Author: barryfisher

In Watson v Salvation Army ( 2018 CarswellOnt 2916) Justice Gordon had a situation where the Plaintiff was suing her former manager for sexual harrassment after having previously settled with her former employer and signed a Release which said as follows:

“This release of claims shall include any claims against anyone or any organization in any way related to or connected with my employment or ending of my employment.”

The Judge found that this did not protect the former manager  even though these events occurred at work because ” sexual harassment, intimidation and other improper conduct are not connected to employment . This are clearly separate items ” 

How to avoid this outcome ?

The Judge said ” specific language to such claims would need to be added to the Release to bar the present claim”.

Does this mean that every employment release must mention sexual harassment, sexual assault etc ? What about racial discrimination, physical assault, or generalized harassment ? Are these also ” not  connected to employment “?

Does this mean that she could go back and again sue the Salvation Army for vicarious liability for the sexual harassment that she endured from her former boss?

I think the Judge got this wrong.

Of course sexual harassment is ” connected with employment” insofar as it exists in most cases because of the employment relationship, especially like in this case where it is the boss harassing an subordinate.

That is why making a sexual advance to a subordinate in the  workplace is qualitatively different than making a sexual overture to a stranger in a bar.

Sexual harassment is all about the power that derives from the inherent power imbalance in the workplace.

One gets the feeling that the Judge didn’t want the former manager to get the benefit of the very low settlement ( $10,000) negotiated between the Army and the Plaintiff. At the time of her settlement the manager was still in the Army’s employ. I am sure that the Army intended at that time that this settlement would cover all their employees, including the manager.

If the Plaintiff wanted to settle with her employer but not her harasser, she could have negotiated  a carve out in the Release. In my experience that would have resulted in no settlement.

Settlements and releases are essential to resolving employment disputes. The only thing that the employer is buying is peace. Allowing releases to be set aside for anything other than fraud or misreresentaion will have a negative effect on resolving future employment disputes.

 

In Dussault v Imperial Oil ( 2018 ONSC 1168) two long term plaintiffs were told that Imperial was selling   the division that they worked for to Mac’s and that Mac’s would make them a comporable  job offer. The Plaintiffs rejected the Mac’s offers.

The legal issue was whether this was a failure to mitigate, thereby reducing the Imperial severance obligations.

Justice Faveau said NO for the following reasons:

1) The Mac’s offers came before the actual termination from Imperial and were not restated after the actual termination.

2) Because Imperial demanded that before paying out severance the Plaintiffs had to sign a release, it was reasonable not to accept Mac’s offer as this would deny the Plaintiffs any ability to later sue Mac’s for any shortfall.

3) As Mac’s was not prepared to recognize their years of service with Imperial, it was reasonable for the Plaintiffs to reject the offer.

4) The Plaintiffs had to agree with Mac that they would not disclose their pay rate to other Mac employees as their pay rate was higher.  This would make the future work relationship ” potentially difficult’.

5) The higher salary was only guaranteed for 18 months, less than the 26 month notice period awarded by the Court.

In Klonteig v District of Kelowna ( 2018 BCSC 124) Justice MacNaughton had a situation where an Assistant Fire Chief ( Administration) was terminated after being given  a 90 day driving suspension ( but no criminal charge ) outside of working hours but while driving an unmarked District owned vehicle.

The Court found that this off duty conduct did not justify dismissal because of the following factors:

1) He was permitted to drive the District vehicle  for personal use and the truck had no markings showing it was owned by the District.

2) The public was not aware of the suspension of his licence.

3) His was not the face of the employer. His duties were largely administrative.

4) No criminal charges were laid.

5) There was no evidence that the plaintiff had lost the support or respect of the other employees. In fact almost every firefighter sent a letter of support in favour of the plaintiff.

6) The conduct of drunk driving was not as morally reprehensible as possession of child porno, consorting with a prostitute on company property or engaging in a dishonest tax scheme.

I understand all the points except the last one. Nobody ever died from consorting with a prostitute or  tax fraud.

Can’t say the same about drunk driving. According to MADD:

Crashes involving alcohol and/or drugs are a leading criminal cause of death in Canada. On average, approximately 4 people are killed each day in crashes involving alcohol and/or drugs. In 2013, there were a total of 2,430 crash deaths on public roads, involving at least one highway vehicle (e.g. passenger cars, vans, trucks, or motorcycles). Based on testing of fatally-injured drivers, it may be estimated that 1,451 (59.7%) of these deaths involved drivers who had some alcohol and/or drugs in their system.

