BY: MIKE WEILER

Chris and I are often asked by clients to advise on independent contractor agreements they wish to use for their senior salespeople or sales managers.  Our advice is usually that such arrangements are fraught with danger as courts and tribunals will find in many cases that the person is both in fact and in law an employee and not an independent contractor notwithstanding what the written agreement says.  A recent Ontario court decision highlights the potential dangers in misclassifying salespersons and sales managers as independent contractors.

In Rallis v Approval Team Inc., 2020 ONSC 4197 (CanLII) the Ontario Superior Court of Justice certified a class action law suit against a car dealer.  The Plaintiff worked for Approval as a salesperson and then a sales manager until 2019 when he converted to an employee position.  While an independent contractor, Approval did not pay the Plaintiff vacation pay, statutory holiday pay or overtime and did not make contributions for CPP or EI.  The claim in the class action lawsuit is for all vacation pay, statutory holiday pay, overtime and CPP and EI contributions for all such persons engaged by Approval since 2018. [NOTE that in BC such a court claim for entitlements under the E S Act cannot be pursued in court:  Macaraeg v. E Care Contact Centers Ltd., 2008 BCCA 182 (leave to appeal to SCC dismissed) but of course those claims can be pursued under the E S Act]

Dependent Contractors

True independent contractors can be terminated at will without notice.  But such true independent contractor relationships are going the way of the dodo bird.  For example the courts will often find that persons or entities that are independent contractors and not employees can still be entitled to much the same benefits as an employee.  Courts regularly find that reasonable notice of termination or pay in lieu will apply if the independent contractor is a “dependent contractor”, which is a judicial fiction of a hybrid position between a true employee and a true independent contractor:  Marbry Distributors Ltd. v Avrecan Int. Inc, 1999 BCCA 172.

Not every dependent relationship will constitute a “dependent contractor”.  For example the Ontario Court of Appeal recently found that a lawyer who provided legal services to the Office of the Children’s Lawyer  (“OCL”) was not a dependent contractor notwithstanding that she earned approximately 40% of her income from the OCL: Thurston v Ontario (Children’s’ Lawyer), 2019 ONCA 640.

Under the B.C. Labour Relations Code “dependent contactors” are treated as employees with all the rights and protections of employees including the right to organize a work place.

Courts had traditionally awarded less notice of termination to a dependent contractor than an employee.  However that trend is changing in favour of the dependent contractors.  In a recent decision the B C Supreme Court held that a dependent contractor was entitled to the same notice that an employee in similar circumstances would be awarded.  So a Senior Manager who was found to be a dependent contractor, aged 49 with 14 years of service received damages based on 15 months’ notice: Liebreich v Farmers N.A. et al, 2019 BCSC 1074.

Independent Contractors vs Employees

The distinction remains important as businesses can and do engage independent contractors.

The test was applied recently in a case involving someone who worked for a company that provided cleaning services to Starbucks stores in BC.  In Farren v Elite Services Group Inc. 2020 BCSC 23 the issue was defined by the court as follows:  

If Mr. Farren was an employee of Elite, the law of wrongful dismissal would govern the termination of his employment. In that case, he would be entitled to reasonable notice of termination or damages in lieu of such notice. The appropriate remedy would have to be determined in a subsequent proceeding. However, if Mr. Farren is an independent contractor, he is not entitled to the remedies he seeks. In that case, his claim should be dismissed: see Jacks v. Victoria Amateur Swimming Club, 2005 BCSC 778.

The court then set out the test for determining whether someone is an employee or an independent contractor:

Recently, in Lightstream Telecommunications Inc. v. Telecon Inc., 2018 BCSC 1940, this court set out a useful list of factors to determine whether a worker is an independent contractor, based on a review of relevant case law. Justice Russell grouped the factors as follows (at paras. 124-159) :

a)    Level of worker control, including:

(1)            Defendant’s control over plaintiff’s activities, including:

(a)            Defendant’s power to select or not select the worker,

(b)            Payment of wages,

(c)            Defendant’s control over method of work, and

(d)            Defendant’s right to suspend or dismiss plaintiff;

(2)            Exclusive nature of the relationship;

(3)            Plaintiff’s economic dependence on defendant; and

(4)            Whether plaintiff could hire their own helpers.

b)    Ownership of equipment or tools;

c)     Opportunity for profit/loss;

d)    Business integration, including:

(1)            whether the plaintiff was a crucial element of the defendant’s business,

(2)            whether the activity of the worker represents the defendant’s business,

(3)            permanency and length of the relationship; and

(4)            whether the parties rely on each other or closely co-ordinate conduct

Mr. Farren operated through his company, “101” which the court basically treated as one entity. The court applied these tests and found that Mr. Farren/101  was an independent contractor in relation to Elite.  Mr. Farren’s action for wrongful dismissal was dismissed with costs to Elite.

Contrast this decision with a recent decision of the Ontario Superior Court of Justice in Marschall v Marel Contractors 2019 ONSC 4692 (CanII).  Mr. Marschall worked as a drywaller for a large company and was terminated and sued for damages for wrongful dismissal.  The Defendant argued that he was an independent contractor who was paid a fixed amount and collected GST.  He could also work for others as long as it did not interfere with their employment.

In finding that Mr. Marschall was in fact and in law an employee the court noted:  

Where an individual is providing services pursuant to an agreement, the fact that the individual is paid through his or her corporation is not determinative of whether an employment relationship exists with the individual (citations omitted).

[17]           In 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59 (CanLII), [2001] 2 S.C.R. 983 at para. 47, the Supreme Court of Canada stated that there is no one conclusive test that can be universally applied to determine whether a person is an employee or independent contractor.  However, it went on to set out what it considered to be a persuasive approach to the issue:

The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account.  In making this determination, the level of control the employer has over the worker’s activities will always be a factor.  However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks.

Tax Considerations

It is one thing to find that the person you thought was an independent contractor was in fact and in law an employee or even a “dependent contractor” and that you are therefore liable to pay benefits, vacation pay, etc.  But it is quite another thing to learn there are also serious risks that an error in properly characterizing the relationship might draw the attention of CRA and other taxing authorities.  I have asked my colleague Kevin Scott, tax partner at Kane Shannon Weiler, to provide a brief summary of the potential tax liabilities.  Kevin comments as follows:

As stated above, a business hiring a contractor who is later determined to be an employee can have significant tax implications for both parties.  The employer will have to remit all unpaid payroll taxes, and might even be subject to penalties and interest.  This re-characterization may also trigger a full-scale payroll audit by the CRA.  Employees who have improperly claimed business expense deductions as contractors may also be liable.  As such, it is vital to ensure that you minimize the risk of your contractors being reclassified by the CRA as employees.”

Employer Takeaways

There are many businesses that engage true independent contractors. But more and more the courts and tribunals are finding that an individual, even if operating through her corporate entity, may not be a true independent contractor.  If she is found to be an employee then serious negative consequences may follow.  In many cases employers think they are doing themselves and the employee a favour by creating such a relationship and not making the appropriate deductions or contributions or otherwise failing to comply with employment standards laws and WCB requirements.  The employee herself may benefit by taking certain deductions and reducing her income tax. The fact that the employee operates through a corporation is not definitive nor is the fact that there is a detailed contract that says the person is not an employee.  The courts and tribunals will look at the substance of the relationship.  If they find the person is an employee then liabilities will follow including the potential of being noticed by CRA.

So if you are thinking of hiring your sales manager who works only for you under your control as an independent contractor you may be asking for a huge financial headache including being on the CRA radar.  At a minimum you should seek professional advice from your lawyer regarding the nature of the agreement that should be in place to offer the best protection against an adverse finding.

