subsequent rulings by legal decision makers: • Safety: This is the most common undue hardship factor relied on by employers. To succeed, the employer must establish that the proposed accommodation presents an intolerable safety risk either to the employee seeking the accommodation or to others.7 • Size of the employer’s operations: The larger the operation, the more likely it would be that the employer can afford or arrange for a viable accommodation.8 • Employee morale: The impact of a proposed accommodation on other employees can amount to undue hardship, but only if the impact is significant. If other employees oppose the accommodation because of a preference for the status quo or a discriminatory attitude, then the impact on employee morale will not amount to a legitimate hardship.9 • Interchangeability of the workforce and facilities: This factor asks whether the workforce, and the nature of the workplace operations, is large enough, complex enough, and adaptable enough to implement a flexible work schedule or a rebundling of work assignments without undue hardship. • Cost: To amount to an undue hardship, the cost of an accommodation must be so significant that it would impact the financial viability of the enterprise.10 The financial threat of an expensive accommodation must be grounded on proven accounting evidence, not impressions or assumptions.11
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378 Part III The Regulatory Regime • Infringement of a collective agreement: Collective agreement provisions in a unionized workplace are to be respected, but a viable accommodation can override the provisions of a collective agreement unless the proposed accommodation would significantly interfere with the rights of other employees.12
2. A (Very) Brief History of the Duty to Accommodate The roots of the duty to accommodate lie in a series of Supreme Court decisions from the 1980s and 1990s. Until 1985, human rights law in Canada required victims of discrimination to establish a demanding standard: they had to prove the employer had intentionally discriminated against them. As well, no legal requirement existed for employers to accommodate employees. The requirement that a complainant prove that a defendant intended to discriminate and the absence of a duty for employers to accommodate employees ensured that human rights statutes remained in the backwaters of Canadian law, with little legal bite or impact. That changed in the groundbreaking Supreme Court decision Ont. Human Rights Comm. v. Simpsons-Sears (“O’Malley”), described in Box 23.4.
BOX 23.4 » CASE LAW HIGHLIGHT Establishing the Principles of the Duty to Accommodate in Canada Ont. Human Rights Comm. v. Simpsons-Sears (“O’Malley”) [1985] 2 SCR 536 Key Facts: Since 1975, O’Malley had worked as a full-time retail clerk at a Simpsons-Sears store in Kingston. The store operated throughout the week, including Thursday, Friday, and Saturday evenings, as well as all day on Saturdays. In 1978, O’Malley joined the Seventh-day Adventist Church. A mandatory tenet of the church was the observation of its Sabbath, which ran from sundown Friday to sundown Saturday. Among other requirements, a church member could not work during the Sabbath. When O’Malley asked her managers to realign her work schedule as an accommodation, they replied that Fridays and Saturdays were busy commercial days and its mandatory work rule required all employees to be available for work during all store hours. Instead of accommodating her needs, the employer reassigned her as a part-time employee, with the consequent reduction in working hours, income, and benefits. A human rights board of inquiry dismissed O’Malley’s discrimination complaint against Simpsons-Sears, and that decision was appealed up to the Supreme Court of Canada. Issues: Is indirect, non-intentional discrimination prohibited by Canadian human rights law? If so, is an employer required to accommodate an employee who is the victim of indirect discrimination? Did Simpsons-Sears discriminate against O’Malley? Decision: Yes to all three questions. The court allowed O’Malley’s appeal, stating that the doctrine of indirect, non-
intentional discrimination (discussed in Chapter 21) was now part of Canadian law. Thus, an employer would be in violation of the Ontario Human Rights Code even though the offending rule—”all employees must be available to work on Friday and Saturday shifts”—was implemented without any discriminatory intent. The court stated: An employment rule honestly made for sound economic or business reasons, equally applicable to all to whom it is intended to apply, may yet be discriminatory if it affects a person or group of persons differently from others to whom it may apply. The Supreme Court then held that human rights law would now include a general duty to accommodate. Once a workplace rule was found to cause an adverse effect on an employee, an employer was required to accommodate the employee, up to the point of undue hardship. It also stated: [W]here it is shown that a working rule has caused discrimination it is incumbent upon the employer to make a reasonable effort to accommodate the religious needs of the employee, short of undue hardship to the employer in the conduct of his business. The court found that Simpsons-Sears had not produced any evidence that accommodating O’Malley’s religious beliefs, such as maintaining her full-time hours while ensuring that she was not assigned work on the Sabbath, would have caused it any undue costs or scheduling problems.
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Chapter 23 The Bona Fide Occupational Requirement, the Duty to Accommodate 379
The O’Malley decision was a giant step forward for human rights law in Canada. The decision introduced a duty to accommodate as an element of the BFOR defence in the case of indirect discrimination. It took some 14 years later, in the Meiorin decision discussed in Box 23.3, for the Supreme Court to extend the duty to accommodate to the BFOR defence in cases involving direct discrimination.13 Today, the duty applies in any case where the employer argues the BFOR defence developed in the Meiorin decision. In the years following the O’Malley decision, human rights tribunals, labour arbitrators, and courts filled in details about the content and scope of the duty to accommodate. In the 1992 decision Central Okanagan School District No. 23 v. Renaud (Box 23.5), the Supreme Court again considered religious accommodation and this time discussed who was responsible for accommodation, as well as the effect of collective agreements between unions and employers on the duty.
BOX 23.5 » CASE LAW HIGHLIGHT Who Has a Duty to Accommodate? Central Okanagan School District No. 23 v. Renaud [1992] 2 SCR 970 Key Facts: Renaud, an employee at a unionized workplace (a school board), requested Friday evenings off because his Seventh-day Adventist faith prohibited work from Friday evening to sundown Saturday. The only practical shift available that could allow the employee to work full time and have Friday evenings off was a Sunday to Thursday shift. However, assigning the employee to that shift would have involved violating part of the union’s collective agreement and granting the employee a preferred shift for which he lacked the seniority (length of service). The union threatened to file a grievance if the employer assigned the employee to the Sunday to Thursday shift, so the employer fired the employee. The employee filed a religious discrimination complaint under the BC Human Rights Code against the employer and the union. The employee won before the human rights tribunal, and that decision was appealed up to the Supreme Court of Canada. Issue: Does the duty to accommodate sometimes require violating a collective agreement to enable accommodation, and is a union obligated by that duty to participate in the accommodation process? Decision: Yes and yes. The Supreme Court found that the rule requiring Friday work indirectly discriminated on the basis of religion. The issue boiled down to whether any accommodation was available to enable the employee to work full time but still have Fridays off. The employer identified a solution— the Sunday to Thursday shift—but that would entail a breach of the collective agreement, which the union rejected. The court ruled that a collective agreement term “cannot absolve the parties from the duty to accommodate,” since no one can contract out of human rights legislation obligations. Therefore, a contract term that stands as an obstacle to
accommodation must be waived if no other accommodation is available and if waiving it will not cause undue hardship on the employer. An accommodation that violates a contract term can cause undue hardship if it involves a “substantial departure from the normal operation of the conditions and terms of employment,” since this may “constitute undue interference in the operation of the employer’s business.” However, there was no evidence that allowing the employee to work Sunday to Thursday would cause undue interference with the employer’s business. If an accommodation proposal would cause “undue interference” with the rights of other employees or would seriously affect employee morale, then it could constitute undue hardship. However, employees are not entitled to insist that the employer be in absolute compliance with the collective agreement, and sometimes co-workers must participate in accommodation of their colleagues. Moreover, there was no evidence that allowing the employee to work Sunday to Thursday would seriously interfere with other employees’ rights. A union has an obligation to cooperate with the employer to identify a reasonable accommodation and to waive collective agreement requirements if necessary, provided that doing so will not cause undue hardship to other employees (the union had not asked other employees if they would cover the Friday night shift). The employee seeking accommodation has an obligation to accept a reasonable accommodation. The court noted that the complainant “cannot expect a perfect solution” and that if a reasonable accommodation is proposed and the employee turns it down, “the employer’s duty is discharged.” The Supreme Court agreed with the tribunal that allowing the employee to work Sunday to Thursday would not have imposed undue hardship on the employer, the union, or the other employees. The employer and union were equally liable for the employee’s lost wages, and the employer was ordered to reinstate the employee to the Sunday to Thursday shift.
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380 Part III The Regulatory Regime In Renaud, the Supreme Court explained that accommodation is everyone’s business. The general scope of the parties’ duties can be briefly summarized as followed: • Employer’s duty: To be flexible in exploring all options to modify jobs and schedules and to provide devices and other measures that will enable an employee to perform the essential duties of a job, subject to undue hardship, and to proactively educate the workplace on the need for accommodation.14 • The worker seeking accommodation: To participate reasonably in their own accommodation, to provide the employer with information necessary for the employer to assess possible accommodation measures, and to accept reasonable accommodation. The worker is not entitled to their preferred accommodation, only reasonable accommodation.15 • Unions: To cooperate with the worker and employer in seeking accommodation measures, including making exceptions to collective agreement provisions if no other accommodation is possible and this would not cause undue hardship.16 Co-workers of the person seeking accommodation may also be required to shoulder some of the weight of an accommodation, such as by altering their work hours or performing additional tasks if necessary, provided that doing so does not cause them undue hardship. As you can see, the duty to accommodate imposes a substantial procedural duty (to investigate the employee’s restrictions and explore all alternatives) and substantive duty (to make changes to how work is performed).
3. The Duty to Accommodate Disabilities After Central Alberta Dairy Pool and Renaud, the duty to accommodate quickly became a central feature of human rights law at work. Human rights tribunals and labour arbitration boards applied the principles from those rulings in scores of decisions that developed the details of this duty. The largest number of accommodation cases have dealt with workers with a disability. The reasons for the high volume of disability accommodation cases are twofold. First, the types of disability are numerous, and the needs of each individual are specific, which makes accommodation for this protected ground more complex than for other grounds. The accommodation required for a bad back will be quite different from that required for depression, a substance addiction, or chronic fatigue syndrome. Second, disabilities are usually more mutable than other human rights grounds, which means their accommodation requirements often change: a bad back can heal or get worse, and an addiction can be managed or go through a relapse. Accommodations for employees with disabilities take as many forms as there are distinct disabilities. When the disabled employee is still capable of working, the duty to accommodate requires a survey of the workplace to identify work possibilities. When an employer is investigating the possibilities for a job accommodation, it must engage in a four-step process: 1. The employer determines whether the employee can productively fulfill his or her existing job as it is presently constituted. 2. If not, the employer determines whether the employee can perform the essential aspects of the existing job in a modified or rebundled form. 3. If not, the employer determines whether the employee can accomplish the duties of another job in its present form. 4. If not, the employer determines whether the employee could perform another job in a modified or rebundled fashion.17 mutable: A condition that is liable to change.
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Chapter 23 The Bona Fide Occupational Requirement, the Duty to Accommodate 381
In most cases, the employer will have legally fulfilled its duty to accommodate if it has thoroughly investigated and has been unable to satisfy the accommodation needs of an employee after following these four steps. When searching for an accommodation for an employee with a disability, an employer can require that the employee be able to productively perform the core aspects or essential duties of a proposed position. Generally speaking, and with some exceptions, the duty does not oblige the employer to create an accommodation position that produces little or no value for the employer and amounts to a “make work” project,18 to hire a new worker to perform tasks a disabled employee is unable to perform,19 or to displace existing employees to create a vacancy for accommodation.20 Some types of disabilities create special challenges for accommodation. For example, if an employee is unable to work at all due to a disability (known as innocent absenteeism), then the four-step process discussed above will not be fruitful. The question then becomes, at what point can an employer terminate a disabled employee who cannot work? The answer is that employers must explore whether rehabilitation, medical treatments, or further rest would allow an employee to return to work in the foreseeable future. Only if the evidence discloses that an employee with a disability has been off work for a considerable time and that they will be incapable of returning to a job, accommodated or otherwise, for the foreseeable future, will continued employment constitute undue hardship for the employer.21 Accommodating mental disabilities poses different challenges. Employers must not make assumptions about mental disabilities and instead must investigate and educate themselves about the disability, and then fully explore what, if any, accommodations could enable the employee to continue working, as explained in the decision in Box 23.6.22
BOX 23.6 » CASE LAW HIGHLIGHT Accommodating an Employee with a Mental Disability Lane v. ADGA Group Consultants Inc. 2007 HRTO 34 Key Facts: Lane was hired as a quality assurance analyst with ADGA Group Consultants in 2001. Several years before, he had been diagnosed with bipolar disorder. During his first week of work, Lane informed his supervisor about his bipolar condition and explained some of the symptoms. Several days later, his employer fired him, stating that it was concerned that workplace stress might trigger a manic episode, and it could not easily endure an extended disability leave by Lane. Following his dismissal, Lane rapidly went into a full-blown bipolar mania and, among other events, lost his marriage. He subsequently filed a complaint with the Ontario Human Rights Commission. Issue: Did the employer violate the Human Rights Code by dismissing Lane because of his mental condition? Decision: Yes. The Ontario Human Rights Tribunal ruled that Lane had a disability and that disability had led to his termination. The employer argued that being able to work under stress and without absence was a BFOR, which included estab-
lishing it could not accommodate Lane without undue hardship. The tribunal noted that the duty to accommodate includes both a “procedural” and a “substantive” duty. The procedural duty to accommodate includes gathering all relevant information necessary to assess whether accommodation is possible. The employer failed to do so. Rather than seek information about managing the disability, the employer rushed to judgment and promptly dismissed Lane. The employer also failed in its substantive duty to accommodate. It did not demonstrate that monitoring Lane and then calling his doctor or wife if there were signs of an episode would cause it undue hardship. While there were some safety concerns if Lane had an episode, they were not “serious” concerns. The tribunal concluded that the employer had not adequately explored the accommodation possibilities within its workplace. Lane was awarded $35,000 in general damages, $10,000 for harm to Lane’s mental health, and an additional $40,511 in special damages. These damages were upheld on the employer’s appeal to the Ontario Superior Court of Justice.*
* ADGA Group Consultants Inc. v. Lane, 2008 CanLII 369605 (Ont. Sup Ct J).
innocent absenteeism: An employee’s absence from work due to reasons that are not blameworthy, such as illness, disability, or religious observance.
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382 Part III The Regulatory Regime The duty to accommodate employees with addictions usually includes granting the employee time off work to attend a rehabilitation program, as well as an exploration of other measures to ensure the employee does not present a safety risk to themselves or others. For example, in a 2019 decision, Regional Municipality of Waterloo v. Ontario Nurses Association, a nurse with a narcotics addiction was terminated for stealing narcotics from her workplace.23 An adjudicator ruled that there was a nexus between the employee’s addiction and the theft and therefore that prima facie discrimination had been made out. The employer lost its BFOR defence because it failed to demonstrate that it could not accommodate the employee’s addiction. The employer did not canvass whether, after the employee completed a rehabilitation program, work arrangements could be adjusted, such as ensuring the employee did not have unsupervised access to the narcotics in the event of a relapse. The employee was reinstated to her job and the parties were ordered to consider accommodation. The decision in Box 23.7 considers the BFOR and the duty to accommodate in the context of mandatory drug- and alcohol-testing policies, which, as we noted in Chapter 22, have been found to discriminate on the basis of disability (addiction).
BOX 23.7 » CASE LAW HIGHLIGHT Is a Rule Requiring Mandatory Random Drug and Alcohol Tests for Employees in Safety-Sensitive Positions a BFOR? Entrop v. Imperial Oil Limited 2000 CanLII 16800 (Ont. CA) Key Facts: Entrop had an alcohol-abuse problem, but he had not had a drink in seven years. He worked in a safety-sensitive job at an oil refinery. The employer introduced a new drug and alcohol policy that required workers in safety-sensitive jobs to disclose past substance-abuse problems and take random drug and alcohol tests. When Entrop disclosed his prior alcohol problems, he was transferred to a new job. He was eventually reinstated to his former safety-sensitive position, but only on the condition that he agree to take random alcohol and drug tests. Entrop filed a human rights complaint alleging that mandatory testing discriminated against him based on disability. Issue: Did the employer’s alcohol- and drug-testing requirement discriminate on the basis of disability and, if so, was it nevertheless a BFOR? Decision: The Ontario Court of Appeal confirmed that drug and alcohol addiction are disabilities and ruled that a random drug- and alcohol-testing policy that leads to negative employment repercussions for any employee with a positive test discriminates on the basis of disability. The policy is prima facie discriminatory because it assumes that an employee with a positive test is an addict who will later report to work intoxicated, and based on this assumption it removes them from the job. Therefore, the onus shifted to the employer to demonstrate that its policy was a BFOR, applying the Meiorin test.
The employer’s BFOR defence argument failed. The first two parts of the Meiorin test were satisfied: the new policy sought to reduce impairment in safety-sensitive jobs, which was a legitimate purpose that was introduced in good faith by the employer. However, the alcohol- and drug-testing policy did not satisfy the third part of the Meiorin test. The policy was not “reasonably necessary” to ensure safe workplaces. The court explained: • Random drug testing was not “reasonably necessary” because drug testing does not measure current impairment but rather whether someone used drugs at some point in the past. Also, the policy resulted in automatic termination of any employee in a safety-sensitive job who tested positive without consideration of accommodation of the individual’s personal circumstances. Therefore, the random drug-testing policy was discriminatory and not a BFOR and was therefore illegal. The court accepted that drug testing could be a BFOR if it is part of a broader assessment of whether an employee previously in a work accident continues to abuse drugs. • Random alcohol testing does test current impairment and therefore is reasonable in safety-sensitive jobs (not in non-safety-sensitive jobs). However, random alcohol testing is only a BFOR if the employer meets its duty to accommodate any employee who is an alcoholic and who tests positive. Accommodation should include consideration of “sanctions less severe than dismissal and where appropriate the necessary support to permit the employee to undergo a treatment program.”
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Chapter 23 The Bona Fide Occupational Requirement, the Duty to Accommodate 383
4. The Duty to Accommodate Other Prohibited Grounds While the duty to accommodate may get the most work in the context of disability discrimination complaints, it is by no means limited to disability. We have already seen several cases in which the BFOR defence and the duty to accommodate were argued in the context of religious discrimination (O’Malley and Renaud in this chapter, and Central Alberta Dairy Pool in Chapter 21). These cases involved requests by employees for time off from work to observe a religious holiday or practice. Such accommodations can often be handled flexibly by permitting the employee to work at different times, if that is possible without causing the employer undue hardship.24 The Supreme Court’s Meiorin decision (Box 23.3) not only redefined the scope of the duty to accommodate but also became the leading decision on the accommodation of women in the workplace. Meiorin established that the development of workplace measurements for employee standards needs to incorporate the principles of equality. In that case, the BC Ministry of Forests had not ensured that the new aerobic fitness test that it developed for its forest firefighters paid attention to the aerobic differences between men and women. Consequently, the prevailing aerobic fitness standard was struck down, and the ministry was ordered to develop a new standard with equality in mind. Many recent human rights rulings on gender in the workplace involve pregnancy and accommodation. Employers cannot dismiss or unfavourably treat a pregnant employee, and they must make every reasonable effort to ensure that a viable accommodation is made for that employee, including flexible scheduling or reassignment of duties, if necessary.25 Table 23.1 summarizes additional Canadian human rights decisions in which the employee established prima facie discrimination based on a prohibited ground and the employer argued a BFOR defence. Pay close attention to whether the employer’s argument satisfied the Meiorin test for a BFOR and how the decision makers applied the duty to accommodate to the point of undue hardship.
TABLE 23.1 Examples of the Application of the BFOR Defence and Duty to Accommodate Case Name
Prohibited Ground
Summary
Saskatoon Board of Police Commissioners v. Saskatoon Police Association, 2018 CanLII 128218 (Sask. LA)
Religion
The employee joined the Living Church of God, which restricted her from carrying guns. The employer rule requiring constables to carry guns indirectly discriminated against the employee. The employer proposes an accommodation in a “special constable” position that doesn’t require a gun but which results in a demotion and a $20,000 per year pay cut. The employer failed in its duty to accommodate by not maintaining the employee’s position as constable and her pay while in the special constable position. In the past, other constables had been accommodated in the same position without a demotion and pay cut.
Markovic v. Autocom Manufacturing, 2008 HRTO 64
Religion
The employer accommodated the employee’s religion by offering the employee a “menu” of options to make up for taking off Orthodox Christmas, including working an alternate day, using vacation time, or switching shifts with a co-worker. The employee argued he should receive the day off with pay without having to make it up because Christian employees get Christmas Day off with pay. The employer satisfied the duty to accommodate by permitting the employee to take the day off and offering options to earn back the pay.
Devaney v. ZRV Holdings Ltd., 2012 HRTO 1590
Family status
The employer’s insistence that the employee work regular 8:30 a.m. to 5:00 p.m. shifts amounted to indirect discrimination on the basis of family status when the employee needed to care for an elderly parent. The employer failed in its BFOR defence because it did not consider and explore possibilities for accommodation and did not demonstrate that undue hardship would result by allowing the employee to work flexible hours, as he done in the past.
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384 Part III The Regulatory Regime Jaques v. TOSH Steakhouse and Bar, 2016 HRTO 403
Sex
A pregnant restaurant server requested accommodation in the “bar” area rather than in her usual “dining room” area because she could not manage the stairs to and from the dining room because of pregnancy-related health issues. The employer argued that working in the dining room was a BFOR and it could not accommodate the employee because the bar area was fully staffed and giving the pregnant employee shifts would disrupt other employees. The tribunal ruled that the employer had discriminated against the employee and failed to demonstrate that accommodation would cause undue hardship. There was no evidence that the employee’s co-workers in the bar would be opposed to switching shifts if requested during the period of the pregnancy.
Bastide v. Canada Post, 2005 FC 1410
Age
An employer rule requiring employees to pass a dexterity test indirectly discriminated against older employees on the basis of age. A BFOR defence was successful because evidence demonstrated a direct link between performance on the test and success in the job. Accommodation by eliminating the test or lowering the standard would result in undue hardship.
Mortland and VanRootselaar v. Peace Wapiti School Division No. 76, 2015 AHRC 9
Age
The employer had a mandatory retirement policy that terminated the employment of school bus drivers at age 65 based on a belief that this was necessary to ensure safety. The rule discriminated on the basis of age. The employer’s BFOR defence failed. While the employer adopted the rule for a purpose that was rationally connected to job performance and in good faith, forced retirement was not reasonably necessary to ensure safety. The rule was overbroad and not tailored to individual circumstances. The employer could use individual testing to check for the presence of risks.
Landry v. Vegreville Autobody, 2017 AHRC 19
Marital status, sexual orientation
In a job interview, the employer expressed concern about hiring Landry, a gay applicant, because Landry’s husband was an RCMP officer who could be transferred to another city. The tribunal found that the employer expressed a preference to hire someone who was not gay and married to a RCMP officer, amounting to sexual orientation and family status discrimination. The BFOR defence failed. Being straight and not being married to an RCMP officer were not “reasonably necessary” to perform the job. There was no rational connection between the employer’s preferences and job performance, and even if the possibility of a short job was rationally connected to job performance, the employer did not demonstrate that accommodating Landry in the job even with this risk would cause undue hardship. Previous employees in the job had not stayed very long, and employers never have a guarantee that employees will not leave.
III. The Special Interest Organization Defence Some of the earliest Canadian human rights legislation included exemptions for charitable, educational, or religious organizations, as well as private social clubs and non-profits. For example, the first federal Fair Employment Practices Act, enacted in 1951, excluded from its coverage non-profit organizations that were “exclusively charitable, philanthropic, educational, fraternal, religious, or social” or that were “operated primarily to foster the welfare of a religious or racial group.”26 Exemptions for some special interest organizations still exist in Ontario, Quebec, Nova Scotia, Prince Edward Island, Saskatchewan, and Newfoundland and Labrador, although the types of organizations exempted and the specific conditions of the exemptions vary by jurisdiction. The Supreme Court of Canada has stated that exemptions in human rights statutes for certain types of organizations are intended to “promote the fundamental right of individuals to freely associate in groups for the purpose of expressing particular views or engaging in particular pursuits.”27 For example, section 24(1)(a) of the Ontario Human Rights Code states that it is not unlawful discrimination where a religious, philanthropic, educational, fraternal or social institution or organization that is primarily engaged in serving the interests of persons identified by their race, ancestry, place of origin, colour, ethnic origin, creed, sex, age, marital status or disability employs only, or gives preference in employment to, persons similarly identified if the qualification is a reasonable and bona fide qualification because of the nature of the employment.
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Chapter 23 The Bona Fide Occupational Requirement, the Duty to Accommodate 385
This provision requires that the special types of employers listed in the section demonstrate that a discriminatory practice is necessary and relevant to the performance of the job. There is no duty to accommodate in this defence. As an example, a religious school that serves students of a particular religion may be entitled to give hiring preference to members of that religion if being of that religion is a requirement of the job. Religious conformity may be a BFOR for a theology teacher in a religious-based school, but not for a secretary or janitor in the same school.28 In the media story found in Box 23.9, the employer defended its decision to terminate an employee for dating outside the religion, arguing that the job required absolute adherence to its version of the religious doctrine. Box 23.8 describes the application of this defence in another religious institution scenario.
BOX 23.8 » CASE LAW HIGHLIGHT Can a Religious Organization Discriminate on the Basis of Religion? Ontario Human Rights Commission v. Christian Horizons 2010 ONSC 2105 Key Facts: Christian Horizons (CH) is an Evangelical Christian organization that provides services to people with developmental disabilities. In 1992, CH introduced a new morality code for its employees that prohibited homosexuality. Heintz, an employee, came out as lesbian in 1999. When CH learned of her sexual orientation, it offered her counselling “to restore her to a state of compliance” with the organization’s code. Heintz eventually went on stress leave, and then filed a human rights complaint alleging that she had been subjected to harassment and a poisoned work environment because of her sexual orientation. CH admitted it had discriminated against Heintz, but argued that it was permitted to do so under section 24(1)(a) of the Ontario Human Rights Code, the special interest organization exemption. Issue: Can CH rely on the defence to discrimination provided for religious organizations in section 24(1)(a) of the code?
Decision: No. It was true that CH was a “religious organization.” It was also primarily engaged in serving the interests of Evangelical Christians, since the purpose of CH was to permit members of the church to perform their religious duty of serving the needy. However, CH failed to establish that not being homosexual was a reasonable and bona fide requirement of Heintz’s job as a support worker: [T]here is no evidence that anyone, including the Christian Horizons leadership, ever considered whether the prohibition on same sex relationships was necessary for the effective performance of the job of support worker in a home where there is no proselytizing and where residents are not required to be Evangelical Christians. Since CH could not rely on section 24(1)(a) of the code, it was found to have violated the code. It was ordered to pay Heintz $23,000 in damages and to develop a new anti-discrimination policy.
BOX 23.9 » TALKING WORK LAW Can a Kosher Certification Organization Terminate an Employee for Dating a Non-Jewish Woman? It was Sunday morning and Shimon Lipovenko was on his way to work when the rabbi phoned and asked to meet at a community centre. At the meeting, the cleric wanted to know whether the Toronto man was living with a non-Jewish woman. When he said yes, he was fired. Mr. Lipovenko was a mashgiach, a supervisor who certifies that food served at banquet halls, hotels or wedding venues follows Jewish dietary rules. … His dismissal raises unusual, compelling legal questions, experts say. They say cases where
the employer invokes religious exemptions are rare, and this one is even more intriguing because it pits one religious interpretation against another. The employer, Kashruth Council of Canada, also known by the acronym COR, is a non-profit agency that issues kosher certifications. It says it had to fire Mr. Lipovenko, otherwise it would have to accept behaviour that violates its religious norms. Mr. Lipovenko failed to follow the Halacha, the Jewish laws which not only dictate dietary rules and prayer practices
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386 Part III The Regulatory Regime but also prohibit sexual relationships outside marriage or with gentiles, COR says … Mr. Lipovenko had worked for COR for six years. By his account, he was to supervise a Sunday event on June 3, 2018, when he received a call from Rabbi Tsvi Heber, COR’s director of community kosher. They met at the Lipa Green Centre and the rabbi asked whether Mr. Lipovenko was living with a woman who wasn’t Jewish. He replied that his girlfriend was in the process of converting to Judaism. “I asked him if I should go to the event I was scheduled to do that afternoon, he said no, that I was not going to do any more events for the company as long as I am dating and seeing the non-Jewish girl,” Mr. Lipovenko wrote in his complaint. He said that he didn’t just suffer financially from his dismissal, but also experienced “hurt feelings, emotional stress and anxiety which [have] disrupted my life.” He is asking for $30,000, an apology, a letter of reference for future job applications and also that COR be monitored for five years to prevent similar incidents. COR is invoking Section 24(1) of Ontario’s Human Rights Code, which allows exemptions for religious purposes, provided they are reasonable and genuine qualifications. Section 24(1) is infrequently applied and usually in education cases, for example when a religious school requires that
a teacher practise a faith, Daniel Lublin, a Toronto employment lawyer, said in an interview. “What makes this case more special is not the employee’s religious adherence but that the relationship he is in calls his qualifications into question.” David Doorey, a professor of employment law at York University, said the case puts competing religious beliefs before the HRTO. “An interesting twist here is that the employee has a different interpretation of the religious doctrine than does the employer. He believes that he is in compliance with Jewish law and that who he dates does not disqualify him,” Dr. Doorey said. He said that courts have ruled it isn’t their role to be arbiters of religious doctrine, and that people have the right to sincerely held beliefs, irrespective of religious dogma. So the onus is on COR to convince the tribunal that its rules are reasonable, Dr. Doorey said. The HRTO has scheduled a mediation session for Sept. 19, 2019. If that does not work, the case would go to a formal hearing. Source: Tu Thanh Ha, “How a Kosher Supervisor Was Dismissed for Living with a Non-Jewish Woman,” Globe and Mail (July 2019), online: .
IV. Other Defences to Prima Facie Discrimination A variety of other defences applicable to specific situations are provided for in Canadian human rights statutes. Below is a quick description of these defences.
A. The Nepotism Defence When I was a high school student, my mom got me a summer job at Eaton’s, a now defunct national department store. The job paid minimum wage, and I had to cut my hair to work there, but it was a job. A lot of people would have taken that job, but I got it because my mom was a long-time employee and Eaton’s, like many employers, gave the children of existing employees preferential hiring status. I got the job because of my “family status,” and many candidates not related to existing Eaton’s employees did not get jobs at the store because of their family status— they lacked the family connection to get in the door. We learned in Chapter 22 that human rights statutes in Canada prohibit employment discrimination based on “family status.” Therefore, Eaton’s was discriminating based on a prohibited ground by giving hiring priority to the children of existing employees instead of holding fully open job competitions. If the store’s hiring policy would have been challenged in a human rights complaint by a disgruntled candidate without family ties, Eaton’s would have lost, unless it could point to a statutory defence. That defence is commonly referred to as the nepotism defence. In the Ontario Human Rights Code, that defence appears in section 24(1)(d), which states that it is not employment discrimination if “an employer grants or withholds employment or advancement in employment to a person who is the spouse, child or parent of the employer or an nepotism defence: A provision found in some human rights statutes that permits an employer to discriminate against workers on the basis of family status or marital status.
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Chapter 23 The Bona Fide Occupational Requirement, the Duty to Accommodate 387
employee.” This section provides a defence to cases of prima facie discrimination on the basis of “family status” and “marital status,” where an employer makes a decision related to the spouse, child, or parent of an existing employee.29 For example, in Nevo v. York University, a complaint that the university denied employment to the spouse of an existing professor was dismissed because the nepotism defence provided the university with “a complete defence.”30 Nepotism defences exist in several other jurisdictions as well. In the Saskatchewan Human Rights Code, the nepotism defence applies to the parent, child, or spouse of an existing employee, just like the Ontario code, but includes an additional requirement that the employer demonstrate that the discrimination was for a “reasonable and bona fide cause.”31 In the Yukon Human Rights Act, it is not discrimination for “individuals to give preference to members of their family.”32 However, most jurisdictions do not include an expressed nepotism defence. Therefore, an employer found to have made a decision that is prima facie discriminatory based on family or marital status would need to defend its actions under the BFOR defence instead.33 In a Quebec case involving the province’s Charter of Human Rights and Freedoms, which does not contain a nepotism defence, an employer was found to have discriminated on the basis of “civil status” when it denied employment as a lifeguard to the daughter of an existing employee pursuant to its anti-nepotism policy. That discrimination was not a BFOR, since it was not “reasonably necessary” to discriminate in the choice of a lifeguard in order to promote the purpose of avoiding conflicts of interest.34
B. The Personal Care Attendant Defence, Homeworker Defence, and Domestic Worker Defence Some jobs involve such intimate relationships that the government has elected to exclude them from human rights laws entirely. For example, in Saskatchewan, Nova Scotia, and Manitoba, employees “employed in a private home” or “living in the home of the employer” are exempt from coverage under the human rights legislation.35 The Ontario Human Rights Code allows discrimination on prohibited grounds against any employee whose “primary duty” is “attending to the medical or personal needs of the person [the employer] or of an ill child or aged, infirm or ill spouse or other relative of the person [the employer].”36 These exclusions tend to provide an absolute defence to complaints that the decision to hire a particular personal care attendant or domestic worker is discriminatory.
