labour and employment law client conference 2003 · balance the protection of their legitimate...

McCarthyTétrault LLP

Labour and Employment LawClient Conference 2003

Friday, October 24, 2003

Metro Toronto Convention CentreNorth Building, 255 Front Street West

Hands on support .

McCarthy Tétrault LLP

Hands on support.

Richard J. NixonKaren Bock

To Spy or Not to Spy?Monitoring Employees by Video Surveillance


Introduction

There are many reasons why an employer may want to place employees—or a particular employee—under surveillance. The employer may be concerned about the safety of employees, customers or clients in areas where it is not possible to have supervisors in constant attendance. The employer’s workplace may be vulnerable to theft or sabotage by employees or customers. There may be productivity issues in the workplace and an employer may believe that putting employees under video surveillance will assist in increasing productivity. Or an employer may suspect that an employee who is claiming sick benefits is in fact malingering. In all these circumstances, and many others, surveillance may be the only, or the best, way to resolve the employer’s concern.

This paper focuses on video surveillance. We propose that employers who seek to protect their interests by using video surveillance should be aware of both the benefits and the pitfalls associated with this form of surveillance. Employers must balance the protection of their legitimate interests against employees’ rights to privacy and against the possibility that surveillance may have significant negative repercussions on employee morale and productivity.

This paper seeks to address some of the factors that employers should evaluate before deciding to put employees under video surveillance and provides an overview of policy considerations which can be modified to suit an employer’s needs in any particular situation.

In dealing with the issue of video surveillance, we focus on the following topics:

When can an employer use video surveillance to monitor employees?

What special considerations arise for an employer in the context of a unionized workforce?

When should an employer consider using video surveillance?

What practical issues should an employer consider before and during the implementation of video surveillance?

When Can an Employer Use Video Surveillance?

The question as to whether an employer has the right to engage in video surveillance of employees most often arises when the employer attempts to use the resulting videotape as evidence of employee wrongdoing. In the context of a unionized workplace, this question may also arise in the form of a grievance that takes issue with an employer’s right to put employees under surveillance. More recently, the advent of privacy legislation in some jurisdictions has resulted in complaints that an employer’s implementation or use of video surveillance violates employees’ rights to privacy in and out of the workplace.

In deciding whether an employer was justified in putting employees under video surveillance, courts and arbitrators have examined why and how the employer has implemented the surveillance. In addition, both courts and arbitrators consider the balance between the employee’s privacy interests and the employer’s interest in controlling the workplace and ensuring that the employees are not engaged in fraudulent behaviour.


Why Employers Use Video Surveillance

Misappropriation of Company Resources

One of the primary reasons employers cite for using video surveillance is the prevention of theft or the general misuse and misappropriation of company resources. Video surveillance is also used to protect against fraud in the case of employees claiming entitlement to sick leave.

Safety

Employers often install video surveillance systems in order to protect the safety of their employees, customers, clients or property. In certain industries and businesses, the use of surveillance cameras has become standard and accepted practice. This is particularly true of highly regulated businesses like banks and other financial institutions, or workplaces where employees or clients are particularly vulnerable or dangerous. Frequently, the deterrent objective of the surveillance systems is achieved simply by the fact that the presence of the cameras is well known to both employees and the public.

Primacy of Event

Videotape evidence—if properly created and handled—enables an employer to document an action over time. If the problematic or illegal employee behaviour is difficult for supervisors to witness (since such behaviour is usually surreptitious), video surveillance can be used to document and prove acts of sexual harassment, harassment and unacceptable aggression.

Strikes

Employers frequently use video surveillance during strikes or lock-outs, in order to be able to document the behaviour and actions of union members and organizers on the picket line. If the employer seeks to demonstrate to a court that an injunction should be granted to restrict or prohibit picketing, videotape evidence of violence on the line or damage to property can be invaluable. If a picketing protocol has been agreed to and established, video surveillance continues to be essential to proving breaches of the protocol.

How Employers Use Video Surveillance

Open Surveillance

Open surveillance is characterized by cameras in plain view, or the presence of which is well known to employees and/or customers. For instance, many convenience stores open 24 hours have cameras in plain view and we are all familiar with cameras operating in banks and spaces like waiting rooms in hospitals, courthouses and prisons.

Open surveillance is usually intended to prevent illegal or problematic behaviour and to alert security personnel to such behaviour.


Covert Surveillance

Covert or surreptitious surveillance is almost always used to deal with employee behaviour that is difficult to intercept or prove, such as theft or fraud. The focus of covert surveillance is usually on a particular employee or a problem area of the workplace and the goal is most often to catch a perpetrator “in the act.” In general, covert surveillance is not intended to be permanent. Once it serves its purpose with respect to a particular problem, its presence becomes known to employees and therefore loses its effectiveness.

Video surveillance of employees outside the workplace is almost by definition covert, since in virtually every case the employer is seeking to catch the employee engaged in activity that contradicts the employee’s claim to be unable to perform work activities of some kind. Video surveillance may also be used to prove that the employee is in possession of property stolen from the employer or that the employee is engaged in disclosing confidential or proprietary information belonging to the employer. Obviously, in these cases, the point is not to let the employee know that he or she is being taped.

Video Surveillance and Employees’ Privacy Rights

In determining whether an employer was justified in engaging in video surveillance of employees—and whether the resulting videotape is admissible in evidence—courts and arbitrators almost invariably turn to the issue of the appropriate balance between an employee’s right to privacy and the employer’s interest in managing and controlling the workplace and employees. In Canada, both the common law and statute may influence the way in which judges and arbitrators decide whether an employer’s video surveillance evidence is admissible evidence.

Privacy Rights at Common Law

Canadian law does not recognize a general “right of privacy.” There is, for example, no general tort of invasion of privacy in Canada. However, some Canadian courts have come very close to recognizing a common law right of privacy. For example, in Dyne Holdings Ltd. v. Royal Insurance Co. of Canada,1 the judge concluded: “It would seem to me the courts in Canada are not far from recognizing a common law right of privacy if they have not already done so.”

It is instructive, however, that the Ontario Workplace Safety and Insurance Board (the “WSIB”) sometimes uses video surveillance as part of its investigations into claims by a workers for insurance benefits under the Workplace Safety and Insurance Act. The WSIB’s Operational Policy 11-02-06 states that the WSIB “may use surveillance to gather evidence” for the purpose of deciding issues under the Act. The Operational Policy goes on to define surveillance as “discreetly observing one or more subjects. It may also involve the use of audiotape, video, film, and/or photographs.” The Operational Policy also states that the director of the Special Investigations Branch must approve the use of surveillance in every case. The fact that the WSIB, a governmental authority, uses video surveillance to investigate insurance claims provides support for the argument that employers are also entitled to protect their interests by using video surveillance with respect to their employees.

Most often, the question as to whether an employer was entitled to videotape an employee’s activities comes up when a court, arbitrator or other tribunal has to decide whether videotape evidence is admissible. In such circumstances, the court, arbitrator or tribunal will generally consider whether the employee had a “reasonable expectation of privacy”

1 (1996), 138 Nfld. & P.E.I.R. 318 (PEI Sup. Ct.), at para 63.


in the specific circumstances in which the taping took place. For example, the case of Richardson v. Davis Wire Industries Ltd.2 involved a wrongful dismissal action brought by an employee who had been fired after being caught on videotape for three consecutive nights sleeping on the job. The judge dismissed the claim and held that Richardson could not reasonably have expected to have the protection of privacy when he was sleeping on company time, on company property and in circumstances where he could be expected to be contacted if needed.

Video surveillance sometimes appears to strike judges, arbitrators and other adjudicators as inherently more invasive of privacy than other means of observing an individual’s behaviour. When seeking to defend the legitimacy of video surveillance, an employer may want to address this issue by pointing out that an adjudicator would almost certainly admit eyewitness testimony by someone who had observed an employee engaging in activity that directly contradicted his or her claim to be physically unable to perform his or her job. It is extremely unlikely that the adjudicator would find that such observation constituted an invasion of the employee’s privacy. Similarly, if that observer happened to take a photograph of the employee engaging in the suspicious activity, the adjudicator would be very unlikely to refuse to admit that photograph in evidence on the grounds that taking the photograph was an invasion of the employee’s privacy. The employer could then point out to the adjudicator that video surveillance is not meaningfully different from eyewitness observation or from taking still photographs. It represents no greater invasion of privacy, and therefore should be admissible if relevant to issues in dispute in the proceeding.

Statutory Rights to Privacy

Unlike some other provinces, Ontario has not yet enacted privacy laws that apply to private sector employers. In the absence of substantially similar provincial privacy legislation, on January 1, 2004, the federal Personal Information Protection and Electronic Documents Act (“PIPEDA”) will apply to private sector companies in Ontario which collect, use or disclose personal information in the course of commercial activities. However, PIPEDA will not apply to Ontario private sector employers in relation to the personal information they collect with respect to employees.

While PIPEDA will not apply to Ontario private sector employers, it is possible that the Ontario government will pass privacy legislation at some time in the future. For this reason, it is instructive to consider how PIPEDA has been applied to video surveillance of employees, both covert and open.

Covert Surveillance: Ross v. Rosedale Transport Ltd.

Ross v. Rosedale Transport Ltd.3 involved the covert video surveillance of an employee who claimed entitlement to accommodation for a workplace-related injury. The federally-regulated, Ontario-based employer, Rosedale Transport, fired Ross after its private investigator videotaped Ross moving furniture when he was supposed to be injured. Ross had injured his back on the job and was assigned clerical and administrative duties in response to a doctor’s advice that he should not return to work as a driver for the time being. At some point, Ross’s supervisor decided that he was malingering and delaying his return to work without medical justification. In the meantime, Ross had told his supervisor that he had bought a house. To confirm his suspicions that Ross was no longer disabled, the supervisor hired a private investigator to videotape Ross and the investigator taped Ross loading furniture into a pickup truck. When Ross subsequently refused to

2 (1997), 28 C.C.E.L. (2d) 101 (B.C.S.C.) at 114. 3 [2003] C.L.A.D. No. 237


resign on being shown the videotape, Rosedale fired him. Ross filed a complaint under the Canada Labour Code seeking damages for his dismissal.

A key issue in the hearing was whether the videotape evidence was admissible in light of PIPEDA. Adjudicator Brunner ruled that the surveillance video tape was inadmissible because it involved collection of personal information in a manner that violated PIPEDA. Brunner spent little time in deciding that the video surveillance as captured on tape contained “personal information,” defined in s. 2(1) of PIPEDA as “information about an identifiable individual, but does not include the name, title or business address or telephone number of an employee of an organization.” In this case, Brunner found that since the physical movements of an identifiable individual were captured on the videotape, the videotape was “personal information” and therefore PIPEDA applied.

Brunner went on to note that s.7(1)(b) of PIPEDA does provide that an organization may collect personal information without the knowledge or consent of an individual if it is reasonable to expect that the collection with the knowledge or consent of the individual would compromise the availability or the accuracy of the information and the collection is reasonable for purposes related to investigating a breach of an agreement. Brunner acknowledged that had Rosedale advised Ross of its intention to videotape his activities and attempted to obtain his consent, this would have likely compromised the accuracy of the information.

Nevertheless, Brunner held that the key question was whether the video surveillance was reasonable for purposes of investigating a breach of Ross’s employment agreement. Brunner noted that labour arbitrators who have considered the admissibility of videotape evidence have generally balanced an employee’s privacy rights against the employer’s right to protect its own interests and in the process have developed a number of tests:

Was it reasonable, in all the circumstances, to request the surveillance?

Was the surveillance conducted in a reasonable manner?

Were other alternatives open to the company to obtain the evidence it sought?

Brunner decided that these principles should also apply to the interpretation of s. 7(1) of PIPEDA. He found that there was no evidence that Ross had ever been anything other than an honest employee. He also noted that there were a number of other means available to Rosedale Transport to test the true extent of Ross’s restrictions and the bona fides of his recovery. If Rosedale Transport really thought that Ross was malingering, it was open to it to ask for an independent medical examination. In short, Brunner found that surveillance of an employee is an extraordinary event which may only be resorted to where there is, beforehand, reasonable and probably cause to support it.

Open Surveillance: PIPEDA Case Summary #114

In this case, 4 an employee of a railway complained to the Privacy Commissioner about digital video cameras recently installed at a company yard. The employee asserted the cameras could collect personal information of the employees, namely their conduct and work performance, and that such information could subsequently be used for disciplinary purposes.

4 Available on the website of the Privacy Commissioner of Canada: www.privcom.gc.ca/cf-dc/2003/cf-dc_031323_e.asp.


The Commissioner’s Office investigated and found that the cameras were fixed and did not have zoom capacity. The company had informed employees of the system and had explicitly stated that the cameras were not intended to be used for productivity issues, and were positioned away from work areas. The purpose of the system was to reduce vandalism and theft and to minimize threats to staff safety. When the company discovered that some of the cameras were inadvertently taking pictures of certain areas where there was a reasonable expectation of privacy or where employees were working, the company changed the camera positions or installed shields to protect employee privacy.

In reaching a decision on whether the company’s video surveillance violated the requirement in s.5(3) of PIPEDA that an organization may collect, use or disclose personal information only for purposes that a reasonable person would consider appropriate in the circumstances, the Commissioner (then George Radwanski) acknowledged that the company’s stated purposes, to reduce vandalism and theft, improve staff security and limit potential liability for damages, would seem to be appropriate. However, in determining whether the company’s use of digital video cameras was reasonable, the Commissioner addressed the following questions:

Is the measure demonstrably necessary to meet a specific need?

Is it likely to be effective in meeting that need?

Is the loss of privacy proportional to the benefit gained?

Is there a less privacy-invasive way of achieving the same end?

The Commissioner found that in this case, the incidents of vandalism had been minor, there was a question as to whether there was an actual threat to security and the risk from liability claims was unclear. In short, the company had not shown the existence of a real, specific problem, only the potential for one. Despite the fact that there had been no incidents since the cameras were installed, the Commissioner was also unconvinced that the digital cameras were effective, noting that the signs warning people also served as a deterrent. The Commissioner went on to note his concern that the mere presence of the cameras may have given employees the perception that they were being watched, and that this could have had the adverse psychological effects of a perceived invasion of privacy, even though such invasion might not have actually occurred. Finally, the Commissioner noted that the company did not appear to have considered the cost and effectiveness of measures that would have been less invasive of privacy, like better lighting.

The Unionized Workplace: Special Considerations

It is perhaps not surprising that Adjudicator Brunner turned to arbitral jurisprudence when he was deciding the Ross case under PIPEDA. The arbitral jurisprudence is generally seen to impose much more stringent protections on employee privacy than the civil courts. In addition, labour arbitrators, unlike the civil courts, enjoy considerable discretion in determining the admissibility of evidence. Section 48(12)(f) of the Ontario Labour Relations Act, 1995 provides that an arbitrator or arbitration board has the power “to accept the oral or written evidence as the arbitrator… in [his/her] discretion considers proper, whether admissible in a court of law or not.” Employers in the unionized context must therefore be aware that different factors influence the admissibility of surveillance evidence.


The Collective Agreement

A collective agreement may preclude the use of video surveillance or require the consent of the union before the employer is entitled to engage in such surveillance. Although management generally enjoys a broad discretion to resolve problems in the workplace, this discretion may be limited by the terms of the collective agreement.

In Lenworth Metal Products Ltd. v. U.S.W.A., Local 3950,5 Arbitrator Armstrong considered a collective agreement clause which allowed management to make “reasonable rules and regulations” for employees to follow. A different clause in the collective agreement required management to exercise its management rights in a reasonable manner. The employer had installed a surveillance system after a series of security-related incidents, including a major fire, theft of computers and attempted auto thefts, break-ins and damage to cars in the parking lot. The employer installed several fixed cameras in fully visible places both outside and inside the workplace (including in the lunchroom and washrooms, although these were never operational).

Arbitrator Armstrong concluded that although the employer was motivated by legitimate business interests, operating the cameras during working hours was an unreasonable exercise of management’s rights in the absence of clear and convincing evidence of internal safety problems. In the result, the arbitrator ordered that those internal cameras that had never been activated should remain disconnected and that the one internal camera functioning in the paint shop (where the fire had occurred) be operated only when the paint shop was not in operation and there were no bargaining unit employees or supervisors present.

Privacy and Reasonableness Concerns

Unlike the civil law context, arbitrators generally presume that an employee is entitled to a certain level of privacy in the workplace. However, there is one line of arbitration decisions where some arbitrators have expressed the opinion that despite the fact that arbitrators have the discretion to exclude evidence that is relevant and that would be admissible in a civil court, they should be extremely reluctant to do so.6

Arbitrators have not agreed on one standard test to be applied to determine whether videotape evidence in admissible. Most, however, will balance the employee’s right to privacy against the employer’s interests and right to investigate and will thus determine whether the employer’s decision to engage in video surveillance was reasonable in the circumstances. In Toronto Star Newspapers Ltd. and Southern Ontario Newspaper Guild, Local 87,7 Arbitrator Springate wrote:

“[A]n employer generally does not have the right to intrude on an employee’s privacy by videotaping his or her conduct. An employee’s right to privacy, however, is not absolute and in certain circumstances the employer’s interests may outweigh an employee’s right to privacy. In order for an employer to establish that this is the case, it must demonstrate that it was reasonable for it to resort to surveillance and also that the surveillance was conducted in a reasonable manner.”

5 (1999), 80 L.A.C. (4th) 426 (Arbitrator T.E. Armstrong), affirmed [2000] CarswellOnt 4282 (Ont. Div. Ct). 6 Kimberly-Clarke Inc. and IWA-Canada, Local 1-92-4, (1996), 66 L.A.C. (4th) 266 (Arbitrator M. Bendel). 7 (1992), 30 L.A.C. (4th) 306 at 312 (Arbitrator I. Springate).


In determining the admissibility of video evidence at an arbitration hearing in Ontario, the following are key considerations:

1. Purpose underlying the video surveillance

The surveillance should be a necessary response to a serious problem. Generally, theft or fraud or a legitimate concern for the safety of employees, clients or customers will meet this requirement.

2. Location and scope of the surveillance

The more invasive and continuous the surveillance, the more it infringes an employee’s privacy interests and hence threatens to tip the balance against admissibility. In Puretex Kitting Co. Ltd. and Canadian Textile and Chemical Union8 the employer had installed open video surveillance in multiple locations. The arbitrator held that the cameras located in the production area were an unwarranted infringement of the employees’ rights. However, the cameras in the storage areas, loading dock and parking lots were not as objectionable and could remain. He also expressed the view that rotating cameras were less objectionable than stationary ones, since the resulting surveillance was not as constant.

In Brewers Retail Inc. and United Brewers’ Warehousing Workers’ Provincial Board,9 the employer surreptitiously videotaped the grievor at work to confirm its suspicions that he was drinking on the job and committing theft. Cameras were installed in both the retail lobby and the warehouse. Arbitrator Herman held that the grievor would have had no reasonable expectation of privacy in the lobby of the store, since he would be observed by customers and would know that he was subject to CCTA surveillance as well. However, in the warehouse the grievor’s expectation of privacy would have been quite high and therefore the employer had to have significant justification for invading that privacy. In the result, Arbitrator Herman held that the company’s manner of videotaping was reasonable because the employer had reasonable grounds for suspecting that the grievor was responsible for cash losses occurring in the retail lobby and for drinking on the job in the warehouse. Therefore, the videotapes were admitted into evidence.

In Toronto Transit Commission and Amalgamated Transit Union, Local 113,10 the employer had engaged in covert videotaping of the grievor in public places outside the workplace in an attempt to challenge the grievor’s eligibility for sick leave. Arbitrator Solomatenko concluded that there was no reasonable expectation of privacy in public places where the individual is in public view.

Absence of Viable Alternatives

As the Ross case indicates, arbitrators may look to see whether the employer could have accomplished its purpose by methods that are less injurious to an employee’s privacy interests. This may include confronting the employee with the employer’s suspicions and asking if the employee has any reasonable explanation. In cases where the employer suspects sick leave or workers’ compensation fraud, the employer should consider asking or requiring the employee to undergo an

8 23 L.A.C. (2d) 14 (Arbitrator S.R. Ellis). 9 (78 L.A.C. (4th) 394 (Arbitrator R.J. Herman). 10 (1999), 79 L.A.C. (4th) 85 (Arbitrator V. Solomatneko).


independent medical examination. In one case, offering the employee modified work has been cited as an alternative to surveillance.11

However, a number of arbitrators have held that it is not necessary for an employer to act on all possible alternatives before resorting to video surveillance.12

Record of the Employee

The seniority of the employee and the disciplinary record of the employee, may play a role in the arbitrator’s decision about the reasonableness of the employer’s decision to engage in video surveillance. As we have seen in the Ross case, Adjudicator Brunner took into account the fact that Ross had no disciplinary record and no history of lying to his employer.

On the other hand, where an employee has a history of dishonesty, this may incline an arbitrator to find that it was reasonable for the employer to put that employee under video surveillance. For instance, in Steels Industrial Products and Teamsters Union Loc. 213,13 the arbitrator considered various previous incidents involving the grievor. These incidents included intentional damage of property, which the arbitrator felt showed a history of the grievor being dishonest and intransigent when confronted with the truth, as well as demonstrating an absence of goodwill, regard or respect for the interests of the employer.

Also, as the arbitrator in Steels Industrial Products observed, if the employee has a history of refusing to cooperate with requests to supply medical information, an arbitrator is more likely to see video surveillance as a reasonable alternative.

When Should an Employer Consider Using Video Surveillance?

Suspected Behaviour or Safety Concern is Serious

If the employer suspects that an employee is engaged in serious misbehaviour, or there are serious and reasonable concerns about the safety of employees, clients or customers that cannot reasonably be addressed by other means, the employer should consider video surveillance.

The following are some circumstances that could justify the implementation of video surveillance:

employees routinely handle cash without full or any supervision (e.g., banks, cash services, financial institutions);

serious problems with theft where it is not possible to determine by less intrusive means which employees are involved (e.g., warehouses, retail stores);

11 Labatt Ontario Breweries (Toronto Brewery) and Brewery, General and Professional Workers Union (1994), 42 L.A.C. (4th)

151 (Arbitrator G.J. Brandt). 12 See, for example, Toronto Transit Commission and Amalgamated Transit Union, supra, note 9. 13 (1991) 24 L.A.C. (4th) 259 (Arbitrator Blasina)


areas in the workplace cannot be reasonable supervised, and there is a high risk of injury to employees, customers or clients (e.g., laboratories, prisons, hospitals, parking lots); and

an employee is claiming sick or injury benefits, the employer has reasonable grounds for suspecting that the employee is malingering or faking, and the employer has reasonable grounds for believing that other methods of determining whether the employee is malingering or faking will not work.

Employee Morale

An employer should always consider the impact of videotaping on employee morale. The monitoring of employee work habits in this fashion may be counterproductive: monitoring has been cited as a source of increased stress and decreased morale.14

Several arbitrators have asserted that video surveillance in the workplace runs counter to the trend of more flexible, less impersonal workplace management. In Lenworth, Arbitrator Armstrong remarked on “a pervasive repugnance to the use of electronic surveillance of employee work performance.” He went on to take “quasi-judicial notice” of the “fact” that for the last 20 years “employers have generally found that their own interests, in terms of both productivity and employee morale, are best served by adopting less rigid, mechanistic, authoritarian, hierarchical and impersonal approaches to the organization of work and the management of their enterprises.”

Whether or not one agrees with Arbitrator Armstong, an employer should consider whether the use of video surveillance might create an atmosphere of distrust and dissatisfaction among employees, reinforcing the gap between management and the workforce.

Economic Costs of Surveillance

The cost of installing and maintaining an effective and appropriate video surveillance system can be significant. In order to be useful and admissible, the video has to be of a sufficient quality in terms of light resolution that the persons captured by the camera can be identified. It is very common for open, continuous video surveillance systems to operate on an intermittent basis, where the camera takes a “shot” once every second or some other interval. The resulting videotape can be jumpy and visually incoherent, but the alternative—constant videotaping with a conventional videocamera—may be prohibitively expensive.

In the case of surreptitious videotaping outside the workplace, an employer should engage the services of a reputable private investigator and such services can also be very costly. However, if the investigator does not conduct the videotaping properly, the resulting “evidence” may be inadmissible. For instance, inexperienced or inadequate investigators may decide to save time and money by recording only the “incriminating” behaviour of the employee in question, and then turning the camera off. Thus, the investigator may tape an employee who claims he has a back injury carrying heavy furniture, but fails to tape the employee’s activities thereafter. This permits the employee to argue that the videotape is inaccurate and doesn’t show that shortly after carrying the furniture, the employee was unable to walk at all.

