Employment Law Fall 2009 ENewsletter - Nelligan

Employment Law
[ LEGAL ISSUES OF INTEREST TO EMPLOYERS AND EMPLOYEES ]
Volume 18, No. 3
Fall 2008
Court of Appeal Says ‘No’ to Unilateral
Changes to Employment Contracts
Pages 71-75
accepted the amended terms by continuing his
employment through the notice provided by the
employer. The court stated at paragraph 32,
“…[M]ere continuance by an employee in
employment does not amount in law to an
acceptance by an employee of a unilateral
variation of his contract by his employer. The
employee is entitled to insist on the employer’s
adherence to the [original] terms of the
contract.”
In its decision, Wronko v. Western Inventory
Service Ltd., [2008] O.J. No. 1589 (Ont. C.A.),
released April 29, 2008, the Ontario Court of
Appeal upheld employees’ rights to refuse
unilaterally imposed contractual changes.
The case involved an employee, Mr. Wronko,
who was presented with an amendment to the
termination provisions of his employment
contract, which reduced his notice entitlement
from two years’ pay to 30 weeks’ pay. Mr.
Wronko refused to sign the new contract. The
company took the position that the amendment
would take effect after two years. Mr. Wronko
maintained his objection to the new terms. After
two years, the company presented an ultimatum
that he must either accept the change or that they
“did not have a job for [him]”. He responded
with his understanding that he was terminated,
and did not return to work.
An employee therefore has three options
available when presented with a unilateral
amendment to the employment contract:
1) The employee may accept the new terms
and employment will continue under the
new terms.
2) The employee may reject the change and
claim constructive dismissal if the employer
insists on enforcing the new terms.
3) The employee may make it clear that he/she
is rejecting the new terms. The employer
may respond by terminating the employee at
this time, provided sufficient notice under
the original contract is provided. However,
if the employer permits the employee to
continue under the original contract, then
the employee is entitled to insist on the
original terms of contract.
The trial judge concluded that the employer was
entitled to unilaterally amend the employment
contract with sufficient notice, and that Mr.
Wronko had ended the employment relationship
by refusing to continue work under the new
terms.
The Court of Appeal disagreed, and focused on
the question of whether Mr. Wronko had
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Summer 2008
police were waiting and arrested for theft and
taken into custody briefly. He was, however,
innocent. Four months later the charges were
dropped and Canac offered to reinstate Mr.
Correia. Unfortunately he had suffered serious
psychological injury as a result of the wrongful
allegations and was unable to return to work.
The court determined that it was reasonable for
Mr. Wronko to view his employer’s ultimatum –
that if he did not accept the new terms, “then we
do not have a job for you” – as a termination.
Therefore, Mr. Wronko was entitled to damages
under the original contract, as he had rejected
the new terms and had continued his
employment under the original contract.
Mr. Correia sued for wrongful dismissal and
negligent investigation, amongst other claims.
The private investigation firm moved
successfully for summary judgment to strike the
claim of negligent investigation. The motions
judge rule that there was no duty of care owed to
Mr. Correia by the private investigation firm.
Consequently, neither the employee nor
employer has a right to unilaterally change a
significant term of the employment contract.
Importantly, an employee cannot be forced by
his/her employer to accept such a change.
Unless the employer is willing to terminate the
employee’s employment, and commence a new
employment relationship under new terms, an
employee is entitled to continue working under
the terms of the original contract.
Mr. Correia appealed the decision of the motions
judge. The Court of Appeal allowed the appeal
in part. In particular it set aside the dismissal of
the claim for negligent investigation against the
private investigation firm, noting, “the fact that
private investigation firms perform public
policing functions but with limited oversight
or clear lines of redress to those injured by
activities strongly favours extending tort
liability.”
Craig Stehr
613-231-8208
[email protected]
Investigations of Workplace
Wrongdoings: Investigators can be
liable to employees
In determining that a duty of care could exist
between the private investigation firm and Mr.
Correia, the Court of Appeal found that, where
an individual is the targeted subject of a criminal
investigation, both proximity and the reasonable
foreseeability that harm could result to the
employee exist if that investigation is carried out
negligently. However, the unanimous court
declined to further extend tort liability under this
head to employers, citing the Supreme Court
decision in Wallace as specifically excluding
this possibility. Therefore, investigators may be
liable to employees for negligent investigation.