C. The Bona Fide Pension or Insurance Plan Defence Many pension and insurance plans have provisions that are discriminatory on prohibited grounds, especially age. For example, the economic model of pension plans and the premiums required to fund them are based on an assumption that people cease to be employees at a particular age. Life insurance plans distinguish eligibility based on age (and sometimes marital status, sex, or disability). Canadian governments have created narrow exceptions to the discrimination that arises from the application of such plans, as long as the plans are bona fide.37 That means that such plans must have been adopted in good faith and the discriminating provisions are reasonably necessary to the sustainability of the plans.38
D. The Special Program Defence Finally, some human rights statutes (Ontario, British Columbia, and Nova Scotia) include provisions that allow employers to grant special employment privileges, including hiring preferences, to traditionally disadvantaged groups of people as part of an affirmative action program designed to alleviate hardship.39 For example, an employer could announce that it will give hiring preference to Indigenous applicants as part of a program to improve economic opportunities to a historically disadvantaged group.40
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388 Part III The Regulatory Regime
V. Chapter Summary This chapter focused on the range of defences available in Canadian human rights statutes once a finding of prima facie discrimination on a prohibited ground has been established. An employer at the receiving end of a discrimination complaint can fit its behaviour into one of the available defences to avoid being found in violation of human rights legislation. By far, the most common defence relied upon by employers is the BFOR defence, which balances a worker’s interest in working without discrimination with the employer’s legitimate business and efficiency interests. A central feature of the BFOR defence is the employer’s duty to accommodate up to the point of undue hardship. As discussed in this chapter, that duty imposes a proactive obligation on employers, employees, and unions to canvass the workplace to identify job opportunities that will enable the employee who is subject to the discrimination to work. We also considered several other defences that apply to narrower circumstances.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Describe the three-step test developed by the Supreme Court of Canada in the Meiorin decision. At what step did the employer fail in that case, and why? 2. Describe the nature of the obligation on unions and the employee seeking accommodation in the duty to accommodate process. 3. Why was the random drug- and alcohol-testing policy in Entrop v. Imperial Oil Limited found not to meet the test for a BFOR? 4. Describe the key factors that are considered in assessing whether accommodation would impose “undue hardship.” 5. Describe the four-step process that should be applied when assessing whether accommodation of an employee’s disability is possible.
APPLYING THE LAW 1. Which defence(s) would you advise an employer to rely on in the following cases of prima facie discrimination? Assume that all of the defences discussed in this chapter are available in the human rights statute. a. The employer refuses employment to a person in a wheelchair because the job requires employees to be able to stand for long periods of time. b. A Jewish high school gives hiring preference to Jewish teachers. c. A department store employer fires an employee who, for religious reasons, cannot work on Saturdays, the busiest day of the week. d. A university refuses employment to a professor who has a vocal disability that prevents her from lecturing in large lecture halls. e. An employee is fired when he reaches age 65 because the employer’s pension plan includes a mandatory retirement clause. f. An organization that provides services and counselling to abused women has a policy of hiring only women.
g. A prison for women has a policy of hiring only female prison guards. h. A bar hires only tall, skinny, blond female servers. 2. An accountant’s office in Toronto has a policy of not hiring family members of existing employees. The rationale for the policy is that family members may have greater loyalty to family than to the employer, and since theft of money is a major concern for the employer, the policy is for security reasons. Sam is denied a job by the employer because his father works for the employer, and he files a human rights complaint. Applying the two-step human rights model, discuss whether Sam’s complaint is likely to succeed. 3. A restaurant introduces a new rule prohibiting employees who interact with customers from wearing hats at work, explaining that customers have complained that hats look unprofessional in a restaurant setting. Tom wears baseball caps all the time and he is pissed off. Ari is Jewish and wears a kippah. Both employees are servers, and they inform the employer that they have a right to keep wearing their hats. When the employer
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Chapter 23 The Bona Fide Occupational Requirement, the Duty to Accommodate 389 insists that the head gear be removed, both employees file a human rights complaint. Discuss whether those complaints will succeed in your opinion. 4. Mark is a heavy crane operator. He works alone high up in the crane during the construction of high-rise buildings, lifting heavy materials many stories up the building. He is also an epileptic. Although he has not had a seizure for several years, the employer learns that the risk of Mark having a seizure has increased
now that Mark is older than 50. If Mark has a seizure while operating the crane, serious harm could come to Mark and people on the ground below the crane. Therefore, the employer terminates Mark’s employment, arguing that he is incapable of performing the job for safety reasons. Mark files a human rights complaint. Discuss whether you think Mark’s complaint would succeed.
NOTES AND REFERENCES 1. See M. Crane, “Human Rights, Bona Fide Occupational Requirements and the Duty to Accommodate: Semantics or Substance?” (1996) 4 CLELJ 209. In the United States, this defence is known as a “bona fide occupational qualification,” or BFOQ.
13. For a review of the history of the application of the duty to accommodate to indirect and direct discrimination leading up to the Meiorin decision, see D. Doorey, The Law of Work: Complete Edition (Toronto, ON: Emond, 2016) at 371-72.
2. Human Rights Code, RSBC 1996, c. 210, s. 13(4).
14. LaBranche v. Treasury Board (Department of Foreign Affairs and International Trade), 2010 PSLRB 65 (employer must address complaints by co-workers and educate them on the need for accommodation).
3. British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3 SCR 3 (Meiorin decision) at para 68. 4. Central Okanagan School District No. 23 v. Renaud, [1992] 2 SCR 970 (Renaud). 5. Central Alberta Dairy Pool v. Alberta (Human Rights Commission), [1990] 2 SCR 489. 6. Council of Canadians with Disabilities v. VIA Rail Canada Inc., 2007 SCC 15. 7. See the remarks of Madame Justice Wilson in Central Alberta Dairy Pool v. Alberta (Human Rights Commission), supra note 5, regarding the Supreme Court’s reappraisal of its earlier decision in CN v. Canada (Canadian Human Rights Commission) [1987] 1 SCR 1114. See also Pannu v. Skeena Cellulose Inc., [2000] BCHRTD No. 56. 8. Commission scolaire régionale de Chambly v. Bergevin, [1994] 2 SCR 525 at 546. 9. Renaud, supra note 4. See also Meiorin decision, supra note 3. 10. Council of Canadians with Disabilities v. VIA Rail Canada Inc., supra note 6. See also Newfoundland (Treasury Board) v. NAPE, 2004 SCC 66; and Re Zettel Manufacturing Ltd. (2005), 140 LAC (4th) 377 (Reilly). 11. British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), [1999] 3 SCR 868; Canadian Union of Public Employees, Local 4848 v. Ambulance New Brunswick Inc., 2012 CanLII 97787 (NBLA). 12. Renaud, supra note 4.
15. Gahagan v. James Campbell Inc. 2014 HRTO 14; Yeats v. Commissionaires Great Lakes, 2010 HRTO 906; OttawaCarleton District School Board v. Ontario Secondary School Teachers’ Federation District 25 Plant Support Staff Unit, 2007 CanLII 9755 (Ont. LA); Van Leening v. College of Physical Therapists of British Columbia, 2006 BCHRT 357; Canpar v. USWA, Local 1976 (2000), 93 LAC (4th) 208; Blumenstiel v. City of Vancouver and Another, 2013 BCHRT 237; and Al-Saidi v. Brio Beverages Inc., 2001 AHRC 5. 16. A union that fails to assertively represent a member who had raised a legitimate accommodation claim can also run afoul of the duty of fair representation, which is a legal obligation owed by unions to their members to represent them fairly and without discrimination, which we will discuss in Part IV; see Bingley (Re), [2004] CIRBD No. 32. 17. Hydro-Québec v. Syndicat des employé-e-s de techniques professionnelles et de bureau d’Hydro-Québec, section locale 2000 (SCFP-FTQ), 2008 SCC 43 (the duty to accommodate includes a duty to reorganize an employee’s duties unless that will cause undue hardship); Vanegas v. Liverton Hotels International Inc., 2011 HRTO 715; Ottawa-Carleton District School Board and OSSTF (Re) (2005), 141 LAC (4th) 41 (Bendel); and Mohawk Council of Akwesasne and Akwesahsne Police Assn. (Re) (2003), 122 LAC (4th) 161 (Chapman).
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390 Part III The Regulatory Regime 18. Roberts v. Slocan Forest Products, 2005 BCHRT 206; Kelly v. Saputo Dairy Products Canada, 2017 BCHRT 225; and Ottawa-Carleton District School Board v. Ontario Secondary School Teachers’ Federation District 25 Plant Support Staff Unit, supra note 15 (an exception to this rule is that an employer can be required to create a temporary “work-hardening” position). 19. Briffa v. Costco Wholesale Canada Ltd., 2012 HRTO 1970; and Re Perron and Revera Long Term Care Inc. o/a Sumac Lodge, 2014 HRTO 766. 20. Carter v. Chrysler Canada, 2014 HRTO 845; Sacco v. TRW Canada Ltd., 2013 HRTO 1068; and Sodexo Canada Ltd. v. Canadian Union of Public Employees, Local 145, 2019 CanLII 72771 (Ont. LA). 21. Hydro-Quebec v. Syndicat des employé-e-s de techniques professionnelles et de bureau d’Hydro-Québec, section locale 2000 (SCFP-FTQ), supra note 17; O-I Canada Corp. v. USWA, Loc. 2805 (N.A.), [2005] OLAA No. 170 (Levinson); City of Toronto v. CUPE, Local 416 (Tucker Grievance), [2014] OLAA (Barrett); Barboutis v. Singer Valve, 2012 BCHRT 244; Alberta (Department of Energy) v. AUPE (Worden Grievance), [2004] AGAA No. 31 (Smith); Thorson v. Northwest Territories, 2013 CanLII 82655 (NTHRAP); and Saunders v. Syncrude Canada Ltd., 2013 AHRC 11. 22. Lane v. ADGA Group Consultants Inc., 2007 HRTO 34; Cape Breton (Regional Municipality) v. Canadian Union of Public Employees, Local 933, 2014 NSSC 97; and Chen v. La Brass Foods, 2019 BCHRT 111. 23. Regional Municipality of Waterloo (Sunnyside Home) v. Ontario Nurses’ Association, 2019 CanLII 433 (Ont. LA). 24. Ont. Human Rights Comm. v. Simpsons-Sears, [1985] 2 SCR 536; Qureshi v. G4S Security Services, 2009 HRTO 409; Markovic v. Autocom Manufacturing Ltd., 2008 HRTO 64 (a menu of options to make up a lost day were acceptable); and Commission scolaire régionale de Chambly v. Bergevin, supra note 8 (employer required to grant employees a paid day off for Yom Kippur).
28. See Caldwell v. Stuart, supra note 27 (the dismissal of a teacher from a Roman Catholic school for violating a Catholic doctrine was upheld, since conformity to religious doctrine was a BFOR); Bonnie Gore v. Ottawa Separate School Board (December 7, 1971, Ont. Bd Inq, unreported) (the dismissal of a secretary from a religious organization for non-conformity with religious doctrine was discriminatory because conformity was not a BFOR). 29. See the discussion in B. v. Ontario (Human Rights Commission), 2002 SCC 66 at para 41. 30. Nevo v. York University, 2013 HRTO 1146. 31. Saskatchewan Human Rights Code, SS 1979, c. S-24.1, s. 16(11). 32. Human Rights Act, RSY 2002, c. 116, s. 11(2). 33. See, for example, Cashin v. Canadian Broadcasting Corp., 1987 CanLII 92 (CHRT). 34. Brossard (Town) v. Quebec (Commission des droits de la personne), supra note 27. 35. Saskatchewan Human Rights Code, supra note 31, s. 16(8). See also Manitoba’s Human Rights Code, CCSM c. H175, ss. 14(8), 14(9), and Nova Scotia’s Human Rights Act, RSNS 1989, c. 214, s. 6(c)(i). 36. Ontario Human Rights Code, RSO 1990, c. H.19, s. 24(1)(c). 37. See, for example, Ontario’s Human Rights Code, ibid., s. 25; British Columbia’s Human Rights Code, supra note 2, s. 13(3); Alberta Human Rights Act, RSA 2000, c. A-25.5, s. 7(2); and Canadian Human Rights Act, RSC 1985, c. H-6, ss. 15(1)(d) and (e). 38. See the discussion in New Brunswick (Human Rights Commission) v. Potash Corporation of Saskatchewan Inc., 2008 SCC 45; Tri-County Regional School Board v. Nova Scotia (Human Rights Board of Inquiry), 2015 NSCA 2; Jones obo Others v. Coast Mountain Bus Company and Others, 2014 BCHRT 166; International Brotherhood of Electrical Workers, Local No. 1007 v. Epcor Utilities Inc., 2017 ABCA 314; Ostofi v. Hamilton Police Services Board, 2012 HRTO 2290; and Repaye v. Flex-N-Gate Canada, 2012 HRTO 1258. See also Duncan v. Retail Wholesale Union Pension Plan, 2017 BCSC 2375 (considering whether differential treatment of married and single employees in a pension plan is “bona fide”).
25. Jaques v. 1633092 Ontario Ltd. o/a TOSH Steakhouse and Bar, 2016 HRTO 403; and Peart v. Distinct HealthCare Services Inc., 2013 HRTO 305. See also Richards v. 905950 Ontario Ltd. o/a Storybook Childcare Centre, 2015 HRTO 517; Sutton v. Best Western Tower Inn (No. 2), 2010 BCHRT 314; and Williams v. Hudson’s Bay Co./Zellers Inc., [2009] OHRTD No. 2129; and City of Ottawa v. OttawaCarleton Public Employees’ Union, Local 503 (Beaulieu Grievance), [2010] OLAA No. 343 (Schmidt).
39. See, for example, Ontario’s Human Rights Code, supra note 36, s. 14; British Columbia’s Human Rights Code, supra note 2, s. 42; and Nova Scotia’s Human Rights Act, supra note 35, s. 6(i).
26. Fair Employment Practices Act, SO 1951, c. 24, s. 2(d).
40. Sauve v. Ininew Friendship Centre, 2010 HRTO 720.
27. Brossard (Town) v. Quebec (Commission des droits de la personne), [1988] 2 SCR 279. See also Caldwell v. Stuart, [1984] 2 SCR 603.
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C H A P T E R 24
Occupational Health and Safety and Workers’ Compensation* LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 391 II. A (Very) Brief History of Injury Compensation and Prevention Laws in Canada 392 III. Contemporary Injury Prevention Legislation: Occupational Health and Safety Legislation 393 A. The Internal Responsibility System (IRS) 394 B. The Employer’s Obligations 394 C. The Rights and Duties of Workers 394 D. OHS Enforcement and Remedies 397 IV. The Criminal Liability of Organizations for Workplace Injuries and Death 398 V. Workers’ Compensation Legislation 399 A. Injury Causation and the No-Fault Principle 399 B. Funding Workers’ Compensation 400 C. Wage-Loss, Rehabilitation, and Survivor Benefits 401 D. The Return to Work 401 VI. Chapter Summary 402 Questions and Issues for Discussion 402 Scenario One: Work Refusal 403 Scenario Two: Arises and Occurs 403 Notes and References 403
• Explain the workplace safety obligations of employers, workers, and the state. • Describe workers’ right to refuse unsafe work and why few workers exercise that right. • Understand the “arises and occurs test” and how workers’ compensation boards use it to assess whether injuries are compensable when the cause of injury is unclear. • Explain how workers’ compensation systems are funded and what rights workers have traded to receive such compensation.
I. Introduction Two workers died and 20 more were injured when the Babine Forest Products sawmill in Burns Lake, British Columbia, exploded on January 20, 2012. Ken Mitchell, 57, was badly burned and is now confined to a wheelchair. “I had stopped my machine and was walking away when there was an orange flame and explosions: boom, boom. … [T]he blast melted my face. I was tossed around like a ragdoll. With the pressure from the flames I got sucked up 15, 20 feet.”1 The explosion was caused by the ignition of dust-laden air—a well-known workplace hazard in sawmills that the employer knew about but failed to remediate.2 A second mill (owned by Lakeland Forest Products) exploded due to dust buildup—killing two workers and injuring 22 more—only two
* This chapter was authored by Bob Barnetson, Athabasca University.
391
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392 Part III The Regulatory Regime months later in nearby Prince George. Babine Forest Products was fined over $1 million by the province, while Lakeland Forest Products was fined over $740,000. While workplace fatalities are relatively rare in Canada, injuries are endemic. In 2017, there were 251,625 accepted workers’ compensation claims for workplace injuries and 951 claims for workplace fatalities.3 These numbers dramatically underestimate the true level of workplace injury by excluding injuries that did not require time away from work, injuries to those outside the workers’ compensation system, and unreported injuries.4 For example, in 2018, researchers estimated the true number of workplace fatalities in Canada to be 10 to 13 times the number of fatalities accepted by workers’ compensation boards. That same year, an analysis of injury reporting in Alberta found that 69.1 percent of serious occupational injuries were not reported to the workers’ compensation board.5 Over the past century, pressure applied by workers, unions, and other activists encouraged politicians to intervene through legislation designed to prevent workplace injuries and to compensate the victims of such injuries. This chapter considers those legislative interventions.
II. A (Very) Brief History of Injury Compensation and Prevention Laws in Canada Prior to the enactment of workers’ compensation legislation, workers who were injured while performing their jobs had only the common law regime to seek recourse. They could sue their employer in court for compensation by alleging either a tort such as negligence or nuisance (see Chapter 16), or a breach of the implied contractual obligation imposed on employers to maintain a reasonably safe workplace (Chapter 9).6 In the tort cases, injured workers seeking compensation had to demonstrate that their employer had failed to exercise due care—the standard of care that would be exercised by a reasonable person in the circumstances.7 Even when employers were found to have failed to exercise due care, they could still put forward three defences to escape liability. First, if it could be shown that the injured worker failed to exercise reasonable care, and thereby contributed to the injury (referred to as contributory negligence), the employer was not liable. Second, if a co-worker contributed to the injury, the co-worker was deemed liable under the “doctrine of common employment.” Finally, workers were assumed to accept the risks of work (riskier jobs entailed higher wages) and thus voluntarily assumed responsibility for any injuries (this defence is known by its Latin name, volenti non fit injuria).8 Together, these three defences to lawsuits arising from workplace injuries or deaths became known in the legal community as the “unholy trinity” and together created a substantial barrier for employees seeking to recover damages for injuries occurring at work. Those workers who successfully navigated this “unholy trinity” of defences (perhaps 15 percent of all cases) could still be denied compensation if their employer declared bankruptcy.9 The outcome of this system was a transfer of production costs from employer to injured workers, their families, charities, and, in rare cases, government. The resulting social instability led the Ontario government to establish a Royal Commission on Workers’ Compensation headed by Sir William Meredith.10 The 1913 Meredith Report led the Ontario government to establish Canada’s first Workmen’s Compensation Act the following year; this act’s model was broadly adopted by all other provinces. Under this model, workers traded their right to sue their employer in the courts in exchange for immediate, predictable, and stable compensation paid for by employers and administered by an expert administrative tribunal known (then) as a Workmen’s Compensation Board (WCB). due care: The conduct a reasonable person would exercise in a situation to protect the health and safety of another. contributory negligence: Negligence of an injured party that contributes to the loss suffered or damage incurred due to the negligence of another party.
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Chapter 24 Occupational Health and Safety and Workers’ Compensation 393
While most workers have had access to compensation for workplace injuries for the last 100 years, governments took little action to prevent the occurrence of workplace injuries until workers began demanding safety in their workplaces in the 1960s. An 18-day strike by uranium miners in Elliot Lake, Ontario, in 1974, fuelled by decades-old concerns about work-related lung cancer and silicosis, increased political pressure on governments to take steps in this direction.11 During the 1970s, occupational health and safety legislation was enacted across the country that established the jurisdiction’s regulatory agency, created an obligation on employers to control workplace hazards, and increased worker rights and involvement in safety.
BOX 24.1 » TALKING WORK LAW Who Is Covered by Safety and Injury Legislation? Workers’ compensation and occupational health and safety laws apply to “workers” rather than “employees,” which in practice usually means that these statutes apply to a greater proportion of the workforce than do laws that apply only to “employees.” Recall, for example, the story of Samir the taxi driver that opened Chapter 4. Samir was injured while on the job and claimed workers’ compensation benefits. Even though he owned his own taxi, fixed his own hours of work, paid all of his own car-related expenses, was an independent contractor for the purposes of his taxes, and had the right to hire workers to drive his cab, Samir was still considered a “worker” employed by Blue Line Taxi for the purposes of workers’ compensation legislation.* Each jurisdiction has industry-specific rules. In Ontario’s construction industry, for example, a “worker” can be an independent contractor, a sole proprietor, a partner in a partnership, or an executive officer—types of workers that clearly fall
outside the ambit of legislation that applies only to “employees.”† Conversely, in some industries, employees may be exempt from mandatory workers’ compensation (and thus are not “workers” for the purposes of workers’ compensation). For example, most employers in Saskatchewan, Prince Edward Island, and Nova Scotia are not required to have workers’ compensation coverage for paid farm workers, although farm employers can purchase voluntary coverage for their workers. The complexity of the rules in Canada about the scope of coverage of workers’ compensation and occupational health and safety legislation makes it a good idea to investigate the rules in your jurisdiction if you have any question about whether the legislation applies to a particular worker. * See Decision No. 934/98, 2000 ONWSIAT 3346. † Workplace Safety and Insurance Act, SO 1997, c. 16, Sched. A, s. 12.
III. Contemporary Injury Prevention Legislation: Occupational Health and Safety Legislation All provinces and territories (as well as the federal government) have enacted occupational health and safety (OHS) legislation designed to prevent workplace injuries. These laws are supplemented by extensive regulations. Although there are jurisdictional differences, the basic requirements of OHS legislation are similar across Canada, as depicted in Box 24.2 and explained below.
BOX 24.2 » TALKING WORK LAW The Basic Elements of the Canadian Occupational Health and Safety Model Although there is some variation across Canadian jurisdictions, the basic elements of the internal responsibility legal model can be summarized as follows: • Employers are required to take every reasonable precaution to ensure that a workplace is safe, including
identifying and controlling hazards, training workers and managers, and providing safety equipment. • Workers are required to comply with the legislation and employer safety directions and report workplace hazards.
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394 Part III The Regulatory Regime • OHS legislation creates legal rights to ensure workers are able to participate in the pursuit of a safe workplace, including: • A “right to participate” through a joint health and safety committee.
• A “right to know” about workplace hazards. • A “right to refuse unsafe work.” • The agency responsible for administering OHS legislation must inspect workplaces, disseminate information, and enforce the legislation.
A. The Internal Responsibility System (IRS) The distribution of responsibilities in the legislation to employers and workers is known as the internal responsibility system (IRS). It is based on the assumption that, since both employers and workers have a stake in preventing workplace injuries, they should work together to address workplace hazards.12
B. The Employer’s Obligations OHS legislation imposes a legal obligation on employers to take all reasonable precautions to protect worker health and safety. The legislation does not require employers to make workplaces completely risk free—sometimes accidents happen and there is nothing the employer could have done to prevent it. An employer can defend a charge that it violated OHS by demonstrating that it took all reasonable precautions in the circumstances to make the workplace safe. This is sometimes known as a due diligence defence. Employers are obligated to control and limit hazards in the workplace. This obligation can be met by modifying work processes, equipment, and materials to reduce exposure to hazards. These sorts of solutions are called “engineering controls.” Employers can also use “administrative controls” (such as training, shift rotations, and medical surveillance) to reduce the risk of injury. Finally, employers can issue workers “personal protective equipment” (PPE), such as steel-toed boots, goggles, and respirators to protect workers from specific injuries. Engineering controls are the most effective but also the most expensive way to reduce the risk of injury in the workplace, while PPE is the least costly and least effective. In Ontario, since 2010, the OHS legislation has also imposed specific detailed obligations on employers respecting workplace violence and harassment.13 Employers with greater than four workers are required to prepare and post workplace violence and harassment policies that must be reviewed annually. The policies must describe measures for controlling risks of violence and describe processes for receiving and processing complaints from employees. In addition, employers must conduct risk assessments and act proactively to protect workers if there is any reason to believe that a worker is under threat of harm at work due to domestic violence.
C. The Rights and Duties of Workers The law provides several mechanisms to empower and equip workers in the pursuit of safer workplaces, including the right to participate in OHS activities (most commonly through joint health and safety committees), the right to know about workplace hazards, and the right to refuse unsafe work. internal responsibility system (IRS): A system of shared responsibility between employers and workers for workplace health and safety. due diligence defence: A defence sometimes available to a party accused of violating a statute (such as occupational health and safety legislation) that requires demonstrating the party took all reasonable precautions in the circumstances to avoid the harm or wrong that occurred. joint health and safety committee (JHSC): A committee comprising employer and worker representatives mandated by occupational health and safety legislation to consult, investigate, and make recommendations relating to health and safety issues in a workplace.
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Chapter 24 Occupational Health and Safety and Workers’ Compensation 395
1. The Right to Participate and Joint Health and Safety Committees Workers’ right to participate in OHS activities is exercised most often through joint health and safety committees (JHSCs). Canadian OHS legislation requires that a JHSC be created comprising representatives of both the employer and the workers. The specific details of when a JHSC is required and what duties they are mandated to perform vary slightly across jurisdictions. For example, the Ontario Occupational Health and Safety Act requires that a JHSC be created at any workplace where “20 or more workers are regularly employed” or where there are less than 20 workers but designated dangerous substances are present. The size of the JHSC depends on the size of the workplace, but at least half the members must be workers at the workplace who are not managers. Worker representatives are selected by the workers. OHS legislation grants various powers to JHSCs, including the power to investigate risks, obtain information regarding hazards, make recommendations to the employer, and investigate unsafe work refusals.14 Where an employer refuses to control hazards, the state may intervene through inspections or in response to OHS complaints filed by workers or unions. Worker participation in OHS tends to be more effective in larger workplaces and in the presence of trade unions.15 JHSCs are often criticized as lacking the authority to compel employers to act on safety issues. Recent research suggests that worker representatives who gather their own research on hazards, emphasize workers’ safety knowledge, and mobilize workers around safety issues are more likely to realize significant improvements in workplace safety.16 2. Workers’ Right to Know About Workplace Hazards Workers have a right to know about hazards in their workplace. This right requires employers to identify and disclose potential sources of injury or harm. This obligation reflects the information asymmetry between employers and workers that allowed employers’ historic pattern of hiding workplace hazards to reduce liability. In order to address the “hidden” hazards posed by chemical exposures, the federal government created the Workplace Hazardous Materials Information System (WHMIS). The WHMIS allows each jurisdiction to require employers to ensure that hazardous substances are used, stored, handled, and disposed of properly. Employers must also ensure that hazardous substances are properly labelled, material safety data sheets (MSDSs) are available, and workers receive proper training about risk prevention. If you have a job, there is a good chance that MSDSs are posted somewhere in your workplace. Each jurisdiction has established occupational exposure limits (OELs) for hazardous substances that are supposed to identify the level of exposure at which it is believed that nearly all workers may be exposed without adverse effect. Over time, these “safe” levels of exposure have gone down, often dramatically. This suggests a systemic bias toward unsafe exposure levels. These unsafe OELs reflect that 90 percent of OELs are based on insufficient data on the long-term effects of exposure from either animal or human studies.17 Further, OELs have been set for only about 700 chemical substances—a fraction of the over 70,000 substances found in modern workplaces. 3. Workers’ Right to Refuse Unsafe Work Despite the various safeguards in OHS legislation that are supposed to ensure safer workplaces, the large number of annual work-related injuries suggest workers continue to face uncontrolled right to participate: Under the IRS, workers have a right to be a part of the process of identifying and resolving health and safety issues. This right is often exercised through joint health and safety committees. right to know: Under the IRS, workers have a right to know about the hazards they are exposed to in the workplace. Workplace Hazardous Materials Information System (WHMIS): An information system and database that provides workers and employers with information about hazardous materials found in workplaces. occupational exposure limits (OELs): The concentration of a hazardous material that a worker may normally be exposed to without causing harm.
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396 Part III The Regulatory Regime hazards in the workplace. For this reason, workers have also been granted the right to refuse unsafe work. The right to refuse unsafe work is one of the few instances when an employee’s common law obligation to obey an employer’s direction is partly suspended—it creates a statutory exception to a charge by the employer of insubordination. A work refusal by a worker triggers an internal workplace investigation first, and if the worker remains unsatisfied with the result of that investigation, a government OHS inspector comes to the workplace and conducts an investigation. The decision in Box 24.3 considers the right of a teacher to refuse work when faced with a violent student.
BOX 24.3 » CASE LAW HIGHLIGHT The Right to Refuse Unsafe Work Toronto Elementary Catholic Teachers v. Toronto Catholic District School Board 2017 CanLII 37597 (Ont. LRB) Key Facts: A kindergarten student engaged in a series of violent acts against other children, a teaching assistant, and the classroom teacher, including punching, biting, kicking, pulling hair, scratching, pushing, and throwing objects at people. On one particularly bad Friday, the student hit another student, then kicked and punched the assistant teacher, and then began to throw toys around the room. While the assistant teacher attempted to control the student, the teacher reported to the office and indicated that she was refusing unsafe work. The principal removed the student from the classroom, and the teacher agreed to return. However, on the next Monday morning, the student was back in the classroom, and the teacher again refused to teach her class. An OHS inspector was called, and after an investigation, the inspector ruled that there was no basis for the teacher to refuse to work on either occasion. The teacher, through her union, appealed to the Ontario Labour Relations Board. Issue: Did the teacher have a right to refuse unsafe work caused by a violent kindergarten student? Decision: The OLRB ruled that the teacher did not have a right to refuse work on the first day but that she did have the right to refuse on the second day. The decision turned on the wording of the Occupational Health and Safety Act and a regulation
that created special rules for teachers. The OHSA allows a right to refuse work when the worker has “reason to believe” that the physical condition of the workplace or workplace violence “is likely to endanger” them.* However, a regulation passed under the OHSA provides that the right to refuse unsafe work does not apply to a teacher when the circumstances are such “that the life, health, or safety of a pupil is in imminent danger.”† The OLRB ruled that when the teacher first refused to work on the Friday, the student’s safety was in “imminent danger” and therefore the exception in the regulation applied and the teacher had no right to refuse work. The student was in an exceptionally agitated mood and was in danger of hurting himself. The fact that there was an assistant teacher still with the student does not change this reality, because a teacher cannot delegate their legal obligations to assistants. However, the teacher did have the right to refuse work on the Monday. The student still posed a threat of violence, and the teacher had good reason to believe she could be harmed, as the student had already scratched her eye and hurt others. The student was not in an agitated state on the Monday morning, so his safety was not in question. By the time of the decision, the student was no longer in the class, so no further remedy was ordered. * Ontario OHSA, RSO 1990, c. O.1, s. 43. † Ontario OHSA Regulation 857, s. 3
While the right to refuse work sounds like a powerful tool for workers, in reality few workers exercise this right. OHS statutes prohibit reprisals against workers who exercise the right to refuse unsafe work, as the case in Box 24.4 describes.18 However, many workers are either not aware of that protection, do not wish to enter into an adversarial relationship with their employer, or doubt that the law will protect them. An Alberta study of 2,000 workers found that right to refuse unsafe work: Under the IRS, workers have a right to refuse to perform work they believe to be unsafe, pending the outcome of an investigation.
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Chapter 24 Occupational Health and Safety and Workers’ Compensation 397
only 33.6 percent of workers exposed to unsafe work refused the work, often due to fear of (illegal) retaliation by their employer.19 Some workers informally refused unsafe work by altering the process or pace of work. Other forms of informal refusal include refusing overtime on unsafe jobs, calling in sick, and seeking transfers.20 It is important to note that the right to refuse unsafe work only allows workers to protect themselves from those dangers that they know about and believe to be unsafe. It does not confer any ability on workers to influence whatever hazards exist in the workplace. By contrast, employers have significant latitude to alter work in ways that make it minimally acceptable to (although perhaps not perfectly safe for) the worker. As demonstrated in Box 24.4, an employer can also simply order another worker to perform the work and see if that worker refuses (although in some jurisdictions, such as Ontario, the employer must first advise the other workers that there has been a refusal by a co-worker). Note that in British Columbia, both workers’ compensation and OHS laws are included in the Workers Compensation Act, and the expert tribunal with authority to enforce the legislation is the Workers’ Compensation Appeals Tribunal (WCAT), which is the decision maker in the case in Box 24.4.21
BOX 24.4 » CASE LAW HIGHLIGHT Employer Retaliation Against a Worker Who Refuses Unsafe Work BC WCAT Decision No. A1701552 (Re) 2018 CanLII 75253 (BCWCAT)
Issue: Was the worker dismissed as a reprisal for exercising his OHS rights?
Key Facts: The worker was hired as a production worker in November 2015. On March 4, 2016, the worker’s supervisor directed him to perform work on a roof but failed to provide fall protection. The worker refused the unsafe work. Fifteen minutes later, the worker saw two other workers on the roof performing the refused work without wearing fall protection. The worker then called WorkSafeBC to report the incident. An OHS inspector visited the site on March 7 and issued four orders, including one related to inadequate fall protection. On March 11, the worker was fired by the employer. The worker subsequently complained that he had been fired for exercising his OHS rights, which a government inspector agreed with. The employer appealed the decision.
Decision: Yes. The British Columbia Workers’ Compensation Appeal Tribunal found that the worker had exercised his statutory right to refuse unsafe work and complied with his statutory duty to report unsafe work, had experienced a negative employment consequence, and that there was a causal connection between the two events. The tribunal also found that the employer failed to rebut the presumption in the Workers Compensation Act that it took discriminatory action against the worker. The employer’s assertion that the worker was fired for poor performance sat uncomfortably with the $2 per hour pay raise given to the worker on the same day that he refused unsafe work.
D. OHS Enforcement and Remedies OHS legislation is applied through a mix of proactive government enforcement and individual complaints. The government agency charged with administering the legislation performs several functions, including workplace inspections (which may be random or targeted) to ensure that the employer has identified and controlled hazards. Complaints can be filed under OHS legislation, which triggers a government investigation and sometimes a legal hearing before an expert administrative tribunal. Non-compliance is usually dealt with by ordering the employer to comply. Where there is a risk of imminent harm, an employer can be ordered to stop work until the problem is remediated. Some jurisdictions also allow OHS inspectors to issue tickets or other administrative fines for non-compliance. Any serious injury or fatality will also usually result in an investigation. Infrequently, a government may also prosecute employers in court
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398 Part III The Regulatory Regime under OHS legislation for non-compliance with the Occupational Health and Safety Act. Most often, this action is taken when a worker has been seriously injured or killed. If convicted, employers can face fines or (less commonly) jail time.
