Newsletter by Michael J WeilerMAILED TO SUBSCRIBERS OF THE NEWSLETTER OFMichael Weiler Employment + Labour Law on May 21, 2019Friends,Bill 8: Employment Standards Act Amended Again – Some “Tips” For You – On April 30th, 2019, the NDP government introduced amendments to the Employment Standards Act (the “Act”) see: Employment Standards Act.  The amendments are proposed in Bill 8, the Employment Standards Amendment Act, 2019 (“Bill 8”), which has passed First Reading Bill 8.  These amendments follow on the heels of the amendments made last year under Bill 6 (the Employment Standards Amendment Act, 2018) that were covered in my blog on October 15, 2018 NDP Agenda – Update.  The 2018 Bill 6 amendments:

1.  extended certain leaves; and
2.  introduced graduated increases to the minimum wage by increasing the minimum wage by $1.30 effective June 1st, 2018 with the final increase to $15.20 to take effect June 1st, 2021.

The amendments in Bill 8 draw extensively on the recommendations and analysis found in the British Columbia Law Institute’s extensive Report on The Employment Standards Act December 2018 (the “Report”). This Report of over 300 pages was compiled by a blue-ribbon panel of experts and was chaired by my former colleague Tom Beasley.  It is a well-researched and comprehensive analysis of employment standards legislation (although it does not review the Regulations to the Act).  I believe that it will serve as an important resource for future amendments.Bill 8 does not include all of the recommendations in the Report.  This suggests that further amendments might be forthcoming.  Further Bill 8 does not always follow the specific recommendations of the Panel even where the recommendation is unanimous—e.g. see section 22(4) of the Act dealing with wage assignments to meet credit obligations.  Finally, many of the matters covered by Bill 8 are left to be defined in the regulations (which are yet to be tabled).Many of the changes in Bill 8 are fairly modest in scope but some will have a significant impact on employers especially the small and medium-size employers. Here is a non-exhaustive summary of some of the provisions that may have a significant effect and others that have become part of the “news cycle”:

• Extension of Liability for Wages: The most concerning change for employers is the extension of liability for wages and claims under section 80 of the Act from 6 months to 12 months across the board (see section 29 of Bill 8). This amendment is coupled with the ability of the Director to extend that period for a further 12 months.  The possibility of extending employers’ liability to 24 months, coupled with the Director’s ability to broaden the scope of an inquiry (see below), could result in a significant monetary judgment against an employer who perhaps unwittingly failed to comply with the Act or, worse, where an employer relies on a bona fide agreement with his employees that is rendered void under section 4 of the Act.

• Investigations by the Director: Bill 8 also amends section 76 of the Act that gives the Director power to conduct investigations following a complaint that an employer has breached a provision of the Act or certain Regulations to the Act.  In section 25(b) of Bill 8, where the Director decides that a complaint could affect employees other than the employee who made the complaint, the Director is given the power to “conduct a broader investigation that addresses the subject matter of the complaint”.  Although the Act remains essentially an individual complaint-driven procedure, this provision will now give the Director authority to ensure that all employees in the business are covered by any order.  That may mean that the wishes of some individuals, who do not support the complaint, are ignored.

• When the Act Governs Unionized Employers:  Unionized employers usually don’t care too much about the Act.  There are some sections that still apply to unionized employers but generally, since 2002, unionized employers can simply rely on their collective agreement.  However, Bill 8 introduces one crucial change that will affect unionized employers.  Section 3 of Bill 8 amends section 3 of the Act to provide that the collective agreement will trump the Act only where the collective agreement provisions “meet or exceed” the provisions of the Act.  If this sounds familiar it is because this amendment takes us back to the previous provisions of the Act in 2002 – like some proposed changes to the Labour Relations Code, it is more “déjà vu all over again”.  Time to dust off those old decisions of arbitrators and/or the LRB.

• New Provisions Relating to Gratuities: Many of the changes in Bill 8 are fairly narrow in scope in terms of the employers affected.  For example, in section 15 of Bill 8, new rules have been added to the Act regarding gratuities (these rules are required because gratuities are not “wages” and thus are currently outside the protections of the Act). Under Bill 8 employers will not be able to withhold gratuities or otherwise make unauthorized deductions or require that they be turned over to the employer.  Tip pools will be regulated such that employers cannot participate except in certain limited circumstances.  Specific narrow exceptions are made for sole proprietors, partners in a partnership, directors and shareholders.

• New Provisions Relating to Hiring of Children:  Another example of amendments that are unlikely to apply to many employers are found in the amendments in Bill 8 that introduce a number of new protections for child workers.

