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Posts tagged: employment law

Can a successor employer offer a person lessor termination pay than the original employer?

By , November 17, 2017 5:13 pm

Can a successor employer offer a person lessor termination pay than the original employer?

This issue was addressed by Ontario’s Court of Appeal in Krishnamoorthy v. Olympus Canada Inc., 2017 ONCA 873

Facts:  Carsen Group Inc. was the exclusive Canadian distributor for Olympus America Inc. Olympus America decided to terminate its distribution agreement with Carsen, and started a related company, Olympus Canada Inc. to distribute its Canadian products. In July 2006, Olympus America terminated its distribution agreement with Carsen and offered employment to one of Carsen’s employees, Nadesan Krishnamoorthy .  

Olympus Canada provided an offer of employment to Mr. Krishnamoorthy. The terms of the employment agreement limited the notice of employment he was entitled to receive to Employment Standards Act (“ESA”) minimums.  When Mr. Krishnamoorthy accepted Olympus Canada’s offer, he did not receive a signing bonus or any other additional compensation for entering into an employment agreement with Olympus Canada.  

Ten years later, Olympus Canada terminated Mr. Krishnamoorthy’s employment  without cause. Olympus Canada offered him the termination pay he was owed under his employment agreement.  Mr. Krishnamoorthy refused the offer claiming  the termination clause was unenforceable because Olympus Canada had not provided him with any legal consideration.

Issue on appeal: Did the motion judge err in concluding that the termination clause in the parties’ employment agreement was unenforceable due to a lack of consideration?

Decision: The Court of Appeal reversed the motion judge’s decision and ruled that Olympus Canada’s offer of employment amounted to consideration for the termination clause.

Mr. Krishnamoorthy relied on a provision of the Employment Standards Act which deems there to be continuity of employment where an employer sells his business to a purchaser who employs an employee of the employer. However, the Court ruled that this statutory provision  can not be used to claim rights or entitlements on which the ESA is silent. For example,  it does not require the purchaser of a business’ assets to offer employment to employees of that business on the same terms as their original contracts as claimed by Mr. Krishnamoorthy.  Olympus Canada became a new employer upon its purchase of some of Carsen’s assets, and the fact that Mr. Krishnamoorthy’s day-to-day job did not materially change after the sale was not relevant. As such, the Court of Appeal found that Olympus Canada’s offer of employment amounted to consideration for the termination clause.

Lessons to be learned:

  1. If your organization purchases the assets of another business you can offer employees of that business lessor terms of employment such as a lower pay rate and less termination pay.
  2. The employee is generally not required to accept substantially lesser terms of employment.
  3. If the employee accepts lesser terms of employment then a court will generally enforce the lesser terms of employment provided the contract is drafted properly and the terms comply with the Employment Standards Act.

All We Do Is Work

By , October 31, 2017 9:23 am

This blog introduces you to all members of the firm and describes the kinds of cases we handle.

 

MacLeod Law Firm

 

OUR PEOPLE

Nicole Simes has been working with me for more than four years. She represents and advises employers and employees. She spends a lot of her time in court and at administrative tribunals: she is a real litigator! Nicole has a particularly strong background and interest in human rights issues.

Nadia Halum articled with the firm and has been working as an associate for about 1 ½ years. Nadia also represents and advises employers and employees. Nadia is an exceptional legal researcher. She also has considerable experience assisting employers with compliance issues under the Employment Standards Act, the Occupational Health and Safety Act and the Accessibility for Ontarians with Disabilities Act.

Fiona Martyn is currently articling with the firm. She supports Nicole, Nadia and me. This includes legal research, drafting pleadings & facta, and putting together court documents.

Judy Lam is our Office Manager and oversees the non-legal aspects of the firm. She is often the first point of contact with the firm.

OUR CLIENTS

Employers

We mostly advise and represent small and medium sized employers. Many of our clients are owner operators. Most of our clients employ 100 or less employees although we do advise several large employers. Many of our employers do not have a person with a formal human resources designation (i.e. CHRP, CHRL, or CHRE) and for these clients, in addition to providing legal advice we often take on the role of trusted advisor.

When we are first introduced to a new client we make sure the employer has a well drafted employment contract. Then we make sure the client has complied with its obligations under Ontario’s employment laws.  Our blog keeps our clients up to date on most employment law developments. We are a phone call away and often answer questions in real time; that is, when you call with a question we can often answer it immediately on the phone.

Employees

We advise employees in all positions and all industries.