14 Andrew Conry-Murray, Special Report – The Pros and Cons of Employee Surveillance, found at

www.networkmagazine.com/shared/showArticle.jhtml?articleID=8703003. See also International Labour Organisation, Conditions of Work Digest, Volume 12, No.1, 1993, Workers' Privacy Part 2: Monitoring and Surveillance in the Workplace.


Practical Concerns and Tips

The following guidelines should be considered by an employer who chooses to proceed with video surveillance of employees:

Before implementing video surveillance, consider other alternatives to obtain the outcome or evidence sought. Maintain records of such considerations, so that they can be presented in evidence.

If the video surveillance is to be open and has a business or security purpose, such purpose should be identified clearly to employees and the surveillance should be restricted to that use. The employer should be prepared to demonstrate the need underlying the business or security purpose.

If video surveillance is considered necessary, the employer should ensure that the surveillance is reasonable in the circumstances and limited in its intrusive effect on employees’ privacy. The employer should consider whether the loss of privacy by the employees is proportional to the benefit gained by the employer.

An employer should review any relevant collective agreement and be aware of any limitations imposed by the collective agreement with respect to employee surveillance.

Some arbitrators require an employer to confront an employee with its suspicions prior to engaging in video surveillance aimed at capturing the employee on tape engaging in prohibited or fraudulent behaviour. The employer should consider whether it is possible to take this interim step, or whether it will undermine the employer’s ability to subsequently use video surveillance.

The employer should consider the various kinds of video surveillance equipment available and choose equipment suitable to the purpose of the surveillance. Many surveillance video cameras take “shots” every second or several seconds, rather then continuously. The resulting tape may miss much of the “action” the camera was intended to capture and may be of poor quality, jerky or difficult to interpret. To be admissible, the videotape must be a true and accurate reproduction of what it purports to depict.

The employer should also consider contracting with a reputable investigation or security services provider to set up and maintain the employer’s surveillance system.

Whether the employer hires a security services provider or does its own taping, it should take care to ensure that the authenticity of the videotape produced in evidence can be established. The employer must be able to establish who created the tape, who if anyone edited the tape and that the tape has been securely maintained and not tampered with since it was created.

The employer should ensure that the video surveillance documents the acts in question and portrays the facts of the situation clearly, without bias and without manipulation. If the prejudicial effect of the videotape exceeds its probative value, the judge or arbitrator may decide to exclude the evidence.

The videotapes should clearly mark the correct time and date when they were made. They should not be edited for content and it should be evident that they have not been edited regarding time, lighting or continuity.


The employer should ensure that a witness will be available to testify when, where and under what circumstances the videotape was made and that the tape is a fair and accurate reproduction of the scene or incident. If many different people are engaged in making the tapes, then this task can quickly become onerous. Therefore, the employer should take steps to ensure that one person, rather than many, does the actual videotaping and that one person (preferably the one who does the taping) maintains secure custody of the tapes.

The individual conducting covert video surveillance of an employee should be prepared to respond if the employee discovers the surveillance. For instance, if the employee demands to know what the individual is doing, the individual should respond briefly and honestly, and state that he/she is videotaping the employee’s activities. If the employee demands to know why the individual is taping his/her activities, the individual should again respond briefly and state that he/she is videotaping because he/she was asked to do so. If the employee then demands to know who asked the individual to do the videotaping, the individual should say that he or she is not at liberty to say.


Hands on support.

Karen M. SargeantRobb A. Macpherson

Preparing for the Next Crisis: What We Have Learned from SARS and the Blackout


Introduction

As we all know, Severe Acute Respiratory Syndrome (SARS) attracted a significant amount of media coverage. As a result, employees became concerned about their workplace rights and employers became concerned about their obligations vis-à-vis the workplace. Just when employers had sorted out how they were dealing with the workplace ramifications of quarantined employees and employees refusing to work, the blackout hit and a whole new set of issues arose as entire workplaces were shut down for several days.

Dealing with these situations may not be over. This paper will address a number of questions that have been raised, such as:

What have we learned from these situations and how can we use that in the future?

What laws cover these situations?

What are employees’ rights and employers’ obligations?

What human resources policies should employers have in place?

What about a disaster contingency plan?

How should employers communicate with their employees?

What Laws Apply?

Employment Standards Act

There is no requirement in the Employment Standards Act or elsewhere to pay employees who are ill or who are under home quarantine without symptoms, in the case of SARS, or who are simply unable to attend work, in the case of a blackout or snowstorm for example. Under the Employment Standards Act, employers are only required to pay employees for work they have performed.

The Employment Standards Act does provide many employees with 10 unpaid emergency leave days, however. This type of leave can be taken for reasons of personal illness or medical emergency of the employee or the employee’s family, or for other urgent matters affecting specified members of the employee’s family. Employees are entitled to take such leave without risking their jobs. Accordingly, if an employee qualifies for such a day, he or she may not be penalized for taking a day or days off.

Employment Insurance Act

Generally, employees are entitled to up to 15 weeks of employment insurance benefits for sickness or quarantine. Normally, a two-week waiting period applies. In the case of SARS, where a quarantine lasted only two weeks, for example, employees were effectively precluded from collecting employment insurance benefits.

However, the federal government amended the regulations under the Employment Insurance Act to make it easier for those affected by SARS to obtain benefits by waiving the two-week waiting period.


Occupational Health and Safety Act

All Canadian jurisdictions have health and safety legislation. These laws generally require employers to provide a workplace that is reasonably safe and allow most workers to refuse to work if they believe the work is unsafe, until the situation is clarified, often by a government inspector.

Workplace Safety and Insurance Act

The Workplace Safety and Insurance Act provides compensation to eligible employees for personal injury or illness arising out of or in the course of employment, as well as to eligible employees suffering from and impaired by occupational disease.

Accordingly, the Workplace Safety and Insurance Act does not provide compensation to employees who are simply unable to attend work because of injury or illness. In the case of SARS, for example, an employee would have to demonstrate that he or she contracted SARS in the course of his or her employment in order to receive workplace safety and insurance benefits. Symptom-free employees, even if they are quarantined or sent home by an employer on a precautionary basis, are not eligible for such coverage.

Human Rights Code

Illnesses such as SARS most certainly meet the definition of handicap under the Ontario Human Rights Code. Because of the broad definition of handicap, employees who:

have SARS;

have had SARS;

are believed to have SARS; or

are believed to have had SARS,

receive human rights protection. Accordingly, employers taking action with respect to an employee who fits within one of these four categories must consider whether such action would constitute discrimination on the basis of handicap.

The Human Rights Code also prohibits discrimination on the basis of place of origin, race and ancestry. In the case of SARS, for example, employers have to ensure that in refusing to allow an employee to return to work after a trip to a known SARS hotspot, they are not discriminating against an employee on one of the above grounds. To ensure that they are not, employers must take measures to justify their policies and procedures. For example, it may be more prudent to allow such employees to return to work if they are able to provide a medical certificate stating that they are fit and healthy, rather than outright banning their return to work.

The Human Rights Code also requires employers to accommodate an employee who fits within one of the four categories listed above. Such accommodation could involve providing disabled employees with alternate work, allowing employees to work from home or providing employees with time off from work without penalty. Keep in mind that the requirement to accommodate disabled employees is to the point of undue hardship.


Employers also have an obligation under the Human Rights Code to ensure that the workplace is free from harassment. Employers must take care to ensure that when enforcing policies and procedures to maintain a safe work environment, in the case of SARS for example, they are not indirectly harassing protected employees. This obligation also extends to harassment from other employees. Employers must therefore treat all complaints of harassment seriously and investigate them as they would in ordinary circumstances.

Health Protection and Promotion Act

This legislation provides the Minister of Health with broad powers to deal with hazards presented by communicable and virulent diseases. Under the Health Protection and Promotion Act, certain individuals are required to report communicable diseases to the Medical Officer of Health. During the SARS epidemic, the regulations under the Health Protection and Promotion Act were amended to include SARS.

Although the Health Protection and Promotion Act does not require employers to report a communicable disease, where an employer operates in an industry in which the public may be put at risk as a result of the failure to report a communicable disease, it should nonetheless consider reporting so as to avoid being guilty under some other public good statute.

Bill 1 – An Act to Protect Jobs, Promote Economic Growth and Address the Challenge of SARS in Ontario

In addition to general legislation, governments can of course pass legislation to deal with specific situations. One example is Bill 1, which the Ontario government passed in May 2003 to deal with SARS.

Among other things, Bill 1 broadened the scope of the emergency leave provisions of the Employment Standards Act to provide employees additional unpaid days off if they (or their family members) were suffering from SARS or under quarantine because of SARS. Like the regular emergency leave provisions, employers were prohibited from intimidating, dismissing or otherwise penalizing employees or threatening to do so because an employee took such a leave.

What Are Employees’ Rights and Employers’ Obligations?

Many of the above laws translate into some right for an employee and/or some obligation of an employer. This section outlines those rights and obligations.

Employment Standards Act

Right To Require Employees To Work Overtime Because of An Emergency

Under the Employment Standards Act, employees can be required to work overtime in the following exceptional circumstances:

there is an emergency;

something unforeseen occurs that could interrupt the continued delivery of essential public services, such as those in hospitals, regardless of who delivers such services;


something unforeseen occurs that could interrupt continuous processes or seasonal operations; or

urgent repair work to the employer’s plant or equipment is needed.

These exceptions apply only so far as is necessary to avoid serious interference with the ordinary working of the employer’s establishment or operations.

Right To Lay Off Employees

If an employer is unable to provide work because of a crisis, it may lay off employees in the normal way.

Vacation Rights

Since employees have no right to be paid when they are not working, if an employee is absent from work because of a crisis, an employer may insist that the employee take vacation time if he or she wishes to be paid. Of course, if the employee is content not to be paid, we do not recommend that employers force employees to take their vacation during this time, unless the provisions of a collective agreement, for example, allow for such forced vacation.

Employees Right To Be Free From Discipline or Discharge

As we outlined above, employees in Ontario are entitled to 10 unpaid emergency days per year. So long as an employee is able to prove that he or she qualifies for each emergency day, the employee is entitled to job protection. Accordingly, employers are not entitled to discipline and/or discharge an employee for taking a legitimate emergency day.


Obligation To Provide a Safe Workplace

Generally speaking, employers must take reasonable steps to ensure that employees are safe, and that the workplace is reasonably safe. In a case like SARS, for example, this could translate into increasing the safeguards in place in the workplace to reduce the risk of an employee contracting a virus while at work. At a minimum, employers are advised to put in place any protections suggested by the government. Some of those protections suggested by the Ministry of Health in the SARS crisis included:

providing employees with antiseptic cleanser;

ensuring that the workplace is kept clean and free of germs to the extent reasonably possible;

reminding employees of the need to wash their hands regularly; and

taking reasonable measures to ensure that employees at work are not symptomatic and therefore likely to infect others.

Obligation To Direct Workers

Employers also have a duty to provide information, instruction and supervision to employees in order to protect workers from workplace hazards. Accordingly, employers must acquaint employees with workplace hazards and how to protect themselves, other employees and any other workers at the employer’s place of business.


Right To Refuse Work

All workers have the right to refuse to work if they believe that:

a machine, equipment or tool that they are using contravenes the Occupational Health and Safety Act, is likely to endanger them or is likely to endanger another worker; or

the physical condition of the workplace contravenes the Occupational Health and Safety Act, is likely to endanger them or is likely to endanger another worker.

Once an employee refuses to work, the employer must investigate the work refusal in the presence of an employee member of the Joint Health and Safety Committee. If the employee and the employer disagree about the nature of the alleged danger, a Ministry of Labour Inspector will attend at the workplace, investigate and make a determination.

Whether the work refusal was legitimate or not, employers must not discipline or appear to discipline a worker for refusing to work. Employers are prohibited from penalizing, dismissing, disciplining, suspending or threatening employees for enforcing Occupational Health and Safety Act rights.

Human Rights Code

As we outlined above, employers have an obligation:

not to discriminate against an employee based on, among other things, handicap, race, ethnic origin and place of origin;

to accommodate such persons up to the point of undue hardship; and

to ensure a harassment free workplace.

Other

Right To Be Paid

As outlined above, there is no general, legal requirement to pay employees who are not at work during a crisis. However, in the case of sickness, sick pay or short-term disability plans may apply. Whether or not such benefit plans (or the collective agreement in the case of unionized employers) gives employees a right to benefits when they are under quarantine but not ill, depends on the specific terms of the plan or agreement.

Of course, an employer or short-term disability insurance carrier may voluntarily agree to provide sick pay benefits to those who have been quarantined. In a unionized environment, we would recommend obtaining the union’s agreement before unilaterally voluntarily providing such sick pay benefits.

Finally, given that employees have a right to be paid for work they have performed, employees who work from home in a crisis will be entitled to be paid.


Privacy Rights

Many employers are concerned whether there are specific privacy considerations, especially in crises involving the health of employees. For example, in the SARS situation, employees needed to be aware of the risks of exposure to SARS from fellow employees.

In Ontario there is no common law right to privacy and, for private sector workplaces, no statutory right to privacy in employment. However, recent trends in privacy legislation suggest that employers must be diligent in protecting employee privacy and confidentiality. Although information concerning the health of an employee should be kept confidential in the workplace generally, employers may need to report incidents of employee illness, or a failure by an employee to abide by an order, to the appropriate person or government body. Regardless of privacy rights, therefore, where an employer believes that it is reasonably necessary to report medical information in order to ensure the safety of other employees and/or to protect the public, the employer should report.

What Can Employers Do Before Disaster Strikes?

Although there will always be situations that require employers to implement specific “one-time” policies like the travel policies that were developed during SARS, employers should also endeavour to implement policies to deal with crises generally. We recommend that employers consider implementing the following general policies and/or plans. In unionized settings, we recommend working together with members of the bargaining unit in implementing such measures.

Disaster Contingency Plan

Business interruption caused by disaster can happen to any business at any time. When a crisis occurs, a company can respond more effectively if a contingency plan is already in place.

Essentially, a contingency plan should attempt to:

ensure business continuity;

reduce the risk to employees;

maintain productivity; and

minimize the possibility of litigation.

When preparing a contingency plan, companies should keep in mind the following:

prepare a callout list of essential employees, including telephone numbers and home addresses;

consider how the essential employees may be transported to your regular (or alternate) business location in the event of a crisis;

establish a “hotline” that employees can access to determine what they should do in the event of a particular crisis;


designate an alternate meeting location in case your business location becomes inaccessible;

regularly back-up your critical records and store them offsite;

conduct a drill at least once a year so employees can practice and demonstrate their duties in the contingency plan; and

update the information in the plan when facilities are changed, when equipment is changed, when growth occurs and at least annually.

In developing a healthcare-related emergency contingency plan, companies may also wish to consider the following:

how the company will deal with quarantined employees;

what action steps the company will take to respond to a member of an employee’s family being quarantined;

how the company’s national and international travel policies will be amended in the event of health-related travel advisories;

plans for emergency on-site health screening clinics or external medical support services; and

establishing an off-site “clean team” that will operate separately from the primary business location.

Training Employees To Deal With Disasters

Having the most comprehensive contingency plan may be of no use if employees do not know how to execute it. In an ideal world, not only employees, but also contractors, visitors, managers and anyone else at a business location must be able to respond to an emergency. As such, it is very important to train employees in this regard.

Training can include:

periodic employee discussion sessions;

meetings to review procedures;

training in using emergency equipment, such as fire extinguishers;

evacuation drills; and

full-scale exercises.

Employers may wish to develop a 12-month training schedule that outlines:

Who will be trained?

Who will do the training?

What training activities will be used?


When and where will each session take place?

How will the session be evaluated and documented?

To ensure your training is current, consider amending the training schedule annually.

As we outlined above, we suggest working with the union when providing training.

Protecting Human Resources Information Systems From Disaster

Since companies rely on the information in their human resources systems to conduct business and meet regulatory and contractual obligations, it is essential to protect this information in the event of a disaster. In order to continually minimize and reduce the risk of loss or theft of this information, companies should consider the following:

monitor and account for all changes to the business that may affect security;

raise internal awareness of systems security and risk through regular security awareness programs and easy access to policies and procedures;

ensure that all new systems meet a rigid set of requirements before they are purchased and implemented;

ensure that your contingency plan includes the back up of all your essential human resources information at a separate business location;

perform regular audits of the organization’s systems security by independent sources; and

know who you are hiring and who is allowed access to your systems.

What Are Some Employers Doing To Ensure Best Practices?

At the beginning of this paper, we outlined what laws apply to disasters. It is important to keep in mind, however, that these laws only set out minimum standards. In many cases, employers have decided to exceed such minimum standards.

Paying Employees Even if You Don’t Have To

During the SARS outbreak, for example, we saw many employers decide to pay employees for time away from work even though they were not required to. For employers with only one or two employees under quarantine, this was an easy decision. For other employers, such as hospitals where many, many employees were absent from work, the decision was much more difficult.

The decision was even more difficult for many employers during the blackout. In that case, employers had the majority of their employees absent from work at one time. Many employers decided to pay all employees for affected days. Given that most employees were only absent for one and one-half days, this may have been an easy decision for many employers. What if the blackout had lasted a week? What if a snowstorm prevented employees from working for two weeks? What is reasonable will depend on the circumstances of each employer in each specific situation.


Employee Education and Training

Depending on the nature of the workplace, employers may wish to consider providing education and training sessions to their employees. In a setting such as a law office, that may involve nothing more than having an annual evacuation drill. In other workplaces, however, more specific training may be required.

Employee Communications Strategy

Apart from providing an safe work environment, there is no law setting out how employers should communicate with their employees in advance of or during a crisis. The more knowledgeable an employee is about his or her employer’s disaster preparedness, the more comfortable the employee is likely to be. The more an employee knows what is expected of him or her during a particular disaster, the more comfortable the employee is likely to be.

Accordingly, we suggest that employers take steps to ensure that all employees are aware of the employer’s disaster contingency plans. This can take the form of actual training sessions, written or verbal communication, or a combination thereof.

We also suggest that employers establish a “hotline” that employees can access during a disaster and which will communicate to the employee what he or she should do; i.e., whether the employee should attempt to come into work; whether the employee will be paid for the day; and the status of the employer’s operations.


Hands on support.

Sunil KapurBen Ratelband

Managing Stress-Related Claims


Introduction

Dealing with issues related to stress in the workplace is becoming one of the most serious human resources challenges facing employers, as more and more employees claim that they are unable to work or perform their job functions due to stress. This paper is intended to assist employers to meet that challenge and effectively manage stress-related claims that can arise in a variety of different ways in the workplace. In Ontario, such claims can take many different forms, including claims for disability benefits or sick leave, lawsuits for wrongful dismissal, tort claims, human rights complaints, and workplace safety and insurance claims. In this paper, we will review the nature of stress and proactive and reactive strategies to manage some common types of stress-related claims.

What is STRESS?

We hear a lot about stress these days, but what is it?

Taber's Cyclopedic Medical Dictionary defines stress as "the result produced when a structure, system or organism is acted upon by forces that disrupt equilibrium or produce strain." The Canadian Centre for Occupational Health and Safety (“CCOHS”) has defined stress in simpler terms, as:

“the result of any emotional, physical, social, economic, or other factors that require a response or change. It is generally believed that some stress is okay (sometimes referred to as "challenge" or ‘positive stress’) but when stress occurs in amounts that you cannot handle, both mental and physical changes may occur.”

So, some stress is normal and healthy. It provides us with the motivations to meet daily challenges and goals at home and at work. However, too much stress can have both negative physical and mental consequences, which can have serious consequences not just for those experiencing stress but also for their employers.

There are a myriad of causes for stress (known as “stressors”) that can arise both inside and outside the workplace. Some of workplace stressors identified by Health Canada and Statistics Canada, include:

uncertainty arising from restructuring, layoffs or other significant workplace changes;

fear of the loss of employment;

increased demands, deadlines and workload;

long hours and forced overtime;

fear of accident or injury;

technological changes;

lack of resources and training;

performance appraisals; and

poor interpersonal relations, discrimination or harassment by co-workers or by managers.


Stress-Related Physical Conditions

Stress has been recognized as a causal factor in various physical conditions. The CCOHS has described this phenomenon as follows:

“Our bodies are designed, pre-programmed if you wish, with a set of automatic responses to deal with stress. This system is very effective for the short term ‘fight or flight’ responses we need when faced with an immediate danger. The problem is that our bodies deal with all types of stress in the same way. Experiencing stress for long periods of time (such as lower level but constant stressors at work) will activate this system, but it doesn't get the chance to ‘turn off’.”

The body's "pre-programmed" response to stress has been called the "Generalized Stress Response," which the Workplace Safety and Insurance Board has described as including:

increased blood pressure;

increased metabolism (e.g., faster heartbeat, faster respiration);

decrease in protein synthesis, intestinal movement (digestion), immune and allergic response systems;

increased cholesterol and fatty acids in blood for energy production systems;

localized inflammation (redness, swelling, heat and pain);

faster blood clotting;

increased production of blood sugar for energy; and

increased stomach acids.

Stress-Related Mental Conditions

The Diagnostic and Statistical Manual of Mental Disorders (“DSM IV”) does not recognize “stress” as a medical diagnosis. However, the DSM IV does contain a number of recognized psychiatric stress-related conditions, such as:

acute stress disorder;

adjustment disorder;

major depressive disorder;

bipolar disorders;

general anxiety disorder; and

post-traumatic stress disorder.

These conditions can be severely debilitating and could be a legitimate medical reason for not being able to attend or perform work. However, given that these conditions are not visible, they are sometimes not treated as seriously as


“real” illnesses by employers. This could be a costly mistake. As we shall explore in this paper, in order to minimize the risk of liability, mental health claims need to be dealt with by employers in a manner that is every bit as rigorous as claims of physical disability.

Proactive Steps to Reduce Stress in the Workplace

There are a number of proactive steps that can be taken by employers to help lessen the amount of stress employees are experiencing. The aim of these steps is to promote a safe and productive work environment but also to prevent the level of stress on employees leading to legal claims against the employer. Human Resources Development Canada has suggested that employers promote work-life stress management through a number of steps, including:

Providing access to an Employee Assistance Programme (“EAP”): EAP services are usually provided by an external company specializing in this type of service. EAP services are confidential and can be offered to either individuals or groups of employees. Most plans offer access via a toll-free 24-hour telephone line. Counsellors will meet with the employee and discuss the problem. Counsellors will refer the employee to appropriate medical, psychiatric, counselling or other services if longer term care is required. Statistics Canada has reported that, in 1999, 26 per cent of employees in Canada had access to an EAP.

Wellness and Health Promotion in the Workplace: Such programmes can take many forms, including workshops on time management, maintaining healthy habits, team building, dispute resolution, elder care and retirement planning.

Implementing and Adhering to Workplace Policies: Consistent application of workplace policies that promote open communication, dispute resolution, fair management practices, safety and consistency, and predictability in the workplace. Workplace policies that are thoughtfully designed can lessen many of the workplace stressors identified above.

Designing Jobs: The CCOHS has also advised that, to the extent that it is operationally feasible, stress can be reduced by jobs that are designed in a way that is reasonably demanding but not overwhelming, with some variety of tasks, giving some opportunity for continuing learning or training, a sphere of decision-making that is the employee’s sole responsibility, recognition for performance and loyalty and the opportunity for advancement.

Proactive employers should also be aware of and watch for warning signs that might indicate that an employee is having trouble coping with stress before that stress becomes so severe that it impairs his or her ability to work. The following warning signs have been identified by the CCOHS as indicators that someone is having difficulty coping with the amount of stress they are experiencing:

Physical: headaches, grinding teeth, clenched jaws, chest pain, shortness of breath, pounding heart, high blood pressure, muscle aches, indigestion, constipation or diarrhea, increased perspiration, fatigue, insomnia and frequent illness.

Psychosocial: anxiety, irritability, sadness, defensiveness, anger, mood swings, hypersensitivity, apathy, depression, slowed thinking or racing thoughts; feelings of helplessness, hopelessness or of being trapped.


Behavioural: overeating or loss of appetite, impatience, quickness to argue, procrastination, increased use of alcohol or drugs, increased smoking, withdrawal or isolation from others, neglect of responsibility, poor job performance, poor personal hygiene, change in religious practices, change in close family relationships.

Stress-related Claims and The Human Rights Code

Prohibition on Discrimination and the Duty to Accommodate

The Ontario Human Rights Code (“Code”) governs discrimination with respect to all aspects of the employment relationship. Section 5 of the Code provides:

5. (1) Every person has a right to equal treatment with respect to employment without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, record of offences, marital status, same-sex partnership status or disability.

