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Posts tagged: Doug MacLeod

Does an Unpaid Suspension Constitute a Constructive Dismissal? Sometimes

By , September 11, 2018 10:06 am

Employers are increasingly suspending employees when allegations of misconduct are made against an employee. This includes allegations of sexual or workplace harassment and allegations of financial improprieties. If such a suspension constitutes a wrongful dismissal then these suspensions can expose employers to significant legal liability.

General Rule

According to Ontario’s Court of Appeal, an unpaid administrative suspension generally triggers a constructive dismissal “unless it (is) an express or implied term of the contract that the employer (can) suspend an employee without pay.”

A Case Study

A recent court case considered the suspension of a security supervisor at a casino. The employee needed to maintain a valid gaming registration from a government agency as a condition of employment. The casino’s Security Department was responsible for managing the casino’s lost and found processes, which include the collection of property and money from the casino’s facilities. The government agency that issues the required gaming registrations told the security supervisor that he was under investigation for theft in relation to the lost and found department but noted that no criminal charges had been laid.

One of the policies in the casino’s handbook stated:

Investigative Suspension may be used as part of the coaching and counselling process to verify allegations of misconduct.  During an investigation, the Associate may be prohibited from working. If a decision is made to separate the Associate’s employment, he or she may not be reimbursed for time spent on Investigative Suspension.

The casino immediately suspended the employee without pay.

The employee was subsequently charged criminally and the casino suspended its investigation into the allegations against the employee until the criminal charges were concluded. About 15 months later, the employee surrendered his gaming registration. Shortly thereafter, the casino wrote the employee and told him that in light of the requirement that he maintain a valid gaming registration, “his employment was at an end since he had surrendered his gaming registration.”

Is an Unpaid Suspension Legally Permitted? The Legal Test

The trial judge concluded that the employee’s suspension was clearly justified in the circumstances. The issue to decide was whether the casino could justify an unpaid suspension.

When considering this issue, the court applied the following test:

… absent express language in the employment contract stipulating that any suspension would be without pay, the burden rests on the appellant to establish that a suspension without pay was justified.  If the appellant cannot justify a suspension without pay, then taking that step amounts to a unilateral change in the employment relationship that constitutes a breach of the contract of employment.

Can a Paid Suspension be Converted into an Unpaid Suspension?

The court also discussed at what point a paid suspension can morph into an unpaid suspension.

While there might have been a point later in time when the suspension of the respondent without pay could have been justified, depending how matters unfolded, there was an insufficient foundation for a suspension without pay on December 19, when the respondent was told he was suspended and escorted out of the premises.  In my view, when the appellant suspended the respondent without pay on December 19, it made a unilateral change to the employment relationship and breached the implied term of the employment contract that the power to suspend without pay would not be exercised unreasonably.

The trial judge and the appeal court concluded the unpaid suspension constituted a constructive dismissal in this case and awarded the employee damages in lieu of reasonable notice of termination.

Lessons to Be Learned:

  1. An employer does not generally have an implied right to suspend an employee without pay during an investigation.
  2. An employer should therefore include a term in its employment contract giving it the right to suspend an employee with or without pay during an investigation.
  3. An employer should not impose an unpaid suspension unless there is evidence of employee misconduct. Accordingly, absent extraordinary circumstances, an employer should generally investigate the misconduct allegations that trigger the employee suspension promptly. If evidence of misconduct is found to exist, an employer may be able to quickly convert a short paid suspension into an unpaid suspension.

For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416-317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

The MacLeod Law Firm’s 2018 Employment Law Seminar: A ½-Day of Ford, Cannabis & Human Rights

By , August 28, 2018 9:52 am

Subscribers to this blog receive a brief description of a new employment law development every two weeks.

Some topics however deserve more than a cursory discussion. We have selected three such topics to cover in a ½ day seminar on October 23rd in Toronto and on October 24th in Barrie.

