SUSPENDED FOR A WORKPLACE INVESTIGATION - THE COURT IS NOT LIKELY GOING TO HELP YOU

If a workplace complaint is made against you, for harassment for example, and you are suspended by your employer while it conducts an internal investigation, it is very unlikely that the Court will intervene to reverse your suspension before the investigation is properly completed.

Since employer’s are required by law to investigate a workplace harassment complaint, the Court confers fairly broad latitude and flexibility to the employer to do so. Provided the employer conducts a reasonable investigation, including any necessary procedural steps to achieve confidentiality and fairness, the Court is very unlikely to interfere with an employer’s decision to suspend any employee for the purpose of conducting, and during, the investigation. The employer may have to justify the decision, if challenged, but if reasonable justification is proffered, the Court is unlikely to intervene.

If an employer is conducting a workplace investigation reasonably, the employer’s duty to do so will also outweigh any potential damage to the reputation of any person involved in the investigation, including the alleged harasser. The Court’s view is that an employee’s reputation would not be impugned if the employee is exonerated by the investigation. Rather, if the employee’s reputation is damaged, it is because of his or her misconduct in the workplace, rather than the investigation conducted by the employer. Accordingly, the Court is very likely to prefer the investigation over a party’s claim that the fact of the investigation itself may harm his or her reputation.

In an Ontario case involving a doctor at a major Toronto hospital, against whom harassment issues were raised in the workplace, the doctor was partially suspended by the hospital during its internal investigation. The doctor sought an injunction that the employer reinstate him immediately. The Court rejected the doctor’s request and, in doing so, expressed: “….the Hospital is obliged to ensure that its employees can work together in the most harmonious environment possible. Disruption and conflict amongst its employees can only adversely affect the care of patients. Any internal investigation into bullying and harassment, once those allegations are raised, is not only desirable, but in many senses, obligatory.”

Therefore, if you are the target of a harassment complaint in your workplace, the best approach is likely to try to negotiate with the employer to minimize potential harm to your reputation, such as certain steps to ensure confidentiality and fairness, rather than seek judicial intervention to try to stop the investigation. If you are suspended during the investigation, it is unlikely the Court will help you, if the employer’s decision to suspend you was reasonable in the circumstances.

The Cases:

Dr. Agostino Pierro v. The Hospital for Sick Children, 2016 ONSC 2987 (CanLII)

Barrick v. Humane Society Yukon, 2018 YKSC 51 (CanLII)

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EMPLOYEES' RIGHTS ON TERMINATION - THE BASICS

Ultimately, employers do not need a reason to terminate an employee governed by Ontario law. They can do so “without cause” at any time, subject to the employee’s right to receive reasonable notice of termination, or pay in lieu of such notice. However, if an employer terminates an employee for cause, the employer may have no obligation to provide the employee with notice of termination or any pay in lieu thereof. Proving “cause” for termination is a high threshold in Ontario. The Courts routinely scrutinize an employer’s allegation of cause, often finding otherwise. Usually every case is unique and determined based on its own facts.  

Generally, an employee in Ontario is entitled to reasonable notice when his or her employer decides to terminate his or her employ without cause. Reasonable notice can be given either by ‘working’ notice (during which the employee remains employed) or by pay in lieu of reasonable notice. The amount of reasonable notice to which any employee may be entitled is case specific and depends on multiple factors, including age and level of responsibility.

Ontario employees terminated without cause are entitled minimum, statutory entitlements, including termination pay, under Ontario’s Employment Standards Act, 2000 (the “ESA”). Generally, most employees are entitled under the ESA to one week’s working notice or pay in lieu of working notice for each full year of service, up to a maximum of 8 weeks working notice or pay in lieu of working notice. This entitlement may vary depending on how many employees are terminated by an employer at any given time. In addition, employees employed for five years or more continuously may also be entitled to “severance pay” under the ESA – usually one week for each year of active service, up to a maximum number of weeks. 