IV. The Criminal Liability of Organizations for Workplace Injuries and Death Most preventable workplace injuries and fatalities are dealt with within the work law subsystem (see Chapter 2)—the laws that govern injuries and fatalities in the course of work are labour and employment laws, such as OHS and workers’ compensation—rather than as criminal law matters (in the broader legal subsystem, shown in Figure 2.1 in Chapter 2). Far less stigma is attached to being found in violation of an OHS statute than being convicted of a criminal offence. Canada’s Criminal Code makes some types of deliberate and negligent conduct that causes harm at a worksite, or anywhere else, a criminal offence. However, in practice, the police have rarely laid criminal charges when workers are harmed or killed in the course of their work, even when that harm was clearly preventable had the employer taken certain basic precautions. In 2004, the federal Parliament amended the Criminal Code to strengthen the corporate criminal liability provisions in the wake of the 1992 deaths of 26 miners at the Westray Mine in Pictou County, Nova Scotia.22 In the Westray Mine disaster, evidence disclosed that corporate officials were aware of the danger that the mine could explode, but still allowed workers to go into the mine to meet production deadlines. Criminal charges were eventually dropped by the Crown, which decided that it was not possible to obtain a criminal conviction owing to the difficulty of attributing fault to a corporation under existing criminal laws. The intent of Criminal Code reforms was to make it easier to prosecute a corporation or other organization for criminal conduct when it either deliberately or negligently contributes to the death or injury of people at a workplace.23 Despite all of the fanfare when the reforms were introduced, the “Westray amendments” have only been used a handful of times to prosecute employers for workplace fatalities.24 For example, neither of the companies involved in the mill explosions that we read about at the beginning of the chapter were criminally prosecuted. In one highly publicized case, a Toronto construction contractor pleaded guilty to criminal negligence causing death after a swing (platform) holding six men collapsed, leading to the death of four of the men after a 14-storey fall on Christmas Eve, 2009. A senior official of the company was one of the deceased, and his negligence in failing to take proper steps to ensure the swing was safe and that rules were complied with was attributed to the corporation under the new legal rules introduced in the Westray amendments. The corporation was ordered A mourner visits the Westray Miners’ Memorial in Pictou County, Nova Scotia. to pay a fine in the amount of $750,000.25 The 1992 Westray Mine explosion was one of the deadliest industrial accidents The reluctance of governments to crimin Canadian history. inally prosecute individuals for safety Source: Miles Howe (Halifax Media Co-op).
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Chapter 24 Occupational Health and Safety and Workers’ Compensation 399
crimes reflects, in part, the widely adopted view that violations of OHS laws are “only” regulatory offences—offences that are illegal because they are prohibited by an occupational health and safety statute—rather than offences that are illegal because they are immoral (e.g., murder, assault) in their own right.26
V. Workers’ Compensation Legislation Every province and territory has a workers’ compensation system. The principles that underlie most Canadian workers’ compensation legislation are those set forth in the 1913 Meredith Report (see Box 24.5). Legislation compels most employers to pay premiums to a governmentappointed workers’ compensation board (WCB). Those workers who are covered receive stable, predictable, and immediate benefits administered by the WCB in the event of a workplace injury. In exchange for this insurance program, workers lost the right to sue their employers in tort or contract for damages sustained as a result of injury.
BOX 24.5 » TALKING WORK LAW The Meredith Principles Contemporary workers’ compensation legislation continues to operate under the five principles laid down by Sir William Meredith in his 1913 report for the Royal Commission on Workers’ Compensation:* 1. Compensation is paid on a no-fault basis (i.e., how the injury occurred is irrelevant), and workers forgo the opportunity to sue their employer. 2. An “accident” fund is established to guarantee the availability of benefits over time.
3. All employers share the cost of injuries collectively by paying premiums. 4. The system is administered by an independent government agency. 5. The workers’ compensation board in each jurisdiction is the only provider of workers’ compensation insurance and is the final arbiter for all claims. * You can read the full text of the Meredith Report here: .
Many legal disputes arise about whether an injury occurred “in the course of employment.” If it did not, then the worker is not entitled to workers’ compensation benefits. However, as we noted in Chapter 16 when we looked at the tort of negligence (see Box 16.4 and the case Rudd v. Hamiota Feedlot), if an injury suffered by a worker is not covered by workers’ compensation, then the worker is entitled to sue the employer in court for breach of contract or for committing a tort.27
A. Injury Causation and the No-Fault Principle Workers’ compensation benefits are available to all workers injured in the course of their employment regardless of who was at fault for the injury. A pivotal initial question is therefore whether the injury occurred “in the course of employment.” Workers’ compensation tribunals apply a two-part arises and occurs test to determine whether an injury was caused by an event arising out of and occurring during the course of employment. An injury arises out of employment when it is caused by the nature, conditions, or obligations of employment (i.e., an employment hazard). An injury occurs in the course of employment when it happens at a time and place consistent with the obligations and expectations of employment. While time and place are arises and occurs test: The test used by WCBs to determine whether an injury is compensable. In short, it is used to determine whether an injury arose from and occurred during the course of work.
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400 Part III The Regulatory Regime not strictly limited to the normal hours of work or the employer’s premises, there must be some relationship between employment expectations and the time and place of the injury.28 Whether an injury arose and occurred during the course of employment is sometimes easy to assess. An acute physical injury (e.g., a fracture) resulting from a fall or contact with an object in the workplace is obviously compensable. However, other cases are not so straightforward, as demonstrated by the case in Box 24.6. In assessing a claim where the facts are ambiguous, tribunals apply a “balance of probabilities” test (i.e., whether it is more likely than not that the injury was caused during work). Workers’ compensation legislation also commonly includes presumptions. For example, certain diseases are so closely linked with certain kinds of work (e.g., bladder cancer in firefighters, certain lung diseases in coal miners) that such claims are presumed to be employment related, unless clear evidence of some other cause exists.
BOX 24.6 » CASE LAW HIGHLIGHT Injured on the Job? Erskine v. British Columbia (Workers’ Compensation Appeal Tribunal) 2013 BCSC 1583 Key Facts: On January 2, 2008, Erskine’s foot was run over by a forklift while he was at work. He saw a doctor that day, and the doctor’s chart indicated that the worker had developed foot and ankle pain as a result of “pushing a quad” several weeks earlier. In August 2007, Erskine had also undergone an X-ray of the foot for discomfort related to bone spurs. After the January 2 incident, Erskine developed foot, knee, hip, and lower back pain. He left the original employer because of his injury in late 2008 and left employment altogether in early 2009. In April 2009, Erskine filed a workers’ compensation claim seeking benefits for an injury caused by the January 2 forklift incident. Issue: Did Erskine’s injury arise out of employment and occur in the course of employment?
Decision: No. The Workers’ Compensation Appeal Tribunal concluded that the damage to Erskine’s foot was most likely caused by an injury occurring prior to the January 2008 forklift mishap: The result is that Dr. Kassa’s chart notes suggest that the worker’s left foot symptoms on January 2, 2008 were related either to his pre-existing spurring, some sort of all-terrain vehicle incident, or perhaps both. Because Dr. Kassa’s records necessarily come from the worker’s own report, it appears likely to me that the worker himself did not believe he sustained any injuries following the forklift accident. The medical evidence, Erskine’s delay in reporting the incident, and the tribunal’s belief that Erskine was not being completely truthful about the origins of the injury all contributed to the tribunal’s conclusion that the injury did not arise out of employment.
Sometimes it can be very challenging to apply the “arises and occurs test.” For example, a cashier with diabetes may be more susceptible to carpal tunnel syndrome because of her disease than a cashier without diabetes. Yet, the constant grasping motion required by the work likely played an important part in the development of the cashier’s carpal tunnel syndrome. In these cases, WCBs will typically use the “but for” standard: if the injury would not have occurred but for the work, the injury is deemed to have arisen and occurred. This means that the work does not have to be the sole, predominant, or major cause of an injury, but it must be a necessary factor for the occurrence of the injury. The case discussed in Box 24.6 considers whether a worker’s foot and ankle injuries were actually sustained on the job and eligible for compensation.
B. Funding Workers’ Compensation Workers’ compensation systems are funded by employer premiums. Premiums are based on an employer’s payroll multiplied by the assessment rate set for each industry. The resulting premiums are designed to ensure that employers in each industry are paying the full cost of all
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Chapter 24 Occupational Health and Safety and Workers’ Compensation 401
injuries incurred in that industry in a year. This means that employers in industries with more injuries or more severe injuries pay higher premiums to offset the higher cost of such injuries. One drawback of assessing premiums by industry is that individual firms have little incentive to lower their own injury rates. Any savings that result from safer workplaces are spread across the entire industry. To counter this effect, some provinces have introduced experience rating programs. Under these programs, individual employers’ premiums can be increased or decreased based on the employer’s “accident record” (i.e., the cost of claims by workers of the employer). Experience rating programs reward employers that have low claim costs and penalize employers that have high claim costs. An analysis of experience rating programs suggests that linking claim costs to premium rebates reduces the number and duration of claims.29 It is, however, unclear whether this outcome represents a reduction in the number or severity of injuries. This outcome may also be a reflection of changes in injury reporting, including claims suppression.30 Employers may also seek to reduce the cost and duration of claims via early return-to-work programs.31 Experience rating programs may also provide employers with an incentive to dispute claims, thereby introducing a form of litigation into the notionally no-fault workers’ compensation system.
C. Wage-Loss, Rehabilitation, and Survivor Benefits Workers’ compensation legislation requires an injured worker and the employer to report injuries to the WCB. Injured workers who experience a wage loss because of their injury can receive financial compensation for this loss. The level of wage-loss benefit provided varies by jurisdiction and is between 75 and 90 percent of a worker’s net loss. Less-than-full compensation reflects that workers’ compensation is designed to insure workers against ruinous loss due to injury, not all loss.32 Further, partial compensation is thought to provide incentive to workers to return to work duties as soon as possible—reflecting a deep-seated (but unsubstantiated) belief by some employers and WCBs that workers have a tendency to exaggerate the extent or duration of their injuries to avoid work.33 Some provinces provide wage-loss benefits starting the day after the injury occurred, while others have short waiting periods (e.g., three days) before compensation begins. Injured workers may also be entitled to receive medical and vocational rehabilitation benefits from a WCB. Medical benefits cover the costs of treating an injury, including costs that would otherwise be borne by the taxpayer (through the health care system) or the worker. Vocational rehabilitation programs are designed to increase the probability of a worker returning to employment. They can entail assessing an injured worker’s level of ability, modifying a worksite to accommodate a disability, providing skill development, and (where a worker is no longer employed) job search assistance. The dependents of workers who die as a result of a compensable injury are eligible to receive fatality benefits, including an allowance for funeral costs and wage-loss benefits.
D. The Return to Work Most injured workers will eventually return to work. Yet returning to work is an area of significant legal and practical complexity. Important differences exist among jurisdictions. For example, Ontario’s Workplace Safety and Insurance Act requires employers to re-employ injured workers in some circumstances, subject to certain time limits.34 An employer who fails to comply with this requirement can face a human rights complaint based on disability discrimination (see Chapter 22), as well as additional costs associated with the WCB extending the experience rating program: Programs that adjust employer’s workers’ compensation premiums based on the employer’s claims record. Experience rating programs incentivize employers to improve safety but also create an incentive for them to attempt to suppress or resist claims, since claims may lead to higher experience rating assessments.
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402 Part III The Regulatory Regime worker’s wage-loss benefits. By contrast, British Columbia has no such requirement. Injured BC workers whose employers refuse to employ them because of their medical condition must pursue a remedy under the provincial human rights statute. During this (lengthy) process, the workers able to work are ineligible for wage-replacement benefits.35 Compounding the difficulty workers can experience in returning to work is the fact that employers across Canada have an economic incentive to minimize the cost of accommodating workers who face medical restrictions. Accommodating an injured worker’s disability almost always entails some degree of disruption and additional cost. Because employers prefer to avoid additional costs (which reduce their profitability), they might promise to accommodate an injured worker with a disability through modified duties but then not actually do so.36 Workers facing such a situation must weigh the short-term costs and prospects of a remedy under human rights legislation against the costs of accepting the unmodified work (which include the risk of reinjury).
VI. Chapter Summary This chapter outlined the laws that seek to prevent and compensate workplace injuries. Workers and employers are expected to work together to identify and control workplace hazards, although employers are ultimately responsible for ensuring the safety of workplaces. The state is responsible for ensuring that employers control hazards and investigating workplace health and safety incidents. Despite worker safety laws, hundreds of thousands of Canadians are injured on the job each year. To compensate injured workers, governments have established provincial and territorial workers’ compensation systems. Injured workers are normally eligible for a mixture of wage-loss, medical, and vocational rehabilitation benefits. In exchange for this compensation, workers have surrendered their right to sue their employer for compensation.
QUESTIONS AND ISSUES FOR DISCUSSION 1. What three safety rights do workers have under the internal responsibility system? 2. What is the role of joint health and safety committees in the Canadian occupational health and safety model? 3. Why might workers be reluctant to exercise their right to refuse unsafe work? 4. What have workers given up and gained under workers’ compensation? Why might workers prefer to receive workers’ compensation instead of seeking redress under the common law? 5. What test do WCBs use to determine whether an injury is compensable? Using this test, would a bee sting injury incurred by a worker whose job is outdoors be compensable?
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Chapter 24 Occupational Health and Safety and Workers’ Compensation 403
APPLYING THE LAW 1. Go online to the CanLII website (), find your jurisdiction’s occupational health and safety statute, and locate the provisions regarding workers’ right to refuse unsafe work. The legal rules may also be found in a regulation that was passed pursuant to the OHS statute. If you have difficulty finding the legislation, try searching “right to refuse unsafe work” and your province and see if your government has prepared an information website that explains the legal rules (and perhaps links to the legislation). Once you have located the legislation or a summary of it, answer the following questions: a. When can a worker refuse unsafe work? b. What test(s) must be met for work to be considered unsafe? c. What must an employer do when a worker refuses unsafe work? d. If a worker believes the work remains unsafe, what happens then? e. What section of your jurisdiction’s legislation prohibits retaliation against workers for exercising their OHS rights? 2. Apply these provisions to answer the question posed in the following two scenarios, which take place in a fast-food restaurant. Scenario One: Work Refusal Sam is employed as a cook at a fast-food restaurant that has two levels. The ground floor includes the kitchen and eating areas. Additional foodstuffs are stored in the basement. The basement also contains changing rooms, employee washrooms, and a small break room. The basement is accessed via a set of stairs in the back of the kitchen. Sam is required to descend the stairs multiple times during each shift to retrieve more frozen French fries and other menu items that are cooked in the deep fryer or on the grill. The cooking processes make the floor of the kitchen area and stairwell
to the basement slippery, despite repeated cleanings of the non-skid surface. At the start of Sam’s shift on Tuesday, Sam descends the stairs to fetch additional food, slips on the greasy floor, and almost falls down the stairs. Sam approaches the manager and indicates that the stairs are unsafe. Sam refuses to descend the stairs until they are made safe. Question: What is Sam’s manager required to do after Sam refuses unsafe work? Sam’s manager sends Sam home for the day without pay and immediately directs another employee to fetch the additional foodstuffs. Question: Has Sam’s manager complied with your jurisdiction’s legislation? Why or why not? When Sam returns to the workplace the next day, the stairs remain slippery and unsafe. Question: What are three ways Sam could handle this situation? What are the pros and cons of each option? Scenario Two: Arises and Occurs Kelly is employed at the same restaurant as Sam. After Kelly’s shift is over, Kelly changes from the restaurant uniform into her street clothes in the basement changing room. Kelly then ascends the stairs to exit the building and go home. While climbing the stairs, she slips on the greasy stair risers and falls. As a result of the fall, Kelly’s wrist is broken. Kelly reports the injury to the workers’ compensation board. Her manager disputes that the injury is compensable. Specifically, the manager asserts that the injury did not arise and occur in the course of employment because Kelly’s shift was over and the injury occurred when she was on her way home. Question: Is Kelly’s injury compensable? Why or why not? Question: Why might Kelly’s manager resist Kelly’s workers’ compensation claim?
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404 Part III The Regulatory Regime
NOTES AND REFERENCES 1. J. Hunter, “Survivors of the Babine Mill Explosion: ‘Our Families Will Never Be the Same,’” Globe and Mail (March 2014), online: . 2. WorkSafeBC, Incident Investigation Report 2012161980018 (Vancouver: WorkSafeBC, 2012). 3. Association of Workers’ Compensation Boards of Canada, National Work Injury, Disease and Fatality Statistics, 2015 – 2017 (Ottawa: AWCBC, 2018). 4. R. Cox & K. Lippel, “Falling Through the Legal Cracks: The Pitfalls of Using Workers’ Compensation Data as Indicators of Work-Related Injuries and Illnesses” (2008) 6:2 Pol’y & Prac in Health & Safety 9. 5. J. Foster, B. Barnetson, & J. Matsunaga-Turnbull, “Fear Factory: Retaliation and Rights Claiming in Alberta, Canada” (April-June 2018) J of Workplace Rts 1. 6. J. Witt, The Accidental Republic: Crippled Workingmen, Destitute Widows and the Remaking of American Law (Cambridge, MA: Harvard University Press, 2004); and E. Tucker, “The Law of Employer’s Liability in Ontario, 1861 – 1990: The Search for Theory” (1984) 22 Osgoode Hall LJ 213. 7. R. Risk, “This Nuisance of Litigation: The Origins of Workers’ Compensation in Ontario” in D. Flaherty, ed, Essays in the History of Canadian Law, vol. 2 (Toronto: University of Toronto Press, 1983) 418-91. 8. B. Barnetson, The Political Economy of Workplace Injury in Canada (Edmonton: Athabasca University Press, 2010). 9. R. Kostal, “Legal Justice, Social Justice: An Incursion into the Social History of Worker-Related Accident Law in Ontario” (1988) 6:1 LHR 1. 10. The Meredith Report (Toronto: Lieutenant Governor of Ontario, 1913) (Meredith), online (pdf): . 11. R. Storey, “From the Environment to the Workplace … and Back Again? Occupational Health and Safety Activism in Ontario, 1970s – 2000+” (2004) 41:4 Can Rev Soc & Anthro 419. 12. Many OHS scholars believe this assumption is false, noting that the profit imperative may incentivize employers to trade workers’ health for profit. See J. Foster & B. Barnetson, Health and Safety in Canadian Workplaces. (Edmonton: Athabasca University Press, 2016).
13. Occupational Health and Safety Act, RSO 1990, c O.1, Part III.01. 14. Ibid., s. 9. 15. T. Nichols & D. Walters, “Worker Representation on Health and Safety in the UK—Problems with the Preferred Model and Beyond” in D.R. Walters & T. Nichols, eds, International Perspectives on Representing Workers’ Interests in Health and Safety (Basingstoke, UK: Palgrave Macmillan, 2009) 19-30. 16. A. Hall, A. Forrest, A. Sears, & N. Carlan, “Making a Difference: Knowledge Activism and Worker Representation in Joint OHS Committees” (2006) 64:3 Indus Rel 408. 17. G. Ziem & B. Castleman, “Threshold Limit Values: Historical Perspectives and Current Practice” in S. Kroll-Smith, P. Brown, & V. Gunter, eds, Illness and the Environment (New York: New York University Press, 2000) 120-34. 18. See, for example, Occupational Health and Safety Act, RSO 1990, c. O.1, part VI (Reprisals by Employer Prohibited). 19. Foster et al., supra note 5. 20. G. Gray, “A Socio-Legal Ethnography of the Right to Refuse Dangerous Work” (2002) 24 Stud in Law, Pol & Soc 133. 21. Workers Compensation Act, RSBC 1996, c. 492. 22. Bill C-45, An Act to Amend the Criminal Code (Criminal Liability of Organizations), now codified in the Criminal Code, RSC 1985, c. C-46, ss. 22.1, 22.2, and 217.1. 23. S. Bittle, Still Dying for a Living: Corporate Criminal Liability After the Westray Mine Disaster (Vancouver: University of British Columbia Press, 2012); E. Tucker & H. J. Glasbeek, “Death by Consensus: The Westray Story” 3:4 New Solut (1993) 14. 24. N. Keith, “After 10 Years, Bill C-45 Yields Few Prosecutions,” Canadian Occupational Safety (April 2014), online: . 25. R v. Metron Construction Corporation, 2013 ONCA 541. 26. Bittle, supra note 23. 27. Rudd v. Hamiota Feedlot Ltd., 2006 MBQB 22. 28. D. Gilbert & A. Liversidge, Workers’ Compensation in Ontario: A Guide to the Workplace Safety and Insurance Act, 3rd ed (Aurora, ON: Canada Law Book, 2001). 29. E. Tompa et al, “Financial Incentives for Experience Rating in Workers’ Compensation: New Evidence from a Program
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Chapter 24 Occupational Health and Safety and Workers’ Compensation 405 Change in Ontario, Canada” (2013) 55:3 J Occ & Envtl Med 292. 30. P. Petrie, Fair Compensation Review: A Review of the Impact of the Manitoba WCB Assessment Rate Model on Fair Compensation for Workers and Equitable Assessments for Employers (Winnipeg: Minister of Family Services and Labour, 2013). 31. E. Tompa et al., “Financial Incentives in Workers’ Compensation: An Analysis of the Experience Rating Program in Ontario, Canada” (2012) 10:1 Pol’y & Prac in Health & Safety 117. 32. T. Thomason, “The Escalating Costs of Workers’ Compensation in Canada: Causes and Cures” in T. Thomason, F. Vaillancourt, T. Bogyo, & A. Stritch, eds, Chronic Stress: Workers’ Compensation in the 1990s (Toronto: C.D. Howe Institute, 1995) 23.
34. Details of Ontario’s requirements can be found on the Workplace Safety and Insurance Board website: . 35. WorkSafe British Columbia, Chapter 5—Rehabilitation and Claims Services Manual, Volume II (Vancouver: WorkSafeBC, 2005), online: . 36. E. MacEachen, S. Ferrier, A. Kosny, & L. Chambers, “A Deliberation on ‘Hurt versus Harm’ in Early-Return-toWork Policy” (2007) 5:2 Pol’y & Prac in Health & Safety 41.
33. D. Michaels, “Fraud in the Workers’ Compensation System: Origins and Magnitude” in T. Guidotti & J. Cowell, eds, Occupational Medicine: State of the Art Reviews (Philadelphia, PA: Hanley and Belfus, 1998) 439.
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CHAPTER 25
The Right to Work: Immigration and Mobility Law* LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 407 II. A Brief History of Migrant Workers in Canada 407 III. Migrant Workers and “Flexible Labour” 409 IV. Immigration Status in Canada 411 A. Citizens, Permanent Residents, and Foreign Nationals 411 V. Temporary Work Permit Programs in Canada 412 A. Live-in Caregiver Program 412 B. Seasonal Agricultural Worker Program 413 C. Temporary Foreign Worker Program 413 D. Open Work Permits 415 VI. The Precarious Status of the Migrant Worker 415 VII. Employment-Related Legal Entitlements and Migrant Workers 416 VIII. Federal Regulation of Employers 418 IX. Chapter Summary 419 Questions and Issues for Discussion 419 Notes and References 419
• Describe the history and policy reasons for migrant worker programs in Canada. • Explain the different kinds of immigration status and where they come from in federal law. • Understand how immigration status affects foreign workers. • Describe the rights of migrant workers and some of the remedies available when workplace problems arise.
I. Introduction Immigration laws are not usually considered to be part of the law of work because they are not directly concerned with the rules of the workplace. However, for obvious reasons, rules that determine who can and cannot work in Canada are of great concern within the law of work system. If someone is not legally entitled to work, then they are not protected by many of the legal rules designed to protect employees that we have explored in this part of the book. This means they are not protected by many of the legal rules designed to protect employees that we have explored in this part of the book. Therefore, immigration laws play an important boundary role in the law of work. This chapter examines how, through these laws, Canadian governments determine who gets to work in Canada and who does not.
II. A Brief History of Migrant Workers in Canada In Canada, immigration policy has always been linked with the economic benefit of migrant work. European settlement of Canada was limited to a relatively small number of trading posts until the early 18th century, when European migration to Canada began to increase substantially. From then until the early 1860s, the greatest number of immigrants came from Britain, where rapid industrialization had led to chronic unemployment and high numbers of impover* This chapter was authored by Sarah Marsden, Thompson Rivers University.
407
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408 Part III The Regulatory Regime ished workers. The British government viewed emigration as preferable to public assistance and encouraged the poor to move to Canada.1 Mass European colonization of Canada had a profound and often negative impact on the country’s diverse Indigenous peoples, which included violence, murder, forcible dispossession of land, forced cultural and religious assimilation, and the introduction of new diseases that led to the decimation of populations.2 Starting in the mid-19th century, Canada actively encouraged immigration. At this time, no explicit racial distinction was made in Canada’s immigration laws, but the preference was to recruit northern Europeans, Britons, and Americans. Immigration policy was linked with the interests of business and industry, and the government encouraged settlement by providing land to new immigrants working in industry and agriculture. At the outset of the 20th century, southern and eastern Europeans were being recruited specifically for “contract labour” and faced indenture, poor wages, and poor working conditions.3 Obtaining permanent residence became more difficult, and laws that excluded people on the basis of poverty or “unsuitability” were enacted. By the 1920s, immigration laws and policies were explicitly racist, effectively creating a four-tier system in which (1) British and American nationals were welcomed, (2) other northern Europeans could immigrate primarily through family links, (3) eastern and southern Europeans needed special permits, and (4) Asian and African people were virtually barred.4 Until 1967, ethnic “suitability” remained a part of Canadian immigration law.
BOX 25.1 » TALKING WORK LAW Canada’s Discrimination Against Chinese Workers During the Building of the Canadian National Railway The second half of the 19th century saw large waves of Chinese migration to Canada, in large part for the purposes of building Canada’s first national rail line. Chinese people worked in substandard conditions for a fraction of the pay that other workers received, and the work was hazardous. Their labour was essential to the establishment of Canada’s rail system, which provided a necessary link from east to west. In 1885, after the railway was completed, the federal government passed the Chinese Immigration Act, the first immigration legislation in Canada to openly discriminate on the basis of race. This law’s stated purpose was to restrict the number of Chinese immigrants in Canada and to regulate and control Chinese immigrants residing in Canada. The law forced anyone “of Chinese origin” to pay a $50 entrance fee (known as a “head tax”) to come to Canada. This was The Chinese head tax certificate for Kung Tsin (Tom Kong), for which he a significant amount of money at the time, and subsewas required to pay $500 in 1912 upon his arrival in British Columbia. quent laws raised the amount to $100, and then $500. In Reprinted by permission of Vincent Kong. 1923, the government passed a law to exclude Chinese people almost entirely from immigration and made it an * Chinese Immigration Act, 1923, 13-14 Geo. V., c. 38. imprisonable offence for Chinese people to enter Canada.* In 1930, the government passed an order in council that pro- † Order in Council PC 2115 of September 16, 1930. ‡ Read about Prime Minister Stephen Harper’s formal apology for the hibited the immigration of people of “any Asiatic race.”† Chinese head tax here: . paid $20,000 to each surviving head tax payer.‡
indenture: A contractual arrangement in which a person is legally bound to serve another for a period of time.
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Chapter 25 The Right to Work: Immigration and Mobility Law 409
The late 1960s and early 1970s was a time of major liberalization in Canadian immigration policy. In addition to removing ethnic requirements, the government introduced more appeal rights and procedural protections for people threatened with deportation, and Canada started accepting refugees for humanitarian resettlement. At the same time, family-based migration decreased and economically based permanent migration increased. Canada initiated the “points system,” a way of assessing potential permanent immigrants based on their education, work experience, and language skills, which were seen as indicators of immigrants’ potential to integrate and contribute economically to Canada. In 1973, the government introduced the first large-scale temporary worker program, called the Non-Immigrant Employment Authorization Program (NIEAP), in which employers could recruit foreign workers.5 Migrant workers were recruited across multiple labour segments and from many countries, and the number of migrant workers often exceeded the number of permanent economic migrants.6 In the beginning, the NIEAP targeted highly specialized workers, such as executives and academics, to meet labour market needs. However, in 2006 the federal government expanded the program to permit employers to request lower-skilled workers to fill vacancies in such industries as fast food and hospitality services. The growing use of foreign workers to fill Canadian service jobs has attracted considerable debate and controversy in recent years, as we will discuss below.
III. Migrant Workers and “Flexible Labour” Temporary migrant workers have contributed immeasurably to Canada’s economy over the past 40 years. But they often work for lower pay, endure difficult or dangerous working conditions, and have otherwise been exploited by their employers—all of this without the benefit of permanent residence. Although programs to bring in foreign workers are labelled “temporary,” the need for foreign workers in our economy seems to be long term, and the number of foreign workers in Canada is increasing. Where does the need for foreign workers come from? Migration scholars provide different answers to this question. Some point out that the labour shortage that migrant workers fill is not a quantitative shortage, where there is too much work but too few people to do it, but a qualitative shortage.7 This means that there are enough Canadian workers to fill jobs, but because certain jobs have conditions (including low pay and long hours) that are unacceptable to most Canadians, Canadians will not take them. For example, if picking blueberries was paid at a rate of $30 per hour with regular breaks and hours and workplace wellness programs, Canadians would be much more likely to do this work, but picking blueberries doesn’t pay this well or have these perks. Canada’s Temporary Foreign Worker Program permits employers to fill undesirable jobs without having to pay the higher wages that the Canadian labour market would otherwise demand. Foreign workers have become a second tier of labour in the Canadian economy. This second tier of labour serves both specific businesses and the economy at large. Temporary foreign work programs make workers available on terms suitable to employers in what Judy Fudge calls “an extreme form of flexible labour.”8 Because workers are often tied to specific employers, they are also “unfree,” in the sense of not being able to circulate in the labour market as citizens do. An Alberta employment standards adjudicator described temporary foreign workers as being “handcuffed to a single employer.”9 Some argue that this type of “unfree” labour is necessary for capitalist economies to function.10 The rise of temporary foreign work programs can also be understood as an aspect of globalization (see Chapter 27); many industries in which foreign workers are employed are those in which the labour cannot be moved offshore, such as agriculture, domestic work, construction, primary industry, and services. Temporary Foreign Worker Program: A federal government program that allows Canadian employers to hire foreign nationals to address temporary labour and skill shortages when qualified Canadian citizens or permanent residents are not available.
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410 Part III The Regulatory Regime In addition to the thousands of workers in Canada under some form of immigrant worker program, unknown numbers of people reside in Canada without formal legal status. Estimated numbers of such workers range from 50,000 to 800,000 people.11 Most likely they once had legal status, but their permits were not renewed. Legal status can change for a number of reasons: sometimes people do not renew their legal status in time, and sometimes people’s applications are refused because they do not meet the federal government’s requirements. For example, as we will see, some foreign workers require an employer sponsor to work in Canada, and an employer may refuse to renew its support of a foreign worker. Not much information exists about the working life of people without legal status, but it is safe to assume that many people without legal status work to support themselves, and that many of their jobs are likely to be in informal or cash positions, such as construction, domestic work, or food services. Workers without legal status are extremely vulnerable in the labour market, as they face a constant concern about enforcement and deportation and have little to no access to social services such as health care. Basic protections for workers, such as employment standards and a basic minimum wage, may be harder for these workers to obtain because they are reluctant to assert their rights.
Lilia Ordinario Joaquin, a Filipino nanny working in Toronto, celebrates her exemption from deportation and can now apply for permanent residence. Her lawyer called her with the news from Canada’s immigration minister as she was packing her bags to leave Canada. Source: Vince Talotta/GetStock.com.
The top source countries for foreign workers in Canada in 2016 were the Philippines, Mexico, Guatemala, India, France, the United States, the United Kingdom and its colonies, the Republic of Korea, and Jamaica.12 Workers are categorized as “higher skilled” and “lower skilled,” and the government has set up special programs for domestic and agricultural workers. Racialized workers are overrepresented in lower-skilled work groups.13 Based on the limited information available,14 the top occupational areas for migrant workers in the Temporary Foreign Worker Program are farm and harvesting work, domestic work, food service work, truck drivers, and
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Chapter 25 The Right to Work: Immigration and Mobility Law 411
food processing.15 Over recent years, an increasing number of foreign workers have entered Canada, and a growing proportion of them are in the “lower-skilled” group. The number of temporary foreign workers entering Canada each year is often much larger than the number of permanent residents entering Canada under the economic class.16
IV. Immigration Status in Canada As we noted in Chapter 17 when we looked at how the Constitution assigns jurisdiction in Canada, the federal government is responsible for the laws that affect immigration and citizenship. The main statutes in this area are the Immigration and Refugee Protection Act and the Citizenship Act.17 Both of these acts also have regulations associated with them. These laws play a role in determining how people obtain, maintain, or lose citizenship or immigration status. Table 25.1 outlines how a person’s status affects their access to services in Canada. TABLE 25.1 Worker Status and Access to Public Health Care, Education, and Social Welfare Status Category
Subcat egory
Subcategory
Public Health Care?
Educa tion?
Social Welfare?
Citizens
—
—
Yes
Yes
Yes
Permanent residents
—
—
Yes
Yes
Yes
Foreign nationals
Foreign workers
“Low-skilled”: requires LMIA*
Yes
Yes
No
“High-skilled”: requires LMIA
Yes
Yes
No
Live-in caregivers: requires LMIA
Yes
Yes
No
Seasonal agricultural workers
Yes
Yes
No
Working holiday permit holders
No
No
No
Students authorized to work during or after their studies
Yes
Yes
No
Limited
Yes
Yes
Workers without documentation
No
No
No
Students
—
Yes
Yes
No
Visitors
—
No
No
No
Open work permit holders (spouses of high-skilled workers, refugee claimants awaiting determination)
Note: Refugee claimants do not formally have legal status, and others enter or remain without status. Social welfare, education, and health care are governed by the provinces, and services vary; many services are only contingently or inconsistently available to temporary workers because of policies and practices requiring confirmation of migration status. * Labour Market Impact Assessment (discussed below).
A. Citizens, Permanent Residents, and Foreign Nationals
A majority of people in Canada are Canadian citizens. People become Canadian citizens by being born in Canada, having Canadian parents, or obtaining permanent residence and then staying in Canada for a certain number of years.18 Canadian citizens have the right to vote, enter and remain in Canada, and live and work in Canada. Until recently, citizenship could only be lost if a person gave it up voluntarily (revocation) or if a naturalized citizen obtained citizenship Canadian citizen: A person who meets the definition of a “citizen” in the Canadian Citizenship Act and who therefore enjoys all the privileges and is subject to all the obligations of Canadian citizens in Canadian and international law.