Check out our Related Articles here.

Note to our Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter, please contact our Employment & Labour Group.

I have known and worked with Mike Weiler for 35 years.  

I have changed firms at least 5 occasions during that time frame and have always brought Mike’s advice and experience along with me.

We have been successful on literally hundreds of cases. From Favorable Union negotiations, to de-certifying to legally foiling a corrupt collective drive. From defending unjust dismissal claims to a Human Rights case dismissed, Mike has always been a collaborative partner.

The  key to success is a secure relationship between client and practitioner . I have always brought Mike into situations long before they blow up. In other words Most of our cases were thought out in advance rather than being reactive.

Needless to say I highly recommend Mike and his approach.

Bryan Edwards

BY: CHRIS DRINOVZ

On July 17, 2020, the federal tabled Draft legislation for more changes to the Canada Emergency Wage Subsidy (“CEWS”) program. In essence, the changes would make the program more accessible to businesses, introduce a two-part new subsidy system, and extend the program until the end of the year. The amendments are scheduled for debate in Parliament on July 22 and we expect they will be put into effect soon after.

Proposed changes to CEWS include the following:

• Extension of the CEWS program until December 19, 2020;
• Removal of the threshold requirement of a 30% decrease in revenue currently required to receive CEWS benefits – thus making the subsidy available for businesses who have experienced losses less than 30%;
• Creation of a two-part benefit comprised of base subsidies and top-up subsidies;
• Determination of a gradually decreasing base subsidies for eligible businesses according to actual revenue lost;
• A new “top-up” wage subsidy of up to 25% for eligible businesses that have experienced at least a 50% decrease in revenue, and
• Expansion of the definition of “eligible entity” to receive CEWS benefits to include trusts, in addition to corporations and individuals.

Finance Canada has released the following news release and backgrounder which provide detailed information about the changes. The following chart provides guidance on the expected CEWS base subsidies: 

Note that some eligible employers may also be entitled to top-up subsidies in addition to the amounts outlined above. It should be noted that employers that have already made business decisions for July and August based on the previous CEWS rules will not receive a lower subsidy rate and can expect to transition to the new proposed subsidy rates in September.

As the new rules and eligibility criteria follow a complicated technical formula, we recommend that you obtain assistance from your legal and financial advisors. Stay tuned for further updates as the Bill passes through Parliament.

If you would like to discuss these changes or any other matter relating to the CEWS program and your workplace, please contact the Employment & Labour Group at KSW Lawyers.

Under the BC Employment Standards Act, the time period for a temporary layoff related to COVID-19 may be extended to a maximum of 24 weeks, ending on or before August 30, 2020. Employers who plan to recall employees on a date that falls after August 30, 2020 can now submit a joint application to extend a temporary layoff through the Employment Standards Branch (ESB) by August 25, 2020 to receive a decision by August 30, 2020. This is done through a variance to the Employment Standards Act. 

In order to grant a variance extending the time period for a temporary layoff, the ESB Director must be satisfied the variance will facilitate the preservation of the employer's operations. The employer applying needs to confirm and attest that the variance application helps preserve the employer's operations.

Steps for joint applications to extend a temporary layoff

Employers must email/communicate to employee the employer’s intention, anticipated recall date and ask for consent. At least 51% of the affected employees must consent to the joint application. A template email is available here. In your email to employees, include link to form for them to submit confirming their consent.

Prepare list of affected employees

It is recommended to prepare a list of affected employees to submit with application for faster processing. Template available here.

Submit your application online. The application can also be submitted by emailing this form, although this method will take longer.

Once application is decided, the employer will receive a copy of the decision. The conditions in the variance must be followed and a copy of the variance must be posted at the worksite. It is recommended a copy is also sent to employees via email. 

Should you have any questions about preparing and submitting an expedited variance application, contact our Employment & Labour Group today.

Note to our Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter, please contact our Employment & Labour Group.

BY: CHRIS DRINOVZ

On July 14, 2020, the BC government tabled Bill 23, Workers Compensation Amendment Act, 2020. The proposed amendments are informed by Jeff Parr’s Consultation Report, which examined the recommendations from three earlier reviews completed in the past two years (Helps Report, Petrie Report, and the Bogyo Report).

While the changes are aimed at increasing support for injured workers in various ways, they will inevitably result in increased costs for employers by way of increased premiums. There are also proposed expansions to personal liability for corporate directors and in our view, a possible shift from administrative penalties to more criminal prosecutions for serious health and safety violations that will cause concern for many businesses. A coalition of businesses proposed the following response letter to the proposed changes.

The following is a summary of the key proposed legislative changes.

Increased Worker Benefits 

• Increasing a worker’s maximum annual insurable earnings from $87,100 to $100,000 – this aims to ensure that 90% of workers have 100% of wages covered in a WorkSafeBC claim;
• Changing the current procedure around whether the loss of function or loss of earnings method should be used in calculating a worker’s pension benefits so that the worker will always receive the higher of the two – at present, there is a complicated test which requires there to be a significant loss of earnings for the loss of earning pension method to be used – again, this will result in higher benefits for disabled workers;
• Permitting WorkSafeBC to set a worker’s retirement date (and therefore the date pension benefits end) when the worker is nearing age 65 rather than at the time of injury – this addresses present difficulties of assessing a retirement date when a worker is young, and will likely result in more claims being extended past the default age 65;
• Allowing WorkSafeBC to fund certain urgent health care treatment even before the claim is accepted (examples given include counselling for mental health issues or preventing infections);
• Removing the current one-year limitation period for reporting mental health claims; presently, workers applying past the one-year mark must show special circumstances existed that prevented them from reporting in time – this will likely result in the acceptance of many historical mental health claims that would otherwise be time-barred.

New Tools Added for Criminal Prosecutions 

The proposed amendments add a number of procedural tools which relate to criminal prosecutions for serious health and safety violations. At this time, WorkSafeBC enforces occupational health and safety regulations primarily through the use of administrative fines and penalties. The amendments will give WorkSafeBC greater powers, such as a process to obtain a warrant for search and seizure under the Act for prosecutions (similar to Ontario), allowing courts to hear victim impact statements during prosecution, and giving courts the power to compel convicted employers to publish facts about their offences in the newspaper or a company-wide newsletter, at the employer’s expense. We note that section 104(1)(e) of the current Act already allows the court to direct WorkSafeBC to publish the facts at the employer's expense.

Additional Changes 

The proposed amendments will make corporate directors personally liable for unpaid premiums or other amounts owed to WorkSafeBC

The legislation also aims to expedite the inclusion of COVID-19 as an occupational disease under Schedule 1 of the Act, which will ensure employees at higher risk of contracting viral diseases can access benefits quickly by way of an automatic presumption.

We will be closely monitoring this Bill as it is debated and will update this blog with any relevant changes made before it is passed into law.

Note to our Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter, please contact our Employment & Labour Group.

BY: MICHAEL J. WEILER

More and more employers are requiring employees to sign employment agreements that in many cases significantly reduce employees’ rights or impose significant restrictions on their ability to compete after they leave their employer. As readers of this blog will know an employer may be able to reduce an employee’s common law right to reasonable working notice to the minimum standards under the Employment Standards Act (“ESA”): see Machtinger v HOJ Industries Ltd., 1992 CanLII 102 (SCC). So for example an employee who would be entitled to 24 months’ notice might sign an agreement that reduces her rights to 8 weeks’ notice or severance pay. Employee counsel often try to undermine the validity of such restrictive contracts in a variety of ways by arguing:

The law in BC at least is pretty well settled with respect to the first 4 of these defenses. However the law with respect to the 5th ground to attack a contract, unconscionability, has been muddied a great deal by the Supreme Court of Canada’s (“SCC”) decision in Uber Technologies Inc. et al v David Heller 2020 SCC 16 (CanLii). Once again employers are left with uncertainty in organizing their affairs and legal relationships.