Here is a brief summary of the three topics we will be discussing at this seminar:

The legalization of the cannabis

On October 17, 2018, Canada is scheduled to become the second country on earth to legalize cannabis. The federal government could have simply decriminalized cannabis use but it went further and established a framework for the legal sale of cannabis. Each province will decide how to distribute cannabis, how to amend impaired driving laws, and set the price of cannabis.

It is important that each employer understand its rights and obligations under the new cannabis legislation and to set and enforce expectations with respect to cannabis use and impairment in the workplace including employees who have been prescribed medical marijuana.

We will discuss issues that should be addressed in a workplace drug policy.

The employment law landscape is changing under the new PC government

The Progressive Conservative government has stated that Ontario is open for business and we expect this will mean less regulation of Ontario workplaces and it may mean that certain legislation will not be implemented as expected. For example, during the provincial election campaign, leader Doug Ford stated that a $1 per hour increase in the minimum wage will not take effect on January 1, 2019 as planned. There are a number of planned amendments to the Employment Standards Act that are scheduled to take place in 2019 and we believe the PC government may delay or scrap some of these proposed changes.

We will discuss what laws the PC government has introduced as of mid-October and identify which laws will not be enacted in 2019 as originally planned.

The human rights landscape is changing

The Human Rights Tribunal of Ontario processes thousands of applications each year and issues decisions that affect all employers. These decisions can provide guidance to employers such as its decisions on what an employer must do to satisfy its duty to accommodate an employee with a disability. Did you know that an adjudicator recently concluded that a law which allows an employer to provide an employee over 65 years old with lesser health benefits than a younger worker was unconstitutional? Does your group health plan permit this kind of age discrimination?

We will discuss the most significant human rights decisions in the last year and what they mean to employers.

The cost of this seminar is $199 plus HST. To register, please email [email protected] or call 647-204-8107.

For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416-317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

Another Example of a Senior Executive Being Awarded More Damages Than Expected

By , August 21, 2018 10:45 am

 

A recent case decided by the Ontario Court of Appeal demonstrates yet again that relying on informal understandings with an employee about their rights on termination is a very bad idea.

In this case, a 51-year-old President was terminated after a little more than 11 years of service.

Judge Concludes 51-year-old Employee with 11 Years Service is Entitled to 17 Months Notice of Termination

The employee did not sign an employment contract so he was entitled to reasonable notice of termination. A well drafted termination clause would have limited the employer’s exposure to 8 weeks notice of termination. Without it, the trial judge concluded he was entitled to 17 months common law notice of termination.

Court of Appeal Concludes the Employee was Entitled to a Bonus Despite the Employer’s Past Practice

The employee claimed he was entitled to a bonus during the 17-month notice period. The trial judge disagreed. However, the Court of Appeal overturned the trial judge’s decision on this issue. The Appeal Court concluded that even though the employer’s practice was not to pay a terminated employee a bonus, he was nevertheless entitled to a $166,945 bonus. In this regard, the Court restated the law as follows:

  1. Was the bonus an integral part of his compensation package, triggering a common law entitlement to damages in lieu of bonus?; and
  2. If so, is there any language in the bonus plan that would restrict his common law entitlement to damages in lieu of a bonus over the notice period?

Lessons to be Learned:

  1. All employees, but especially high paid executives, should be required to sign an employment agreement with a termination clause. Reasonable notice periods for older employees seem to be going up and often exceed one month per year of service.

  2. All variable compensation plans should clearly set out an employee’s rights under the plan when his or her employment is terminated. There are several recent Appeal Court decisions which have strictly read contractual language against the employer. These plans should be reviewed by an employment lawyer regularly.

For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416-317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

Will a Judge Enforce the Termination Clause in Your Employment Contract?

By , August 14, 2018 10:27 am

A Termination Clause can Save an Employer a lot of Money

An employer can significantly reduce the amount of termination pay that it would otherwise owe an employee by including a termination clause in an employment contract.

Accordingly, most employers require that all new hires sign an employment contract with a termination clause.