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412 Part III The Regulatory Regime or immigration status by fraud. However, the federal government has recently expanded the ways in which citizenship can be revoked. For citizens who have access to citizenship in other countries (potential dual citizens), the government can now revoke citizenship for terrorism and national-security-related matters. These changes may be challenged in court on the basis that they are unconstitutional.19 People become permanent residents (also known as landed immigrants) if they meet the government’s requirements for economic immigration, if they are sponsored by a family member, or if their case is accepted for refugee or humanitarian reasons.20 Permanent residents are similar to citizens in some ways, but different from them in others. Like citizens, they have the right to enter and remain in Canada and to live and work here, but they do not have the right to vote. Permanent residents must meet a residency requirement by staying in Canada for two years out of every five; otherwise they risk losing their status. They can also lose their status if they are convicted of or commit certain serious criminal offences or human rights violations. If a person does not have citizenship or permanent residence in Canada, they are “foreign nationals” at law.21 Foreign nationals are visitors to Canada and need a temporary permit to enter Canada. Temporary permits include visitor visas, study permits, and work permits.22 All temporary permits have time limits and conditions: for example, people with visitor visas are generally not allowed to work. Work permits allow people to work in Canada, but they have specific conditions attached to them; for example, a permit holder must leave Canada at the end of the authorized stay or may have to work for a specific employer. Rules about work permits have a serious impact on the rights and obligations of foreign workers, and, therefore, we will now spend some time exploring how work permits are organized and some of the problems foreign workers face.
V. Temporary Work Permit Programs in Canada Canada’s immigration laws recognize a variety of different streams through which foreign nationals can gain temporary access to jobs in Canada.
A. Live-in Caregiver Program Canada has a work permit program designed specifically to bring in domestic workers to care for children, people with disabilities, or elderly people. The program leads eventually to permanent resident status for workers who complete a number of years of work in Canada. The average annual number of new foreign workers that entered Canada under the Live-in Caregiver Program from 2007 to 2016 was 15,749.23 In 2016, Live-in Caregiver work permit holders made up over 9 percent of the total foreign worker entries to Canada.24 A vast majority of workers in this program are women from the Philippines. Workers have been unable to bring their families with them, which has led to years of separation between these workers and their spouses and children.25 While many migrant workers eventually obtained permanent residence in Canada under the Live-in Caregiver Program, this program has historically been plagued by long procedural delays, employer abuse, and unfair working conditions.26 Until recently, caregivers were tied to one specific employer on their work permit, and they were authorized to work only for that employer. This means that when a caregiver needed to leave a bad workplace or was laid off, it was difficult for them to get a new work permit. permanent resident: An immigration status under Canadian immigration law that grants a person of foreign origin many but not all rights available to Canadian citizens. For example, a permanent resident’s voting rights are restricted. landed immigrant: See permanent resident. work permit: A legal authorization issued by the Canadian government that permits a non-Canadian citizen to work temporarily in Canada.
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Chapter 25 The Right to Work: Immigration and Mobility Law 413
As of 2019, in response to concerns about delays, family separation, and complications in obtaining permanent residence, the federal government announced a new program in which workers will be able to work in Canada in home support or home child-care streams. The federal government has stated that workers will require two years of work to become permanent residents. Most notably, the federal government has also promised that these workers will now be issued sector-based, rather than employer-based, work permits. This means they will be able to move to a new employer at will, rather than relying on a new employer’s approval, as they have in the past. Finally, the government has promised to allow spouses and children of caregivers to accompany them to Canada, with work permits and study permits.27 These changes respond to many of the concerns raised by caregivers in recent years.
B. Seasonal Agricultural Worker Program Canada has a foreign worker program in which seasonal labourers come to Canada from specific countries to undertake work in cultivating and harvesting fruits, vegetables, flowers, and trees as well as work involving animals. This program, known as the Seasonal Agricultural Worker Program, is based on agreements between Canada and a short list of source countries, including Mexico and multiple Caribbean countries. Under this program, farms hire foreign workers for a maximum of eight months per year. Wages for each occupation are set by the federal government.28 As with the Live-in Caregiver Program, workers in this program are at risk of exploitation and substandard working conditions. Workers are also attached to a specific employer through their work permits and cannot easily change jobs if they need to because, like workers in the Live-in Caregiver Program, they also require a Labour Market Impact Assessment (LMIA) to do so. Also, these workers cannot bring their families with them when they come to work in Canada. Unlike workers in the Live-in Caregiver Program, however, foreign agricultural workers do not qualify for permanent residence through their work in Canada; they often return to Canada for many years, never obtaining permanent status. In 2018, seasonal agricultural positions made up 46.7 percent of the total number of approved temporary foreign worker positions, up from 19.1 percent in 2011.29
C. Temporary Foreign Worker Program As mentioned above, apart from special programs for caregivers and agricultural workers, Canada also has a general Temporary Foreign Worker Program. In this program, workers are divided into “higher-skilled occupations” and “lower-skilled occupations.” The number of work permits granted under this program has grown exponentially in recent years. As a result, the program has come under intense public scrutiny and criticism for permitting employers to use foreign workers rather than attract Canadian workers to the same jobs (see Box 25.2). Workers under the Temporary Foreign Worker program still have “closed” work permits, in which they are tied to a specific job and a specific employer. This requirement put employers in an increased position of power over these workers—unlike other Canadian workers, foreign workers with closed work permits do not have the option of quitting and finding a new job, because they first need to find an employer who is willing to obtain permission to hire them. In order to obtain that permission from the federal government, the prospective employer needs to apply for a Labour Market Impact Assessment (LMIA).30
Labour Market Impact Assessment (LMIA): An assessment of labour market conditions conducted by the federal government whose purpose is to determine whether an absence of Canadian workers to fill a vacancy justifies issuing a temporary work permit to a foreign national.
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414 Part III The Regulatory Regime
BOX 25.2 » CASE LAW HIGHLIGHT Temporary Foreign Workers and the Tumbler Ridge Mining Project Construction and Specialized Workers’ Union, Local 1611 v. Canada (Citizenship and Immigration) 2013 FC 512
of the work to get permission to hire temporary foreign workers rather than Canadian workers, and that the federal government should not have granted permission.
Key Facts: In this case, two unions launched the first court challenge of a positive Labour Market Opinion (ostensibly an assessment of the effect that hiring temporary foreign workers will have on the Canadian labour market) by the federal government. In a much-publicized case, HD Mining International applied for and received a positive Labour Market Opinion to hire 201 temporary foreign workers from China to undertake extraction work at its Tumbler Ridge mining operation. The unions claimed that HD Mining had misrepresented the nature
Issue: Was the federal government’s positive Labour Market Opinion unreasonable? Decision: No. The unions’ case was dismissed. Justice Zinn found that the federal officer who issued the Labour Market Opinion had followed the statutory guidelines and did not err in his decision. Nonetheless, it is likely that similar cases will come before the Federal Court concerning the hiring of temporary foreign workers.
Poor government oversight of the Temporary Foreign Worker Program has allowed some Canadian employers to misuse the program, as explained in the story described in Box 25.3.31
BOX 25.3 » TALKING WORK LAW Federal Government Steps Up Monitoring for Temporary Foreign Workers Program The following excerpt describes how the federal government responded to an auditor’s report that the Temporary Foreign Worker program lacked oversight: The federal Liberal government, chastised last year in an auditor’s report that found a lack of oversight of Canada’s controversial temporary foreign workers program, is stepping up employer inspections and naming and shaming those caught breaking the rules. Since the start of the year, roughly 1,600 employers have been flagged as “high-risk employers” and selected for inspections by the Employment and Social Development Department, with more than 1,340 on-site inspections launched and in various stages of completion. That’s more than seven times the number of onsite inspections conducted during the same period in 2016 – 17. … A list of penalized companies and employers has been posted online. Since August 2017, the number of sanctioned employers jumped to 62 from just one. Many have been banned from using the program for up to two years, while others have been hit with fines.
Kameron Coal Management Ltd. was banned from the program for a year and ordered to pay $54,000—the largest fine to date. The Cape Breton mining company faced criticism from a local union two years ago for hiring foreign workers where qualified locals were available for work. Employers are given the chance to address any red flags and improve working conditions for temporary foreign workers, which is preferable to simply imposing sanctions, the department said in a written statement. “In over 45 per cent of our cases (in 2017 – 18), employers willingly took corrective measures in areas where they were initially found non-compliant to come into compliance with program conditions,” the statement said. “Employers who do not, continue to be subject to serious penalties.” Source: Excerpt from Teresa Wright, “Liberals Step Up Monitoring for Temporary Foreign Workers Program,“ The Canadian Press. Retrieved from . Used with permission.
1. Higher-Skilled Occupations Higher-skilled occupations are those that require education or formal training from a university, college, or trade or vocational school. For example, a carpenter would be considered “higher skilled,” and so would a business manager or a visual artist. Higher-skilled workers also have the
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Chapter 25 The Right to Work: Immigration and Mobility Law 415
benefit of being able to obtain an open work permit (discussed below) for their spouse or partner who accompanies them to Canada. Most higher-skilled workers require an LMIA, but some do not (e.g., workers who come to Canada as part of a trade agreement such as NAFTA, and workers who are moved from a foreign branch to a Canadian branch of the same company). Higher-skilled workers are often still bonded to one specific employer and may also have trouble changing jobs if they need to, but they are much more likely to be able to obtain permanent residence, which would give them the opportunity to freely circulate in the labour market. Higher-skilled workers can apply for permanent residence under economic classes such as Federal Skilled Worker, Federal Skilled Trades, and Canadian Experience Class.
2. Lower-Skilled Occupations Workers in “lower-skilled” occupations constitute a growing proportion of the foreign workers in Canada.32 Work classified as “lower skilled” includes work that involves on-the-job training or does not require more than a secondary school level of education. Examples of lower-skilled positions are office clerks, drivers, oil and gas drilling operators, food servers, tourism workers, machine operators, and assembly-line workers. Both agricultural workers and domestic workers are also classified as lower skilled, regardless of the skills and educational background of the worker. For example, a 2014 study shows that over 80 percent of surveyed workers in the Live-in Caregiver Program had a university degree.33 Unlike higher-skilled workers, lower-skilled workers are unlikely to qualify for permanent residence during their time in Canada, even if they remain for a number of years, because lowerskilled work does not qualify them for permanent residence in the same way that higher-skilled work would (with the notable exception of caregivers, as described above). Furthermore, a lower-skilled worker’s spouse or partner is not eligible for an open work permit and requires an LMIA to apply for a work permit in Canada. The application of the labels “low skilled” and “high skilled” to certain kinds of work, therefore, has a significant impact on the benefits for a worker. Some criticize the distinction, arguing that it is not fair to classify certain work as “high skilled” when much of what is called “low skilled” does require skills, and is also essential to Canada’s economy, in agricultural and domestic work, but also in retail, construction, and other essential industries.
D. Open Work Permits
Open work permits do not require an LMIA. This means that an employer does not need to demonstrate the need for a specific worker to the government, and the work permit is not bonded to a particular employer: a person can work for any employer in Canada for the duration of the permit. Open work permits are only available in certain circumstances, usually under a special program or when they would have a policy benefit. Examples of people eligible for open work permits include spouses of higher-skilled work permit or study permit holders, people who have graduated from a Canadian college or university program, and those participating in a working holiday program. Open work permits are also issued to people who belong to refugee and humanitarian-protected classes.
VI. The Precarious Status of the Migrant Worker Because they are not permitted to change jobs without finding a new employer who can obtain an LMIA, migrant workers with “closed,” employer-specific permits are at a disadvantage if they are laid off. However, they may also be reluctant to leave an unsafe workplace or report their employer if their working conditions and wages fall below legal standards. Migrant workers have open work permit: A legal authorization issued by the Canadian government to a foreign national who meets certain criteria permitting them to work for any employer in Canada. This permit does not require a Labour Market Impact Assessment.
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416 Part III The Regulatory Regime less bargaining power with their employer, and the employer has more power over the workers relative to Canadian workers. Even for migrant workers with an open work permit, fear over losing their immigration status can act as a deterrent from reporting poor work conditions or negotiating with their employers for better working conditions or wages. As outlined above, migrant workers come to Canada under many different programs, and they obtain employer-specific or open work permits in a variety of different situations. But all of them are workers in Canada’s labour market, and none of them has permanent status. Sociologist Luin Goldring suggests that the idea of “precarious status” is a way of understanding the impact of less than full migration status. For Goldring and her colleagues, “precarious status” can include the lack of permission to work or to stay in Canada, dependence on a third party for the right to be in Canada (such as an employer), and lesser access to social entitlements such as education and health.34 Precarious status is a useful concept because it allows us to consider the effect of non-permanent status on different groups of workers. For example, a domestic worker in the Live-in Caregiver Program would be precarious because they rely on the employer’s support for a work permit extension, but a refugee claimant with an open work permit would also be precarious because their status is dependent on the outcome of a refugee hearing. Workers with precarious status experience negative health and social impacts, as well as a lack of access to various necessary services.35 Precarious status does not affect everyone equally. It can interact with other forms of privilege or disadvantage, including class, nationality, race, gender, and disability, and the level of privilege the person has may insulate them from the impacts of precarious status. For example, an upper-class student from England who is in Canada for a working holiday after graduating would likely be much less susceptible to harm and exploitation than an agricultural worker from Jamaica trying to support their lower-income family. Sociologist Nandita Sharma has linked the temporary foreign work programs in Canada to the racialization of workers and tied these programs to Canada’s record of race-based immigration laws.36 Precarious work is gendered as well; for example, Geraldine Pratt shows that Canada’s domestic work program is part of the feminization of caring work as part of a global supply chain.37
VII. Employment-Related Legal Entitlements and Migrant Workers Migrant workers in Canada have faced many workplace difficulties, including unpaid wages, unpaid overtime, a lack of breaks and mealtimes, and other exploitive employer practices. The federal work permit system allows employers to offer lower-than-average wages to foreign workers,38 but migrant workers can, and some have, used both provincial employment standards tribunals and the courts to enforce their statutory and contractual employment rights.39 In a recent case, temporary foreign workers employed by Denny’s restaurants were awarded a settlement for violations of employment contracts and employment standards legislation amounting to nearly $1.5 million, as described in Box 25.4.
BOX 25.4 » CASE LAW HIGHLIGHT Denny’s Restaurant Chain Settles Foreign Worker Class Action Lawsuit Dominguez v. Northland Properties Corporation 2013 BCSC 468 Key Facts: Seventy-seven employees of Denny’s restaurant in British Columbia filed a class action lawsuit alleging violations
by the employer of the province’s employment standards legislation, including failing to pay overtime and committing various breaches of employment contracts (e.g., the requirement to provide 40 hours of work per week). The employees were in Canada under the Temporary Foreign Worker Program, and
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Chapter 25 The Right to Work: Immigration and Mobility Law 417 most of them were from the Philippines. The employees were required to pay fees ranging from about $2,500 to $6,000 to a third-party recruitment company to apply for positions at Denny’s. The employees continued to work for Denny’s after the lawsuit was filed, and some alleged that Denny’s “suggested to them that they should decide to opt out of these proceedings rather than run the risk of losing their employment with Denny’s or otherwise losing support from Denny’s in relation to their work permits or in obtaining permanent residency status in Canada.” The court issued an order that there could be no repercussions against employees who participated in the lawsuit. The class action was certified by the court and permitted to proceed.* The case went to mediation and a proposed settlement was reached. That settlement included the following terms: • Since the employment contracts required the employees to be given at least 37.5 or 40 hours of work per week, Denny’s would pay each employee any shortfall in the entitled number of hours and actual number of hours worked. • Denny’s would pay all unpaid overtime. • Denny’s would reimburse employees for their airfare cost from their home country and back (if they fail to
•
•
• •
secure permanent residence status and must return home). Denny’s would establish a settlement fund in the amount of $300,000 to reimburse employees for recruitment fees paid to any third party as a condition of receiving a placement at Denny’s. Denny’s would donate $40,000 to a local BC charity that assists temporary foreign workers and an additional $40,000 to a local children’s charity. Denny’s would pay $425,000 in legal fees and disbursements to the employees’ lawyers. When Denny’s fulfills its obligations under the settlement, the employees would provide a full release against all claims against Denny’s.
Issue: Was the proposed settlement fair and reasonable, as required by the BC Class Proceedings Act? Decision: Yes. The court assessed the total value of the settlement at about $1.425 million to be paid by Denny’s and ruled that the settlement was fair and reasonable to the employees. Therefore, the court approved the settlement. * Dominguez v. Northland Properties Corporation, 2012 BCSC 328.
As the Dominguez case shows, migrant workers have the same formal rights as any other workers with regard to hours of work and pay, including termination pay, overtime, minimum wage, mealtime breaks, hours of work, and unlawful fees (such as recruitment fees to find a job). However, big legal wins like this are rare. As noted above, unlike citizen workers, migrant workers may be concerned about losing their immigration status or having to leave Canada if they try to enforce their rights. They are particularly vulnerable to exploitation.40 When they do enforce their rights, they cannot use employment law remedies to maintain their immigration status. In other words, a court or tribunal may order the payment of money to the workers; but if a worker has lost their work permit, that worker cannot obtain a new work permit from an employment tribunal. For some workers, maintaining their status or eventually obtaining permanent residence is the most important part of their work in Canada, and employment law remedies cannot help with this. Migrant workers are overrepresented in the most onerous forms of work, sometimes referred to as “3D” work: dirty, difficult, and dangerous.41 Migrant workers are covered by workers’ compensation laws (and employment standards laws), but they do not always have equal access to the protection of those laws. For example, in Ontario, the Workplace Safety and Insurance Board can reduce or stop an injured worker’s benefits if the worker is “deemed” able to return to a different job. This policy is a major problem for migrant workers, because without a work permit, they cannot work at a different job “deemed” appropriate for them.42 Although migrant workers are treated “just like any other workers,” their access to the benefit of the law falls short because they are different from citizen workers in important ways. Although none of Canada’s human rights statutes prohibits discrimination on the basis of “immigration status” or “migrant worker status,” all prohibit discrimination on the basis of race, ethnicity, citizenship, place of origin, or nationality. Discrimination against migrant workers is
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418 Part III The Regulatory Regime often captured by one or more of these grounds, and migrant workers have made claims using these grounds. In one example, a group of Latin American migrant workers made a human rights claim on the basis that they received less than the European migrant workers doing the same work at their job site.43 Represented by their union, the workers won back wages and an award for injury to dignity, feelings, and self-respect. In British Columbia, migrant workers from the Philippines and Mexico have brought cases before the human rights tribunal alleging discrimination in employment practices on the basis of race, colour, ancestry, and place of origin.44 In a 2015 Ontario case, two women migrant workers from Mexico filed a human rights claim on the basis that they had experienced ongoing sexual harassment and assault by their employer while working at a fish processing plant. The Ontario Human Rights Tribunal considered the discrimination on the basis of sex, but also took into account the particular vulnerabilities associated with being a migrant worker. The tribunal heard expert evidence from Dr. Kerry Preibisch and found the following: Given the nature of the temporary foreign worker program, the fact that work permits are tied to a specific employer, and that trying to find a different employer while in Canada poses immense difficulties for a migrant worker, including the need for any new employer to qualify for the program by obtaining a labour market opinion and the reality that in the interim migrant workers would lose access to the accommodation provided by their existing employer, the reality is that renewing her contract with Presteve was the only real choice that [the worker] had if she wanted to remain in Canada and continue working legally to help support her children.45
In this case, the Ontario Human Rights Tribunal made orders of $150,000 and $50,000 against the employer, making this one of the largest awards for injury to dignity ever made by a Canadian human rights tribunal.
VIII. Federal Regulation of Employers The federal government is responsible for issuing work permits and for approving the requests of employers to hire foreign workers. While it cannot directly enforce provincial employment standards, it has the power to grant or deny permits and also to investigate and penalize employers who exploit migrant workers. The federal government (through Economic and Social Development Canada, or ESDC) has been able to “blacklist” employers for failing to provide promised wages and other problems since 2011, but this power has only been exercised since 2014. Tens of thousands of employers in Canada hire foreign workers, and so far the ESDC website lists 54 employers who have had an LMIA revoked and a further 93 who have been subjected to fines.46 Since 2015, ESDC has been granted expanded enforcement powers under immigration law. Based on tips received online, by phone, or through random selection, officers can now search employer premises, require the employer to produce documents, and interview workers and others to determine whether the employer is compliant. This law has also created clear standards for the employers of migrant workers. Among other things, employers must abide by the wages, occupation, and working conditions promised to the worker; they must comply with federal and provincial laws that regulate employment; and they must “make reasonable efforts to provide a workplace that is free of abuse.”47 This new law is promising, but it is still in the early stages of implementation, and it is difficult to know whether it will improve the working conditions of migrant workers or effectively deter employers from exploitative practices. Finally, there is a new pilot program in British Columbia in which migrant workers who can show they are “at risk of abuse” are now able to apply for six-month open work permits, with the assistance of migrant-serving organizations. The federal government has proposed expanding this pilot program to all of Canada.48 This way, workers may be able to leave bad employers more quickly and have an easier time finding new work. Like the new employer standards, this
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Chapter 25 The Right to Work: Immigration and Mobility Law 419
program is new and it holds promise, but it has not yet been studied to find out whether it will create meaningful change for workers. Migrant workers form a growing proportion of the Canadian workforce, and they often face exploitive workplace conditions as well as barriers because of their non-permanent status. Concerns and disputes over migrant worker rights will be increasingly relevant to the laws governing workplaces. Some critics claim that we should eliminate temporary foreign work programs entirely.49 Others propose significant changes to the system, such as the elimination of employerspecific permits, better access to permanent residence, and equal treatment of higher- and lower-skilled workers.50 Laws and policies pertaining to migrant workers continue to evolve, influenced not only by government policy and court and tribunal decisions but also by the work of unions, advocates, researchers, and community organizers.
IX. Chapter Summary This chapter explained the role and history of migrant workers in Canada. It also reviewed the way migrant workers are regulated by the federal government in immigration law. Migrant workers’ lack of permanent status has many complex effects on their workplace rights, and this chapter has explained some of the major issues migrant workers face and some of the remedies available to address these issues.
QUESTIONS AND ISSUES FOR DISCUSSION 1. How would you characterize the role of migrant workers in Canada historically? 2. Why do employers need permission to hire migrant workers? 3. How does the federal government categorize migrant workers, and how does this categorization affect workers? 4. What are some of the major differences between migrant workers and citizen workers in Canada? 5. Migrant workers are often formally entitled to the same workplace standards (such as minimum wage) as citizen workers, but they do not always have the same access to meaningful resolutions. Why is this? 6. What key issues do lower-skilled migrant workers face? What changes would be most effective in resolving them? Who should be responsible for making those changes?
NOTES AND REFERENCES 1. J.M. Bumsted, Canada’s Diverse Peoples: A Reference Sourcebook (Santa Barbara, CA: ABC-CLIO, 2003) at 108; and Exodus, “The Great Migration of Canada,” online: .
5. A note on terminology: foreign worker refers to a person who has a foreign work permit, whereas migrant worker refers to anyone who is in Canada without permanent status who is working in Canada (and includes a person without status or with expired status).
2. For a history of Indigenous – settler relations in Canada, see, J. Sutton Lutz, Makuk: A New History of Aboriginal – White Relations (Vancouver: University of British Columbia Press, 2008).
6. N. Sharma, “On Being Not Canadian: The Social Organization of ‘Migrant Workers’ in Canada” (2001) 38:4 Can Rev Soc 415 at 425.
3. For a detailed treatment of labour migration in Canada, see D. Avery, Reluctant Host: Canada’s Response to Immigrant Workers, 1896 – 1994 (Toronto, ON: McClelland & Stewart, 1995).
8. J. Fudge & F. MacPhail, “The Temporary Foreign Worker Program in Canada: Low-Skilled Workers as an Extreme Form of Flexible Labour” (2009) 31 Comp Lab L & Pol’y J 5 at 11.
4. N. Kelley & M. Trebilcock, The Making of the Mosaic: A History of Canadian Immigration Policy (Toronto, ON: University of Toronto Press, 2010).
7. Ibid.
9. 639299 Alberta Ltd v. Meganathan, 2013 CanLII 87001 (Alta. ESU) at para 20.
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420 Part III The Regulatory Regime 10. See, for example, R. Cohen, Migration and Its Enemies: Global Capital, Migrant Labour, and the Nation-State (Aldershot, UK: Ashgate, 2006); and V. Satzewich, “Unfree Labour and Canadian Capitalism: The Incorporation of Polish War Veterans” (2010) 28 Stud Pol Econ 89. 11. D. Tilson, Temporary Foreign Workers and Nonstatus Workers (Report of the Standing Committee on Citizenship and Immigration) (Ottawa: Library of Parliament, 2009). 12. Citizenship and Immigration Canada, “Facts and Figures 2016: Immigration Overview—Permanent and Temporary Residents, Table 1.5: Temporary Foreign Worker Program Work Permit Holders with a Valid Permit on December 31 by Top 50 Countries of Citizenship,” online: . 13. Fudge & MacPhail, supra note 8; and N. Sharma, Home Economics: Nationalism and the Making of “Migrant Workers” in Canada (Toronto, ON: University of Toronto Press, 2006). 14. There are limits to what we know about the industries in which foreign workers are employed, because this information is only available for workers whose employer is specified on their work permit. 15. Immigration, Refugees, and Citizenship Canada, “Temporary Foreign Worker Program 2011-2018, Table 7: Number of Temporary Foreign Worker (TFW) Positions on Positive Labour Market Impact Assessments (LMIAs) by National Occupation Classification—2001 (NOC) Skill Type, and Province/Territory Between 2011 and 2018,” online: . 16. Citizenship and Immigration Canada, supra note 12 at 6 and 62. 17. Immigration and Refugee Protection Act, SC 2001, c. 27; and Citizenship Act, RSC 1985, c. C-29. 18. See Citizenship Act, supra note 17, s. 3. 19. T. MacCharles, “Rocco Galati Plans Legal Challenge to Citizenship Act Changes,” Toronto Star (June 2014), online: .
24. Government of Canada, supra note 23. 25. G. Pratt, “Circulating Sadness: Witnessing Filipina Mothers’ Stories of Family Separation” (2009) 16:1 Gend Place Cult 3. 26. See, for example, M. Sargeant & E. Tucker, “Layers of Vulnerability in Occupational Safety and Health for Migrant Workers: Case Studies from Canada and the UK” (2009) 2 Pol’y & Prac in Health & Safety 51; K. Preibisch, “PickYour-Own-Labor: Migrant Workers and Flexibility in Canadian Agriculture” (2010) 44:2 Intl Migr Rev 404; L. Binford, “From Fields of Power to Fields of Sweat: The Dual Process of Constructing Temporary Migrant Labour in Mexico and Canada” (2009) 30:3 Third World Q 503; and S. Marsden, “Silence Means Yes Here in Canada: Precarious Migrants, Work, and the Law” (2014) 18:1 CLELJ. 27. Government of Canada, “Table 1: Number of Temporary Foreign Worker (TFW) Positions on Positive Labour Market Impact Assessments (LMIAs) by Province/Territory Between 2011 and 2018”; Table 9: Number of Temporary Foreign Worker (TFW) Positions on Positive Labour Market Impact Assessments (LMIAs) Under the Primary Agriculture Stream by Province/Territory Between 2011 and 2018,” online: . 28. Employment and Social Development Canada, “Hire a Temporary Worker Through the Seasonal Agricultural Worker Program: Overview,” online: . 29. Government of Canada, Table 1 and Table 9, supra note 27. 30. See an explanation of the Labour Market Impact Assessment here: Government of Canada, “What Is a Labour Market Impact Assessment?” . 31. See also “RBC Replaces Canadian Staff with Foreign Workers,” CBC News (April 2013), online: .
22. Ibid., s. 30.
32. Lower-skilled jobs as a growing proportion, charted by “occupation skill level.” See Government of Canada, “Table 1.7: Temporary Foreign Worker Program Work Permit Holders with a Valid Permit on December 31st by Gender and Occupational Skill Level, 2007 to 2016,” online: .
23. Immigration and Refugee Protection Regulations, SOR 2002-227, ss. 110-15. Government of Canada, “Table 3.1: Temporary Foreign Worker Program Work Permit Holders by Program and Sign Year, 2007 to 2016,” online: .
33. Rupa Banerjee, Philip Kelly, Ethel Tungohan, et al., Assessing the Changes to Canada’s Live-In Caregiver Program: Improving Security or Deepening Preaciousness (2017), online (pdf): .
20. Immigration and Refugee Protection Act, supra note 17, s. 12. 21. Ibid., s. 20.
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Chapter 25 The Right to Work: Immigration and Mobility Law 421 34. L. Goldring, C. Berinstein, & J. Bernhard, “Institutionalizing Precarious Migratory Status in Canada” (2009) 13:3 Citizensh Stud 239 at 240. 35. L. Goldring & P. Landolt, eds, Producing and Negotiating Non-Citizenship: Precarious Legal Status in Canada (Toronto, ON: University of Toronto Press, 2013). 36. Fudge & MacPhail, supra note 8. 37. G. Pratt, Working Feminism (Philadelphia, PA: Temple University Press, 2004). 38. Government of Canada, “Hire a Temporary Foreign Worker in a Low-Wage Position,” online: . 39. A CanLII database search of “Temporary Foreign Worker Program” will lead you to some of the decisions arising from these complaints. 40. See Lee v. ScotiaCare Homecare & Caregivers Inc., 2014 NSLB 53. 41. See, for example, A. Bakan & D. Stasiulis, “Marginalized Dissident Non-Citizens: Foreign Domestic Workers” in B. Walker, ed, The History of Immigration and Racism in Canada: Essential Readings (Toronto, ON: Canadian Scholars’ Press, 2008) 264 at 267. 42. J. Hennebry & J. McLaughlin, “‘The Exception That Proves the Rule’: Structural Vulnerability, Health Risks and Consequences for Temporary Migrant Farm Workers in Canada” in P. Lenard & C. Straehle, eds, Legislated Inequality: Temporary Labour Migration in Canada (Montreal, QC: McGill-Queen’s University Press, 2012) 117.
43. CSWU Local 1611 v. SELI Canada and Others (No. 9), 2009 BCHRT 161. 44. Peart v. Ontario (Community Safety and Correctional Services), 2014 HRTO 611. 45. O.P.T. v. Presteve Foods Ltd., 2015 HRTO 675 at para 132. See also United Steelworkers obo Others v. Tim Hortons and others, 2014 BCHRT 152; and Chein and Others v. Tim Hortons and Others, 2013 BCHRT 229. 46. Government of Canada, “Employers Who Have Been Non-Compliant,” online: . 47. Immigration and Refugee Protection Regulations, supra note 23, ss. 209.1-209.91. 48. Government of Canada, “Regulations Amending the Immigration and Refugee Protection Regulations,” 152:50 Can Gazette, online: . 49. See calls by No One Is Illegal to abolish the foreign worker program. See No One Is Illegal, “Foreign Temporary Workers,” online: ; and No One Is Illegal, “No One Is Illegal Vancouver—Our Principles and Statements,” . 50. See, for example, MigrantWorkersRights Global, “Abolition of Employer-Tied Legal Status for Migrant Workers” (March 2015), online: .
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CHAP TER 26
Privacy Law at Work* LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 423 II. Privacy Legislation in Canada 425 A. Provincial Privacy Acts 425 B. Federal Information Privacy Law: The Federal Personal Information Protection and Electronic Documents Act 426 C. Human Rights Statutes and Privacy 429 III. The Common Law and Privacy at Work 430 A. Tort Law 430 B. Contract Law 432 IV. Privacy in the Unionized Workplace 433 V. Recent Case Law Related to Privacy and “Reasonableness” 434 VI. Chapter Summary 435 Questions and Issues for Discussion 435 Notes and References 436
• Understand the legal sources of privacy protection in Canadian law. • Recognize the kinds of privacy issues that can arise in the workplace. • Understand the jurisdictional differences in the protection of an employee’s privacy. • Understand how the protection of an employee’s privacy differs in a unionized versus a non-unionized workplace.
I. Introduction Canadian privacy law has been characterized as a loose collection of concepts and doctrines that establish a sort of “legal checkerboard” whose application depends on the jurisdiction and the status of the employee. The legal protection of privacy in the workplace comes from a variety of sources (see Table 26.1 for a brief snapshot of the sources of law that touch upon issues related to privacy at work). These sources include public and private sector privacy statutes, anti-discrimination statutes, the tort of “intrusion upon seclusion,” contract law, and arbitration decisions in unionized environments.1 Some sources of privacy protection overlap in their application, while others apply exclusively to certain groups of employees. The aforementioned legal sources of privacy protection are not unified by a universal “right” to privacy applicable to employees across Canada. Instead, the levels and types of privacy protection afforded to employees in Canada are entirely dependent on the legal regimes applicable to the particular employment relationship. Therefore, it would be inaccurate to claim that all employees in Canada enjoy the same right to privacy and, correspondingly, that all employers in Canada have the same legal obligations and rights with respect to the collection and use of information from employees. Determining the right of an employee to privacy and the right of an employer seeking to collect and retain information about its employees can be a complex exercise. This chapter provides an overview of the various sources of workplace privacy law and the employment contexts to which they apply. * This chapter was authored by John Craig and Justine Lindner.
423
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424 Part III The Regulatory Regime TABLE 26.1 Sources of Law That Govern Issues Related to Privacy at Work Source of Law
Jurisdiction(s)
Conduct Regulated
Enforcement
Regulatory Regime: Privacy Legislation
BC, Saskatchewan, Manitoba, Newfoundland and Labrador, Quebec
Legislation creates a new “tort of privacy” that protects workers from unreasonable invasions of privacy. The employer’s business interests are weighed against the employee’s expectation of privacy in the circumstances.
Lawsuit in court for violation of the tort that is created by the statute
Regulatory Regime: Information Privacy Legislation
Federal: Personal Information Protection and Electronic Documents Act (PIPEDA)
PIPEDA applies only to federally regulated companies, like banks, airlines, and telecommunications companies (see Chapter 17). Regulates the collection and disclosure of personal information that could disclose information about the employee, including contact information and images. Employers may collect information about employees if a “reasonable person” would consider it appropriate in the circumstances. Often the employer requires employee consent to collect and disclose personal information, but the statutes create some exceptions to this.