In Grant v Electra Signs, the Court of Appeal was dealing with a decision of the Queens Bench which awarded a 63 year old GM with 13.5 years service the following:

a) 12 months reasonable notice.

b) Plus 2 extra months for the manner of dismissal (  Keays v Honda ).

c) Less 4 months notice for poor mitigation.

Thus the plaintiff was awarded 10 months .

The CA ruled that :

a) 12 months was reasonable and that there is no rigid rule in Manitoba  that one year of service = 2/3 of a month notice.

b) To award Honda damages based on an increased notice period is wrong in law and although medical evidence is not required there must be some evidence that the plaintiff suffered some damages in excess of the normal feelings upon losing one’s job.

c) Even though the plaintiff  did nothing to look for a job, the failure of the Defendant to show that had he looked for a job within the notice period that he could have lessened his damages was fatal to their argument and thus no reduction of the notice period was appropriate.

In the end the Plaintiff got 12 months notice.

In Holm v AGAT Labs ( 2018 (ABCA 23 ) the Court of Appeal dealt with a clause that said that upon termination the employee would only receive the notice “in accordance with the provincial legislation for the province of employment” . It sets out in great detail that that is all the employee is entitled to.

The Alberta Employment Standards Code, just like the Ontario ESA, says that an employer must give “at least” the number of weeks set out in the Act, in this case 1 week. Therefore , the Court held, it is also permissible under the Act to pay more than the one week. As this creates an ambiguity, the interpretation that favours the employee should prevail. The Court quoted the Ontario case of Wood v Fred Deeley Imports ( 2017 ONCA 158).The plaintiff was therefore entitled to reasonable notice .

As the  Alberta Code and the Ontario Act use the same language, one could reasonably expect the same result in Ontario.

Of interest also is the  concurrent opinion by Justice O’Farrell who examined the issue of why would the parties have a six paragraph termination clause if all they meant to do was apply the doctrine of reasonable notice. In his reasons he sets out two vastly different approaches to determining the legality of ESA clauses.

          I am compelled to concur in the result reached by the majority. The chambers judge properly applied judicially-approved principles governing the interpretation of employment contracts.

[39]           However the contractual terms employed by the parties in this case have given me cause to question those principles. A lay person reading the entire termination provision of the contract (which is reproduced and appended to these reasons) might be forgiven for thinking that the parties did intend to “limit” termination notice or pay in lieu of such notice to the “minimums” set forth in the employment standards legislation, even though the parties failed to employ either of the quoted words of limitation. A reasonable observer might question why the parties needed a termination clause as lengthy and detailed as the one employed in this case to merely indicate their intention to be governed by the common law’s reasonable notice requirement. In other words, if the termination provision of the employment contract was not intended to limit termination notice or pay in lieu, what was it there for?

[40]           Perhaps the best way to explain the result in this case to the appellant employer is to say that in employment law it is sometimes not as much about ascertaining the parties’ intention as it is about applying judicially-mandated principles of interpretation designed to protect employees because of perceived, and sometimes very real, inequality of bargaining power as between employees and employers. At least two of those principles were operative in this case. One was the principle that termination clauses will only rebut the presumption of reasonable notice if they are absolutely clear. The other is that faced with a clause in an employment contract which could reasonably be interpreted in more than one way, courts are required to prefer the interpretation which gives the greatest benefit to the employee.

[41]           The problem, not so much with principles, but with the approach employed by the courts in interpreting employment contracts is that it may be less understandable than an approach which simply requires the court to ascertain the intention of the parties as disclosed by the words they used. Also, the rules employed in interpreting employment contracts involve presumptions against the employer which may or may not be justified in any given case. Inequality of bargaining power is not always a justifiable assumption. Small business employers and employers in the not-for-profit sector, for example, may be on a much more level playing field. Finally, prospective employers and employees who do not have access to employment lawyers may not be aware of the interpretational rules. Whether small business employers and their employees ought to be required to wade through mountains of jurisprudence in order to find the magic formula needed to achieve enforceable contract language is what is being questioned here.

