Employee Unable to Establish Entitlement Based on Purported 5-Year Contract

Where an employee is retained for a fixed-term and is dismissed prior to the expiry of the contract, the employer may be liable for any compensation and benefits that the employee would have been entitled to for the remaining term (subject to a provision setting describing the parties' rights and obligations in the event of an early termination).  However, what happens when there is disagreement between the parties about the existence of a fixed-term contract?  The Ontario Superior Court of Justice recently wrestled with this very issue.

In Tossonian v. Cynphany Diamonds Inc., the plaintiff alleged that the employer had 'guaranteed' him employment for 5 years as part of their contractual arrangement.  The plaintiff was working for a jewellery store in British Columbia, but was interested in a position in the Toronto area.  He had discussions with the owner of Cynphany Diamonds (which operated as Symphony Diamonds) about a position managing two of the company's stores.  The parties had two conversations on the terms and conditions under which the plaintiff would be employed.  Following the second conversation, the plaintiff wrote to his potential employer, setting out what he expected in his contract.  His email message included reference to a fixed, 5-year term, as well as compensation, bonus and moving expenses in line with their earlier conversation.  When the owner of Symphony Diamonds replied to the plaintiff a few days later, his email made no reference to a 'guarantee' or a fixed-term.  The plaintiff did not object, although he alleged that the parties had a subsequent conversation during which he claimed that the employer told him that it was "not a problem.  I will guarantee you."

The plaintiff commenced working for the defendant company, and a couple of months later the contract was reduced to writing.  The initial "Employment Contract" set out the terms of employment, but did not make mention of a fixed term.  Subsequently, the employer did sign two letters that the plaintiff provided, which included a 5-year term, but the owner explained that both of these documents were provided solely to assist the plaintiff in obtaining a mortgage for a property in the Toronto area.  There was also evidence that the employer confirmed this information on a call with a representative of the bank that offered the plaintiff a mortgage.

Only a few months later, there was a dispute between the parties surrounding the plaintiff's decision to take employment with a competitor.  While the employer alleged that the plaintiff had resigned his employment with Symphony, the plaintiff claimed that he was dismissed when the employer learned that he had been negotiating with the competitor, and suspected that the plaintiff was also encouraging other employees to leave the employer. 

The Court concluded that the owner had, in fact, terminated the employment of the plaintiff, after only 8 months, so the primary issue was whether or not the plaintiff was working on a 5-year contract, or had been hired indefinitely (and was entitled to "reasonable notice" at common law).  The Court considered the case law that analyzed when a contract was formed.  In the Court's opinion, the plaintiff's contract of employment came into existence when the owner emailed the plaintiff with the terms of their agreement, excluding the fixed term.  The plaintiff had failed to ensure that the 5-year 'guarantee' was incorporated into that agreement, and the evidence did not establish that Symphony had subsequently to make such a promise.  The parties' agreement was evidenced in the formal "Employment Contract" that they signed after the commencement of employment.  The Court also accepted the employer's evidence that the other documentation that was signed by the parties was solely for the purpose of helping the plaintiff to obtain a mortgage, and did not amend their agreement.  Given that the plaintiff had not established the parties' mutual intention that he would be employed for a 5-year term, the plaintiff's entitlement was to be determined in accordance with the common law factors applicable to "reasonable notice". In light of his short service, the fact that he relocated to take the job, and the availability of other similar work, the Court concluded that he was entitled to pay in lieu of two (2) months' notice (not the outstanding 52 months remaining on the purported contract claimed by the plaintiff).

The decision in Tossonian highlights the importance of clear communication and documentation.  The parties' agreement on the fundamental terms and conditions of employment should be reduced to writing, and signed by both parties prior to the commencement of employment.  If a party feels that the written agreement omits some important detail, their objection should also be put in writing and addressed in the contract (assuming they agree on its inclusion).  Where the contract consists of an exchange of correspondence or email, the parties would still be wise to create a formal document to memorialize their agreement prior to the employee starting work.  Doing so avoids confusion or misunderstandings that may arise later (when memories are not as clear and valuable evidence of negotiations may be gone).