Often the employer tries to limit the employee’s entitlement on termination to the minimum notice of termination required under Ontario’s Employment Standards Act (“ESA”).

Employee Lawyers Attack Termination Clauses

Employee lawyers often claim that these ESA termination clauses are not enforceable and there have been a myriad of court cases dealing with this issue.

Three Termination Clauses That have Been Litigated

Here are three termination clauses that were litigated and an indication as to whether or not the judge concluded the clause was legally enforceable:

  1. Movati Athletic Inc. may terminate your employment without cause at any time during the term of your employment upon providing you with notice or pay in lieu of notice, and severance, if applicable, pursuant to the Employment Standards Act, 2000 and subject to the continuation of your group benefits coverage, if applicable, for the minimum period required by the Employment Standards Act, 2000, as amended from time to time. (Not enforceable)
  2. In the event Hampton wishes to terminate your employment without cause they may do so by paying you the minimum amounts required pursuant to the ESA in force at the time of termination; no further compensation shall or will be provided. You agree by signing this agreement that such amounts are the total compensation you will receive if terminated without cause. (Not enforceable)
  3. If you are terminated by IBM other than for cause, IBM will provide you with notice or a separation payment in lieu of notice of termination equal to the greater of (a) one month of your current annual base salary or (b) one week of your current annual base salary, for each completed six months worked from your IBM service reference date to a maximum of 12 months of your annual base salary. This payment includes any and all termination notice pay, and severance payments you may be entitled to under provincial employment standards legislation and Common Law. Any separation payment will be subject to applicable statutory deductions. In addition, you will be entitled to benefit continuation for the minimum notice period under applicable provincial employment standard legislation. In the event that the applicable provincial employment standard legislation provides you with superior entitlements upon termination of employment (“statutory entitlements”) than provided for in this offer of employment, IBM shall provide you with your statutory entitlements in substitution for your rights under this offer of employment. (Originally not enforceable but decision reversed on appeal)

As you can see, although it is theoretically possible to limit an employee’s rights on termination to ESA minimums it is difficult to do so in practice because trial judges are reluctant to enforce them.

Lessons to Be Learned

  1. Every employment contract should have a termination clause.
  2. If an employer wants to limit an employee’s rights on termination to ESA minimums then the termination clause should be drafted extremely carefully.
  3. Because trial judges have not adopted a uniform approach to interpreting ESA termination clauses and new decisions on this issue are being released regularly, every organization should have an employment lawyer review its termination clause regularly.

For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416-317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

Can An Employee’s Off-Duty Behaviour Constitute Just Cause for Termination?

By , August 8, 2018 12:34 pm

We receive calls from employers asking whether they can terminate an employee for off duty conduct. Unfortunately there is not an easy answer. This blog discusses two cases of similar off-duty conduct. A judge found the employer did not have just cause to terminate in one case whereas in the other case the judge concluded the employer did have just cause.

Case Where Off-duty Conduct Did Not Amount to Just Cause

In a 2018 decision, a judge concluded that driving a Company vehicle while impaired was not just cause for termination.

Mr. Klonteig worked with the City of West Kelowna (“the District”) as a firefighter and later as the Assistant Fire Chief. He had an unblemished employment record and it was undisputed that he was an exemplary and valued employee.

After 13 years of employment with the District, Mr. Klonteig was terminated based on an off-duty incident of driving while impaired. Mr. Klonteig was driving home in the vehicle allocated to him as an Assistant Fire Chief. This vehicle was a pick-up truck and there were no policies restricting its personal use. The only indicator that it belonged to the District at all was a fleet number on its rear. Mr. Klonteig was pulled over for suspected impaired driving and failed two roadside breathalyzer tests. The District vehicle was impounded and Mr. Klonteig received a 90-day administrative driving prohibition.