These are the minimum, statutory rights only for Ontario employees. If there is no employment contract limiting an employee’s entitlement on termination without cause to the minimum standards under the ESA, or otherwise determining the entitlement, the terminated employee will be entitled to reasonable notice of termination of employment pursuant to the “common law”. Many lawyers refer to the ‘one month per year of service’ rule of thumb, but this is not the law. Rather, common law entitlement to reasonable notice is determined by several of factors, including: the nature of the employment, the level of responsibility, the length of the employment, the age of the employee, the availability of alternative employment and the circumstances surrounding the employer’s decision to terminate the relationship. Usually this is a very subjective assessment.

Perversely, in order to be awarded the full amount of any entitlement to pay in lieu of notice, an employee who is terminated is obliged by law to attempt to limit and/or “mitigate” his or her damages/losses from the termination by actively seeking alternative, comparable employment. Failure to do so may adversely impact the amount of common law reasonable notice to which the employee may be entitled. Only actual damages incurred are granted by the Court. Mitigated earnings during the notice period are usually deducted from the Court’s overall award. 

The situation for federally-regulated employees is different. Under the Canada Labour Code, most employees are entitled to two weeks’ notice of termination and, after twelve consecutive months of continuous employment, employees may also be entitled to severance pay equal to two days’ pay for each year of completed service, with a minimum benefit of five days wages.

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TIPS - EMPLOYEES ON A LEAVE OF ABSENCE - HOW LONG? WHEN CAN THEY BE REPLACED? WHEN DOES IT END?

HIRING A REPLACEMENT FOR AN EMPLOYEE ON A LEAVE OF ABSENCE:  

If an accommodated employee is on a leave of absence stipulated by Ontario’s Employment Standards Act, 2000 (the “ESA”), the employee has a presumed right to return to work in the same position (if the position still exists or similar duties are still performed), or be given the opportunity to return to a comparable position. Employers cannot ‘punish’ employees who take a leave of absence authorized by the ESA, or a leave that is otherwise permitted by the employer or by applicable law, particularly if the leave of absence is attributable to a disability experienced by the employee, which is also protected by Ontario’s Human Rights Code (the “Code”).

If a replacement employee is hired, the employer may even be forced to terminate the replacement to accommodate the returning employee and, if so, liability for pay in lieu of notice (and other statutory rights) may ensue, particularly if the replacement cannot be placed in another, satisfactory position. If a replacement employee is hired, the employment offer should specifically address this, including by defining the temporary nature of the hire and the limited entitlement to pay in lieu of notice. 

FRUSTRATION OF THE EMPLOYMENT RELATIONSHIP:

If an employee is absent from work due to a disability for an extended period of time, it may constitute a “frustration” of the employment contract, in which case the employer may only be lawfully required to pay the employee his or her entitlements under the ESA, which may include severance pay, being the statutory minimum at law.  However, there is no judicially set time period to apply to determine the event of frustration, particularly if the employee has long-term disability benefits available during the leave of absence. Typically, such benefits make it more difficult to determine if a frustration has taken place. In addition, employers must continually consider accommodating the employee, to the point of undue hardship, with the objective of the employee returning to work when capable of doing so. Employers should carefully consider this duty before determining that a frustration of the relationship has occurred. The employer may need to consider different return-to-work accommodation plans during the leave of absence and before taking the position that a frustration has occurred, such as, for example, periodic or temporary return-to-work options and possibly requesting and reviewing medical information for the employee regarding the employee’s ongoing and future treatment plan and potential ability to return to work in the same position, which may require modification. Usually every case is unique and has its own, distinct considerations, particularly depending on the length of the ongoing leave of absence, efforts to accommodate the employee and facilitate a return to work, either temporarily or longer and usually the step of affirming with the employee’s treatment provider(s) whether the employer is unable to return to work for the foreseeable future, even with accommodation.