We review 100s of severance packages each year; this usually involves a one-hour meeting where we: review the background to the termination; discuss the client’s legal rights; discuss the client’s options; and, tell the client whether we think the package is fair.

If we cannot negotiate a fair settlement for our client then we commence legal proceedings. These proceedings may be commenced in small claims court, at the Ministry of Labour, at the Ontario Human Rights Tribunal, or in the courts. It is sometimes in our client’s interest to commence two or more legal proceedings.

We also review scores of employment contracts each year. After reviewing the history of contract negotiations, we inform our clients which parts of the contract are a problem and suggest ways to change the contract so it is more employee friendly. If our client is the employer’s clear first choice then we can often help the person secure significant enhancements to the employer’s initial offer.

ALL WE DO IS WORK

The MacLeod Law Firm will continue to restrict its practice to workplace law which includes employment law, labour law (i.e. workplaces that are unionized), and human rights law.

We have three lawyers to assist you with your legal needs. We operate a collaborative law practice which means we often consult with each other to get different perspectives on a case. I also delegate work to Nicole, Nadia and Fiona as appropriate which means our client receive cost effective service.

We understand that every client has a different risk tolerance. We get to know our clients so the advice we provide is consistent with this risk tolerance and makes business sense.

For those readers who have not retained the MacLeod Law Firm in the past and want to know how we can help your organization, please call me at 416 317-9894 at your convenience.

 

Case Study: Why You Need to Periodically Review Your Employment Contract

By , October 11, 2017 9:08 am

A well-drafted employment contract is the best employment law investment an employer can make. It protects an employer from significant liability and will usually save thousands of dollars in termination costs.

An employment contract should be reviewed periodically because judges are refusing to enforce termination clauses if they are not drafted properly.

In a recent case, Covenoho v. Pendylum Ltd.,2017 ONCA 284, Ontario’s highest court concluded a termination clause was not legally enforceable because it might breach the Employment Standards Act (“ESA”) in the future.

The Facts

Joss Covenoho signed a one year fixed-term contract with Pendylum Inc. The employer terminated her agreement without advance notice when she had been employed for less that 3 months. The termination clause stated in part that the contract could be terminated before the end of the fixed-term “if the Pendylum Client to which you have been contracted terminate[s] its contract with Pendylum for your services”.

Decision by Motion Judge

The motion judge concluded that since the employee had been employed for less than three months, she was not entitled to any notice of termination. Under the ESA an employer is not required to provide any notice of employment to an employee during the first three months of employment.

Decision by Court of Appeal

The Court of Appeal reversed the motion judge’s decision and found that the termination provisions were void. It ruled that “the terms must be construed as if (the employee) had continued to be employed beyond three months; if a provision’s application potentially violates the ESA at any date after hiring, it is void”. In this case, if Ms. Covenoho had been terminated after three months of work, then the termination clause would have violated the ESA because she could have been terminated without any notice of termination (or any payment in lieu of notice) contrary to the ESA.  The court also ruled the employee was entitled to receive the salary that she would have earned for the balance of the fixed-term contract.

Lessons for employers:

1)   Employers should periodically review their termination clauses to ensure they are properly drafted and do not provide shorter notice than required by the ESA.

2)  As we have written about before, it is generally a bad idea to enter into a fixed term contract. If a fixed term contract must be used, it must include an enforceable early termination clause.

On October 16 and October 20 MacLeod Law Firm is holding seminars in Toronto and Barrie that will cover three topics. One topic is why employment contracts need to be reviewed periodically. Cases like this one is one reason but there are other reasons. Information on the seminar can be found here.

For over 25 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.

 

How to Spot a Resignation

By , July 31, 2017 10:16 am

Contrary to popular belief, it is not always easy to know when someone has resigned. Even if an employee uses words such as “I quit,” a court may still find that the employee has not truly resigned. An employer in Alberta learned this lesson the hard way. 

Carroll v Purcee Industrial Controls Ltd. (“PIC”) 

Mr. Carroll worked for the defendant first in Calgary, Alberta. He then moved with his family to Madagascar, where he continued to work for PIC. In 2012, business was in decline and the relationship between Mr. Carroll began to deteriorate. In August 2012, Mr. Carroll tendered his written resignation and requested a fair severance package. PIC rejected his resignation and urged Mr. Carroll to take his planned holiday. Mr. Carroll continued to work for PIC after he returned from his holiday. 

