Labour & Employment Newsletter
News and Decisions You Might Have Missed
It would be easy to think the only issues that employers need to consider this year relate to COVID-19 and its impact on the workplace. However, there have been a number of other legal developments that employers should know about. In this newsletter, we look at three decisions that address topics that many employers encounter: ensuring that the language in a termination article in an employment contract will hold up; dealing with employees who discuss their salary at work; and, seeking to enforce a “last chance agreement”.
How can an Employer ensure that a termination article in an employment agreement will hold up?
The Ontario Court of Appeal reminded employers about the importance of proper drafting of termination articles in employment contracts with non-unionized employees, and the consequences of not meeting those requirements. Our regular clients have heard us advise that an employment contract can include language setting out how the employer can end the contract for just cause or by providing notice and that the particular language used in the contract can be crucial.
In Waksdale v. Swegon North America Inc., 2020 ONCA 391 the Ontario Court of Appeal invalidated a termination article in an employment contract, even though the employer was not relying on the unenforceable section. The employment contract contained a provision that the employer could terminate the contract for just cause or by giving one week of notice/salary in addition to the employee’s entitlement under Ontario employment standards legislation. The employer terminated the employment contract by giving the employee two weeks of salary, which satisfied the notice required in the employment contract. However, the employee argued that the part of the contract allowing for termination for just cause was somehow unenforceable. Unfortunately, the Court did not set out the language of the section allowing for termination with just cause so we do not know exactly why it was unenforceable.
The employee argued that the entire termination article in the employment contract, including the portion that entitled them to one week of notice in addition to their entitlement under the employment standards legislation, was unenforceable. If successful, the employee would then be entitled to common law reasonable notice, which would be much more than the two weeks that the employer provided. The employer conceded that the “for cause” provision was unenforceable but claimed that the unenforceability of that provision did not impact the validity of the provision allowing it to terminate the contract by giving the specified notice.
The Court of Appeal rejected the employer’s argument. It found that the two provisions were entangled. As one part of the termination article was invalid, the entire article was unenforceable. The employee therefore was entitled to common law reasonable notice, which would be considerably more than notice under the employment standards legislation. The Court remitted the matter to the lower court to determine the amount of reasonable notice.
Are Employees Allowed to Discuss their Salary at Work?
Amendments to the Nova Scotia Labour Standards Code (the “Code’) came into force in March 2020 stating that employers cannot prohibit employees from discussing their own wages or the wages of another employee in the workplace (there are some exceptions).
It turns out that the Nova Scotia Labour Board dealt with this sort of case in 2019. In Boulangerie La Vendéene Incorporée v. Hiltz, 2020 NSLB 78 the Labour Board considered whether an employer had just cause to terminate an employee’s employment after the employee violated a workplace policy by discussing their salary with other employees in the workplace. The employer had a “zero tolerance” policy expressly stating that discussing salary would result in immediate termination of employment.
The employer learned that the employee had discussed salary and related information so terminated her employment in July, 2019.
The terminated employee filed a complaint under the Code. The Labour Board concluded that there was not just cause for the ending employment. It noted that there was evidence that wages and other compensation information had been discussed in the past between employees without any disciplinary action taken.
The Labour Board added that it may have been possible to apply a written warning or reprimand, as the actions of the employee did not support an automatic termination. With the amendments to the Code, there would not even be any basis for that level of discipline.
We point out that the amendments to the Labour Standards Code in 2020 also prohibit employers from requesting the wage history of an employee when hiring. If the employee voluntarily discloses that information, the employer can confirm it.
When will an arbitrator set aside a Last Chance Agreement?
Employers, employees and unions will sometimes enter into a “last chance agreement” (an “LCA”). An LCA can be useful if there are issues with an employee (particularly with regard to job performance or attendance) and the parties want to be sure that they have taken all possible steps to maintain employment. In the LCA, the parties would typically set out the standards the employee must meet and specify that if the employee does not meet them, employment will end.
In UNIFOR, Local 823 v K + S Windsor Salt Ltd., (2020 CANLII 64088) the employee in question had a longstanding absenteeism issue and the parties entered into an LCA. The employee violated the LCA and was subsequently terminated for cause. The Union grieved the termination.
Arbitrator Gus Richardson noted that there is a strong presumption in favour of enforcing an LCA as it sets out the way that the parties agreed to settle a dispute among them. He pointed out, though, that an LCA is also subject to human rights legislation. In this case, it turned out that the employee had an alcohol addiction (and that the employer was aware of it). That addiction triggered the employer’s duty to accommodate, but the LCA did not include any accommodation.
The Arbitrator found that the LCA was invalid. He re-instated the employee to employment, on certain terms and condition.
As is clear from these decisions, there continue to be workplace developments that employers need to know. We hope that this newsletter will help keep you informed.
This newsletter is produced by Wickwire Holm to keep our clients and friends informed of developments in the law and emerging issues. It is intended for general information purposes only. In preparing and circulating this newsletter, Wickwire Holm is not providing legal or other professional advice. Readers are encouraged to consult their professional advisers before taking any action on the basis of information contained in this newsletter. If you have any questions about any issues raised within this newsletter or a related issue, please contact us at firstname.lastname@example.org or 902.429.4111.