UBER

Mr. Heller provided food services in Toronto using Uber’s software applications. He had to accept Uber’s standard contract that provided, inter alia, that any dispute with Uber had to be resolved by mediation and arbitration in the Netherlands. The up-front administrative and filing fees were US $14,500 plus legal fees and costs of participation which represented most of Mr. Heller’s annual income. Mr. Heller brought a class action against Uber for violations of the employment standards legislation. Uber obtained a stay order successfully arguing that the issue had to be decided in arbitration in the Netherlands. That of course would have effectively ended the law suit.

Mr. Heller argued that the arbitration clause was unconscionable and therefore invalid. The majority of the SCC stuck down the arbitration clause and lifted the stay order. Based on both the financial and logistic disadvantages faced by Mr. Heller in his ability to protect his bargaining interests and on the unfair terms that resulted, the arbitration clause was found to be unconscionable and therefore invalid. Brown J issued a concurring decision but did not rely on the doctrine of unconscionability. In fact Brown J pointed out that the expansion by the majority of the doctrine of unconscionability set a dangerous precedent in contract law.

UNCONSCIONABILITY DOCTRINE

A fundamental cornerstone of our common law is the ability of parties to enter into binding contracts. However “equity” tempers the common law. “Unconscionability” is an equitable doctrine that is used to set aside unfair agreements that resulted from inequality of bargaining power. 

The Majority held that unconscionablity requires both an inequality of bargaining power and a resulting improvident bargain. Inequality of bargaining power exists when one party cannot adequately protect its own interests in the contracting process. A bargain will be improvident if it unduly advantages the stronger party or unduly disadvantages the more vulnerable. While one party knowingly taking advantage of another’s vulnerability may provide strong evidence of inequality of bargaining power, it is not essential for a finding of unconscionability. In fact unconscionability, according to the Majority, does not require that the transaction be grossly unfair, that the imbalance of bargaining power be overwhelming or that the stronger party intend to take advantage of a vulnerable party.

Brown J in a concurring opinion struck down the arbitration clause but did so on different grounds. His opinion strongly disagreed with the Majority’s reliance on the doctrine of unconscionablity. The concurring opinion provides a very detailed analysis of the doctrine of unconscionability a complete review of which is beyond this article. However Brown J’s opinion regarding the Majority’s analysis and expansion of the doctrine is seen in this passage:  -->

" It is therefore important to elaborate on the criteria that form the basis for reaching the conclusion that a contract or contractual provision should be set aside. Attempting to jam multiple grounds for setting aside contracts and contractual terms into one single principle serves only to obfuscate those criteria. To move forward in a coherent and rational way, “it is absolutely imperative, in connection with the doctrine of unconscionability, to resist appeals to unreasoned intuition” ... Courts must not develop contract doctrines that invite “ad hoc judicial moralism or ‘palm tree’ justice” (Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, at para. 70).

[153]                     But unreasoned intuition and ad hoc judicial moralism are precisely what will rule the day, in my respectful view, under the analysis of my colleagues Abella and Rowe JJ. In their view, judges applying unconscionability are to mete out justice as they deem fair and appropriate, thereby returning unconscionability to a time when equity was measured by the length of the Chancellor’s foot (para. 78, quoting L. I. Rotman “The ‘Fusion’ of Law and Equity?: A Canadian Perspective on the Substantive, Jurisdictional, or Non-Fusion of Legal and Equitable Matters” (2016), 2 C.J.C.C.L. 497, at p. 535). As Professor Bigwood writes:

   . . . acceptance of such a “free‑wheeling” approach is also acceptance of the risk that those subject to Canadian law in this area will lose the very virtues of guidance, transparency and accountability that come with forced specificity in application, justification and analysis. To the extent the test bypasses such natural controlling phenomena of the common law method, it certainly risks decline into unprincipled and undisciplined judicial decision‑making, and thus could rightly be viewed as an “enemy” of reason, discipline and the rule of law. [Footnote omitted.]"

UNCONSCIONABILITY DOCTRINE AND EMPLOYMENT CONTRACTS

As noted the SCC has sanctioned the use of what might be considered Draconian employment contracts that can effectively reduce an employee’s entitlement in the extreme case from 24 months’ notice or pay in lieu to 8 weeks.  But in doing courts have noted this caveat:

Similarly, in Brown v. Utopia Spas and Salons Ltd., 2014 BCSC 1400, the court commented specifically on incorporating the ESA into an employment contract:

[17]  Absent unconscionability, an employer can make contracts with employees that “referentially” incorporate the minimum notice periods in the ESA. Such contractual notice provisions are enough to displace the presumption that the contract is terminable without cause only on reasonable notice. Machtinger at 1004-1005. See also: University of British Columbia v. Wong, 2006 BCCA 491 [UBC]. (Emphasis added).

BC courts have considered the doctrine of unconscionability in employment contracts and related documents.

For example in Saliken v Alpine Aerotech Limited Partnership 2016 BCSC 832 the court struck down a release signed by an employee on the grounds that the termination documents and the release were signed by the Plaintiff in circumstances of distress and concern for supporting his family and  “in a situation of substantial unfairness such that it would be unconscionable to hold the plaintiff to the release.”

On the other hand courts in BC have been reluctant to strike down an employment agreement on the basis of unconscionability.  For example in Finlan v Ritchie Bros. Auctioneers (Canada) Ltd. 2006 BCSC 291 the employee signed an employment agreement that limited his rights on termination to severance pay to the minimum requirements under the ESA.  The Plaintiff argued the contract should be set aside as unconscionable and that he be awarded common law damages.  The Court noted that a contract that includes a defined notice period in accordance with the ESA but not the reasonable notice that an employee could expect to receive at common law is not, by itself, grounds for finding a contract unconscionable.  After setting out the legal elements of unconscionability the court rejected the Plaintiff’s argument and upheld the contract.

EMPLOYER TAKEAWAYS

One of the most troubling things a business owner can hear from her lawyer is “Now that is an interesting question”. We have seen over recent years various doctrines incorporated especially in employment law that create uncertainty for employers. Doctrines such as “honesty and good faith performance of contractual obligations” (Bassin v Hrynew) or the duty of good faith at the time of termination (Honda v Keayes) or the requirement that courts take a “contextual approach” to the issue of just cause such that dishonesty will not always be cause for dismissal (McKinley) are fertile lawyer playgrounds that often result in expensive litigation or unsatisfactory settlements of disputes.

The issue of the status of Uber drivers as employees under the ESA or the Labour Relations Code will be a significant battle going forward. But the Uber decision should be viewed as a wake up call for employers generally in dealing with their employees. Coming out of COVID 19 many employers are looking to protect their businesses by requiring employees to enter into written employment agreements that significantly restrict their rights. In my view the expansion of the doctrine of unconscionability by the SCC in Uber makes the task of crafting enforceable agreements that employers can rely even more difficult and uncertain.

Check out Related Articles here.

Note to our Readers: This content is for information only, it is not legal advice. If you are looking for legal advice in relation to a particular matter, please contact our Employment & Labour Group.

Michael Weiler provides 40 years of experience in employment law with a delicate mix of humour and attention to detail.

Michael was instrumental in assisting our organization on several occasions involving sound pragmatic legal advice, mediation, arbitration, and union negotiations.  Staff enjoy working with Michael for he understands rural local governments and their distinct challenges.