[42]           The courts have repeatedly asserted that there is no magic formula for limiting termination notice or pay in lieu to the minimums in employment standards legislation. However, if the analysis is not simply one of ascertaining the intention of the parties but rather one of determining whether or not a particular clause is sufficiently clear to rebut the presumption of reasonable notice or to satisfy a judicially-mandated requirement that such clause be interpreted in favour of the employee, there will indeed be a formula of sorts. The formula will be what it takes to satisfy a court that presumptions in favour of the employee, mandated by previously-decided jurisprudence, have been rebutted. Perhaps the jurisprudence requires revisiting for situations where it is clear what the parties intended, but where the words chosen do not satisfy judicial canons of construction. This is not to suggest that the considerations articulated by courts in cases such as Wood v Fred Deeley Imports Ltd, 2017 ONCA 158 (CanLII) at para 28, 134 OR (3d) 481 are not useful. It is simply to suggest that perhaps more emphasis ought to be put on ascertaining what the parties intended.

This differing judicial approach is evident in Ontario, where one set of judges seem to follow the Wood v Fred Deeley approach of closely examining the wording of the clause for potential illegality and/or ambiguity and the “parties intention ” approach as set out in the recent Ontario Court of Appeal  case of Nemeth v Hatch.

Only time will tell which approach will prevail, unless one day the Supreme Court of Canada agrees to address this issue and tell us all once and for all how these contracts should be interpreted.

 

Mr. Wilson worked for AECL from May 2005 until his termination on November 16, 2009. He then filed a CLC unjust dismissal complaint, presumably in early 2010.

It took two years to get to arbitration at which time Arbitrator Shiff made a preliminary ruling  that said simply paying statutory notice and severance pay did not avoid the remedies section of the CLC. This was judicially reviewed first by the Federal Court, Trial Division, then the Federal Court of Appeal and finally to the Supreme Court of Canada, which ruled in Mr Wilson’s favour.

I thought that at that point, having won, Mr Wilson would either get his back pay and reinstatement or just a whole lot of money.

Nope. The matter was referred to a new arbitrator, Michael Bendal. Seven years after the fact, AECL raised for the very first time, a new jurisdictional defence involving the application of Public Servants Disclosure Protection Act, a whistle blowing statute intended to protect whistleblowers from retaliation.

AECL lost again before Bendel. ( 2017 CarswellNat 6877) Another set of dates will be set to finally hear the merits. That is unless AECL again seeks judicial review of the rejection of their jurisdictional argument.

I thought that there was a principle of administrative law which said that a Court should wait until the administrative procedure is completed before judicially reviewing the case, in order to avoid this start and stop process. One can only hope that if AECL tries to judicially review this newest ruling that the Court will tell them to wait until the case is over and then file their comprehensive application,

Justice delayed in justice denied.

In Horner v 897469 Ont Ltd ( 2018 ONSC 121) Newton J. awarded non-notice damages for an employee who was bullied at work. In this undefended action, the Court found that Ms Horner had been bullied by a co-worker, which caused her great upset. She complained to the owner, who told her to take a few days off  and that he ” would figure it out in a few days”. A few days later he fired her, alleging cause in relation to her dealings with the bully co-worker. Having previously been diagnosed with depression, the termination caused her to fall into deeper depression. She lost 30 pounds, was under doctor’s care and has been unable to look for work. She did not get EI as the employer alleged cause.

The Court awarded $20,000 for aggravated damages and another $10,000 for punitive damages. A previous judge had awarded her 3 months notice.

Contrast this with Galea v Walmart ( 2017 ONCA 245) where the Court awarded $750,000 for conduct of a somewhat different sort where there was no medical evidence of mental distress of the Plaintiff.

In Hagholm v Coreiro ( 2017 ONSC 7713) Sloan  J. had a situation where  a 59 year old Manager of Consulting Services who for 22 years had been able to work at home 3 days a week and only came to to the office the other two days . Then out of the blue, the Employer said now you must come to the office 5 days a week . She said no and quit and sued for constructive dismissal . Her commute was 110 km one way.

The Court found that it was essential term of her agreement that she be able to work at home 60% of the time and that the employer’s unilateral change was a constructive dismissal , warranting a 22 month notice period.

In Nemeth v Hatch ( 2018 ONCA 7) the Court was faced with the following termination clause:

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

The Court decided that this clause was not ambiguous. This is what they said :

[14]       It is clear from the plain language of the termination clause in the present case that the parties intended and agreed to limit the appellant’s common law notice entitlement. The clause clearly “specifies some other period of notice” that meets the minimum entitlements prescribed under the ESA:  it contemplates the appellant receiving “one week per year of service with a minimum of four weeks or the notice required by the applicable labour legislation.” It cannot be said that the appellant retained his common law entitlements in the face of this explicit language, which denotes an intent to the opposite effect.  I agree that there is no ambiguity that the parties intended and agreed to displace the appellant’s common law notice entitlement. Whether they agreed to limit it to the minimum entitlements under the ESA is a question to which I return later in these reasons.

