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 mweiler@kswlawyers.wpengine.com“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

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 mweiler@kswlawyers.wpengine.com 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.

*******

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 • jblackburn@casselsbrock.com2100 Scotia Plaza, 40 King Street West, Toronto, Ontario, M5H 3C2www.casselsbrock.com