ACCOMMODATING AN EMPLOYEE WITH A DISABILITY:

Under the Code, employers must accommodate employees with any disability to the point of “undue hardship”. This is historically a very high threshold for employers to justify, legally. Employers must permit any accommodation request, unless denying the request is justified based on objective evidence reasonably satisfactory in the circumstances. Generally, if an employee has a documented restriction regarding his or her inability to perform regular duties, the employer may be required to review and consider the employee’s current duties, including to decide if the employee is able to continue performing the bona fide duties for the position, which may require some modification to accommodate the employee’s specific disability. If, for example, modified duties could be achieved, the employee is likely entitled to continue in the same position, as modified. Only is such modification is virtually impossible, to the point of “undue hardship” to the employer, should the employer review and consider other positions and duties that would accommodate the employee’s documented restrictions. In that case, the employer is only obliged to pay the accommodated employee based on the duties and hours of work actually performed by the employee, including in the modified position, if any. Accommodation of any employee should always be reviewed fairly regularly, including to facilitate the employee returning to his or her regular duties as soon as reasonably capable of doing so.

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JASON'S TOP 10 TIPS - HIRING AN EMPLOYEE

Our Top 10 tips for hiring a new employee: 

[1]      SIGNED EMPLOYMENT AGREEMENT/OFFER:

Before the employee starts any work:

  • ensure you have the employee’s properly signed employment agreement or accepted offer of employment;

  • ensure the employment agreement/offer addresses everything necessary, including for termination (with and without cause), leaves of absence, police record check (if desired or mandatory), health and safety training, accessibility, job description (defining the position adequately), confidentiality, right to lay-off, rules for suspension, etc.;

  • consider if the employment agreement/offer should contain any non-competition and/or non-solicitation provisions to protect your business and assets in future; and     

  • provide a copy to the employee, before the employee starts in the position.

[2]    POLICE RECORD CHECK AND PROFESSIONAL REFERENCES:

  • obtain any required police record check (judicial record check, vulnerable sector check) and professional reference(s) prior to the employee starting any work for the position; and  

  • ensure the employment agreement/offer is conditional on those requirements and being satisfied with the results.  

[3]    HIRING AND RECRUITMENT:

  • ensure avoidance of discriminatory practices prohibited by the Ontario Human Rights Code, R.S.O. 1990, c. H. 19, as amended (the “Code”). 

[4]    BE CLEAR ABOUT WORK, ESPECIALLY REMOTELY (FROM HOME):

  • before the employee is permitted to work remotely, such as from home, ensure you have a workplace policy specifying eligibility, rules, requirements to do so (responsiveness, productivity, conduct, etc.), digital security and access, confidentiality and approval for overtime work, among other things; and

  • consider your own confidentiality requirements and ensure the employee is required to meet those obligations, including via online communications, using digital devices, etc.

[5]    BE SENSITIVE TO POTENTIAL DISABILITY ISSUES:

  • offer accessibility and accommodation during the recruitment and hiring process, if necessary; and 

  • request the employee to identify any potential accessibility or accommodation needs, if any, being very mindful of avoiding questions, or requesting information, prohibited by the Code. 

[6]    PROTECT CONFIDENTIALITY:

  • ensure you have the employee’s properly signed confidentiality acknowledgement, depending on the nature of your business and the importance of confidentiality to you and your clients, customers, employees, service providers, etc.   

[7]    PROTECT YOUR PROPRIETARY INTERESTS:

  • if you have proprietary intellectual property and/or information technology assets, ensure you have a proper acknowledgement signed by the employee to protect both your IT and IP assets in future, including digital assets.  

[8]    DISCLOSURE OF PERSONAL INFORMATION:

  • ensure the employee has properly signed a consent to the disclosure of the employee’s personal information (i.e., photographs, videos, etc.) for the purpose of marketing and/or promotion of your business, if desired, which also protects your third party marketing/promotion partners and agents.   