Section 11 of the Code prohibits constructive discrimination that arises from the application of an ostensibly neutral job rule that adversely affects individuals based on a prohibited ground (such as disability). Specifically, section 11 of the Code provides:

11. (1) A right of a person under Part I is infringed where a requirement, qualification or factor exists that is not discrimination on a prohibited ground but that results in the exclusion, restriction or preference of a group of persons who are identified by a prohibited ground of discrimination and of whom the person is a member, except where, (a) the requirement, qualification or factor is reasonable and bona fide in the circumstances; or

(b) it is declared in this Act, other than in section 17, that to discriminate because of such ground is not an infringement of a right.

11. (2) The Commission, a board of inquiry or a court shall not find that a requirement, qualification or factor is reasonable and bona fide in the circumstances unless it is satisfied that the needs of the group of which the person is a member cannot be accommodated without undue hardship on the person responsible for accommodating those needs, considering the cost, outside sources of funding, if any, and health and safety requirements, if any.

11. (3) The Commission, a board of inquiry or a court shall consider any standards prescribed by the regulations for assessing what is undue hardship.

Section 17 of the Code makes it clear that employees with disabilities must be accommodated to the point of undue hardship:

17.(1) A right of a person under this Act is not infringed for the reason only that the person is incapable of performing or fulfilling the essential duties or requirements attending the exercise of the right because of disability.


17 (2) The Commission, the Tribunal or a court shall not find a person incapable unless it is satisfied that the needs of the person cannot be accommodated without undue hardship on the person responsible for accommodating those needs, considering the costs, outside sources of funding, if any, and health and safety requirements, if any.

The range of options for accommodation are extremely varied and depend largely on the circumstances of each case. For example, if an employee is absent due to a disability and is unable to return to any position in the workforce, the duty to accommodate will sometimes be met simply by allowing the employee to remain “on the books” and, where applicable, retain and accumulate seniority. In other circumstances, the duty to accommodate will be met by finding a suitable alternative position, creating a special work schedule or modifying the duties of the employee.

As noted above, employers are required to accommodate disabled employees to the point of “undue hardship.” While there is no definition of the term “undue hardship” in the Code, more than mere inconvenience or disruption to the workplace is contemplated. Some of the factors relevant to assessing undue hardship include financial costs, disruption of a collective agreement, staff morale, interchangeability of work forces and facilities, and health and safety. The Ontario Human Rights Commission Guidelines (which do not have the force of law but reflect the Commission’s interpretation of the Code) provide:

“Undue hardship will be shown to exist if the financial costs that are demonstrably attributable to the accommodation of the needs of the individual with a disability, and/or the group of which the person with a disability is a member, would alter the essential nature or would substantially affect the viability of the enterprise responsible for accommodation.”

Is Stress A Disability?

In order for an employee to avail themselves of the protections of the Code, it must first be established by the employee that he or she has a “disability” within the meaning of the Code. Section 10(1) of the Code defines disability as: any degree of physical disability, infirmity, malformation or disfigurement that is caused by bodily injury, birth defect or illness and, without limiting the generality of the foregoing, includes diabetes mellitus, epilepsy, a brain injury, any degree of paralysis, amputation, lack of physical co-ordination, blindness or visual impediment, deafness or hearing impediment, muteness or speech impediment, or physical reliance on a guide dog or other animal or on a wheelchair or other remedial appliance or device;

a condition of mental impairment or a developmental disability;

a learning disability, or a dysfunction in one or more of the processes involved in understanding or using symbols or spoken language;

a mental disorder; or

an injury or disability for which benefits were claimed or received under the Workplace Safety and Insurance Act, 1997.


As the above definition makes clear, both physical and mental conditions can fall within the scope of “disabilities.” In fact, in Gibbs v. Battlefords,1 the Supreme Court of Canada held that it is discriminatory to provide persons with physical disabilities with greater entitlements to disability benefits than persons with mental disabilities. The Ontario Human Rights Commission has emphasized the special needs of persons with mental disabilities:

“Protection for persons with mental disabilities deserves special attention. These persons have the same rights as persons with any other kind of disability. They may, however, have trouble expressing themselves or even identifying that they have a disability.”

It is not unusual for us to hear the phrase “stressed-out” to describe how a person is feeling at work. It is also more and more common for us to hear of employees going off work on what many people commonly refer to as “stress-leave.” Yet, in order to manage stress-related issues in the workplace, it is important for employers to note that “stress” is not, in and of itself, a medical or psychiatric diagnosis. As noted in the CCOHS definition at the beginning of this paper, stress may lead to physical or mental conditions.

So, stress is not a disability per se. However, stress may cause or exacerbate physical or mental conditions that, depending on their nature and severity, could fall within the definition of disability under the Ontario Human Rights Code.

In assessing whether or not any physical or mental condition is a disability adjudicators will take into account a number of factors, such as:

the duration of the condition and the extent to which the condition creates any significant, ongoing or persistent limitation;

the severity of the limitation upon the person’s ability to carry on any of life’s important functions;

whether the person can be considered to be part of an identifiable group who suffer from the same condition, as opposed to having a condition that is commonplace; and

whether regarding the condition as a disability would trivialize the purpose of the Code.

For example, in Ouimette v. Lily Cups Ltd.,2 an allergic reaction producing cold or flu-like symptoms of a few days duration, which might have been avoided by the employee’s own personal preventative health care, was not considered to be a disability within the meaning of the Code. This suggests that the employer must assess the nature of the condition or illness giving rise to the claim in order to determine if there is an underlying duty to accommodate issue. A claim of stress, without additional medical information, may not be sufficient to support a human rights claim.

Various stress-related and mental conditions have been recognized by Canadian Human Rights tribunals as disabilities.

1 [1996] 3 S.C.R. 566 2 (1990) 12 C.H.R.R. D/19 (Ont. Bd. Inq.)


In the case of N.S.G.E.U. v. Nova Scotia (Human Resources),3 an employee suffering from “major depression” arising in part from increased stress at work was held to be mentally disabled under the Nova Scotia Human Rights Act. The arbitrator held the duty to accommodate required the employer to take “positive and active steps” to identify a suitable position for the grievor, comparable to the position that he had left prior to his disability. The arbitrator held that the employer must scan the workplace in whatever ways are available to find work that the grievor could productively do.

In Calgary Co-operative Association and Calco Club,4 the grievor was discharged for behaving inappropriately towards customers. The grievor’s misconduct was subsequently found to have been caused by frontal lobe brain damage. The arbitrator reinstated the grievor and stated that the employer was subject to a duty to accommodate the grievor’s disability to the point of undue hardship even though the grievor’s mental illness was unknown at the time of his discharge. The arbitrator suggested that accommodation may involve the employer reducing the level of stress in the grievor’s position, reassigning the grievor to an alternate position or modifying and/or designing a less stressful position.

Tips for Managing Stress-Related Claims Under the Code

Stress-related claims, whether they are primarily mental or physical in nature, should be treated in the same way as any other disability claim:

Determine if a claim of stress is related to harassment or discrimination under the Code. If so, commence an investigation into the allegations and take appropriate action in response to the investigation’s conclusions.

Determine if a claim of stress is constitutes a disability within the meaning of the Code. Obtain sufficient medical information to provide at least prognosis and details of the physical/mental restrictions that would require accommodation. A diagnosis is arguably necessary to determine if there is indeed a disability that would trigger obligations under the Code.

If the employee is absent from work, ensure the employee is fit to return to work (although perhaps in a modified form) safely.

Consider whether accommodation is possible. Explore the options thoroughly. Examine the health and safety, operational and cost consequences of accommodation. Is there modified work available? Is it possible to transfer the employee to another available position? Is it possible to modify the employee’s schedule? Would accommodating the employee amount to “undue hardship” for your company or organization?

Implement accommodation. Ensure that employees with mental disabilities and employees with physical disabilities are treated equally under accommodation policies.

Monitor the situation following implementation.

3 (1999) Carswell N.S. 173 4 (1992), 24 L.A.C. (4th) 308


Stress-Related Claims Under the Workplace Safety and Insurance Act, 1997

Is an employee entitled to benefits under the Ontario Workplace Safety and Insurance Act, 1997 (“WSIA”) for mental stress that arises at work? In certain circumstances, the answer is yes.

Subsections 13(4) and (5) of the WSIA provide

13 (4) Except as provided in subsection (5), a worker is not entitled to benefits under the insurance plan for mental stress.

13 (5) A worker is entitled to benefits for traumatic mental stress that is an acute reaction to a sudden and unexpected traumatic event arising out of and in the course of employment. However, a worker is not entitled to benefits for traumatic mental stress caused by his or her employer’s decisions or actions relating to the worker’s employment, including a decision to change the work to be performed or the working conditions, to discipline the worker or to terminate the employment.

Policy

Board policy Traumatic Mental Stress, 15-02-02 elaborates on the application of the statutory provisions relating to mental stress. The most current version of the policy is dated May 10, 2002, and by its terms applies to “any single traumatic event, or in the case of cumulative effect the most recent traumatic event, occurring on or after January 1, 1989.” This policy provides guidelines for determining entitlement for traumatic mental stress.

Guidelines

1. Sudden and Unexpected Traumatic Event

The policy guidelines define the kind of event that can be considered to be a “sudden and unexpected traumatic event.” The policy states:

“A traumatic event may be a result of a criminal act, harassment, or a horrific accident, and may involve actual or threatened death or serious harm against the worker, a co-worker, a worker’s family member, or others.”

In all cases, the event must arise out of and occur in the course of the employment and be:

clearly and precisely identifiable;

objectively traumatic; and

unexpected in the normal or daily course of the worker's employment or work environment.

This means that the event:

can be established by the WSIB through information or knowledge of the event;

provided by co-workers, supervisory staff or others; and


is generally accepted as being traumatic.

Sudden and unexpected traumatic events may include:

witnessing a fatality or a horrific accident;

witnessing or being the object of an armed robbery;

witnessing or being the object of a hostage-taking;

being the object of physical violence;

being the object of death threats;

being the object of threats of physical violence where the worker believes the threats are serious and harmful to self or others (e.g., bomb threats or being confronted with a weapon);

being the object of harassment that includes physical violence or threats of physical violence (e.g., the escalation of verbal abuse into traumatic physical abuse); and

being the object of harassment that includes being placed in a life-threatening situation (e.g., tampering with safety equipment; causing the worker to do something dangerous).

The worker must have suffered or witnessed the traumatic event first hand, or heard the traumatic event first hand through direct contact with the traumatized individual(s) (e.g., speaking with the victim(s) on the radio or telephone as the traumatic event is occurring).

2. Acute Reaction

The policy discusses what constitutes an "acute reaction" as follows:

“An acute reaction is a significant or severe reaction by the worker to the work-related traumatic event that results in a psychiatric/psychological response. Such a response is generally identifiable and must result in an Axis I Diagnosis in accordance with the Diagnostic and Statistical Manual of Mental Disorders (DSM-IV).”

An acute reaction is said to be immediate if it occurs within four weeks of the traumatic event.

An acute reaction is said to be delayed if it occurs more than four weeks after the traumatic event. In the case of delayed onset, the evidence must be clear and convincing that the onset is due to a sudden an unexpected traumatic event, which arose out of and in the course of the employment.

3. Cumulative Effect

Sometimes the nature of an occupation will expose a worker to multiple, sudden and unexpected traumatic events. In these cases, a decision-maker must establish from clinical and other information that there were prior traumatic events and that these events led to the worker’s current psychological state, even if the worker was able to tolerate them in the


past. A final reaction to a series of sudden and traumatic events is considered to be the cumulative effect. The last traumatic event that triggers the cumulative effect may not be the most traumatic in the series of events.

4. An Employer’s Work–Related Decisions or Actions

There is no entitlement for traumatic mental stress due to an employer’s decisions or actions that are part of the employment function (e.g., terminations, demotions, transfers discipline, changing in working hours and changing in productivity expectations).

5. Diagnostic Requirements

Decision-makers will require an Axis I diagnosis in accordance with the American Psychiatric Association’s DSM-IV. Diagnosis may include but is not limited to:

acute stress disorder;

post-traumatic stress disorder;

adjustment disorder; or

an anxiety or depressive disorder.

For immediate acute reactions, a claim will be accepted if an appropriately regulated health-care professional confirms the worker is suffering from an Axis I diagnosis. Where the acute reaction is delayed or the onset due to cumulative effect or harassment, a claim will be adjudicated only if there is an Axis I diagnosis of the worker’s psychological state provided by a psychiatrist or psychologist.

Note that the foregoing provisions of the WSIA do not prevent a claim for entitlement where a worker develops mental stress as a result of a physical injury. In such cases, the WSIB’s longstanding Operational Policy 03-03-03 continues to apply.

Conclusion

As made clear in the above policy, an employee will only be entitled to benefits for work-related stress, in a very narrow range of circumstances. In such circumstances, it is important to remember that all of the usual requirements of the WSIA apply. For instance:

Section 40 of the WSIA states that where an injured worker is unable to work as a result of an injury, the employer must (amongst other things) initiate and maintain communication with the injured worker throughout the worker’s recovery and impairment and attempt to provide suitable employment.5

Section 41 of the WSIA (subject to certain conditions) also requires employers to offer to re-employ a worker who has been unable to work as a result of an injury.

5 Note that employers must be careful about how they communicate with an injured worker. See the Ontario Court of Appeal

decision in Prinzo v. Baycrest Centre for Geriatric Care, discussed under the heading Intentional Infliction of Mental Suffering, below.


If the injured worker is able to perform the essential duties of his or her pre-injury job, the employer must reinstate the employee to that position or offer the employee comparative alternate employment.

In fulfilling the above requirements, the employer is subject to a duty to accommodate the worker up to the point of undue hardship, which is similar to the duty to accommodate imposed under human rights legislation.

Employees also have a duty to co-operate with their employer’s return to work efforts.

Stress and Termination of Employment

Just Cause for Dismissal

Employers must be extremely cautious in dismissing an employee for just cause when that employee is suffering from any kind of mental illness, whether stress-related or not. Although there are conflicting authorities on this issue, in our opinion an employee cannot be dismissed for just cause for behaviour resulting from a mental illness. Where an employee’s behaviour (e.g., poor performance, insubordination or absenteeism) is related to a stress-related or mental illness, employers must satisfy their duty to accommodate before discharging the employee.

In Yeager v. Hastings,6 the plaintiff employee developed a temporary organic brain disease that led to a severe deterioration in his ability to perform his job duties and eventually incapacitated him for a period of two years. Although the employee’s behaviour would have otherwise been cause for summary dismissal, the court held that since his conduct is due to his mental illness, there was not cause to dismiss him. The employer was ordered to provide the employee with pay in lieu of reasonable notice of termination.

In Rivest v. Canfarge Ltd.,7 a court held that an employee suffering from mental strain had been discharged without cause. The plaintiff employee, was discharged after failing to show up for work for three consecutive days. Prior to that time, the plaintiff had been working six to seven days per week and up to 12 hours per day. The court found that, due to the pressures and demands of his job, the plaintiff was suffering from a mental strain, which the court classify as a “real illness.” Accordingly, the court held that the plaintiff could not be responsible for his absenteeism. The employer was required to provide the employee with pay in lieu of reasonable notice of termination.

In Casey v. General Inc.,8 the defendant employer terminated the plaintiff employees’ employment for a neglect of duty following repeated warnings. However, the employee successfully sued the employer for wrongful dismissal. In that case, a court allowed the plaintiff employee’s claim because he had been suffering from an acute stress-related condition that the court found to have been brought on by the pressures of his job. The employer was ordered to provide the employee with pay in lieu of reasonable of notice of termination.

There are a few court decisions that have upheld dismissals for misconduct caused by mental illness. One such case is Tarailo vs. Allied Chemical Canada Ltd..9 In that case, the plaintiff employee suffered from mood swings and depression.

6 (1984) 5 C.C.E.L. 266 (B.C.S.C.) 7 [1977] 4 W.W.R. 515 8 (1998) 24 C.C.E.L. 142 (Nfld.T.D.) 9 (1989), 68 O.R. (2d) 288


The employee resigned from his employment. Approximately three months later, the employee requested that his letter of resignation be withdrawn. The employer allowed the employee to return to work for a trial period. However, the plaintiff’s performance continued to be unsatisfactory. The employee was antagonistic towards his supervisors and failed to attend meetings when requested. When the plaintiff was confronted with a letter outlining his performance problems, he crumbled it up and threw it at his supervisor. Upon being told that he would be discharged, the plaintiff resigned from his employment. The plaintiff was subsequently diagnosed as a paranoid schizophrenic. The court found that the employee had not been wrongfully dismissed because, in the circumstances, the employer had acted reasonably and the employee’s work had been unacceptable. However, the court did find the employer liable for disability benefits because, at the time of the employee’s resignation, the employer failed to assist the employee to make a claim for benefits. The court held:

“It was not up to [the employer] to decide whether or not there was a valid claim but rather to “assist in completing the required forms.” [The plaintiff] may well have been so mentally ill that he did not appreciate that he might have a claim. I concluded that the duty was owed to him. …”

Resignation

In order for an employee’s resignation to be a “true” resignation, it must be voluntary. A number of courts have held that the onus of establishing that an employee’s resignation is truly voluntary is on the employer and, unless the weight of evidence favours such a result, the plaintiff should recover damages for wrongful dismissal. The test for determining whether or not an employee’s resignation is voluntary is an objective one.

In Rajput vs. Menu Foods Ltd.,10 an Ontario Court stated the test:

“It seems to me that in deciding whether or not a person was entitled to think that he had been fired, or whether in fact the person had resigned, a court ought to ask itself: what would a reasonable man understand from the words used in the context in which they were used in a particular industry, in a particular working place, and in all the surrounding circumstances?”

Employers should exercise extreme caution in accepting a seemingly voluntary resignation from an employee suffering from a stress-related or mental illness. The case of Mager vs. Louisiana-Pacific Ltd..11 illustrates this point. In Mager, the employer proposed that an employee accept a layoff due to a technological change. However, at the time it ought to have been known to the employer that the employee was in extreme emotional distress and, as a result, disabled from performing her job. The British Columbia Human Rights Tribunal found that the employer discriminated against the employee on the basis of mental disability because it failed to ensure that the employee understood (i) that there were options (other than layoff) available to her; and (ii) the consequences of a layoff.

In any case where an employee with obvious emotional or mental problems purports to resign, an employer should be very cautious in accepting the resignation. Ensuring that the employee has been given a “clean bill of health” by a medical professional or ensuring that an employee obtains independent legal advice about the resignation are ways in which an employer may minimize the risks of a resignation subsequently being found to be involuntary.

10 (1984), 5 C.C.E.L. 22 (Ont. H.C.J.) 11 (1998), 33 C.H.R.R. D/457


Constructive Dismissal

The concept of constructive dismissal has been described by the Supreme Court of Canada in the following way:

“Where an employer unilaterally makes a fundamental or substantial change to an employee’s contract of employment – a change that violates that contract’s terms – the employer is committing a fundamental breach of the contract that results in its termination and entitled the employee to consider himself or herself constructively dismissed. The employee can then claim damages from the employer in lieu of reasonable notice.”

In a number of cases, Canadian courts have recognized that where an employer makes an employee’s work environment so unpleasant and stressful that it would be unreasonable for the employee to continue in his or her employment, a constructive dismissal may be found to exist. In making this determination, the standard is an objective one. The court must ask whether a reasonable person in the same situation as the employee would conclude that an essential term of the employment contract had been substantially changed by the employer.

In a number of cases, Canadian courts have found that bullying, harassing behaviour that is caused by or condoned by management can justify an employee considering themselves constructively dismissed:

In Saunders v. Chateau des Charmes Wines Limited,12 the Ontario Superior Court of Justice found that a supervisor’s behaviour created a workplace environment that justified the plaintiff employee from considering himself constructively dismissed. The supervisor was hostile, aggressive, profane, rude, demeaning and intimidating in his managerial style over the course of approximately two weeks. Kiteley, J. found that the supervisor’s behaviour was so abusive that, to any reasonable employee, the workplace environment had become unbearable.

In Stamos v. Annuity Research and Marketing Service Ltd.,13 an employer’s failure to take any steps to curb a new employee’s verbal harassment, threatening and intimidating behaviour, unjustified attacks on the plaintiff’s job performance, unreasonable demands, sexist and bigoted language and hostility amounted to constructive dismissal of the plaintiff.

Note that not all stressful work environments will justify a claim of constructive dismissal. For example, in Grant v. Oracle Corp. Canada Inc.,14 a salesman resigned from his employment with his employer because of extreme pressure to meet sales quotas. The plaintiff employee alleged that the defendant’s expectations were unrealistic and that the work environment was so oppressive he had been forced to resign. At trial and on appeal, the Manitoba courts disagreed with the plaintiff. In finding that the plaintiff had not been constructively dismissed, the courts noted that the plaintiff had been aware of the high pressure environment at the defendant company when he applied for the position and the defendant had done nothing to unilaterally alter the employee’s working conditions or position. Accordingly, the employee was held not to be constructively dismissed and found to have voluntarily resigned from his employment.

12 [2002] O.J. No. 3990 13 [2002] O.J. No. 1865 (O.S.J.) 14 (1995), 8 C.C.E.L. (2nd) 1 (Man. C.A.)


Stress-related Tort Claims

Intentional Infliction of Mental Suffering or Nervous Shock

The Ontario Court of Appeal recently described the tort of intentional infliction of mental suffering (sometimes called “nervous shock” in the caselaw) as having three elements:

1. flagrant or outrageous conduct by the defendant;

2. calculated to produce harm; and

3. resulting in a visible and provable illness.

Recognition of this cause of action in torts originates with the decision in Wilkinson v. Downton, [1897] 2 Q.B. 57 in which a practical joker informed a woman that her husband had been seriously injured, thereby inducing a state of nervous shock and prolonged mental and physical suffering. In finding the defendant liable, Wright J. stated:

“The defendant has ... wilfully done an act calculated to cause physical harm to the plaintiff -- that is, to infringe her legal right to personal safety, and has in fact thereby caused physical harm to her. That proposition without more appears to me to state a good cause of action, there being no justification alleged for the act. This wilful injuria is in law malicious, although no malicious purpose to cause the harm which was caused nor any motive of spite is imputed to the defendant.”

“... It is difficult to imagine that such a statement, made suddenly and with apparent seriousness, could fail to produce grave effects under the circumstances upon any but an exceptionally indifferent person, and therefore an intention to produce such an effect must be imputed, and it is no answer in law to say that more harm was done than was anticipated, for that is commonly the case with all wrongs.”

It is important to note that liability for intentional infliction of mental suffering will not attach without proof of actual harm. There must be a “visible and provable illness” resulting from the conduct of the defendant.15 There is thus a requirement that the plaintiff establish that she has suffered some type of objectively measurable psychopathological harm in addition to the emotional distress.16

The principles developed in Wilkinson have been adopted in a number of Canadian cases.

Most of the cases involving intentional infliction of mental suffering involve a single incident or precipitating event that results in the mental injury to the plaintiff.

However, there are a number of decisions in which a course of harassing conduct leading up to a termination have led to awards of damages for mental distress. For example, in Boothman v. R.17 a plaintiff successfully sued for intentional infliction of nervous shock in circumstances where a supervisor had engaged in harassing and threatening behaviour

15 Linden, Allen M. Canadian Tort Law. 7th Edition. (Toronto: Butterworths, 2001), at p. 53 16 Ibid., p. 10-10 17 (1993) 49 C.C.E.L. 109 (F.C.T.D.)


toward the plaintiff over a six-month period, from the time the plaintiff was hired until she was dismissed. There was evidence that throughout the course of her employment, the plaintiff was insulted, humiliated and harassed by her supervisor. He threatened her with physical violence by waving a screwdriver in her face and keeping a hammer on her desk. When the plaintiff complained to his superiors, her supervisor’s actions became more threatening and controlling. Ultimately, the plaintiff’s employment was terminated. The plaintiff was awarded $5,000 for pain and suffering and $20,000.00 for loss of future earnings as damages suffered as a result of the intentional infliction of nervous shock.

In recent Ontario Court of Appeal decision of Prinzo v. Baycrest18 , the court of appeal addressed the tort of intentional infliction of mental distress in the context of a claim for wrongful dismissal. The plaintiff had worked for the defendant for seventeen and a half years, providing various services. The plaintiff injured herself as a result of a fall in the parking lot of the defendant and on the advice of her physician, she went off work. Shortly thereafter, as part of the employer’s duties to maintain contact with injured workers under s. 40 of the WSIA, employees of the defendant began calling her to inquire about her ability to return to work. An employee of the defendant wrote to the plaintiff and falsely implied that they had been in contact with her physician and that he had agreed she could return to work. The company threatened the plaintiff with dismissal if she did not return to work immediately. The plaintiff’s lawyer wrote to the company stating that the actions of the employer were causing the plaintiff stress and anxiety and that all communications should be addressed to him until further notice. However, the calls from the employer’s staff continued despite the lawyer’s letter. Ultimately the plaintiff was provided with a letter from the employer indicating that her employment was being terminated. The plaintiff sued for wrongful dismissal, damages for mental distress and punitive damages.

