McCarthy Tétrault launched its 13th blog today, Alberta Employer Advisor, to help clients manage the challenges they face in today’s workplace. The blog provides employers and HR professionals with analysis of the latest legal issues that affect employment-related practices, labour and human resources policies. In addition to providing clients with insights on the implications of new case law, as well as updates on the latest legislative and regulatory developments, the blog will be regularly updated with practical tips, specifically relevant in the Alberta marketplace. We encourage you to visit the blog and subscribe for regular updates.
Employment agreement interpreted in light of statutory right to maternity leave
The recent decision of the B.C. Supreme Court in Sowden v. Manulife Canada Ltd. is noteworthy for its interpretation of a written agreement regarding bonus payments, and the court’s reluctance to allow an employer to use an employee’s maternity leave as a reason to reduce her bonus payment.
Janice Sowden was a regional marketing director for Manulife Canada Ltd. (“Manulife”). Her remuneration was made up of a base salary plus a variable bonus, calculated partly on her success in recruiting new financial advisors to work for Manulife. In essence, the more valuable the assets brought to Manulife by Ms. Sowden’s recruits, the higher her bonus. Ms. Sowden had worked for Manulife for 20 years when she was dismissed in a corporate reorganization. In an earlier decision, the court had determined that Ms. Sowden was owed damages for wrongful dismissal based on a notice period of 20 months. This case concerned the calculation of those damages, especially her bonus for the 2012 year.
Ms. Sowden’s recruiting target for 2012 was set at $125 million, and confirmed in a letter to her in March, 2012. When the target was set, Manulife knew that Ms. Sowden would be going on maternity leave later in the year, but did not adjust the target to take this into account. Manulife also advised Ms. Sowden that her bonus was capped at 135% of base salary.
Ms. Sowden exceeded the target four months early, landing a deal bringing in several new recruits and portfolios worth hundreds of millions of dollars. It was the most significant recruitment of her career and probably the largest ever for Manulife. In the period leading up to the deal, her supervisor made several statements to the effect that if she exceeded the recruiting target, she would be awarded appropriately and the bonus cap would not apply. To seal the deal, Ms. Sowden worked extremely long hours, right up until the day before she gave birth.
Contrary to Ms. Sowden’s expectations, when Manulife paid Ms. Sowden her bonus in early 2013, it applied several deductions to the amount paid. Despite assurances to the contrary, Manulife applied the 135% bonus cap. In addition, it prorated the bonus to reflect the four months of maternity leave she took in 2012. Ms. Sowden returned to work in March 2013. She was notified in late May that her employment would be terminated nine days later.
In defending its bonus calculation before the court, Manulife relied on a term in the letter setting out her bonus entitlement which stated that “If you take an approved leave of absence your bonus will be prorated accordingly”. The court found that the term could not apply, since Ms. Sowden had “an absolute right to maternity leave under s. 51 of the Employment Standards Act”. It held:
[T]he recruiting portion represented a specific, calculable amount that [Ms. Sowden] had fully earned before her maternity leave. If the parties contemplated prorating of that amount, [Ms. Sowden] would have in effect been penalized for exercising her statutory right to maternity leave. I find the agreement cannot reasonably be read in that way and the recruiting portion of the bonus was not subject to prorating.
Regarding the statements made to Ms. Sowden by her supervisor, the court reasoned that employment contracts differ from others in that they govern long-term, changing relationships: “[t]he terms of the contract may vary over time and may be implied by the court, based on conduct and the history of the relationship”. Although the March letter set out certain terms of Ms. Sowden’s employment, in the court’s view, it did not constitute the entire contract, and it was possible to alter those terms through later discussions. Ms. Sowden’s supervisor had “led [her] to believe”, at several different points in time, that she could expect a bonus over and above what the March letter provided, if she landed the big deal. The agreement set out in the March letter had been varied by these statements so that the cap did not apply to the recruitment portion of the bonus derived from that deal.
Manulife had paid the plaintiff a bonus of $81,000 in 2013. After recalculation to reflect Manulife’s various errors, the court determined that the bonus should have been $62,500 higher. Manulife also owed Ms. Sowden $320,000 in damages in lieu of notice. After deductions for certain payments it had already made, Manulife was found to owe Ms. Sowden $143,111.52.