With all due respect to the Court, I suggest that it is not clear what the intentions of the parties were, for the following reasons:

1. The Defendant took the position that the clause only required them to provide 8 weeks notice ( the ESA maximum notice ) notwithstanding that the Plaintiff had 19 years service. The trial judge agreed with that position. However the Court of Appeal held that he was entitled to 19 weeks notice under that clause, in effect saying that the Plaintiff was entitled to the greater of the ESA entitlement or one week per year of service with a minimum of 4 weeks. So, tell me, how can the clause be unambiguous, and therefore ” clear from the plain language “, when one judge sees it one way and another 3 judges see it another way?
2. The clause makes no sense because the phrase stating ” or the notice required by the applicable labour legislation” could never apply. If the person had 1, 2 or 3 years service, then the contractual minimum of 4 weeks exceeds the ESA minimums. If they had 4,5,6,7, or 8 years service the ESA amount would equal the  contactual amount. If they had more than 8 years service, then the contractual amount would always exceed the ESA amount. How then can a clause which makes no internal sense and contains useless language be clear and unambiguous?
3. The Clause refers to ” applicable labour legislation”. The Court assumed that the parties must have intended to  refer to the Employment Standards Act . Why not the Labour Relations Act? Why not the Employers and Employees Act? Why not the Employment Protection for Foreign National Act? Why not the Human Rights Code? Why not the Occupational Health and Safety Act? Get my drift?

In the book ” Ontario Labour and Employment Legislation 2016 ” by Thomson Reuters there are 15 statutes listed. How is Mr. Nemeth, the plaintiff supposed to know which sections of which Act are being incorporated into his employment contract. The above mentioned book requires 1360 pages to set out these statutes.

If one does a search in CANLII for “Ontario -Legislation -Labour “, you get 17 hits , but the ESA does not appear in that search.

I did a word search in the ESA for the word “labour” . I got 29 hits. They all referred to either the Labour Relations Board, a labour officer, Labour Day, the Ministry of Labour or the Canada Labour Code. Not a single reference to ” labour ” let alone ” applicable labour legislation ” in any section relating to the termination of employment.

Even a cursory review of the ESA shows you that there are numerous provisions in the Act that you would have to know in order to truly understand what the termination provisions of the ESA actually cover. To think that poor Mr. Nemeth was aware of all of this, let alone that he knew that he was actually giving up  a right to reasonable notice, (which he probably did not even knew he had), is unrealistic.

However, to this panel of the Court of Appeal, it was ” clear” what the parties intended.

The reference to ambiguity voiding a termination provision comes from a earlier Court of Appeal decision called Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158,

In  that decision Laskin J. sets out 8 Guiding Principles to be used in examining these types of clauses. I have summarized them as follows:

1. In general, courts interpret employment agreements differently from other commercial agreements. They do so mainly because of the importance of employment in a person’s life. As Dickson C.J.C. said in an oft-quoted passage from his judgment in Reference re Public Service Employee Relations Act (Alberta), [1987] 1 S.C.R. 313, at p. 368:

” 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.”

2 . As important as employment itself is the way a person’s employment is terminated, it is on termination of employment that a person is most vulnerable and thus is most in need of protection: see Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701.

3. When employment agreements are made, usually employees have less bargaining power than employers. Employees rarely have enough information or leverage to bargain with employers on an equal footing: Machtinger, p. 1003

4. Many employees are likely unfamiliar with the employment standards in the ESA and the obligations the statute imposes on employers. These employees may not seek to challenge unlawful termination clauses: Machtinger, p. 1003

5. The ESA is remedial legislation, intended to protect the interests of employees. Courts should thus favour an interpretation of the ESA that “encourages employers to comply with the minimum requirements of the Act” and “extends its protections to as many employees as possible”, over an interpretation that does not do so: Machtinger, p. 1003.

6.. Termination clauses should be interpreted in a way that encourages employers to draft agreements that comply with the ESA. If the only consequence employers suffer for drafting a termination clause that fails to comply with the ESA is an order that they comply, then they will have little or no incentive to draft a lawful termination clause at the beginning of the employment relationship: Machtinger, p. 1004.