Do you have questions about how to structure an employment agreement?  Need guidance on whether a fixed-term or indefinite contract is right for you?  Contact Lance Ceaser for expert assistance with your labour and employment law issues.

ESA Complaint Found to Not Preclude Human Rights Application

While the Human Rights Code does provide a mechanism to prevent the relitigation of claims that may arise under a collective agreement or another statutory regime, it will not apply in all cases to prevent a claimant from making an Application to the Human Rights Tribunal of Ontario (the "Tribunal" or the "HRTO") based on the same or related circumstances.  Section 45.1 of the Code provides:

The Tribunal may dismiss an application, in whole or in part, in accordance with its rules if the Tribunal is of the opinion that another proceeding has appropriately dealt with the substance of the application.

The Tribunal's focus in these cases is on determining whether the other proceeding "has appropriately dealt with the substance of the application".  Mere overlap between the factual allegations will not suffice, unless the other matter has resolved the human rights aspects of the claim.

Recently, the Tribunal found that a claim of family status discrimination was not precluded by the employee having made a prior claim under the Employment Standards Act, 2000 (the "ESA").  In Bala v. TRQSS, Inc., the employee had advised her employer in January of 2013 that she anticipated having child care issues as her mother was becoming increasingly ill.  Although there was some discussion between employee and employer about the potential for trading shifts with other employees, it does not appear that any arrangements were put in place before the employee went on medical leave from mid-March until the end of April of 2013.  When the employee was supposed to return, she claimed one day of emergency leave to deal with child care, and was then absent for two more days.  The company advised the employee that she needed to attend work the following week or she would be deemed to have abandoned her position.  When she did not come to work for the first three days of the following week she was deemed to have resigned and her employment ended.

The employee made a claim to the Ministry of Labour for termination and severance pay under the ESA, but an Employment Standards Officer ("ESO") denied the claim, finding instead that the employee was disentitled as she had engaged in wilful neglect of duty.  She did not appeal the decision of the ESO to the Ontario Labour Relations Board.  The employee then brought an Application before the HRTO, alleging that she had been discriminated against on the basis of family status.  The employer asked the Tribunal to dismiss the application on the basis that it raised the same factual matters that had been addressed in the ESO's decision.

Following a summary hearing, the Tribunal rejected the employer's request to dismiss the Application.  The Tribunal noted that the remedial provisions of the ESA were not as robust as those found in the Code (at least in relation to orders to pay termination and severance pay), and that the ESO's decision did not reference the Code, the employer's duty to accommodate, whether the attendance policy was discriminatory, or any of the human rights issues that were raised by the Application.  Accordingly, it could not be said that the ESA claim had dealt "appropriately" with the "substance" (i.e., the human rights issues) of the employee's Application, and the matter should be allowed to proceed before the Tribunal.

While the Bala decision is fairly straight-forward on its face, it highlights an issue that employers should address when faced with a "proceeding" by an employee or former employee that may involve human rights issues, but which is not brought through the HRTO process.  Employers should ensure that any human rights claims are fully addressed in the initial proceeding, and dealt with effectively.  If the matter is resolved in a mutually acceptable manner, any settlement documentation should clearly address the fact that the human rights issues have also been fully and finally resolved.  Outside of these situations, arguing that a subsequent HRTO Application should be dismissed will be all but futile, and only serve to delay and drive up the costs of the litigation.

Do you have questions about procedure before the HRTO?  Wonder about the impact of various dispute resolution schemes on a claim?  Contact Lance Ceaser for advice and guidance.

 

Did you know...?

... Telling an employee who has given notice of resignation that you no longer require their services and they can leave immediately can convert that resignation into a termination without notice?  If the employee has provided 'reasonable notice' of resignation, but the employer decides to end the relationship before the expiry of that notice, it is the employer who has terminated the contract.  In these circumstances, the employee is entitled to payment in lieu of reasonable notice. 