Town Manager, District of Sicamous

‍

On June 25, 2020, the BC government decided to further extend the temporary layoffs provision in the Employment Standards Act to a maximum of 24 weeks, expiring on August 30, 2020: https://news.gov.bc.ca/releases/2020LBR0018-001174. Extending the temporary layoff provision saved countless businesses from having to pay out severence to their employees who have been temporarily laid off due to COVID-19, and provide them with more time to recall their employees as business is restarting.

However, once the maximum period is reached, many temporary layoffs will become automatic terminations under the Employment Standards Act, triggering the obligation to pay statutory termination pay. In addition, recent case law in 2021 confirmed employees who were laid off can still start a wrongful dismissal lawsuit at common law against employers claiming constructive dismissal.

If you have employees who have been laid off for 13 weeks or longer, or are considering a layoff, and the layoff is related to COVID-19, this may apply to you. There are many different considerations including: is there a written employment contract, what is the nature of employment, was the contract impossible to perform due to COVID-19, has your business started back up, can you reach an agreement to recall or furlough the employee at reduced hours or pay, do you qualify for CEWS or other government benefits including the recently modified CEBA, can you apply to the Director of Employment Standards for a variance authorizing a longer period under existing provisions of the ESA? These are the questions we cover in this article.

When is a laid-off employee entitled to severance pay?

This has been one of the top questions both employers and employees are asking. Generally, if an employer lays off non-union employees due to lack of work with a right to do so in the employment contract, then termination pay under the Employments Standards Act (“ESA”) or damages for wrongful dismissal at common law may be owing. However the world has changed in such a fundamental way that we need to talk about pre COVID-19 and post COVID-19. This article will cover common severance pay questions for employers and employees.

Continue Reading: 8min Read

WHEN IS A LAID-OFF EMPLOYEE ENTITLED TO SEVERANCE PAY?

Absent seasonal work and the right to lay-off in a written contract, any temporary layoff is generally treated as a constructive dismissal under the common law, triggering the employer’s severance pay obligations either under the employment contract or the common law.

The ESA provided that after 13 weeks in any 20 week period, any temporary layoff would automatically become a termination. However, the Courts have held that this does NOT prevent employees from exercising their common law rights to claim a constructive dismissal if the layoff is less than 13 weeks.

After COVID-19 started, there were mass layoffs and many workers were prepared to waive their rights and accept temporary layoffs and rely on government benefits such as the Canada Emergency Response Benefit in order to keep their jobs. Many of these workers are now being recalled back to work but some are not. The ESA was also amended to extend the temporary layoff from 13 weeks to 16 weeks for a limited period of time.

If the temporary layoff was caused by COVID-19, then determining whether an employee is owed termination pay under the ESA or has a claim for severance pay and wrongful dismissal is more complicated. Here are some things to consider:

The important question is whether at the time of the lay-off, the employment contract was impossible to perform due to an unforeseeable event or circumstance outside of the control of the employer and the employee (such as COVID-19)? If the answer is “yes”, then the exception under section 65(1)(d) of the ESA may apply so that no termination pay is owing in this circumstance. A good example of this is if the employer had to completely shut down or significantly reduce its operations such that it simply could not continue to provide work for its employees.

If an employer simply loses business (e.g. loses a big contract) such an exempting principle would not normally apply to relieve an employer of its fundamental obligations to provide working notice of termination or pay in lieu.

The Director of Employment Standards has issued a revised Interpretation Bulletin outlining the circumstances when the exclusion would apply when the layoffs were related to COVID-19.

Different considerations might apply depending what point of the layoff you are. So for example if an employer’s business starts up but some employees are not recalled then the layoffs might constitute a wrongful dismissal or otherwise attract severance pay under the ESA after 13 - 16 weeks of lay off.

If an employer can recall or arrive at an agreement with all employees before the 13 week period arrives then it is highly unlikely that any claims by employees will be made.

At this time, the maximum period for allowed temporary lay-offs due to COVID-19 under the ESA is 13 weeks, if the employee agrees. Since an employer cannot contract out of the ESA if it violates its minimum prosvisions, an employer cannot enforce any agreement that involves a layoff longer than 13 weeks in a 20 week period, even with an employee's consent.

As confirmed by the BC Labour Minister in his letter dated June 18, 2020 addressed to the Business Council of British Columbia, "in a specific situation where employers and employees require longer than 16 weeks (at that time, now back to 13) for a temporary layoff caused by COVID-19, an option that would be available to the parties if they agree would be to jointly apply to the Director of Employment Standards for a variance authorizing a longer period under existing provisions of the ESA. The Director may grant the requested variance if a majority of affected employees approve."

For more information, contact our Employment & Labour Group or visit the Employment Standards Branch website for detailed guidelines on the application of the ESA including recent updates in response to the COVID-19 pandemic.

If an employee has to be terminated and paid severance pay, the amount will be limited by the employment contract termination provision (if there is one and it is enforceable).

As previously mentioned, under the ESA, a temporary layoff longer than 13 weeks in any 20-week period (or about three months in a five-month period) was considered a permanent layoff or a termination. With a permanent layoff, employers are required to provide employees with written working notice of termination and/or pay severance to qualifying employees, based on their length of service (and issue a Record of Employment at the end of the employment relationship). Now, temporary layoffs relating to the COVID-19 pandemic can be extended through the application for variance process, if the employee agrees.

Although a longer layoff might be considered a termination for the purposes of the ESA, we strongly recommend communicating with your employees and trying to reach an agreement if further time is required due to COVID circumstances. A lot of employees are willing to work together to support their employer and keep their jobs and with the added support of the numerous financial aids from the Federal and Provincial governments (previously including CERB, CEWS, CEBA, Rent Assistance, Work Share, Sub Plan), this could be possible. We recommend reaching agreements where possible before terminating valued employees, and we can help you ensure the agreements are documented accordingly.

Since the decision in Bardal v Globe & Mail in 1960, courts have relied on the set of factors laid out when calculating the length of the reasonable notice period to be awarded to a terminated employee that does not have a written or implied term limiting severance pay. These “Bardal factors” include the length of the employee’s service, age, character of the job they have lost, and availability of similar alternative employment. The economic downturn caused by COVID-19 will likely impact how courts calculate reasonable notice. In previous economic downturns, the courts have provided for increased notice periods, however they have explicitly stated that this factor cannot be given undue weight. At present, we do not have any legal precedent for how our courts in BC will treat the pandemic when assessing the notice period.

If you are interested in an opinion regarding the amount of severance pay owing, please contact one of our team members and we would be pleased to assist you.

Note to our Readers: Information regarding COVID-19 is rapidly evolving. We are working to bring you up-to-date articles as the legal issues unfold. This is not legal advice. If you are looking for legal advice or are dealing with an issue in relation to COVID-19, please contact Chris Drinovz ([email protected]) of our Employment & Labour Group.

I will be relying on Chris and KSW for

all of my companies Employment Law

needs for many years to come

I was referred to KSW by our corporate lawyers because they said KSW was the most experienced firm for Employment Law in B.C. I reached out to KSW and was put in contact with Chris over a year ago. He spent over an hour with me on the phone and over email to help me with an issue that he never charged me for. About 6 months later, I reached back out to have Chris create our Employment Agreement contracts, and customer Letter of Agreement contracts. Chris is helpful, quick, and thorough. I will be relying on Chris and KSW for all of my companies Employment Law needs for many years to come. Thank you Chris!

Jessica Louise, Kitchen Makeovers

In March 2020 most businesses in BC ground to a halt with many laying off most, if not all, of their employees or dramatically reducing hours of work or wages. In many cases employers were able to carry on some portion of their businesses by having employees work from home.

