By: Japreet Lehal

A Step in the Right Direction to Protect Migrant Workers

In November 2018, the provincial government passed the Temporary Foreign Worker Protection Act (the “Act”). It was introduced by the BC Minister of Labour, Harry Bains. The regulations will be introduced this year and we look forward to seeing how this legislation is implemented. The legislation is intended to ensure that recruiters and employers are regulated and prevented from exploiting temporary foreign workers (“TFWs”).

They are employed in industries such as agriculture, hospitality, construction and in care-giving roles. Thousands are employed in British Columbia. In 2017, there were 16,865 TFWs here.

Migrant workers face numerous hardships. A March 2018 report, Envisioning Justice for Migrant Workers: A Legal Needs Assessment, by the Migrant Workers Centre outlines many of the issues they face. In one case, an employee was fired simply for pointing out that the duties she was asked to do were not mentioned in her employment contract (page 33).

A migrant worker expressed concerns about how raising a voice against injustice in the workplace can even lead to homelessness (page 36):

“Most caregivers, we are afraid to file a complaint about our rights because if something happens then we are on the streets. It is not the same thing like if I work for a company but I have my own house and I go home everyday, if I make a complaint and get fired I would still have a house. For us, if we make a complaint and get fired it’s like ‘sorry you have to sleep on the streets so I think that most people don’t complain even if the situation is bad because where are you going to live. I have talked to a lot of people who are in bad situations with their employers and people tell them that they have to report it. But if you need to find a new employer it can take like 4 to 6 months to do all the paperwork and where are you going to live in that time and so they are scared (Focus Group 1, July 28, 2017).”

Under the new law, a foreign worker recruiter will have to apply for a license. A licensed foreign worker recruiter registry and registered employer registry will be introduced, requiring online registration by recruiters and employers. Recruiters and employers are prohibited from misleading workers, taking and holding their passports, mispresenting work opportunities, making threats of deportation for no lawful reason, and threatening workers if they complain or are involved in an investigation against their employer (Section 20).

An employer or recruiter is not allowed to charge the employee for the recruitment services, either directly or indirectly (Section 21). There are disclosure requirements if the recruiter is referring the foreign national to someone else and is receiving some sort of fee or compensation for this. The recruiter needs to put this in writing to let the foreign national know (Section 22). If the recruiter is providing immigration services as well as providing an employer with recruitment services, then there are certain requirements that this recruiter needs to meet, discussed in further detail in Section 23 of the Act.

A complaint to the Director has to be made within two years of the contravention being alleged and it has to be delivered in writing to an Employment Standards Branch office, as per Section 33 (2). The Director can also start an investigation, regardless of whether the Director received a complaint or not (Section 32).

A contravention of this Act can lead to a monetary fine or even jail time. An individual can be fined up to $50 000 or imprisonment up to one year (Section 80(2)(a)). A corporation can be fined up to $100 000 (Section 80(2)(b)).

I will now turn to some cases that have involved TFWs and workplace law.

Dominguez v. Northland Properties Corp. (c.o.b. Denny’s Restaurants), [2012] B.C.J. No. 443, BCSC 328 was a class proceeding by 75 people, which was certified against the defendants. The plaintiff claimed that the defendants did not provide them with overtime pay and did not give them the amount of work they were promised. The plaintiffs also alleged that the defendants did not give them money to travel from their home country and the agency recruitment fees (para. 2).

A settlement in the amount of $1.425 million was made in 2013 (Dominguez v. Northland Properties Corp. (c.o.b. Denny’s Restaurants), [2013] B.C.J. No. 527, BCSC 468). The terms of the settlement agreement included: work hours, overtime, airfare costs, agency fees, donations and release. The donations were to be made to an organization helping temporary foreign workers and a children’s charity (para. 17).

In 2017, a Determination was issued by a delegate of the Director of Employment Standards, which was about an individual, Mr. Brijesh Mohan, who was in Canada as a TFW and was working as a cook for a restaurant. He was not paid overtime pay, and his employer contravened other sections of the Employment Standards Act as well. He was awarded $32,702.43. His employer also had to pay administrative penalties of $3,000.00. Paragraph 17 of Right Choice Products Inc. (Re), 2018 BCEST 56 states:

“The Director made several findings of fact: that Mr. Mohan worked 12 hours a day, 6 days a week, commencing November 9, 2016, and ending, but not including, February 16, 2017; that Mr. Mohan was not paid for all regular hours worked; that Mr. Mohan worked four hours of overtime every Tuesday through Saturday for which he received no overtime pay; that Mr. Mohan qualified for and worked three statutory holidays for which he was not paid in the manner required under the ESA; that Mr. Mohan was owed 4% annual vacation pay on wages found owing to him; that Mr. Mohan voluntarily resigned employment on February 16, 2017, and was not owed compensation for length of service; and that RCP contravened section 8 of the ESA, misrepresenting wages and hours of work in order to induce Mr. Mohan to accept employment with them resulting in compensable losses to Mr. Mohan.”

The 2018 British Columbia Court of Appeal decision in Basyal v. Mac’s Convenience Stores Inc., [2018] B.C.J. No. 1086, BCCA 235 was an appeal of a certification order under the Class Proceedings Act. The case involved TFWs who alleged that Mac’s breached their contract and did not provide them with the work they were promised or “…in other cases any work at all…” (para. 1). The certification against the immigration companies was confirmed for breach of fiduciary duty. The plaintiffs were given the chance to make amendments to their pleadings for other aspects (paras. 77-80). In paragraph 80, Madam Justice Mary V. Newbury stated that “…As for the remaining causes of action, I would stay the action pending the plaintiffs’ amendment of the NOCC such that the material facts relating to each cause and to the existence of an agency relationship (if counsel chooses to pursue that allegation) are clearly stated…”

The journal article and report mentioned below delves deeper into the problems faced by migrant workers and provides further insights into how they can be supported.

A 2017 journal article, The Inaccessibility of Justice for Migrant Workers: A Capabilities-Based Perspective, by Bethany Hastie, an Assistant Professor at the Peter A. Allard School of Law, University of British Columbia, notes the various hardships that migrant workers face. It is noted that even though migrant workers face abuse and exploitation by employers, the number of legal cases is not high because of a lack of access to justice. A capabilities approach to justice, when addressing issues faced by migrant workers, is appropriate. The capabilities approach says that legal rights should not just be limited to what is written in the law itself, but one also has to examine whether the people who the law is meant to benefit are actually able to access it or not. The question is whether the people are able to access the laws to advocate for their rights (pages 21-22 and 24-25).