If employers negligently investigate employees
for wrongdoing, then this may be a breach of an
employer’s obligation of good faith and fair
dealing and damages may be awarded on that
basis.
In Correia v. Canac Kitchens, 2008 ONCA 506,
the Ontario Court of Appeal expanded the tort of
negligent investigation to include such claims by
employees if private investigators conduct
negligent workplace investigations.
The employee in this case, Joao Correia, was a
sixty-two year old long-time employee of Canac
Kitchens. In 2002, Canac hired a private
investigation firm to conduct undercover work
in its plant because it suspected theft and other
criminal activities at its facilities. Due to a
number of errors, the private investigation firm
and the employer confused the plaintiff with the
actual suspect who was 40 years younger. Mr.
Correia was thus wrongly identified as one of
several employees engaged in theft and drug
dealing at the Canac plant.
Robert Monti
613-231-8348
[email protected]
Mr. Correia was accused of theft and fired for
cause. He was then taken to another room where
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« 1) qu’il a adopté la norme dans un but
rationnellement lié à l’exécution du travail en
cause;
2) qu’il a adopté la norme particulière en croyant
sincèrement qu’elle était nécessaire pour réaliser
ce but légitime lié au travail;
3) que la norme est raisonnablement nécessaire
pour réaliser ce but légitime lié au travail. Pour
prouver que la norme est raisonnablement
nécessaire, il faut démontrer qu’il est impossible
de composer avec les employés qui ont les
mêmes caractéristiques que le demandeur sans
que l’employeur subisse une contrainte
excessive. »
Duty to Accommodate does not mean
accommodation to the point of
« impossibility » : Hydro-Québec c.
Syndicat des employé(e)s de
techniques professionnelles et de
bureau d’Hydro-Québec, section
locale 2000 (SCFP-FTQ), 2008 CSC 43
La Cour suprême du Canada a récemment rendu
un jugement unanime, lequel concilie
l’obligation d’accommodement de l’employeur
et l’obligation des employés de fournir leur
prestation de travail.
Dans cet arrêt, une employée d’Hydro-Québec
avait manqué 960 jours de travail pendant une
période d’environ sept années et demie. Ses
absences découlaient de problèmes physiques et
mentaux.
Dans son jugement, la Cour suprême ne remet
pas en question la pertinence de l’analyse ci-haut
mentionnée. Elle suggère plutôt un problème
d’interprétation par la Cour d’appel de
l’utilisation du mot « impossible ». La Cour
suprême précise que le critère n’est pas
l’impossibilité par un employeur de composer
avec les caractéristiques d’une employée. Bien
que l’employeur n’a pas l’obligation de modifier
de façon fondamentale les conditions de travail,
il doit, dans la mesure où cela ne lui cause pas
une contrainte excessive, aménager le poste de
travail ou les tâches de l’employée pour lui
permettre de fournir sa prestation de travail.
Au moment du congédiement de l’employée,
celle-ci était absente du travail depuis les cinq
derniers mois. Son médecin-traitant lui avait
prescrit un arrêt de travail d’une durée
indéterminée. L’expertise d’un psychiatre,
obtenue par l’employeur, indiquait que
l’employée ne serait pas en mesure de fournir
« une prestation de services régulière et continue
sans continuer à présenter un problème
d’absentéisme comme [...] dans le passé ».
L’employée a déposé un grief alléguant que son
congédiement n’était pas justifié.
De plus, la Cour suprême a rejeté l’approche
voulant que l’obligation d’accommodement doit
être appréciée au moment où l’employée a été
congédiée. Au contraire, la contrainte excessive
doit s’évaluer globalement pour tenir compte de
l’ensemble de la période pendant laquelle
l’employée s’absente, de sorte à éviter une
approche compartimentée.
La Cour suprême du Canada a infirmé l’arrêt de
la Cour d’appel et confirmé le jugement de la
Cour supérieure qui avait rejeté la requête en
révision judiciaire de la décision de l’arbitre qui
avait rejeté le grief. Dans son analyse, la Cour
suprême adopte, comme point de départ,
l’analyse de la norme à satisfaire pour démontrer
une contrainte excessive, établie dans l’arrêt
Colombie-Britannique (Public Service Employee
Relations Commission) c. BCGEU, [1999] 3
R.C.S. 3 (Meiorin).