Case law on the employment contract implications flowing from statutory maternity/parental leave is not common and can be inconsistent, so it interesting to see a decision in which the issue is painted in terms of “reasonableness”. Leaves under the Employment Standards Act create clearly-defined statutory rights, but it is important to remember that these rights can affect the interpretation of an employment contract.
Employers would also be wise to take note of the court’s conclusion that the employment agreement was modified by the supervisor’s verbal statements. The interpretation of a contract is always carried out in light of the surrounding circumstances such as, in this case, the unusual scope of the recruiting effort. The court found it unlikely that Ms. Sowden would have worked as hard as she did until the last day of her pregnancy if she had not been led to believe that she would receive an additional bonus. The fact that her supervisor may have been purposely vague did not prevent the court from finding that the contract had been varied.
We are delighted to welcome Laura DeVries as an associate in McCarthy Tétrault’s Labour and Employment Group in Vancouver. Prior to joining the firm in November of 2014, Laura clerked at the Supreme Court of Canada for Justice Andromache Karakatsanis. Laura received her law degree from the University of British Columbia in 2013.
Laura has already established herself as a confident and knowledgeable speaker on contemporary labour and employment issues at our recent client conference and demonstrates a keen enthusiasm and natural aptitude for the broad variety of issues that arise in labour and employment.
We are very happy to have Laura join our group and look forward to her continued involvement in assisting clients and her contributions to the firm’s blog and other publications into the future. Welcome, Laura!
Human Rights Tribunal found nanny was sexually assaulted, isolated and underfed by employer
Where an employer fails to meet its human rights obligations, the damages awards for the “injury to dignity” component of damages are becoming increasingly significant. The recent decision of the British Columbia Human Rights Tribunal in PN. v. FR and another (No. 2), is an example of the scale of penalty an employer can face where the breach of human rights obligations is at the extreme end of the scale.
The complainant, a domestic worker from the Philippines, was placed with the respondents as a housekeeper and caregiver to their two children. The complainant had two children of her own, whom she left in the Philippines, and she sent money back to support them. She first worked for the family in Hong Kong and, after about a year, the respondents persuaded her to join them when they moved to Canada. The complainant was only in Canada for about 6 weeks before she escaped from the hotel where the family was staying, eventually taking refuge with an organization that assists victims of human trafficking.
The complainant’s treatment while in Hong Kong and after the move to Richmond, British Columbia, was horrendous. As summarized by the Tribunal:
 While working for the respondents, PN was exploited. She had to perform sexual acts at the whim and insistence of her employer, she was humiliated and degraded by her other employer, and she was even made fun of by the children who were in her care. She was isolated, underfed and treated like she was sub-human; all because she was a young Filipino mother who needed the job to take care of her own children.
The complainant’s contract of employment, entered in Hong Kong, provided for pay and conditions well below the minimum standards required in British Columbia, including working long hours with no break and no overtime pay. After paying for agency fees and training, the complainant started her employment in debt, and the respondents would remind her that she needed to comply with their demands so that she could repay her debt and support her children. Before moving to Canada, the respondents forced the complainant to sign another contract, which required her to repay the cost of her Canadian visa and plane tickets (almost $14,000) if she left her employment without giving a month’s notice.
When the family arrived in Canada, they stayed in a two-bedroom suite in a hotel while the respondents looked for a house to buy in Richmond. The complainant was not permitted to leave or eat without permission, and the sexual assaults by the male respondent continued. He warned her that if she told anyone, she should be worried about her children. Depressed and isolated, the complainant finally took an opportunity to leave when she was supposed to be emptying the garbage, walking away with no money, clothes, passport, or even her glasses. She knew no one and, after receiving help from a Filipino hotel employee and people she met through a church, she was eventually put in touch with a specialized facility which assists victims of human trafficking. She discovered that the visa obtained by her employers was visitor’s visa, so she was unable to work or to access any government benefits. She received counselling and was diagnosed with post-traumatic stress disorder.