This concept was illustrated in a recent decision out of the Supreme Court of Canada, Quebec (Commission des normes du travail) v. Asphalte Desjardins inc. The Supreme Court determined that it is a "fiction" for an employer to claim that it has 'renounced' (or 'waived') the employee's notice of resignation, when in fact it has taken unilateral action to bring the contract to an immediate end. While the Asphalte Desjardins case was decided under the Quebec Civil Code, similar rules are applied by the common law courts.  See for example, the decision in Compton v. Partners in Motion Pictures Inc., a 2005 decision of the Saskatchewan Court of Queen's Bench. 

Once an employee provides notice of resignation, the employer can accept it or seek to negotiate a longer or shorter period of notice, but cannot dictate the effective date of resignation.  If the employee is to be sent home prior to the effective date of resignation, the employer should make clear that their active service will not be required, but that the employee should make him or herself available during the notice period to facilitate the transition of duties, projects, etc.  Full salary and benefits must be maintained for the entirety of the notice period, as well.

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... That the new Ontario Budget Bill was accompanied by the Building Opportunity and Securing Our Future Act (Budget Measures, 2014) ("Bill 14") which, among other things, amends the Insurance Act to require employers who provide Long-Term Disability ("LTD") benefits to do so through "a contract of insurance undertaken by a licensed insurer"?  No longer can such benefits be self-insured. Health benefits providers have been pressing for this change for some time, as it provides greater security for those receiving benefits coverage.  This measure brings provincially-regulated employers in Ontario into line with federal employers, who have been subject to a similar requirement since 2012. Bill 14 received Royal Assent on July 24, 2014, but has yet to be proclaimed.  Stay tuned...

 

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... That an employer's duty to accommodate an employee suffering from drug addiction or alcoholism may not be triggered until the employee fully discloses the existence of the disability?  In a handful of recent decisions, adjudicators have been reluctant to overturn employer decisions to terminate the employment relationship where an employee engages in serious misconduct, even where the behaviour has its roots in addiction or alcoholism.

In Bish v. Elk Valley Coal Corporation, the employer had a drug and alcohol policy which offered amnesty to employees who disclosed an addiction, in exchange for their undertaking to go to rehab.  The employee was found to have cocaine in his system when he was tested after an accident on the job.  He had never disclosed an addiction prior to the accident, although he had attended a training session on the drug and alcohol policy.  The Alberta Human Rights Commission dismissed his complaint, finding that the employee was terminated not because of his addiction, but for his non-compliance with the policy, including his failure to reveal his condition and seek treatment. The Commission's decision that there was no prima facie discrimination was upheld by the Alberta Court of Queen's Bench on appeal.

In Huffman v. Mitchell Plastics, the Human Rights Tribunal of Ontario reached a similar conclusion.  Huffman was terminated by the company following grossly inappropriate behaviour at the office Christmas Party.  The employee was drunk, and belatedly claimed that he suffered from alcoholism, which he had 'disclosed' to the employer when he inquired about benefit coverage for the medication "Champix" (commonly used to assist smokers to quit smoking).  The Tribunal found that the Applicant had not properly disclosed his disability or provided sufficient information from which the employer ought to have known that he was an alcoholic.  Accordingly, the employer could not be expected to recognize that it had a duty to accommodate the employee at the point when it terminated him for his conduct.

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Are you struggling to manage an employee's resignation?  Have questions about accommodating an addicted employee?  Feel free to contact Lance Ceaser to obtain advice and guidance.

Two Employers Learn Costly Lessons: Significant downside to not properly investigating human rights concerns

Two recent decisions of provincial human rights tribunals highlight the risk that an employer faces in not appropriately addressing and/or investigating an employee’s claims of discrimination in the workplace.  It is not simply enough to have a workplace harassment and discrimination policy.  Unless the employer has procedures to address concerns when they come forward, including protocols for effectively investigating complaints of discrimination and harassment, those policies will not offer much protection.