Chris and I spent much of the last 3 months counselling clients on how to deal with dramatic changes in their businesses and how to access the numerous Federal, Provincial and Municipal programs intended to keep businesses and employees afloat.

As we enter Phase 2 of BC’s Restart Plan, many employers are realizing that the light at the end of the tunnel might not be the oncoming train they saw in March. Chris and I are now fielding more questions on how businesses open up again, in many cases on reduced capacity, in order to maximize their chances of success post COVID-19 lockdown.

Here are 5 critical questions you might consider. The list of course is not exhaustive. We once again caution the reader to not consider these comments to be legal advice for your business. Each case must be considered on the particular facts of your business—did you totally shut down or were you partially shut down? Did you keep your benefits for employees while on lay off? Are you union or non-union? Do employees have binding written employment agreements? Are any of your employees entitled to COVID-19 leave under the Employment Standards Act? Given these limitations if you have any questions about your business or your employees and are seeking legal advice please consult your professional advisors. However the value of this article we hope is to help you identify what questions to ask those advisors as you search for the optimum avenue to return to business post COVID-19 lockdown.

Continue Reading: 8min Read

5 CRITICAL QUESTIONS TO ASK AS YOU RESTART YOUR BUSINESSES

We have been saying from the beginning that it is incumbent on employers to ensure they maximize all the financial benefits being provided by all 3 levels of government. That is something each business must do on an ongoing basis as the programs are changing almost daily. The programs are too numerous to describe here but include the initial amendments to EI to waive the waiting period, the $2000 a month CERB payments, to the 75% wage subsidy under CEWS, to all the other financial programs such as the Canada Emergency Business Account (CEBA) which provides for an interest free loan of up to $40,000 with up to $10,000 forgiven, to bank loans and deferrals, to deferrals of taxes such as the Employer Benefit tax and GST/HST remittances and rent relief. The Provincial government has introduced numerous programs to support employees and businesses including $1000 for each employee.

So do your due diligence and maybe assign one of the management team members to do a daily or at least weekly update. If you are part of a business association see if they are providing any useful information and assistance. For example the New Car Dealers Association of BC provides daily updates for its members and is proactive in lobbying government for changes.

The good news is the CEWS has been extended now for another 12 weeks to August 29th 2020. This is not surprising as the goal of government in introducing CEWS was to allow employers a runway to get back on their feet and maintain a strong work force.  Don’t be surprised if further extensions are provided.

We also note that the government has announced changes to the criteria for the CEBA to allow more businesses to access the program. In particular, the previous requirement that the business have at least $20,000 in payroll for 2019 is going to be waived so that self-employed persons and others that pay themselves in dividends can access the program provided they can show eligible non-deferrable expenses between $40,000 and $1.5 million. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance.

If you need help in accessing information on all these programs give us a shout.

Generally if an employer lays off non-union employees due to lack of work then severance pay under the Employments Standards Act (“E S Act”) or damages for wrongful dismissal at common law may be owing. However the world has changed in such a fundamental way that we need to talk about pre COVID-19 and post COVID-19.

Pre COVID-19

If an employer laid off a non-union employee then under the E S Act that temporary layoff became a termination if it lasted more than 13 weeks within a 20 week period. Severance pay would then be owing. In addition at common law, absent an express agreement, laying off an employee due to lack of work would normally constitute a fundamental breach of the employment contract and thus the employee could claim her employment was terminated. She could then claim damages for lack of working notice as she was wrongfully dismissed. Those damages could far exceed the minimum severance payments under the E S Act which cap at 8 weeks after 8 years of service.

For example in Bessie v Dr. A. S. Machner Inc. 2009 BCSC 1316 the employer mistakenly relied on advice from the Employment Standards Branch that he could temporarily lay off an employee so long as it was less than 13 weeks. The court held that a temporary layoff constitutes, in the absence of a contractual provision permitting the same, a fundamental breach of contract. Dr. Machner breached an essential term of the contract of employment as the continued attendance of an employee at the place for work, for pay, is central to the employer-employee relationship.

Post COVID-19

However if the layoff was caused by COVID-19 then it is very likely that no severance pay under the E S Act would be owing nor would the employee necessarily have a claim for wrongful dismissal damages.

The E S Act was amended recently to expand the temporary layoff provisions from 13 weeks to 16 weeks within a 20 week period when the layoffs are related to COVID-19. But more importantly it is likely that the severance provisions under section 63 (individual severance) or section 64 (group termination) would not apply because of the exception under section 65(1)(d) of the E S Act that provides no severance is owing if the employee is:

(d) employed under an employment contract that is impossible to perform due to an unforeseeable event or circumstance.

The Director of Employment Standards has issued a revised Interpretation Bulletin outlining the circumstances when the exclusion would apply when the layoffs were related to COVID-19.

https://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/forms-resources/igm/esa-part-8-section-65

 A similar principle may well apply to claims of wrongful dismissal based on layoffs caused by COVID-19. At common law a contract can become “legally frustrated” when the substratum of the contract is impossible to perform because of unforeseen events.

In Wightman Estate v. 2774046 Canada Inc., 2006 BCCA 424, 57 B.C.L.R. (4th) 79 (C.A.) Smith J.A., giving the decision of the Court, stated the concept of frustration at para. 1 as follows:

It has long been a tenet of our law that a contract may be brought to an end by operation of law and the parties discharged from further performance if, without the fault of either party, the circumstances in which it was expected to be performed have changed so radically that performance would be impossible or at least something fundamentally different than was initially contemplated. In such circumstances, the contract is said to be frustrated.

If an employer simply loses business (e.g. loses a big contract) such an exempting principle would not normally apply to relieve an employer of its fundamental obligations to provide working notice of termination or pay in lieu. But here COVID-19 is a game changer-- a pandemic that has suddenly shut down almost the entire province. Indeed it would be ironic for a plaintiff’s lawyer to argue that the layoff caused by COVID-19 was a dismissal when all levels of courts in BC are shut down because of COVID-19.

Different considerations might apply however at some point in the layoff process. So for example if an employer’s business starts up but some employees are not recalled then the layoffs might well constitute a wrongful dismissal or otherwise attract severance pay under the E S Act after 16 weeks of lay off.

If an employer can recall all employees before the 16 week period arrives then it is highly unlikely that any claims by employees will be made.

The first thing to do is check if any of the circumstances of the COVID-19 leave provided in section 52.12 of the E S Act applies (for example, is the employee providing child care due to school closure). If the employee meets any of these criteria, they are entitled to an unpaid job-protected leave as long as the circumstances persist.

The second thing to consider is whether the employee is making a legitimate work refusal for health and safety reasons. Employees have the right to refuse unsafe work under section 3.12 of the Occupational Health & Safety Regulation. A valid work refusal requires that the employee have reasonable cause to believe that performing the job or task will create an undue hazard to their health and safety. The term “undue hazard” means something that will expose the worker to an excessive or unwarranted risk of injury or occupational disease. Once the worker makes an unsafe work complaint, the OHS Regulation and Guidelines mandate a four-step process for investigating and responding. If you cannot resolve the issue with your worker, the final step and last resort is to call in WorkSafeBC to make a ruling. We recommend that take these complaints very seriously and be sure not to retaliate against an employee for making a complaint or you may end up with a prohibitive action complaint (previously called discriminatory action complaint) under the Workers Compensation Act.

It is my view that so long as employers strictly comply with WorkSafeBC’s COVID-19 Safety Plan guidelines and industry-specific protocols, it is unlikely that an employee can make a valid work refusal based on general concerns about getting the virus at the workplace. You can read more on COVID-19 Safety Plans and work refusals in our previous blog entry here.