Complaint filed with a privacy commissioner, who investigates and issues a report; if either party is unhappy with the report, they can bring an action in federal court
Alberta, British Columbia, and Quebec have enacted their own similar legislation that applies to provincially regulated employers
Regulatory Regime: Human Rights Legislation
All jurisdictions
It is unlawful for employers to rely on some types of personal information related to “prohibited grounds” in making employment-related decisions. For example, an employer cannot ask a job applicant about their religion or marital status and cannot consider those characteristics in decision making.
Complaint filed under human rights legislation
Common Law Regime: Tort of “Intrusion upon Seclusion”
So far, this tort has been recognized by courts in Ontario, Manitoba, and Nova Scotia, but other provinces may follow
Tort applies when an employer intentionally violates an employee’s privacy at work “without lawful justification” if the intrusion is highly offensive and would cause distress, humiliation, or anguish to a reasonable person.
Lawsuit in court alleging the tort was committed
Common Law Regime: Contracts
All jurisdictions
An expressed or implied contract term may protect employee privacy.
Lawsuit in court for breach of contract
Collective Bargaining Regime: Labour Arbitration Law
All jurisdictions, in unionized workplaces
Arbitrators have recognized an implied right of privacy in arbitration case law. Employers must justify any intrusion on employee privacy with reference to pressing business concerns that outweigh employee privacy concerns.
Grievance filed under the collective agreement that, if not settled, would be litigated before a labour arbitrator
Before we delve into a discussion of workplace privacy law in Canada, it is useful to consider how technology, which is often central to concerns about privacy, has affected the legal protection of privacy interests (see Box 26.1).
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Chapter 26 Privacy Law at Work 425
BOX 26.1 » TALKING WORK LAW Emerging Issues in Technology and Privacy Historically, one of the main drivers of privacy law has been the rise of technologies that can be used (or abused) to intrude upon private life. Consider the ever-increasing development and use of surveillance and communications technologies with privacy-invasive potential: video monitoring, listening devices, voice recognition, and global positioning systems, to name just a few. Today, aerial drones are available and affordable, allowing users to fly over their neighbours and “spy” on them from the sky. What will be next? Ask yourself: Does privacy exist in modern society, when everything an individual says and does can be monitored, recorded, and disseminated globally on the Internet? Or is the legal protection of privacy more important and urgent than ever before? Given the availability and affordability of these technologies, to what extent should an employer be permitted to monitor employees? The rise of social media (Facebook, Twitter, etc.) presents additional legal challenges. Prior to the widespread use of social media, an author could only publish information to a relatively narrow audience. Today, any posting on social media
can “go viral” and potentially reach hundreds of millions of people. Ask yourself: Does privacy exist in social media? Can an individual have any expectation of privacy in anything they put on the Internet? Or is privacy lost the moment an individual engages with social media? How should the law respond? Should the law permit an employer to rely on information posted by an employee on social media as justification for discipline or termination of employment? Modern workplaces provide employees with ready access to technologies that can be used to enhance productivity and the work experience but that can also threaten privacy. Ask yourself: How important is it for an employer to have clear policies concerning the proper use of technology at work? What should be included in such a policy? These are just some of the difficult questions that arise in relation to the modern challenge of governing privacy in the workplace.
II. Privacy Legislation in Canada As noted in the introduction, Canada has a loose patchwork of privacy legislation. Some provinces have enacted privacy legislation applicable to the workplace, but most have not. In those provinces that do not have stand-alone privacy legislation, other statutes may indirectly regulate aspects of workplace privacy, and tort and contract law also may play a minor role in protecting privacy interests (as we will see below). The federal government has enacted legislation that affects some aspects of workplace privacy, but that law applies only to federally regulated employers.
A. Provincial Privacy Acts Several provinces (British Columbia, Saskatchewan, Manitoba, Newfoundland and Labrador, and Quebec) have created a tort of invasion of privacy through their privacy legislation.2 That legislation filled a void in the common law since, until recently, Canadian courts resisted recognizing a general tort of invasion of privacy (as we will discuss below, recent significant movement in that direction has been made).3 For example, British Columbia’s Privacy Act includes a provision for “violation of privacy actionable”: 1(1) It is a tort, actionable without proof of damage, for a person, wilfully and without a claim of right, to violate the privacy of another. (2) The nature and degree of privacy to which a person is entitled in a situation or in relation to a matter is that which is reasonable in the circumstances, giving due regard to the lawful interests of others.
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426 Part III The Regulatory Regime (3) In determining whether the act or conduct of a person is a violation of another’s privacy, regard must be given to the nature, incidence and occasion of the act or conduct and to any domestic or other relationship between the parties. (4) Without limiting subsections (1) to (3), privacy may be violated by eavesdropping or surveillance, whether or not accomplished by trespass.4
That provision, and similar language in other provincial privacy legislation, creates a tort of privacy that enables an employee to sue their employer in court for alleged invasion of privacy. Damages for infringement of the tort are assessed in accordance with the rules of tort damages discussed in Chapter 16. Note that privacy legislation does not necessarily restrict the right of an employer to conduct surveillance or to search an employee or an employee’s locker, work computer, or even personal belongings. The courts will weigh the “reasonableness” of the employer’s actions against the employee’s privacy interests, considering also whether the employee would have a reasonable expectation of privacy in the circumstances. For example, in Richardson v. Davis Wire Industries Ltd., a BC court ruled that the Privacy Act was not violated when the employer relied on videotape evidence of an employee sleeping on the job in its defence to a wrongful dismissal lawsuit.5 The court found that the employee had no expectation of privacy in the area where the camera was placed. It also noted that even if the camera were a violation of the Privacy Act, the images it recorded would have been admissible in the wrongful dismissal lawsuit, since the legislation “merely provides the foundation for a claim in tort and does not prohibit the admission of evidence.”6
B. Federal Information Privacy Law: The Federal Personal Information Protection and Electronic Documents Act The federal Personal Information Protection and Electronic Documents Act (PIPEDA)7 introduced information privacy law to the federally regulated private sector in 2001, but it expressly does not apply to provincially regulated employment relationships.8 PIPEDA only applies to federally regulated private employers (both unionized and non-unionized), such as banks, airlines, railways, and telecommunications companies (see the discussion of jurisdiction in Chapter 17). A provincially regulated employer is impacted by PIPEDA only to the extent that the province in question has enacted substantially similar legislation—and only British Columbia, Alberta, and Quebec have done so.9 It remains the case today, as in 2001, that provincially regulated private sector employers in the other seven provinces are not subject to information privacy legislation. PIPEDA, like the substantially similar provincial laws, regulates “personal information” about an individual, which is defined as “information about an identifiable individual, but does not include the name, title or business address or telephone number of an employee of an organization” (i.e., basic business card information). “Personal information” is a broad concept and generally includes any information related to an individual that could be used directly or indirectly to identify the individual, including video and photographs. The regulatory framework of PIPEDA is built on two fundamental and sometimes conflicting principles: (1) reasonableness and (2) consent. Hence, section 5(3) of PIPEDA states “[a]n organization may collect, use or disclose personal information only for purposes that a reasonable person would consider are appropriate in the circumstances (emphasis added).”10 Section 7(1) then adds that “an organization may collect personal information without the knowledge or consent of the individual only if ” certain exceptions apply.11 Even if an individual consents to the collection of personal information, no exception appears in PIPEDA that would allow collection, use, or disclosure of personal information to occur in unreasonable circumstances. PIPEDA is uniquely structured because many of its key legal standards are found in a schedule
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Chapter 26 Privacy Law at Work 427
to the statute.12 This schedule sets out ten privacy principles that were developed by the Canadian Standards Association: 1. Accountability. 2. Identifying purposes. 3. Consent. 4. Limiting collection. 5. Limiting use, disclosure, and retention. 6. Accuracy. 7. Safeguards. 8. Openness. 9. Individual access. 10. Challenging compliance. PIPEDA establishes a process for individuals to make complaints to a privacy commissioner about alleged privacy invasions.13 Upon receipt of the complaint, the privacy commissioner may decide to conduct an investigation.14 In the course of an investigation, the privacy commissioner has considerable powers, including the power to receive evidence, summon witnesses, demand disclosure of documents, and enter premises.15 Following an investigation, the privacy commissioner is required to report back to the parties with findings and recommendations.16 The privacy commissioner has no ability to issue binding decisions and orders; it is up to the parties to either accept or reject the findings and recommendations. If a complainant is dissatisfied with the outcome at this stage, then section 14 of PIPEDA allows for an application to the Federal Court for a hearing. This hearing is not an appeal or a judicial review of the privacy commissioner’s findings and recommendations. It is a trial de novo—a new trial—in the Federal Court. In numerous cases, the Federal Court has disagreed with the privacy commissioner’s assessment of the issues. One such case is described in Box 26.2. Another is Turner v. Telus Communications Inc.,17 which dealt with the difficulties of applying the above-noted consent requirement in a unique workplace context. In Turner, a small group of employees refused to consent to the employer’s collection of their voice prints for use in a voice-recognition security system. The employer’s purpose for collecting the information (security, efficiency, and cost effectiveness) was found by the privacy commissioner to be reasonable in the circumstances and, therefore, the employer did not need the consent of the employees in question. The Federal Court of Appeal, while agreeing that the employer was acting reasonably and even laudably, found that the employees nevertheless had the right under PIPEDA to refuse consent even if their refusal was objectively unreasonable or motivated by an improper purpose. Ultimately, the employer could not bypass the consent requirement to compel the employees to provide their voice prints. The Federal Court of Appeal suggested that the employer could take steps against holdout employees, such as reassignment or discipline, but that the question of whether such consequences would be an appropriate exercise of management’s rights is a matter for labour law and is beyond the reach of PIPEDA.
BOX 26.2 » CASE LAW HIGHLIGHT Video Surveillance of the Workplace Under PIPEDA Eastmond v. Canadian Pacific Railway 2004 FC 852 Key Facts: Canadian Pacific Railway (the employer) installed surveillance cameras in the mechanical facility area of its To-
ronto rail yard in response to theft and vandalism in the yard. The privacy commissioner found that the security benefit to the employer was outweighed by the intrusion into employees’ privacy because (1) there was an absence of statistics to show a demonstrable need for the cameras, and (2) the cam-
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428 Part III The Regulatory Regime eras could have an adverse psychological effect on employees who felt that being filmed while working in the Toronto yard was an invasion of privacy. When the employer persisted with the cameras, the employees requested a hearing before the Federal Court. Issue: Was the installation of video surveillance cameras acceptable under PIPEDA because a “reasonable person” would consider the cameras appropriate in the circumstances due to concerns over theft and vandalism? Decision: Yes. The Federal Court disagreed with the privacy commissioner, finding that a reasonable person would consider the use of the cameras to be appropriate in the circumstances. The Federal Court based its decision on the fact that the cameras were not surreptitious and the collection of personal information was not continuous. The video footage was
deleted after 96 hours and was only reviewed if a security incident was reported. The Federal Court found that the security and deterrence purposes of the employer outweighed the relatively minor privacy interests of employees whose images might be recorded while working in the rail yard. In addition, the employees’ consent was not required to record their images because the exception for personal information “collection without knowledge or consent” in section 7(1)(b) of PIPEDA applied. That section eliminates the need for an employer to seek consent when doing so “would compromise the availability or the accuracy of the information and the collection is reasonable for purposes related to investigating a breach of an agreement or a contravention of the laws of Canada.” Since the video was intended to record theft or vandalism, a requirement to obtain the consent of the people being watched would compromise the purpose of the recording.
Recently, the federal government amended PIPEDA to remove the requirement to obtain consent for the collection, use, or disclosure of personal information “necessary to establish, manage or terminate an employment relationship” and information “produced by the individual in the course of their employment, business or profession.”18 In its submission to the Senate Standing Committee on Transport and Communications with respect to these amendments, the Office of the Privacy Commissioner of Canada recognized the challenge of obtaining meaningful consent in a workplace environment given the unequal bargaining power of employers and employees. It also noted that removing the requirement to obtain consent would be sensible given that several other important protections under PIPEDA (i.e., ones limiting the collection, use, and disclosure of information) would continue to apply.19 The passage of these amendments effectively resolves the challenge of obtaining consent from employees in circumstances like those raised in Turner v. Telus Communications Inc. In the future, the analysis of a federally regulated employer’s request for personal information will be focused on the “reasonableness” of the request. The PIPEDA amendments applicable to employment bring the federal sector in line with Alberta and British Columbia, where information privacy laws have specific provisions permitting employers to collect personal information from employees without their consent as long as the collection is reasonable and employees have prior notice. For example, section 15(1) of Alberta’s Personal Information Protection Act states: 15(1) An organization may collect personal employee information about an individual without the consent of the individual if (a) the information is collected solely for the purposes of (i) establishing, managing or terminating an employment or volunteer-work relationship, or (ii) managing a post-employment or post-volunteer-work relationship, between the organization and the individual, (b) it is reasonable to collect the information for the particular purpose for which it is being collected, and (c) in the case of an individual who is a current employee of the organization, the organization has, before collecting the information, provided the individual with reasonable notification that personal employee information about the individual is going to be collected and of the purposes for which the information is going to be collected.20
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Chapter 26 Privacy Law at Work 429
BOX 26.3 » TALKING WORK LAW What Kinds of Privacy Are Protected in the Workplace? Four different types of privacy interests have been recognized in Canadian law as worthy of protection in the workplace context: 1. Corporeal privacy: the bodily integrity of an employee, including bodily fluids and images captured by photographs and video cameras 2. Territorial privacy: places inside or outside the workplace that are considered private, such as washrooms, change rooms, lockers, and the home 3. Temporal privacy: off-duty hours (including breaks) when an employee is entitled to be free of intrusions 4. Informational privacy: information about an employee (often collected through an intrusion upon the first
three privacy interests) that is irrelevant to the proper administration of the employment relationship A workplace policy or practice could intrude upon several of these privacy interests at the same time. For example, workplace drug testing impacts corporeal privacy (since an employee must provide a bodily fluid for the test), temporal privacy (since the testing could relate to the use of substances during off-duty hours), and informational privacy (since the results of the testing could provide information about an employee’s use of drugs and even suggest that the employee is disabled by reason of drug addiction).
While such provisions may seem at first glance to be less protective of employee privacy because they permit information collection without consent, an approach to workplace privacy based on an overall reasonableness assessment could provide a better framework to balance competing employer and employee interests. This approach is also more consistent with the balancing approach to human rights generally in Canada, as exemplified by section 1 of the Canadian Charter of Rights and Freedoms.
C. Human Rights Statutes and Privacy As discussed in Chapter 22, every jurisdiction in Canada has human rights legislation that protects individuals from discrimination in employment on the basis of prohibited grounds such as race, sex, and disability.21 While the courts and labour arbitrators (in the unionized setting) can take jurisdiction over human rights issues (e.g., in wrongful dismissal litigation or in grievance arbitrations), each jurisdiction’s human rights tribunal has the authority to adjudicate complaints of employer discrimination from both employees and job applicants. Although privacy is not directly protected by human rights statutes, these laws can offer important indirect protection of individual privacy interests. A number of privacy-related issues implicate an employer’s obligations under human rights legislation. For example, the collection of private information (e.g., an employee’s marital status, religion, or sexual orientation) by an employer or a potential employer may reveal facts about an individual that relate to prohibited grounds of discrimination. Insofar as an employer relies on this information in its decision making, it risks running afoul of human rights legislation. And as discussed in Chapter 22, human rights legislation prohibits employers from soliciting from employees and job applicants some information pertaining to prohibited grounds. For example, in Thompson v. Selective Personnel, the Ontario Human Rights Tribunal ordered an employer to pay a job applicant $3,000 as damages for illegally asking the applicant if she had ever received psychiatric care.22 Sometimes human rights legislation permits (or may require) employers to request information from employees or job applicants about prohibited grounds, but it also imposes restrictions on what the employer can do with that information. For example, as we discussed in Chapter 23, employers have a duty to accommodate an employee with a disability up to the point of undue hardship.23 This duty imposes obligations on both the employer and employee to participate in an accommodation process, which extends to the sharing of information about the dis-
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430 Part III The Regulatory Regime ability to facilitate an appropriate accommodation. An employer is entitled to request such medical information as is necessary for it to fulfill its duty to accommodate. Recall as well our discussion of drug and alcohol testing under human rights law from Chapter 23 (and the case of Entrop v. Imperial Oil Limited). By finding that human rights legislation restricts the right of employers to mandate employees to submit to drug and alcohol testing, the courts have effectively protected employees’ privacy interests. Individuals have significant privacy interests in the protection of their bodily integrity and in the medical information that could be gleaned from an analysis of their bodily fluids, such as blood or urine. If privacy itself were to be characterized and protected as a human right in Canada, then an employer would likely be prohibited from collecting such private information about an individual, particularly if it would involve invading the individual’s body or a private space, such as the individual’s home. Currently, human rights legislation in Canada prevents employers from discriminating against an employee or applicant on the basis of information that has been obtained relating to a prohibited ground and, as demonstrated in Entrop, may indirectly provide protection of individual privacy in some circumstances by discouraging or prohibiting employers from collecting such information in the first place.
III. The Common Law and Privacy at Work Until recently, as noted earlier, the common law had very little to say about privacy at work. When we considered common law torts in Chapter 16, we left out any discussion of privacy. However, a limited common law right to privacy has emerged in recent jurisprudence.
A. Tort Law In the landmark 2012 case of Jones v. Tsige (see Box 26.4), the Ontario Court of Appeal held that individuals should be permitted to sue others at common law for wrongfully invading their privacy. The court called this new tort “intrusion upon seclusion.”24 Prior to Jones, persons whose privacy had been invaded by a private actor had no formal recourse in Canadian tort law.25
BOX 26.4 » CASE LAW HIGHLIGHT A New Tort of Intrusion upon Seclusion Jones v. Tsige 2012 ONCA 32
Decision: The court’s decision addressed the three questions in turn:
Key Facts: The plaintiff (Jones) and the defendant (Tsige) did not know each other personally but worked at different locations of the same bank. Tsige, who was in a common law relationship with the plaintiff’s former husband, reviewed Jones’s banking records at least 174 times over a four-year period. Tsige claimed that she accessed Jones’s banking records to determine whether her partner, Jones’s former husband, was paying child support. Tsige was disciplined by the bank for having accessed the records without a legitimate reason. Significantly, the bank was not named as a defendant in the lawsuit.*
1. The court recognized a new common law tort for breach of privacy and called it a right of action for “intrusion upon seclusion.” In its analysis and consideration of the right to privacy, the court found that Charter jurisprudence afforded constitutional protection to the right to privacy and characterized privacy as a Charter value.† In general, the Supreme Court of Canada has acted to develop the common law in a manner consistent with Charter values, even though the Charter does not apply to disputes between private parties. The court noted that the recognition of a right to privacy as underlying specific rights under the Charter in combination with the principle that the common law should be developed in a manner consistent with Charter values provides support for the recognition of a civil action for
Issues: (1) Should the court recognize a new tort for breach of privacy? (2) If yes, what are the elements of the tort? (3) What remedies should be available?
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Chapter 26 Privacy Law at Work 431 damages for invasion of privacy.‡ As a further justification for recognizing the new tort, the court also noted the threat to privacy posed by rapid technological change. 2. To establish the tort of “intrusion upon seclusion” a plaintiff must demonstrate the following three elements: (a) the conduct was intentional (this includes situations in which the plaintiff demonstrates that the defendant was reckless); (b) an invasion took place into the plaintiff’s private affairs or concerns without lawful justification; and (c) the invasion was highly offensive, such that it would have caused distress, humiliation, or anguish to a reasonable person.
of intrusion upon seclusion. The maximum amount available is $20,000. To provide an indication of how the damages are applied, in this case Jones experienced an invasion of her privacy that the court characterized as “highly offensive” and “shocking” and was awarded $10,000. * It is likely that the bank was not named in the lawsuit because the plaintiff determined that vicarious liability would not apply to the bank in the circumstances of this case, potentially because the bank had disciplined the defendant for her conduct. † Jones v. Tsige at para 43, quoting Hill v. Church of Scientology of Toronto, [1995] 2 SCR 1130 at para 121; and R v. O’Connor, [1995] 4 SCR 411 at para 113. ‡ The decision cites J.D.R. Craig, “Invasion of Privacy and Charter Values: The Common Law Tort Awakens” (1997) 42 McGill LJ 355.
3. The court established a cap on general damages available to individuals who successfully establish the tort
The Jones case represents a significant legal development for individuals who have had their privacy invaded. In the workplace context, the new tort is available to non-unionized private sector employees whose employers are provincially regulated and are not already subject to privacy legislation. However, restrictions placed by the court on the application of the tort will likely limit its application. For example, the tort is only available when a deliberate and significant invasion of privacy has taken place that would be “highly offensive” to a reasonable person.26 This means that a person who is overly sensitive or unreasonably concerned about their privacy will fail to meet the elements of the tort. The court also noted that the right to privacy may have to be balanced against competing claims or interests, such as freedom of expression and freedom of the press.27 The right to privacy, while important, may not always trump a competing interest. In cases where a competing interest is alleged to justify an invasion of privacy, the court will engage in a “reasonableness” analysis that will balance the interests in the situation. Finally, the court limited the amount of general damages available for intrusion upon seclusion to $20,000. Since privacy interests are intangible—that is, they have no obvious monetary value—the damages for the tort will be modest unless the plaintiff can demonstrate an actual monetary loss.28 Significantly, while the court in Jones acknowledged that the defendant’s conduct was “highly offensive” and “shocking,” the plaintiff was only entitled to $10,000 in general damages. Given that the tort is still relatively new and not many cases exist to provide guidance on the quantum of damages, it is difficult to estimate how a court will award damages in a particular case. The court’s cap on damages discourages plaintiffs from commencing litigation over trivial invasions of privacy given that the likelihood of a monetary windfall is low, but it may also discourage plaintiffs from commencing litigation over meritorious cases given the costs—both financial and otherwise—of litigation. Notably, there appears to be considerable potential for new causes of action to be recognized based on the common law protection of privacy. In Doe 464533 v. N.D, the plaintiff ’s ex-boyfriend allegedly shared sexually explicit images of her on a pornographic website. The court found this to be tortious, recognizing a new aspect of the privacy tort, “public disclosure of private facts”: One who gives publicity to a matter concerning the private life of another is subject to liability to the other for invasion of the other’s privacy, if the matter publicized or the act of the publication (a) would be highly offensive to a reasonable person, and (b) is not of legitimate concern to the public.29
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432 Part III The Regulatory Regime The 2018 decision of the Ontario Superior Court, Jane Doe 72511 v. Morgan similarly concerned the unauthorized posting of sexually implicit images of the plaintiff on a pornographic website. The court essentially restated the test from the previous Jane Doe case, finding that the plaintiff had to prove that: (a) the defendant publicized an aspect of the plaintiff ’s private life; (b) the plaintiff did not consent to the publication; (c) the matter publicized or its publication would be highly offensive to a reasonable person; and (d) the publication was not of legitimate concern to the public.30 Given the severity of the particular privacy invasion at issue, the court determined that the $20,000 compensation limit from Jones would not apply. Instead, the court awarded the plaintiff $50,000 in general damages, $25,000 in aggravated damages, and $25,000 in punitive damages. A class action could provide non-unionized, private sector employees in Ontario with a costeffective approach to enforcing their privacy rights in some circumstances. Where the privacy of numerous individuals has been intruded upon in a similar manner, those individuals could attempt to have the court certify a lawsuit as a class action.31 A class action is less expensive and more efficient overall than individual lawsuits. The Ontario Superior Court of Justice recently certified a class action that in part claimed damages for a breach of the plaintiffs’ privacy rights through the tort of intrusion upon seclusion.32 This case, which addresses the potential vicarious liability of an employer for an employee’s breach of customers’ privacy, demonstrates that the class action could be used to assert workplace privacy rights. It is possible that in the future we will see class actions certified in cases where an employer has collected or accessed information from all or a number of its employees in a manner that allegedly violates their common law right to privacy.
B. Contract Law A right to privacy in employment may also exist, indirectly, in contract law. In Colwell v. Cornerstone Properties Inc., the employer secretly installed a video camera in the office of a manager.33 When the employee learned of the camera several months later, she was informed by the employer that it was installed to detect thefts by other employees. The employee did not believe that explanation and felt her personal privacy had been violated. She sought medical assistance for stress and was prescribed sedative drugs. One month after learning of the camera, she quit and sued for constructive dismissal. As we learned in Chapter 13, a constructive dismissal involves a fundamental breach of the employment contract by the employer that the employee treats as having terminated the contract. The court noted that Ontario does not have privacy legislation, and that a general tort of invasion of privacy did not exist. Therefore, “employment law” in relation to privacy must “be directed at contract rather than tort.”34 In the Colwell case, the court ruled that the installation of the camera violated “an implied term at the time the contract was entered into, that each party would treat the other in good faith and fairly, throughout the existence of the contract.”35 Secretly installing a camera in the employee’s office violated that term and amounted to a constructive dismissal. The employee was awarded damages based on seven months’ notice. class action: A lawsuit in which a group of people join together and act as one common plaintiff on the basis that they all allege to have suffered the identical or a similar legal wrong at the hands of the same defendant. A class action must be approved by a court before it can proceed. constructive dismissal: A fundamental change to an employment contract by an employer that an employee may treat as an effective termination of the contract.
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Chapter 26 Privacy Law at Work 433
IV. Privacy in the Unionized Workplace Part IV is concerned with the law of the unionized workplace. However, it makes sense to deal with privacy in the unionized setting in this chapter on privacy at work. It is important to understand that the legal protection of privacy differs between unionized and non-unionized employees, with the former enjoying generally stronger and better-developed privacy rights. In a unionized workplace, a collective agreement governs the terms and conditions of employment for the members of the bargaining unit. When a dispute arises between the employer and the union concerning the interpretation or application of the collective agreement that the parties cannot settle on their own, the dispute is often resolved by a labour arbitrator. Disputes involving workplace privacy issues have often been raised by unions and dealt with through labour arbitration hearings. In fact, hundreds of arbitration decisions have been made on workplace privacy issues, such as the right of an employer to search employee lockers and bags, engage in video surveillance of employees inside and outside the workplace, monitor employee computers, and require employees to take drug and alcohol tests. Usually, these decisions have been concerned with the “reasonableness” of policies implemented unilaterally by the employer. We will learn in Part IV that, in the unionized setting, employers generally have the right to manage the workplace as they deem fit, subject to three important provisos: (1) the employer must act in accordance with the law; (2) the employer cannot violate the express collective agreement terms; and (3) the employer must not implement rules or policies that are “unreasonable.” Many grievances that involve allegations of employer invasion of employee privacy challenge the employer’s actions as being unreasonable.36 For example, arbitrators have struck down as unreasonable many employer searches of employee property, including lunchboxes and clothing, unless evidence exists that justifies a real suspicion of theft.37 Video surveillance at a unionized workplace has been struck down as unreasonable unless the employer can demonstrate a legitimate business reason for the surveillance (e.g., a serious theft problem), that the surveillance was carried out in a reasonable and non-discriminatory manner, and that no other lessintrusive options that do not impinge as greatly on employee privacy were available to deal with the problem.38 Arbitrators have also held that a requirement for employees to provide fingerprints—such as in the case of security checks39 and for use in payroll and timekeeping systems40—is an unreasonable invasion of employee privacy. It is likely that future advances in technology that make biometric identification methods such as facial recognition, eye scanning, and voice prints increasingly available and affordable will be the subject of union grievances. A recent arbitration decision regarding a random alcohol- and drug-testing policy called Communications, Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp & Paper, Ltd. was appealed to the Supreme Court of Canada.41 The majority of the court discussed and endorsed the arbitration board’s view that privacy is fundamentally important and that privacyinvasive workplace policies may be unreasonable and invalid: [49] On the other side of the balance was the employee right to privacy. The board accepted that breathalyzer testing “effects a significant inroad” on privacy, involving coercion and restriction on movement. Upon pain of significant punishment, the employee must go promptly to the breathalyzer station and must co-operate in the provision of breath samples. … Taking its results together, the scheme effects a loss of liberty and personal autonomy. These are at the heart of the right to privacy. [50] That conclusion is unassailable. Early in the life of the Canadian Charter of Rights and Freedoms, this Court recognized that “the use of a person’s body without his consent to obtain information about him, invades an area of personal privacy essential to the maintenance of his human
collective agreement: A contract between an employer (or employers) and a trade union (or trade unions) that sets out the conditions of employment for a group of employees.
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434 Part III The Regulatory Regime dignity” (R. v. Dyment, 1988 CanLII 10 (SCC), [1988] 2 SCR 417, at pp. 431-32). And in R. v. Shoker, 2006 SCC 44 (CanLII), [2006] 2 SCR 399, it notably drew no distinction between drug and alcohol testing by urine, blood or breath sample, concluding that the “seizure of bodily samples is highly intrusive and, as this Court has often reaffirmed, it is subject to stringent standards and safeguards to meet constitutional requirements” (para. 23). [51] In the end, the expected safety gains to the employer in this case were found by the board to range “from uncertain … to minimal at best,” while the impact on employee privacy was found to be much more severe. Consequently, the board concluded that the employer had not demonstrated the requisite problems with dangerousness or increased safety concerns such as workplace alcohol use that would justify universal random testing. Random alcohol testing was therefore held to be an unreasonable exercise of management rights under the collective agreement. I agree.42
Significantly, however, although the Supreme Court recognized the importance of individual privacy at work, it nevertheless characterized privacy as a matter that can be subject to negotiation between the employer and the union, as the representative of the employees: Moreover, the employer is not only always free to negotiate drug and alcohol testing policies with the union, as was said in Nanticoke, “such an extraordinary incursion into the rights of employees must be expressly and clearly negotiated” (para. 101 (emphasis added)). But where, as here, the employer proceeds unilaterally without negotiating with the union, it must comply with the timehonoured requirement of showing reasonable cause before subjecting employees to potential disciplinary consequences. Given the arbitral consensus, an employer would be justifiably pessimistic that a policy unilaterally imposing random alcohol testing in the absence of reasonable cause would survive arbitral scrutiny.43
The result in this case demonstrates that unionized employees may have stronger privacy protections than non-unionized employees because the employer must act reasonably (and invading privacy would be unreasonable in many cases). However, it is notable that even the privacy of unionized employees may be negotiated away by their union.
V. Recent Case Law Related to Privacy and “Reasonableness” From the foregoing, we can see that the concept of “reasonableness” is central to the analysis of privacy rights under provincial privacy acts, information privacy laws like PIPEDA, the common law privacy tort, and collective agreements. The recent decision of the Supreme Court in R v. Jarvis is therefore notable.44 There, the court interpreted the meaning of “reasonable expectation of privacy” in the context of a criminal provision (voyeurism), but set down general principles that may be influential in assessing the reasonableness of an alleged privacy invasion in different contexts, including in the workplace. In particular, the court provided the following non-exhaustive list of considerations that may assist an adjudicator in determining whether the subject of an alleged privacy violation was in circumstances that give rise to a reasonable expectation of privacy: (1) The nature of the location where the alleged privacy violation occurred; (2) The nature of the impugned conduct (for example, recording a person is more intrusive on privacy than mere observation); (3) Whether the subject was aware of, or consented to, the impugned conduct; (4) The manner in which the alleged privacy invasion occurred (for example, was technology involved and, if so, what technology?); (5) The subject matter or content of the alleged privacy violation; (6) Any rules, regulations, or policies that governed the observation or recording in question; (7) The relationship between the subject and the person who allegedly violated the subject’s privacy;
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Chapter 26 Privacy Law at Work 435
(8) The purpose underlying the alleged privacy violation; and (9) The personal attributes of the subject (for example, was the subject a child or otherwise vulnerable?). In future cases, adjudicators can be expected to look at these considerations in assessing whether privacy has been violated in a particular circumstance.
VI. Chapter Summary The laws regulating workplace privacy attempt to strike a reasonable balance between the privacy rights of employees (including the right to be free from surveillance and searches and disclosure of private information) and the legitimate business interests of the employer (including improving efficiency and safety and preventing theft and vandalism). This chapter has demonstrated that Canadian law regulates privacy through a complicated mix of statutory and common law rules. As a result, the manner in which the law strikes a balance between employee and employer interests can vary from workplace to workplace and jurisdiction to jurisdiction. Privacy law is an evolving legal field, and there is no doubt that advancements in technology will pose challenges for this area of law.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Briefly explain the various legal sources of employee privacy protection in Canada. 2. What types of privacy interests are protected by the legal sources of employee privacy protection in Canada? 3. Do you agree with the decision of the privacy commissioner or the decision of the Federal Court in Eastmond v. Canadian Pacific Railway (see Box 26.2)? Briefly explain your reasoning. 4. Is the tort of intrusion upon seclusion an effective deterrent for an employer considering the implementation of measures or technology that potentially impact employees’ privacy interests? Briefly explain your reasoning. 5. Should unionized and non-unionized employees enjoy the same privacy protection? Briefly explain your reasoning.
APPLYING THE LAW Victor works in an entry-level position at ABC Co., which operates in Ontario and British Columbia, is provincially regulated, and is non-unionized. Aside from his day job, Victor is also active on a popular social networking site, Outstagram, where he shares numerous photos and videos of himself on a daily basis with his 3,000 followers. Shortly after starting employment at ABC Co., Victor’s manager asked him for his personal phone number and told him to download a specific app to his phone, explaining that this was required so that the company could easily contact him in an emergency. During the next few months, Victor noticed his phone operating much slower than usual and brought it to an expert to be repaired. Upon investigation, Victor was informed that data from his phone was being downloaded by two other accounts through the special app installed on his phone. One of the accounts, which was only downloading Victor’s photos from his phone, was traced to his manager. Victor reported this to ABC Co., which fired his manager for cause.