In Cromwell v. Leon’s Furniture Limited, the Complainant employee, an African-Canadian woman, had been a Sales Associate with a furniture store in Halifax for approximately 4 years.  Over the course of several months, she was subject to multiple disciplines for alleged violations of the employer’s attendance policies, and was the recipient of unwanted comments and name-calling from her manager.  The employee claimed that the manager referred to her as “Condoleeza Rice” or “Contessa”, described her hair as being “wool”, and resolved disputes between the Complainant and a fellow Sales Associate in the other employee’s favour on more than one occasion.  Throughout the period of her employment, the Complainant was in regular contact with the Area Supervisor, with whom she had a “personal relationship”, but the corporate Respondent did not take any effective action to address her difficulties.  Instead, the Area Supervisor routinely advised the Complainant that she needed to take up her concerns with the store manager.  Ultimately, the Complainant reached the conclusion that her career with Leon’s was over when her manager greeted her at her performance review by telling other managers to leave the office, “There’s going to be a lynching”.  Three weeks later, the Complainant resigned, and set out all of the differential racial treatment in a letter to the company.

After determining that most of the racial discrimination alleged in the complaint had occurred, the Board of Inquiry had to assess whether the employer had taken sufficient measures to prevent and address workplace harassment and discrimination.  The company did have policies in place, and following the Complainant’s resignation, an investigation was conducted.  However, the investigation was performed by the Area Supervisor, who never disclosed to Leon’s the nature of his relationship with the Complainant.  The Board of Inquiry concluded that the employer’s policy was inadequate as it did not define “discrimination” or describe the mechanism for addressing complaints.  However, more concerning was the employer’s response after the Complainant’s resignation.  The “investigator” did not take any notes of his initial call with the Complainant, and rather than conduct an interview, he suggested she come in to meet with himself and store management – an offer which she declined.  The Complainant was effectively excluded from the investigation from this point forward.  Statements were obtained from the other managers at the store by the Store Manager (not the investigator), but he did meet with and interview a number of other staff.  Despite corroboration that the “lynching” comment had been made, and that none of the managerial staff present had offered any objection, the investigator concluded that the Complainant had not been subject to any racist behaviour.

At para. 354, the Board stated:

I cannot reasonably conclude than an investigation conducted by a manager who has been in a romantic relationship with the Complainant is reasonable or appropriate in these circumstances.  I find that this conflict of interest impacted the reasonableness of the findings [the manager] made and throws into question the bona fides of those findings.  As well, [the manager] failed to make findings on key aspects of information in the possession of the Respondent respecting the Complainant’s allegations.

Putting aside the conflict presented by the investigator’s relationship with the Complainant, the Board found that there were “significant flaws in the investigation”.  The investigator failed to consider or place weight on relevant evidence, failed to follow up on equivocal answers from witnesses, did not address key allegations, failed to seek information directly from the Complainant, and simply did not seem to understand what discrimination was, placing emphasis on intention over impact.

In the result, the Board of Inquiry awarded the Complainant eighteen (18) months’ wages, less mitigation earnings, and damages in the amount of $8,000.

Where an employer did not even undertake an investigation, before purportedly terminating the alleged victim of discrimination, the outcome was similar.  In Morgan v. Herman Miller Canada Inc., the Applicant had worked for the corporate Respondent for approximately 3 years before his employment was terminated for “cause”.  The employer asserted that the employee’s past disciplinary history, combined with spreading rumours of the company’s demise, constituted cause for dismissal, but still paid out his contractual entitlements.  At the hearing, the employer also alleged that the employee was slated for termination months before his employment actually ended, due to redundancy.  However, shortly before his employment was terminated, the Applicant had brought forward concerns about the assignment of work and other alleged incidents that he claimed revealed racial discrimination.  The complaint , therefore, raised allegations of both discrimination and retaliation.

The Human Rights Tribunal of Ontario heard the case, and determined that none of the conduct that the Applicant complained of amounted to discrimination prohibited by the Human Rights Code.  The employer was able to establish that its actions were either legitimate (due to actual concerns with the Applicant’s conduct) or had been misconstrued.  However, the Tribunal was not satisfied that the employer could justify its termination of the Applicant's employment, particularly on the shifting evidence of its reasons for doing so and having not investigated his complaints. 