[9]    SET EXPECTATIONS:

  • provide the employee access to review your workplace policies before the employee signs the employment agreement/offer;

  • offer to review those with the employee and answer any questions; and

  • ensure the employee signs an acknowledgement verifying the employee’s review of your workplace policies (and any other key expectation for the employee in future) and agreement to adhere to those in future.

[10]  COMPLY WITH STATUTORY AND CRA RULES:

  • add the new employee to your CRA account for payroll source deductions, etc.

  • ensure the employee completes a TD-1 and a TD1ON Form;

  • complete the year-end T4A and other CRA requirements for the employee;

  • add the employee to your Workplace Safety and Insurance Board account, if applicable;

  • inform the employee where a copy of (Ontario’s) Occupational Health and Safety Act, R.S.O. 1993, c. O.1, as amended (the “OHSA”), is posted prominently in your workplace;

  • inform the employee where copies of both your heath and safety policy and your violence, harassment and sexual harassment prevention policy are posted prominently in your workplace, as required by the OHSA;  

  • give the employee a copy of the “Health & Safety at Work: Prevention Starts Here” poster, required by the OHSA, which must also be displayed prominently in your workplace at all times;

  • inform the employee of the names and locations of your workplace Joint Health and Safety Committee members, if applicable;

  • give the employee a copy of the “Employment Standards in Ontario” poster, published by the Ontario Ministry of Labour; and

  • arrange for the employee, including if he or she is a supervisor, to complete the mandatory health and safety awareness training required by the OHSA.

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"FORCED RETIREMENT" OF ADVANCED-AGE EMPLOYEES - GET READY TO PAY A PREMIUM, SAYS THE COURT

The emerging judicial trend in Ontario is to give more to long-service, advanced-age employees if they are wrongfully terminated.  The Courts are determining that “forced retirements” are unacceptable and punishing employers who are perceived to do so by granting more pay in lieu of notice (i.e., longer notice periods).

Severance settlements will be impacted by this trend in the Courts and, certainly, much more careful scrutiny should be given by employers forced to consider whether to litigate the notice period for advanced age employees (typically those over the age of sixty-five years), particularly if they have mid-to-long-term service records with the employer.

Case One: Dawe v. Equitable Life Insurance Company2018 ONSC 3130 (CanLII):

The employee had worked for thirty-seven years for the employer. He was a senior VP. He was sixty-two years of age when he was terminated, without cause. He earned a salary of about $250,000 annually, plus a bonus of nearly $400,000 in the year his employment was terminated.

He sued. He claimed he had planned to work for another three years.

The Court acknowledged the general rule that twenty-four months is the maximum notice period awarded. Despite this, the Court noted “a change in society’s attitude regarding retirement”, particularly with the abolition of mandatory retirement in 2006. The Court rules that “presumptive standards no longer apply”, mainly because many employees work past the age sixty-five.

After considering all of the usual factors in a case for wrongful termination, such as the employee’s age, length of service, character of employment and availability of alternate employment), the Court emphasized the employee’s advanced age, especially on the basis that it made the availability of comparable employment more difficult for the employee.

In fact, the Court held that termination without cause of this employee was “tantamount to a forced retirement”, stressing that the employee should have been given the opportunity to retire on his own and on his own terms.

In the end, Court would have awarded the employee a “minimum 36-month notice period”. However, only thirty months’ pay in lieu of notice was granted, given that the employee claimed no more in the case.

The case has been appealed; stay tuned.

Case Two: Saikaly v. Akman Construction Ltd., 2019 ONSC 799 (CanLII):

In this recent case, a sixty-year old office manager employee, who had worked for approximately twelve years only, was given twenty-four months’ pay in lieu of notice. Following its decision above, the Court’s decision took account that the employee did not hold as high a level of position or have a lengthy service record. However, despite this, the Court concluded a two-year notice period was appropriate, particularly given the employee’s  advanced age, dedication to his former employer and lack of formal training, making it more challenging for the employee to secure alternate employment.