• Extension of Time Period for Record Retention, Etc.: Unlike the narrow changes regarding tips and child workers, there are changes that will affect most employers.  The period for which certain employment records must be retained is extended from 2 years to 4 years (see sections 13, 14, 16 and 17 of Bill 8). There are changes to section 22(4) of the Act that governs written wage assignments that allow an employer to deduct from wages funds to meet certain types of credit obligations (see section 12 of Bill 8).

• New Statutory Leaves:  Bill 8 (see sections 18 and 19) creates new unpaid leave provisions for employees offering care and support of family members whose life is at risk as a result of a serious illness or injury as well as certain unpaid leaves where an employee or certain family members or persons close to them are victims of domestic violence.  While one can feel very sympathetic to employees in these situations, the proliferation of leaves, even where unpaid, can cause great disruption to employers, especially small and medium-size employers.

• Provision to Inform Employees of their Rights: Section 5 of Bill 8 adds a new section 6 to the Act under which employers will be required to make available or provide each employee, in a form provided or approved by the Director, information about the rights of the employee under the Act.  This will likely lead to more complaints being filed as employees become more aware of their rights.

• Waiver of Penalties for Directors and Officers in Some Circumstances: There is some good news for employers.  Currently, if a Determination is issued against an employer, the Act requires a mandatory imposition of penalties that can reach $10,000.  Bill 8 will give the Director discretion to waive the penalties.  This will include cases where the employer (or a director or officer of the employer, where applicable), provided an arguable interpretation of the Act or there was a valid dispute on the facts.

There are a number of procedural changes including abolishing the “self-help kit” that the employee was required to use before filing a complaint.  There are some changes to the successorship provisions of section 97 providing for successorship in the case of receivers or receiver/managers who continue to operate the business and certain extensions of the liability of directors and officers in section 96 of the Act. Bill 8 provides for transitional provisions that will need close scrutiny in considering how such changes might affect a particular business.Given the changes in the Act (and the Labour Code under Bill 30), I understand the government will be hiring a number of additional Investigating Officers.What is disappointing is that there are no substantial changes to the averaging provisions.  Employers and employees in today’s world need more flexibility in defining their work schedules and compensation structures but Bill 8 does not address this concern.The above summary is not exhaustive.  As Bill 8 will likely undergo some changes before it is proclaimed, we will not, at this time, provide a detailed analysis.  As soon as we have the final version of the legislation, we will post a more detailed summary on our web site.Warm regards,Mike

Newsletter by Michael J WeilerFriends,Labour Code and E S Act AmendmentsIn our recent newsletter and blog posts we advised that the NDP/Green coalition government introduced significant amendments to the Labour Relations Code (“Bill 30”) and the Employment Standards Act (“Bill 8”):

• Labour Relations Amendment Act 2019 – SUMMARY OF PROVISIONS  (BUT notice that the link to Bill 30 in that blog is the First Reading version –  instead see the link in green below to Third Reading version of Bill 30.)

• Labour Relations Amendment Act 2019  –EXPANDING SUMMARY & ANALYSIS – 3 KEY AREAS  (BUT see the link in green below to Third Reading version of Bill 30.)

• Employment Standards Act Amended Again  – SOME TIPS FOR YOU  (BUT see the link in green below to the Third Reading version of Bill 8.)

On May 30th, 2019 Bill 30 as passed Third Reading, and Bill 8 as passed Third Reading, they were given royal assent and became law.The legislation was passed with just two fairly minor changes Bill 30 was amended with respect to raids in the construction industry.  The original bill was going to allow unions to raid in the construction industry in July and August of each year of the collective agreement.  That was changed to only allow raids in the last year of the collective agreement consistent with other raid provisions.Bill 8 was amended to provide for both domestic and sexual violence leaves of absences.I was surprised to see that the legislation allowing successorship for contracted out services such as food was not amended.  As I noted that provision will hurt not only employers/owners who contract out work but also unionized service companies who now might find it more difficult to get new contracts. Recall that these particular amendments allowing successorship for contracted out services became effective retroactive to April 30, 2019, the date when Bill 30 was given First Reading in the Legislature.It is my view that these amendments will have a major negative impact on businesses in BC—both union and nonunion.  Employers would be wise to review the legislation and determine how it might affect their operations.Note that effective June 1st, 2019 the minimum wage increased to $13.85 and the minimum wage for liquor servers, resident caretakers and live-in camp leaders also increased.  Note also the trend in Ontario and now Alberta to reverse these types of changes.WorkSafe changes will likely create further problems for employers Significant changes to the Workers Compensation Act and policies have already been implemented as a result of the extensive review undertaken by Paul Petrie who was appointed to conduct a review of WorkSafe’s Rehabilitation and Claims Services policies.  Mr. Petrie was directed to consider what changes needed to be made to provide a more worker-centred approach.  His report was published on April 25th, 2019 and contained 41 recommendations for change.  The title of the Report will give you some idea of the content:  “Restoring the Balance:  A Worker-Centred Approach to Workers’ Compensation Policy”.The government has now appointed retired labour lawyer Janet Patterson to do a further study of the workers’ compensation system to advise on how “to shift the workers’ compensation system to become more worker-centred.”The government web site goes on to note that the review by Ms. Patterson will assess:

• the system’s policies and practices that support injured workers’ return to work;
• WorkSafeBC’s current policies and practices through a gender- and diversity-based analysis (commonly referred to as GBA +);
• modernization of WorkSafeBC’s culture to reflect a worker-centric service delivery model;
• the case management of injured workers; and
• any potential amendments to the Workers Compensation Act arising from this focused review.

You should read the Terms of Reference for this review.The Review is due September 1st, 2019.  In my view, employers have reason to be concerned about the changes that will likely flow from the Patterson Report.  Employers can go to the Terms of Reference website and fill out the questionnaire and attend the public hearings to make sure their voices are heard.Human Rights Commissioner appointedIn November 2018 the government amended the Human Rights Code.  Included in those amendments was the establishment of the position of Human Rights Commissioner.On May 30th, 2019 the government announced that Kasari Govender was appointed Commissioner.  Ms. Govender is a practicing lawyer and serves as executive director of the non-profit organization West Coast LEAF (Women’s Legal Education and Action Fund).The Code sets out the powers of the Commissioner as follows:

Powers of commissioner

47.12(1) The commissioner is responsible for promoting and protecting human rights, including by doing any of the following:(a) identifying, and promoting the elimination of, discriminatory practices, policies and programs;(b) developing resources, policies and guidelines to prevent and eliminate discriminatory practices, policies and programs;(c) publishing reports, making recommendations or using other means the commissioner considers appropriate to prevent or eliminate discriminatory practices, policies and programs;(d) developing and delivering public information and education about human rights;(e) undertaking, directing and supporting research respecting human rights;(f) examining the human rights implications of any policy, program or legislation, and making recommendations respecting any policy, program or legislation that the commissioner considers may be inconsistent with this Code;(g) consulting and cooperating with individuals and organizations in order to promote and protect human rights;(h) establishing working groups for special assignments respecting human rights;(i) promoting compliance with international human rights obligations;(j) intervening in complaints under section 22.1 and in any proceeding in any court.Have a happy and safe summer.Mike

Newsletter by Michael J WeilerMAILED TO SUBSCRIBERS OF THE NEWSLETTER OFMichael Weiler Employment + Labour Law on January 23, 2019Friends,Happy New Year folks.  I trust everyone had a break over Christmas and hit the refresh button getting ready for what will undoubtedly be a very important year for employers and employees in BC.  Assuming the NDP is still in power come the February sitting of the House, we can expect major legislative changes to employment and labour laws in the Province.  As well the courts will continue to play a major role in defining the rules governing the employer/employee relationship. Unlike Ontario which is reversing the labour and employment law reforms, BC will make these major changes that will be mostly in favour of employees, and 2019 will certainly become “The year of the employee”.  I hope that the following information and recent postings on my blog will be helpful to you in navigating your way through 2019.

NOTICE PERIODS ROUNDUP FOR 2018

Each year we report on how the courts have defined “reasonable notice” in the previous year.  For those employers who have binding written employment agreements that define the notice period on termination – congratulations!  Those agreements should be determinative, and therefore these decisions are not relevant.  But for the vast majority of employers who do not have such written agreements in place with their employees, the following summary will be very much relevant and should be of interest. READ

COURTS ONCE AGAIN STRIKE DOWN NON COMPETITION CLAUSE

Given the shortage of skilled workers and senior management, it is not unusual to see employers trying to protect their interests by having their employees sign contracts that restrict the employee from competing or soliciting customers after the employee leaves.  These restrictive covenants are frowned upon by the courts but can be effective if properly drafted.  Telus recently found out the hard way that the non-competition clause they included in a senior executive’s employment contract that Telus said it paid $1 million to achieve was found to be unenforceable.  The fact the employee had breached his fiduciary duties to Telus did not affect the result.In finding that the clause was unenforceable the court noted:“In my view, the restrictive covenant is the product of overzealous drafting by Telus’ solicitors. The entire focus of the covenant appears to be directed to making the covenant as broad as possible without giving adequate consideration to the important interests that Telus seeks to protect in the covenant or the interests of Mr. Golberg as an employee. READ