Victor learned that the second account was linked to ABC Co.’s compliance department, which was investigating him for insider trading at the instruction of the head of the compliance department. ABC Co. provided Victor with a copy of a redacted whistleblower report, which contained bald and unparticularized allegations accusing Victor of insider trading. Aside from the whistleblower report, there was no other basis for ABC Co. to investigate Victor. Ultimately, it was determined that Victor had not engaged in any insider trading. 1. Assuming that Victor and his manager both reside in the province of Ontario, can Victor successfully bring a civil action against his manager? If so, what is the likely outcome? Can Victor successfully bring a civil action against ABC Co. regarding his manager’s conduct? 2. Assuming that Victor resides in the province of British Columbia and is currently working in ABC Co.’s branch in British Columbia, can Victor successfully bring a civil action against ABC Co.? If so, what is the likely outcome?
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436 Part III The Regulatory Regime
NOTES AND REFERENCES 1. Jones v. Tsige, 2012 ONCA 32. 2. See British Columbia’s Privacy Act, RSBC 1996, c. 373; Saskatchewan’s Privacy Act, RSS 1978, c. P-24; Manitoba’s Privacy Act, CCSM c. P-125; and Newfoundland and Labrador’s Privacy Act, RSNL 1990, c. P-22. Quebec has also included privacy as an offence against the law in the Civil Code of Québec, CQLR c. C-1991. 3. On the common law’s recognition (or lack thereof) of a tort of privacy, see the discussion in Jones v. Tsige, supra note 1 at para 15; and Ontario (Attorney General) v. Dieleman, 1994 CanLII 7509 (Ont. Sup Ct J). 4. BC’s Privacy Act, supra note 2, s. 1. 5. Richardson v. Davis Wire Industries Ltd., 1997 CanLII 4221 (BCSC). 6. Ibid. at para 48. 7. Personal Information Protection and Electronic Documents Act, SC 2000, c. 5 (“PIPEDA”). 8. Ibid., s. 4(1)(b). 9. See Alberta’s Personal Information Protection Act, SA 2003, c. P-6.5; British Columbia’s Personal Information Protection Act, SBC 2003, c. 63; and Quebec’s An Act Respecting the Protection of Personal Information in the Private Sector, CQLR c. P-39.1. 10. PIPEDA, supra note 7, s. 5(3).
19. Office of the Privacy Commissioner of Canada, “Bill S-4, An Act to amend the Personal Information Protection and Electronic Documents Act and to make a consequential amendment to another Act: Submission to the Senate Standing Committee on Transport and Communications” (2014), online: . 20. Alberta’s Personal Information Protection Act, supra note 9, s. 15(1). 21. See, for example, Ontario’s Human Rights Code, RSO 1990, c. H.19, s. 5. 22. Thompson v. Selective Personnel, 2009 HRTO 1224. See also Alberta Human Rights Act, RSA 2000, c. A-25.5, s. 8(1) as an example of a statutory prohibition on employers soliciting personal information related to prohibited grounds from job applicants. 23. Ontario’s Human Rights Code, supra note 21, s. 17. 24. Jones v. Tsige, supra note 1. 25. A number of prior Ontario cases regarding workplace privacy disputes suggested that a common law privacy tort could be available: Somwar v. McDonald’s Restaurants of Canada Ltd., 2006 CanLII 202 (Ont. Sup Ct J); and ShredTech Corp. v. Viveen, 2006 CanLII 41004 (Ont. Sup Ct J). 26. Jones v. Tsige, supra note 1 at para 72.
11. Ibid., s. 7(1).
27. Ibid. at para 73.
12. Ibid., s. 5(1) and Schedule 1. 13. Ibid., s. 11. Unionized employees in federally regulated workplaces can assert PIPEDA claims to arbitrators under the applicable collective agreement grievance process. 14. Ibid., s. 12. 15. Ibid., s. 12.1. 16. Ibid., s. 13. 17. Turner v. Telus Communications Inc., 2005 FC 1601; appealed to the Federal Court of Appeal in Wansink v. Telus Communications Inc., 2007 FCA 21. 18. Bill S-4, An Act to amend the Personal Information Protection and Electronic Documents Act and to make a consequential amendment to another Act, SC 2015, c. 32 (also referred to as the Digital Privacy Act) was passed into law on June 18, 2015. Bill S-4 also contains two other employment-related amendments: (1) the clarification that PIPEDA applies to the personal information of an applicant for employment with a federally regulated employer and (2) that PIPEDA does not apply to business contact information when it is used solely for the purpose of communicating or facilitating communication with the individual in relation to their employment, business, or profession. The Office of the Privacy Commissioner supported these amendments.
28. Ibid. at para 71. In McIntosh v. Legal Aid Ontario, 2014 ONSC 6136, a plaintiff was found to be entitled to $7,500 in general damages after the defendant (an employee of Legal Aid Ontario) improperly accessed the plaintiff ’s legal aid file in a situation involving domestic issues. The defendant improperly used the information from the legal aid file to make a complaint to the Children’s Aid Society. 29. Doe 464533 v. N.D., 2016 ONSC 541 at para 46. 30. Jane Doe 72511 v. Morgan, 2018 ONSC 6607. 31. A class action must be “certified” by the court before it can proceed. The requirements that must be met to achieve certification are outlined in the Class Proceedings Act, 1992, SO 1992, c. 6. 32. Evans v. The Bank of Nova Scotia, 2014 ONSC 2135. 33. Colwell v. Cornerstone Properties Inc., 2008 CanLII 66139 (Ont. Sup Ct J). 34. It is important to note that this case was decided prior to the finding of the Ontario Court of Appeal in Jones v. Tsige, supra note 1, which founded the tort of intrusion upon seclusion (see Box 26.4). 35. Ibid. 36. The “reasonableness” requirement has its roots in the seminal arbitration decision KVP Co. Ltd and Lumber &
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Chapter 26 Privacy Law at Work 437 Sawmill Workers’ Union, Local 2537 (1965), 16 LAC 73 (Robinson), which we will consider in Part IV. 37. See the discussion in M. Mitchnick & B. Etherington, Labour Arbitration in Canada (Toronto, ON: Lancaster House, 2006) at 215-16; Lornex Mining Corp. and USWA, Local 7619 (1983), 14 LAC (3d) 169 (Chertkow); and B. Bilson, “Search and Surveillance in the Workplace: An Arbitrator’s Perspective” in W. Kaplan, J. Sack, & M. Gunderson, eds, Labour Arbitration Yearbook (Toronto, ON: Lancaster House, 1992). 38. St. Mary’s Hospital (New Westminster) and HEU (1997), 64 LAC (4th) 382 (Larson); Lenworth Metal Products Ltd. and USWA, Local 3950 (1999), 80 LAC (4th) 426 (Armstrong); and Securicor Cash Services and Teamsters, Local 419, 2004 CanLII 55078 (Ont. LA) (Whitaker).
employees’ right to privacy trumped the employer’s need for reliable employees to handle mail, particularly in the absence of a specific power in the collective agreement to demand fingerprints and in circumstances where the employer could have made the provision of fingerprints a condition of hiring before the collective agreement applied to the individual employee. 40. IKO Industries Ltd. (2005), 140 LAC (4th) 393 (Tims); aff ’d 155 LAC (4th) 225 (Ont. Sup Ct J (Div Ct)). 41. Communications, Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp & Paper, Ltd., 2013 SCC 34. 42. Ibid. at paras 49-51. 43. Ibid. at para 53. 44. R v. Jarvis, 2019 SCC 10.
39. Canada Post Corp. v. CUPW (1988), 34 LAC (3d) 392 (Bird). In this decision, the arbitrator found that the
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CHAP TER 27
Globalization and the Law of Work: International Labour Law and Trade Law LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 439 II. International Labour Law and the ILO 440 A. The Guiding Philosophy of the ILO 440 B. “Labour Is Not a Commodity” 441 C. What Does the ILO Do? 442 III. Trade Law 444 A. Direct Effects of Trade Agreements on Canadian Work Law 445 B. Indirect Effects of Trade Agreements on Canadian Work Law 448 IV. Chapter Summary 451 Questions and Issues for Discussion 451 Exercises 452 Notes and References 452
• Describe the origins and guiding philosophy of the International Labour Organization. • Explain the meaning and significance of the phrase “labour is not a commodity.” • Describe how the legal rules developed by the International Labour Organization have influenced Canadian law. • Identify trade agreements signed by Canada that include labour cooperation agreements. • Explain how trade laws can have both direct and indirect effects on Canadian work law. • Explain the meaning of “economic globalization” and discuss how it affects Canadian work law.
I. Introduction In this final chapter of Part III of the text, we step back and consider how Canada’s activities in the global community can influence the form and substance of Canadian laws governing work. We are concerned with two types of supranational laws: (1) international labour laws and (2) trade laws. As an active member country of the International Labour Organization (ILO), Canada has helped shape the development of internationally recognized core labour standards. By its participation at the ILO and its ratification of ILO Conventions, Canada has publicly promised to enact a set of work law standards. Some of the laws we have considered in the regulatory standards part of the text were originally enacted to comply with ILO obligations. The effect of Canada’s participation in global and regional trade agreements on our work laws is less obvious. None of the trade agreements to which Canada is a party include substantive obligations requiring Canada to enact (or repeal) specific work laws. However, trade agreements can nevertheless influence labour policy in Canada by shaping policy debates. In particular, by dismantling trade barriers, trade agreements make it more economically feasible for businesses to move from one jurisdiction to another in search of the most “business friendly” environments.
supranational law: Laws that transcend national borders and have application in more than one nation. 439
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440 Part III The Regulatory Regime This dynamic puts pressure on Canadian work laws and arms those political forces that would prefer Canada’s work laws to be weaker. In this way, trade agreements have had an important indirect effect on the trajectory of Canadian work law and policy debates. The effects of international law and trade laws (which are part of the broader legal subsystem) on the development of Canadian work laws provide a clear example of the external feedback loop explained in Chapter 2—these laws indirectly influence the substance and form of the laws that govern work in Canada in ways described in this chapter.
II. International Labour Law and the ILO Canada is a member country of the ILO, which is based in Geneva, Switzerland. The ILO is the central global institution responsible for promoting decent work laws around the world.1 It was formed in 1919 in the wake of World War I, and Canada has been deeply involved in the organization from the start.
A. The Guiding Philosophy of the ILO The preamble to the ILO’s founding constitution, which formed part of the Treaty of Versailles, explains the guiding philosophy of the organization: And whereas conditions of labour exist involving such injustice, hardship and privation to large numbers of people as to produce unrest so great that the peace and harmony of the world are imperilled; and an improvement of those conditions is urgently required: as, for example, by the regulation of the hours of work, including the establishment of a maximum working day and week, the regulation of labour supply, the prevention of unemployment, the provision of an adequate living wage, the protection of the worker against sickness, disease and injury arising out of his employment, the protection of children, young persons and women, provision for old age and injury, protection of the interests of workers when employed in countries other than their own, recognition of the principle of freedom of association, the organizaILO headquarters in Geneva. tion of vocational and technical education and other measures; Whereas also the failure of any nation to adopt humane conditions of labour is an obstacle in the way of other nations which desire to improve the conditions in their own countries; The High Contracting Parties, moved by sentiments of justice and humanity as well as by the desire to secure the permanent peace of the world, agree to the following: … .2
Several important points leap out from this preamble. First, the dominant theme is that decent working conditions are necessary to achieve justice, peace, and world harmony. Second, “regulation” is necessary to achieve decent working conditions; most of the areas in need of regulation appearing in the first paragraph have been covered in this text. And third, as indicated in paragraph two, the drafters believed that basic supranational labour standards are necessary to prevent a global race to the bottom in work laws. If one country could attract businesses by promising very weak or non-existent labour standards, and therefore very low labour costs, then this would create an obstacle for all other countries that wish to maintain decent working conditions.
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Chapter 27 Globalization and the Law of Work: International Labour Law and Trade Law 441
These core ideas were “reaffirmed” by the ILO in the wake of the atrocities of World War II. In 1944, the ILO adopted the Declaration of Philadelphia, now incorporated into the ILO Constitution.3 That document opened with the following statement of principles: The Conference reaffirms the fundamental principles on which the Organization is based and, in particular, that: (a) labour is not a commodity; (b) freedom of expression and of association are essential to sustained progress; (c) poverty anywhere constitutes a danger to prosperity everywhere; (d) the war against want requires to be carried on with unrelenting vigour within each nation, and by continuous and concerted international effort in which the representatives of workers and employers, enjoying equal status with those of governments, join with them in free discussion and democratic decision with a view to the promotion of the common welfare.
These are powerful claims that elevate labour rights to fundamental importance, and the ILO has remained an important global defender and promoter of strong work laws to this day.
B. “Labour Is Not a Commodity” The deceptively simple phrase “labour is not a commodity,” found in the ILO Constitution, has served as the rallying cry for generations of advocates for stronger work laws and collective bargaining rights throughout the world.4 It signals the powerful idea that workers, as human beings, are fundamentally different from other factors of production (such as office supplies and electricity) and that the law should recognize this distinction. Professor David Beatty (University of Toronto) examined the meaning of this phrase in an important 1979 article entitled “Labour Is Not a Commodity”: [R]eflecting the characterization of humans as, for the most part, doers and makers, the identity aspect of employment is increasingly seen to serve deep psychological needs. … It recognizes the importance of providing the members of society with an opportunity to realize some sense of identity and meaning, some sense of worth in the community beyond that which can be taken from the material product of the institution. … [E]mployment is seen as providing recognition of the individual’s being engaged in something worthwhile. … [E]mployment comes to represent the means by which most members of our community can lay claim to an equal right of respect and of concern from others. It is this institution through which most of us secure much of our self-respect and self-esteem.5
This passage has been quoted by the Supreme Court of Canada in support of decisions that have recognized a need for law to consider the social and psychological value of work, and not just its economic function. For example, in Lavigne v. Ontario Public Service Employees Union (which we will discuss in Part IV, the Supreme Court wrote: In the past, this Court has not approached labour matters from an exclusively economic perspective. For example, in Slaight Communications, supra, Dickson C.J. adopted the expression of Professor David Beatty that “labour is not a commodity.” … The idea that is meant to be captured by this expression is, I think, that the interests of workers reach far beyond the adequacy of the financial deal they may be able to strike with their employers. … [T]he Chief Justice made it clear that the interests of labour do not end at some artificial boundary between the economic and the political. He expressed the view that “[a] person’s employment is an essential component of his or her sense of identity, self-worth and emotional well-being” … and that viewing labour as a commodity is incompatible with that perspective.6
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442 Part III The Regulatory Regime The exercise at the end of this chapter encourages you to explore how the concept of “labour is not a commodity” has influenced the development of Canadian work law. The claim that labour is not a commodity clashes with core tenets of the neoclassical perspective. Recall from our discussion in Chapter 3 that neoclassical economics advocates that labour is indeed a commodity that should be left to the supply and demand of market forces.7 As the neoclassical perspective ascended in political discourse over the past 30 years, the ILO’s pursuit of strong work laws and effective regulation of labour markets came under attack by neoclassical-influenced economists and politicians as well as powerful employer organizations. This tension has played out most clearly within the ILO in a sustained attack by employers’ representatives at the ILO against the expansive right to strike, long recognized in ILO law. Employers have sought to pull back the scope of workers’ right to strike.8 In Canada, the tension between Canadian labour policy and ILO policy is demonstrated in a series of findings by ILO supervisory bodies that Canadian governments violated ILO doctrine by restricting collective bargaining rights and the right to strike.9 We will explore this tension again in Part IV.
C. What Does the ILO Do? Almost every country in the world is a member of the ILO; the organization has 187 member countries in all. The machinery and institutions of the ILO are quite complex, but here we can briefly describe the main points.10 A distinctive feature of the ILO, compared with other international governmental organizations, is its tripartite structure. Each member country sends four delegates to participate in its annual International Labour Conference in Geneva, where policies are discussed and debated and sometimes ILO Conventions and recommendations are adopted. The delegates for Canada include two government representatives, one representative of Canadian employers (selected by the Canadian Employers Council), and one representative of Canadian workers (selected by the Canadian Labour Congress, the umbrella organization for Canada’s national and international unions). By 2019, 190 Conventions had been adopted by the ILO, covering virtually every area of employment and work-related subject matter.11 A Convention adopted by the ILO has no immediate legal effect in Canada. Ratifying a Convention is like making a public promise: once Canada ratifies a Convention, its governments are expected to enact domestic legislation that gives effect to the principles stated in that Convention and to report to the ILO on progress toward effective implementation. Our courts cannot directly enforce and apply ILO Conventions to Canadian legal disputes. However, as explained in Box 27.1, ILO Conventions can influence how judges interpret Canadian laws. The federal government ratifies international Conventions on behalf of Canada, but as we learned in Chapter 17, most of work law falls within the jurisdiction of the provinces. Therefore, when Canada ratifies an ILO Convention, it must rely on the provinces to introduce laws to make the Convention effective.12 Many of Canada’s early statutes regulating working conditions mentioned earlier in this text were originally introduced to give effect to ILO Conventions, including laws on maximum hours of work and gender wage equality at work. As of 2019, Canada had ratified only 37 of the ILO’s 190 Conventions.13
ILO Convention: An international treaty adopted by the International Labour Organization that is subject to ratification by member countries. ILO recommendations: Non-binding guidelines introduced by the International Labour Organization that provide guidance to member countries but are not subject to ratification. ratify: A term used to describe the process in which a national government endorses and agrees to implement into its legal system the requirements of an international legal convention or other legal instrument.
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Chapter 27 Globalization and the Law of Work: International Labour Law and Trade Law 443
BOX 27.1 » TALKING WORK LAW How ILO Conventions Influence the Development of Canadian Work Law ILO Conventions, even if ratified by Canada, do not directly change Canadian work laws. A Canadian worker cannot sue their employer or their government for violating an ILO rule. Ratification of an ILO instrument is like a public promise by a government to enact domestic laws that will make effective rules found in the ILO instrument. The ILO has no formal power to order a country to ratify or implement one of its Conventions. However, the ILO’s various bodies can write reports that publicly shame or embarrass governments for non-compliance. As noted at various points in this part of the text, many of Canada’s regulatory labour standards were first enacted in order to bring Canada into compliance with ratified ILO Conventions. ILO instruments can influence the development of Canadian work law in another way. Canadian courts have sometimes referred to and been influenced by ILO Conventions and norms in their interpretation of Canadian laws and the Canadian Charter of Rights and Freedoms, which we will consider in Chapter 39. For example, in the 2007 case of Health Services and Support—Facilities Subsector Bargaining Assn. v. British Columbia, the Supreme Court of Canada considered whether the same BC laws found by the Committee of Freedom of Association to have violated ILO Convention 98 also violated the Canadian Charter of Rights and Freedoms guarantee in section 2(d) of
freedom of association. The Supreme Court ruled that they did, and in doing so, ruled that section 2(d) of the Charter should be “presumed to provide at least as great a level of protection as is found in the international human rights documents that Canada has ratified.”* This pronouncement effectively made ILO Conventions, along with other international legal instruments,† directly relevant to the development of Canadian work law. The Supreme Court has, controversially, also relied directly on Conventions that Canada has not ratified, including ILO Convention 98 before Canada had ratified it, which requires that governments enact legislation to ensure that unions and employers can engage in “voluntary negotiation” of collective agreements.‡ The Supreme Court’s reliance on ILO Conventions has contributed directly to its recent decisions to recognize a constitutional right in Canada to collective bargaining§ and the right to strike# (as we will discuss in Part IV). * Health Services and Support—Facilities Subsector Bargaining Assn. v. British Columbia, 2007 SCC 27 at para 70. † Ibid. at para 70. ‡ See B. Langille, “The Freedom of Association Mess: How We Got into It and How We Can Get out of It” (2009) 54 McGill LJ 177; and R.J. Adams, “Prospects for Labour’s Right to Bargain Collectively After B.C. Health Services” (2009) 59 UNBLJ 85. § Health Services and Support, supra note * at para 70. # Saskatchewan Federation of Labour v. Saskatchewan, 2015 SCC 4.
Member countries are required to submit an annual report to the ILO outlining the measures that have been taken to implement a ratified Convention, and those reports are examined by a special committee of the ILO known as the Committee of Experts on the Application of Conventions and Recommendations.14 Complaints can be made to the Committee of Experts alleging that a country has failed to adhere to a ratified Convention. Two Conventions were singled out by the ILO long ago for special treatment within the ILO’s enforcement machinery on the basis that the rights and freedoms mentioned in them are fundamental to the mission of the ILO (and are included in the ILO Constitution): • ILO Convention 87: Freedom of Association and Protection of the Right to Organise Convention (1948), which deals with the rights of workers to organize unions without reprisals and to strike.15 • ILO Convention 98: Right to Organise and Collective Bargaining Convention (1949), which deals with the rights of unions to exist independently of government.16 These Conventions deal with collective worker rights, including the rights to form and join unions, engage in collective bargaining, and strike. Canada has ratified both Convention 87 (in 1972) and Convention 98 (in 2017). The ILO asserts that all member countries have an obligation to comply with these two Conventions, even if they have not ratified them, on the basis that by becoming a member of the ILO a country agrees to abide by fundamental rights expressed in the ILO’s Constitution, including freedom of association.17 A special expert body, known as the Committee on Freedom of Association (CFA), was created in 1951 to hear complaints alleg-
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444 Part III The Regulatory Regime ing violations of these two core Conventions.18 In recent years, the CFA has singled out Canadian governments for their persistent use of legislation that restricts workers’ rights to collective bargaining and to strike. Since the 1980s, Canada has the notorious distinction of having been found by the ILO’s supervisory bodies to have violated its citizens’ fundamental rights to collective bargaining more frequently than any other ILO member country.19 In response to a 2003 complaint filed by Canadian unions about BC legislation that prohibited strikes and imposed contract terms on unionized health workers, the CFA was highly critical of the provincial government’s actions: Recalling that the voluntary negotiation of collective agreements, and therefore the autonomy of bargaining partners, is a fundamental aspect of freedom of association principles … and that the right to strike is one of the essential means through which workers and their organizations may promote and defend their economic and social interests, … the Committee regrets that the Government felt compelled to resort to such measures and trusts that it will avoid doing so in the future … The Committee also points out that repeated recourse to legislative restrictions on collective bargaining can only, in the long term, prejudice and destabilize the labour relations climate.20
The CFA has no authority to order a government to do anything to remedy the violation of an ILO Convention. Instead, the CFA makes “recommendations” for governments to comply with in the future. However, being found in violation of a core ILO Convention may, in some circumstances, shame a government and influence domestic debates over labour policy. In 1998, the ILO adopted the ILO Declaration on Fundamental Principles and Rights at Work.21 That document emphasizes a set of core labour standards that all member countries are expected to “promote” and “realize.” The ILO identified eight Conventions that comprise these core labour standards (Canada has ratified all eight, some only recently): • Conventions 87 (ratified by Canada in 1972) and 98 (2017), which together protect freedom of association, including unionization, collective bargaining, and strikes. • Conventions 29 (2011) and 105 (1959), which regulate the use of forced and compulsory labour. • Conventions 138 (2016) and 182 (2000), which regulate child labour. • Conventions 100 (1972) and 111 (1964), which regulate gender pay discrimination and job discrimination on the basis of race, colour, sex, religion, political opinion, national extraction, or social origin. All member countries are required to report on their efforts to realize these core Conventions, whether or not they have ratified them. The ILO’s Conventions have had both direct and indirect impacts on the development of Canadian work law since the early 20th century.
III. Trade Law Trade laws regulate the manner by which goods and services flow across national borders. An important part of the trade law arsenal is import duties, or tariffs. Canada, like other countries, has a long history of imposing tariffs on goods and services entering the Canadian market from abroad in order to both collect revenues and, more importantly, protect domestic companies
core labour standards: A set of eight ILO Conventions covering subjects considered to be critically important to the mission of the ILO. These subjects include freedom of association, abolition of forced labour, abolition of child labour, and non-discrimination in employment. tariff: A fee or tax imposed on goods and services as a condition of their entering a country to be sold in that country’s markets.
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Chapter 27 Globalization and the Law of Work: International Labour Law and Trade Law 445
from foreign competition.22 Protectionist trade laws allowed Canadian lawmakers to develop a relatively robust work law system of collective bargaining and regulatory standards protections with considerable confidence that many large manufacturers would remain in Canada in order to bypass high tariffs. For example, by imposing tariffs as high as 35 percent on cars imported into Canada from the United States in the early 20th century, the Canadian government created an incentive for American automakers to build car plants in Canada in order to bypass the tax and sell directly to Canadian consumers. The Big Three car manufacturers of the time (Ford, General Motors, and Chrysler) all invested in new production facilities in Canada, producing cars mostly for the Canadian market. The 1965 Canada – US Automotive Products Agreement (Autopact) removed tariffs on condition that production of cars in Canada remained at a specified high level. Ontario cities like Oshawa and Windsor blossomed under the protection afforded by trade tariffs and later by the Canadian content rules in the Autopact, confident that the American automakers would continue to employ thousands of Canadian workers for the indefinite future. Although these trade agreements did not directly deal with work laws, they represent an important part of the story of the development of that law in Canada, particularly the collective bargaining law we will explore in Part IV. As the Canadian auto industry grew under the protection of tariffs and later the Autopact, American unions, including the United Auto Workers, crossed the border and organized Canadian workers. Many of the historical battles we consider in Part IV that led to important legal developments took place in the context of efforts by Canadian autoworkers (and workers in other industries protected by high tariffs, including steel) to unionize and bargain collective agreements. Those events likely would not have occurred if not for government trade policy designed to protect key manufacturing and resource industries.23 We cannot fully understand the development of work law in Canada without reference to Canada’s trade policies over the years. Canada has negotiated many bilateral or multilateral trade agreements that reduce or eliminate tariffs to encourage lower-cost international trade. Trade agreements can have both direct and indirect effects on work laws, although in practice the effects have been mostly of the latter variety.
A. Direct Effects of Trade Agreements on Canadian Work Law A trade agreement can have a direct effect on a country’s work laws by imposing an obligation to enact new laws or repeal or enforce existing work laws. The clearest example is provided by the European Union (EU), where laws (“directives” and “regulations”) enacted by the European Parliament targeting employment practices are legally binding on member countries and enforceable before the European Court of Justice.24 Canada is not party to any supranational legislative body similar to the EU, although it is party to trade agreements that include legally enforceable rules. For example, the General Agreement on Tariffs and Trade (GATT) is an international trade agreement that includes rules about tariffs and prohibits Canada from treating foreign-based companies less favourably than Canadian companies. Those rules can be enforced through the legal machinery of the World Trade Organization (WTO), an international organization created in 1995 to deal with the rules of trade between nations.25 For example, in 2000, a WTO panel struck down the Canada – US Autopact as contrary to international trade rules that were binding on Canada.26 protectionist trade law: A law that favours domestic goods or services over goods and services offered by providers located in other jurisdictions, such as a law that imposes import tariffs on goods manufactured in other countries. bilateral trade agreement: A trade agreement between two nations. multilateral trade agreement: A trade agreement between more than two nations.
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446 Part III The Regulatory Regime The international trade agreements Canada is party to do not include direct obligations relating to work law. Whether international and regional agreements should link preferential trade rules (such as lower tariffs) to compliance with a set of core labour standards was one of the great public debates of the 1990s. Inclusion of a social clause in WTO trade agreements, which would condition trade benefits on compliance with labour rights, was one of the central demands of protesters at the WTO meetings in Seattle in 1999. The Seattle WTO meetings were shut down following violent clashes between police and protesters.27 In the end, the argument that trade benefits should be linked to labour rights in international trade agreements was rejected. Canada is party to several trade agreements that include more limited obligations relating to work laws. These obligations arise from “labour side agreements” appended to trade agreements, often referred to as labour cooperation agreements (LCAs). As of 2019, Canada had entered into eight such agreements.28 With the exception of the North American Agreement on Labor Cooperation (NAALC)—which includes Canada, the United States, and Mexico—these agreements are bilateral (see Table 27.1). TABLE 27.1 Canada’s Labour Cooperation Agreements Effective Date
Labour Cooperation Agreement
1994
North American Agreement on Labor Cooperation
1997
Canada–Chile Agreement on Labour Cooperation
2002
Canada–Costa Rica Agreement on Labour Cooperation
2009
Canada–Peru Agreement on Labour Cooperation
2010
Canada–Panama Agreement on Labour Cooperation
2011
Canada–Colombia Agreement on Labour Cooperation
2012
Canada–Jordan Agreement on Labour Cooperation
2014
Canada–Honduras Agreement on Labour Cooperation
The NAALC was annexed to the controversial North American Free Trade Agreement (NAFTA), which created a “free trade” zone between Canada, the United States, and Mexico. The principal obligation the NAALC imposes on the three member countries is “effective enforcement of national labor law.”29 Therefore, the NAALC does not impose any new work law obligations on Canada, but instead it requires Canadian governments to enforce whatever laws they choose to enact. For this reason, the NAALC has been criticized for failing to raise labour standards in any of the three participating countries. Following an extended period of negotiations, prompted by US President Donald Trump, the three signatory countries to NAFTA concluded a revised Canada – United States – Mexico Agreement (CUSMA) (the United States refers to the agreement as USMCA) in 2018.30 The CUSMA includes revised rules on labour issues, including a requirement that the countries comply with social clause: A clause included in a trade agreement that would in some manner condition access to trade benefits, such as lower tariffs, upon compliance with certain defined work law standards. labour cooperation agreement (LCA): An agreement between nations, often appended to a trade agreement, that imposes obligations on nations to work toward improving labour standards within their borders.
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Chapter 27 Globalization and the Law of Work: International Labour Law and Trade Law 447
the ILO’s Declaration on Fundamental Principles and Rights at Work, mentioned above. As of December 2019, Canada had not yet ratified the CUSMA but was expected to do so in 2020.
US President Donald Trump, centre; Canada’s Prime Minister Justin Trudeau, right; and Mexico’s President Enrique Pena Nieto, left, sign the CUSMA.
The NAALC enables governments or private parties to file complaints alleging that a country is not enforcing its own laws. The complaint must be filed with the NAALC office (known as the National Administrative Office [NAO]) of a country other than the one in which the violation is alleged to have occurred. A complaint may initiate an investigation, consultations between the labour ministers of the three countries, and in some circumstances (relating to child protection, minimum wage, and health and safety only), an independent arbitration panel that has the power to fine an offending government if it has shown a “persistent pattern of failure to effectively enforce” national laws.31 Most complaints filed under the NAALC have targeted Mexico’s alleged failure to enforce its work laws, although a couple of complaints have targeted Canada. In one, a coalition of unions alleged that Quebec was failing to protect workers who are dismissed when their employer suddenly closes to avoid a union.32 The other complaint challenged a federal law that denied collective bargaining rights and health and safety protections to rural mail carriers employed by Canada Post. The complaint was not accepted on the grounds that the NAALC does not regulate the content of laws, only the non-enforcement of laws.33 Little came of the first complaint; the file was closed after Quebec agreed to study the issue. In practice, the NAALC has had little if any direct effect on Canadian work law. The LCAs appended to bilateral trade agreements since 2002 (see Table 27.1) function in a manner similar to the NAALC. However, unlike the NAALC and Canada – Chile Agreement,
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448 Part III The Regulatory Regime they refer specifically to the “obligations” of both countries to comply with the ILO’s Declaration on Fundamental Principles and Rights at Work. It remains to be seen what effect, if any, this explicit reference to the ILO Declaration will have on legal developments in the various countries (including under the CUSMA, if it is eventually ratified).
B. Indirect Effects of Trade Agreements on Canadian Work Law The fact that trade agreements have had little if any direct effect on Canadian work laws does not mean that the development of our domestic work laws has not been influenced by Canada’s participation in the global economy. The dismantling of trade barriers, part of a wider process of economic globalization, has influenced the political climate in which work laws are developed and applied. Economic globalization describes a process of economic integration across national borders facilitated by several key developments, including (1) trade agreements that dismantle trade tariffs; (2) new information technologies that enable instantaneous supply chain coordination across vast geographical spaces; and (3) improved transportation and tracking systems that facilitate efficient global supply chain systems.34 Economic globalization facilitates greater capital mobility across national borders, and this, in theory at least, creates the possibility of a race to the bottom in labour standards as nations compete for business investment by offering lower labour standards or fewer or weaker unions. Concerns that “free” trade agreements would create downward pressure on Canadian work laws have been voiced every time Canada has entered into negotiations for a new trade agreement. The biggest concern, and loudest opposition from opponents of the trade agreements, was reserved for trade deals with Canada’s largest trading partner: the United States. The United States accounts for approximately 75 percent of Canada’s exports and just under 50 percent of its imports.35 When the Canada – United States Free Trade Agreement (CUFTA) was being negotiated in the late 1980s, Canadians were engrossed in debates over whether more open trade with the United States would eventually lead to the dismantling of Canadian social programs, massive Canadian job losses, and a downward adjustment in Canadian work law standards toward the less protective American levels.36 CUFTA was the central issue in the 1988 federal election. The Conservatives supported the deal, while both the Liberals and the New Democratic Party were opposed to it. Brian Mulroney’s Conservatives won, and the agreement passed. Professor Kevin Banks (Queen’s University) explains the basis of the argument that trade agreements (particularly but not exclusively with the United States) tend to put downward pressure on Canadian work laws: That thesis essentially consists of four propositions. The first is that unit labour cost differences matter in international competition between enterprises for market share and between jurisdictions for investment. The second is that because goods, services, and capital are much more internationally mobile than labour, production and jobs will move toward jurisdictions with labour market conditions and policy environments that favour low unit labour costs. … The third proposition is that labour and employment laws increase unit labour costs enough to matter in this competition. As a result—and this is the fourth proposition—trade and investment integration will drive a global market in labour regulation. Internationally mobile producers and domestic industries faced with international competition will respond to unit labour cost pressures by putting political pressure on national governments. Over time, governments will respond to this pressure, opting for low-cost
economic globalization: A term used to describe a confluence of factors that enable and promote global integration, including (1) trade agreements that dismantle trade tariffs; (2) new information technologies that enable instantaneous supply chain coordination across vast geographical spaces; and (3) improved transportation and tracking systems that facilitate efficient global supply chain systems.