C’est ainsi que la Cour suprême du Canada
concilie les obligations de l’employeur et de
l’employée.
Julie Skinner
613-231-8354
[email protected]
L’employeur doit établir, selon la prépondérance
des probabilités :
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Summer 2008
Employees are not liable to their
employers for negligence while on the
job Douglas v. Kinger, 2008 ONCA
452
“ordinary” negligence was not addressed,
though areas of law have set a high threshold
before an individual will be found liable for
gross negligence.
Employees are not liable to indemnify their
employers for negligence, according to a recent
decision by the Ontario Court of Appeal. In
today’s world of integrated business practices
and an increasing reliance on complex
machinery and sophisticated information
technology systems, the Court of Appeal
concluded it is the responsibility of the employer
to account for, adequately prepare for, and
insure against potential negligence of an
employee.
Steven Levitt
613-231-883
[email protected]
A change in notice period in a
contract must be backed by
consideration, not including
forbearance of firing
In Braiden v. La-Z-Boy Canada Limited, 2008
ONCA 464 the Ontario Court of Appeal has
ruled that an employer who wants to change the
termination provision of a contract of
employment (from reasonable notice to a fixed
notice period) must provide some benefit to the
employee in exchange for that change.
The facts are as follows. In 2000, Douglas hired
a 13 year old, Kinger, to complete specific
chores at his cottage. Kinger was expected to
work three days a week during his summer
vacation. In addition to the list of chores,
Douglas ordered Kinger not to use power tools
unsupervised at the cottage. On June 17, Kinger
burned down his employer’s boathouse when his
attempt to refuel a lawnmower went awry,
causing $285,000 in damages. After resolving
the insurance claim, the insurer launched a
subrogated claim for damages against Kinger.
In that case, Gordon Braiden had worked for LaZ-Boy Canada Limited for almost 23 years when
La-Z-Boy ended the employment relationship.
He began without a contract, and then in 1997
was told to sign a contract with a 60-day notice
period.
Mr. Braiden successfully sued La-Z-Boy for
wrongful dismissal, and the Court of Appeal
upheld that decision.
Finding that there is no existing duty of care
owed by skilled or unskilled employees at law,
the Court proceeded to determine if a duty of
care should be imposed. The Court found on an
examination of the employment relationship
demonstrates that employee negligence was
foreseeable, but that the employee’s liability for
negligence was not. Also, public policy
considerations favored no duty being imposed as
employers are in a better position than
employees to allocate resources to mitigate
against risks of negligence in the workplace,
principally through insurance or as a cost of
business.
Braiden was an employee, not a contractor
The Court of Appeal stated that where an
individual is providing services pursuant to an
agreement, the fact that the individual is paid
through his or her corporation is not
determinative of whether an employment
relationship exists with the individual. In light
of the circumstances of Mr. Braiden’s activity
with La-Z-Boy, he was an employee and not a
contractor.
The Court did note however, that employees
could be held liable in cases of gross negligence
or willful misconduct. What type of conduct will
be categorized as “gross” as opposed to
Enforeceability of notice provision
Mr. Braiden thought that he needed to “sign or
lose your job”. In 1997 the Court of Appeal
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concluded that this consideration did not mean
that the new contract was valid. If an employer
provides consideration beyond mere continued
employment, the employee may be bound by the
modified terms of the agreement. That can
include some assurance of enhanced security of
employment. However, there was no evidence
that Mr. Braiden received anything that might be
considered to amount to “enhanced security of
employment”. Mere continuance of
employment is insufficient.
Employment Law is not intended to provide
legal advice or opinion as neither can be given
without reference to specific events and
situations.
Questions and comments concerning materials in
this newsletter are welcomed.
Christopher Roothan, Editor,
[email protected].
Copies of this newsletter are also posted on our
Web site at www.nelligan.ca.
Laz-Y-Boy also argued that Mr. Braiden
received beneficial tax treatment as a result of
the 1997 change to his contract (that began
paying him as a corporation). The Court of
Appeal concluded that this benefit was also not
consideration that would support a change to the
contract. The benefit arose as a result of
favourable tax treatment and was a collateral or
incidental result of the Agreement. It was not
consideration that flowed from La-Z-Boy to Mr.
Braiden. Rather, it was a benefit that flowed
from the tax authority as a result of the taxing
statute.
© Copyright 2008 Nelligan O’Brien Payne LLP
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