ONTARIO JUDGE BLOWS THE LID OFF THE 24-MONTH NOTICE CAP

In my December 2015 blog, I commented on the increasing number of decisions in Ontario that awarded notice periods beyond the normal “cap” of 24 months:  http://weilerlaw.ca/will-the-rough-upper-limit-of-24-months-notice-be-increased-in-bc/.  I opined that the 24-month cap will remain the law in BC.  However, Ontario courts continue to push the envelope in extending notice periods beyond 24 months.  See for example:  http://weilerlaw.ca/26-months-notice-for-husband-and-wife-contractors/.Now an Ontario court has held that 36 months’ notice would have been reasonable. READ

WEILER LAW SEMINARS ON LABOUR CODE AND EMPLOYMENT STANDARDS CHANGES

Assuming the NDP/Green coalition goes ahead with changes to the Labour Relations Code and the Employment Standards Act, we will send out a reporting email once the legislation passes third reading highlighting the changes and how they might affect employers.In addition, we will offer half-day seminars likely to be scheduled a month after the legislation passes.  Stay tuned for notices on the date, time and place.If anyone in your organization would be interested in attending please send me an email with their contact information and we will put their names on our priority list of attendees.Link here to KSW's Law blog full Table of Contents and all posts, or use individual links above to go to a particular post.

Gerry Massing has become a regular contributor to our Blog.  In this article, Gerry summarizes recent changes to the Workers Compensation Act that will have a real impact on your business.  I have known Gerry for almost 40 years as he and I locked horns on a file dealing with a WCB matter very early on in my career.  Gerry has recently retired from the WCB where he has been senior legal counsel in its litigation department.  Gerry will continue to practice in the area of WCB law and related aspects such as judicial review applications, etc.  He has a strong interest in providing training on claims matters, health and safety matters, assessment matters, policy matters and appeals.  If you have any WCB matters requiring advice or wish to explore an enhanced WorkSafe training program please feel free to contact me at [email protected] and I will put you in touch with Gerry.  ********Recommendations in a report to the government following the explosion and destruction by fire of two sawmills in British Columbia (the Macatee Report) resulted in amendments to the governing legislation.  The Workers Compensation Amendment Act, 2015 (Bill 9) is the most recent legislative implementation of these recommendations.  WorkSafeBC and the government both accepted the Macatee recommendations.  Most of the changes took effect on September 15, 2015.  A provision for citations of the employer will be implemented in 2016.Among other things the Macatee Report noted that

• WorkSafeBC needs greater access to health and safety and enforcement expertise,
• the Prevention investigations, penalty processes and appeals took too long, and
• some employers were able to avoid paying assessments including health and safety penalties and continue their business operations without remedying unsafe conditions.

Bill 9 implements tools for improving enforcement and addressing those concerns. PAYMENT OF ASSESSMENTSThe worker's compensation system pools the cost of claims in the workplace.  The collective liability of all employers is adjusted by placing similar employers into groups and the groups of employers into similar risk categories to provide rate categories that reflect relative risk.  Collecting the assessments owing from the employer who owes them rather than their unpaid debt being added to the base cost of other employers also enhances equity between employers.The amendments provide additional tools to promote that equity.  The Workers Compensation Act permits the board to seek an injunction stopping an employer from continuing to operate if they do not pay their assessments.  This is generally a remedy of last resort and has not been used frequently by the board.The Workers Compensation Amendment Act, 2015 (Bill 9) expands this tool by detailing when a President, Director, officer or their equivalent or a person performing similar functions in an incorporated business can be prohibited by the court from continuing an industry or an activity in an industry until the assessments are paid.  It remains to be seen what the board and the courts will consider amounts to continuing an activity in an industry but the potential could be quite broad.