In an earlier decision, the Tribunal ruled that it had no jurisdiction over the treatment of the complainant while she was working in Hong Kong, but went on to address the consequences of the incidents that occurred in Richmond.
The Tribunal held that the complainant was discriminated against on the intersecting grounds of race, colour, ancestry, family status, sex and age, accepting expert evidence on stereotypes and prejudices that apply to Filipino domestic workers, especially in Hong Kong. The complainant was found to have been a “virtual slave”, and her treatment was based on the characteristics stereotypically attributed to Filipino workers.
In addition, the Tribunal found that the respondents retaliated against the complainant after she filed her complaint, when their Hong Kong lawyers wrote demanding repayment of the $13,600 in the agreement, and alleging that her claims in the human rights complaint amounted to defamation. The letter was copied to various people not parties to the human rights complaint, in order to undermine the complainant’s credibility and to attempt to have her deported from Canada.
The complainant was awarded wages for the time worked in Canada based on the minimum standards in the Employment Standards Act, including overtime pay. Strangely, although the Tribunal accepted the existence of an employment relationship and the requirement to pay wages for the purposes of past wage loss, it refused to award any damages for future wage loss. The Tribunal gave two reasons for this conclusion: first, that doing so would “enforce a discriminatory contract”; and second, that the complainant was not entitled to work in Canada. It seems inconsistent that the Tribunal would not, at the very least, find that the complainant would have been entitled to payment of the minimum severance amount under the Employment Standards Act.
Addressing damages for injury to dignity, feelings and self-respect, the Tribunal noted that the highest award from the Tribunal for such damages to date has been $75,000. Finding that the impact of the respondents’ discriminatory conduct was “severe”, the Tribunal held that $50,000 was an appropriate award.
Frankly, given the appalling nature of the respondents’ treatment of the complainant in this case, it is difficult to imagine why the Tribunal would not have awarded the complainant at the very highest end of the range of damages for injury to dignity. The Tribunal found that the complainant was treated as a possession, repeatedly sexually assaulted, isolated, intimidated, and deliberately exploited by the respondents. If nothing else, this decision provides a very high bar for the type of severe misconduct which will justify an award of damages in the range of $50,000.
While the circumstances of this case are uncommon, the more general tip employers should take from this decision is to ensure that they seek advice from Canadian employment counsel before bringing employees into the country. Failure to comply with immigration requirements, employment standards and other related workplace laws can lead to numerous headaches which can be avoided with proper planning.
The duty to accommodate is a difficult process because it is uncertain. Whether an employer has met its duty to accommodate under human rights law requires an individualized assessment on a case-by-case basis. In addition, the standard of “undue hardship” is a high and moving target, and will depend on the employer’s size, nature of operations, resources and other relevant factors. A recent decision, however, may have moved the target closer to “reasonableness” than “the point of undue hardship”.
In Wilcox v. University of British Columbia, the British Columbia Human Rights Tribunal dismissed a human rights complaint from a former research assistant who had developed a severe mouse allergy and was unable to perform the duties of her position. Dr. Wilcox was employed as a research assistant at the University’s Rederivation Facility and Animal Care Services. A core part of her duties (about 50%-70%) was to perform daily work with live mice, including maintaining colonies, administering hormone treatments, and testing blood samples. Unfortunately, Dr. Wilcox developed a severe allergy to mice and could no longer work with or around mice. The University was initially able to accommodate her in a temporary assignment which did involve any work with mice; but when that work, and subsequently her paid sick leave, ran out, she was placed on an unpaid leave of absence.
While Dr. Wilcox was on leave, the University searched for alternate vacant positions for which she was qualified and which did not involve working with or close to mice, including positions which would have been considered a promotion. The University only identified two positions during Dr. Wilcox’s leave that met these criteria, and provided these job postings to her. However, Dr. Wilcox did not apply for either one because she felt she was not qualified.
The University eventually decided to close the Rederivation Facility for financial reasons. It provided affected employees with notice of termination and, since Dr. Wilcox was on a leave of absence, she was provided with pay in lieu of notice of termination.