At para. 108 of the decision, Vice-Chair Geneviève Debané found:

Instead of dealing with the applicant’s allegations in an appropriate manner, the company chose to terminate the applicant’s employment. I note that the termination letter itself relies on the fact that the applicant was “profoundly unhappy”. I find that this unhappiness was a direct result of the fact that he perceived that he was being treated in a discriminatory manner because of his colour. Although reprisal need only be one factor in the decision to terminate the applicant in order to find that the applicant was terminated contrary to his right to be free from reprisal under the Code, in my view the reasons in the respondent’s termination letter were otherwise pre-textual. This includes the breach of confidentiality that occurred on August 2009 and the comments made by the applicant about Ms. Ingham. A significant period of time had passed since the confidentiality incident and in my view the issue was largely “stale dated” by the time of the applicant’s termination. Further, the applicant was not even disciplined by Ms. Ingham at the time of the comments in relation to her but he was “cautioned”.

While the employer was clearly aware of his claims of discrimination prior to terminating the Applicant, the issue was merely forwarded to the U.S. parent company, and no investigation of his claims was ever undertaken.  Instead, he was dismissed.
For the “organizational failure” of having taken no action to address his complaints, the Applicant was awarded $15,000 in damages and 14 months’ pay as lost income arising from the termination of his employment, despite none of the underlying discriminatory conduct having been proven.

Whether an employer undertakes no investigation or performs a deeply deficient investigation, the outcome is essentially the same:  the employer will have failed to meet its human rights obligations with all of the liability that flows as a consequence.  Allegations of this nature must be dealt with in a timely and meaningful way.  The employer needs to ensure policies are adequate, that complaint mechanisms are effective and well-communicated, and utilize a trained investigator to perform a thorough inquiry.  Anything less will run afoul of human rights legislation, as both of these employers can attest.

If you have questions about dealing with human rights complaints or assistance with investigations, do not hesitate to contact Lance Ceaser.

A Tale of Two Cities (in Alberta): The Good and Bad of Managing Human Rights in the Workplace

Two recent decisions from the Wild Rose province demonstrate the dangers an employer can face when confronted with human rights issues in the workplace, and how to appropriately address an employee’s request for medical accommodation.

In Robinson v. City of Edmonton, the complainant was a bus driver for the City who suffered from environmental ulticaria, a type of chemical sensitivity to things like diesel fumes and perfume.  For the first 8 - 9 years of her employment as a transit operator, the complainant was able to control her symptoms with over-the-counter medications, but her condition progressively worsened and she was prescribed a medication that had the side-effect of making her drowsy.  That being said, up until 2009, the City had consistently accommodated the complainant by allowing her periods of medical leave and by allowing her to trade or “sell” her shifts to other transit employees (including her husband, who was also a transit worker).  However, starting in August 2009, the complainant was off work on STD due to her medical condition.  She applied for LTD in the fall of 2009.

The complainant’s supervisor asked her to provide her LTD application and a resume in mid-October.  The City was contemplating whether there might be a different transit operator position – a Light Rail Transit (LRT) operator role – that would accommodate the complainant’s condition.  LRT operators drive from a self-contained booth, and are therefore separated from many of the irritants that would trigger the complainant’s sensitivities.  It was decided to offer this option to the complainant.  Based on this form of accommodation being made available (and confirmation from the complainant’s doctor that she was cleared to attempt a trial as an LRT operator), the LTD carrier found that she was not “totally disabled” from her own occupation, and denied her claim for benefits.

There was some dispute in the evidence about whether the complainant understood that she was being offered the LRT role as an accommodation for her return to work, but the Tribunal concluded that she was in fact aware that this alternative was being proposed.  Instead of accepting the LRT trial, however, the complainant tendered her resignation in December, stating that she did not believe she was cleared to return to work without restrictions as she still could not safely drive (while medicated) and no other options were open to her. 