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Chapter 27 Globalization and the Law of Work: International Labour Law and Trade Law 449 regulatory environments in order to attract and retain production facilities and to ensure the future viability of enterprises within their borders. Such regulatory competition would be expected to affect Canada more than the US, because Canada’s trade and investment relationship with the US accounts for such a large share of the Canadian gross domestic product, and because American labour and employment laws are generally considered to be less protective.37
The same concerns about downward pressures on Canada’s work laws resurfaced in the buildup to NAFTA, which brought Mexico, a developing country, into the trade pact with Canada and the United States.38 In the case of NAFTA, Americans were especially concerned that jobs would be lost to Mexico, where labour costs were substantially lower. Those concerns led then-President Bill Clinton to insist upon the inclusion of the NAALC in NAFTA. Similar concerns have driven President Trump’s contemporary opposition to NAFTA. Whether the dire predictions that CUFTA and NAFTA would lead to a gutting of Canadian work laws have come to pass is a matter of ongoing debate.39 It is difficult if not impossible to isolate the effects of a trade agreement from all other possible causes of legal reform. Certainly, there are anecdotal stories of US corporations closing Canadian subsidiaries and returning to the United States where many work laws are less protective of workers, as described in Box 27.2. When that happens, sometimes Canadian work laws or decent collective agreements bargained by Canadian unions are blamed. At a more aggregate level, however, little empirical evidence supports the thesis that work laws play a substantial role in business decisions about where to invest, at least between economically developed nations, which comprise the vast majority of international trade.40 Other factors, such as currency rates, the quality of infrastructure (electricity, water, roads, etc.), the business environment, the skills of the labour force, access to markets, and the quality of the legal system, are of much greater significance in investment decisions.41
BOX 27.2 » TALKING WORK LAW Was Work Law to Blame for the Closure of a Caterpillar Plant in Ontario? “This is legislation which completely undermines the workIn 2012, a locomotive plant near London, Ontario owned by ers’ ability to bargain collectively,” said local Member of Parliagiant American corporation Caterpillar closed its doors for ment Irene Mathyssen.* good. About 450 Canadian workers lost their jobs. The closure came after the workers were locked out for a month when they and their union, the Canadian Auto Workers, refused Caterpillar’s demand for a 50 percent pay cut to bring their pay in line with lower-waged American operations. Caterpillar was coming off a record profit year, having earned $4.9 billion in 2011. Some of the plant’s work was transferred to a new factory in Indiana, where the state government had offered multi-million dollar tax incentives to lure the company from Ontario. The announcement from Caterpillar that the Ontario factory would close came less than two days after the Indiana government enacted a “right to work” law designed to weaken unions and discourage collective bargaining. (In this context, “right to work” refers to laws in some American states that allow workers to opt out of joining a union and from paying union Workers on the picket line in February 2012, during the bitter closure of a dues.) factory owned by Caterpillar in London, Ontario.
Source: Mark Spowart/Alam.
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450 Part III The Regulatory Regime The plant owned by Caterpillar, known as EMD (ElectroMotive Diesel) had been a part of London’s economy since 1949, and as with the loss of most industrial jobs, the closure had an economic ripple effect beyond the hundreds of plant workers themselves. The EMD plant was purchased by Caterpillar—a notoriously anti-union employer—in 2010. Within the next several years, many governments in U.S. states (primarily Republican-dominated state governments) enacted anti-union legislation, including the sort of “right to work” laws described above. According to some observers, this outcome was the logical outcome of the current era of largely unfettered trade. In response to the plant’s closing, the Conservative federal government of Stephen Harper and the Liberal provincial government in Ontario led by Dalton McGuinty were uninterested in intervening. Toronto Star columnist Thomas Walkom wrote: Neither did anything. But the real villain is unrestrained globalization. As long as goods and capital are free to move unimpeded across national borders, companies—even nice ones—will locate where wages are cheap. All of this could be changed. But to do so would require the fundamental rethinking of belief in the unalloyed virtue of free trade, a belief that the country’s political and business classes accept on faith.† Walkom and other critics of current trade practices suggest that any foreign company wishing to purchase a Canadian company—particularly anti-union ones such as Caterpillar— should be given much more serious scrutiny before being
given approval. According to Walkom, “Caterpillar clearly had no intention of keeping its newly purchased London locomotive plant open—and closed it as soon as the company’s preferred location, Indiana, passed anti-union laws.”‡ By acting in concert, anti-union corporations such as Caterpillar along with sympathetic state governments have been able to use the threat of moving plants and factories to lowerwage jurisdictions around the world as a way of undermining unionized workers. As noted above, the company had originally offered workers a deal that cut their wages in half, along with other concessions. As workforces become more global, the threat of moving an entire operation elsewhere gives powerful leverage to corporations. Given this dynamic, it is not entirely surprising that the proportion of unionized jobs in the workforce has been in steady decline for forty years. (See the “Law of Work Timeline” graph on page xxvii of the preface.) * Irene Mathyssen, “Caterpillar Shut-Down: How Many More Manufacturing Jobs Must We Lose?” Huffingon Post (4 April 2012), online: . † Thomas Walkom, “The Real Villain of Caterpillar Shutdown? Mindless Free Trade,” Toronto Star (8 February 2012), online: . Sources: Based on “Caterpillar Closing Toronto Plant, 330 Workers to Lose Jobs,” CBC News (4 May 2013), online: ; Mathyssen, ibid.; Walkom, ibid.
However, the perception that businesses will not invest in Canada because our work laws are more protective of workers than in other jurisdictions has played an important role in shaping labour policy debates, especially since the enactment of CUFTA and NAFTA in the early 1990s. Professor Harry Arthurs (York University) describes this impact as the “globalization of the mind.”42 The narrative that employers will avoid Canada unless we weaken our work laws can create downward pressure on those laws, even if the narrative is in fact false or the risk is overstated. We can see this indirect effect of trade liberalization in almost every debate about work law reform in Canada over the past 20 years. It is now commonplace for Canadian politicians to justify reforms to work law that reduce the level of worker protections by reference to the need to “compete” in the global economy. As one example, in the mid-1990s, the Conservative government in Ontario enacted a series of reforms intended to weaken collective bargaining rights and other statutory employee
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Chapter 27 Globalization and the Law of Work: International Labour Law and Trade Law 451
protections. The minister of labour rose in the legislature in the fall of 1995 and explained the justification for the changes: We believe that the current Labour Relations Act is a barrier to jobs, growth and investment. In a global economy, Ontario cannot afford to be perceived as anything less than welcoming to the initiative, the imagination and job creation potential of the private sector.43
Inversely, legislative reforms that strengthen collective bargaining rights and employment standards are routinely described as “job killers” by businesses and especially (but not exclusively) conservative politicians and commentators, who argue that businesses will leave to avoid these laws. That sentiment is captured nicely in the following 1992 speech in the BC legislature by a Liberal MPP, criticizing a bill introduced by the NDP government that would strengthen collective bargaining rights: In preparation for debating this bill, I want to tell you that the Liberal opposition thought about going to the very people who will benefit from the bill. We talked to labour lawyers, and they told us that there will not be a sudden flood of investment disappearing from the province; it will be a slow and steady erosion. In this modern era of a global economy, you simply cannot pass labour legislation as an island. Capital, unfortunately, can go anywhere in the world; it can go into Whatcom County, for example.44
Whatcom County is in Washington State, just south of British Columbia. We could tour the country to every jurisdiction that has enacted work-related legislation in the past 20 years and find similar commentary in the legislatures. Trade liberalization has affected Canadian work laws by influencing the form and substance of debates over work law reform. It has strengthened the claims that Canada must compete with other jurisdictions for investment and jobs, and that relatively strong protective work laws discourage both. In this way, trade agreements, and the more general processes of economic globalization, act as “conditioning frameworks” that shape public discourse to the benefit of those interests that prefer fewer regulatory protections for workers.45 Since Canada entered into CUFTA and NAFTA, it has become progressively more difficult for politicians to campaign on and then sustain generous protective labour laws in the face of arguments (and sometimes threats) by business and pro-trade advocates that such laws will ultimately drive businesses to leave in search of less-regulated jurisdictions.
IV. Chapter Summary In this final chapter of Part III of this text, we explored how Canada’s participation in the global economy affects the development of Canadian work laws. We began by considering the role of the ILO, the global institution responsible for promoting decent working standards around the world. Canada is expected to realize ILO rules and principles. These rules have influenced Canadian governments in relation to the work laws they enact and the Supreme Court of Canada in its interpretation of the guarantees found in the Charter. The impact on Canadian work laws of Canada’s participation in trade laws is less obvious, but still important. Of particular importance is the indirect effect that trade laws have had on shaping the discourse around Canadian labour policy.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Summarize the guiding philosophy of the ILO. In your summary, explain why the promotion of decent working conditions is considered an important and necessary objective for national governments. 2. Explain the meaning of the phrase “labour is not a commodity.”
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452 Part III The Regulatory Regime 3. When Canada ratifies an ILO Convention, do the legal rules in that Convention immediately become legally enforceable in Canada? Explain. 4. How has the ILO influenced Canadian work law? 5. Summarize the explanation Professor Kevin Banks provides (in an excerpt in this chapter) on why many people believe trade agreements with the United States will eventually have the effect of weakening Canadian work laws. 6. What did Professor Harry Arthurs mean when he wrote that globalization and free trade are leading to “globalization of the mind”?
EXERCISES 1. The ILO is guided by the idea that “labour is not a commodity.” This concept has, on occasion, been cited by Canadian courts as they deal with work law cases. This exercise explores this term’s usage in Canadian work law. a. Go to the CanLII website: . b. Enter in the Document Text search window “labour is not a commodity.” c. Select a decision that looks interesting to you and read it. d. Prepare a case summary like those found in the Case Law Highlight boxes in the text, outlining the facts, issue, and decision of the case. e. For what purpose is the court referring to “labour is not a commodity”? 2. In this chapter, we noted that Canada has a poor record of violating its obligations to protect “freedom of association” of its citizens as required by its membership in the International Labour Organization. The ILO maintains an electronic database of its proceedings. In this exercise, we search that database for ILO decisions involving Canada. 1. Go to the ILO’s website called NORMLEX (information on international labour standards), which compiles cases decided by the Committee on Freedom of Association: . 2. Select Canada in the “All Countries” drop-down menu under the “Browse Cases by” heading, then select “Find.” That search should give you a long list of “cases” with Canada in brackets (e.g., “Case No 2403 (Canada)”). 3. Select a sample of those cases and look for one in which the Committee on Freedom of Association explains the nature of the complaint and makes recommendations. 4. Read the report and answer the following questions: a. Who is the complainant (who filed the complaint)? b. Which Canadian government is alleged to have violated freedom of association? c. What is the nature of the alleged violation? d. What position does the government take in its response to the complaint? e. What does the committee conclude? f. What recommendations are made?
NOTES AND REFERENCES 1. International Labour Organization (ILO), “Mission and Objectives,” online: . 2. Treaty of Versailles, June 28, 1919, at Pt. XIII, Labour, s. I, “Organisation of Labour.” 3. ILO, “Declaration of Philadelphia” (1944), online: . 4. D. Beatty, “Labour Is Not a Commodity” in B. Reiter & K. Swan, eds, Studies in Contract Law (Toronto, ON: Butterworths, 1979) at 314; and J. Fudge, “Labour Is Not a Commodity: The Supreme Court of Canada and the Freedom of Association” (2004) 67 Sask L Rev 425.
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Chapter 27 Globalization and the Law of Work: International Labour Law and Trade Law 453 5. Beatty, supra note 4 at 323-24. 6. Lavigne v. Ontario Public Service Employees Union, [1991] 2 SCR 211. See also Slaight Communications Inc. v. Davidson, [1989] 1 SCR 1038. 7. M. Wachter, “Neoclassical Labor Economics: Its Implications for Labor and Employment Law” in C. Estlund & M. Wachter, eds, Research Handbook on the Economics of Labor and Employment Law (Cheltenham, UK: Edward Elgar, 2012) at 20; and A. Armen & W. Allen, University Economics, 3rd ed (Belmont, CA: Wadsworth, 1972) at 407. 8. See the discussion in J. Bellace, “The ILO and the Right to Strike” (2014) 153 Intl Lab Rev 29; and L. Swepston, “Crisis in the ILO Supervisory System: Dispute over the Right to Strike” (2013) 29:2 Intl J Comp Lab L & Ind Rel 199 9. See B. Burkett, J. Craig, & J. Gallagher, “Canada and the ILO: Freedom of Association Since 1982” (2003) 10 CLELJ 231. 10. For a more sophisticated and detailed description of how the ILO functions, see ILO, “How the ILO Works,” online: ; and B. Langille, “Can We Rely on the ILO?” (2007) 13 CLELJ 363. 11. See the list of Conventions at ILO, “Conventions,” online: . 12. See Attorney-General for Canada (Attorney General) v. Ontario (Attorney General), 1937 CanLII 362 (UK JCPC). For many years after this decision, there was uncertainty about whether Canada could ratify any ILO Convention relating to subjects falling within provincial jurisdiction. As a result, between 1937 and the late 1950s, Canada ratified only Conventions dealing with subject matter that fell within federal jurisdiction, such as rules about working conditions in the shipping industry. In the late 1950s, Canada revised its position and accepted that the federal government could ratify any ILO Convention, but that it would need to consult with and rely on the provinces to enact instantiating legislation. See the discussion in R. Matthews & C. Pratt, Human Rights in Canadian Foreign Policy (Montreal, QC: McGill-Queen’s University Press, 1988) at 119-22. 13. See Canada’s ratification record at ILO, “Ratifications for Canada,” . 14. You can read the Committee of Experts’ observations on Canada’s reports by searching Canada on the ILO’s NORMLEX search engine: .
15. Convention 87 does not expressly include a right to strike. However, the ILO’s expert bodies long ago decided that the right to strike is fundamental to the ability to engage in collective bargaining and is therefore implied within Convention 87. See ILO, “C087—Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87),” online: . See also Bellace, supra note 8; and B. Gernigon, A. Odero, & H. Guido, ILO Principles Concerning the Right to Strike (Geneva: ILO, 1998), online (pdf): . 16. See ILO, “C098—Right to Organise and Collective Bargaining Convention, 1949 (No. 98),” online: . 17. This claim is expressed in the language of the ILO’s 1998 Declaration on Fundamental Principles and Rights at Work, articles 1 and 2. See H. Kellerson, “The ILO Declaration of 1998 on Fundamental Principles and Rights: A Challenge for the Future” (1998) 137 Intl Lab Rev 223; and R.J. Adams, “The Supreme Court, Collective Bargaining, and International Law: A Reply to Brian Langille” (2009) 14 CLELJ 317. 18. You can find reports from the Committee on Freedom of Association involving Canada through the ILO’s NORMLEX search engine: . 19. See Fudge, supra note 4 at 448; and B. Burkett, J. Craig, & J. Gallagher, supra note 9. Canadian unions have been more willing to use the ILO complaints procedure than have labour movements in other countries, which in part accounts for the large number of decisions involving Canada by the CFA. 20. ILO, 330th Report of the Committee on Freedom of Association (Geneva: Author, 2003) at para 304. 21. ILO, 1998 Declaration on Fundamental Principles and Rights at Work, online: . 22. The key federal laws that govern trade-related tariffs are the Customs Act, RSC 1985, c. 1 (2nd Supp.) and the Customs Tariff, SC 1997, c. 36, as well as the many regulations associated with that legislation. 23. H. Arthurs, “Extraterritoriality by Other Means: How Labor Law Sneaks Across Borders, Conquers Minds, and Controls Workers Abroad” (2010) 21 Stan L & Pol’y Rev 527 at 534. 24. See the discussion of the scope of the EU’s jurisdiction over work-related practices at European Commission,
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454 Part III The Regulatory Regime “Rights at Work,” online: . See also C. Barnard, EU Employment Law, 4th ed (Oxford, UK: Oxford University Press, 2012). 25. World Trade Organization, “What Is the WTO?” online: . 26. D. Anastakis, “Requiem for a Trade Agreement: The Auto Pact at the WTO, 1999 – 2000” (2001) 34:3 Can Bus LJ 313. 27 See C. Summers, “The Battle in Seattle: Free Trade, Labor Rights, and Societal Values” (2001) 22 U Pa J Intl Econ L. See also the film Battle in Seattle, directed by Stuart Townsend (2007, Redwood Palms Pictures). 28. See links to the LCAs at Government of Canada, “Negotiating and Implementing International Labour Cooperation Agreements,” . 29. See Secretariat of the Commission for Labor Cooperation, “NAALC—Part Two: Obligations,” online: . 30. For a summary of the labour elements in the CUSMA, see . 31. See Secretariat of the Commission for Labor Cooperation, “NAALC—Part Five: Resolution of Disputes,” online: . 32. U.S. NAO 9803 (1998). 33. U.S. NAO 9804 (1998). 34. See D. Doorey, “International Business and Globalization” in W.P. Kissick, ed, Business Ethics: Concepts, Cases and Canadian Perspectives (Toronto, ON: Emond Montgomery, 2012) 169 at 172-73. 35. K. Banks, “Must Canada Change Its Labour and Employment Laws to Compete with the United States?” (2013) 38 Queen’s LJ 419 at 423. 36. See B. Langille, “Canadian Labour Law Reform and Free Trade” (1991) 23 Ottawa L Rev 581; G. Betcherman &
M. Gunderson, “Canada – U.S. Free Trade and Labour Relations” (1990) 41 Lab LJ 454; and R. Sears, “The Great Free-Trade Election of 1988,” Globe and Mail (October 2012), online: . 37. Banks, supra note 35 at 427. 38. See, for example, M. Gunderson, “Harmonization of Labour Policies Under Trade Liberalization” (1998) 53 Indus Rel 1; P. Singh, “NAFTA and Labor: A Canadian Perspective” (2002) 23 J Lab Res 433; and Banks, supra note 35. 39. See, for example, Banks, supra note 35; R. Gomez & M. Gunderson, “Does Economic Integration Lead to Social Policy Convergence? An Analysis of North American Linkages and Social Policy” in R. Harris & T. Lemieux, eds, Social and Labour Market Aspects of North American Linkages (Calgary, AB: University of Calgary Press, 2005) at 309; Singh, supra note 38; Gunderson, supra note 38; and B. Langille, “General Reflections on the Relationship of Trade and Labor (Or: Fair Trade Is Free Trade’s Destiny)” in J. Bhagwati & R. Hudec, eds, Fair Trade and Harmonization: Prerequisites for Free Trade? Vol. 2: Legal Analysis (Cambridge, MA: MIT Press, 1996) 231. 40. See the discussion in Banks, supra note 35. 41. Ibid. See also Gunderson, supra note 38; and M. Gunderson, “Ten Key Ingredients of Labour Policy in the New World of Work” (2002) 28 Can Pub Pol’y 117. 42. See H. Arthurs, “Who’s Afraid of Globalization? Reflections on the Future of Labour Law” in J.D.R. Craig & S.M. Lynk, eds, Globalization and the Future of Labour Law (Cambridge, UK: Cambridge University Press, 2006). 43. See Legislative Assembly of Ontario, Debates (Hansard), October 4, 1995. Comments by Hon. Elizabeth Witmer, minister of labour, online: . 44. See 1992 Legislative Session: 1st Session, 35th Parliament, Hansard, British Columbia, November 5, 1992. Comments by Hon. Wilf Hurd, MPP (Liberal), online: . 45. H. Arthurs, “Labour Law Without the State?” (1996) 46 UTLJ 1 at 20.
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Selected Cases: Part III Cases with boldface page numbers appear as Case Law Highlights. Alberta (Human Rights and Citizenship Commission) v. Kellogg Brown & Root (Canada) Company, 2007 ABCA 426 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 B. v. Ontario (Human Rights Commission), 2002 SCC 66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364, 368, 370, 390 Balikama obo Others v. Khaira Enterprises and Others, 2014 BCHRT 107 . . . . . . . . . . . . . . . . . . . . . . . . . . . 361 BC WCAT Decision No. A1701552 (Re), 2018 CanLII 75253 (BCWCAT)���������������������������������������������������������397 Bhinder v. CN, [1985] 2 SCR 561 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Bliss v. Attorney-General of Canada, [1979] 1 SCR 183 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369 British Columbia (Public Service Employee Relations Commission) v. BCGSEU, [1999] 3 SCR 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347, 350, 369, 375, 389 British Columbia (Workers’ Compensation Board) v. Figliola, 2011 SCC 52 . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Brooks v. Canada Safeway Ltd., [1989] 1 SCR 1219 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359, 369 Brossard (Town) v. Quebec (Commission des droits de la personne), [1988] 2 SCR 279 . . . . . . . . . 356, 370, 390 Canada (Attorney General) v. Johnstone, 2014 FCA 110 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365, 371 Canada (Attorney General) v. Ontario (Attorney General), 1937 CanLII 363 (UK JCPC) . . . . . . . . . . . . . . . 453 Canadian Union of Public Employees, Local 4848 v. Ambulance New Brunswick Inc. (Saunders Grievance), 2012 CanLII 97787 (NBLA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389, 390 Carasco v. University of Windsor, 2010 HRTO 2090, 2010 HRTO 1968 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Central Alberta Dairy Pool v. Alberta (Human Rights Commission), [1990] 2 SCR 489 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346, 347, 349, 363, 370, 380, 383, 389 Central Okanagan School District No. 23 v. Renaud (1992), [1992] 2 SCR 970 . . . . . . . . . . . . 379, 380, 383, 389 Colwell v. Cornerstone Properties Inc., 2008 CanLII 66139 (Ont. Sup Ct J) . . . . . . . . . . . . . . . . . . . . . . . 432, 436 Commission scolaire régionale de Chambly v. Bergevin, [1994] 2 SCR 525 . . . . . . . . . . . . . . . . . . . . . . . . 389, 390 Communications, Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp & Paper, Ltd., 2013 SCC 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369, 433, 437 Construction and Specialized Workers’ Union, Local 1611 v. Canada (Citizenship and Immigration), 2013 FC 512 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 Construction Montcalm Inc. v. Min. Wage Com., [1979] 1 SCR 754 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282 Davies v. Fraser Collection Services Limited, 2008 BCSC 942 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334 Dominguez v. Northland Properties Corporation, 2013 BCSC 468 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416, 417 Eastmond v. Canadian Pacific Railway, 2004 FC 852 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435, 437 1748271 Ontario Inc. v. Patterson, 2015 CanLII 26117 (Ont. LRB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313 Elsegood v. Cambridge Spring Service (2001) Ltd., 2011 ONCA 831 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334 Entrop v. Imperial Oil Limited, 2000 CanLII 16800 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . 369, 375, 382, 388, 430 Erskine v. British Columbia (Workers’ Compensation Appeal Tribunal), 2013 BCSC 1583 . . . . . . . . . . . . . . . 400 Fresco v. Canadian Imperial Bank of Commerce, 2012 ONCA 444 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 Harrison v. University of British Columbia, [1990] 3 SCR 451 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370 Hydro-Québec v. Syndicat des employeé-e-s de techniques professionnelles et de bureau d’Hydro-Québec, section locale 2000 (SCFP-FTQ), 2008 SCC 43 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389, 390 Islam v. Big Inc. 2013 HRTO 2009; aff ’d 2015 ONSC 2921������������������������������������������������������������������ 349, 364, 370 Janzen v. Platy Enterprises Ltd., [1989] 1 SCR 1252 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360, 368, 369, 370 Jazairi v. Ontario (Human Rights Commission), 1999 CanLII 3744 (Ont. CA) . . . . . . . . . . . . . . . . . . . . 364, 370 Jones v. Tsige, 2012 ONCA 32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430, 431, 432, 436 Lane v. ADGA Group Consultants Inc., 2007 HRTO 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349, 381, 390
455
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456 Part III The Regulatory Regime Lavigne v. Ontario Public Service Employees Union, [1991] 2 SCR 211 . . . . . . . . . . . . . . . . . . . . . . . . . . . 441, 453 Loomba v. Home Depot Canada, 2010 HRTO 1434 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349, 368, 370 McKinney v. University of Guelph, [1990] 3 SCR 229 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370 Meiorin, see British Columbia (Public Service Employee Relations Commission) v. BCGSEU O’Malley, see Ont. Human Rights Comm. v. Simpsons-Sears Ont. Human Rights Comm. v. Simpsons-Sears, [1985] 2 SCR 536 . . . . . . . . . . . . . . 340, 348, 349, 368, 378, 390 Ontario Human Rights Commission v. Christian Horizons, 2010 ONSC 2105 . . . . . . . . . . . . . . . . . . . . . . . . . 385 Ontario Nurses’ Association v. Orillia Soldiers Memorial Hospital, 1999 CanLII 3687 (Ont. CA) . . . . . . . . . 375 Oosterbosch v. FAG Aerospace Inc., 2011 ONSC 1538 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326, 334 Public Service Alliance of Canada v. Canada Post Corp., 2011 SCC 57 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299 Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Montréal (City), 2000 SCC 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358, 369 R v. Metron Construction Corporation, 2013 ONCA 541 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404 Re Leisure World Nursing Homes Ltd. and Director of Employment Standards, 1980 CanLII 1681 (Ont. H Ct J) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295 Richardson v. Davis Wire Industries Ltd., 1997 CanLII 4221 (BCSC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426, 436 Riddell v. IBM Canada, 2009 HRTO 1454 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363, 370 Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 SCR 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 282 Saskatchewan Federation of Labour v. Saskatchewan, 2015 SCC 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443 Slaight Communications Inc. v. Davidson, [1989] 1 SCR 1038 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335, 453 Somwar v. McDonald’s Restaurants of Canada Ltd., 2006 CanLII 202 (Ont. Sup Ct J) . . . . . . . . . . . . . . . . . . 436 Stolze v. Addario, 1997 CanLII 764 (Ont. CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334 Stewart v. Elk Valley Coal Corp., 2017 SCC 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353, 358, 368 Toronto Elementary Catholic Teachers v. Toronto Catholic District School Board, 2017 CanLII 37597 (ON LRB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396 TCS Express Inc. v. Yasin, 2006 CanLII 19423 (Ont. LRB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311 United Steelworkers Obo Others v. Tim Hortons and Others, 2014 BCHRT 152 . . . . . . . . . . . . . . . . . . . . . . . 421 Vrana v. Procor Ltd., 2003 ABQB 98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334 Vriend v. Alberta, [1998] 1 SCR 493 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366, 371 Weihs v. Great Clips and Others (No. 2), 2019 BCHRT 125 ���������������������������������������������������������������������������������360 Wilson v. Atomic Energy of Canada Limited, 2016 SCC 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332, 335
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PART IV
The Collective Bargaining Regime CHAPTER 28 Introduction to the Collective Bargaining Regime and the Canadian
Labour Movement
CHAPTER 29 A Brief History of Labour and the Law CHAPTER 30 Why Do Workers Join Unions, and What Effects Do Unions Have on
Business?
CHAPTER 31 The Unionization Process CHAPTER 32 Unfair Labour Practices and the Right to Organize CHAPTER 33 Collective Bargaining and the Making of a Collective Agreement CHAPTER 34 The Law of Industrial Conflict CHAPTER 35 The Collective Agreement CHAPTER 36 Grievances, Labour Arbitration, and “Just Cause” for Discipline in the
Unionized Workplace
CHAPTER 37 The Regulation of Unions: Legal Status, the Duty of Fair
Representation, and Decertification
CHAPTER 38 Public Sector Labour Relations Selected Cases: Part IV
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CHAPTER 28
Introduction to the Collective Bargaining Regime and the Canadian Labour Movement LEARNING OBJECTIVES
CHAPTER OUTLINE
After reading this chapter, students will be able to:
I. Introduction 459 II. A Brief Overview of the Common Law’s Treatment of Collective Worker Activities 460 III. The Outputs and Legal Institutions of the Collective Bargaining Regime 465 IV. Who Is Governed by the Collective Bargaining Regime in Canada? 466 V. Canadian Unions Today: A Snapshot 470 VI. Chapter Summary 473 Questions and Issues for Discussion 473 Exercises 473 Notes and References 473
• Describe how the common law regime treats collective worker activities, including unionization, collective bargaining, and strikes. • Describe how early collective bargaining laws modified the common law to both create new rights for workers to act collectively and control unions and employee associations. • Explain the key legal institutions within the collective bargaining regime and the role they play. • Identify trends in the composition and quantity of Canadian workers who are unionized and governed by the collective bargaining regime. • Discuss the decline in private sector unionization in Canada and the possible causes of this decline. • Discuss the basic structure of Canadian unions and the Canadian labour movement.
I. Introduction This book examines work relations through the lens of Canadian law and public policy. We are interested in how legal rules have helped shape and respond to labour market events and interactions. In this part of the book, we turn our attention to the third of the legal regimes of work law that we introduced in Chapter 1, the collective bargaining regime. A new, important actor is introduced to our story here: unions. For over 200 years, Canadian workers have banded together into unions to increase their bargaining power beyond that which any individual worker can possess alone. At every step in the development of collective worker activity, law has been harnessed in response, often to crush and resist that activity, sometimes to support and encourage it, but always to manage it and control conflict between workers, unions, and employers. In Chapters 1 and 2 we introduced the “three regimes of work law”: common law, regulatory standards, and collective bargaining. The common law regime encompasses judge-made rules relating to employment contracts and torts with application to work. The regulatory standards regime encompasses government-made legal rules found in statutes and regulations that restrict freedom of contract in pursuit of public policy goals, such as better working conditions, safer workplaces, and less discrimination. Whereas the guiding philosophy of the common law regime 459
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460 Part IV The Collective Bargaining Regime is freedom of contract, the regulatory regime assumes that workers are vulnerable in a system based purely on freedom of contract and subject to the superior power of employers in most cases. One way to protect vulnerable workers is to introduce mandatory labour standards (the regulatory regime). Another method of protecting workers from the harshness of market forces is to “[turn] up the bargaining power valve on the employees’ side,”1 to borrow the words of Professor Brian Langille, so that employees are negotiating on a more level playing field. The principal goals of the collective bargaining regime, explored in the remainder of the book, are to facilitate worker power by allowing, and sometimes encouraging, workers to engage in collective bargaining rather than individual bargaining, and to then manage the conflict that sometimes results within a system of collective worker power. The collective bargaining regime encompasses various legal rules—tort, contract, and legislative—that govern employment relations as workers transition from the non-union common law regime to the unionized collective bargaining regime (the union organizing and certification process) and the relations between unions, employees, and employers after the workers are unionized (collective bargaining, collective agreement administration, industrial conflict). This chapter sets up our exploration of the collective bargaining regime by explaining how the collective bargaining model we use today evolved from, and was initially a response to, common law judges’ hostile treatment of collective worker activities such as unionization, collective bargaining, and strikes. We will introduce some key concepts, processes, and institutions that we will need to understand as we move forward in our exploration of the collective bargaining regime, before concluding with a description of workers who are governed by the collective bargaining regime in Canada today and an overview of the Canadian labour movement.
II. A Brief Overview of the Common Law’s Treatment of Collective Worker Activities As noted earlier, the regulatory regime is the government’s response to perceived inadequacies with the manner in which the common law regime governs the work relationship. For example, minimum wage laws were enacted out of a concern that in the common law regime, where workers usually negotiate employment contracts individually with more powerful employers, the wages that resulted were unacceptably low. Minimum wage laws were a response to a perceived failure in the common law: low wages. Similarly, to fully understand how our existing collective bargaining model came to be, we must have at least a basic understanding of how the common law regime dealt with collective worker activities. Modern collective bargaining legislation operates in the shadow of common law rules of tort and contract that were often used to crush early attempts by workers to join unions and pressure their employers to engage in collective bargaining. Before Canadian governments legislated a process for union recognition in the 1940s, the only way employees could force an unwilling employer to recognize a union and engage in collective bargaining was to engage in what was often an unlawful strike.2 These work stoppages were known as recognition strikes, and some of Canada’s most important (and sometimes violent) labour clashes began this way, before any statutory right to collective bargaining existed. For example, during a recognition strike at Estevan, Saskatchewan, in 1931, the RCMP shot and collective bargaining: Negotiations between an association of employees (usually but not always a union) and an employer or association of employers aimed at reaching a collective agreement. strike: Legislation can assign a particular definition to the word strike. In Canada, strikes are usually defined to include both (1) a collective refusal by employees to perform work, and (2) a deliberate collective slowdown by workers designed to restrict the output of an employer (commonly known as a work to rule). recognition strike: A strike by workers with the aim of pressuring an employer to recognize and bargain with a union on behalf of the employees.
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Chapter 28 Introduction to the Collective Bargaining Regime and the Canadian Labour Movement 461
killed three strikers, and it was a 1937 recognition strike at General Motors in Oshawa that produced a landmark collective agreement between the giant automaker and the Americanbased United Auto Workers Union (see Chapter 29).3 Prior to collective bargaining legislation, common law judges treated strikes or threats to strike as torts of conspiracy to injure or intimidation.4 Picketing by workers designed to dissuade people from entering a business during a labour dispute could violate torts such as nuisance, intimidation, or inducing breach of contract.5 Union organizers who entered employer property to speak with workers were trespassing, and if they encouraged workers to strike and set up picket lines, they could be committing any number of the torts just mentioned, as well as criminal conspiracy or “watching and besetting” under the Criminal Code.6 A tort or criminal finding could result in the court issuing an interlocutory injunction order requiring the activity in question to cease immediately, or imposing a damages award against workers or union leaders. The story of how common law judges invented and used the “labour injunction” to control and restrict collective worker activities is among the most fascinating in all of law.7 In the common law model, employees who strike—who refuse to come to work as scheduled while an employment contract is in effect—are probably committing a fundamental breach of their employment contract that could lead to their termination.8 Until protective collective bargaining legislation was passed in the mid-1940s, employees could also be denied employment for joining a union or speaking favourably about unionization, and employers could include terms in employment contracts indicating that support for a union was grounds for summary dismissal (known as yellow dog contracts).9 In addition, before collective bargaining legislation mandated a legal “duty to bargain in good faith” (see Chapter 33), employers could simply refuse to recognize and bargain with a union, even if every employee was a union member and wanted the union to represent them in bargaining with their employer. As we will learn in Chapter 37, unions did not have legal status in the common law regime—they were considered neither a person nor a corporation—and therefore lacked any legal means to force an employer to bargain with them.10 This very quick overview of how the common law regime treats collective worker activities is sufficient to demonstrate that, historically, the common law regime and the judges who preside over it have not been sympathetic to unions or collective bargaining, as Professor Harry Arthurs explained: Anglo-Canadian courts have been dealing with issues of individual and collective labour law for at least two hundred years. During that entire period, the courts virtually never, not on any given occasion, created a right which might be asserted by or on behalf of working people.11
However, this hostile common law environment did not prevent hundreds of thousands of Canadian workers from joining unions in pursuit of collective bargaining in the late 19th and early conspiracy to injure: A tort that involves two or more people acting in combination with the intention of causing harm to another party and actually causing that harm. intimidation: A tort that involves an attempt to coerce another person to do something or to refrain from doing something they are entitled to do by the threat of an unlawful act. nuisance: A tort in which the activities of one person unreasonably interfere with the use or enjoyment of the property of another person. inducing breach of contract: A tort that involves wrongful acts by a third party that are intended to cause a breach of contract between two other parties. interlocutory injunction: A temporary court order prohibiting conduct that is potentially unlawful until a decision is released by the court on whether the conduct is unlawful. yellow dog contract: A contract or contract term that requires an employee to refrain from joining a union or permits termination for cause of an employee who joins a union.