7. A termination clause will rebut the presumption of reasonable notice only if its wording is clear. Employees should know at the beginning of their employment what their entitlement will be at the end of their employment: Machtinger, p. 998.

8. Faced with a termination clause that could reasonably be interpreted in more than one way, courts should prefer the interpretation that gives the greater benefit to the employee: Ceccol v. Ontario Gymnastics Federation (2001), 149 O.A.C. 315, Family Counselling Centre of Sault Ste. Marie and District (2001), 151 O.A.C. 35.

I would respectfully submit that the Court of Appeal panel in this case did not give adequate consideration to  Guiding Principles 4, 7 and 8.

This panel also dealt with the issue as to whether or not the fact that the clause did not reference severance pay that it fell afoul of the ESA. However citing Laskin’s reasoning in Wood on how Roden v Toronto Humane Society , they decided as follows:

(ii)         Is the termination clause void because it purports to contract out of the ESA?

[15]       With respect to the second argument, I do not accept that the silence of the termination clause concerning the appellant’s entitlement to severance pay denotes an intention to contract out of the ESA. I agree with the motion judge’s conclusion that the termination clause purports to limit notice but not the severance pay that the appellant would receive on termination. This is a very important distinction.

[16]       As such, this case falls within Roden v. Toronto Humane Society (2005), 259 D.L.R. (4th) 89 (Ont. C.A.), and is entirely distinguishable from Wood, for the reasons noted in the latter by Laskin J.A., at paras. 53 to 55:

53      In Roden, the termination clause in issue stated that the employer, The Toronto Humane Society, could terminate the employment of the plaintiff Roden “upon providing the Employee with the minimum amount of advance notice or payment in lieu thereof as required by the applicable employment standards legislation”: see para. 55. Roden made the same argument as Wood: the termination clause contravened the ESA and was void because it failed to include The Toronto Humane Society’s obligation to continue its contributions to Roden’s benefit plans during the notice period.

54     Gillese J.A., writing for the panel, rejected this argument. In her view, the termination clause was simply silent about The Toronto Humane Society’s obligation to continue to contribute to Roden’s benefit plans. The clause did not contract out of an employment standard and thus was not void. She wrote, at para. 62:

The without cause provisions in question are of precisely the type that Iacobucci J. says are valid: they referentially incorporate the minimum notice period set out in the Act. The without cause provisions do not attempt to provide something less than the legislated minimum standards; rather, they expressly require the Society to comply with those standards. As I have said, in my view, the provisions do not purport to limit the Society’s obligations to payment of such amounts. That is, they do not attempt to contract out of the requirement to make benefit plan contributions. Because the contracts are silent about the Society’s obligations in respect of benefit plan contributions, the Society was obliged to –  and did – comply with the requirements of the Act in that regard.

55     The difference between Roden and this case lies in the wording of each termination clause. In Roden, the clause dealt only with The Toronto Humane Society’s obligation to give the notice of termination, as required by the ESA, or to pay Roden a lump sum for the notice period. It did not exclude The Toronto Humane Society’s additional obligation to continue to contribute to Roden’s benefit plans during the notice period. It said nothing about that obligation.

[17]       As a result, I am of the view that the termination clause in this case does not provide less than the minimum severance obligations under the ESA, and is not void pursuant to s. 5(1).

I agree that when the Court of Appeal pronounces on a relevant legal issue it is binding on the Courts, even other panels of the Court of Appeal ( unless the new panel has 5 judges, which this did not ) .

However this rule does not apply where the comments being relied upon are not relevant to the outcome of the case, what we common law lawyers call ” obiter dictum” .

This is the classic definition of obiter dictum that we all learnt in law school:

A judge’s expression of opinion uttered in court or in a written judgement, but not essential to the decision and therefore not legally binding as a precedent.

In the Roden case the actual issue in dispute was whether or not the employer had just cause for termination. The trial judge held that there was just cause. The Court of Appeal upheld that finding of just cause.

The comments by the Court on the enforceability of the contract therefore were neither relevant or necessary with respect to the outcome of the case. This is classic obiter dicta, which is not binding on other Courts.

From what I can tell about this issue, neither the Court of Appeal in Wood nor in this case were made aware of this obiter dictum argument in relation to the Roden comments.

Since Wood purports to believe that it had to follow Roden,  and Nemeth seems to believe that it had to follow Wood, if in effect the Roden comments  were not precedent setting, then could a future trial judge ignore Roden and decide that that the clause is unenforceable given the 8 Guiding Principles in the Wood decision?

Only time will tell .