The trial judge awarded Prinzo $15,000 in damages for mental distress. The Court of Appeal upheld this finding, noting that the trial judge made express factual findings with respect to each of the three required elements of the tort of intentional infliction of mental suffering, namely outrageous or flagrant conduct, calculated to produce an effect of the kind produced, which causes a visible and provable illness. Further, the court noted that the employer’s duty under s. 40 of the WSIA to maintain contact with the plaintiff while she was off work did not justify the employer harassing or hounding the employee. This case offers a cautious note for employers. In monitoring absences due to a stress-related condition, an employer must be careful that their conduct does not exacerbate the situation.

18 [2002] O.J. No. 2712 (C.A.)

Page I McCarthy Tétrault LLP

Appendix A – Sources of Information on Managing Stress in the Workplace

The following are some sources of information on stress and the workplace that are available to employers:

Canadian Centre for Occupational Health and Safety www.ccohs.ca

Human Resources Development Canada www.labour.hrdc-drhc.gc.ca

Statistics Canada www.statcan.ca

Canadian Mental Health Association www.cmha.ca

Workplace Safety and Insurance Board www.wsib.on.ca


Hands on support.

Mary Catherine Chambers Lorenzo Lisi

Update on The Employment Standards Act, 2000


Introduction

The purpose of this paper is to bring you up to date on new and significant decisions interpreting the Employment Standards Act, 2000 (the “ESA, 2000”) and to provide some practical advice with respect to how to approach issues arising under the ESA, 2000 generally.

Since the ESA, 2000 became law on September 4, 2001, there have been approximately 468 decisions interpreting the ESA, 2000 issued by the Ontario Labour Relations Board (the “Board”), 86 reported arbitration decisions that interpret the ESA, 2000 and a handful of decisions of the Ontario Court interpreting the new legislation.

The vast majority of the decisions issued by the Board indicate that the parties have settled all matters in dispute. There are few decisions that offer an interpretation of the new substantive provisions of the ESA, 2000.

On the arbitration front there are a handful of decisions that interpret the new substantive provisions of the ESA, 2000.

Some Practical Advice

Many short-term employees whose employment is terminated are beginning to use the new anti-reprisal provisions of the ESA, 2000 as a springboard from which to seek reinstatement and back wages.

The new anti-reprisal provisions of the ESA, 2000 permit an Employment Standards Officer, or the Board, to order an employee to be reinstated and “made whole” with financial compensation from the termination date to the time of reinstatement if the employer terminated the employee’s employment because the employee tried to enforce his or her rights under the ESA, 2000.

Employers that terminate the employment of short-term employees without clearly documenting and communicating the reason for the termination may have to defend an allegation that the termination was a reprisal (e.g., motivated by the employee’s refusal to work overtime or the fact that the employee took emergency leave days) and therefore contrary to the ESA, 2000. An employment standards complaint can be made cheaply, without consulting a lawyer and decisions on complaints are rendered quickly, making a reprisal allegation the perfect way for short-service, non-unionized former employees to secure both reinstatement and back pay. Clear documentation and communication will help employers to avoid such allegations, and if necessary, to defend such allegations.

Board Decisions

Recently the Board considered the difference between the new managerial exception to overtime entitlement and its predecessor, an issue of great importance for many employers.

In Tri Roc Electric Ltd. [2003] OLRB Rep. January/February p. 146, the Board summarized the test under the former managerial exception in the following way:

“the … test, the characterization of work as supervisory or managerial in character is made having regard to the whole of the work performed, the overall character of the work.”


Under the former exception, the Board found that the managerial exception could apply to employees who performed much of the same work as those employees whom they supervised or managed if they had control over the work, an ability to decide who would do what and when, the ability to set priorities, self-determine and have a role in hiring and firing.

The Board concluded with respect to the new exception that, “the clear implication is that the regular performance of non-managerial duties in the ordinary course of an employee’s work renders the exemption is applicable.”

This interpretation of the new exemption, if widely adopted, may be problematic for many employers in Ontario.

In another recent decision, the Board confirmed that under the new legislation an employer may terminate the employment of a pregnant employee for bone fide business reasons that are not in any way related to an employee’s eligibility or intention to take a leave, Menorah Nursery [2003] OLRB Rep. May/June, p. 452.

Arbitration Decisions

There have been a number of arbitration decisions that deal with the complicated issue of the relationship between the ESA, 2000 and the collective bargaining regime, particularly the conflicts that can arise when the rights created pursuant to collectively bargained agreements differ from entitlements created under the ESA, 2000.

Public Holidays

One of the more interesting and complex issues arbitrators have been asked to deal with concerns the interplay between a collective agreement and the public holiday provisions in the ESA, 2000. In two recent cases, arbitrators have had to decide on what basis to assess whether a collective agreement provides a greater right or benefit than the minimum standards in the ESA, 2000.

In Toronto Zoo and C.U.P.E., Loc. 1600 (2001), 102 L.A.C. (4th) 397 (Arbitrator S. Tacon, December 17, 2001), the collective agreement provided for 11 statutory holidays and two floating holidays. In addition, the collective agreement provided that employees regularly worked 11.5 hour shifts, but received eight hours pay for both the statutory holidays and the floating holidays. The ESA, 2000, on the other hand, provides for eight public holidays and sets out requirements for the calculation of public holiday pay that would have resulted in most of the affected employees receiving 11.5 hours pay for the public holidays. The dispute between the parties centred on whether the floating holidays should be included when the holiday benefits under the collective agreement were compared to the holiday benefits resulting under the ESA, 2000. If the floating holidays were included, the employees would get a greater benefit under the collective agreement (11 public holidays at eight hours per day); however, if the floating holidays were excluded, the employees would get a greater benefit under the ESA, 2000 (eight public holidays at 11.5 hours per day).

The arbitrator held that section 5(2) of the ESA, 2000 has to be read more narrowly than the “greater right or benefit” provisions in the predecessor Act. In the ESA, 2000, section 5(2) states:


“If one or more provisions in an employment contract or in another Act that directly relate to the same subject matter as an employment standard provide a greater benefit to an employee than the employment standard, the provision or provisions in the contract or Act apply and the employment standard does not.”

Section 5(1) of the old ESA stated:

“Where terms or conditions of employment in a collective agreement as defined in the Labour Relations Act confer a higher remuneration in money or a greater right or benefit for an employee respecting holidays than the provisions of Part VII, the terms or conditions of employment shall prevail.”

In this case, the arbitrator considered the fact that the floating holidays were found within a separate subsection of the collective agreement for the listed statutory holidays and that therefore the floating holidays did not “directly relate” to the same subject matter as the public holiday provisions. As a result, the proper comparison, for determining the greater right or benefit, was to compare the benefits received by employees for the statutory holidays under the collective agreement to the benefits they would receive under the public holiday provisions in the ESA, 2000.

In Zehr’s Markets and U.F.C.W., Loc. 175 (2002), 107 L.A.C. (4th) 261 (Arbitrator R. D. Howe, May 16, 2002), the arbitrator had to decide whether the method of determining entitlement to public holiday pay set out in the collective agreement provided a greater right or benefit to employees and therefore prevailed over the provisions in the ESA, 2000. The parties agreed that under the collective agreement, 69 per cent of the employees would have received more public holiday pay than they would have received in accordance with the ESA, 2000 public holiday pay provisions. Obviously, this meant that 31 per cent of the employees would have received more public holiday pay if it had been calculated according to the requirements set out in the ESA, 2000.

The union argued that the entitlement to public holiday pay must be determined by looking at each employee individually, in relation to each separate holiday, and that each employee should thus receive whatever the greater benefit would be for each holiday. Not surprisingly, the employer contended that the provisions of the collective agreement should prevail over the ESA, 2000 provisions, because they provided a greater benefit in the aggregate to the employees when calculated over the course of a calendar year.

The arbitrator held when applying section 5(2) of the ESA, 2000 and determining whether a collective agreement provided a greater right or benefit than the minimum standards under the ESA, 2000, one should not look at each holiday separately. Rather, the comparison mandated by section 5(2) requires that all of the holiday provisions under the collective agreement be compared to all of the holiday provisions under the Act to determine whether the collective agreement or the Act provides the greater benefit.

However, the arbitrator also held that the entitlement to public holiday pay must be determined by looking at the individual employee, rather than at all the employees in the bargaining unit. The arbitrator concluded that in most circumstances the collective agreement provided the individual employees with greater benefits than the ESA, 2000. Therefore, the arbitrator held that the employer would not generally contravene the ESA, 2000 by applying the collective agreement rather than the provisions of the ESA, 2000. Despite this, the arbitrator went on to hold that the employer would have to determine at the end of every year, or at the time an employee’s employment was terminated,


whether each individual employee had in fact received a greater benefit under the collective agreement. If not, the employer would have to pay the employee the amount of the shortfall.

Hours of Work

The ESA, 2000 also contains new and amended provisions relating to hours of work and these provisions have led to new disputes between parties to collective agreements. Imperial Tobacco Canada Ltd. and B.C.T., Loc. 323T (2002), 111 L.A.C. (4th) 434 (Arbitrator J.H. Devlin, September 16, 2002) involved a dispute about the extent to which employees may work in excess of 13 hours a day. Section 18(1) of the ESA, 2002 provides that an employer shall give an employee a period of at least 11 hours free from performing work in each day. Before the coming into force of the ESA, 2000, employees subject to the collective agreement could work a considerable number of overtime hours, including double shifts totalling 16 hours a day. After the ESA, 2000 came into force, the employer took the position that the Act placed strict limits on the hours that may be worked on a daily basis and precluded employees from working double shifts. The Union disagreed, and argued that section 18(2) created an exception to the requirement in section 18(1). Section 18(2) provides an exception to the requirement that an employee have at least 11 hours a day free from work where that employee is on call and is called into work during a period when the employee would not otherwise be expected to perform work. The union argued that section 18(2) contemplates agreements between employers and employees regarding hours of work.

The arbitrator held that the “on call” exception in section 18(2) of the ESA, 2000 applies to a period when an employee is not scheduled to work. The arbitrator concluded that the section could not apply to an employee who remains at work to perform overtime at the conclusion of his or her regular shift, because in those circumstances it cannot be said that the employee is “called in” to work.

Section 18(1) was also addressed in Toronto Transit Commission v. Amalgamated Transit Union, Local 113 (2003) O.L.A.A. No. 391 (Arbitrator I. Springate, July 21, 2003). Under the collective bargaining agreement, employees signed up for shifts in priority according to their seniority. As a result of this system, some employees were often left in a position where they could not avoid signing up for work assignments which left them with less than 11 hours between shifts. Union counsel argued that employees should be permitted to sign up for work assignments as they pleased, and in situations where their work schedule ran afoul of section 18(1), the employees should then be entitled to exercise their other rights in the collective agreement, such as A.M. rest periods and shift swapping, if they desired their 11 hours rest. Union counsel also argued that the wording of section 18(1) suggests that although the employer must offer the employee an 11-hour rest period, there is no requirement that the employee actually accept it. Counsel for the employer submitted that the provisions of the ESA, 2000 must take precedence over the collective agreement, and therefore employees were prohibited from signing up for work assignments that contravened section 18(1). Employer counsel also rejected the union’s argument that section 18(1) of the ESA, 2000 is only binding on an employer and not an employee.

The arbitrator held that it was not open to the employer to absolutely prohibit employees from signing up for work that begins within 11 hours of the end of a previous shift and referred the matter back to the parties to work out specific administrative mechanisms that would better facilitate shift scheduling under the collective agreement. However, the arbitrator also ruled that section 18(1) is equally binding on both employers and employees.


Entitlement to Termination Pay

In Royal Doulton Canada Ltd. v. Retail Wholesale Canada, CAW Division, Local 414 (2003), O.L.A.A. No. 199 (Arbitrator I. Springate, March 13, 2003) the arbitrator addressed the distinction between termination and a temporary layoff under the ESA, 2000. A group of employees, each of whom had 12 years service or more, were laid off for an indefinite period of time. The collective agreement provided that laid off employees would be terminated if they were not recalled within 12 months. The grievors claimed that they were entitled to eight weeks termination pay, as of the date of the indefinite lay off. To this end, union counsel based his argument on a number of arbitral and judicial decisions made under the “old” Act that said an indefinite lay off amounted to termination and resulted in an immediate entitlement to termination pay.

The arbitrator’s decision noted that the “new” ESA specifically changed the law in this area. In particular, the arbitrator cited section 56(4), which states that an employer who lays an employee off without specifying a recall date shall not be considered to terminate the employee, and clause 56(2)(c), which states that an employee who is laid off indefinitely, but who retains recall rights for a period of time under a collective agreement and is recalled within that time period, is regarded as having been on temporary lay off. Since the applicable time period for the grievors had not yet elapsed (12 months), they were not considered to have been terminated and thus were not entitled to termination pay.

Collective Agreements and the ESA, 2000

In Curtis Products Corp. and I.W.A. –Canada, Loc. 500 (2002), 110 L.A.C. (4th) 193 (Arbitrator Langille, October 25, 2002) the arbitrator addressed head-on the issue of the proper relationship between the collective bargaining regime and the statutory regime created under employment standards legislation in Ontario. Although the case involved a dispute about the interpretation of the “old” ESA rather than the ESA, 2000, it proves very instructive in the interpretation of the ESA, 2000 in the context of a collective bargaining regime.

The case involved a dispute about the definition of “temporary lay-off” in the old ESA. In the result, the arbitrator found that although the employer’s notices of lay-off had not specified a specific recall date, it was clear that the lay-offs were temporary in nature and thus did not constitute terminations within the meaning of termination in the old ESA. The arbitrator drew a distinction between an “indefinite” lay-off, which pursuant to Regulation 327 was a termination under the old ESA, and a temporary lay-off, which, although the recall date may not be know, was reasonably expected by employer and employee to fall within the 13 or 35-week rules for recall under the old ESA.

More importantly for our purposes in this paper, the arbitrator considered at some length the proper relationship between the collective bargaining regime and the statutory regime under the ESA. The arbitrator noted that under section 64.5 of the old ESA, if an employer entered into a collective agreement, the ESA was enforceable against the employer with respect to a contravention of or failure to comply with the ESA as if the ESA were part of the collective agreement. Significantly, the ESA, 2000 contains essentially the same provision in section 99.

Ultimately, the arbitrator in Curtis Products Corp., supra rejected a “segregation” model of enforcing section 64.5 of the old ESA. That is, the arbitrator refused to enforce the ESA as if there were no union or collective agreement in place, and by ignoring the realities of the differences between enforcement of employee rights under a collective agreement and mechanisms available to unorganized employees. Rather, the arbitrator held that section 64.5 required


him to enforce the ESA in terms of an “integration” model, as part of the collective bargaining scheme. The arbitrator asserted:

“Part of what it means for a right to be enforced ‘as if it were part of the collective agreement’ is that the normal apparatus of contract administration by the union and the employer applies. The result is that employment standards entitlements are put on the same footing as collective agreement entitlements. There is no separate argument available about which time limits to apply, or whether there can be estoppel against the statute.”

The Curtis Products Corp. supra decision makes good common sense and both union and employer counsel will want to rely upon it.

Court Decisions

Section 97 of the ESA, 2000 provides:

97(1) An employee who files a complaint under this Act with respect to an alleged failure to pay wages or comply with Part XIII (Benefit Plans) may not commence a civil proceeding with respect to the same matter.

97(2) An employee who files a complaint under this Act alleging an entitlement to termination pay or severance pay may not commence a civil proceeding for wrongful dismissal if the complaint and the proceeding would relate to the same termination or severance of employment.

97(3) Subsections (1) and (2) apply even if,

(a) the amount alleged to be owing to the employee is greater than the amount for which an order can be issued under this Act; or

(b) in the civil proceeding, the employee is claiming only that part of the amount alleged to be owing that is in excess of the amount for which an order can be issued under this Act.

97(4) Despite subsections (1) and (2), an employee who has filed a complaint may commence a civil proceeding with respect to a matter described in those subsections if he or she withdraws the complaint within two weeks after it is filed.

The purpose of section 97 is to avoid duplicative proceedings by requiring employees to either pursue a civil remedy or a claim with the Ministry of Labour when the issue in dispute is unpaid wages or wrongful dismissal. Scarlett v. Wolfe Transmission Ltd. [2002] O.J. No. 4403 (Pepall J.), a recent decision of the Ontario Superior Court of Justice, suggests that section 97 will not be strictly interpreted by the courts.

Scarlett was employed by Wolfe Transmission for more than 20 years when Wolfe terminated his employment. Scarlett filed a claim for termination and vacation pay under the ESA, 2000. Approximately a month later, he commenced an action for damages for wrongful dismissal. An employment standards officer advised Scarlett that if he proceeded with his ESA claim, Wolfe Transmission could apply to have his civil action dismissed on the grounds that he had not


withdrawn his ESA claim within two weeks of filing it, pursuant to section 97(4) of the ESA, 2000. The officer sought Scarlett’s written direction by November 26, 2002, with respect to continuing the investigation or with drawing his claim. Scarlett did withdraw his ESA, 2000 claim on November 26, 2002, some 10 weeks after filing it. Wolfe Transmission subsequently brought a motion to stay or dismiss the action on the grounds that it was barred by virtue of section 97(4) of the ESA, 2000.

In the judgment, Pepall J. noted that there was nothing in section 97(4) that provides for an extension of the two-week time period for making an election between an ESA, 2000 complaint and a civil action. However, Pepall J. went on to add that while presumably the objective of section. 97(4) was to ensure that the issue of parallel proceedings is dealt with at an early stage, it was surely not to limit an applicant’s ability to pursue any proceeding whatsoever. Peppal J. pointed out that since Scarlett had withdrawn his ESA complaint, if Wolfe Transmission’s motion were successful, Scarlett would have no remedy at all, even though he had worked Wolfe Transmission for more than 20 years.

Despite the fact that Wolfe Transmission’s counsel indicated that the defendant would not take any objection on jurisdictional or procedural grounds if Scarlett wanted to reinstate his ESA, 2000 claim, Pepall J. dismissed the motion. Pepall J. relied on the court’s inherent jurisdiction to extend a limitation period where special circumstances warranted. In this case, Pepall J. pointed out that Scarlett had been unrepresented by legal counsel when he commenced his ESA, 2000 claim, he had complied with the deadline imposed by the employment standards officer, and he had been employed by Wolfe Transmission for over 20 years and had an arguable case in support of his action for wrongful dismissal. In addition, Pepall J. noted that there had been no bad faith on the part of Scarlett and that Wolfe Transmission had not been misled or taken by surprise in any way. Finally, Peppal J. held that while there was no suggestion of prejudice to Wolfe Transmission if their motion was denied, the prejudice to Scarlett would be significant, since he would be deprived of the opportunity to pursue his rights in court.

An extension of the two-week time period for making an election was not forthcoming in Galea v. Wal-Mart Inc. [2003] O.J. No. 1765 (Sachs J.). In June of 2002, Galea filed a claim with the Ministry of Labour, alleging she had been terminated without cause and seeking termination pay. On January 2, 2003, the day of her fact-finding meeting with the Employment Standards Officer and her former employer, Galea was absent due to illness. In her absence, the Officer rendered an oral decision in which he found that the plaintiff had been terminated with cause and was not entitled to termination pay. However, the plaintiff was unaware that a decision had been rendered and, in the meantime, retained a lawyer to commence a civil action. On January 17, 2003, Galea’s lawyer advised counsel for the defendants that Galea intended to withdraw her claim under the Act and commence civil proceedings. On January 23, 2003, Galea received a written copy of the Officer’s decision denying her claim under the Act. Nonetheless, on February 14, 2003, the plaintiff issued a statement of claim for damages for wrongful dismissal. The defendant filed a motion to strike Galea’s civil action.

The plaintiff relied on the decision in Scarlett v. Wolfe Transmission, supra. However, Sachs J. distinguished the present fact situation on a number of grounds. First, in this case a hearing with an Officer was held and a decision was rendered. Second, the fact that the plaintiff did not pursue her civil remedy until the hearing with the Officer was completed means that the defendant, who attended and participated in that hearing, had experienced some prejudice. Thirdly, unlike Scarlett v. Wolfe Transmission, supra, the plaintiff did not form the intention to sue civilly within the two-week period after the filing of the complaint. In this case, the plaintiff did not decide to pursue a civil claim until approximately six months after she filed her claim under the Act, and also after the fact-finding meeting with the


Officer had taken place. Sachs J. concluded that he could not exercise jurisdiction to extend the time limit provided for in section 97(4) of the Act and accordingly granted the motion to dismiss the action.

Conclusion

To date, the case law interpreting the ESA, 2000 is minimal. Many of the key new provisions of the ESA, 2000 have not yet been scrutinized by the Board, arbitrators or the courts. We can look forward to reading ground-breaking decisions that interpret the ESA, 2000 in the coming months.


Hands on support.

Dean T. Palmer Wanda M.L. Shreve

Top 10 Employment Law Pitfalls


Introduction

The Changing Workplace

Hiring, working with and terminating employees can be wrought with potential pitfalls for employers. The purpose of this paper is to: (a) outline some of the common pitfalls employers may experience at various stages in the employment relationship; and (b) to give some practical advice for avoiding or resolving these pitfalls.

Pitfall #1 – Poor Recruiting Practices

The hiring process is one of the most important processes in the employment relationship. It can also be the most difficult. While we cannot offer any fool-proof formula for recruiting the best candidate, we can point out some of the common pitfalls employers face.

The Employment Application

When drafting employment applications, employers should ensure that the Ontario Human Rights Commission’s guidelines on employment applications have been considered. Although the guidelines do not have the binding force of the Ontario Human Rights Code, they provide valuable insight into the types of questions the Commission considers appropriate during the hiring process.

The Interview

The interview is a very subjective tool in the recruiting process where first impressions can sometimes cloud judgment. As such, the hiring phase is one where the risk of an allegation of discrimination can be heightened. The Ontario Human Rights Commission’s guidelines provide tips for conducting a “neutral” interview.

To help ensure that interviews successfully screen the best candidates, consider the following suggestions:

1. Establish objective criteria to govern the hiring decision. In Mears v. Ontario Hydro (1984), 5 C.H.R.R. D/1001 (Ont. Bd. of Inquiry), the employer was forced to reduce the size of its workforce. In order to decide which employers were going to be laid off, the employer had each foreman rank the members of his crew. However, each foreman was also allowed to determine his own ranking criteria, the result being that inconsistent criteria was used. The Board of Inquiry found that racism pervaded the ranking and layoff process. While 12 out of the 65 crew members considered for layoff were black, seven out of the 13 employees eventually laid off were black.

2. Interview in pairs. Sometimes two heads are better than one. Sharing the task of interviewing can be beneficial because you have two sets of eyes and ears to assess the candidate more objectively. Having two interviewers can also provide verification of what was said during the interview.

3. Invest in training interviewers who are familiar with techniques to elicit useful and appropriate information from candidates. Non-verbal communication and other nuances relating to how a candidate answers questions can provide insight into whether this candidate is the best person for the job.

4. Select interviewers who are acquainted with the job requirements. The interview process is really a mutual one during which you not only assess whether a candidate is the best person for the job, but a candidate also assesses


whether your workplace is the best place for him or her. It is helpful if there is someone knowledgeable about the requirements of the job who is available to answer a candidate’s questions.

5. Establish an interview questionnaire so that there is consistency in the questions posed to candidates.

6. Vet questions for compliance with the Ontario Human Rights Code or other applicable human rights legislation.

7. Take detailed notes of the interview. A written record of what was said may help differentiate candidates from one another; allow other people who were not present during the interview to provide input about who the best candidate is; and provide protection against allegations of unfair dealings.

The Reference Check

Often employers do not check behind their initial impressions of a candidate and make the effort to contact references. Although everyone has his or her own opinion about another person, confirming your impression with someone who has worked with the candidate is recommended. This is not to suggest that it should sway your decision one way or the other, but it does give an added perspective that may warrant consideration.

The Background Check

Although background checks may be required for some employees under a particular piece of legislation or rules of a self-governing profession, in other contexts it may still be advisable to make an offer of employment conditional upon the employer obtaining a satisfactory background check. In Jacobi v. Griffiths, [1999] 2 S.C.R. 5, the Supreme Court of Canada confirmed that direct liability can be imposed on an employer who is negligent in hiring or supervising an employee who causes damage to another. Therefore, employers should consider the nature of their organization and the nature of the position when assessing whether to obtain a background check and what kind of background check is appropriate.