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DON'T USE THE SO-CALLED "RULE OF THUMB" TO PAY SEVERANCE TO SHORT-TERM EMPLOYEES

Some employers use the so-called “rule of thumb” to make severance offers to employees terminated without notice. 

Basically, one month severance pay for each completed year of service.

By implication, short-term employees, even managerial ones, would only be entitled to minimal pay in lieu of notice if terminated without cause.

This is not the law.

Indeed, length of service is only one factor a Court will assess in awarding severance pay (pay in lieu of notice). 

Furthermore, Ontario’s highest Court has also clearly rejected placing weight disproportionately on length of tenure, especially if it would potentially discredit or undervalue other factors, such as the employee’s level of responsibility, age and the nature of the position generally [Example: Minott v. O’Shanter Development Company Ltd., 42 OR (3d) 321 (ONCA); Love v. Acuity Investment Management Inc., 2011 ONCA 130 (CanLII)].

Particularly with a managerial employee, Courts now fairly consistently award significantly more for pay in lieu of notice. Higher management have been awarded six months’ pay in lieu of notice, for example, even though the length of employment was less than two years.

So, for short-term employees, particularly managerial positions, the “rule of thumb” should be carefully applied, if at all, these days. If the managerial employee is senior in age, the risk becomes even greater, as Courts are becoming increasingly intolerant of ‘forced retirement’ terminations. A severance offer should rarely, if ever, be weighted disproportionately on length of service. Rather, all of the factors typically evaluated by the Courts should be examined, such as the employee’s age, level of responsibility and possibly the employee’s reasonable ability to secure alternative and comparable employment.

Other cases in Ontario where the so-called “rule of thumb” has been rejected or, least, not applied:

  • product manager employed for nineteen months awarded nine months’ severance after termination without cause, in which the Court noted that the employer did not provide the employee with a reference letter and the manager had taken more than nine months to find alternate employment, even at a lower salary [Nemirovski v. Socast Inc., 2017 CarswellOnt 14948];

  • senior technical architect employed for less than three years awarded a five-month reasonable notice period [Raposo v. CA Canada Company, 2018 CarswellOnt 12044];

  • sales manager awarded a notice period of four months following the termination of her employment after less than one year [Nogueira v. Second Cup, 2017 CarswellOnt 16262]; and

  • general manager employed for less than two years awarded a three-month reasonable notice period, noting the employer was less than forty years of age and had found alternative, comparable employment within thirty days of the termination date [Bergeron v. Movati Athletic (Group) Inc., 2018 ONSC 885 (CanLII)].

Decisions on severance offers must be carefully considered, ideally with proper, qualified legal advice. 

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THE TEST FOR PROVING A TOXIC (POISONED) WORKPLACE

Constructive dismissal” is different from wrongful termination. If an employee leaves, usually it is by resignation. However, if the departure is due to an alleged toxic, abusive or intolerable workplace, to the extent that the employer has substantially changed fundamental or essential terms of the employment contract, it may be considered a forced departure, or constructive dismissal.

A recent B.C. case demonstrates the importance of maintaining a workplace free of harassment, toxicity and abusive behaviour.

In this case, an employee alleged a co-employee engaged in, among other things, intimidation and both verbal abuse and harassment.  The employer conducted an internal investigation, concluding many of the allegations were unfounded or unsubstantiated, although the co-employee was disciplined for using profanity in the workplace. The employer concluded the workplace conflict was attributable to both employees, effectively. The employee remains dissatisfied with the employer’s reaction to her complaints and, ultimately, resigned from her employ and sued the employer for constructive dismissal.