Migrant workers face numerous hardships and barriers in accessing justice and asserting their legal rights. Because of a lack of legal resources in their language, some may not know about their legal rights (pages 28-29). As noted on page 29:

“…the unfamiliarity or lack of knowledge about applicable laws and rights, where to seek assistance or advice, and even language barriers, can combine to create daunting obstacles for migrant workers who may desire to seek out information or help (referencing footnote 43)…”

The author of the article also notes, however, that access to knowledge about their legal rights is not the only barrier to accessing justice for migrant workers. There are deeper issues that prevent workers from enforcing their rights, such as fear that they may not be called back to their job. In some situations, despite knowing about their legal rights, they face an even bigger systemic issue. This is about barriers in the system which can lead to problems turning knowledge of legal rights into “valued functionings” (pages 29-30).

Migrant workers face a challenging situation, as their work permits under the Temporary Foreign Worker Program (TFWP) streams are tied to one specific employer. While in theory, they can change employers, this is actually quite difficult in reality (pages 31-32):

“…The employer-specific work permit thus creates significant dependence on an employer, and can prevent a migrant worker from freely circulating in the labour market (referencing footnote 52). This, in turn, produces a strong disincentive for migrant workers to assert their rights in the workplace, or in other words, creates a barrier to effective conversion of formal rights into substantive realization of just conditions of work in practice…”

A study participant noted on page 33:

“Well, I feel that the first barrier is the fact that the – the dilemma for the worker. This doesn’t look good. Should I endure it? To what extent? What happens if I seek help? While the employer is constantly saying, ‘Well, either you do this or you go back to where you came from.’ So the threat is – verbalized or not – it’s always on the horizon of the temporary foreign worker. He or she knows that they have to come back eventually, but every day they stay here, it’s a financial difference that has an impact on their lives and their families. So that even if they are not paid well, even if they are paid close to nothing, they still have the hope that eventually they are going to be paid. […] So the dilemma and at what point they reach the limit of their endurance, how much I’m going to support this, to endure this abuse […]”

In a complaints-drive system, a migrant worker has to spend lots of time and resources, which is not feasible for workers here on a temporary basis. Furthermore, the complainant also worries about his/her future and immigration status. The literature states that as “proactive investigations and monitoring” has decreased, so has “voluntary employer compliance” (pages 34-35).

Complainants also worry that coming forward with a complaint can identify them to the employer and put their current and future employment and income at risk (page 36).

The TFWP regulations and employer-specific work permit can become the root problem for many other issues. Many workers are hesitant to raise a voice because even though there are laws on paper, it is difficult to turn them into “…meaningful and just working conditions, and into realizable remedies or compensation for workplace rights violations…” The remedial options are quite limited as well. While workers could receive compensation for the abuse they have suffered, it is not likely that they will receive “longer-term employment and administrative security” (pages 36-37). At page 37, it is noted:

“For migrant workers who face rights violations in the workplace, this requires not only compensation, but considering how mechanisms for justice can address the underlying issues concerning security of employment, administrative status, and other important values underlying migrant workers’ experiences.”

It is important to provide information and resources about legal rights, but further work is needed to support migrant workers. There are many problems with the employer-specific work permit (pages 37-38):

“…Rather, an exploration of the employer-specific work permit establishes the deeper underlying issues that effectively disable migrant workers from substantively accessing the rights which they are entitled to in practice. This article has explored how the bonded nature of the work permit constrains migrant workers’ capabilities to access justice. The work permit system negatively impacts the ability for migrant workers to convert their legal rights into just conditions of work by creating a distinct and exacerbated power imbalance in the employment relationship. This, in turn, creates strong disincentives to assert rights or utilize vehicles for legal remedy when considered in light of the wider context in which migrant labour occurs, and the underlying motivations and needs of migrant workers participating under the TFWP. As a result, the legal system and access to justice for migrant workers who face abusive or unlawful treatment appear to be far too often out of reach.”

The author of the journal article also mentioned another important point in regards to the usage of terminology in her article (footnote 1 on page 20):

“This article will use the term ‘migrant worker’ to refer to participants under Canada’s Temporary Foreign Workers Program [TFWP], as opposed to the technical label of ‘temporary foreign worker’ which propels forward the ‘otherness’ of this population.”

I have also tried to minimize the use of this term in the blog post.

The Canadian Centre for Policy Alternatives report of August 30, 2018, titled, Building a Stronger Foundation of Basic Workplace Rights for BC Workers, suggests further measures that can be taken to help TFWs. In regards to farmworkers, the report states on pages 14 and 15:

“…In addition to the recommendations already made above for targeted proactive enforcement in the agricultural sector and reintroducing the entitlements to statutory holidays, annual vacation, hours of work and overtime pay for farmworkers, BC employment standards must be strengthened as follows:

23. Mandate that workplace rights are posted in the workplaces of all farmworkers in appropriate languages, including the native language of all migrant farmworkers employed under the Seasonal Agricultural Workers’ Program.

24. Establish an independent review of the ESA in relation to farmworkers, including representation from workers and their advocates. The review would make recommendations for improving the working conditions of farmworkers and develop coordinating mechanisms with other agencies that oversee migrant agricultural programs to fill the jurisdictional void that exists in enforcing the rights of migrant workers. It would include a review of the farm labour contracting system, notorious for its violations of employment standards, safety regulations and for shoddy recordkeeping practices, which make it virtually impossible for workers to seek redress when their rights are violated…”

It is also suggested that the complaint process rapidly address the issues faced by TFWs (page 16):

“…28. Expedite the investigation of complaints by temporary foreign workers to address potential reprisals and unjust dismissal that would force the worker to leave Canada before their complaint is handled…”

The introduction of the Temporary Foreign Worker Protection Act is a step in the right direction. Further efforts also need to be made at both the federal and provincial level to protect migrant workers, as noted above. We look forward to seeing how the Act is implemented and how it can address the many hardships that temporary foreign workers face.

If you are an employer or an employee seeking advice regarding your employment relationship, the Workplace Law Practice Group at Kane Shannon Weiler LLP would be pleased to speak with you. Please contact us at cdd@kswlawyers.wpengine.com or 604-746-4357.

By: Japreet Lehal

Proposed class-action lawsuit against Uber can proceed in Ontario

We are living in a time where the gig economy is becoming more prominent and popular. In British Columbia, food delivery apps are being used and many people are driving for these apps. Ride-hailing apps are expected to come to this province in the near future.

In this post, I will be focusing on quite a significant Ontario Court of Appeal decision, Heller v. Uber Technologies Inc.,2019 ONCA 1 (CanLII) [Heller]. This case was an appeal by Mr. David Heller, from a decision of the Ontario Superior Court of Justice, Heller v. Uber Technologies Inc.,2018 ONSC 718 (CanLII). Mr. Heller delivered food through the UberEATS app. This is a proposed class-action lawsuit against Uber. The ONSC decision was decided in the favour of Uber Technologies Inc. (“Uber”). In the Court of Appeal decision, Mr. Heller was successful.

In the proposed class-action lawsuit against Uber, the appellant wants to put forth the idea that Uber drivers should be considered employees pursuant to the Employment Standards Act,2000, S.O. 2000, c. 41 (the “ESA”), and that Uber has violated the ESA by not considering them employees. Furthermore, it sets out that the arbitration clause should be considered “void and unenforceable,” and the drivers are entitled to $400 million in damages (para. 4).

Mr. Heller entered into the Driver services agreement and the UberEATS services agreement. There was an arbitration clause in both agreements. This clause stated that the laws of the Netherlands are applicable to the Agreement (para. 11). Additionally, UberEATS drivers would be required to pay US$14,500 in the beginning, prior to the mediation-arbitration starting. These were called administrative/filing-related costs (para. 15).

It was decided that the arbitration clause is invalid because it contracted out of the ESA, which is not allowed (paras. 41 and 49). As noted in paragraph 41:

[41] Given my conclusion regarding the meaning of “employment standard”, it follows that the Arbitration Clause constitutes a contracting out of the ESA. It eliminates the right of the appellant (or any other driver) to make a complaint to the Ministry of Labour regarding the actions of Uber and their possible violation of the requirements of the ESA. In doing so, it deprives the appellant of the right to have an ESO investigate his complaint. This is of some importance for, among other reasons, if a complaint is made then the Ministry of Labour bears the burden of investigating the complaint. That burden does not fall on the appellant. Under the Arbitration Clause, of course, the appellant would bear the entire burden of proving his claim.

Even though the appellant did not go through the ESA complaint process route, the arbitration clause is invalid because it contracts out of this legislation, which is a violation of ESA Section 5(1). Under the ESA, the appellant has a right to begin a civil proceeding, instead of the complaint process. The appellant began the civil proceeding because this is a class proceeding. Under arbitration, there would be no class determination, and no public record. Even if the appellant was successful, it remains unknown what sort of remedy he would have received, because the laws of the Netherlands apply. If he is considered an employee, as an Ontario resident, he would be entitled to the minimum benefits under the ESA (paras. 42-46).

It was also decided that the arbitration clause is invalid on the basis of unconscionability (para. 52). In Ontario, a contract provision is considered unconscionable if the factors in Titus v. William F. Cooke Enterprises Inc., 2007 ONCA 573 (CanLII), 284 D.L.R. (4th) 734, at para. 38, recently affirmed in Phoenix Interactive Design Inc. v. Alterinvest II Fund L.P., 2018 ONCA 98 (CanLII), 420 D.L.R. (4th) 335 are met (cited at para. 60 of Heller):

1.   a grossly unfair and improvident transaction;

2.   a victim’s lack of independent legal advice or other suitable advice;

3.   an overwhelming imbalance in bargaining power caused by the victim’s ignorance of business, illiteracy, ignorance of the language of the bargain, blindness, deafness, illness, senility, or similar disability; and

4.   the other party’s knowingly taking advantage of this vulnerability.

These factors were applied in this case. The Clause was considered quite unfair because even for a small claim, the driver would have to pay lots of money to initiate the mediation-arbitration. Uber would be better suited to incur these costs, instead of the drivers. Moreover, there is the issue that the driver would have to engage in individual arbitration in the Netherlands, instead of where he/she is living (para. 68, at 1).

Mr. Heller did not receive any legal advice, and he could not negotiate the agreement terms with Uber either (Ibid, at 2). There is also bargaining inequality between Mr. Heller and Uber (Ibid, at 3). It was held that Uber inserted this Arbitration Clause in the agreements because it wanted to take advantage of the driver’s vulnerability, and did so knowingly and intentionally (Ibid, at 4).

It is noted in this case that the appellant and other individuals like him are similar to consumers, and Uber has greater bargaining power. At paragraph 71, it was stated that:

[71] I would add that, for the purposes of this analysis, I do not see any reasonable distinction to be drawn between consumers, on the one hand, and individuals such as the appellant, on the other. Indeed, I would note that, if Uber is correct and their drivers are not employees, then they are very much akin to consumers in terms of their relative bargaining position. Alternatively, if Uber is wrong, and their drivers are employees, we are not speaking of employees who are members of a large union with similar bargaining power and resources available to protect its members. Rather, the drivers are individuals who are at the mercy of the terms, conditions and rates of service set by Uber, just as are consumers. If they wish to avail themselves of Uber’s services, they have only one choice and that is to click “I agree” with the terms of the contractual relationship that are presented to them.

The Judge did not consider the arbitration clause valid from two different aspects. It was considered illegal under the ESA and Arbitration Act, 1991, S.O. 1991, c. 17. At paragraph 74, Nordheimer J.A. stated:

[74] I conclude that the Arbitration Clause amounts to an illegal contracting out of an employment standard, contrary to s. 5(1) of the ESA, if the drivers are found to be employees as alleged by the appellant. I reach the separate and independent conclusion that the Arbitration Clause is unconscionable at common law. On the basis of each finding, the Arbitration Clause is invalid under s. 7(2) of the Arbitration Act, 1991. The remedy of a mandatory stay has no application.

With the introduction of new technologies, it is important that issues relating to employment law are also taken into consideration. In British Columbia, with the popularity of food delivery apps and the imminent introduction of ride-hailing apps, such legal issues may arise in this province as well. Heller can be persuasive case law here too.

As Ottawa lawyer Paul Willetts notes, we can expect that Uber will seek a leave of appeal to the Supreme Court of Canada (final para., under “So, are Uber Drivers now Employees?”).

Uber is involved in lawsuits in other countries as well. In the UK, the Court of Appeal agreed with the Employment Appeal Tribunal that Uber’s drivers should be considered workers. If a driver is considered a worker, he/she then receives worker rights, such as the national minimum wage and paid holiday entitlement (paras. 2 and 3 of “Court of Appeal confirms that Uber drivers are workers”, by Katie Spearman). To read the full decision, please visit this link.

In France, Paris’ Court of Appeals decided that drivers had a “work contract” with Uber. They were not considered “independent workers” because they could not decide how much they were going to charge customers for the fare nor their working conditions. However, they are not yet considered employees because the driver’s complaint must first go to an employment matters court (paras. 1-2 and 4-5 of “French court: Uber and drivers tied by ‘work contract’”, by Laura Kayali).

The New York State Unemployment Insurance Appeal Board decided that to receive unemployment insurance benefits, Uber drivers can be considered employees, as opposed to independent contractors (NYS UIAB Appeal Decision for case 596725, online: <http://uiappeals.ny.gov/uiappeal-decisions/596722-appeal-decision.pdf>, cited in National Employment Law Project (NELP) link). Uber withdrew its appeal regarding this decision (NELP link).

In this blog post, I have not delved into the distinctions between employee, independent contractors, and dependent contractors. I have instead focused on the arbitration clause. These distinctions are another big topic that is related to the gig economy, and it is likely that in the coming years, there will be new legal developments in Canada in this area as well.  

If you are an employer or an employee seeking advice regarding your employment relationship, the Workplace Law Practice Group at Kane Shannon Weiler LLP would be pleased to speak with you. Please contact us at cdd@kswlawyers.wpengine.com or 604-746-4357.

Overtime for salaried employees can be an area of confusion for workers in BC.  Many employees (and many employers) assume that because their employment contract sets out a fixed salary for the year, the employer is not required to pay the employee for overtime worked.  This assumption is incorrect, and can lead to significant problems in the employment relationship. Let's delve into discussing overtime and the salaried employee under the Employment Standards Act.

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In fact, unless an employee is in one of the select categories of employees excluded from hours of work and overtime requirements under s. 34 of the Employment Standards Regulation, or is working under an averaging agreement or a variance, a salaried employee is entitled to overtime under the Employment Standards Act if he or she has worked more than 8 hours in a day, or more than 40 hours in a week.  An employee is also entitled to time-and-a-half pay if he or she is not provided with at least 32 hours in a row free from work each week.

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As the Employment Standards Act sets out minimum standards for employment contracts in British Columbia, employees and employers cannot contract out of these obligations.  This means that even if a salaried employee has agreed that overtime cannot be paid, he or she is not bound by this agreement, and can seek to recover unpaid overtime through the Employment Standards Branch.

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With salaried employees, the amount of overtime is determined by calculating a nominal hourly rate, based on how many hours they would have to work at full-time employment to achieve their salary.  After this hourly rate has been determined, the employee is owed:

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• Time-and-a-half when working more than 8 hours a day;
• Double pay when working more than 12 hours a day;
• Time-and-a-half when working more than 40 hours a week; and
• Time-and-a-half for any time the employee is required to work during the 32 hour rest period. 

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Because both employees and employers are often unaware of the requirement to pay overtime for salaried workers, it is possible for significant unpaid overtime to accrue without anyone realizing it, particularly as the Provincial government has recently amended the Employment Standards Act to extend the period for recovering of unpaid wages from 6 months to 12 months.  This means that there is now the potential for up to a year of unpaid overtime to be owing. 

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If you are a salaried employee who has been required by your employer to work unpaid overtime, or an employer concerned that you have salaried employees who have been working significant amounts of unpaid overtime, it is important that you speak with a qualified workplace lawyer regarding your situation.

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If you are an employer or an employee seeking advice regarding your employment relationship, the Employment & Labour Group at KSW Lawyers would be pleased to speak with you. Please contact us here or by phone at 604-746-4357.

By: Chris Drinovz

Sherstobitoff v British Columbia (Workers’ Compensation Appeal Tribunal), 2019 BCSC 1659

Chris D. Drinovz of KSW Lawyers recently represented our client Dale Sherstobitoff in a judicial review overturning a decision of the Workers Compensation Appeal Tribunal (“WCAT”). Ms. Sherstobitoff was injured on her first day at a new job as a heavy equipment operator. The issue before WCAT was whether her employment was permanent or temporary. This in turn determined her rate of compensation while disabled under the Workers Compensation Act (the “Act”). This judicial review presented an interesting intersection of employment law, workers compensation law, and administrative law. Let's look at where employment law and contract law principles meet.

In the WCB regime, when a worker is injured less than 12 months into the job, that worker receives WCB benefits at a rate based on what they actually earned in the 12 months prior to the injury. Section 33.3 of the Act provides an exception for workers whose employment was not casual or temporary i.e. permanent. In this case, the worker’s compensation is based on the average earnings of other permanent company employees doing similar work. This often results in a more favourable wage rate than what a temporary worker would receive.

Ms. Sherstobitoff was hired to operate a haul truck for a contractor on the Site C dam project. She did not have a written employment contract or any terms that limited her employment to casual or a fixed term. The employer argued the employment was nevertheless temporary because its work at the Site C dam project would come to an end and it had no other projects in BC at the time of hiring. WCAT agreed with the employer.

In its analysis, WCAT invoked common law principles of contractual interpretation and reasoned that interpreting the nature of Ms. Sherstobitoff’s agreement required looking at the surrounding circumstances such as her past periods of short-term employment with multiple employers and the apparently seasonal nature of the heavy construction industry. In the judicial review, we argued that WCAT’s contractual interpretation was flawed and therefore patently unreasonable. In particular:

"The correct approach which accords with the common law and WCAT jurisprudence would be for the Tribunal to consider only the objective evidence that informs the terms and conditions of the employment contract at the time of hiring. Such evidence includes any written offer letter(s), employment contracts, collective agreement, and documents provided or things said at the time of hiring and the entering into of the agreement."

In the Court’s decision, Madam Justice Fleming stated that “in these circumstances, I view legal findings relating to general common principles of contractual interpretation, or mixed findings of law and fact-based on a contractual interpretation as susceptible to review for patent unreasonableness” (para 65). She noted that the only way to determine the nature of the worker’s employment was to consider the principles of contractual interpretation with the goal of objectively determining the parties’ intention at the time the contract was formed. Applying this standard, Madam Justice found that “although the common law framework required the [WCAT Vice Chair] to consider and make findings about the words of the Contract, his reasons demonstrate he did not do so. Instead, he immediately turned to the surrounding circumstances” (para 71). She therefore found WCAT’s decision patently unreasonable and remitted the matter back for a re-hearing. 

There are two key takeaways here:

1. First, the decision highlights that the nature of the employment contract is relevant not just in determining matters such as severance pay, but in determining a worker’s wage rate for a WCB claim. This gives employers and employees yet another reason to ensure they have a written employment contract clearly setting out the terms and conditions of employment.
2. Second, those making submissions at the Tribunal level can take comfort knowing that administrative decision-makers who engage in legal exercises such as contractual interpretation are subject to the review of the Court to ensure conformity with accepted common law principles.

If you are an employer or an employee seeking advice regarding your employment relationship, the Employment & Labour Practice Group at KSW Lawyers would be pleased to speak with you. Please contact us at cdd@kswlawyers.wpengine.com or 604-746-4357.

By: Chris Drinovz

Lots of recent court action on employment law matters in BC. Let's review these recent employment law developments:

A-Teck Appraisals Ltd. v. Constandinou, 2020 BCSC 135: Court stayed a wrongful dismissal claim in light of enforceable arbitration clause. Judge declined to apply reasoning of the Ontario Court of Appeal inHeller v. Uber Technologies Inc. et al, 2019 ONCA 1 that removing right to ESB investigation amounts to contracting out of the ESA. This would render most arb clauses in BC void. Heller has been argued at the SCC and is awaiting release of reasons.

Quach v. Mitux Services Ltd., 2020 BCCA 25: Many interesting issues addressed by the Court of Appeal. First, the Court did not decide the issue but said the import of the landmark Rosas case may not change the “nuanced world of employer and employee contractual relationships” where continued employment cannot be fresh consideration. The Court clarified mitigation earnings are still deductible from damages awarded under a fixed term contract unless there is a specific termination clause providing otherwise. Finally, the trial judge’s award for aggravated damages was set aside (big surprise).

Perron v. IG Image Group Inc., 2020 BCSC 171: After a seven-day trial, employee’s claims for constructive dismissal, conspiracy, and interference with contractual relations dismissed. Primary issue was whether the company ignored its policies by allowing two other employees to takeover the plaintiff’s largest sales account resulting in substantially reduced sales commissions. Employee also alleged breach of the duty of honest performance under Bhasin but this claim was dismissed as well.

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Update: March 17, 2020

The COVID-19 status is rapidly evolving in Canada. Please see our updated informational Video and Guide here: https://youtu.be/GHBAyojQtt0

We are also sharing some further questions we are getting from our clients for your information below covering How to Respond to Potential Infection and Infection. Let's delve into an employer's guide to managing Coronavirus in the workplace.

Can an employer implement medical testing to determine whether employees might be infected, including taking their temperature?

Compulsory health testing of all employees, such as mandatory temperature checks, is restricted by human rights and privacy legislation. However, as the prevalence of COVID-19 continues to escalate, it may become reasonable for employers to take more aggressive health testing measures in the workplace to meet their health and safety obligations.Employers should continue to review recommendations from the Public Health Agency of Canada and provincial health authorities and consult with an experienced employment or labour lawyer before implementing any procedures that go beyond their recommendations.Information should only be collected to the limited extent necessary to achieve COVID-19 preventative or precautionary measures. Access to this information should be limited to management and/or human resources, and applicable privacy legislation must be followed.

What should an employer do if an employee has tested positive for COVID-19?

Employers in BC are required under occupational health and safety laws to protect their employees and other workers from work-related hazards, including any infectious disease posing a risk at their workplace.Further to this duty and the current advice from public health authorities, an employer should direct a worker from the workplace, and any other worker who came into close contact with the worker, to not attend work, if:   – they are ill and/or exhibit any cold or flu-like symptoms   – they have COVID-19   – they returned from anywhere outside of Canada

What constitutes “closely” working with someone will depend on the workplace and the nature of interactions between employees. Employers should err on the side of caution.

Employers should also take reasonable measures to protect the confidentiality, to the extent possible, to protect the identity of any employee who contracts COVID-19. This can be a tough balancing act.

What do I do if one of our employees has symptoms or an unconfirmed case of COVID-19?

As with a confirmed case, the employee should be removed from the workplace.

The Public Health Agency of Canada encourages any person who has even mild symptoms to stay home and call the public health authority in the province or territory they are in to inform them. They will provide advice on what the employee should do.

Other employees who may have been exposed should be informed as removed from the workplace for at least a 14 day period or until the diagnosis of COVID-19 is ruled out by health authorities.

What happens to our employees if we are ordered to close our business by health authorities?

If the employer is ordered to close by health or other authorities, employers may be able layoff employees without liability under provincial employment standards legislation or the common law. Each case will be dependent on its own facts and you should consult a lawyer.

Can an employer close its business for safety reasons due to the COVID-19 outbreak?

An employer must ensure a safe working environment. Depending on the situation, it may be necessary to close a business location for occupational health and safety reasons.

An employer’s obligation for providing notice or pay in lieu of notice to employees in the event of a workplace closure will be governed by the specific facts of each case.

Update:  March 12, 2020

B.C. health officials recommend against travel outside Canada, and large gatherings

The Public Health Agency of Canada continues to advise the risk of COVID-19 to the general population remains low despite the significant measures all major organizations and businesses took over the last 24 hours. PHAC also advised all Canadians against non-essential travel outside of the country, and cancelling all gatherings of more than 50 people (previously 250).

During this afternoon's daily briefing, Health Minister Adrian Dix further announced that anyone who chooses to travel outside Canada must self-isolate from work and school for 14 days when arriving back in B.C. This includes people who are coming back to B.C. now. This was also recommended by the Federal Authorities.

This is a significant development with large implications on both employers and employees. Our Group strongly recommends that Employers review and update their workplace policies to include requirements for employees regarding travel and attendance at large gatherings. Employers can also include in their policies any other requirements important for the protection of their workplace and other employees.

Frequently Asked Questions

March 11th, 2020

As of March 10, 2020, COVID-19 or Coronavirus has been confirmed in four provinces: British Columbia, Alberta Ontario and Quebec. There are currently 39 cases in BC.  Of the cases reported in Canada:

• 55% of ill individuals are female
• 79% of ill individuals are over the age of 40
• 13% of ill individuals have been hospitalized
• 1 person has died of COVID-19
• 79% of ill individuals are travellers and 12% are close contacts of those travellers

This morning the Federal Government announced significant financial support programs for employers, their employees and businesses. More details are expected over the next week.  While the health authorities expect the number of cases to increase for a period of time, most Canadian employees are not at significant risk of infection. Despite the relatively low risk, we recommend that employers prepare for the various workplaces issues that may arise in the wake of Coronavirus.  Below we review some frequently asked questions and answers.

This is intended to be a general guide only.  Each case will depend on the particular circumstances of your business including any contract, policy manuals or collective agreements.  If you have a particular question we suggest you contact our Group for legal advice.

How should employers communicate with employees regarding the Coronavirus?

Employers have statutory obligations to protect the safety of employees and maintain a safe workplace.  Employees will be anxious to know what measures will be taken by the employer to address the consequences of the Coronavirus.  Employers should in our view provide employees with information about Coronavirus from official sources. It is also appropriate to remind employees of applicable company policies such as sick days, work from home policies, sick leave policies, and, pandemic policies.

Be mindful that employee personal information, including health information, should be kept confidential. While employers can collect, use and disclose information about an employee’s health, such disclosure must be reasonable in the circumstances and the employer must provide notice of disclosure to the employee.

Can an employer restrict international travel?

*see March 12, 2020 update above: all non-essential travel outside of Canada is not recommended and everyone who travels anywhere outside of Canada (including U.S.) must self-isolate for 14 days upon their return.

As of March 10, 2020, the Government of Canada has posted travel health notices for non-essential travel to all countries outside Canada due to the outbreak of Coronavirus. The full list of advisories can be viewed here: https://travel.gc.ca/travelling/advisories

Employers should restrict business travel to all areas outside of Canada. If employees travel to these regions for personal reasons, you should advise that they will be required to inform you and not return to work for 14 days upon their return to Canada.

Also, employees need to consider the consequences of travelling at this time.  For example, a major tennis tournament (the 5th major) was cancelled in Palm Springs due to one case of the Coronavirus nearby.  It is possible that employees travelling internationally might get quarantined.  Of particular concern to any traveller is the impact on their travel insurance.  It is reported today that many travel insurance policies might be void in respect of travel to certain countries where level 3 warnings have been issued.  We recommend therefore that employers and employees carefully consider insurance issues if travelling at this time. Further, on March 16, 2020, the Prime Minister asked all Canadians outside of Canada to return home at this time, while they are still able to.

Can an employer stop employees who travelled in an area affected by Coronavirus from returning to work?

*see March 12, 2020 update above: all non-essential travel outside of Canada is not recommended and employers should ask any employee who travels anywhere outside of Canada (including U.S.) to self-isolate for 14 days upon their return.

This depends on where the employee has travelled and the nature of your business. An employer is entitled to assess the risks involved with an employee returning to work. A greater assessment will be required for businesses that employ or serve persons who are more vulnerable to the disease, including senior citizens (such as care home operators or service providers).  That said, care must be taken to reduce the risk of a legal claim (such as a complaint to the BC Human Rights Tribunal or an allegation of constructive dismissal for fundamentally altering the terms of the employment.

An employee returning from an affected area should be asked to confirm they do not have any symptoms of illness.  It may also be appropriate to ask employees returning from at-risk areas to self-isolate for a period of 14 days, even if they are not exhibiting symptoms.

The symptoms associated with a confirmed case of Coronavirus include mild to severe respiratory illness with symptoms of fever, cough, and shortness of breath. The BC Centre for Disease Control publishes regularly updated guidance on its website, which should be consulted here. If your employee has these symptoms, they should seek medical attention and should not be permitted to return to work until they are confirmed by medical testing to either not be suffering from COVID-19 or that they no longer carry the virus.

If an employer does not permit an employee without symptoms to work, is there a requirement to still compensate the employee?

Subject to applicable contracts, policy manuals or collective agreements an employer is not required to pay an employee who does not work.  However, if action is taken to preclude an employee from working there might be claims for wrongful dismissal.  As well the temporary layoff may become a termination under the Employment Standards Act if the absence is more than 13 weeks in a 20 week period. We recommend reviewing our March 16, 2020 detailed Guide here: https://drive.google.com/open?id=1SCLyNW4CtTJp5AmYD69ltjQWdhxICe4a.

Therefore we suggest that the first step is to consider whether the employee can work from home.  Where working from home is not possible, employees can be invited to use any paid leave entitlements to cover the period of absence should they wish to do so. However, absent any entitlement to pay, employers face a difficult issue of whether to provide pay when the employee is not providing work. There may be situations where holding an employee out of service, without pay, may be determined to be reasonable and appropriate. This depends on the specific circumstances and any applicable employment contract, policy manual or collective agreement. We recommend speaking with a lawyer to receive advice on this matter.

Employees who qualify for EI sick-leave can apply for benefits. The Federal Government has announced it is waiving the one week waiting period for benefits to start for workers who are quarantined due to COVID-19.

What if an employee has Coronavirus and cannot work?

Where an employee contracts Coronavirus and is unable to work, an employer must review the employment contract, policy manual or collective agreement and grant any applicable sick leave and/or disability benefits the employee may be entitled to. The employer should relax its sick leave policies where available, including not requiring a medical certificate from the employee to confirm his or her inability to work due to COVID-19.

Generally, if an employee is entitled to paid sick leave under a workplace policy, collective agreement or employment contract, he or she will be able to claim sick leave benefits due to a coronavirus infection. If an employer does not provide paid sick leave benefits to its staff, it has no legal obligation to provide paid sick leave in circumstances of a coronavirus infection.

The Federal Government’s announcement earlier this week to provide wage assistance through EI and Work Share programs alleviate the financial pressure on employees and employers by waiving the one week waiting period for EI sick leave benefits, and eliminating the requirement for a medial certificate signed by a doctor. (updated March 12, 2020)

What if an employee refuses to work because they are worried about contracting Coronavirus in the workplace?

An employee has the right to refuse unsafe work under BC’s occupational health and safety laws. The employee must have reasonable cause to believe that performing the work would create an undue hazard to the health and safety of themselves or another person. If that is the case, the employee must immediately report the unsafe condition to the employer. An employer then has an obligation to investigate the matter and address the issue in accordance with procedures set out in section 3.12 of the OHS Regulation.

Where an employer is faced with a work refusal, it must respond in the manner prescribed by the Regulation. This includes an investigation into the concerns and the adoption of any reasonable measures to reduce or eliminate the workplace hazard. In conducting the investigation, the employer must educate itself on the current scientific and medical understanding of COVID-19 and apply this to the specific facts of the concerned individual in the workplace.  We recommend erring on the side of caution and respecting the refusal pending investigation of the issue. We also encourage employers to seek to identify arrangements by which the work can be performed which addresses the risk while that is occurring (an example may be allowing the employee to work from home).

An employer is not permitted to retaliate against an employee for raising a health and safety concern and may face a discriminatory action complaint under the Workers Compensation Act if they do so.

Can an employer terminate an employee if they contract Coronavirus and cannot come to work?

No. Under the Human Rights Code, employers may not terminate an employee or treat an employee adversely in the workplace because of a physical disability, which includes any disability arising from the symptoms of COVID-19.   In these circumstances, the employer has a duty to accommodate the employee to the point of undue hardship.

Can an employer replace sick or absent employees in order to continue operating?

An employer is permitted to hire temporary employees to fill in for persons on sick leave. It may also ask its healthy employees to work additional hours, so long as the employer complies with the overtime requirements of the Employment Standards Act and does not require employees to work excessive hours.

Can an employer require employees to work from home?

This will depend on the reasons for the request. If there has been potential exposure to COVID-19 in the workplace such that other employees are at risk, it is likely reasonable for the employer to take measures to require certain employees to self-isolate and work from home for a period of time.

Employees who refuse to stay home when ordered to do so may be prevented from entering the workplace and may be disciplined in accordance with existing employment agreements and policies.

Do employers have to buy personal protective equipment for employees?

There is a duty for employers to provide a safe working environment. If there is a legitimate risk of infection, the employer may be obligated to provide preventative equipment such as a mask or other personal protective equipment.

What preventative measures should an employer put in place?

WorkSafeBC is currently advising employers and workers that special precautions for COVID-19 are not required, beyond the recommended measures to prevent common respiratory viruses like influenza.  These measures include:

• Washing hands often, and always after coughing, sneezing, or blowing the nose.
• Washing hands with soap and water for at least 20 seconds, or, if soap and water are not available, using an alcohol-based hand sanitizer.
• Avoiding touching the eyes, nose, and mouth with unwashed hands.
• Avoiding close contact with people who are sick.
• Cleaning and disinfecting frequently touched objects and surfaces.

In addition, health care workers are recommended to consistently apply appropriate infection prevention and control measures, including hand hygiene, wearing appropriate personal protective equipment, including masks and eye protection, when assessing patients with respiratory illness, and performing a risk assessment before providing care.

Federal Government support programs March 11th, 2020

On March 11, 2020, the Federal Government announced a comprehensive plan to provide the provinces with $1 billion in funding to support medical services available to respond to the Coronavirus.  It also announced changes to EI and Workshare programs to assist employees not able to attend work because of the Coronavirus.  Employers should familiarize themselves with these programs before implementing changes to see if their employees are eligible for financial assistance.

If you have any questions about managing the Coronavirus in your workplace, the lawyers in Kane Shannon Weiler LLP’s Employment & Labour Group are available to answer your questions and advise you or your organization.

Contact us here: https://www.ksw.bc.ca/employment-law/

Update: March 24, 2020

Staying Safe at Work

WorkSafeBC has provided updated guidelines for “staying safe at work” during the COVID-19 outbreak. These social distancing guidelines include:

Evaluate your work tasks and workspace

• Can you reduce/suspend non-essential work, to allow some workers to stay home?
• Can any of your workers perform work tasks remotely (e.g. work from home)?
• Can you alternate and/or add additional shifts to reduce the risk of exposure?
• Can you position essential workers further apart from each other and customers and still get the tasks done?

Change the way space is used and shared at your workplace

• Minimize the sharing of office space, including work vehicles. When you do share, clean and disinfect frequently touched surfaces before you leave the space (like you do at the gym). For vehicles, the steering wheel, gear shift, and radio and for desks, the computer keyboard and mouse, desk surface, and phone.
• Schedule rotating coffee and meal breaks to allow for 1-2 metres distance between workers in all break rooms, and do not share food or drink (no buffets).
• Hold meetings by teleconference, video conference, or email only.
• Use work vehicles as satellite offices, for workers who can download work on their phone or portable computer.
• Field workers should muster from home, rather than from an office, where feasible.

Working From Home

WorkSafeBC provided the following guidance to ensure safe remote working practices:

• The employer should ensure it has a basic health and safety policy for working from home and that this is communicated to workers working remotely.
• At a minimum, this policy should require employees to conduct an assessment of their workplace and report any hazards to their manager.
• Other items to cover are protocols for emergency evacuation of the home, discussion of safe workplace practices, how to report any work-related incidents, and discussion of ergonomic considerations.
• Some health and safety requirements will need to be administered in different ways for at-home staff, including: outlining the role of the worker’s supervisor, determining how the employer will follow-up on reported incidents.

Other Updates

WorkSafeBC has granted short-term extensions on any occupational first aid, or equivalent certificates, that are due to expire between March 1, 2020 and June 30, 2020. These certificates will now be acceptable in the workplace for 90 days beyond their original expiry date.

The BC Government published guidelines for construction sites and social distancing here.

Claims Questions

WorkSafeBC also provided guidance for COVID-19 and injury claims, including:

• When a worker contracts COVID-19 as a direct result of their employment, they are entitled to compensation. This means the nature of the worker’s employment created a risk of contracting the disease significantly greater than the ordinary exposure risk of the public at large (e.g. acute care hospital worker). See more on this in our previous guide
• Where an employee is on modified duties or a graduated return-to-work through WorkSafeBC and the employer shuts down, WorkSafeBC will pay the employee wage-loss benefits if they are not being paid by the employer.
• WorkSafeBC does not provide coverage for people who are symptom-free even when quarantined, self-isolating or sent home on a precautionary basis.

Review or Appeal of WorkSafeBC decisions

Where your ability to review or appeal a decision of WorkSafeBC within the timelines required has been affected by COVID-19 please seek legal advice or request an extension from the Review Division or WCAT as special circumstances may warrant an extension.

Note to our Readers: Information regarding COVID-19 is rapidly evolving. We are working to bring you up-to-date articles as the legal issues unfold. This is not legal advice. If you are looking for legal advice or are dealing with an issue in relation to COVID-19, please contact our Employment & Labour Group: Chris Drinovz at cdd@kswlawyers.wpengine.com, Mike Weiler mweiler@kswlawyers.wpengine.com, or Melanie Booth at mdb@kswlawyers.wpengine.com.

Visit us here: https://www.ksw.bc.ca/employment-law/

Update: March 24, 2020

New COVID-19 Leave

On March 23, 2020, the BC government passed amendments to the Employment Standards Act (“ESA”) to support workers during the pandemic crisis by creating a COVID-19-related leave. The new provisions permit an employee to take an unpaid leave from work in any of the following circumstances that apply to that employee:

• Diagnosed with COVID-19 and is acting in accordance with advice from a health officer or medical professional;
• Not diagnosed with COVID-19, but is in quarantine or self-isolation in accordance with a government order or the guidelines of the BC Center of Disease Control or Public Health Agency of Canada;
• Directed by the employer not to work due to the employer's concern about the employee's exposure to others;
• Providing care to a child or person with a disability, including because of the closure of a school or daycare or similar facility because of COVID-19 (we don’t believe this would apply if school was closed for other reasons, such as the end of the school year);
• Is outside the province and cannot return to British Columbia because of travel or border restrictions;
• Any other circumstances prescribed by regulation (there are none yet).

It appears that these circumstances are meant to coincide with the employee’s eligibility for federal employment insurance and/or other emergency care benefits. Importantly, this leave is not likely available to employees who are laid off solely due to the employer’s shortage of work or business downturn arising from the COVID-19 pandemic.

The employee is entitled to the leave for as long as one or more of the COVID-19 related circumstances above apply to them. Under section 54 of the ESA, the employer must not terminate employment or change a condition of employment without consent because of the COVID-19 leave. Under section 126, the burden is on the employer to prove that a termination during the leave is not related to the leave.

As soon as the leave ends, the employer must place the employee back in the same or comparable position they had before the leave started. Under section 56, the employment is deemed continuous while the employee is on leave for the purposes of calculating annual vacation entitlement, termination pay entitlement, and any pension, medical, or other benefit plan.  In this sense, the COVID-19 leave operates similarly to a maternity or parental leave under the ESA.

A medical note is not required and cannot be requested by the employer and we hope that all parties will be acting in good faith at this time. However, if requested by the employer, the employee must provide “reasonably sufficient” proof that one of the circumstances apply to them.

Importantly, the leave is retroactive to January 27, 2020 (the date of the first confirmed COVID-19 case in BC). This means that if an employer has terminated an employee on or after January 27, 2020 due to one of the above circumstances, the employer must offer that employee re-employment in the same or a comparable position. The retroactivity provision raises some interesting questions where employer may have laid-off or terminated employees to which the leave would apply, particularly if they have already provided severance payments and/or ended benefits for those employees.

*Note: the amendments also created a new illness or injury leave, which entitles employees with 90 or more consecutive days of employment to up to 3 days of unpaid leave in each year of employment for personal illness or injury.

Provincial Action Plan

The BC Government has also announced the details of its COVID-19 Action Plan, which includes the following relief for employees and businesses:

• For workers, a new BC emergency benefit of $1,000, which is a tax-free one-time payment for BC residents who receive federal EI or the new federal emergency care benefit or emergency support benefits as a result of COVID-19 impacts:
• Includes workers who have been laid off, who are sick or quarantined, parents with sick children, parents who stay at home from work while child care centers and schools are closed, and those caring for sick family members, such as an elderly parent
• The workers can be EI eligible and non-EI eligible, such as self-employed
• The benefit will be paid to BC residents in addition to federal income supports
• For businesses:
• Businesses with a payroll over $500,000 can defer their employer health tax payments until September 30, 2020. Businesses with a payroll under this threshold are already exempt from this tax
• The province is extending tax filing and payment deadlines for PST, municipal and regional district tax, tobacco tax, motor fuel tax and carbon tax until September 30, 2020
• Business and light and major industry property classes will see school tax cut in half – relief for businesses who own their own property and will allow commercial landlords to immediately pass savings on to their tenants in triple-net leases
• Longer term plans coming for recovery of hard-hit parts of the economy such as tourism, hospitality and culture sectors to build economic stimulus

As noted in our March 17, 2020 update, there are further details coming on a federal government stimulus package currently under debate in Parliament. We will provide the details once they are finalized but we expect them to include a temporary wage subsidy for employers and other emergency care benefits for workers not eligible for EI.

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

Chris Drinovz cdd@kswlawyers.wpengine.com

Mike Weiler mweiler@kswlawyers.wpengine.com

Melanie Booth mdb@kswlawyers.wpengine.com

Jesse Dunning jtd@kswlawyers.wpengine.com

Visit us here: https://www.ksw.bc.ca/employment-law/

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WHAT???

I have to create a new register for my company?

The following three terms mostly mean the same thing and are used throughout the world to identify the people that are important to a company:

UBO – Ultimate Beneficial Owner

BO – Beneficial Owner

SI – Significant Individual

This trend towards transparency of ownership is global. It helps governments and agencies in the recovery of money and assets from illegal activities and helps fight terrorism. The Global Forum on Asset Recovery (GFAR) produced a guide for Switzerland in 2018. The Swedish government now requires a similar register of “beneficial ownership.” The European Union (EU) has been a global leader in fighting money laundering. The EU recently issued the Fifth Anti-Money Laundering Directive (5AMLD) amending the 4AMLD. Part of the reason for the 2019 amendment was the release of the now-infamous Panama Papers and how to close the many loopholes that were exposed in those leaked documents. If you haven’t seen The Panama Papers movie yet, take the time – it’s a decent summary and a pretty good watch.

The BC Province and Canada want to know who owns what and to know this, the provincial and federal governments need to know: Who are the actual real people that are controlling our corporations that are owning Canadian assets? Canada is one of over 200 members (countries) of an international organization called the Financial Action Task Force (FATF) and a smaller group called the Asia/Pacific Group on Money Laundering which is associated with FATF. The FATF organization reviewed and reported to Canada on its laws and policies as they relate to anti-money laundering and combatting the financing of terrorism. Canada agreed to force companies to make available the natural persons (that is, living breathing people) that are significant to a company. This law came into effect in June 2019 for federal companies. Now, British Columbia and other provinces and territories are following suit by enacting similar laws. Each province has its own laws. There are subtle differences between them, but at the end of the day, a new transparency register will be required and it will list the names of actual people of significance who may or may not also be a shareholder.

A company can be fined up to $100,000.00 for the failure to have this information available. A person who has failed to have this information available, whether intentionally or by omission, can be fined up to $50,000.00. This includes shareholders, directors, and even officers. Officers don’t have to be shareholders or directors of companies, but they can still be fined.

On October 1, 2020 (extended from the initial May 1 date), all companies of British Columbia will have to have a transparency register of significant individuals.

The governments of British Columbia and Canada both require this and most other provinces are in the process of changing their laws to also require this. The purpose of the new laws is to flush out money laundering and foreign ownership of Canadian property and to combat the financing of terrorist activities. This trend is global. Over 30 countries already have similar legislation.

Every company has to keep its Constating documents (fancy words for the documents that are the guts of the company) at its records office. Every company has to identify its registered and records office, which is a physical location where the company minute books are located. For the most part, many different types of governments, agencies, people, etc. have the right to look at or inspect the minute book. The minute book usually includes the certificate of incorporation, the articles of incorporation, the register of directors and officers, and a share register, called a Central Security Register, as well as resolutions, agreements and documents that are filed electronically or in hard copy in Victoria at the British Columbia Companies Registrar.

This new register, the Transparency Register, must be maintained or kept at the company’s records office. As of March 2020, the Transparency Register is private and very limited people have access to it. Only the directors of the company and inspecting officials have access to it. Inspecting officials include Canada Revenue Agency, provincial taxing authorities, police and law enforcement, regulators (branches of the government). Companies must make their register available for at least 2 hours per day and only during statutory business days (not after 4 pm on weekdays or at all during the weekends).

Exceptions
Ok, so some specific types of companies do not have to maintain a transparency register of significant individuals, but if you are reading this, your company is probably not on the list below and you probably do have to maintain this new register.

The exceptions are as follows:

1. Extra-provincial companies
2. Publically traded companies (ie: on the stock exchange, like McDonald’s, and Tim Horton’s, and Shell)
3. Reporting issuers or equivalents
4. Prescribed companies (such as the BC Ferries Corporation)

SUMMARY

Companies have to have a transparency register of Significant Individuals

Significant Individuals are:

1. Shareholders with 25% of all shares are Significant Individuals
2. Shareholders with 25% of voting shares are Significant Individuals
3. Trustees are (probably) Significant Individuals
4. Beneficiaries are (possibly) Significant Individuals

Significant Individuals have to provide:

1. Full name
2. Address
3. Citizenship
4. Birthdate
5. Tax residency status in Canada
6. Relationship to other individuals

Shareholders must:

1. Respond to queries from the company about the new register
2. Take reasonable steps to gather the information requested
3. Promptly reply to the company

Directors must:

1. Take reasonable steps to gather information on shareholders
2. Cause the company to create the register
3. Cause the company to update the register within 30 days of getting new information
4. Cause the company to report to significant individuals
5. Cause the company to destroy information

Companies have to:

1. Try to find out details to determine Significant Individuals
2. Create and maintain the register
3. Notify when Significant Individual becomes or ceases to become a Significant Individual
4. Destroy data

Records Office has to:

1. Keep the register
2. Avoid false entries
3. Make the register available at least 2 hours per statutory working day
4. Not allow inspection to unauthorized persons

Contact us at 604-591-7321 or 877-738-3797 toll free, or by email. Our team of experienced business lawyers can help answer all your questions — William G. Weiler, Peter McCrank, Heather Blatchford, Darlene Dort and Larry Hagan.

Call us before your records are inspected.

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