If it is necessary to obtain a comprehensive background check, ensure that you comply with any notice and consent requirements. Be aware that legislation such as the Ontario Consumer Reporting Act, R.S.O. 1990, c. C.33 requires that candidates be informed of the background check by displaying a notice in a particular font with explicit wording.

Promising the Sun, Moon, Stars and Sky

That employees “embellish” resumes is not news to anyone. According to a study conducted by Infocheck, a Toronto-based reference checking firm, resume fraud is becoming increasingly common in the Canadian workforce. According to Infocheck’s survey, out of 1,000 “short-listed” applicants, 33 per cent lied on their resumes1.

Employers can fall into a similar trap. When recruiting for a position, employers – like employees – try to put their best foot forward to attract the best candidates. This can create problems when facts about the position are misrepresented to a candidate.

1 Gupta and Pulver, “Better Safe than Sorry,” Canadian Employment Law Today, No 392 (June 25, 2003).


In Queen v. Cognos, [1993] 1 S.C.R. 87, the Supreme Court of Canada restored the trial judge’s finding that the Defendant was liable for negligent misrepresentation. During the Plaintiff’s interview, he was assured by the Defendant’s product development manager that the sales of the new “Multiview” computer program the Defendant was developing were high, that other versions of the program would be created, and that the Defendant was committed to the project. Soon after the Plaintiff commenced employment, the Defendant’s senior management team rejected a proposal to fund the development of the program. The Plaintiff’s employment was eventually terminated.

The Defendant was found liable for negligent misrepresentation because the court found that:

“misrepresentations were made to the [appellant] by Sean Johnston in the hiring interview. The effect of these misrepresentations was that the [appellant] would have a position in the research and development of the product ‘Multiview’; that that position would be a significant one and would involve his expertise as an accountant; that he would perform the responsible role of seeing proper accounting standards being implemented into the product; that beyond the three modules immediately in contemplation were a minimum of four other modules; and that the project of ‘Multiview,’ in connection with which [the appellant] would be hired would last a minimum of two years. I find further that Mr. Johnston implicitly represented that management had made a firm budgetary commitment to the development of four other modules in addition to those presently under development.”

The Supreme Court was satisfied that the classic five elements for a negligent misrepresentation were made out:

1. there was a duty of care between the representor and representee based on a “special relationship”;

2. the representation in question was untrue, inaccurate or misleading;

3. the representor acted negligently in making the misrepresentation;

4. the representee reasonably relied on the negligent misrepresentation; and

5. the representee’s reliance was to his detriment.

Although some written contracts of employment incorporate a term that requires the employee to waive any right to assert a claim based on any pre-contractual representations, negligent or otherwise, made by the employer, such provisions do not provide a guarantee against liability for negligent misrepresentation.

Pitfall # 2 – Compromising the Enforceability and Utility of a Written Contract of Employment

There are many considerations to take into account when deciding whether it is prudent to enter into a written contract of employment and if so, what form is most appropriate in the circumstances. Your lawyer can help you decide whether the position is best served by a written employment agreement. However, once the decision has been made to execute a written contract of employment, there are mistakes employers commonly make that compromise the enforceability and utility of such contracts.


The “Welcome Aboard” Letter

Sometimes employers offer a candidate employment without specifying the terms and conditions of that employment. Then, when the employee reports for his first day of work, he is given the details of his employment. By then however, the employment contract may have already been formed and additional consideration may be required to make the later terms and conditions binding.

Similar circumstances occurred in Francis v. Canadian Imperial Bank of Commerce (1994), 21 O.R. (3d) 75 (C.A.) where the Defendant bank sent the Plaintiff a letter offering employment which the Plaintiff accepted in writing. On reporting to work, the Plaintiff was then asked to sign numerous forms and documents, including an “Employment Agreement” that included a provision stating that in consideration of employment by the bank, the Plaintiff agreed that his employment could be terminated upon stipulated advance notice or payment in lieu of notice. The Ontario Court of Appeal held that the employment contract was formed by the initial exchange of correspondence and that the Defendant had provided no consideration to make the terms of the Employment Agreement binding.

Last Minute Delivery

For any contract to be valid and binding, it must be entered into voluntarily, understanding the terms of the contract.

Employers should provide candidates with some time to carefully review, consider, ask questions, and where appropriate, have an opportunity to obtain independent legal advice before entering into the employment contract.

Drafting Dilemmas

Another common mistake employers make is that they do not have the employment agreement reviewed by legal counsel. At the time of hiring when the parties are in agreement and on friendly terms, it may seem like an unnecessary cost to have the employment agreement reviewed by legal counsel. However, because the courts will resolve any ambiguity in interpreting an employment agreement against the author (the employer), it is recommended that the agreement be reviewed by legal counsel, who can also ensure that the employment agreement is valid and in compliance with statute and common law. While an employment agreement will permit an employer to bargain for terms of employment that are more favourable than might otherwise apply, the employment agreement must be valid and entered into properly.

Pitfall #3 – The Never-Ending Fixed-Term Employment Contract

Many employers are attracted to the idea of a fixed-term employment contract because it can be a good way to rebut the common law presumption that a contract of employment is only terminable without cause on the provision of reasonable notice.

In Ceccol v. Ontario Gymnastic Federation, [2001] O.J. No. 3448 (C.A.) the Ontario Court of Appeal made it clear that to be enforceable, fixed-term contracts must be clear and unequivocal.

Diane Ceccol commenced employment with the Federation in 1981 pursuant to a one-year employment contract. Ms. Ceccol’s employment with the Federation continued for the next 15 years and eight months pursuant to a series of fixed-term employment contracts. In 1997 when Ms. Ceccol’s employment was terminated without cause, the Federation took the position that her notice was limited to the minimum notice required under the Ontario Employment Standards Act,


2000 (the “ESA”). The Federation offered to pay Ms. Ceccol three months’ salary on a gratuitous basis in exchange for a release.

Both the trial judge and a unanimous Court of Appeal agreed that Ms. Ceccol was entitled to reasonable notice of the termination of her employment based on the true nature of her employment. Notwithstanding the characterization of Ms. Ceccol’s employment as being for a fixed-term, in reality she was treated as an employee of indefinite duration and entitled to common law reasonable notice of the termination of her employment. In fact, during her initial interview, Ms. Ceccol was told that the position was a full-time, permanent position.

In considering whether a fixed-term employment contract is appropriate consider the following:

1. Length of service – the longer the employee is employed, the more difficult it will be to argue that the employment is only for a fixed term.

2. Representations – could any of your words and/or conduct be construed as a representation that employment is for an indefinite duration?

3. Termination provisions – try to simplify the termination provisions in a fixed-term employment contract. If it is your intent to limit notice to the minimums provided in the ESA, say that clearly and unequivocally.

4. Limit renewals of the contract, especially “automatic” renewals – if the employment relationship is going to continue, ensure that you revisit the contract and revise any provisions as necessary.

Pitfall #4 – Failure to Document Discipline

Helping To Build a Case For Cause

The notion of an employer-employee relationship mirroring a master-servant relationship where the servant’s tenure is at the whim of the master is no longer appropriate. Legislation, contractual requirements and the common law have placed the burden of proving cause on the employer’s shoulders. With the concept of progressive discipline expanding, employers alleging cause must be prepared to justify their position by well-documented factual circumstances. Unfortunately, there are often situations where an employee’s personnel file does not reflect the history of problems the employer alleges led to the termination of the employee’s employment.

Employers should invest the time to ensure that all supervisors and managers have some rudimentary understanding about “papering” a file. For example:

1. “Verbal” reprimands or verbal counselling should still be reduced to writing. In some workplaces, progressive discipline operates on a “Four strikes, you’re out” approach:

Strike 1 – Verbal reprimand

Strike 2 – Written reprimand


Strike 3 – Suspension without pay

Strike 4 – Termination

Where a manager or supervisor fails to properly document the verbal reprimand, this may delay the termination.

2. Draft documents contemporaneously to the event. A delay in recording documents, such as a witness statement, may affect not only the quality of the information contained in the document (as memories fade), but it may also prejudice the admissibility of the statement if legal proceedings are commenced.

3. Record the facts: Who, What, Where, When, and How…(Not Necessarily Why). In preparing a document such as a witness statement, the purpose is to recount the events as observed by the witness. It may not be particularly useful when a witness writes an editorial, giving his or her opinion about why the event occurred or what the consequences to the perpetrator should be. When witness statements contain subjective opinions, opposing counsel may have more ammunition with which to discredit the witness’ evidence.

Sugar-Coated Performance Reviews

Chills are often sent up the spine of legal counsel who, while reviewing the personnel file of “Mr. Smith” who was terminated for poor performance and incompetence, discover consistently satisfactory (or even glowing) performance reviews that do not contain one piece of constructive criticism.

Sound performance appraisals:

1. Assess an employee’s success in achieving known and reasonable expectations.

2. Are objective in what they address and how they are conducted.

3. Truly reflect the evaluator’s objective appraisal of the employee’s performance. A good performance appraisal should not only applaud the employee’s strengths, but should also point out the employee’s weaknesses and provide constructive criticism for improvement.

4. Are thoroughly reviewed with the employee. The employer and employee realize mutual benefits when performance evaluations are used as a professional development tool.

Pitfall #5 – Misunderstanding “Just Cause”

Employers often do not appreciate how difficult it is to prove that the termination of an employee’s employment was effected for just cause. It is often very frustrating for employers to learn that an employee can breach a policy, conduct him or herself in an unacceptable manner or provide mediocre services to the employer and still be entitled to notice of his or her termination.

However, because of the harsh consequences of a for-cause termination on the employee, there is a heavy burden on the employer to satisfy the trier of fact that the conduct of the employee was serious enough to constitute a repudiation of the employment contract by the employee. Since the facts of each case are an important consideration in whether cause is established, it is often difficult to predict the outcome of a for-cause termination.


The trier of fact will consider a variety of factors, including but not limited to:

whether the employee has a history of discipline;

the character and nature of the employment;

the employee’s length of service;

whether the incident was isolated or part of an ongoing pattern of conduct or behavior;

the seriousness of the incident;

whether the employee was warned that his or her conduct or behavior would lead to discriminary measures being taken, and in particular, termination of his or her employment for cause;

whether the employee was given an opportunity to respond; and

whether there was condonation by the employer of the employee’s conduct or behavior.

Indeed, there are many cases where the employer has not established cause for termination despite outlandish behaviour on the part of an employee.

In many cases, effecting a for-cause termination is best utilized as a bargaining tool for the employer to cap (not avoid) the costs of termination. For-cause termination letters now include language, such as “Without admission of any liability and without prejudice to our position that there is cause to terminate your employment, we are prepared to offer you, on a gratuitous basis and in exchange for a Release, the following severance package offer…” This tactic might effectively reduce the employer’s payment to the minimum provided under the ESA.

Pitfall #6 – Failure To Implement a Union Avoidance Plan

Non-unionized employers often make the mistake of assuming that their workplace will remain union free. They do not take proactive measures to maintain the conditions that have resulted in the workplace being non-unionized. Unions use the employer’s naivety and inertia to their advantage to secretly campaign and organize. Employers are thus caught off guard when they receive an application for certification to which they must quickly respond.

Though it sounds cliché, in the case of union avoidance, the best defence is a good offence.

Understand the “phases” of unionization.

Understand why employees typically unionize.

Know the earmarks of employee dissatisfaction and address them in your workplace.

Know the telltale signs of union activity.

Identify which unions would likely target your workforce and conduct research to understand their platform and style.


Understand the “DOs and DON’Ts” for employers during an organizing drive. Be prepared to rebut false information from the union and to provide your opinion in an articulate manner that reduces the risk of an unfair labour practice.

Implement an action plan that enables you to respond to any application for certification within the time limits established by the Ontario Labour Relations Act.

Pitfall #7 – Poor Management Practices

In many workplaces, the reputation of first-line supervisors sets the tone for labour relations. In many workplaces, first-line supervisors are employees who have risen up through the ranks because of their knowledge of the job, not for their managerial skills.

Unfortunately, employers often ignore the importance of a supervisor with good managerial skills and do not invest the time, money or energy in ensuring that supervisors become capable managers. Employers also do not always appreciate that the actions of their supervisors are the actions of the company. As a result, the supervisor who has no people skills or appreciation of employment and labour laws can seriously damage relations between the company and its workforce. Damaged employer-employee relations can increase the risk of a union organizing campaign and in unionized contexts, cause additional strain on the employer’s relationship with the union, increasing the frequency of grievances.

Basics of sound management practices include:

objectivity;

consistency;

clarity;

fairness; and

good communication.

Pitfall #8 – Tolerating a Poisoned Work Environment

The Ontario Human Rights Code (the “Code”) prohibits harassment in employment by the employer, agents of the employer and other employees on 14 prohibited grounds of harassment enumerated in the Code:

1. race;

2. ancestry;

3. place of origin;

4. colour;

5. ethnic origin;


6. citizenship;

7. creed;

8. age;

9. record of offences;

10. marital status;

11. same-sex partnership status;

12. family status;

13. disability; and

14. sex.

Not only must the employer not engage in discriminatory or harassing conduct itself, it has a duty to create a harassment-free workplace for all employees.

The Code defines harassment as “engaging in a course of vexatious comment or conduct that is known or ought reasonably to be known to be unwelcome.” However, a somewhat broader concept of a “poisoned work environment” also exists and can result in an employer being liable if it condones such an environment.

A poisoned work environment can be created where an employee is exposed to vexatious and insulting words or conduct relating to a protected characteristic that the perpetrator knows, or ought reasonably to know is unwelcome. The essence of a poisoned work environment is that the employee is made to feel ill-at-ease in the workplace2. If the comment or conduct is egregious enough, a poisoned work environment can be created from a single incident3. The adverse conduct or comments need not be targeted toward a particular individual and they need not explicitly refer to the individual’s protected characteristics for a poisoned work environment to exist.

In Ghosh v. Domglas Inc. (No. 2) (1992), 17 C.H.R.R. D/216 (Ont. Bd. Inq.), the Board of Inquiry held that the test for liability in creating a poisoned work environment is subjective, i.e. that the conduct was in fact annoying, distressing, troubling or agitating to the complainant, not necessarily to the reasonable person.

The Ontario Human Rights Commission’s Policy Statement on Racial Slurs and Harassment and Racial Jokes includes (among others) the following examples of comments or conduct creating a poisoned work environment:

2 England and Christie, Employment Law in Canada, 3rd Edition, page 5.67.4.

3 Dhanjal v. Air Canada (1997), 28 C.H.R.R. D/367 (Ont. Bd. Inq.).


racial epithets, comments ridiculing individuals because of race-related physical characteristics, religious dress, etc.;

persons who encounter comments, signs, caricatures or cartoons displayed that depict members of their race, religious group, etc. in a demeaning manner;

demeaning racial remarks, jokes or innuendos about an employee that impairs the right of those persons who are the subject of the comments to be viewed as equals and creates a “them/us” barrier;

racial remarks, jokes or innuendos made about other racial groups that may create an apprehension on the part of members of other racial minorities that they are also targeted when they are not present; and

the displaying of racist, derogatory or offensive pictures, graffiti or materials.

To reduce the risk of a poisoned work environment existing at your workplace, we suggest the following:

1. Draft an anti-harassment policy if you don’t have one already. The policy should include:

a definition of prohibited conduct;

an explanation of the recourse available to complainants;

an explanation of the investigation process; and

an explanation of the possible consequences to perpetrators.

2. Once you draft the policy, make sure it is communicated to employees.

3. Educate employees about their rights and obligations.

4. Train supervisors and managers to properly investigate and handle complaints.

5. Follow the policy consistently.

6. Review and revise the policy on a regular basis.

Pitfall #9 – The Questionable Doctor’s Note

At some point almost every employer has to deal with a doctor who writes cryptic, illegible and questionable notes for his or her patient. Though dealing with such physicians can be a time-consuming and frustrating endeavour for an employer, there are employers who act too precipitously: upon receipt of a questionable doctor’s note, they either retain a private investigator to conduct surveillance on the employee or terminate the employee’s employment without warning or notice. Such action can result in a human rights complaint being filed or a wrongful dismissal action being commenced.

An employer must demonstrate patience, logic and strategy when dealing with an employee who provides unsatisfactory doctors’ notes.


As an employer, you have a right to request further particulars from a doctor if the information being solicited relates to bona fide requirements of the job. If a request for accommodation is made, you also have the right to information that will allow you to fulfil your duty to accommodate in a way that preserves the employee’s dignity, but without causing your organization undue hardship.

Rather than taking drastic measures immediately, we suggest the following options:

1. provide the employee’s doctor with a copy of the employee’s job description and a questionnaire for him or her to complete that asks the questions you need answered; and

2. if the employee’s doctor still does not provide satisfactory information, send the employee for an independent medical examination.

3. if these options fail, consult legal councel (if you haven’t already) for assistance in considering what other options are available.

Pitfall #10 – No Consideration on Termination

Some employers terminate an employee without cause and offer him or her a “severance package” in exchange for a Release in favour of the employer in an effort to settle any claims the employee might later make. However, if the employee rejects the severance package, employers mistakenly withhold all amounts from the employee, including those amounts the employee is entitled to under the ESA.

When structuring a severance package, it is important to remember that there are essentially two components:

1. the ESA minimums, including:

termination payment in lieu of notice required under section 57 of the ESA,

the severance payment (if any) required under section 64 of the ESA; and

2. the “severance package offer.”

Regardless of whether the employee executes a Release in favour of the employer, it is important that the employer pays the employee his or her ESA minimums and continues to make the employer’s contributions toward any benefit plans for the minimum period required by the ESA. Failure to pay an employee his or her ESA minimums can expose an employer to “Wallace” type damages in the form of an extended notice period being awarded to the employee.

Conclusion

Although not specifically listed on our “top 10” list of pitfalls, the most common pitfall is not contacting legal counsel soon enough to assist you in handling these, or other situations. Everyone always thinks that they will save money by not contacting a lawyer. However, in some cases, this can be the most costly mistake of all.

Not only is your lawyer there to help get you out of trouble, your lawyer is there to assist you in avoiding costly mistakes.


Hands on support.

James B. NoonanTrevor Lawson

Nikolas Rajkovic

Performance Management: Are Your Ducks in a Row?


Introduction

What is Performance Management?

For many organizations, performance management is used only as a method for laying the foundation to discipline problematic employees and eventually terminate their employment for cause. For other organizations however, performance management is primarily used as a proactive tool to ensure that all employees perform their duties and responsibilities to the standards established by the organization and communicated to its employees. When this latter approach to performance management is adopted, the discipline or dismissal of a problematic employee for cause becomes merely the unfortunate last step along a progressive scheme of actively eliciting improved performance among all the employees within your organization.

However, there is a catch. Your organization’s performance management program is only as effective as you choose to make it. To this end, your organization should carefully consider two fundamental questions when deciding to implement a new performance management program or make changes to its existing program:

What does your organization require from a performance management program?

Is performance management merely a way to administer discipline? Could it be used as a tool for performance enhancement? Is it a way of ensuring there is both upward and downward communication in your organization? Your answers here will dictate how sophisticated your administration and training must be in order to ensure your performance management program operates according to purpose.

Are you aware of all the administrative and legal elements necessary to ensure an efficient and effective performance management program?

This inquiry relates back to the purpose of your performance management program. The more sophisticated your purposes and objectives, the more administrative and legal issues you will need to consider to ensure that your performance management program maintains its integrity and withstands scrutiny if challenged in administrative or judicial proceedings.

The purpose of this paper is to provide you with an overview of the legal and administrative issues that you will be required to address in implementing a performance management program or improving upon your organization’s existing program.

Overview: Essential Elements of a Performance Management Program

There are a number of elements that are essential to any effective performance management program. These elements include the following:

1. do not ignore poor performance;

2. address performance problems when they occur – don’t wait until you have a formal performance review;


3. make sure that you have an objective factual basis for your concerns about an employee’s performance;

4. tell the employee in question what your concerns are:

clearly explain the performance expectation or standard that they are not meeting;

give them clear and specific instructions as to what they must improve in order to meet the standard; and

give the employee guidance or training as appropriate in order to assist them in meeting new performance standards expected of them;

5. give the employee a reasonable amount of time in which to achieve the performance improvements required of them;

6. be consistent – all employees should be held to the same performance standards (unless it is inappropriate to do so);

7. when appropriate, give the employee praise and encouragement if their performance is improving; and

8. if an employee’s performance is not improving, the employee should be made aware of your concerns and warn that their employment is in jeopardy if they do not meet the performance standards expected of them.

What Are the Benefits of a Performance Management Program?

Improved Communication

Good communication between management and employees is crucial to building and maintaining good relations with employees. Performance management is fundamentally about communicating in a clear and timely manner with your employees.

Giving employees accurate information about their individual productivity and employment standing.

Performance standards are communicated in a clear and interactive manner to employees.

Fairness

Provide a basis to make informed decisions on salary review and promotion.

Provide a framework for employees to meet management needs and expectations.

Prevent feelings of actual or perceived bias.


Checklist: How Your Organization Can Firm Up Its Performance Management Program.

The following checklist sets out recommendations that your organization should consider in implementing a performance management program or improving upon its existing program:

Caveat for Unionized Employers

If your organization is unionized, it is likely that the collective agreement has provisions regulating the type and extent of performance management program you can employ. Your ability to implement a number of the recommendations set out below may be restricted by your collective agreement. For example, policy-making and progressive discipline are generally governed by collective agreements. If you are considering the implementation of a performance management program or are thinking about making changes to your existing program, you must do so in a manner that is consistent with the terms of your collective agreement. Otherwise you could face a sea of grievances and needless arbitrations.

Policies and Measurements

Leaving workplace rules, policies and procedures to “common sense” or memory is as good as having none at all. Rules governing an employment relationship should be in writing and made conspicuous. This can be achieved through bulletin board postings, newsletters or memos. Repetition is not a bad thing either.

Be sure to limit your rules, policies and procedures to those matters that are important to the business and the workplace. Needless “micro-managing” will antagonize your employees.

Ensure that your rules, policies and procedures are reasonable. Reasonable rules are not only more persuasive to judges and arbitrators but are also easier to follow in the workplace. When making rules, avoid impulse, consider a variety of perspectives and subject yourself to scrutiny.

Make unambiguous policies. Remember, all rules are subject to an even higher and more dreaded set of rules: the rules of interpretation. Avoid legalistic language and boilerplate. Be specific and simple.

If foreseen in advance, penalties and consequences should also be stated in a rule, policy or procedure.

If a rule involves a pre-condition, such as pre-authorization, be specific as to how or with whom the pre-condition must be satisfied.

If a policy grants discretion, think about attaching criteria that limits that discretion.

A policy will have greater weight in court if an employee acknowledges in writing that he/she agrees to be bound by that policy. However, remember that the Supreme Court of Canada decision in McKinlay found it probable that only breaches of rules which go to the “root of the contract” will be cause for dismissal.

Performance Reviews

Written Evaluations

Scrutinize the categories and criteria in your evaluation. Are your criteria rationally connected to performance? Make sure your criteria comply with the applicable human rights legislation.


Are you evaluating all aspects of an employees performance?

Have you defined the meaning of each grade on your evaluation scale? For example, what does 3 out of 5 mean? Design your forms to control arbitrary and subjective evaluation as much as possible.

Don’t “Paper Over” Performance Problems! Formal procedures can be intimidating, and written performance evaluations are no exception. However, this sense of intimidation sometimes causes supervisors and managers to “paper over” performance problems in an evaluation. Make sure the evaluation records all performance problems. Why? Picture this awkward scenario. Your organization terminates an employee for consistent incompetence and a history of dishonesty. The former employee sues for wrongful dismissal. You dig up the former employee’s performance evaluations to find a history of glowing reviews and bonuses.

Written evaluations can become public. Therefore, make sure comments on an evaluation are not abusive, discriminatory or even libellous. This does not mean supervisors and managers are to cover up problems. Rather, evaluators should choose appropriate and constructive language to convey concerns. Legalities aside, concerns expressed in a respectful and dignified manner are more likely to achieve positive change. Remind evaluators that they are writing on behalf of the organization.

Prepare an evaluation message for the employee which both the manager and the employee can sign. This provides proof as to the message delivered at evaluation.

Don’t use evaluations as a way to needlessly “micro-manage” subordinates. To do so lessens the credibility of the instrument.

Addressing Day-To-Day Concerns

Distinguish between a “verbal warning” and merely expressing “a concern” informally. Verbal warnings are a matter of discipline and record.

When issuing a verbal warning make sure: (1) you tell the employee that it is a verbal warning; and (2) another managerial employee is present.

Keep concerns concrete and specific. Do not be vague. For example, when talking about an attitude problem, give recent examples. Talk to your employee about the cause of the problem and provide a plan to correct it.

When a problem arises with a new employee, think about first having an informal conversation rather than expressing “a concern.” You should have some basic understanding of an employee’s life circumstances so as to ensure that the problem does not relate to a prohibited ground of discrimination under the applicable human rights legislation. (e.g., family status, handicap, creed, etc.).

Recordkeeping for Disciplinary Purposes

To prove a material fact you need documentation and/or witnesses.

Formal documentation: employment contracts and amendments; performance evaluations; written warnings; incident reports; disciplinary reports; witness report; signed statements; and published rules, policies and procedures.


Informal documentation: memo to file, e-mails and notes.

Avoiding Condonation and Ensuring Consistent Enforcement

An employer that continues to employ someone despite full knowledge of a particular misconduct cannot later discipline that employee for the same misconduct.

Rules, policies and procedures must be enforced uniformly and consistently.

Don’t play favourites when enforcing.

If certain rules have not been enforced for a period of time, advanced notice that strict compliance will be required must be given to resurrect the rules.

Progressive Discipline—Non-Unionized Environment

Historically, the courts have not recognized an implied right of progressive discipline in a contract. Rather, courts will look at whether dismissal or suspension is justified because the alleged misconduct goes to the “root of the contract” (McKinley). In the non-union environment, courts consider a suspension to constitute termination.

However, an employer can create an employment contract that provides for some measure of progressive discipline.

What Are the Basic Increments of Progressive Discipline?

oral warnings;

written warnings;

transfer/demotion;

suspensions; and

discharge.

What is Just Cause for Dismissal?

While some differences remain, the common law notion of “just cause” today converges more closely with the arbitral approach than it ever has before.1 Both systems follow similar doctrines regarding the location of the burden of proof and the standard of proof, the categories of misconduct, the treatment of off-duty conduct, the treatment of probationary workers, the admissibility of mitigating factors and the culminating incident principle.

The onus is on the employer to prove that there was just cause for the employee’s dismissal. There is no fixed rule that demarcates the specific degree or act of misconduct required to support dismissal for just cause. While each employment contract, employment relationship and set of circumstances affects the assessment, the general requirement is that the misconduct must amount to a wrong that a reasonable person could not be expected to

1 G. England, I. Christie & M. Christie, Employment Law in Canada, vol. 2, 3d., looseleaf (Markham: Butterworths, 1998+)

at para 15.28; R..S. Echlin & Cortosimo, Just Cause—The Law of Summary Dismissal in Canada, looseleaf (Aurora: Canada Law Book Inc., 1998+) at para. 6:100.


overlook. The employee’s behaviour must be serious enough to fundamentally strike at the root of the employment relationship.2

The “reasonable person” standard is an objective one. The employer must show more than mere dissatisfaction. At common law, there must be some proof of misconduct, which is serious enough to repudiate the contract of employment or one of its essential elements.3

In the unionized context, the test for “just cause” has been expressed slightly differently. First, has the employee given just and reasonable cause for some form of discipline by the employer? If so, was the employer’s decision to dismiss the employee an excessive response in all of the circumstances of the case? Finally, if the arbitrator does consider discharge excessive, what alternative measure should be substituted as just and equitable?4

Attendance Management & Medical Inability: Identifying the Pitfalls

You suspect that an employee:

is abusing the sick leave/disability system and/or is absent from work without a legitimate medical justification;

is abusing workers’ compensation benefits; or

is not following a recommended course of treatment (e.g., substance abuse).

How do you get more information on the employee’s true state of health? Once in possession of the information, how do you handle the employee? First, consider the DOs and DON’Ts of obtaining medical information. Second, always remember the statutory framework relevant to attendance management and accommodation. Lastly, don’t act on impulse.

Obtaining Medical Information: DOs and DON’Ts

What Kinds of Information Can an Employer Request?

Information relating only to the employer’s legitimate interests (e.g., for one of the above reasons).

The request must be reasonable in the circumstances.

The request must relate to information the employer does not already have.

Information regarding employee’s functional abilities (e.g., see s. 22(5) of the Workplace Safety and Insurance Act).

Information concerning a dispute as to workers’ compensation entitlement (see procedures under s. 58 and 59 of the Workplace Safety and Insurance Act).

Information necessary to ensure the health and safety of the employee or other employees.

2 R.S. Echlin & M. Cortosimo, Just Cause—The Law of Summary Dismissal in Canada, looseleaf (Aurora: Canada Law Book Inc., 1998+) at para. 6:100.

3 Ibid. at para. 6:400. 4 Wm. Scott & Co. and Canadian Food and Allied Workers Union, Local P-162, [1977] 1 C.L.R.B.R. 1 (P.C. Weiler).


Information necessary for the employer to determine its operational requirements, including:

likelihood of employee’s ability to return to pre-injury job;

likely length of disability;

current and future restrictions; and

prognosis.

What Information Should Employers Not Request?

Any information that the employer does not really need, e.g. the diagnosis.

Why Should Employers Not Request Information That They Do Not Really Need?

Receipt of irrelevant information may increase the risk to the employer of a complaint of discrimination because of handicap.

How Does An Employer Obtain Medical Information?

Ask the employee for information.

Request that the employee sign a direction and release, authorizing health care professional(s) to release medical information to the employer.

Ask health care professionals, either through employee or directly but with the employee’s consent, to provide specific information, explaining why it is necessary and important. If they are unfamiliar with the employee’s job, the employer may wish to provide job description or physical demands analysis.

Ask the insurance company with the employee’s consent, to provide the medical information.

Under the Workplace Safety and Insurance Act, 1997, a worker must consent to disclosure of medical information to the employer concerning functional abilities, when filing claim.

Can an Employer Request an Examination by the Employer’s or Insurer’s Chosen Doctor or by a Mutually Agreeable Doctor?

Yes, in certain circumstances.

For example, where the contract of employment/collective agreement and/or insurance plan provides for such examinations.

For example, it is reasonable in order to provide a safe workplace and protect the health and safety of the employee or other workers (such as where employer’s doctor has specialized knowledge of the workplace).

Keep in mind that the chosen doctor will be bound by the same confidentiality obligations toward the patient/employee as would other doctors and that the employee should give a written authorization to the doctor for the release of information to the employer.


How Can the Employer Enforce its Right to Obtain Medical Information?

Through the WSIB, where appropriate for its purposes.

Insurer can withhold disability benefits if employee in breach of obligations.

Employer can withhold sick pay if employee refuses reasonable request.

Employer can delay return to work where adequate information confirming safety and fitness to work has not been received.

Employer may discipline, including termination of employment for cause, where the employee refuses to provide or refuses to give consent to the employer to obtain information such that the employer cannot satisfy itself that the employee’s absence is medically justified.

Accommodation: Statutes You Must Keep in Mind

Ontario Human Rights Code

Prohibits discrimination against a person “because of handicap.”

Defines “because of handicap” very broadly as “for the reason that the person has or has had or is believed to have or have had:

any degree of physical disability, infirmity, malformation or disfigurement that is caused by bodily injury, birth defect or illness, including diabetes mellitus, epilepsy, any degree of paralysis, amputation, lack of physical coordination, blindness or visual impediment, deafness or hearing impediment, muteness or speech impediment, or physical reliance on a guide dog, or on a wheelchair or other appliance,

mental retardation or impairment,

learning disability or dysfunction in one or more of the processes involved in understanding or using symbols or spoken language,

a mental disorder, or

an injury or disability for which benefits were claimed or received under the Workplace Safety and Insurance Act.

Prohibits employers from discriminating against both applicants for employment and employees because of handicap, unless the person is incapable of performing or fulfilling the essential duties or requirements of the position because of his or her handicap.

Requires an employer to accommodate a person to the point of undue hardship even where an employer can demonstrate that a person is incapable of performing the essential duties or requirements of the job.

Prohibits an employer from “constructively” discriminating against an applicant or an employee by imposing a requirement, qualification or factor that indirectly excludes handicapped persons from employment unless the


requirement, qualification or factor is reasonable and bona fide in the circumstances, or the Code specifically permits the discrimination, subject again to the duty to accommodate without undue hardship.

Authorizes the Human Rights Commission, the board of inquiry or a court to consider only cost, outside sources of funding and any health and safety requirements in assessing undue hardship.

Employment Standards Act, 2000

Entitles every employee whose employer employs 50 or more employees to a total of 10 days “emergency leave” without pay for three specific reasons, the first of which is “a personal illness, injury or medical emergency.”

Exempts an employee from entitlement to termination pay or severance pay if the contract of employment has become impossible of performance or frustrated by a fortuitous or unforeseeable event or circumstance, subject to the Human Rights Code.

Workplace Safety and Insurance Act, 1997

Provides for the payment of benefits to workers who suffer a workplace accident or an occupational disease.

Obligates employers to co-operate in the return to work of an injured worker by:

contacting the worker as soon as possible after the injury and maintaining communication during the worker’s recovery;

attempting to provide suitable employment that is available and consistent with the worker’s functional abilities and that, when possible, restores the worker’s pre-injury earnings;

giving the Workplace Safety and Insurance Board such information as the Board may request concerning the worker’s return to work; and

doing such other things as may be prescribed.

Obligates the worker to co-operate in his or her early and safe return to work by:

contacting his/her employer as soon as possible after the injury occurs and maintaining communication throughout the recovery;

assisting the employer, as required or requested, to identify suitable employment that is available and consistent with the worker’s functional abilities and that, when possible, restores pre-injury earning;

giving the Board the information it requests concerning the worker’s return to work; and

doing such other things as prescribed.

Requires an employer to offer re-employ a worker in the position held on the date of injury or offer to provide the worker with alternative employment of a nature and at earnings comparable to the worker’s employment on the date of injury, at such time as the worker is medically able to perform the essential duties of the pre-injury position. The obligation to re-employ applies if the employer regularly employees 20 or more workers and the


worker had been employed continuously for at least one year at the time of the injury. The obligation to re-employ continues until the earlier of (i) two years from the date of injury, (ii) one year after the Board notifies the employer that the worker is medically able to perform his or her essential duties of the pre-injury employment or (iii) the date the worker reaches 65.

Obligates the employer to offer the worker the first opportunity to accept “suitable” employment that becomes available when a worker is medically able to perform suitable work (if not the pre-injury employment).

Requires the employer to accommodate the work or the workplace to the worker to the point of undue hardship.

Subjects an employer who fails to comply with its re-employment obligations to a penalty not exceeding the amount of the worker’s net average earnings during the year preceding the injury. The Board may also make payments to the worker for a maximum of one year.


Obligates an employer to take every precaution reasonable in the circumstances for the protection of a worker. Consequently, an employer has a duty to ensure that an employee who is at work or returning to work can perform his or her duties safely.

Provides that no employer may seek to gain access to a health record concerning a worker without the worker’s written consent (except by order of a court, tribunal or to comply with another statute).

Conclusion

Whether your organization’s performance management program is intended simply to assist in laying the foundation for discipline or as part of a broader approach to performance enhancement, the ultimate success of the program will hinge on your organization first considering the administrative and legal issues that we have discussed within this paper.

With these issues in mind, your organization will be able to establish, communicate and enforce a performance management program that provides employees with clear direction as to the standards of conduct expected of them, and the consequences of an employee’s failure to meet these standards.As we all know, Severe Acute Respiratory Syndrome (SARS) attracted a significant amount of media coverage. As a result, employees became concerned about their workplace rights and employers became concerned about their obligations vis-à-vis the workplace. Just when employers had sorted out how they were dealing with the workplace ramifications of quarantined employees and employees refusing to work, the blackout hit and a whole new set of issues arose as entire workplaces were shut down for several days.


Hands on support.

Doug Thomson

Employer Liability For Environmental Offences of Employees


Introduction

A recent British Columbia case illustrates the potential use of the due diligence defence by employers charged with environmental offences committed by their employees.

Facts

In R. v. Rezansoff, the owner of a property was charged with five offences under the Waste Management Act and the Pesticide Control Act of British Columbia. The charges related to alleged unlawful storage and disposal of pesticides on private property. The pesticides in question had been taken from a shed on the defendant’s property while it was under repair and, for reasons that were not explained at trial, not returned to the shed following its repair. Rather, the pesticides were taken by an employee of the defendant to a gully on the property that was being used to dispose of garbage. The pesticides were not buried; rather they were placed in plain view in the gully.

The defendant claimed to have had no knowledge that his employee had dumped the pesticides in the gully and testified that he would never have consented to that situation. The defendant testified that he knew that his employee had at one point obtained a pesticide applicator certificate and that he had specific training as to the proper handling of these chemicals.

Crown Argument

The Crown argued that the acts of the employee were the acts of his employer at law. According to a 1951 English King’s Bench decision in Reynolds:

“A man may be made responsible for the acts of his servants or even for defects in his business arrangements, because it can fairly be said that by such sanctions, citizens are induced to keep themselves and their organizations up to the mark.”

The Crown further argued that given that the acts of the employee are at law the acts of the accused employer, the only way that the employer could be acquitted would be to establish due diligence – in this case, that he had exercised reasonable care to prevent what had occurred from occurring. In this case, the Crown argued, the defendant had not acted with reasonable care in leaving the employee in charge of the pesticides, given that there was some question as to the mental capabilities of the employee.

Court Decision

The court accepted that the acts of the employee were at law those of the employer. It then considered whether the employer had made out a due diligence defence in the circumstances. The court observed that the nature and extent of safety systems that might be required to make out due diligence on a farm might be very different from what is expected in a large commercial business, but that regardless of the scale of the enterprise, due diligence must be demonstrated if there is to be a defence. The court further reminded itself that under the case law, “(d)ue diligence does not mean superhuman efforts. It only requires a high standard of willingness, and decisive and prompt and continuing action.”


The court placed considerable emphasis on the specialized training and knowledge that one must have to obtain a pesticide applicator certificate from the province. If this certificate had been up-to-date in this case, the defendant would not have had any difficulty making out a due diligence defence according to the court. The difficulty in this case was that the employee in question had obtained such a certificate some nine years prior to the alleged offence. In the end, the court held that the due diligence defence had been made out in this particular case, because “an average person in that circumstance would have thought that they could have relied on” the employee. The charges were accordingly dismissed.

Discussion

What permitted the employer to establish a due diligence defence in this case was the fact that his employee had been certified by the province as an expert in the handling of pesticides, albeit nine years prior to the date of the offence and without having been recertified in the interim. The court was also undoubtedly influenced by the scale of the enterprise in question – a small farm, as opposed to a large commercial enterprise.

The result in this case can be contrasted with several other cases in which accused companies have argued due diligence on the basis that they had delegated responsibility to employees. In MacMillan Bloedel, for instance, a 1973 British Columbia decision, the company was convicted under the Fisheries Act when employees washed gravel near a creek and deposited deleterious substances in the creek because:

“(t)here was no check or supervision of the operation by senior officials during the four days it continued... I would emphasize, as I have before, that due diligence, in my opinion, requires successful communication of adequate information and inspections from the company right down to the man on the job.”

Similarly, in Stelco, a 1989 Ontario environmental prosecution, Stelco argued that it had a system in place that, if it had been implemented, should have prevented the events giving rise to the charge. The company had not been negligent it was argued, rather its employees. In rejecting this defence, the court stated as follows:

“The obligation of the constructor is much more than to simply create a system to inform employers concerning their responsibilities under the act; it must take the next reasonable step and ensure the effective operation of the system through its supervisors. Due diligence must in addition to a good system establish that a person in charge is doing what he is supposed to do.”

Similarly, in Van Waters & Rogers, a 1998 Alberta decision, the court stated the following in passing sentence:

“Since human errors are inevitable, it is insufficient for the accused to say that it gave proper instruction to its employees and expected them to perform in accordance with them. The point is that the best of instructions cannot prevent violations borne of human error. It falls to the accused to put in place systems that are designed to counteract the inevitable human error.”

These decisions can however be contrasted with others in which employers have successfully made out due diligence notwithstanding their employee’s negligence. In Blastech for example, a 1997 Ontario decision, the court accepted a defence of due diligence to an occupational health and safety prosecution on the basis that the company had


communicated safety procedures to its employees and was entitled to reasonably rely on its foreman, an experienced employee, to carry out those procedures.

It is always somewhat difficult to draw a straight line through the seemingly conflicting cases on due diligence, given that each case will turn on an individual judge’s perception of what is reasonable in the circumstances. The cases on delegation of responsibility to employees are no exception. If, however, employees have been properly trained in the carrying out of their job, a corporation charged with an environmental or occupational health and safety offence should always consider whether a due diligence defence may be available on the basis that any negligence giving rise to the offence was that of the employees rather than the corporation.


Hands on support.

Daniel Black

Due Diligence:Your Company’s Best Defence Against an OH&S Offence


If You’re Not Prepared For an Accident Before it Happens, You Don’t Stand a Chance

Introduction

Several months ago, you had an accident in your workplace and a worker was injured. Government officials responsible for administering the applicable Occupational Health and Safety (OH&S) legislation in your province investigated. Orders were issued requiring you to make various changes in your workplace with which you complied.

Now, months after the accident, you have been served with a summons informing you that your company is being charged with an OH&S offence. You call your company’s lawyer who advises that your company’s best defence to the charge will likely be a defence of “due diligence.”

Hopefully, you’ve known for a long time what your lawyer means by “due diligence.” If not, you’ll quickly discover that it may be a very difficult defence for your company to establish after the fact. This is because the preparation of a successful defence of due diligence begins long before an OH&S prosecution is commenced. In fact, preparation for a successful due diligence defence begins long before an accident ever happens.

Why is Due Diligence Important?

A defence of due diligence is available for all types of OH&S offences. When the potential consequences of a conviction are considered, it becomes crystal clear why having a due diligence defence available is critical.

OH&S legislation across Canada imposes obligations on employers, constructors, supervisors, workers and, in some jurisdictions, owners, directors, officers and other workplace parties to ensure that the workplace is safe and that all workers work in a safe manner. The cost of failure to meet such obligations can be very high. For example, in Ontario, a fine of up to $500,000 can be imposed on a corporation for each contravention of the Ontario Occupational Health and Safety Act. In addition, the penalties for an individual include fines of up to $25,000 and/or imprisonment for up to 12 months.

The OH&S Offence

In Canada, there are three categories of offences:

1. mens rea offences, which require proof beyond a reasonable doubt of the defendant’s intent to commit the unlawful act;

2. absolute liability offences in which the prosecution need only prove that the defendant committed the unlawful act of which no defences are available; and

3. strict liability offences.


Strict Liability Offences.

Breaches of OH&S legislation are categorized by the courts as “strict liability” offences. A strict liability offence is one that requires proof that the defendant committed a prohibited act, but which allows for a finding of “not guilty” if the defendant proves that it was duly diligent in its attempts to comply with the law.

In other words, the prosecution must prove beyond a reasonable doubt that the defendant committed a prohibited act (or omitted to perform a required act). Once the prosecution has done so, the onus of proof shifts to the defendant to establish a balance of probabilities that it has a defence of “due diligence.”

Two Branches of Due Diligence Defence

In R. v. Sault Ste. Marie – the leading case on due diligence as a defence to strict liability offences – the Supreme Court of Canada made it clear that there are really two separate branches of the due diligence defence.

The first branch is where the defendant persuades the court that it reasonably believed in a mistaken set of facts that, if true, would render the defendant’s act or omission innocent. This “mistake of fact” branch of the due diligence defence arises infrequently and can be very difficult to establish.

The second branch of the due diligence defence is where the defendant persuades the court that, in the words of the Supreme Court of Canada, the defendant “took all reasonable steps to avoid the particular event.” This “reasonable steps” branch of the due diligence defence is the one most often raised as a defence to an OH&S offence.

“All Reasonable Steps”

There appear to be two conflicting lines of case law outlining the standard applied by the courts in considering whether the employer “took all reasonable steps” in its attempts to prevent the occurrence that gave rise to the prosecution, such that the employer can be said to have been “duly diligent.”

In the first line of case law, the courts are willing to recognize that an employer cannot be expected to anticipate every possible failure. Rather, it is enough for employers to take “all reasonable precautions” in the circumstances.

Under this line of case law, the court may be persuaded to consider the extent to which the behaviour of the injured worker caused or contributed to the worker’s injury. At the same time, it is important to recognize that, unless the worker’s actions clearly could not be foreseen or anticipated, the employer will be required by the court to demonstrate that specific steps were taken to prevent the particular event.

In the second line of case law, the courts have refused to permit an employer to escape liability for failing to ensure a safe workplace by laying blame on the careless or negligent acts of the injured worker.

Rather, the courts take the view that the employer is solely responsible for ensuring a safe workplace, even to the point of protecting workers against their own negligence. For example, in R. v. Commodore Business Machines, the Ontario Provincial Court stated that, “... the scheme of the act appears to be to protect the foolish, heedless, thoughtless employee; the wise, careful and thoughtful one will protect him or herself.”


In R. v. Stelco, the Ontario Provincial Court went even further in its finding that, “All reasonable care was not taken to ensure compliance with the act and protection of the workers, regardless of their own incompetence, recklessness or stupidity.”

Was the Event That Caused the Injury Foreseeable?

The question of whether or not “all reasonable steps” were taken by the employer will, of course, depend on the circumstances of each case. As part of the analysis, the court will consider the magnitude of the risks and the nature of the potential harm involved. The greater the risk and the more serious the potential harm, the more precautions necessary to demonstrate that the employer has been duly diligent.

For this reason, in assessing the reasonableness of the steps taken by the employer to avoid the event that caused the injury, the courts will frequently consider the extent to which that event was foreseeable.

Although the Crown is not required to prove that the event that gave rise to the prosecution was foreseeable, the more foreseeable the event, the more closely the court will scrutinize the steps taken by the employer to avoid that event.

A leading case on the standard of foreseeability applied by the courts is R. v. Rio Algom Ltd., in which the Ontario Court of Appeal overturned the decision of the trial judge, who had dismissed the charges on the basis of a finding that none of the witnesses who testified at trial had foreseen the type of accident that had occurred.

In that case, the gate that led to the area where a worker was uncoupling mining cars had developed an “overswing,” which allowed the gate to open more than 90 degrees from its closed position. The corner of a mining car bumped the gate from its opened position towards a train of moving rail cars. The worker was killed when he was crushed between the gate and one of the rail cars.

The employer was aware that the gate had developed an “overswing,” but the witnesses all testified that no one had foreseen “this type of accident happening.” In overturning the trial judge’s dismissal of the charges, the Court of Appeal held that:

“The test which should have been applied was not whether a reasonable man in the circumstances would have foreseen the accident happening in the way that it did happen but rather whether a reasonable man in the circumstances would have foreseen that an ‘overswing’ of the gate could be dangerous in the circumstances and if so whether the (defendant) had proven it was not negligent in failing to check the extent of overswing in order to consider and determine whether it created in any way a potential source of danger to employees and in failing to take corrective action to remove the source of danger.”

Does an OH&S Program Constitute Due Diligence?

The ruling in the R. v. Rio Algom Ltd. case should make it clear that the courts will look for evidence of specific precautions taken to avoid the particular occurrence. Most employers do have some form of workplace health and safety program aimed at ensuring compliance with the statutory obligation to ensure that the workplace is safe and that all workers work in a safe manner.


However, evidence of general safety policies and procedures, and a commitment to workplace health and safety, on their own, are not enough. While an effective health and safety program may form a helpful background to a due diligence defence, the courts will focus on that part of the safety program that was intended to prevent the event which gave rise to the prosecution.

For example, in R. v. Van Rob Stampings Inc., a decision of the Ontario Court of Appeal, the Crown successfully appealed the acquittal of an employer on charges relating to the amputation of a worker’s hand.

In this incident, two workers were jointly responsible for operating six punch presses. One worker had her hand in a press when the second worker started it. Two safety mechanisms designed to prevent the press from operating if there was an obstruction failed, resulting in the amputation.

The evidence at trial indicated that the employer had provided regular, compulsory safety training to its employees. Indeed, both press operators had received general safety training as well as training specific to the safe operation of the press.

The employer had also implemented an extensive program of regular preventive maintenance and equipment testing. In fact, one of the workers testified that they had tested the emergency stop mechanism on the morning of the accident. Furthermore, in each of three preventive maintenance inspections performed during the six weeks prior to the accident, the stop mechanisms on the press had operated properly.

However, an investigation by the company’s joint health and safety committee revealed that the dies in the press had been changed on the morning of the accident. The committee concluded that a slight adjustment to the safety mechanism was required to ensure the equipment did not malfunction after the dies were changed. This adjustment had not been made.

At trial, the Justice of the Peace held that, although the press was not properly guarded on the day of the accident (because the adjustment had not been made), there was no evidence to suggest that the accident could have been foreseen by the employer. The Justice of the Peace concluded that the employer had taken all reasonable steps to prevent the accident.