Absent a valid health and safety reason, if your employee refuses to attend work when scheduled then you can likely take the position they have abandoned their position and issue a Record of Employment stating “Quit”. This may well mean that the employee can no longer collect the CERB too, though it is their responsibility to report accurately.

We are carefully monitoring the recent federal government announcement regarding employers possibly having to provide all employees with 10 days of paid sick leave and will report further as this issue develops.

This is a good example of why we cannot provide employer specific advice as each case clearly depends on the facts plus the law regarding constructive dismissal and creating enforceable contracts is complicated.

Recall from Layoff

First if you are unionized and have a collective agreement in force then likely you must recall the employees in a certain order with seniority likely playing a major role.

For your nonunion employees, absent any contractual obligations, provisions in your employee handbook or promises you made when you laid them off, you are able to recall employees back in the order you wish. There are as you might expect some caveats to that.

First if you are not recalling a person in order of seniority in whole or in part because of (for example) that employee’s disability then you are likely violating the Human Rights Code. Therefore if you are going to deviate from recalling in order of seniority we suggest you have a valid reason.

Secondly if an employee is off on a COVID-19 related leave of absence under section 52.12 of the E S Act and the conditions that created that leave have expired then the employee has a right to be placed back in her position or if her position no longer exists then in a comparable position.

Finally even if you have a right to recall employees in any order you might want to consider that if a number of employees are upset by that decision they may seek union representation. Given the significant changes to the Labour Relations Code in 2019 in favour of unions making it easier for them to unionize your workplace you need to be careful to not create an environment where your employees might feel the need to obtain union representation. Unions are businesses too and their income is set by the number of members they have so they are likely motivated to find such organizing opportunities. A large part of your restart should involve proper communications with your employees.

Imposing a 10% wage cut

If employers simply want to unilaterally impose a wage cut then they run the risk of creating a constructive dismissal. A constructive dismissal will occur when an employer unilaterally imposes a fundamental change to employment terms or otherwise changes fundamental terms. The courts ask whether the conduct evinces an intention on the part of the employer to no longer be bound by the employment contract.

While pay and benefits are clearly central to the employment relationship it is clear that some reductions in remuneration will not constitute a constructive dismissal. In Pavlis v HSBC Bank Canada 2009 BCSC 498 the court considered how big a decrease in pay would have to be to constitute a constructive dismissal. Generally the court stated that a reduction in salary of up to 10% would not be a fundamental breach; a reduction 14—17 % may amount to a fundamental breach if another significant or substantial unilateral change occurs and any reduction beyond 20% will on its own will be a fundamental breach.

Again these cases will have to be decided in Post COVID world. In my view courts are going to be far more sympathetic to employers when these changes are necessitated in order to continue in business.

If the change does not constitute a constructive dismissal an employee may have a right to claim wages under the E S Act which now provides that claims can go back 12 months.

Employers should not take any chances in our view if they can get the employees to accept the reduction. Such an agreement in writing may well constitute a defence to a constructive dismissal claim. Further even in the absence of a written agreement if the employee continues on in the employ under the altered terms without complaint then likely she will have been found to have condoned the change.

Finally if the employee refuses to accept the reduction in pay then we recommend employers continue to offer that position as the employee may be bound to accept the new pay structure in mitigation of her damages.

2021 Case Law Update:

In Kosteckyj v Paramount Resources Ltd, 2021 ABQB 225, the Alberta Justice found that the Employer’s implementation of a COVID-19 related Cost Reduction Program imposing a salary reduction of 10%, a suspension of the RRSP contribution valued at 6% of the employee’s salary, and the “delay/cancellation of the 2019 Bonus Program” amounted to constructive dismissal. The employee was a 47 year old Engineer who had worked with the Employer for over 6 years, and was awarded 9 months notice.

Employment agreements

In most cases employees will be thrilled to come back to work and receive a steady income and benefits. Most will be glad to turn in their day pajamas and get back to work. They now have a lot more skin in the game when it comes to having the business succeed.

In my view this is a good opportunity to have employees sign employment agreements with a view to limiting their rights on termination as well as standardizing a number of key terms such as vacations, bonuses, benefits etc. Further, employers might want to obtain more flexibility to make changes to terms and conditions of employment and provide for the right to lay off or suspend employees. Employers can argue that it is best practices to standardize the employment agreements for all employees. Despite a recent court decision that suggest that legal consideration for amendments to employment agreements may not be necessary, we strongly recommend paying employees some bonus or otherwise improving their pay or benefits as the legal consideration for entering into the agreement. If an employee refuses to sign the agreement then you can consider your options including giving working notice of termination.

Mike responds

My son is in-house counsel for a large telecommunications company in Australia. Despite the fact I have worked from home for 4 years we have debated the issue of whether working from home is a good business model. He argues that it is an efficient, productive and cost effective way of doing work in the 2020’s. I, of course, note all the problems with such an arrangement from an employers’ perspective.

An excellent article by Eric Andrew-Gee in the Saturday May 30th edition of the Globe & Mail puts this debate in a different light. In “Is the office era over?” the author references a study/experiment conducted by James Liang CEO of Ctrip in 2010. He had employees divided in two groups—one worked from home and one worked from the office. His conclusions were rather surprising. He found after 9 months that, contrary to popular belief, those that worked from home were 13 % more productive than those that worked at the office. But the study also found that half the employees who worked from home were discontent and when offered the choice decided to come back to work. Apparently “loneliness” was the biggest factor.

There are many things to consider when instituting a program of working from home. This article got me thinking as much about the practical issues as with the legal issues.   In my view a much more nuanced approach needs to be taken given today’s workplace and employee. One size does not fit all for either the employer or the employees. I suspect that the optimum compromise is one that allows some days work from home but the majority of days’ work at the office or some other variation. Absent a vaccine COVID-19 also creates logistical and social problems in having employees return en masse to their workplaces. Employers might not want to rent more space or reconfigure work stations in order to provide for social distancing and other safety measures

Practical issues may well trump legal issues. Most importantly consider how in fact it did work during COVID-19—was it efficient and productive?   What do your employees think about it? What were the problems? What will the costs be to reconfigure your current workforce to have employees return with social distancing etc? Where are you in your lease ie can you walk away without penalty?

So in my view before any business considers putting in a permanent program of working from home (in whole or in part) this article is well worth reading. If you would like a copy of the article let me know and I will send the link.

There are as well some legal issues to consider that Chris will comment on. 

Chris responds

Thanks Mike, I too enjoyed working from home on a regular basis before the pandemic and plan to continue doing so at least part-time for the foreseeable future. For those employers that will be offering continued working-from-home (WFH) arrangements, there are several legal issues to consider.

In the WFH scenario, the employee’s home workstation is an extension of the workplace and is therefore subject to the jurisdiction of WorkSafeBC and occupational health and safety laws and regulations. This means that if the worker is injured in the course of employment at home, the employer will still be held accountable for any unsafe working conditions and will be penalized with a premiums increase in the event of a claim. This of course presents unique challenges where you have little control over the home workstation or the employee’s actions while at home. In an ideal world, the employer would conduct home safety inspections, however some reasonable alternatives include inspection via video conferencing or having the employee complete a hazard assessment checklist. For more on this topic, see our previous blog entry here. You can also access these helpful WorkSafeBC resources:

Working from Home Guide

Workplace Setup Guide

Working Alone Procedures

We also recommend that you create WFH policy which includes tips on setting up an ergonomic workstation and outlines how employees should report workplace injuries or safety concerns. Also, ensure you have a mechanism for employee check-ins and monitoring and that you ensure you specify the employer’s right to end or suspend the WFH arrangement and require the employee to come back to the office if there are productivity issues or circumstances require. 

Some employees may make requests for specialized equipment such as ergonomic chairs, desk or other office equipment. These requests should be considered on a case-by-case basis. Consider human rights issues and whether you might be obligated to provide such equipment as part of the duty to accommodate a disabled employee. If the employee was already being accommodated at work, such measures ought to continue in the home workspace at the employer’s cost.

Several important issues arise regarding employment standards, including business costs and overtime. The E S Act prohibits employers from requiring employees to pay for their business costs. In the WFH scenario, the employee may be incurring additional costs they would not otherwise have, such as home-office items (scanners, printers, paper) long-distance charges, increased internet or data use, and software. These extra costs are likely business costs and must be borne by the employer. We recommend that employers carefully assess whether their employees are paying any such costs and ensure they are reimbursed. In most circumstances, a portion of the employee’s rent would not be considered a business cost.

Be mindful of overtime issues. In the WFH scenario, the line between on and off-duty can become blurry. If you are expecting the employee to be “on call” and available to answer calls and/or emails at all times while at home, this may create significant overtime pay liabilities. If appropriate, set clear hours and ensure the employee abides by them and logs out of the company system entirely at the end of the workday. 

Finally, be cognizant of privacy issues. Be careful with how you are tracking employee productivity when they are using personal devices. Also, ensure that employees are not downloading and/or sending sensitive or confidential information onto their personal devices or over personal email addresses or text message without proper security measures in place.

 In every case, we recommend you work collaboratively with your employees to design a WFH arrangement that works for both parties and achieves a balance between safety, productivity, and employee satisfaction and well-being.

Note to our Readers: Information regarding COVID-19 is rapidly evolving. We are working to bring you up-to-date articles as the legal issues unfold. This is not legal advice. If you are looking for legal advice or are dealing with an issue in relation to COVID-19, please contact our Employment & Labour Group:

• Mike Weiler: [email protected]
• Chris Drinovz: [email protected]
• Melanie Booth: [email protected]
• Jesse Dunning: [email protected]

I've known and worked with Mike Weiler

for 35 years

I have changed firms at least 5 occasions during that time frame and have always brought Mike’s advice and experience along with me.

We have been successful on literally hundreds of cases. From Favorable Union negotiations, to de-certifying to legally foiling a corrupt collective drive. From defending unjust dismissal claims to a Human Rights case dismissed, Mike has always been a collaborative partner.

The key to success is a secure relationship between client and practitioner . I have always brought Mike into situations long before they blow up. In other words Most of our cases were thought out in advance rather than being reactive.

Needless to say I highly recommend Mike and his approach.

Bryan Edwards

Written by Michael J WeilerWhen I spoke to a large group of employers on April 16th, 2013 on the topic of NDP Employment and Labour Policies I assumed I would have the NDP platform well in advance.  After all, Shane Simpson and Adrian Dix had promised full disclosure prior to the election—no HST type surprises.  At the time of my presentation, I had to speculate on what I thought might be the key changes in Apprenticeship Training, Employment Standards, Labour Relations Code, WCB and Human Rights (to obtain a copy of the PowerPoint “Déjà vu All Over Again—NDP Employment and Labour Policies April 16th, 2013 click here).  My prognostications were based on my experience over the last number of decades when there was a change in government and the statements made by the NDP.Potential key changes to the Labour Relations Code were of particular interest to the attendees, as they will be to most employers in BC.  Two key and simple questions needed to be answered:

1. Will the NDP reintroduce the card-based automatic union certification system as they did in 1993?
2. Will the NDP make changes to the free speech provisions of the Code?

I did not think the NDP would punt these two questions and other changes to the Code to a panel or review committee based on what I heard and read from the senior officials of the NDP.  And I thought there was very little need for a committee review because that thorough review had been done by a 3 member committee chaired by Vince Ready whose report was issued a decade ago: “Recommendations for Labour Law Reform September 1992” (“Ready Report”).  Unfortunately, my Karnack-like speculation was wrong—no specific changes were announced and a committee will be struck.  Here is the full extent of the NDP policy on changes to the Labour Relations Code as published Wednesday, April 24th, 2013 (at pages #31 and #33):“The right of British Columbians to join unions is enshrined in the Constitution.  Unions play a positive role in building a competitive economy and a thriving middle class.  But work needs to be done to ensure that the rules around union certification are fair and to remove barriers for workers who wish to exercise their legal rights.…4. Unionized workplacesForm a special panel, under the Labour Code (sic), to recommend changes to ensure workers can freely exercise their right to join a union. Within 90 days, the panel will consult interested parties and recommend possible changes regarding certification options, including the card-check model, and ways to help employers and unions arrive at first contract settlements through mediation.Invest new resources to make the BC Labour Relations Board more efficient and effective in helping employers and unions to solve disputes.Repeal Bills 27, 28 and 29, the infamous legislation that tore up legal contracts, and restores free collective bargaining in the health and education sectors.”In my view, the outcome of this review will allow the NDP to either reintroduce automatic certification, as the Ready Report recommended in 1992, or make the sign up for votes easier and perhaps have an almost instant vote without the employees being able to hear both sides of the arguments for and against unionization.  I would also expect revisions to restrict employer free speech.   The offer of “assistance” to employers to arrive at a first contract settlement might suggest mandated arbitration for first time collective agreements to replace the current section 55 provisions.I certainly do not see any substantial changes that will favour employers such as the repeal of section 68 Replacement Worker Prohibition.  I agree with the observations of Vaughan Palmer who wrote:  “Based on past experiences with NDP-led makeovers of the labour code, one can readily presume that the rules will be rewritten to suit the unions”.  This certainly is consistent with what Adrian Dix said at the BC Fed biannual convention on November 28, 2012, as quoted in the Globe & Mail on the same date:“I want to make it clear that I am proud of the work I’ve done for years, side by side with labour unions,” Mr. Dix said. “The labour movement and the NDP have done great things, but our best days are still ahead of us.”If you want a preview of what the 90 day NDP Panel Report might conclude you should take a look at the 1992 Ready Report.The irony of all of this is the fact the NDP has promised to have the committee finalize its report in 90 days.  When the Liberals were elected in 2001 they also had a 90-day plan which included abolishing the automatic card-based certification and requiring a vote in all cases subject to the odd exemption to remedy particularly egregious unfair labour practices.The Ready Report noted that following the introduction of the secret ballot vote in 1985 union certifications declined by over 50%.  The return to a card-based system of automatic certification in 1993 reversed that trend.Déjà vu all over again.I was correct in some predictions about what changes to other areas of employment and labour statutes the NDP might consider.  To see the NDP platform on employment and labour issues click here.

Newsletter written by Michael J WeilerThis newsletter expands the May 10, 2019 blog post summary of amendments.MAILED TO SUBSCRIBERS OF THE NEWSLETTER OFMichael Weiler Employment + Labour Law on May 13, 2019Dear Clients and Friends,Labour Relations Code amendments — Why are BC Fed Officials Smiling?  On April 30th, 2019, the NDP government introduced Bill 30, the Labour Relations Code Amendment Act, that fundamentally alters the law in favour of unions – see Bill 30 – Labour Code Amendment Act.  Bill 30 largely follows the recommendations of the Labour Relations Code Review Panel (the “Review Panel”) in its August 31st2018 Report (the “Report”). See Report of Review Panel.While employers may be thankful that Andrew Weaver stuck to his guns and forced the NDP to retain the secret ballot vote in certification applications, the reality is that employers, especially nonunion employers, need to take note of these changes as they may well have a profound impact on how business is done in BC.  Further, the report makes it clear that there may well be other changes following further consultations.Bill 30 comes on the heels of proposed amendments to two other pieces of employment legislation, namely:

• significant “worker favourable” changes to the Workers Compensation Act that have been introduced or will likely be introduced following further consultations; and
• significant changes to the Employment Standards Act that were introduced on April 29th, 2019 in Bill 8.  We will be posting a summary of Bill 8 on our blog website later this week.