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462 Part IV The Collective Bargaining Regime 20th centuries, as depicted in Figure 28.1. For most of the period covered in the figure, there were no formal legal rights protecting a right of workers to join unions, and most collective worker activities were unlawful under the various common law doctrines just mentioned. Nevertheless, employers often agreed to bargain with unions “outside of the law,” because if they refused, the workers might walk off the job. While the strikes were unlawful, in many cases the employer could not, for practical reasons, fire all of the striking employees since it would take time to hire and train new workers, who would then need to cross angry picket lines each day. It made more business sense to work out a deal with the union. FIGURE 28.1 Trade Union Membership in Canada, 1900 – 1948 1000
PC 1003 900
800
Membership (thousands)
700
600
500
400
300
200
WWII
WWI 100
0
1911 1913 1915 1917 1919 1921 1923 1925 1927 1929 1931 1933 1935 1937 1939 1941 1943 1945 1947 1949
Year
Source: Department of Labour. Thirty-sixth Annual Report on Labour Organization in Canada (Ottawa, ON: King’s Printer, 1948) at 11.
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Chapter 28 Introduction to the Collective Bargaining Regime and the Canadian Labour Movement 463
Notice how unionization levels spiked during both World Wars. During the war years, workers acquired unprecedented bargaining power due to labour shortages as thousands of young men (and some women) joined the military, and that power translated into bumps in union organizing and collective bargaining as workers responded to what they perceived to be unfair working conditions. Another spike occurred after 1944, the year the first comprehensive collective bargaining legislation (called PC 1003, as discussed below) was enacted. Over time, governments intervened in the common law model in a variety of ways and for a variety of policy purposes. Sometimes the intervention was aimed at further controlling unions and workers when the arsenal of torts and hostile contract and criminal law doctrines proved ineffective at stopping collective worker activities that threatened commerce. For example, legislation in the early 20th century sought to reduce strikes by forcing unions and employers to engage in conciliation and then wait out a “cooling off ” period before a strike could commence.12 Sometimes legislation was enacted to protect unions and their members from the harshness of common law rules. For example, the Ontario Rights of Labour Act excluded union members from liability for the tort of conspiracy when they acted in combination in furtherance of a lawful labour dispute, and in 1932 the Criminal Code was amended to remove peaceful labour picketing from the definition of criminal watching and besetting.13 But the most formative legislative change came in the mid-1940s, when the federal government introduced the legislative model that still acts as the template for collective bargaining across Canada today. The legislation passed by the federal government in 1944 during World War II was known as the Wartime Labour Relations Order, or Order in Council PC 1003.14 PC 1003 was inspired by the “Wagner Act” (the National Labor Relations Act) that had been enacted in the United States in 1935. PC 1003, the details of which were later adopted by provincial governments in similar legislation after World War II, ushered in a new legal model that substantially reduced the reach of the common law over the unionization process, collective bargaining, and labour conflict (see Chapter 29 for more of the history of PC 1003). Box 28.1 describes the important ways in which the legislative model first created by PC 1003 altered how unionization and collective bargaining was treated under Canadian law.
BOX 28.1 » TALKING WORK LAW The Wartime Labour Relations Order The Wartime Labour Relations Order (PC 1003), enacted by the federal government in 1944, established a statutory scheme that continues to shape modern collective bargaining legislation today. As the following chart demonstrates, the new legal rights introduced by PC 1003 fundamentally altered the legal environment that had regulated collective worker activity under the common law regime.
conciliation: A form of mediation in which a neutral collective bargaining expert attempts to assist an employee association (e.g., a union) and an employer or employer association in reaching a collective agreement. PC 1003: Federal legislation that granted workers collective bargaining rights, including protection from anti-union discrimination by employers and a limited protected right to strike, and imposed on employers a legal “duty to bargain” with unions representing a majority of workers.
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464 Part IV The Collective Bargaining Regime
Legal Rights
Treatment of Collective Worker Activities in the Common Law Regime Before PC 1003
Rules in Collective Bargaining Statutes Beginning in the Mid-1940s
Right to join a union
• Employees could join worker associations. However, an employer could refuse to hire or could terminate a worker who did so, because freedom of contract includes the right to choose with whom you contract.
• PC 1003 introduced a statutory “right to be a member of a trade union or employees’ organization” that prohibited employers from refusing employment to, terminating, or discriminating against workers because of their support for collective bargaining (see Chapter 31).
Right to collective bargaining
• An employer had no obligation to recognize or bargain with a union that claimed to represent its employees.
• PC 1003 introduced a statutory duty to bargain “in good faith,” provided that the union had been “certified” by the government. Certification occurs once a union has satisfied the requirements in the collective bargaining statute, which include proving that a majority of employees wish to be unionized (see Chapter 33).
Right to strike and lockout
• A worker could refuse any offer of employment and refuse to work until an acceptable offer was made and accepted. However, an employer could refuse to hire any person who did not accept its offer.
• PC 1003 introduced a limited, protected right to strike that prohibits an employer from terminating employees for the reason only that they are engaged in a strike that the collective bargaining statute defines as lawful. A lawful strike is one that occurs only after a series of statutorily defined preconditions are satisfied.
• An individual worker who refused to work during the term of an employment contract either had quit or had probably given the employer cause for summary dismissal without notice (see Chapter 12). • If a group of workers together refused to work for an employer, they were likely engaged in torts such as “conspiracy to injure” the employer or “intimidation.”
• Recognition strikes, strikes by non-union workers, and strikes while a collective agreement was in effect remained unlawful. • Employers were granted a limited right to lock out workers as a bargaining tactic, provided that a series of statutorily defined preconditions are satisfied (see Chapter 34).
• Organizers of a strike were likely also engaged in “conspiracy to injure” or “intimidation,” and could also be committing the tort of “inducing breach of contract.” • An employer that “locked out” an employee— refusing to allow an employee to come to work—was committing a fundamental breach of contract that the employee could accept as a constructive dismissal (see Chapter 13). Right to picket in support of a strike
• Depending on the manner in which it was conducted, picketing could be treated as a tort (i.e., nuisance, inducing breach of contract).
• Picketing was not directly addressed in PC 1003. However, by the mid-1940s peaceful picketing support of a strike was no longer criminal. Picketing could still be tortious, depending on how it was conducted.
The next major legislative moment that contributed to the expansion of collective bargaining in Canada came two decades after PC 1003. Although Saskatchewan had permitted public sector workers to unionize since the 1940s, the rest of Canada did not pass public sector collective bargaining legislation until the 1960s. Quebec extended protections for collective bargaining to government employees in 1965, followed by the federal government, which enacted the Public Service Staff Relations Act in 1967. The other provinces soon followed, paving the way for a wave of public sector unionization beginning in the late 1960s and through the 1970s. Today,
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Chapter 28 Introduction to the Collective Bargaining Regime and the Canadian Labour Movement 465
each province in Canada and the federal government has its own legislation governing collective bargaining in the public and private sectors. While there are differences in this legislation, there is enough similarity that it is common to hear reference to the “Canadian model” of collective bargaining law. The main features of that “model” are those originally included in PC 1003 in 1944.
III. The Outputs and Legal Institutions of the Collective Bargaining Regime PC 1003 developed a model that fundamentally altered how the law previously governed unions and the processes of collective bargaining, collective agreements, strikes, and lockouts. Today, the basic principles found in PC 1003 exist in federal and provincial labour relations legislation across Canada, such as the federal Canada Labour Code, the Ontario Labour Relations Act, and the British Columbia Labour Relations Code.15 Labour relations boards are responsible for interpreting and enforcing labour relations legislation. We will explore the key elements of labour relations legislation in depth in the chapters that follow. The “outputs” (or legal rules) produced within the collective bargaining regime include more than just those found in labour relations legislation. For example, unions and employers (sometimes through employer associations) bargain their own legal rules that appear in collective agreements.16 Disputes about the application and interpretation of collective agreements are resolved by labour arbitrators, and a rich body of Canadian labour arbitration jurisprudence exists (see Chapter 36). Judges continue to play an important albeit more limited role in the collective bargaining regime than in the common law regime, particularly in the governance of picketing and strikes, where the old tort laws remain important for reasons explained in Chapter 34, and through judicial review of the decisions of arbitrators and labour relations boards. Table 28.1 provides a quick overview of the legal institutions responsible for enforcing the legal rules of the collective bargaining regime. TABLE 28.1 Legal Institutions in the Collective Bargaining Regime Legal Institution
Primary Role in the Collective Bargaining Regime
Labour Relations Boards
• To interpret and enforce labour relations legislation enacted by governments
Labour Arbitrators
• To interpret and enforce collective agreements negotiated by unions and employers
Courts
• To enforce tort law as applied to collective activities • To provide judicial review of decisions of arbitrators and labour relations boards
collective agreement: A contract between an employer (or employers) and a trade union (or trade unions) that sets out the conditions of employment for a group of employees. lockout: A tactic whereby an employer refuses to permit employees to report to work and to pay the employees to apply pressure on the employees and their union in collective bargaining. labour relations boards: Expert administrative tribunals responsible for enforcing and interpreting labour relations legislation. labour arbitrator: An individual or three-person expert arbitration panel appointed to decide disputes over the application and interpretation of collective agreements. judicial review: The process through which a decision of an expert administrative tribunal is appealed to a court on the basis that the tribunal exceeded its authority (or jurisdiction) as defined in the statute that created it or that the tribunal’s decision was wrong. How much deference a court must give to the expert tribunal’s decision is a complex question that is considered in a field of law known as administrative law.
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466 Part IV The Collective Bargaining Regime
IV. Who Is Governed by the Collective Bargaining Regime in Canada? Once employees unionize, they enter a new legal world. The common law rules of employment contracts explored in Part II of the book mostly fall by the wayside. For example, common law doctrines like constructive dismissal and wrongful dismissal—crucial legal concepts within the common law regime—no longer apply to an employee governed by a collective agreement and represented by a union. Unionized employees are represented by their union in dealings with the employer, and the collective agreement that the union bargains on behalf of employees supplants any pre-existing individual employment contracts. Therefore, when employees decide to switch from the common law regime to the collective bargaining regime by joining a union, they are electing to fundamentally alter the legal framework that governs their relationship with the employer. In 2018, approximately 4.7 million Canadian employees had their terms of employment governed by a collective agreement rather than an individual employment contract.17 That number translates into a union coverage rate—the percentage of employees covered by a collective agreement—of approximately 30.1 percent of Canadian employees (down from 34.5 percent in 1998).18 Sometimes the union density rate—measured in Canada as the percentage of non-agricultural employees who are union members—is used to measure unionization levels instead of union coverage rates. Union density can be lower than union coverage because some workers who are covered by a collective agreement may not have signed union membership cards. In Canada, the two rates tend to be similar. For example, in 2018, the union density figure was 28.1 percent, just slightly lower than the union coverage rate of 30.1 percent. Note that because both “union coverage” and “union density” measure the proportion of Canadian workers who are covered by a collective agreement and who are union members, respectively, relative to the total population of employees, the figures can decline even if total union membership is increasing. That would happen when the total number of people employed increases at a faster rate than union coverage and union membership. For example, while union density fell from 30.9 percent in 1997 to 28.1 percent in 2018, union membership—the number of people who are union members—actually increased from about 3.5 million to over 4.7 million over that same period.19 In other words, although there are more Canadians who are union members today than ever before, the percentage of total employees who are unionized is declining. Table 28.2 presents important details about the identity of unionized workers in Canada. TABLE 28.2 Union Representation in Canada, 2018 Total Union Coverage in Canada
30.1%
Men Covered by a Collective Agreement
27.9
Women Covered by a Collective Agreement
32.2
Union Coverage by Sector Public
75.1
Private
15.9
union coverage rate: The percentage of employees whose employment conditions are governed by a collective agreement bargained on their behalf by a union. union density rate: The percentage of employees who are union members. union membership: The number of people who are members of a union.
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Chapter 28 Introduction to the Collective Bargaining Regime and the Canadian Labour Movement 467 Union Coverage by Age 15–24
15.2
25–34
29
35–44
33.6
45–54
35
55+
33.8
Union Coverage by Employment Status Full time
31.5
Part time
23.6
Union Coverage by Education Level No degree, certificate, or diploma
30.1
High school graduate, some post-secondary education
22.7
Post-secondary certificate or diploma
34.5
University degree
34
Union Coverage by Workplace Size Under 20 employees
13.5
20–99 employees
30.4
100–500 employees
40.2
Over 500 employees
53.7
Sources: Statistics Canada, “Union Status by Establishment Size,”Table 14-10-0133-01, online: ; Statistics Canada, “Union Status by Geography,”Table 14-10-0129-01, online: .
The union coverage rate in the Canadian public sector is more than four times that in the private sector. Publicly provided services such as education, health care, and public administration are highly unionized, whereas privately provided services such as retail, food services, hospitality, and financial services have low collective agreement coverage rates. The high level of public sector unionization has kept Canada’s overall union coverage rate (30.1 percent) high relative to the United States, where overall union density is about 10 percent. Private sector union coverage in Canada has experienced a downward trend since the 1980s (see Box 28.2), which is similar to but less dramatic than that experienced in the United States, where private sector union density sits (in 2018) at about 6 percent—approximately the same level of unionization as existed in the early 1930s. Large workplaces are far more likely to be unionized than small workplaces. There is also a substantial difference in union coverage across provinces. In 2018, Alberta had the lowest union coverage rate at only 24.5 percent, while Quebec (38.4 percent) and Newfoundland and Labrador (37.3 percent) had the highest (see Table 28.3).
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468 Part IV The Collective Bargaining Regime TABLE 28.3 Union Coverage by Jurisdiction, 2014 – 2018 Geography
2014
2015
2016
2017
2018
Canada
30.4
30.6
30.3
30.4
30.1
Newfoundland and Labrador
37.8
37.3
37.5
38.7
37.3
Prince Edward Island
32.3
34.1
31.5
31.3
32.0
Nova Scotia
30.8
30.9
31.0
30.2
29.7
New Brunswick
28.6
29.3
28.1
29.0
29.8
Quebec
39.3
39.4
38.6
38.4
38.4
Ontario
27.0
26.8
26.7
26.8
26.3
Manitoba
35.4
35.9
35.1
34.5
34.2
Saskatchewan
33.3
33.2
32.6
32.9
33.5
Alberta
22.1
23.5
24.9
25.0
24.5
British Columbia
30.0
30.3
28.9
29.7
29.1
Source: Statistics Canada, “Union Status by Geography,”Table 14-10-0129-01, online: .
Since 2004, a greater percentage of women (32.2 percent compared to 27.9 percent men) have been in unions than men, as depicted in Figure 28.2. The typical unionized employee in Canada today is a woman working in public services, a sharp contrast to earlier eras in which union members were overwhelmingly male and employed in sectors such as manufacturing, mining, construction, and forestry.20 FIGURE 28.2 Union Membership in Canada by Gender, 1981 – 2018
Membership (percentage)
45
Men Both sexes Women
40
35
30
25
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2018
Year
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Chapter 28 Introduction to the Collective Bargaining Regime and the Canadian Labour Movement 469
As noted above, unionization in the private sector has experienced a steady decline over the past few decades. This is due to a variety of forces that are discussed in Box 28.2. Whether the fall in private sector union representation is a good or bad trend is a matter of perspective (see Chapter 3). However, the question of whether governments should be reforming our collective bargaining laws with the aim of expanding private sector collective bargaining has been hotly debated in political elections and policy debates for decades. We will explore these debates throughout the rest of this text.
BOX 28.2 » TALKING WORK LAW The Decline in Private Sector Union Coverage in Canada While unionization in the public sector has held strong (about 75 percent of public sector employees are unionized), since the 1980s there has been a slow and steady decline in the percentage of private sector workers represented by unions in Canada, as demonstrated in the figure below. Private sector unionization has decreased from about 26 percent in 1984 to about 16 percent today. Changes to collective bargaining laws designed to discourage the spread of collective bargaining provide part of the explanation for this decline. Provincial governments inspired by the neoclassical perspective (see Chapter 3) introduced laws that made it more difficult for unions to organize new workers.* We will examine some of the ways that labour laws influence unionization levels in the coming chapters. However, legislative changes within the collective bargaining regime explain only part of the decline in private sector union representation.
Structural changes in the Canadian economy—in the economic and market subsystem (Chapter 2)—over the past four decades are an important part of the story as well. “Structural changes” include shifts away from heavily unionized sectors toward sectors with lower union representation levels. There has been a shift in the composition of the Canadian workforce from traditionally heavily unionized sectors of the economy (manufacturing especially) toward less unionized sectors (private services) and public sector employment (which is heavily unionized).† Between 1984 and 2018, the share of Canadians employed in manufacturing declined from 16.9 percent to 9.2 percent.‡ At the same time, employment in public services such as health care grew substantially. Many of those public sector jobs are unionized, which explains why the public sector unionization rate has remained strong. However, as the labour force trends away from industries with traditionally high levels of union penetration, union representation levels decline.
80
Density (percentage)
70 Public All Employees Private
60 50 40 30 20 10 0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Year
Source: Armine Yalnizyan, Senior Economist, Canadian Centre for Policy Alternatives, based on Statistics Canada data from CANSIM 282-0078; Statistics Canada, “Union Status by Industry,”Table 14-10-0132-01, online: .
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470 Part IV The Collective Bargaining Regime There have also been structural changes within sectors, from unionized workplaces to non-unionized workplaces.§ For example, since the 1980s Canada has lost thousands of unionized manufacturing jobs, aided by “free trade” agreements that encouraged corporations to shed Canadian manufacturing jobs in favour of lower wage and regulation jurisdictions (see Chapter 27). Although new manufacturing jobs were created, fewer of them have been unionized. The unionization rate in manufacturing fell from 31.2 percent in 1999 to 24.7 percent in 2018.# Unionization levels also fell in other traditionally heavily unionized sectors, including forestry, mining, and construction. * S. Slinn, “An Empirical Analysis of the Effects of the Change from CardCheck to Mandatory Vote Certification” (2004) 11 CLELJ 259; and C. Riddell, “Union Certification Success Under Voting Versus Card-Check
Procedures: Evidence from British Columbia, 1978 – 1998” (2004) 57 Indus Lab Rel Rev 493. † D. Galarneau & T. Sohn, Long Term Trends in Unionization (Ottawa, ON: Statistics Canada, 2012), online: ; G. Murray, “Unions: Membership, Structures, Actions, and Challenges” in M. Gunderson & D. Taras, eds, Canadian Labour and Employment Relations, 6th ed (Toronto, ON: Pearson, 2009) 74 at 83; and Statistics Canada, “Union Status by Industry,” Table 14-10-0132-01, online: . ‡ Galarneau & Sohn, supra note †; and Murray, supra note † at 83. § A. Jackson & S. Schetagne, “Solidarity Forever? An Analysis of Changes in Union Density” (Summer 2004) 4 Just Labour 53 at 58, online (pdf ): . # Ibid.; and R. Morissette, G. Schellenberg, & A. Johnson, “Diverging Trends in Unionization” (2005) 6:4 Persp Lab & Income, online: .
V. Canadian Unions Today: A Snapshot Canada’s close historical, cultural, and economic ties to the United States led US-based “international unions” to play a key role in the establishment and early development of Canadian unions. Indeed, many of the largest and oldest private sector unions in Canada began as affiliates of much larger US unions, including Unifor (which was known as the Canadian Auto Workers from the time it split with the US-based United Auto Workers in 1985 until 2013),21 the United Steelworkers Union, and the United Food and Commercial Workers (UFCW). With their larger size and earlier development, US unions provided an attractive option for Canadian workers with few alternatives. However, since the 1970s, many Canadian unions have seceded from their US parent unions, sometimes complaining of a lack of attention or interference from the US leadership. In addition, growing Canadian patriotism and a widening cultural and political gap between Canada and the United States contributed to what is now a strong national labour movement in Canada. As a result, the proportion of international union membership declined from more than 70 percent in the mid-1960s to its current level of 5.2 percent.22 The spread of collective bargaining in the public sector during the 1960s and 1970s brought national (exclusively Canadian) unions to the fore, as international unions were seldom active among Canadian public employees. Today, the largest unions in Canada represent public sector employees, including the Canadian Union of Public Employees (CUPE) and the National Union of Public and General Employees (NUPGE), as well as many large provincial public sector unions, such as the Ontario Public Sector Employees Union (OPSEU). Most unionized workers in Canada belong to local unions, which operate like branches or divisions of a larger parent union. Local union members usually elect their local union leadership. For example, Local 222 of Unifor represents workers at General Motors’ factories in and around Oshawa, Ontario, as well as other workplaces in that geographic area. Unifor’s national head office (the parent union) provides a variety of services to its locals, including negotiating assistance, legal and economic services, training and development, and help with organizing
international unions: A union that represents workers in more than one country. local union: A local branch of a union; it is part of and chartered by a parent union. parent union: A larger umbrella organization made up of smaller local unions. It provides service to its member local unions, such as training of local union representatives, maintaining strike funds, and providing collective bargaining support and legal expertise.
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Chapter 28 Introduction to the Collective Bargaining Regime and the Canadian Labour Movement 471
new union members. The largest parent unions in Canada are listed in Table 28.4. Parent unions often supply professional service or union business representatives to local unions, who work with the employer and local union stewards and other local union officials to negotiate and enforce collective agreements, although larger local unions may employ their own professionals to perform these services. As we will learn in Chapter 36, disputes arising under collective agreements are dealt with through grievance procedures found in the agreements and are litigated before labour arbitration tribunals rather than courts. A union’s business representative, union steward, or other local union official (like a local union president) may present a grievance at arbitration, or the union may use a labour lawyer. Similarly, an employer may use a senior human resources or labour relations manager to present arbitrations, or more frequently they hire labour lawyers. TABLE 28.4 The Largest Parent Unions in Canada Number of Members (2015)
Union Canadian Union of Public Employees (CUPE)
635,500
National Union of Public and General Employees (NUPGE)
360,000
Unifor
300,152
United Food and Commercial Workers Canada (UFCW)
247,543
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW)
190,452
Public Service Alliance of Canada (PSAC)
181,017
Fédération de la santé et des services sociaux (FSSS)
135,527
Source: Statistics Canada, “Labour Organizations in Canada 2015,” Appendix 5, online: .
Most Canadian unions have affiliated with a central union confederation that provides representation at the provincial or national level. Approximately 81 percent of all union members in Canada belong to a union that has affiliated with a central labour congress.23 The largest and most important national confederation is the Canadian Labour Congress (CLC), which represents 69 percent of all Canadian union members.24 The next largest, at only 6.9 percent, is the Quebec-based Confédération des syndicats nationaux. There are also provincial union federations in every province that advocate for unions at the provincial level, such as the Ontario Federation of Labour and the BC Federation of Labour. union business representative: An employee of a union whose job includes assisting local unions in the negotiation of collective agreements and administration and enforcement of collective agreements. union steward: A representative of a union in a workplace, often elected by employees in that workplace, who is responsible for representing employees in day-to-day concerns about working conditions and collective agreement administration. grievance procedure: A provision of the collective agreement that explains when and how a grievance alleging a breach of the agreement can be filed and what process will be used to mediate the grievance and, if not resolved, to refer the grievance to binding labour arbitration. A grievance procedure usually includes several “steps,” with the final step being referral to arbitration. Canadian Labour Congress (CLC): The largest federal confederation of unions in Canada, representing 3 million Canadians. Its main roles are to lobby governments, provide leadership on key issues, and provide training and education resources for its member unions. It holds a national convention every three years.
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472 Part IV The Collective Bargaining Regime The CLC serves a number of important functions for the Canadian labour movement. First, it advocates and lobbies for legislative and policy initiatives at the national level, especially for things it believes benefit union members and Canadian working people in general. Second, the CLC provides a variety of educational and other supports to affiliate unions, especially smaller ones that lack resources. Third, it represents the interests of the Canadian labour movement in the international arena, such as at the International Labour Organization. Fourth, the CLC attempts to regulate and limit inter-union conflict. In particular, the CLC had adopted a policy relating to union raiding, which occurs when one union seeks to displace another union as the representative of a group of workers. Unions affiliated with the CLC are expected to not “raid” other CLC affiliates. However, the CLC has no legal authority to sanction a union that violates this pact, and in recent years there have been some high-profile disputes relating to alleged union raiding. The media story in Box 28.3 describes the recent decision of Unifor, Canada’s largest private sector union, to leave the CLC following a dispute about the CLC’s raiding rules.
BOX 28.3 » TALKING WORK LAW Canadian Labour Congress Accuses Unifor of Leaving to Raid Another Union The head of the Canadian Labour Congress is accusing Unifor of raiding another union for members after it severed ties with the national lobby group for the country’s labour movement. Unite Here Local 75, which represents hundreds of hotel workers in Toronto and Mississauga, announced Thursday night it is seeking to leave its U.S.-based parent union and join Unifor. The move came a day after Canada’s largest private sector union split from the CLC over concerns including what it says are some U.S.-based unions stifling workers’ rights to change the group representing them. “Since the disaffiliation, they are now involved in raiding Unite Here in Toronto,” CLC president Hassan Yussuff said. It’s against the rules for affiliates to solicit the members of another affiliate to join their union, he explained. “But, if you leave the congress, then, of course, you’re free to go and solicit any members that they wish to join their union. And that’s what they’re doing right now.” However, Unifor president Jerry Dias insists Unifor’s decision to leave the CLC was not about boosting its membership and denied the accusation that he was raiding another union. “I have zero interest in raiding any unions. We will respond to those that attempt to raid us, but this has absolutely nothing to do with raiding,” he said. Dias said the CLC rules that give disgruntled unionized workers an avenue to choose different representation don’t work, particularly because U.S.-based unions that are also part of the CLC don’t want them to be effective. Among the CLC’s 65 members, there are 33 international unions. The Air Line Pilots Association International, for example, is an affiliate that represents pilots at airlines in both the U.S. and Canada. While unionization rates have fallen in Canada, the drop in the United States has been even larger.
For U.S. organizations, there’s financial incentive to keep Canadians in their unions, said Dias. “Canada is a major cash cow,” he said. “So there is one heck of a push amongst the U.S.-based unions to ensure that their members can never leave their union.” Unite Here Local 75 outlined several frustrations with its parent Unite Here when announcing the vote to switch unions. It said Unite Here put the local into trusteeship in January, removed elected officials and seized the local unit’s assets. But international unions have been a part of Canada’s labour movement since the start, said Christopher Monette, a spokesman for Teamsters Canada—a CLC affiliate. The union represents more than 125,000 members and is affiliated with the Washington, D.C.-based International Brotherhood of Teamsters. “We don’t feel concerned by these accusations and charges from Unifor,” said Monette, calling Unifor’s reasoning “spin.” “They’re leaving because the CLC does not allow their affiliates to openly go out and raid other unions,” he said. Yussuff disagreed with Dias’s assertions that the CLC has failed to act on member complaints, adding its received 46 complaints between May and December last year and all have been resolved. The group can’t address complaints it doesn’t receive, he added. If Unifor has issues with the group’s constitution, Yussuff said, the union should have worked within the system to build a consensus around how to improve the structure. “Leaving and interfering in the relationship with other affiliates is not a way to demonstrate your solidarity,” he said. Source: “CLC Accuses Unifor of Leaving Lobby Group to Raid Another Union,” CBC News (January 2018), online: .
union raid: An attempt by one union to organize workers who are represented by another union.
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Chapter 28 Introduction to the Collective Bargaining Regime and the Canadian Labour Movement 473
VI. Chapter Summary This chapter explained how the collective bargaining regime and laws that inhabit it should be understood against the historical backdrop of how collective worker activities were treated within the common law regime over many years. Many of the legal rules we will explore in the chapters that follow represent government attempts to alter the common law approach, which was hostile to unions and collective worker activities, or otherwise to control worker militancy. PC 1003, introduced by the federal government in 1944, marked a definitive moment in the development of the modern collective bargaining model that we will explore in the coming chapters. Today, approximately one-third of Canadian employees have their terms and conditions of employment set through collective bargaining and collective agreements rather than individual employment contracts. We examined some characteristics of Canadians who are unionized today and noted that collective bargaining is more common in the public sector, in large workplaces, and among older workers and women. Finally, we examined the basic structure of Canadian unions and how they function. In the chapters that follow, we will dive deeper into many of these subjects.
QUESTIONS AND ISSUES FOR DISCUSSION 1. Describe how collective bargaining legislation created new legal rights to protect workers who joined unions that did not exist in the common law regime. 2. Identify the three main legal institutions within the collective bargaining regime and explain what role they play. 3. What factors have contributed to the overall decline in union coverage in the private sector over the past 30 years in Canada? 4. What explains the spike in union membership numbers during the two World Wars of the twentieth century? 5. What are the key functions of the Canadian Labour Congress?
EXERCISES 1. Go to a search engine such as Google. Type “Canada” and “the decline of unions.” 2. Select a news article from the search results, read it carefully, and answer the following questions: a. What is the story about? b. Does the story cite any statistics about union representation in Canada? c. Does the story argue or propose that the decline of unions is a positive or negative development for the Canadian economy? For workers? For employers? d. Does the article provide any reasons why unions are in decline? e. Does the article describe any legal rules that either have contributed to the decline of unions in Canada or could help rejuvenate unions in Canada’s private sector?
NOTES AND REFERENCES 1. B. Langille, “Labour Policy in Canada—New Platform, New Paradigm” (2002) 28 Can Pub Pol’y 133. 2. For a discussion of the common law’s treatment of union organizing and collective bargaining, see B. Langille, “The Freedom of Association Mess: How We Got into It and How We Can Get out of It” (2009) 54 McGill LJ 177 at 188-93.
3. See J. Fudge & E. Tucker, Labour Before the Law: The Regulation of Workers’ Collective Action in Canada, 1900 – 1948 (Toronto, ON: Oxford University Press, 2001) at 168-69; and S. Hanson, “Estevan 1931,” in I. Aella, ed, On Strike: Six Key Labour Struggles in Canada, 1919 – 1949 (Toronto, ON: Lorimer, 1974) 33.
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474 Part IV The Collective Bargaining Regime 4. In Quinn v. Leathem, [1901] AC 495 (HL), the tort of conspiracy to injure was decided; in Rookes v. Barnard, [1964] AC 1129, the tort of intimidation was committed when workers threatened to strike (i.e., to breach their employment contracts). 5. J. T. Stratford & Sons Ltd. v. Lindley, [1965] AC 269. For a discussion of the application of torts to restrict collective worker activities, see Labour Law Casebook Group, Labour and Employment Law: Cases, Materials, and Commentary, 8th ed (Toronto, ON: Irwin, 2011) at 418-22; Fudge & Tucker, supra note 3; and H. Arthurs, “Labour Law—Secondary Picketing—Per Se Illegality—Public Policy” (1963) 41 Can Bar Rev 573. 6. Criminal Code, RSC 1985, c. C-46; and Fudge & Tucker, supra note 3 at 25. 7. H. Arthurs, “Tort Liability for Strikes in Canada: Some Problems of Judicial Workmanship” (1960) 38 Can Bar Rev 346; B. Laskin, “Picketing: A Comparison of Certain Canadian and American Doctrines” (1937) 15 Can Bar Rev 10; and K. Wedderburn, “Strike Law and the Labour Injunction: The British Experience, 1850 – 1966” in A.W.R. Carrothers, ed, Report of a Study on the Labour Injunction in Ontario, vol. 2 (Toronto, ON: Ontario Department of Labour, 1966). 8. McGavin Toastmaster Ltd. v. Ainscough, [1976] 1 SCR 718 at 8-9. 9. See Fudge and Tucker, supra note 3 at 2. 10. Orchard v. Tunney, [1957] SCR 436. 11. H. Arthurs, “The Right to Golf: Reflections on the Future of Workers, Unions, and the Rest of Us Under the Charter” (1988) 13 Queen’s LJ 17 at 18. 12. See, for example, the Industrial Disputes Investigation Act, SC 1907, c. 20. 13. That legislation remains in effect as the Rights of Labour Act, RSO 1990, c. R33, s. 3(1). On the Criminal Code amendments, see Fudge & Tucker, supra note 3 at 165-66. 14. Wartime Labour Relations Order PC 1003 is available at . 15. Canada Labour Code, RSC 1985, c. L-2; Ontario’s Labour Relations Act, 1995, SO 1995, c. 1, Sched. A; and BC’s Labour Relations Code, RSBC 1996, c. 244. 16. Unions are the most common type of employee association. However, many workers are also represented by nonunion forms of employee associations. For example, employees at WestJet Airlines are represented by a
company-sponsored employee association known as the Proactive Communication Team (PACT), which negotiates agreements with the employer. Non-union employee associations are usually not covered by labour relations legislation applicable to unions, and employees in those associations continue to be governed by the common law regime’s rules of employment contracts. See D. Doorey, “Union Drive at WestJet Highlights Current Tensions in Labour Policy,” Globe and Mail (August 2015), online: ; and D. Taras & B. Kaufman, “Non-Union Employee Representation in North America: Diversity, Controversy, and Uncertain Future” (2006) 37:5 Indus Rel J 513. 17. Statistics Canada, “Union Status by Industry,” Table 14-100132-01, online: 18. Ibid. 19. Statistics Canada, “Union Status by Geography,” Table 14-10-0129-01, online: