We hope the Winter edition of the Labour & Employment News will be of interest to you and your business. This edition of the newsletter features articles on just cause, and protecting your business from departing employees. In addition, the use of Project Labour Agreements in large construction projects is outlined. The latest on the Ontario Ministry of Labour’s attempt to regulate internships in Ontario is considered by one of our authors. And finally, we provide you with an overview of new proposed Retirement Pension Plan legislation.
We value your feedback. If you have suggestions, or an issue you would like addressed in a future edition, please feel free to contact us directly.
We’re growing! We are pleased to announce that BLG’s labour and employment group has welcomed the following new Associates:
- Bethan Dinning (Toronto)
- Maude Longtin (Montréal)
- Nicolas Drolet (Montréal)
- Andrew Pozzobon (Calgary)
- Kamini Dowe (Calgary)
- Christine Dowling (Calgary)
The Montréal office is pleased to announce the addition of Éloïse Gratton, one of Canada’s foremost experts in the field of privacy. Éloïse is available to assist our clients with employment-related privacy issues.
Ontario Ministry Of Labour Releases Internship Inspection Blitz Results
On September 30, 2014, the Ontario Ministry of Labour (the “Ministry”) published the results of an internship inspection blitz that it ran from April 1 to June 15, 2014. During the inspection blitz, employment standards officers visited workplaces in the Greater Toronto Area in sectors known to employ a high proportion of interns, including advertising, public relations, computer systems design, consulting services and information services. They checked for contraventions of the Ontario Employment Standards Act, 2000 (“ESA”), and in particular whether unpaid interns were present and whether they were entitled to be paid under the ESA.
As we have previously reported in this newsletter, the ESA considers some interns to be employees (and therefore entitled to the protections under the ESA), if they are trained in a skill that is used by the employer’s other employees. Interns will be exempt from the ESA protections only if all of the following six (6) conditions are met:
- The training is similar to that provided in a vocational school;
- The training is for the benefit of the trainee (i.e., not the employer);
- The employer derives little, if any, benefit from the trainee’s activities;
- The trainee does not displace other employees in the workplace;
- The trainee is not accorded a right to become an employee of the employer; and
- The trainee is advised that he or she will not be paid for the time spent in training.
The ESA also contains exemptions for certain types of interns, including a secondary school student who performs work under a work experience program authorized by the school board, and an individual who performs work under a program approved by a college of applied arts and technology or a university.
Furthermore, students in training to become certain professionals (including in architecture, law, professional engineering, public accounting, surveying, veterinary science, chiropody, chiropractic, dentistry, massage therapy, medicine, optometry, pharmacy, physiotherapy, psychology, and naturopathy, or teaching as defined in the Teaching Profession Act) are exempt from the minimum wage, hours of work, overtime pay, paid vacations and public holiday provisions of the ESA. (Most of these professions have some type of work experience or apprenticeship requirement that must be completed before a person can qualify to practise the profession, and such work experience is often mandated by the profession’s governing statute.)
During the blitz referenced above, the Ministry conducted 56 inspections. It found that 13 of these employers had internship programs with ESA contraventions. As a result, the Ministry issued 36 Compliance Orders and 1 Order to Pay Wages (there were additional monetary violations found, but in all but a single case, the employer voluntarily complied and there was no need to issue an Order to Pay Wages). In total, the Ministry assessed $48,543 owing, which has apparently all been recovered. The most common monetary violations pertained to minimum wage, vacation pay, and public holiday pay. The most common non-monetary violations pertained to wage statements, record keeping, and hours of work.
The blitz was generally viewed as exposing the fact that widespread violations continue to exist with respect to unpaid interns, despite previous rounds of inspections in 2014 and negative media attention regarding such programs. In addition to its various blitzes, the Ministry has been reaching out to interns via social media and encouraging them to come forward with any concerns. Consequently, we expect to see further/ongoing attention to this particular issue.
If you need any assistance understanding or complying with the ESA rules regarding unpaid interns, please contact a member of BLG’s Labour and Employment Law Group.
Melanie A. Warner
How to Best Protect Your Business From Departing Employees
Businesses often seek to minimize the potential harm that can be inflicted by former employees after they leave employment. Regardless if an employee is currently working with your company or departing (either on good or bad terms), your company may have exposure to a number of risks, including the risk that they may set up a competitor or steal your employees, clients, property or confidential information. There are a number of contractual options which can be put in place to assist in protecting your business, however.
(i) Restrictive Covenants
A business can use restrictive covenants to protect its interests by prohibiting former employees from either competing or soliciting (customers or employees) for a defined period of time. However, as between the parties, restrictive covenants are presumptively unenforceable unless it can be shown that they are reasonable and so it is important that they are drafted with care. To be enforceable, a restrictive covenant in an employment contract must be reasonable in terms of: (i) geographical scope; (ii) duration; and (iii) subject matter. In contrast, in the commercial context, where the parties are negotiating on more equal terms, restrictive covenants are enforceable unless they are unreasonable.
More recently, businesses have sought creative ways of drafting restrictive covenants to protect their interests in order to overcome their presumptive unenforceability. In the recent case of Rhebergen v. Creston Veterinary Clinic Ltd.,1 the British Columbia Court of Appeal considered an “unconventional” restrictive covenant that did not restrict the former employee from competing outright, but imposed a financial “penalty” on the employee if she did. The Court determined that the covenant was reasonable as it was not ambiguous and was not a penalty because it was a genuine pre-estimate of losses. This case indicates that courts may be more willing to enforce clauses that impose financial penalties on competing rather than barring it outright, provided some thought has been put into the amount of the “penalty”.
(ii) Return of Property Clauses
Another way to protect your business interests is to contractually stipulate that an employee has a duty to return the business’s property upon the termination of employment. While fairly obvious, including a provision in an employment agreement will make enforceability easier and can be tailored to the particular type of property. If your former employee refuses to return a laptop, for example, which contains important software or confidential information, it will be imperative to show that he or she is acting in breach of contract in doing so.
(iii) Confidentiality Clauses
In the course of their work, employees often learn or have access to confidential information about their employers’ businesses. Non-disclosure or confidentiality clauses can define the rights and remedies of your business if an employee discloses confidential information – such as client information, trade secrets, or other intellectual property – to outsiders.
One way businesses can protect their confidential information is by including confidentiality obligations in their offers of employment. For example, in the recent British Columbia case of Phoenix Restorations Ltd. v. Drisdelle,2Phoenix sought an interlocutory injunction to restrain two former employees from using confidential information, including lists of suppliers, estimates for customers, marketing presentations and email communications with specific customers. The court, in reviewing the confidentiality provisions in Phoenix’s offer of employment, noted that at an interlocutory stage restrictive covenants need to be more rigorously tested and scrutinized as compared to confidentiality clauses. Further, the court noted that irreparable harm would result from confidential documents being released. This case highlights the effectiveness that well drafted confidentiality clauses have in protecting confidential information.
To be enforceable, confidentiality clauses must be explicitly drafted to include any information that is particularly important to your business. This will vary from business to business, and all types of proprietary and confidential information should be considered for inclusion. If an employee ever uses or discloses such defined information inappropriately, courts generally will be prepared to uphold and enforce confidentiality clauses, and may award compensation and other remedies to the employer such as an injunction prohibiting the employee from using or disclosing the information to third parties.
Well-drafted employment contracts will maximize the likelihood of enforceability in the event a departing employee engages in unfair competition. Contracts should be drafted to specifically address the needs of your business and regularly updated in order to minimize potential harm to your business.
1 2014 BCCA 97.
2 2014 BCSC 1497.
Large Construction Projects – PLA or Non-PLA... That is the Question
Unique labour relations issues often arise in connection with large scale construction projects. One way in which these challenges can be addressed is through the use of a Project Labour Agreement (or “PLA”). PLA’s can be used to address labour issues, establish cost standards and keep construction contracts on track by avoiding costly work stoppages. Recently, we have seen an increased interest in the use of PLA’s, particularly in construction in British Columbia’s liquid natural gas industry.
Generally speaking, a PLA is an agreement between the owner/developer (or a subsidiary or group of contractors) of a specific construction project and the various trade unions that will perform that construction work. The PLA typically governs all of the working conditions for a specific construction project. In most cases, the terms of the PLA will apply to all contractors and subcontractors working on the project (regardless of whether or not they are union or non-union), and the PLA will supersede any existing collective agreements or terms and conditions of employment which otherwise exist. In this way, the PLA creates a “level playing field” between union and non-union contractors. For example, wages and benefits are generally the same for all contractors working under a PLA, regardless of what union relationships or employment conditions would apply to that contractor outside the project. Often, workers are obtained through union hiring halls or a combination of hiring halls and outside hires.
A PLA typically includes provisions prohibiting any strikes, lockouts, or other work stoppages for the length of the project. By incorporating such terms, a PLA can provide labour stability for the duration of the particular construction project. However, that stability often comes at an increased cost, as working conditions and wage rates tend to be the same for all employees working on the project and therefore contractors must include those costs in their bids.
Because the terms of the PLA are project specific, it was generally thought that non-union contractors working under a PLA could not be certified in respect of work being done outside of the project. A recent decision of the B.C. Labour Relations Board appears to confirm that view. The issue was considered in the recent decision of the Kitimat Modernization Employer Association -and- Sarens Canada Inc. -and- DL Baker Construction Canada ULC -and- International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local No. 97. 1 That case involved a PLA which governed the project to modernize an aluminum smelter located in Kitimat, B.C.
One of the unions representing ironworkers on the project under the PLA brought an application to certify two subcontractors working on the project. The union’s application was not limited to employees working on the project, but rather, the union applied to represent all of the subcontractors’ employees within the province of British Columbia.
The Board found the unit being applied for was not appropriate. In reaching this conclusion, the Board found that the PLA established a single multi-employer, multi-union unit which covered all employees working on the project. The Board concluded that it would not be appropriate to carve out a smaller bargaining unit from the unit established under the PLA. That decision was upheld by the Board on reconsideration. The union has applied for judicial review of this decision however, the matter has not yet been set for hearing. BLG represented one of the subcontractors before the Labour Relations Board and will be representing that subcontractor in defending the application for judicial review.
This case highlights two important considerations: Owners and contractors involved in these types of large projects should carefully consider the pros and cons of using a PLA model versus traditional construction labour relation structures. Many factors will need consideration in making that important decision. If a PLA model is chosen, the terms of the PLA and related organization and documents must be carefully crafted in order to minimize the risk of labour relations complications and litigation.
1 BCLRB No. B111/2014.
Cumulative Misconduct Amounts To Just Cause For Dismissal:Chopra v. Easy Plastic Containers Limited
A recent decision by the Ontario Superior Court provides employers with a helpful precedent when seeking to terminate an employee for cause. In Chopra v. Easy Plastic Containers Limited,1 a number of separate incidents of misconduct and performance issues, taken together, provided sufficient justification for a just cause dismissal.
Mr. Chopra claimed that his former employer wrongfully dismissed him. He also claimed that his dismissal was in essence a reprisal under s. 50 of the Occupational Health and Safety Act for complaints he had made to the Ministry of Labour, and that the employer acted in bad faith, failing to fairly, fully and impartially investigate in order to understand his version of events. He sought over $100,000 in damages, which included aggravated damages for bad faith termination and negligent infliction of mental suffering, as well as punitive and exemplary damages.
The employer submitted that it had just cause to terminate Mr. Chopra’s employment and, therefore, he was not entitled to damages. The employer claimed that Mr. Chopra’s termination was a result of a number of incidents beginning in 2007, including poor performance, serious misconduct, insubordination, incompetence, breach of company rules and conduct prejudicial to the employer’s business. This included allowing an unauthorized person to enter a restricted area and use equipment, allowing employees under his supervision to leave the premises without punching their time cards, approving products with missing labels, falling asleep during a night shift (which resulted in him being moved to the day shift), a mistake on the job resulting in two hours of bottle production having to be destroyed and ignoring instructions to wear protective equipment (resulting in a three-day suspension without pay).
Following these incidents, Mr. Chopra approached a co-worker and asked him to help build a case against management, who he claimed had been harassing him. This co-worker had not witnessed any such behaviour and refused to agree, reporting these comments to the employer’s management. Mr. Chopra also told co-workers that the Ministry of Labour representative was a “rat” being paid by the employer to find that there wasn’t any wrongdoing with respect to Mr. Chopra’s health and safety complaints. Over this period, Mr. Chopra received a total of six written warnings, along with a number of verbal warnings.
Mr. Chopra’s behaviour fell below a reasonable standard of conduct. The Court accepted the employer’s submissions that the various incidents of misconduct and poor performance were sufficient to terminate Mr. Chopra’s employment for cause. Adopting a contextual and proportional approach, the incidents taken together were not minor or trifling and affected the workplace as a whole. The Court quoted Echlin J. in Daley v. Depco International Inc.,2, stating that there were enough “bricks to constitute a just cause wall”.
Furthermore, Easy Plastic was justified in their actions following each individual incident of misconduct and had adequately investigated the health and safety concerns that Mr. Chopra raised. The termination was not a reprisal under s. 50 of the OHSA. The Court also rejected Chopra’s argument that he had no opportunity to dispute the facts in his warning letters, as he could have written responding letters setting out his version of the facts.
An accumulated series of incidents of misconduct may entitle an employer to dismiss for cause. The case law relied upon in this decision stated that the quality of the cumulative misconduct, rather than the similarity, shows an intention to no longer be bound by the employment contract. A proper analysis takes into account the nature and extent of the misconduct, the surrounding circumstances, particular factors of the employee and employer and the seriousness of the misconduct, which may give rise to a breakdown in the employment relationship.
The fact that there were a total of six welldocumented warnings is not insignificant. This Court relied on the ample verbal and written warnings given to Mr. Chopra, which explained his poor performance and the necessity to correct it. He had several opportunities to improve his behaviour and failed to do so. He also did not respond to the warnings to set out his own account of the events in writing. This case shows that an employer may be able to meet the threshold to establish a termination for cause when an employee has engaged in cumulative acts of misconduct, poor performance and failure to improve.
12014 ONSC 3666.
22004 CanLII 11310 (ONSC).
Ontario Outlines and Seeks Feedback on the New Ontario Retirement Pension Plan
On December 8, 2014, the Ontario Government introduced Bill 56, Ontario Retirement Pension Plan Act. Bill 56 sets out the parameters for the Ontario Retirement Pension Plan (ORPP). If Bill 56 receives Royal Assent in the future, which is expected, almost all employers that have employees in Ontario will be impacted.
The ORPP is a mandatory provincial pension plan. Some of the parameters of the ORPP that are in the first version of Bill 56 are as follows:
- Contributions to the ORPP will be made by eligible employers and eligible employees. A person who participates in a “comparable” workplace pension plan is not an “eligible employee” (i.e. contributions do not have to be made to the ORPP with respect to such persons), but the legislation has not yet defined what constitutes a comparable workplace pension plan.
- Contributions will be determined by applying the “applicable contribution rate” (which will be the same for eligible employers and eligible employees but will not exceed 3.8 percent combined) to the portion of the eligible employee’s annual salary and wages between the minimum and maximum thresholds. The maximum threshold for 2017 will be $90,000 adjusted in accordance with legislation.
- Normally, retirement benefits under the ORPP will be paid for the life of a plan member beginning at age 65, but such benefits may begin to be paid as early as 60 years of age or as late as 70 years of age as long as they are actuarially adjusted. Retirement benefits under the ORPP will be indexed to inflation.
Bill 56 sets a deadline of January 1, 2017 for the Ontario Government to establish the ORPP. In the meantime, the Ontario Government has released a consultation paper entitled Ontario Retirement Pension Plan: Key Design Questions. Three key policy areas are addressed in the consultation paper:
- What constitutes a “comparable” workplace pension plan? The Ontario Government has indicated that its preferred approach is to define comparable workplace pension plan as a defined benefit or target benefit multiemployer pension plans. This would mean that defined contribution pension plans, pooled registered pension plans, and group registered retirement savings plans would not be a “comparable” workplace pension plan. The Ontario Government has asked the following question, among others: in your view, what would be the best definition of “comparable” workplace pension plans?
- What is the right minimum earnings threshold? The 2014 Ontario Budget indicated that earnings below a certain threshold would be exempt from contributions, to reduce the burden on lower-income workers. One question the Ontario Government has asked is how different employers will be affected if the minimum earnings threshold is different than that of the Canada Pension Plan.
- How to best assist self-employed individuals? One question the Ontario Government has asked is whether Ontario should engage in discussions with the Government of Canada to amend the Income Tax Act rules to allow the selfemployed to participate in the ORPP.
The Ontario Government has provided all parties (including employers) until February 13, 2015 to make submissions on the consultation paper and the ORPP initiative. All types of businesses, including small and medium-sized business, may wish to make submissions to ensure that their voices are heard. Members of our Pension and Benefits Group would be pleased to assist your business in making submissions to the Ontario Government on the wide-impacting ORPP legislation and the consultation paper.
On a related note, on December 8, 2014, the Ontario Government also introduced Bill 57, Pooled Retirement Pension Plans Act, 2014 (PRPP Act). Ontario’s proposed PRPP Act incorporates many features of the federalPooled Registered Pension Plans Act, including voluntary participation and contributions by employers, automatic enrolment of employees, locked-in contributions and low cost, but has a few Ontariospecific features where appropriate. We will continue to monitor developments with respect to Bill 57.