Non-union employers, in particular, should become familiar with the certification process and the potential impact of the changes on your particular business once Bill 30 becomes law in order to develop effective strategies to respond to a union organizing drive.Some will argue that Bill 30 does nothing more than restore balance to the Code.  I disagree.  These amendments are politically motivated as the NDP continues to favour its traditional union constituents (to the exclusion, for example, of other non-traditional unions such as CLAC through its “Building Trades only” project agreements).  In fact, the NDP would have eliminated the secret ballot vote in favour of a card check system and taken labour relations back to 1992, but for the Greens’ objection.  Labour Minister Harry Bains made this point very clearly—one wonders what will happen if the NDP is returned for a second term with a full majority.Bill 30 is aimed at increasing union power and union density.  BC Fed President Laird Cronk summed it up nicely:“British Columbia remains a low-wage province, and precarious work is on the rise.  The best antidote to economic inequality is greater union density.”Furthermore, the changes proposed in Bill 30 create uncertainty for employers and will undoubtedly increase litigation as the Labour Relations Board (the “LRB”) sorts out what the changes mean and how they are to be applied.  Further consultations will likely produce more legislation. One thing remains certain—the changes in Bill 30, for the most part, are intended to increase union density and security and will likely be interpreted by the LRB with that in mind.In order to assist our readers in understanding the critical elements of Bill 30 when it becomes law, we have prepared two reports.First, we have provided a summary of the changes to the Code.  Some are fairly innocuous, but others are very significant.  See: summary that is posted on our blog on our website. We suggest you review the summary and if you need further information on any aspect, send me an email at [email protected]“Summary” may also be accessed by copying and pasting this URL in your browser:https://www.ksw.bc.ca/2019/05/10/bill-30-labour-relations-amendment-act-2019-summary-of-provisions-first-reading-april-30th-2019/Second, I have expanded the analysis on 3 key areas of Bill 30 that I think will have a significant impact on both union and nonunion employers.  Those three key areas of analysis are:

1. Changes to the certification process, employer free speech and remedial certifications
2. Successorship and retendering of contracts.
3. First collective agreements, the extension of the statutory freeze and remedial certifications.

Our analyses on these three areas are reported below, in this newsletter.1.  Changes to the certification process, employer free speech and remedial certifications Nonunion employers need to take note of the cumulative effect of these changes against the backdrop of the NDP’s goal of increasing union density.  Although Bill 30 has retained the secret ballot vote (for now), the process has been changed to favour unions.In 2002, the Liberal government made two critical changes to the Code.  First, it reintroduced the secret ballot vote and eliminated the automatic card check certification process.  Second, it amended sections 6(1) and section 8 of the Code to expand employer free speech.  These two changes combined to ensure that employees made intelligent, careful decisions when making the very important choice of whether their workplace should be unionized, or should it remain nonunion.I don’t want to diminish the importance of retaining the secret ballot vote in Bill 30. The employer input on that issue and its representative on the Review Panel made compelling arguments as to why the secret ballot vote should be retained.  Employees will still be the final arbiter on whether their workplace becomes unionized through the democratic process of the secret ballot vote.But Bill 30 includes other fundamental changes that will undoubtedly assist unions. The Review Panel, at page 12 of the Report, made it clear it would only maintain the secret ballot vote if there were added protections for unions:“The Panel is acutely aware the secret ballot vote can only be an effective mechanism for employee choice if the Code deters and prevents employers from engaging in unfair labour practices and provides meaningful consequences for such practices.The exercise of employee choice through certification votes must be protected by shortening the time-frame for votes, ensuring the expeditious and efficient processing of certification applications and unfair labour practice complaints, together with the expansion of the Board’s remedial authority.  If these enhanced measures are not effective, then there will be a compelling argument for a card check system.”I take this to mean, if union certifications do not increase dramatically, the Code will be changed to revert back to the 1992 concept of a card check system and the elimination (for all intents and purposes) of the secret ballot vote.Despite the retention of the secret ballot vote, Bill 30 makes a number of changes to the certification process to deter employer interference and broaden the LRB’s remedial authority.  These changes include:

• A shortened period between the filing of the application for certification and the secret ballot vote (the period will be 5 business days from the current 10 calendar days).  An employer who is not prepared may well find it impossible to communicate effectively within a significantly shortened period.
• Employer free speech has been curtailed.  Sections 6(1) and 8 have been amended to reduce employer free speech and widen the scope of what can be considered unfair labour practices.  Bill 30 reverses the 2002 amendments and takes us back to the restrictions of 1992.
• The LRB will have expanded powers to order a certification without a vote if there are unfair labour practices. Bill 30 allows the Board to order such certifications where the Board “believes it is just and equitable in order to remedy the consequences of the prohibited act”. It will take some time for employers to know how the Board will exercise its discretion and by then it may be too late. As a further enhancement of a union’s ability to organize a workplace and achieve a collective agreement, Bill 30 extends the statutory freeze on changing terms and conditions of employment and the prohibition from disciplining or terminating employees unless there is “proper cause” from the current 4-month period to 12 months. Further, a union cannot be decertified until 12 months after certification.

2.  Successorship and retendering of contracts.Prior to Bill 30, if an employer contracted out services and then retendered that contract, the successful bidder would not be bound as a successor employer under section 35 to any union certification or collective agreement.Bill 30 makes the bold move of allowing successorship orders if the contract is retendered, resulting in the new contractor being bound by any certification or collective agreement in force.The service contracts that are included in this provision are very broad and not defined with any precision.  They include building cleaning services, security services, bus transportation services, food services and “non-clinical services in the health sector”.  The NDP left themselves lots of room to add to the list of services that will be covered as prescribed under section 159(2)(f) of the Code.  I note that this list of services goes well beyond what the Review Panel recommended.What this effectively means is that, once your contractor of the type of non-core services is unionized, all such contractors will be unionized.  The union certification and collective agreement effectively become attached to the work and not the employees of the contractor. This is contrary to the whole premise of the Code.There are many practical problems resulting from this ill-advised provision.  Ironically, unionized service contractors will now find it much harder to get contracts for fear of the successorship provisions.3.  First collective agreements, the extension of the statutory freeze and remedial certifications.Section 55 of the Code allows a union to apply to have a first-time collective agreement imposed by the LRB.  Currently, a union must get a strike vote to make such an application, but Bill 30 removes that requirement.  Most importantly, a mediator or the LRB can consider the conduct of an employer who is subject to a remedial certification both before and after certification.  This might well mean that unions lacking strong support from their membership are able to get a first collective agreement through arbitration rather than a strike.We suggest you consider how these three provisions might affect your business, in the contexts of these analyses above together with the detailed Summary of the specific amendments contained in Bill 30.These provisions in Bill 30 are complex and nuanced.  They may well have unintended consequences.  For the nonunion employer, especially, it is imperative to develop a strategy that deals with the very real possibility that your operations may be the target of a union organizing drive and your response to such an application is limited to 5 business days.Depending on interest I will consider conducting seminars on both Bill 30 and Bill 8 once they have become law.  If you are seriously interested in attending such a seminar, please email me so I can gauge interest.Warm regards,Mike