The Court noted the legal test to successfully establish a toxic, or intolerable, workplace, being a relatively high barrier: whether a reasonable person in the circumstances should not be expected to persevere in the employment. An individual's subjective perception of the work environment will not be enough to establish constructive dismissal. Unfriendliness, confrontations between co-workers or even some hostility and conflict will not amount to constructive dismissal where the employee is still able to perform his or her work. In this case, the Court found no ongoing, repeated abusive behaviour, nor did the employer tolerate or condone any sufficiently objectionable behaviour in the workplace. Rather, the employer was found to have treated the complaints seriously, discipline the co-employee, in part (for using profanity) and arranged for a professional coach to try to intervene and distill the conflict between the co-employees. 

The test for toxic, poisoned or intolerable, workplace had not been met by the complaining employee.

However, regardless of the legal outcome, the employer incurred significant expense in the process, which caused uncertainty and additional conflict within the workplace, all of which may be more avoidable by taking the following steps:

  • Implement and maintain a respectful workplace policy;
  • Establish and implement a workplace policy for harassment, sexual harassment and conduct within the workplace;
  • Treat and handle complaints seriously, including pursuant to any written workplace harassment policy, which is mandatory by law;
  • Take action, where appropriate; and  
  • Reaffirm the commitment to having and maintaining a respectful workplace.

The Case:   

Baraty v. Wellons Canada Corp., 2019 BCSC 33.

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LONG-TERM DISABILITY BENEFITS EXPLAINED

Long term disability benefit coverage (“LTD”) is a type of insurance that may be available to employees, often as part of a group benefit package or program. It is a contract between the insurance provider (benefit carrier) and the employer, which benefits the employee. Often the employee must contribute to the monthly premium for the LTD coverage, at least partly, which is usually deducted from the employee’s pay and remitted by the employer directly to the benefit carrier (usually as part of the total monthly expense for the group benefit package being made available to the employee).  LTD terms and conditions are not usually the same for every insurance company or benefit carrier, but often features of this coverage are the same, or similar.

For example, most LTD policies require an “elimination period”, being the period required for the employee to be absent from work due to a disability before the coverage will be triggered. Often an employee will be required by the terms of the coverage to apply for and exhaust any available short-term disability benefits (including through employment insurance sick benefits) and accumulated sick days. An  employee may also be required to apply for Canada Pension Plan disability benefits, too. 

LTD benefits are typically a percentage of the employee’s regular wages or pay (based on the pre-disability employment). The percentage may depend on the amount of the premium paid for the coverage, or other factors, and largely depends on the contract negotiated by the employer and the benefits carrier. If, while LTD is being received, an employee receives income from another sources, such as workplace insurance benefits, or Canada Pension Plan benefits (including disability-related payments), those amounts will usually be deductible, or set-off, against the LTD payment.  The LTD benefit received may be taxable or non-taxable to the employee, depending on whether tax was paid on the payment of the monthly premiums by the employee. If so, it is likely the LTD benefit may be paid on a tax-free basis to the employee. 

Generally, LTD will be available for a period of two years in terms of the employee’s ability to perform his or her own job. However, after this period, the coverage terms will shift to whether the employee could perform “any occupation”, not only his or her own vocation. This is a higher test in order to qualify for ongoing, continuous LTD in future. This assessment may require medical examination and/or information to review the “any occupation” condition.

If LTD is available beyond the two-year “any occupation” threshold, it likely will continue until the employee turns age 65, returns to work, passes away or the benefits carrier conducts a further assessment and changes, or suspends, the ongoing benefit payment. If an employee returns to work after receiving six months or more of LTD benefits, but suffers a further disability, generally the employee will have to exhaust any short-term benefits available, including through employment insurance sick benefits, possibly with the requirement to apply for CPP disability benefits.

The employer’s contract with the benefits carrier is the critical document for LTD rights and entitlements. The coverage is usually summarized by a benefits booklet, which should be requested from an employer prior to accepting a position, or during employ, to review and understand the terms and conditions of that specific LTD plan.

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