QUICKER RESOLUTION OF HEALTH AND SAFETY RISKS

Bill 9 also legislates measures to speed up health and safety enforcement and provide a new layer of response to what might be considered less serious violations of the health and safety regulation.1.  Incident Investigations:A preliminary investigation and report of an incident must be completed within 48 hours of the incident.  Any proposed corrective action must be undertaken without delay and a report provided to the health and safety committee or posted as soon as practicable.  The board describes the purpose of this report as follows:Employers must identify what interim corrective action they plan to take between the date of the incident and the time the full investigation report is due, which is 30 days from the incident. During that interim period, they must take all actions reasonably necessary to prevent a recurrence of the incident. If an employer is only able to identify some, or only able to identify in broader or more general terms, the unsafe conditions, acts or procedures that significantly contributed to the incident, the interim corrective action may include a full or partial shutdown of a workplace, removing equipment, or reassigning workers.While this investigation is preliminary in nature the measures required to ensure safety can be extensive.  The immediate need to protect the safety and the desire to provide continued employment and business continuity will require a thoughtful and informed response.A full investigation and more formal report must be undertaken immediately upon the conclusion of the preliminary report and completed within 30 days of the incident.  The board has the discretion to extend the due date for the full investigation.  The Bill does not provide for an extension of time on the preliminary report.2.  Compliance Plans:A compliance plan developed in collaboration with the board allows a solution to be developed rather than having an order imposed.  The compliance plan is at the board’s discretion provided certain conditions are met.  The conditions are that the violation is the first one under that regulation, no immediate risk exists and an agreement is considered appropriate.  The health and safety committee or worker safety representative is provided with a copy. 3.  Enforcement Responses:The Bill provides for a “summary” penalty of up to $1000.00 for a violation which is much lower than the maximum amounts available under the regular process now in place.  The implementation of these employer citations is planned for 2016.  Theoretically, these citations can be decided and appealed more quickly than the current process for determining penalties for health and safety violations.Also regarding enforcement, the appeal period for Prevention decisions has been shortened to 45 days from 90.4.  WorkSafeBC’s board of directors is expanded to include one new member with law or law enforcement experience and one with occupational health and safety experience based on recommendations from community organizations in those businesses.WorkSafeBC has published primers on these topics at:  http://www.worksafebc.com/regulation_and_policy/legislation_and_regulation/new_legislation/bill_9/default.aspCONCLUSION:Bill 9 expands the statutory tools to address incidents more quickly and to provide for quicker incident investigations, lower penalties on a “summary” basis, and compliance agreements.  Where financial sanctions are not sufficient, injunctive relief can be sought against some corporate decision-makers as well as the employer.  Equity in relation to insured risks is increased by injunctive relief as a result of increasing the limitations on continued business operations in the event of failure to pay.The Board reports that the majority of the Macatee recommendations have been completed.  Bill 9 is the most recent implementation of those recommendations.  Some work towards full implementation remains but Bill 9 has brought the full implementation much closer.

Written by Michael J WeilerCanadian employers continue to downsize in light of the collapse of the commodities market. Anglo-American announced earlier this week that it will terminate 85,000 employees worldwide due to poor economic circumstances. 1500 employees work for Anglo-American in Canada. So one would think maybe in these extraordinarily difficult times employers would catch a break in court in wrongful dismissal cases resulting from bona fide downsizing. Unfortunately, a recent Ontario Court of Appeal decision reaffirms that courts will not reduce notice periods when the terminations result from serious economic problems.In Michela v. St. Thomas of Villanova Catholic School, 2015 ONCA 801 the employer terminated 3 teachers because a lower than anticipated enrollment at the school would have likely resulted in a $300,000 shortfall in revenue. The employer tried to limit its exposure in the wrongful dismissal actions by the 3 teachers in two ways. First, the employees were subject to a series of one-year fixed-term contracts and therefore the school argued that, as the employees were subject to fixed-term contracts, no further notice was required. Secondly, it argued that if the teachers were entitled to reasonable notice, the notice periods should be reduced due to the financial circumstances of the school.The trial judge found that the teachers were employed for indefinite periods and therefore the fixed-term contracts did not apply to limit the common law notice for each teacher. This finding was not appealed. The trial judge also held that the reasons for the termination should result in reduced periods of notice.On appeal the court overturned the trial judge’s decision to reduce the notice stating:[17]…….[The court] is not concerned with the circumstances of the employer. An employer’s financial circumstances may well be the reason for terminating a contract of employment – the event that gives rise to the employee’s right to reasonable notice. But an employer’s financial circumstances are not relevant to the determination of reasonable notice in a particular case: they justify neither a reduction in the notice period in bad times nor an increase when times are good.[22] It is important to emphasize, then, that an employer’s poor economic circumstances do not justify a reduction of the notice period to which an employee is otherwise entitled having regard to the Bardal factors. See Anderson v. Haakon Industries (Canada) Ltd. (1987), 48 D.L.R. (4th) 235 (B.C.C.A.), at pp. 238-41 (Lambert J.A.), pp. 243-44 (Wallace J.A.); Farquhar v. Butler Bros. Supplies Ltd. (1988), 23 B.C.L.R. (2d) 89 (C.A.), at pp. 92-93; and Sifton v. Wheaton Pontiac Buick GMC (Nanaimo) Ltd., 2010 BCCA 541, 12 B.C.L.R. (5th) 90, at paras. 34-35, 47-50.[23] Thus, even assuming that the respondent was suffering financial difficulties when it dismissed the appellants, the motion judge erred in concluding that the period of notice to which the appellants were entitled should be reduced as a result. That conclusion is neither required by the case law nor consistent with the nature and purpose of an employee’s right to notice.As noted this reflects the law in BC.For employers in BC, there is even more bad news as our courts go one step further and find that economic circumstances may be relevant in favour of employees to increase the notice period. In Hunter v Northwood Pulp 62 BCLR 367; 7 CCEL 260 at the height of the forest industry recession Mr. Hunter was terminated due to economic reasons. He was 36 years old and had a responsible management position “although at the lowest rung” and earned $36,000 per year. He made 200 job inquiries and sent out 180 resumes. The trial judge awarded 8 months which is a very high award given the 4 Bardal factors. In upholding the trial judge’s decision to award 8 months’ notice the Court of Appeal stated:(1) The lack of available employment opportunities resulting from a depressed economy is a factor to be taken into account.(2) The economic factor must not be given undue emphasis.

Written by Michael J Weiler

Last updated November 16, 2015

Recently I reported on the rather remarkable case involving a number of Indo-Canadian veterinarians who successfully brought a complaint against the College of Veterinarians. What was remarkable about the case was the fact the hearing lasted 356 days.One would think the parties would have been exhausted both mentally and financially. However, it appears the acrimonious litigation will continue.It was reported in the Vancouver Sun on November 12 2015 that the College will pursue a judicial review of the Tribunal’s decision. In a letter from counsel to the Complainant’s lawyers the College lawyers advised that “While the College would like to put this unfortunate matter behind it, it cannot let the findings of racism by the College go unchallenged.”The Complainants claim they have spent more than $3 million fighting the College and it would be reasonable to assume that the College has spent at least that amount on its fees not to mention lost management time. One wonders if the Government might step in as the NDP has urged.

Ontario Superior Court Awards $100,000 in punitive damages for employer's failure to honestly perform the employment contract

It gives me great pleasure that my brilliant nephew Jed Blackburn has allowed us to post his recent article on a very interesting Ontario case regarding punitive damages. Jed is an associate in the Toronto offices of Cassels Brock Lawyers specializing in employment and labour law.

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Last Updated: November 12, 2015When an employment relationship deteriorates, an employer can be tempted to terminate an employee for cause, especially where the employee would otherwise be entitled to a substantial payment upon termination. However, a recent decision of the Ontario Superior Court of Justice highlights the risks to employers if they rely on unfounded allegations in an attempt to justify a termination for cause and avoid their contractual notice obligations.BackgroundIn Gordon v. Altus Group, 2015 ONSC 5663, the plaintiff employee was hired by the defendant employer in November 2008 as part of an asset purchase transaction in which the defendant purchased assets of the plaintiff’s company. The purchase price was a multi-million dollar sum with an adjustment to be made in February 2010 based upon the performance of the business. As part of the deal, the plaintiff was hired for a three-year term with provisions for renewal.As the adjustment date approached, a dispute arose as to the performance of the company. The plaintiff (through his company) triggered an arbitration clause to resolve the dispute. Shortly thereafter the defendant terminated the plaintiff’s employment and took the position that he was fired for cause and therefore not entitled to the termination payments under his employment contract. The defendant alleged it had cause to terminate the plaintiff’s employment and that the working relationship could not be maintained due to the following:• The plaintiff was unproductive and very unpleasant;• The plaintiff talked of senior personnel in very derogatory terms; and• The plaintiff used excessive profanity.After the termination, the defendant further alleged that the plaintiff had breached the defendant’s conflict of interest policy by failing to disclose lending money to a company with which the defendant was doing business and that the plaintiff continued to employ another employee after she had been charged with fraud and misled the defendant about the fraud charges.FindingsJustice B. Glass held that the defendant did not have cause to terminate the plaintiff’s employment. Specifically, Justice Glass found that the complaints regarding the plaintiff’s conduct and profanity were exaggerated by the defendant after the fact in an attempt to justify the dismissal. Notably, there was no written record of these concerns nor reprimand given to the plaintiff despite an employment handbook requiring that progressive discipline be exercised.Similarly, Justice Glass held that the conflict of interest allegation was yet another example of the defendant “puffing up complaints to justify its peremptory dismissal” and that the employee had in fact disclosed the issue in accordance with the defendant’s policy.Finally, Justice Glass found that the allegations regarding the criminal fraud charges against the plaintiff’s employee were a red herring since the employee had resigned within three weeks of the commencement of her employment and there was no evidence of any harm to the defendant.In assessing damages, Justice Glass held that the plaintiff was entitled to approximately ten months' notice of termination in accordance with his employment contract, which amounted to $168,845.00. Justice Glass also found that the defendant’s requirement that the plaintiff comply with his two-year non-competition clause effectively prevented the plaintiff from mitigating.Most significantly, Justice Glass went on to hold that the plaintiff was entitled to an additional award of punitive damages as a result of the defendant’s outrageous conduct and decision to ignore its contractual obligations as the arbitration approached. As a result of the defendant’s failure to honestly perform the employment contract, Justice Glass awarded punitive damages in the amount of $100,000.00 to sanction the defendant for its “harsh treatment” and “terrible conduct.”TakeawaysThis decision serves as a useful reminder to employers that, even where the employment relationship has soured, termination for cause is very difficult to establish and must be based upon demonstrable employee misconduct. Attempting to justify a termination for cause based on unfounded allegations in order to avoid notice obligations may be sanctioned by the court through substantial punitive damages awards.Here are a few key takeaways for employers:1. Employers can rely on employee misconduct discovered after dismissal to support a termination for cause (i.e., after acquired cause), but the alleged misconduct must be serious and not exaggerated by the employer in an attempt to avoid notice obligations;2. A record of progressive discipline will almost always be required to uphold a termination for cause (apart from conduct justifying immediate dismissal, such as theft). Where an employment handbook requires progressive discipline and it is not followed, this will generally be fatal to the position that a termination was for cause;3. Broad-ranging non-competition clauses can actually increase the liability of employers if they prevent employees from mitigating, thereby requiring the employers to fully compensate employees for their common law or contractual notice periods; and4. Employers should carefully consider the employment provisions and dispute resolution mechanisms in any asset or share purchase transaction to ensure they are properly protected if an employment relationship deteriorates. In this case, the combination of a substantial price adjustment, a lengthy arbitration process, and the plaintiff’s three-year term of employment appear to have accelerated the deterioration of the employment relationship and motivated the defendant to abruptly terminate the plaintiff without compensation. Consideration of these issues during the negotiation of the purchase agreement may have allowed the defendant to avoid litigation altogether, not to mention the very substantial punitive damages award it received.Jed BlackburnDirect: +1 416 860 6725 • Fax: +1 416 646 5494 • [email protected]2100 Scotia Plaza, 40 King Street West, Toronto, Ontario, M5H 3C2www.casselsbrock.com

Written by Michael J WeilerAs most readers will know, the essence of a wrongful dismissal lawsuit is a claim that the employer, absent a binding written agreement limiting its liability, terminated the employee without just cause and without “reasonable working notice”. The employee claims damages for lack of working notice. If the claim is proven, the court will put the employee in the same position financially as she would have been in if she had received reasonable working notice subject to reduction for mitigation.The Supreme Court of Canada has confirmed that the 4 basic criteria for determining what is reasonable notice are as stated in Bardal v Globe & Mail, a 1960 decision out of Ontario:In determining what constitutes reasonable notice of termination, the courts have generally applied the principles articulated by McRuer C.J.H.C. in Bardal, at p. 145: There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.[29] These four factors were adopted by this Court in Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986. They can only be determined on a case-by-case basis.These 4 factors are not exhaustive as other factors such as economic conditions or inducement might influence the notice period, but clearly these 4 criteria remain the most important.Over time the courts in Canada have found that there is a “rough upper limit” for the notice period of 24 months. Recently an Ontario decision held that 27 months’ notice was reasonable. In Markoulakis v SNC-Lavalin Inc., 2015 ONSC 1081, the court held that there were exceptional circumstances to make an award beyond the usual maximum of 24 months. The employee was a civil engineer who had been employed for nearly 41 years and was 65 years old when he was terminated. The court found that 27 months was a reasonable notice in these circumstances and noted among other things that “the Plaintiff is over 65, has more than 40 years of service with the Defendant, his only employer [and] is in my view exceptional”.Given the aging workforce and the fact that many established companies are letting go of long service employees with greater frequency, the question is, will BC Courts make 27 months the new “rough upper limit”? The matter should be of concern to employers as adding an extra 3+ months can amount to a very large damage award. Many senior executives earn substantial compensation in the form of salary, bonuses and stock options so adding 3 months might well add $100,000 + to the damage award. As well it is clear that “a rising tide raises all ships” so raising the upper limit would necessarily increase all awards. We have seen this for example in human rights cases where damages for hurt feelings have skyrocketed from $3,000 or so to the now new upper limit of $50,000 in some cases. In my view, the good news for employers is that the BC Courts will likely maintain 24 months as the very high end of the notice range and will not begin creating exceptions such as Ontario has done.The question of the “rough upper limit” was considered by the BC Supreme Court in Ansari v. B.C. Hydro & Power Auth., 1986 CanLII 1023 (BCSC). While there will be some anomalous exceptions the 24-month ceiling will likely apply in almost all cases. Chief Justice Alan McEachern summarized the law in BC as follows:[37] But the law is also clear that there is a “rough upper limit” for the notice period which has lately been substantially increased as in Suttie where a period of 24 months was approved for a 58-year-old employee who had exercised senior management responsibilities and had served his employer for 39 years, and in Sorel v. Tomenson Saunders Whitehead Ltd., [1985] B.C.W.L.D. 4260, B.C.S.C. Gibbs J., Vancouver No. C837279, dated 24th October 1985 (not yet reported), where a 60-year-old senior executive with 37 years’ service was awarded 30 months. [Editor’s note: This latter decision was overturned by the BCCA substituting 24 months’ notice for the 30 months’ notice awarded by the trial judge: see Sorel v Tomenson 1987 CanLII 154 (BCCA).][38] In other words, the law seems to place a cap of reasonableness upon the notice period and does not compensate a discharged employee to retirement age, whatever that may be, even if there is no likelihood of alternative equivalent employment. I believe this is because:(a) such a law would amount to a guarantee of lifetime income;(b) it would fix the employer with all responsibility for the lack of employment opportunities; and(c) the law presumes that no employer would accept such an onerous responsibility at the time of engagement.[39] Subject, therefore, to exceptional cases such as Suttie and Sorel [Editor’s note—See above reversal] where the degree of responsibility, age and years of service were very extensive, it seems to me that 18 to 24 months is the rough upper limit for reasonable notice, and other cases should be scaled downward from there unless there are extenuating circumstances which cannot all be enumerated in this crude attempt to provide guidance for the settlement of the many cases still outstanding. …[41] At the end of the day the question really comes down to what is objectively reasonable in the variable circumstances of each case, but I repeat that the most important factors are the responsibility of the employment function, age, length of service and the availability of equivalent alternative employment, but not necessarily in that order.[42] In restating this general rule, I am not overlooking the importance of the experience, training and qualifications of the employee but I think these qualities are significant mainly in considering the importance of the employment function and in the context of alternative employment.[43] What all this means, in my view, is that the general statement of factors quoted above from Bardal are the governing factors, and it would be better if other individual or subjective factors had not crept into the determination of reasonable notice. In my view, such other matters are of little importance in most cases.[44] I turn to a consideration of the individual cases [of the separate actions of the four plaintiffs against the defendant for damages for wrongful dismissal which were tried summarily together under R. 18A.]Mindful of the foregoing reasons of the then Chief Justice, I look to the following recent cases as support for my conclusion that the 24-month maximum will remain the law in BC:

• Liborion v IBM 2015 BCSC 1523 – Technical Services Professional, $63,000 p/a, 57 yrs old, 32 yrs service = 20 months notice
• Johnson v Marine Roofing 2015 BCSC 472 – Service Mgr, $144,000 p/a, 65 yrs old, 24 yrs service = 24 months notice
• Younger v CNR 2014 BCSC 1258 – Asst. Superintendent, $96,000 p/a, 50 years old, 32 yrs of service = 24 months notice
• Hooge v Gillwood 2014 BCSC 11- Production Supervisor, $82,000 p/a, 57 years old, 36 yrs of service = 18 months notice
• McBrearty v Cerescopr, 2009 BCJ 1843 – President, $300,000+ p/a, 70 years old, 39 yrs of service = 24 months notice

Written by Michael J WeilerMike Weiler is an active member and committee member of the BC Chamber of Commerce. Through that, Mike also participates as a member of the Employee Relations Committee of the Business Council of British Columbia. The Business Council’s December 2015 issue of “Human Capital Law and Policy” newsletter reviews the provincial government’s updated labour market supply-demand outlook publication.That issue of the Human Capital Law and Policy newsletter begins with the following HIGHLIGHTS:

• The new British Columbia 2014-2024 Labour Market Outlook report projects a cumulative 935,000 job openings in the province over the next decade.
• Over two-thirds (68%) of these job openings will be ‘replacement’ positions (mostly due to retirements among the current workforce).
• Overall, the projections suggest BC’s labour market will be in rough balance over the coming decade. Circumstances have shifted since the previous 2012-2022 Labour Market Outlook was produced. It foresaw aggregate labour shortages emerging by 2019.
• Most of the relevant variables, such as economic growth, retirements, and migration numbers, that enter into the forecasting process signal somewhat weaker demand and a greater supply of workers than was expected when the 2012 Labour Market report was developed.
• Tighter labour market conditions and moderate shortages of skilled workers are still expected in certain regions of the province by the 2020s.
• Consistent with increasing urbanization, a surplus of labour is anticipated in the Lower Mainland area.
• The 2014-2024 Labour Market Report includes detailed projections for 500 distinct occupations. Anyone interested in BC’s labour market or future job opportunities is encouraged to read the report [of the BC Ministry of Jobs, Tourism and Skills Training].

Follow this link to see the full Business Council of BC Human Capital Law and Policy December 2015 newsletter.