The relationship between Mr. Carroll and PIC became increasingly strained. In May 2013, Mr. Carroll again suggested they should terminate his employment “on professional terms”, and outlined his proposed terms of severance. One of the owners told Mr. Carroll that he would be ready to discuss the matter in a few days. Mr. Carroll responded that he planned to move back to Canada with his family in July. 

Mr. Carroll’s employment ended on June 7, 2013, when PIC purported to accept his resignation. 

The Decision 

At trial, Mr. Carroll argued his employment was terminated without cause and he was entitled to pay in lieu of notice. PIC claimed Mr. Carroll voluntarily resigned from his employment, in which case he was not entitled to any damages. 

A resignation must be clear and unequivocal, which involves both a subjective and objective component. Subjectively, did the employee intend to resign? Objectively, viewing all the circumstances, would a reasonable employer have understood that the employee had resigned? The court looks at the employee’s words, acts and the surrounding circumstances. 

Despite the fact that all indications of severing the employment relationship were initiated by Mr. Carroll, the court found that he did not intend to resign from his employment. The court found that Mr. Carroll’s words, when viewed contextually, were “an emotional reaction.” Mr. Carroll’s resignations came from a place of frustration, even though they were not said in the heat of the moment. Furthermore, the fact that that the owner indicated he would be ready to discuss the matter in a few days was consistent with someone who was contemplating the proposal outlined by Mr. Carroll (i.e. he could not have considered Mr. Carroll to have resigned). 

More importantly, the court found it difficult to accept the resignation was clear and unequivocal when it was tied to a proposal for terms of severance. In the circumstances, the burden was on the employer to confirm with Mr. Carroll that he truly intended to resign. The court concluded that Mr Carroll was dismissed, and therefore entitled to seven months’ pay in lieu of notice. 

Lessons to be Learned 

The onus is on the employer to confirm an employee’s true intentions behind a purported resignation. Otherwise, the employer risks having to respond to a wrongful dismissal claim in the future. Therefore, even in situations where employees utter words typically associated with a resignation (such as “I quit”), it is important not to take such words at face value. In these circumstances, or any time an employee brings up the matter of a severance package, it is important to consult a lawyer. 

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 my organization implement a drug testing policy at the workplace?

By , July 24, 2017 10:24 am

If you’ve been following the news over the last few months, you know that the Ontario Superior Court of Justice refused to allow the union’s injunction against the TTC’s random drug and alcohol testing policy. More recently, the Supreme Court of Canada upheld the termination of an employee who was terminated for violating his employer’s drug testing policy. These developments have led to us answering many questions from employers (and news publications) about whether they can also test their employees for drugs and alcohol.

Despite the TTC’s success at court, employers should proceed with caution when instituting drug and alcohol testing at the workplace. Firstly, the issue before the court was not whether such a policy was discriminatory. Secondly, the court refused the union’s injunction because of both the safety-sensitive industry and the wide area in which the TTC operates. Furthermore, the caselaw preceding the TTC decision shows that there is a high evidentiary burden an employer must satisfy to justify random drug testing its employees.

Because addictions to drugs or alcohol are considered “disabilities” under the Ontario Human Rights Code, drug and alcohol testing has human rights implications for people with addictions. For example, a human rights issue may arise where a positive test leads to automatic negative consequences for a person based on an addiction.

However, courts and tribunals recognise that it is a legitimate goal for employers to have a safe workplace, particularly in safety-sensitive industries. Therefore, there is caselaw that has recognised that a drug testing policy is justifiable if an employer can show that the policy is a bona fide (i.e. legitimate) requirement of the job. However, even if the policy is a legitimate requirement, employers should strive to minimise any potential discriminatory impact, and be prepared to accommodate employees with addictions who are negatively impacted by the policy.

Another requirement for a drug and alcohol testing policy to be found justifiable is that it must measure impairment, as opposed to drug or alcohol use. For example, while alcohol testing is able to measure a person’s impairment quite accurately, because drugs can remain in a person’s system for quite some time after their use, drug testing is less accurate at measuring impairment rather than drug use. For this reason, alcohol testing tends to be more permissible than drug testing. Similarly, testing after an accident or a “near-miss” is more justifiable than random testing.

Lessons to be Learned

As we get closer to marijuana being legal in Canada, questions around workplace safety and the permissibility of drug testing are bound to increase. We will continue to publish additional information as more relevant cases are released. In the meantime, if you are considering implementing a drug and alcohol testing policy at the workplace, you should consult an employment lawyer to find out whether such a policy would survive the scrutiny of a court or tribunal.

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.

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