However, on appeal, the Crown argued that the fact that one of the two safety mechanisms on the press was adjustable should have been a signal to the employer that a potential danger to workers arose when the press itself was adjusted. The Court of Appeal recognized the employer’s “considerable attention to the safety of its workers” and its “impressive safety and maintenance programs.”

Nevertheless, the court accepted the Crown’s argument that, notwithstanding the employer’s general commitment to safety, the failure to institute a preventive maintenance program specifically designed to ensure that the safety mechanism was adjusted when the dies were changed meant that the employer had failed to meet its positive statutory obligation to ensure that the machine was guarded and the guard was working effectively.

Steps to Establish Due Diligence

If “considerable attention” is paid to workplace safety and an “impressive” health and safety program are not enough to form the basis of a due diligence defence, what steps taken by an employer will be sufficient?


The answer will depend, of course, on the specific facts of the alleged OH&S offence. However, there are some key elements that form the basis of a successful due diligence defence, which every employer should ensure are present in its health and safety programs.

You should ensure that your company has a written health and safety policy that is reviewed on a regular basis (at least annually) to ensure that it remains up-to-date. Copies of the policy should be provided to each worker and posted where all workers can read it.

The development of an effective program to implement the health and safety policy at the workplace is absolutely essential.

A joint health and safety committee should be formed and its functions conducted in accordance with the governing legislation. Only competent supervisors should be appointed and both supervisors and workers should be provided with proper and ongoing safety training, both general and specific to the tasks they perform and the equipment they operate.

Procedures for identifying hazards specific to your workplace, including regular and comprehensive workplace inspections designed to identify hazards, should be developed and implemented. Employees at every level should be encouraged to play a role in the identification of hazards and appropriate corrective action should be taken, in a timely fashion, whenever a hazard is identified.

Health and safety rules and all applicable statutory provisions should be communicated and strictly enforced with discipline administered where necessary. A system for responding to and resolving work refusals should be developed and implemented, as should a procedure for investigating accidents and reviewing the results of the investigation.

The company’s directors and officers should play an active role not only in the development and implementation of the health and safety program, but also in ensuring ongoing compliance with the program as well as with applicable legislation. Responsibilities for every aspect of the health and safety program should be clearly defined and communicated and every element of the program should be carefully documented.

Due Diligence is a Philosophy

“Due diligence” is much more than just an available defence to an OH&S offence. It is a workplace philosophy, a program for ensuring health and safety in the workplace, a plan of action for implementing that program and a system of identifying and addressing hazards and ensuring ongoing compliance with all applicable health and safety obligations.

The suggestions outlined above are far from being exhaustive. Even if your company takes each of these steps, it will have only begun to form the foundation for a due diligence defence.

However, once this foundation has been laid, you will be able to focus your day-to-day attention on identifying particular hazards and taking specific steps to eliminate them. If the time ever comes when you find yourself with a summons in your hand and your company’s lawyer on the phone, it is these specific steps, viewed against the background of your company’s general compliance with the applicable OH&S legislation that will constitute the real essence of your due diligence defence.

© Copyright Canadian HR Reporter, May 31, 1999, by permission of Carswell, a division of Thomson Canada Limited, Scarborough, Ontario, 1-800-387-5164.


Hands on support.

Carl CunninghamEarl G. Phillips

Brian P. Smeenk

Temps, Telecommuters and Consultants –What You Need to Know


Establishing Relationships with Temporary Workers, Telecommuters and Consultants

Introduction

The Changing Workplace

Recent studies1 have demonstrated that the Canadian workplace and workforce have changed significantly over the past decade and are continuing to change. Corporations increasingly seek to obtain the services of workers2 in a capacity other than as employees and workers are increasingly setting up their own businesses and contracting out their services.

A corporation may seek to obtain the services of workers in a capacity other than as employees for many reasons, including labour flexibility and for special expertise on an as-needed basis. For example, the corporation may from time to time:

need to replace its regular employees who are on leave (e.g., vacation, pregnancy and parental leave, sick leave);

require the worker’s services as a supplement to the corporation’s regular workforce (e.g. in order to meet the demands of a new product schedule, or the needs of a seasonal or cyclical production schedule); or

require the services of the worker for specialized skills that are not found within the corporation’s regular workforce.

In addition, corporations are frequently adopting flexible or alternate work arrangements as a recruitment or retention tool. Telecommuting is one example of flexible work arrangements.

Types of Non-Traditional Working Relationships

The result of the changing workplace is the development of several types of non-traditional working relationships, including the following:

Temporary Worker – A worker who provides services to the corporation through an employment agency.

Telecommuter – An employee of the corporation who is providing services to the corporation by “performing job-related work at a site away from the office, then electronically transferring the results to the office or to an other location.” 3

1 See, for example, 1996 Contract Personnel Survey, KPMG and Contingent Work: Trends, Issues and Challenges for Employers,

The Conference Board of Canada. 2 Throughout this paper, the person providing services is referred to as the “worker”. The entity for whom the services are

provided is referred to as the “corporation.” 3 Solomon N.; Templer A.; Human Resource Implications of Telecommuting in Canada: Preliminary results of a survey Women and

Industrial Relations: Proceeding of 28th Conference, Canadian Industrial Relations Association, Kingston, June 2-4, 1991.


Consultant – A worker who is normally an independent contractor possessing specialized skills and who provides services to the corporation. These services are frequently provided on a project basis.

The purpose of this paper is to outline and highlight some of the issues unique to non-traditional workers, such as temporary workers, telecommuters and consultants.

Business Objectives

An employer should be clear about the business objectives it is trying to achieve in entering into a non-traditional working relationship. Some common objectives can be well served:

acquire expertise or skills that are needed on a short-term basis;

fill temporary vacancies;

determine whether a particular job can add value to the business;

find new recruits;

retain valuable employees;

relieve temporary space shortages; and

meet specific needs of a particular project.

When one or more valid business objective is the impetus and the objective remains aligned with the overall business strategy, there is a sound basis for entering into a non-traditional working relationship. The challenge is to then design, implement, manage and review the relationship with the objectives constantly in mind. Terms of the arrangement, including how it can be terminated, can then be based on achievement of the objectives and interference from extraneous factors, including entrenchment of a relationship beyond its useful life, can be limited.

Where many employers run into trouble is in a confusion of objectives or when a non-traditional working relationship is continued without regular review of objectives and strategy.

The most common cause of confused objectives is trying to meet the desires of a particular employee. Recruiting or retaining key employees is always an important objective but an employer should be careful about entering into a non-traditional working relationship that is requested by an employee rather than prompted by a current business need. The risks of a consulting arrangement and the difficulties in properly managing a telecommuting arrangement must be fully considered before deciding that meeting the employee’s request is a sufficient benefit.

When faced with a request by an employee or prospective employee for a non-traditional working arrangement, an employer should carefully question the need the employee is seeking to address and explore alternatives within a traditional employment relationship. As a general proposition, the request should be resisted unless there is no better way to meet the employee’s needs, business objectives and strategies will not be compromised and the risks are manageable.


The other common danger is the continuation of non-traditional arrangements beyond their useful life. The indefinite continuation of a temporary, telecommuting or consulting arrangement is a danger sign to be heeded. Has the “temporary” employee or “consultant” in fact become more like a regular employee such that the non-traditional arrangement should now be regularized? Is the temporary, telecommuting or consulting arrangement continuing because of familiarity and inertia or because it is still the best way to achieve a valid business objective?

Assuming business objectives are being given the proper priority, we can then move on to consider how to structure the arrangements and manage the risks.

Worker’s Status

Is the Worker an Employee or an Independent Contractor?

The starting point in defining the scope of any contractual relationship under which a worker’s services are provided is determining whether the worker is an independent contractor or an employee. This issue arises both in situations where the corporation contracts directly with the worker for the provision of the worker’s services and where the corporation contracts with an employment agency for provision of the worker’s services. In either situation, the same analysis is applied to determine whether the worker is an employee or an independent contractor. There are several tests to make this determination, however, generally a court or tribunal will look at factors, such as whether the worker sets his/her own hours, maintains control over his/her work, provides his/her own tools, has the ability to perform work for other corporations and is subject to minimal supervision from the corporation. (See Appendix A for a more complete discussion of these tests.)

One of the important distinctions between employees and independent contractors is that the many statutes that govern a traditional employment relationship, such as the Canada Pension Plan4 and the Workplace Safety and Insurance Act, 1997 5, will not affect dealings between the corporation and the true independent contractor.

A legal problem arises when the corporation and the worker have agreed that the worker is an independent contractor, but the ministries, the boards, and the tribunals that administer the statutes governing the employment relationship determine that the relationship is in fact one of employer and employee. Similarly, a legal problem may arise for the corporation where the worker later decides that he or she would like to obtain certain benefits or privileges under an employment statute, such as employment insurance or service credits for Canada Pension Plan purposes and asserts that the work relationship was, in fact, one of employment.

Assuming the Worker is an Employee, Who is the Employer?

Where the corporation contracts with an employment agency for the provision of the worker’s services, a second issue arises. Assuming the worker is an employee and not an independent contractor, who is the worker’s employer: the corporation or the employment agency? Depending on the facts, the corporation, the employment agency or both could be the worker’s employer.

4 R.S.C. c. C-8, as amended. 5 S.O. 1997, c. 16, Sched. A, as amended.


It is therefore essential that corporations that seek to obtain the services of workers in a capacity other than as employees become familiar with the legal issues respecting the type of work relationships into which they are entering. Furthermore, it is essential that some form of “due diligence” procedure be followed when a worker is retained in a capacity other than as an employee in order to ensure that no unexpected legal liabilities arise from the work relationship. (See the checklist at Appendix “B” for a list of ways to reduce the likelihood the corporation will be found to be the employer of the temporary worker.)

Defining the Working Relationship

Benefit of an Agreement or Policy

We believe it is important to develop a written policy or agreement by which both parties6 will be bound that defines the rights and obligations, of the employer and the worker. The agreement should be as detailed as possible in identifying the obligations imposed on each party.

The primary reason for entering into an agreement or preparing express policies to deal with non-traditional working relationships is to reduce the chance of disputes over the terms of the working relationship.

General Employment Terms to Include in the Policy/Agreement

Remuneration

Temporary Workers – The corporation pays the employment agency for the worker’s services on an hourly rate. To reduce the risk that the corporation rather than the employment agency is found to be the employer, the employment agency should be responsible for paying the temporary worker, making all required deductions and remittances and providing group insurance benefits, if any.

Telecommuters – Salary, benefits and corporation sponsored group insurance coverage are subject to negotiation, but presumably they would remain the same as when the employee worked in the office.

Consultants – The corporation pays the consultant a fee for the consultant’s services. Fee may be on a project basis or at an hourly rate. There are no withholdings from the fee paid to the consultant and GST is applicable. To assist in distinguishing consultants from employees, consultant’s fees should be paid on a different schedule than employees’ wages.

Term

Temporary Workers – Term of assignment of temporary worker with the corporation to be negotiated between corporation and the employment agency. The corporation needs to be cognizant of contract renewal provisions to ensure it has sufficient labour to meet its production needs. To reduce the risk that the corporation rather than the employment agency is found to be the employer, it is preferable if the same temporary worker does not work indefinitely at the corporation’s premises.

6 In the case of temporary workers, the corporation will be a client and will enter into an agreement with the employment

agency, not the worker.


Telecommuters – Similar to any other employee, a telecommuter may be employed pursuant to a fixed term or indefinite term employment agreement. However, the corporation may wish to review or re-negotiate the telecommuting relationship on a semi-annual or annual basis.

Consultants – The consultant may provide services on a project basis or as needed for an indefinite term. To reduce the risk that the consultant is found to be an employee, rather than an independent contractor, the consultant should be able to work for other clients during the term of the agreement.

Termination

Temporary Workers – The corporation provides notice of termination of worker’s assignment to the employment agency. To provide the corporation with optimal operational flexibility, the Corporation should attempt to negotiate as short a notice period as possible.

Telecommuters – The corporation should include separate provisions providing for the termination of employment and the termination of the telecommuting relationship. In addition, the corporation should ensure the agreement/policy confirms that termination of the telecommuting relationship does not constitute termination of employment.

Consultants – Similar to temporary workers, the corporation gains operational flexibility by negotiating a short notice period. Conversely, since consultants frequently provide a specialized skill that may be in short supply, the corporation will be asking the consultant to provide it with enough notice so that the corporation can find a replacement for the consultant.

Job/Project Description

Temporary Workers – The corporation should ensure that the employment agency commits to providing workers who can fulfill the mandate and duties and responsibilities of the required position.

Telecommuters – The employee’s duties and responsibilities should not vary significantly just because the employee is now working from home. However, it is more important to establish clear work objectives since the employee will largely be working in an unsupervised environment.

Consultants – The corporation needs to specify the requirements and objectives of the project, but the means by which the consultant meets those requirements or objectives should not be expressly dictated to the consultant since such control is not consistent with a finding that the worker is an independent contractor.

Supervision

Temporary Workers – To reduce the risk that the corporation rather than the employment agency is found to be the employer, the employment agency should be responsible for discipline and, as far as possible, for supervision.

Telecommuters – The employee’s duties and responsibilities should not vary significantly just because the employee is now working from home as a telecommuter. However, it is more important to establish clear work objectives since the employee will largely being working in an unsupervised environment. The corporation should also consider the extent to which “electronic” supervision is possible.


Consultants – The corporation needs to specify the requirements and objectives of the project, but the means by which the consultant meets those requirements or objectives should not be expressly dictated to the consultant since such control is not consistent with a finding that the worker is an independent contractor.

Tools and Equipment

Temporary Workers – The corporation’s agreement with the employment agency should be as detailed as possible regarding what, if any, tools and equipment the employment agency and the temporary workers are expected to provide.

Telecommuters – The corporation needs to define who pays for the tools and equipment installed in the telecommuter’s home office, for what purposes the tools and equipment may be used (and by whom) and what happens to the tools and equipment in the event the relationship is severed.

Consultants – To reduce the risk that the consultant is found to be an employee rather than an independent contractor, the consultant should supply their own tools and equipment.

Intellectual Property

Many corporations have a significant interest in developing intellectual property and protecting its integrity. There are several types of intellectual property to consider and standard provisions that should apply to employees and others as described in Appendix E. Of special significance for non-traditional work arrangements are:

Temporary Workers – Both the worker and the employment agency should be under obligation with respect to the “invention” and integrity of intellectual property in the course of work for the corporation.

Telecommuters – The telecommuter’s duties need to be clearly and broadly defined and an ownership of developments agreement needs to cover all the possibilities of how or when a telecommuter might develop something related to the corporation’s business.

Consultants – A consulting agreement must clearly identify what work product belongs to the corporation and the consultant respectively. The consultant, and all of the consultant’s employees, agents or sub-contractors, should be bound to ownership of developments agreements.

Non-Competition/Non-Solicitation/Confidentiality

Temporary Workers – Depending on the nature of the position that the temporary worker is filling, the corporation needs to evaluate whether the temporary worker should sign a confidentiality or non-disclosure agreement.

Telecommuters – The employee’s duties and responsibilities should not vary significantly just because the employee is now working from home as a telecommuter. However, to ensure the protection of confidential information, the corporation will need to evaluate whether additional security measures, such as secure extranet links are required.


Consultants –The corporation will likely want to have the consultant sign a confidentiality agreement to ensure that confidential information of the corporation is protected.

Safety and Workers’ Compensation Issues

Temporary Workers

Occupational Health and Safety Act (“OHSA”)

The OHSA includes very broad definitions of “employer” and “worker.” The OHSA definition of employer includes a person who “employs one or more workers or contracts for the services of one or more workers and includes a contractor or subcontractor who performs work or supplies services…” The OHSA defines worker as:

“a person who performs work or supplies services for monetary compensation but does not include an inmate or a correctional institution or like institution or facility who participates inside the institution or facility in a work project or rehabilitation program.”

Both employment agencies and the corporation can be prosecuted as “employers” for breaches of the OHSA when a temporary worker is injured.7 Employers who retain temporary staff have an obligation to ensure the safety of all workers who work at that workplace, including temporary workers.8 Accordingly, employers who utilize staff who are not their own employees (including temporary workers) prudently should provide, and carefully document, very specific training on potential workplace hazards. Why? Because (other than an owner on a construction project), an employer in Ontario who contracts for the services of another worker cannot delegate the obligation to provide a safe workplace under the OHSA and will be liable as “an employer” for those temporary workers while they are at the workplace.

The following steps should be taken when retaining temporary employees and to create the basis for a strong due diligence defence:

Contractually require the temporary agency to provide general safety training (such as WHMIS) and to confirm that the agency is providing suitable and adequately trained workers.

Create a general orientation session for temporary and contract workers relating to the workplace premises (including how to access the workplace) for temporary workers assigned to the workplace. The orientation may be given by the employer, or at the direction of the employer, by the agency. The more effective training however, is likely to be given by the employer, who can answer inquiries of the temporary workers.

Document the content of the general orientation session. Have the worker taking the session confirm he/she was trained on the content listed and understands the training.

Where the temporary worker is given a specific assignment, provide training specifically for that assignment. Include a review of the specific safety procedures applicable for the assignment. A knowledgeable employee should conduct the training.

7 R. v. Excell Tempro, [2001] O.O.H.S.A.D. No. 121 8 R v. Grant Forest Products Inc., Ontario Court of Justice, [2002] O.J. No. 3374, July 26, 2002.


Ensure that the supervisor is aware that temporary employees are assigned and consider what additional steps may be necessary to protect the temporary workers.

Ensure that temporary employees understand to whom they should go for assistance and additional instruction.

Ensure that permanent employees comply with safety instructions.

Workplace Safety and Insurance Act (“WSIA”)

The central purpose of the workplace safety and insurance system is to compensate employees injured in the course of their employment. The WSIA refers to employees as “workers.” With respect to temporary workers, the most relevant provision of the WSIA is section 72 that states:

“If an employer temporarily lends or hires out the services of a worker to another employer, the first employer shall be deemed to be the employer of the worker while he or she is working for the other employer.”

Accordingly, the effect of Section 72 is to keep the obligations of an “employer” under the WSIA with the employment agency rather than the corporation that has contracted with the employment agency for the provision of temporary labour services.

Telecommuters


Section 3(1) of the OHSA states that the Act does not apply to work performed “to, in or about a private residence” by the “owner or occupant or servant of the owner” of that private residence. The meaning and intent of section 3(1) of the OHSA does not appear to have been tested. There is, however, a strong policy argument to be made that the employer bears no responsibility for the workplace, when a worker works from home, because the employer has no control over the residence. Under the OHSA, generally, the party responsible for the workplace and directing the work bears the liability. A contrary conclusion is possible if the employer requires the employee to work from home.


Unlike the OHSA, there is no exemption contained in the WSIA that exempts employers from reporting accidents that occur at home. Since there is no exemption under the WSIA to work performed “at, in or about” a private residence, there may be a gap between the requirement to report accidents that occur at home and the obligation to ensure a safe workplace.

Ergonomic injuries are likely to be the most often reported by telecommuters. That risk may be reduced if appropriate equipment and set-up are addressed at the outset of the relationship. To reduce the risk, consider:

The employer must implement a system whereby if a worker is injured at work, the worker understands that he/she is immediately to report to the supervisor. Employees should be provided with the number of the contact person. Prompt notice of an injury permits the company to know the details of the accident as soon as possible. There is a three-day obligation to file a Form 7 with the Workplace Safety and Insurance Board (“WSIB”).


Employers must develop a procedure to permit the employer to investigate under the WSIA any accident or injury claims. Practically, this is likely to be by on-line questionnaire. Employers should recognize that if an injury from home is reported, it will not likely be subject to challenge.

Employers must report all “workplace” accidents as required under the WSIA. It is appropriate that the parties define those areas of the home residence that will be deemed to be the workplace, for all purposes. Generally, the “workplace” in a residence can include the actual office area, kitchen and a bathroom.

Employers must report workplace accidents which arise “in the course of employment.” The parties may agree that the telecommuters will be considered to be in the course of their employment only when actually performing work, which must occur either in defined times or if the worker has followed certain log on/off procedures that can limit the hours that may be worked in a day (such an arrangement may not be enforceable, should there be a claim for workers' compensation benefits, if the employee can prove the accident arose out of the course of employment regardless of the time of the injury).

To prevent the risk of occupational illnesses, such as carpal tunnel syndrome, the equipment used by the telecommuter should be set up in accordance with ergonomic standards. The parties should define how that will occur. Will the employer send a representative to actually install the equipment or will it develop detailed installation instructions to be followed by the telecommuter?

If the employer supplies the equipment, or has control over the type of equipment to be purchased by the telecommuter, the employer needs to confirm that the equipment meets current safety standards and should be checked and maintained as required (the telecommuter presumably can do this even if it means bringing equipment to the workplace or returning to the manufacturer for its review). Presumably the equipment could include furnishings, such as lighting, shelving, desks and seating that meet current CSA or ergonomic specifications. If the employer is not providing the equipment, it could define standards for the equipment that can be used by the employee. If the telecommuter chooses not to use appropriate equipment, the employer may wish to reconsider if it will permit the telecommuter to continue to work from home if the equipment he/she uses may cause harm (i.e., ergonomic injury).

Consultants


As discussed above under the sub-heading “Temporary Workers – OHSA,” the OHSA includes very broad definitions of “employer” and “worker.” In R. v. Wyssen,9 the Ontario Court of Appeal held that the legislature had intended the definition of employer to include independent contractors.

In the more recent decision of R. v. Grant Forest Products Inc.,10 the Ontario Superior Court of Justice affirmed the principle that the legislature broadly defined “employer” in order to give effect to the purposes of the OHSA and protect the health and safety of workers. Accordingly, the corporation will have a duty to provide a safe work

9 (1992), 10 O.R. (3d) 193 (C.A.) 10 Supra, footnote 8.


environment to consultants. When retaining consultants, the corporation should follow the due diligence steps outlined under the sub-heading “Temporary Workers – OHSA.”


Assuming that the consultant is not a “worker” for the purposes of the WSIA, if the consultant is injured, there is no obligation upon the corporation (who retained the consultant) to report the accident to WSIB. In addition, the accident would also not be insured since the accident would not be “arising out of and in the course of his or her employment” (Section 13 of WSIA). However, as discussed above, legal risks arise if the consultant is in fact an employee and a “worker” under the WSIA. In such case, there is an obligation to file a Form 7 within three days of the workplace accident.

Consultants are also not on the corporation’s payroll. Accordingly, the corporation is not paying insurance premiums for consultants. Improperly characterizing a consultant as an “independent contractor” rather than an employee can therefore also result in the corporation under-reporting its payroll, underpaying its premiums and being in violation of the WSIA.

If the consultant is not a “worker” for the purposes of the WSIA, the consultant will be an employer or an “independent operator.” The WSIB policy manual defines an “independent operator” as a person who carries on an industry as set forth in Schedule 1 of the WSIA and who does not employ any workers for that purpose. The independent operator is therefore a separate business with which the corporation contracts for services.

“Independent operators” such as a consultant can apply to the WSIB to be deemed a worker for the purposes of the WSIA. In such case, the “independent operator” is responsible for maintaining their own workplace insurance coverage.

However, section 141(2) of the WSIA deems the principal (i.e., the corporation) to be the “employer of workers employed by the contractor or subcontractor” unless the contractor or subcontractor is a Schedule 1 or Schedule 2 employer in respect of the work, or the WSIB decides that holding the contractor or subcontractor responsible is sufficient protection to the workers for the benefits provided under the insurance plan. To reduce the chance that the corporation is potentially liable for contractor or subcontractor obligations under the WSIB, the corporation should have the consultant provide a current Clearance Certificate issued from the WSIB.

Finally, since a true consultant is not covered by the WSIA, the consultant retains his/her right to sue in the event of an injury at the corporation’s workplace and is not prohibited from commencing an action against the corporation.

Telecommuting and Constructive Dismissal

Having created a policy for telecommuting, can employers insist that their employees become teleworkers? If an employee objects to a mandatory direction, it is possible that such a direction would result in a claim for constructive dismissal.

A constructive dismissal occurs where the employer unilaterally alters a significant term of the employment relationship, without the consent of the employee, in the absence of reasonable notice.


A telecommuting arrangement that is truly voluntary should not be a constructive dismissal. But, if an employer wishes to require employees to work from their homes, reasonable notice or consideration (typically special or additional compensation) must be provided. Failure to do so may result in successful claims for damages by employees directed to perform their employment duties from their homes.

Conclusion

Non-traditional working relationships can be a useful tool to provide labour flexibility, provide a specialized skill set and, in the case of telecommuting, be a means of recruiting or retaining employees. But, to be successful, there should be clear guidelines setting out the parties’ obligations. These guidelines may be contained in a general policy or a specific agreement, but the terms of the arrangement must be known and accepted by the parties. Without express guidelines, unnecessary disputes may arise which can adversely affect the working relationship.


Appendix A – Independent Contractors

This memorandum summarizes some of the basic legal principles followed by the courts in distinguishing employees from independent contractors.

While these principles are regularly applied by the courts, they can often lead to different conclusions depending on the statutory regime under which the decision is being made. For example, it is possible for a person to be considered an employee under the Employment Standards Act but an independent contractor under the Income Tax Act. Nevertheless, consideration of these principles will help to decide whether independent contractor status can be sustained.

There are four basic tests that have been recognized:

the control test;

the ownership of tools;

the chance of profit and risk of loss; and

the integration of the person’s work into the company’s business.

The Control Test

The control test has been stated as:

“... the difference between the between the relations of master and servant and of principal and agent is this: a principal has the right to direct what the agent has to do; but a master has not only that right, but also the right to say how it is to be done.”

This typically means minimizing the amount of reporting to be done by the contractor to the company’s management and the amount of control the company’s management has over when and how the contractor does his work. It also means maximizing the freedom of the contractor to work where, when and how he chooses.

Ownership of Tools

The more “tools” the contractor owns or provides at his expense to carry out the work increases the chance of independent contractor status being found. In many cases the basic tool is a car or a computer. The contractor should be responsible for providing that “tool” and to pay for all its acquisition and maintenance costs. Other “tools” provided by the company that might be provided by or paid for by the contractor are promotional materials, office space and administrative and accounting services.

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Profit and Loss

The chance of profit and risk of loss refers to what is also called the “entrepreneur test.” It has been described as follows:

“... it is in some cases possible to decide the issue by raising as the crucial question whose business is it, or in other words by asking whether the party is carrying on the business, in the sense of carrying it on for himself on his own behalf and not merely for a superior.”

As you can see, this test contains elements of the previous two tests. To the extent that the contractor dictates for himself when and how he will work and provides the tools and pays the expenses of carrying out the work, he may be seen as carrying on business for himself. In addition, to the extent it is practical, if a contractor is allowed to carry on other businesses or to provide services in conjunction with or in addition to those provided to the company, a greater degree of independence is shown and it is easier to argue the contractor is truly in business for himself.

Integration

The organization or “integration” test has been described as follows:

“... under a contract of service, a man is employed as part of the business, and his work is done as an integral part of the business; whereas under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it.”

However the integration test has also been criticized:

“... the effect has been to dictate the answer through the very form of the question, by showing that without the work of the “employees” the “employer” would be out of business ... As thus applied, this can never be a fair test, because in a factual relationship of mutual dependency it must always result in an affirmative answer. If the businesses of both parties are so structured as to operate through each other, they could not survive independently without being restructured. But that is a consequence of their surface arrangement and not necessarily expressive of their intrinsic relationship.”

While there have been four separate tests identified, the courts have stated that all four must be considered together and no one test will necessarily be decisive. The different tests and their proper application has been summarized as follows:

“... the fundamental test to be applied is this: `Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’ ... No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors, which may be of importance, are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk be taken,

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what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.”

Some features of an agreement with an independent contractor could be:

replacing any salary or car allowance with an advance against commissions or reimbursement of out of pocket expenses or payment of a mileage charge;

removing restrictions on where, how and for whom a contractor may provide services;

allowing the contractor to recruit his own staff and to substitute one of his staff for himself in appropriate circumstances;

having the contractor pay all his own expenses;

having the contractor indemnify the company for any claims made in the course of his activities;

making equipment, promotional material, office space, telephones, support services and other administrative services available for a fee to the contractor who wishes to buy that material or those services; and

allowing the contractor at least some right to assign the contract.


Appendix B – Reducing the Risk that the Corporation will be Found to be the Employer of Temporary Workers

As far as it can practically, the employment agency should:

recruit the worker;

hire the worker;

pay the worker (and the corporation only pays the agency);

provide as much general training as possible - in particular, contractually require the employment agency to provide general safety training (such as WHMIS) and to confirm that the agency is providing suitable and adequately trained workers;

supply the worker’s tools and equipment;

define the scope of the worker’s duties and responsibilities;

control the manner of work and method of work;

define the worker’s days and hours of work;

determine the worker’s work location;

record the worker’s time;

make payroll deductions for the worker;

review the worker’s performance;

discipline the worker;

terminate the worker; and

issue records of employment.

In addition, the term of temporary assignment should be as brief as possible in order to reduce the perception that the worker perceives the corporation as the real employer.


Appendix C – Issues to Consider when Drafting Your Telecommuting Agreement/Policy

Work objectives and expected results (against which the worker will be assessed).

Wages and benefits to be provided to employee.

Hours of work, both at home and in the office, if applicable.

Daily/weekly log of time spent working (for ESA reporting requirements).

How work will be assigned.

How the telecommuter will be supervised.

Sick leave reporting procedures.

Overtime authorization procedures.

Accessibility for visitation by supervisor at the home (if this is part of the concept).

Monitoring of employee telecommunications electronically (if required, obtain consent).

Employee interaction with supervisor and other employees, either telecommuters or “regular” office employees.

Obligation to attend the workplace for meetings.

Training.

Technical assistance from the head office.

Use of supplies, how and from where supplies are obtained.

Liability, both personal and for equipment, including if the employer will reimburse (or not) the employee for increased expenses such as utilities, home maintenance, renovations or security.

Proof of homeowners insurance and liability limits acceptable to the employer to protect against loss or damage to the equipment used by the telecommuter.

Conditions for termination of telecommuting arrangement (ensure the agreement/policy confirms that termination of the telecommuting relationship does not constitute termination of employment).

Identify with precision (i.e., by serial number) the property belonging to the company and define what will occur to the equipment installed in the worker's home in the event that the employment relationship is severed. (Consider an “equipment agreement” that identifies the actual pieces of equipment placed in a residence, to be signed by the employee).


Determine whether the company software licence extends to a telecommuter and whether the telecommuter can install personal software on hardware owned by the company?

Identify how the telecommuter will ensure the protection of confidential company information, including passwords, user id, and any other security measures to be implemented by the company.

Reserve the right to amend or modify the terms of the relationship of the employee’s right to participate in the telecommuting program.


Appendix D – Issues to Consider in Consulting Agreements

Define the services to be provided.

Consultant to obtain all necessary licences and permits.

Consultant to supply their own tools and equipment.

Consultant to provide insurance.

Establish the term or clearly define the project for which the services will be provided.

Fee structure: project based or hourly rate?

Consultant to pay own expenses.

Timing for delivery of invoices and payment following receipt.

Consultant to charge and remit GST if required.

Consultant responsible for its employers and all related obligations.

Indemnity from consultant.

Non-Disclosure clause?

Non-Solicitation clause?

Consultant shall not contract on corporation’s behalf without prior consent.

Termination clause.


Appendix E – Protecting Your Intellectual Assets

Protecting the intellectual assets of a business is one of the most important things an employer can do. Information, customer lists, trade secrets and patents can be the most valuable assets of a business, even those not in knowledge-based industries.

Some protections are available in any event, but the best protections are only available through proper contracts and business processes.

What Does the Employer Own Anyway?

The general rule is that the individual who creates or invents intellectual property (IP) is the first owner. The employer’s rights to the IP comes by way of exception to that rule: if the employee creates the intellectual property in the course of employment, the employer can claim ownership in the right circumstances.

Patents

For patent protection, the employer must show a clear connection between the invention and what the employee was hired to do. If the invention is unrelated to the employee’s duties, or if it results from efforts outside of work, the employer is unlikely to be able to claim ownership.

Copyright

The Copyright Act deems the employer to be the copyright owner of all “works” produced by its employees in the course of employment. Unless the work in question was produced outside the workplace, on the creator’s own time, the employer should have copyright.

Trade Secrets

The employer’s confidential information used for an actual or potential competitive advantage is a trade secret. Some trade secrets are patentable or copyrighted; for others, the employer can only claim a remedy in the event of improper disclosure or use.

Know-how

The employer has no rights over a former employee’s ‘know how’- the knowledge and skills gained by an employee - even when gained from working for the former employer. The law presumes that every employee has the right to transport and fully exploit his or her know-how.

Temporary Workers

The temporary worker is employed by the employment agency so an express agreement is required, binding both the worker and the agency, to confirm that any intellectual property developed while the worker is on the temporary assignment belongs to the corporation.


Telecommuters

With telecommuters, the issue of whether intellectual property is developed in the course of employment can be confused by the flexibility of the arrangement as to hours and because the “invention” is made away from the employer’s place of business.

The telecommuter’s duties need to be clearly and broadly defined and the ownership of developments agreement needs to cover all the possibilities of how or when a telecommuter might develop something related to the corporation’s business.

Consultants

Note that a consultant who is an independent contractor will have a greater claim to ownership of an invention or work than an employee. A consulting agreement must clearly identify what work product belongs to the corporation and the consultant respectively. The consultant, and all of the consultant’s employees, agents or sub-contractors, should be bound to ownership of development agreements.

How Can an Employer Improve its Position?

Agreements

The employer can better protect its IP rights through proper agreements with its employees and through better processes and procedures.

The employer can require written agreements dealing with ownership of developments, confidentiality, and restrictive covenants.

“Developments” should be broadly defined, covering all IP resulting from employment duties and tasks assigned by the employer or which result from the use of the property of the employer. The employee should be obliged to disclose all developments, assist in the protection of the IP, and cooperate in further acts during and after employment to confirm the employer’s ownership.

Confidentiality provisions and non-disclosure agreements are the principal tools for protecting trade secrets.

“Confidential information” should be broadly but not excessively defined. Confidentiality provisions should acknowledge the employer’s ownership, prohibit unauthorized disclosure, require compliance with the employer’s security policies and procedures, and require the return of all confidential information upon termination.

Non-solicitation or non-competition covenants may be appropriate in an employment agreement. The law provides former employees with a presumption that they are free to exploit their talents and know how. But carefully drafted restrictive covenants that do not go beyond what is reasonable to protect the legitimate business interests of the former employer will be enforced.

A restrictive covenant will have to be reasonable in the scope of the activity it seeks to restrict, the length of time it applies and the geographic area it covers.

Page III McCarthy Tétrault LLP

Business Processes and Procedures

In addition to the right agreements, the employer should use improved processes and procedures to develop a culture of respect and protection for IP rights.

An important first step is to conduct an IP audit. The employer needs to know what IP it has, the status of its protection and the extent to which the employer’s rights can be enforced.

Once an IP audit is completed, a written policy for the protection of proprietary assets should be adopted. The policy should identify the company’s IP, establish the development and ownership obligations and rights of both the employer and employee, and describe the various ways in which the IP is being protected.

The policy should be supplemented with procedures, such as limit access to trade secrets on a “need to know” basis, enforce a “clean desk” policy, use “confidential” labelling for trade secrets, remind employees to disclose any developments they create, remind employees to be vigilant in protecting IP off-site or when dealing with third parties and conduct exit interviews for departing employees to restate and reinforce IP related obligations.

Physical security precautions can be effective. Consider employing uniformed security personnel, using employee identification and access cards, controlling visitors, limiting access to certain areas of the facilities, using computer security software and hardware, using locked file cabinets, shredding discarded documents and using security cameras.

With these protections in place, the employer’s ongoing task is to maintain a compliance program. The employer should regularly verify that employees have signed required agreements, policies are being followed, and former employees are meeting their continuing obligations. The employer should treat breaches of agreements or IP policies like other serious employment misconduct, remembering that time is of the essence in most IP cases and develop an action plan for protecting its IP in the courts.


Hands on support.

Naseem MalikAnne Feehely

Work Permits: Practical ImmigrationInformation for Employers


Introduction

In this seminar, we will outline the general framework and relevant considerations for bringing a foreign worker to Canada. We will examine the major steps involved in obtaining a work permit and review a variety of exemptions. In addition, we will examine the role of key players, including the government, the foreign worker and the employer.

It should be noted that the new Immigration Refugee Protection Act1 as well as the accompanying Regulations2 were proclaimed into force on June 28, 2002. Although there have been technical changes to the Act, the underlying philosophy and the basic principles of the system with respect to foreign workers have remained intact.

The information described below may not be exhaustive and requests for additional information should be made by the employer before beginning immigration processes on behalf of employees. It is also worth noting that if there are unique qualities that relate to the employer or the employee, the information provided below may or may not apply.

Working in Canada Temporarily: Relevant Considerations

Definition of Work

Section 2 of the IRPR defines “work” as follows:

“an activity for which wages are paid or commission is earned, or that competes directly with activities of Canadian citizens or permanent residents in the Canadian labour market.”

When Do You Require a Work Permit?

A foreign national may not work in Canada unless authorized to do so under the IRPA.3 Section 2 of the IRPR defines a “work permit” as a written authorization to work in Canada issued by an officer to a foreign national. The Foreign Worker Manual explains the Regulations and Citizenship and Immigration Canada’s Policy with respect to temporary foreign workers. According to the Foreign Worker Manual, if a person performs an activity that will result in being paid or receiving remuneration, they will be considered to be engaging in work. This includes salary or wages paid by an employer to an employee, remuneration or commission received for fulfilling a service contract, or any other situation where a foreign national receives payment for performing a service. Examples of work include:

a foreign technician coming to repair a machine, or otherwise fulfill a contract, even though they will not be paid directly by the Canadian company for whom they are doing the work;

self-employment that could constitute a competitive economic activity, such as opening a flower shop or restaurant; or

unpaid employment undertaken for the purpose of obtaining work experience, such as an internship or practicum normally performed by a student.

1 S.C. 2001, c.27 [hereinafter IRPA]. 2 P.C. 2002 – 997, June 11, 2002 [hereinafter IRPR]. 3 Subsection 30(1), IRPA.


Activities That Do Not Require a Work Permit

According to the Foreign Worker Manual, an activity that does not actually “take away” from opportunities for Canadians or permanent residents to gain employment or experience in the workplace is not “work” for the purposes of the definition. Examples of activities not considered to be “work” include, but are not limited to:

volunteer work for which a person would not normally be remunerated, such as sitting on the board of a charity or religious institution;

unremunerated help to a friend or family member during a visit, such as a grandmother taking care of her grandchildren;

long distance work done by a visitor whose employer is outside Canada and who is remunerated from outside Canada;

self-employment where the work to be performed would have no real impact on the labour market or deprive an employment opportunity from Canadians; or

other terms of unpaid short-term work where the work is incidental to the main reason for the visit to Canada and is not a competitive activity, even though non-monetary valuable consideration is received (i.e., if a tourist wishes to stay on a family farm and work part-time just for room and board for a short period, this person would not be considered to be a worker under the Regulations and Foreign Worker Manual).

Where Do You Apply For a Work Permit?

The general rule is that a foreign national must apply outside of Canada for a work permit4. However, there are situations that allow for a work permit to be obtained at port of entry or within Canada.

Before entering Canada, a foreign national must apply to an officer in order to seek a work permit on the basis of HRDC approval. The general rule is that a person must apply at a visa post abroad for their work permit upon obtaining HRDC confirmation. Often, HRDC will notify the appropriate visa post or port of entry of the confirmation. In some instances, the post will either notify the intending employee of its receipt of the HRDC approval and request the work permit application.

A foreign national may apply for a work permit after entering Canada if they satisfy one of the categories for nationals described under Section 199 of the IRPR:

they hold a work permit;

they have been working in Canada under the authority of Section 186 of the IRPR that means working legally without a permit for a period of at least three consecutive months, unless they are a business visitor, hold a study permit, hold a temporary resident permit that is valid for at least six months or are family member of the first two people described above, etc.

4 Section 197, IRPR.


Temporary Resident Visas

A foreign national may not enter Canada to remain on a temporary basis without first obtaining a temporary resident visa (formerly known as a “visitor visa”)5. Following an examination, an immigration officer shall issue a temporary resident visa to a foreign national who meets the following requirements:

they have applied in accordance with the IRPR for a temporary resident visa as a member of the visitor, worker or student class;

they will reach Canada by the end of the period authorized for their stay under the conditions prescribed at Division 2 of Part 9 of the IRPR;

they hold a passport or other document that they may use to enter the country that issued it or another country;

they meet the requirements applicable to that class;

they are not inadmissible; and

they meet the medical requirements as prescribed under Section 30 of the IRPR6.

Section 190 of the IRPR provide for specific exemptions from the requirement of obtaining a temporary visa. A foreign national who is a citizen of certain select countries does not require a temporary resident visa. The effect of an exemption makes it possible to make an application for a work permit at the port of entry7.

Work Permit Exemptions

The IRPA and IRPR provide for several specific circumstances under which a work permit is not required. The exemption of a usual requirement allows for more expeditious processing of foreign worker applications.

Pursuant to Section 186 and 187 of the IRPR, a foreign national may work in Canada without a work permit if they fall under one of the following categories:

business visitors;

diplomats and their suites;

members of visiting armed forces;

foreign government exchange officers;

on-campus students;

performing artists;

5 Subsection 7(1), IRPR. 6 Section 179, IRPR. 7 Section 198(1), IRPR.


foreign-based athletes and coaches;

foreign news reporters;

guests or public speakers;

convention organizers;

spiritual leaders;

supporting or other event judges and referees;

academic examiners and evaluators;

expert witnesses or investigators;

medical clerks or health care students;

civil aviation inspectors;

aviation accident or incident inspectors;

crew members;

emergency service providers;

bridge worker permit holders; and

implied status.

It should be noted that the persons described above cannot enter Canada for a purpose other than employment in the designated field. Furthermore, the person cannot engage in secondary employment in another field.

The “implied status” category of exemption essentially allows for a person to continue working under the conditions of an expired work permit as long as they have applied for a new work permit before the original one expires. Once a decision has been rendered on the new work permit application, the foreign worker will either have to leave Canada or will continue as a worker with a valid work permit.

Medical Examinations

The following foreign nationals are required to submit to a medical examination upon request8:

foreign nationals who are seeking to work in Canada in an occupation in which protection of public health is essential;

8 Subsection 16(2), IRPA; subsection 30(1) IRPR of subsection 30(2) lists exceptions to the requirement of a medical

examination (it concerns mainly foreign diplomats, members of the armed forces, etc.).


foreign nationals who are seeking entry into Canada or applying for renewal of a work permit or authorization to remain in Canada as a temporary resident for a period in excess of six consecutive months;

foreign nationals who have resided or sojourned for a period of six consecutive months, at any time during the one-year period immediately preceding the date they sought entry or made their application, in an area that the Minister determines has a higher incidence of serious communicable disease than Canada; and

foreign nationals who an officer of the Immigration Division has reasonable grounds to believe are inadmissible under subsection 38(1) of the IPRA.

Dependents of Principal Applicant

Effective with the implementation of the IRPA and accompanying Regulations is the concept that a partner is no longer confined to just a spouse. When considering who may be a dependent partner, whether for temporary work permit applications, applications for permanent residence or otherwise, common law partners will generally be viewed in the same manner as spouses. The rights that spouses had under the former Immigration Act now generally expand to common law partners. The technical definition of common law partner or de facto spouse is someone who is co-habiting with another person for a period of at least one year in a conjugal relationship. There is no distinction based on sex.

The principal worker must be employed in a highly skilled occupation that requires a university degree. Furthermore, the principal worker must be in Canada on a work permit of a duration of at least six months. Potential qualified applications must confirm that their occupation is on the list of National Occupational Classification professionals.

In terms of education, the new IRPA allows for dependent minor children (up to the age of 22) to attend any school up to and including secondary school, without the need for a study permit. Those students from visa requiring countries will still require a visa. Non-dependent children and spouses/common-law partners do require study permits and are required to apply through the traditional procedure.

HRDC Confirmation

Key Factors

Human Resources Development Canada (“HRDC”) provides an opinion as to whether the job offer is genuine and whether the employment of the foreign national is likely to have a neutral or positive economic effect on the labour market in Canada. Traditionally, this process was called validation but is now referred to as either “economic effect determination” under the new IRPA or as confirmation under the Foreign Worker Guidelines.

HRDC provides the opinion referred to above on the request of an immigration officer or an employer or group of employers9. An opinion provided by HRDC shall be based on the following key factors:

whether the work is likely to result in direct job creation and job retention for Canadian citizens or permanent residents;

9 Subsection 203(2)(a), IRPR.


whether the work is likely to result in the creation of transfer skills and knowledge for the benefit of Canadian citizens or permanent residents;

whether the work is likely to fill a labour shortage;

whether the wages and working conditions offered are sufficient to attract Canadian citizens or permanent residents to, and retain them in, that work;

whether the employer has made, or has agreed to make, reasonable efforts to hire trained Canadian citizens or permanent residents; and

whether the employment of the foreign national is likely to adversely affect the settlement of any labour dispute in progress or the employment of any person involved in the dispute10.

Traditional factors such as wages, working conditions and the availability of Canadians or permanent residents to do the work in question remain important. However, new factors considered by HRDC include whether skills and knowledge transfer would result from confirming the foreign worker and whether the work is likely to create other additional jobs for the benefit of Canadians or permanent residents. Although the IRPR provides broad authority for HRDC to weigh several factors in assessing the impact on the Canadian labour market, it should be noted that the ultimate decision with respect to “economic effect” lies with the immigration officer.

What the Employer Must Do For HRDC Confirmation

The employer must submit a written application to HRDC requesting a foreign worker and demonstrate one of the following two conditions:

(i) That,

sufficient efforts were made to hire or train Canadians;

consideration was given first to suitably qualified Canadians and that these persons were not available or could not be trained in time to fill the position for which the foreign worker is requested;

the required skill level, working conditions, salary, benefits and other factors were adequate to attract Canadians and therefore warrant the recruitment of foreign workers; and

the employer provides evidence that concurrence was obtained from unions or professional associations or organizations, where appropriate.

(ii) Or, that there are clear benefits to the Canadian labour market by creating employment opportunities or maintaining employment for Canadians by:

providing training opportunities;

transferring specialized skills or knowledge;

10 Subsection 203(3), IRPR.


introducing new technology; or

otherwise increasing the competitiveness of the Canadian company in the international marketplace.

HRDC Confirmation Exemptions

Sections 204 to 208 of the IRPR provide the regulatory authority to issue a work permit to a worker who does not have an HRDC confirmation. These sections provide a foundation of guidelines for situations where confirmation is not really necessary:

International Agreements: Section 204 of the IRPR deals with work permits generally required but exempt from HRDC confirmation due to international agreements, such as NAFTA. Admission of foreign workers under these agreements benefits the Canadian economy and serves to meet other objectives aimed at foreign policy, culture, trade and commerce.

Canadian Interests: Generally speaking, authorizing a foreign national to work in Canada has an impact on the Canadian labour market and economy. Without a mutual or positive labour market opinion, there is a reluctance to issue a work permit without confirmation from HRDC. However, circumstances arise where social, cultural or economic benefits to Canada of issuing the work permit are so clear and compelling that the lack of HRDC confirmation or a specific exemption can be overcome.

Information In Support of a Confirmation Request

The employer should be able to provide the following information to HRDC:

a description of the duties required by the job;

details of wages, benefits, and working conditions;

a statement of essential educational qualifications, experience, certifications or licenses required by the worker;

name, date and place of birth and address of the foreign worker who has been identified to fill the position;

documentation supporting the efforts that the Canadian firm has made to locate and recruit qualified Canadian applicants;

an indication of the duration of the job and whether it is temporary or permanent;

a Revenue Canada Taxation (RCT) number;

a brief description of the company, including number of employees and its products or services; and

documents to demonstrate that the employer has contacted appropriate unions or professional associations to identify suitable Canadian candidates, where appropriate.


HRDC needs this information to determine if:

the job can be filled from within Canada;

the foreign worker’s presence will help maintain or increase employment and training opportunities for Canadians; or

other employment programs and services could help meet the needs of the Canadian employer.

To ensure that suitable Canadian workers will be able to fill any future job vacancies, the Canadian employer may have to develop a human resources plan.

Provided that the HRDC confirmation request is granted, the employee must subsequently apply for a work permit and may need to undergo medical examinations before travelling to Canada. A medical examination is required if an applicant has resided for six or more consecutive months in a designated country in the one year immediately preceding the date of seeking entry to Canada.

Conclusion

The requirements under the new IRPA will have an impact on employers and their ability to hire foreign nationals. Consequently, it is critical for companies to be aware of the relevant rules that govern the employment of foreign nationals in Canada. In summary and depending on the circumstances, the foreign national must secure some or all of the following:

temporary resident visa;

application to a Canadian Visa Office abroad;

examination on arrival;

medical examination;

HRDC confirmation of job offer; and

a work permit.