That same day, Mr. Klonteig reported the incident to the District’s Chief and a human resources advisor. Mr. Klonteig was sent home and he believed he was simply suspended from work. However, once the District’s Chief Administrative Officer, Mr. Johnson, was informed of the incident, he exercised his discretion to terminate Mr. Klonteig’s employment. Mr. Johnson chose termination despite the advice of two senior managers because of his concern for potential liability and public safety.

Mr. Klonteig was provided with a cheque for his outstanding unpaid wages, a payout of his accrued vacation time, and a promise of a written reference letter.

The District alleged that the incident was serious enough to amount to just cause for termination, while Mr. Klonteig submitted that he was wrongfully terminated.

The BC Supreme Court agreed with Mr. Klonteig that his dismissal was wrongful and found that the District did not have just cause to terminate him.

Case Where Off-duty Conduct Amounted to Just Cause

The facts of the Klonteig case can be contrasted with a 2012 Ontario case we previously discussed  here.

In this case, Mr. Dziecielski was an employee of the Company for 13 years and had no history of misconduct or performance issues. Mr. Dziecielski borrowed a company vehicle without permission and crashed it while under the influence of alcohol. The vehicle was destroyed and the employee sustained life-threatening injuries. Based on the test that judges apply when deciding whether just cause for termination exists, the judge found the employer was justified in terminating the employee for just cause.

The Test for Determining Whether Just Cause Exists

A judge will adopt a contextual approach when determining the degree of misconduct that will justify summary dismissal. One must look at both the circumstances surrounding the misconduct and the nature of employment relationship. Further, the principle of proportionality is vital; balance must be struck between the severity of the employee’s misconduct and the sanction imposed.

Judges have found that in order for off-duty conduct to amount to cause, the conduct must be or be likely to be prejudicial to the interests or reputation of the employer.

Application of the Test in the Klonteig Case

Mr. Klonteig was found not to be representing his employer when he was stopped for impaired driving. The vehicle he was driving was essentially unmarked and his conduct was not considered to be of the same high moral reprehensibility as some of the cases cited by the District. Further, the court pointed out that Mr. Klonteig’s role was more administrative so he was not the public face of the Fire Department, nor was the public aware of his administrative suspension.

Based on the fact that Mr. Klonteig’s conduct did not cause his fellow firefighters to lose confidence in him, the court concluded the public would be unlikely to do so either. All in all, Mr. Klonteig’s off-duty conduct was not incompatible with faithful discharge of his duties, nor was it prejudicial to the interests or reputation of the District.

Application of the Test in the Dziecielski Case

The employee in the second case was charged with a number of criminal offences related to drunk driving. The judge stated that the employee was guilty of serious misconduct and discussed the problem of drunk driving in our society. He noted that the employee’s conduct was prejudicial to the employer’s business as the employer’s goodwill and reputation could have been significantly affected. Further, the employee had signed an Employee Handbook that made it clear consuming alcohol on the job could result in termination of employment because it is a violation of a serious workplace rule. Based on the context of this case, the judge concluded that this single act of drunk driving was enough to constitute just cause for dismissal.

What These Conflicting Cases Mean for Employers

The differing outcomes in these two cases show how important it is for employers to thoroughly assess the circumstances surrounding misconduct in its entirety before terminating an employee for just cause for off-duty conduct.

As can be seen from the cases discussed in this blog, although the test applied by the the courts is consistent, outcomes are determined on a case-by-case basis. Driving a company vehicle can amount to just case in some cases but not others.

If you are considering disciplining or terminating an employee for off-duty conduct, you can reach one of our lawyers at [email protected] or 647-204-8107.

“The material and information provided on this blog and this website are for general information only and should not, in any respect, be relied on as legal advice or opinion. The authors make no claims, promises or guarantees about the accuracy, completeness, or adequacy of any information linked or referred to or contained herein. No person should act or refrain from acting in reliance on any information found on this website or blog, without first retaining counsel and obtaining appropriate professional advice from a lawyer duly licensed to practice law in the relevant jurisdiction. These materials do not constitute legal advice and do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.”

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