After reviewing the evidence, the Tribunal concluded that the City had not discriminated against or failed to accommodate the complainant.  The complainant should have understood that she was being cleared to return to a ‘transit operator’ role in LRT and that the City was prepared to accommodate her in this position (at least on a trial basis).  Her doctor was on side with this option (as it would likely reduce her symptoms and lead to reduced medication usage) and there were no collective agreement impediments to this approach (i.e., she had sufficient seniority to sign up for LRT shifts, once she received required training).  The Tribunal held that “Accommodation is a two way street” and that the complainant had effectively ended the accommodation process by insisting that she could not drive safely and by resigning her job.  In the circumstances, the duty to accommodate did not require the City to decline the complainant’s resignation or offer her the job back.

On January 15, 2014, the Alberta Court of Queen’s Bench upheld the decision of the Tribunal, concluding that its decision was not only reasonable, but that it was “correct”.

The result in City of Calgary v. Canadian Union of Public Employees, Local 38, on the other hand, was not so favorable to the employer.  In that case, before Arbitrator Phyllis Smith, the issue was whether the employer had violated its obligations under the collective agreement in dealing with the sexual harassment complaint of the grievor, MP.  MP had been sexually assaulted by a foreman who worked for the City on a number of occasions in the fall of 2010.  Some incidents were caught on a spy camera that the grievor and her husband installed in the workplace after her initial complaints were not addressed effectively by her supervisor.  The foreman was ultimately suspended by the employer and an investigation was undertaken.  The grievor also brought criminal charges against the foreman.

Shortly after the foreman was suspended, the grievor came in to work to find what she thought was rat poison on her keyboard.  The incident was reviewed by management, but the investigation was never completed as the grievor was moved to another City facility temporarily.  When the grievor questioned what was being done about the incident, she was rebuked by her manager and warned about compliance with the Respectful Workplace Policy.  The grievor later alleged that her manager was following her home (which was found to be untrue), and so the employer determined that the grievor should attend a mandatory IME to clear her to return to work after a week of vacation.  The grievor did not attend the IME session, upon learning that the doctor was a psychiatrist whose report would be provided to the employer.  The grievor did, however, provide a note indicating that she was fit to be at work and returned to her original office location.  Upon her return, she was counselled on respectful interactions with co-workers and asked to return certain office keys that she’d had in her possession for a long time.

A grievance was filed on her behalf and she also made a complaint to the Alberta Human Rights Commission (which was held in abeyance pending the outcome of the grievance arbitration).  The foreman was permitted to take retirement, and the employer took the position in the grievance process that it had acted appropriately. 
In her decision, the Arbitrator concluded that “there was a total failure on the part of those responsible to meet the obligations under the Collective Agreement, human rights legislation, occupational health and safety legislation and the City’s Respectful Workplace Policy”.  The City was not only vicariously liable for the sexual assaults on the grievor, but for a number of serious missteps that followed:

·         Not starting an investigation when the issue was first raised by the grievor to her immediate supervisor, leaving the abuser in charge of the workplace where the grievor worked;

·         The grievor’s manager claiming that he viewed the evidence from the spy camera as “inconclusive” and not removing the grievor from the workplace or taking any steps to prevent reprisals;

·         Moving the grievor back into the workplace before the “rat poison” investigation was completed contrary to her concerns for her safety, and counselling her on being disrespectful;

·         Sending her for a psychiatric IME when she stated an intention to speak to the mayor about the situation, and insisting that she have a fitness certificate before she could return to work from a previously scheduled vacation;

·         Only removing the grievor from the workplace after her union intervened, and then only transferring her to a temporary ad hoc location, causing additional stress; and

·         Maintaining that the grievance had no merit throughout the grievance procedure.

After reviewing the evidence, the Arbitrator awarded the grievor lost wages (past and future), general damages, damages for pension loss, and special damages, totalling approximately $850,000 (less a discount for various contingencies).  The Arbitrator described the situation as a “tragic case” in which a “vulnerable victim” had her situation worsened by “insensitive management”, greatly exacerbating the effects of the sexual assaults.

If any lesson is to be learned from these two cases, it’s that careful, proactive steps can greatly mitigate an employer’s risks, particularly when addressing sensitive issues like human rights.  Failure to act with urgency and care comes with very high and unnecessary costs.

If you have a question about this post or have a human rights issue you’d like to discuss, please don’t hesitate to contact Lance Ceaser.