Dr. Wilcox alleged that she had been discriminated against on the basis of a disability when she was placed on an unpaid leave of absence and also alleged that the University did not meet its duty to accommodate because it conducted an unduly restrictive search for alternate positions. Dr. Wilcox also took the position that it was discriminatory for the University to provide her with pay in lieu of notice rather than working notice, as other employees were provided.
The Tribunal disagreed with Dr. WIlcox and dismissed the complaint. It found that Dr. Wilcox had no reasonable prospect of success in showing that she had suffered discrimination by being placed on an unpaid leave of absence after the end of her temporary accommodation. Since she was unable to work (and not otherwise eligible for any other paid leave of absence), continuing her employment on an unpaid leave of absence was not adverse treatment. The Tribunal also found that the University conducted a reasonable search for accommodations and was not obliged to displace another employee to create a vacancy for Dr. Wilcox or to create a tailor-made job for her. Simply put, an employer does not breach the Human Rights Code because it seeks to accommodate an employee with an available job. Further, the Tribunal found there was no reasonable prospect of Dr. Wilcox showing that the termination of her employment was related to her disability. The Rederivation Facility closed for financial reasons and all employees were affected. There was no adverse treatment in providing Dr. Wilcox with pay in lieu of notice instead of working notice, since she was unable to work at the facility at the time of the closure.
The most valuable part of the Tribunal’s decision, for employers, is the emphasis on “reasonableness” over “undue hardship”. In paragraph 83, the Tribunal went to some length to explain that the duty to accommodate does not extend, technically, “to the point of undue hardship”. Rather, the Supreme Court of Canada in Ont. Human Rights Comm. v. Simpsons-Sears,  2 S.C.R. 536 (“O’Malley”) actually expressed the duty as a requirement for reasonableness “short of undue hardship”. In other words, the employer is obliged to accommodate within a range of reasonableness, which may well involve a measure of hardship, but not “undue” hardship. As stated by the Tribunal, “[t]o state the duty to accommodate extends ‘to the point of undue hardship’ implies a precision of measurement incongruous with the reasonableness standard expressed in O’Malley.”
This decision should give some hope to employers who make good faith and comprehensive attempts to accommodate employees with disabilities. While each case must be assessed individually and taking into account all relevant factors, an employer may meet its duty to accommodate if, after a comprehensive search, there are simply no available positions for which an employee is qualified and which fit with his or her medical limitations.
New fees and regulatory changes for the TFWP are set to take effect on February 21, 2015. Our colleagues in Montréal have published a helpful article to help employers understand how these new fees and regulatory changes may impact their engagement with the TFWP. The full text of the article can be read here.
In light of the scrutiny the TFWP has been experiencing of late, this may not be the last set of changes we see in the near future and we’ll be sure to report on further developments as they arise.
Until last Friday, the Royal Canadian Mounted Police was Canada’s only police force that was legislatively prohibited from unionizing. On January 16, 2015, the Supreme Court of Canada ruled in Mounted Police Association of Ontario v. Canada (Attorney General), 2015 SCC 1, that the exclusion of RCMP members from the definition of “employee” under the Public Service Labour Relations Act (Canada) [PSLRA] and the Staff Relations Representative Program (“SRRP”) infringed on RCMP members’ freedom of association under s.2(d) of the Charter of Rights and Freedoms. This decision overrules the Court’s previous decision in Delisle v. Canada (Deputy Attorney General),  2 S.C.R. 989.
The Court held that, although the SRRP purported to provide a scheme of labour relations that met the requirements of s.2(d), the SRRP is an organization that RCMP members did not choose, do not control and requires them to work within a structure that is part of the RCMP management organization. As such, it does not provide the meaningful and independent choice of process for collective bargaining that is necessary to meet the purposes of s.2(d). The Court further held that the exclusion of RCMP members from the collective bargaining scheme under the PSLRA could not be justified under s 1 of the Charter.
Despite the Court’s finding of unconstitutionality regarding the PSLRA and the SRRP, the Court did not go so far as to say that the RCMP must be permitted to unionize under the PSLRA. In keeping with its ruling that s.2(d) guarantees a process and not a specific outcome, the Court allowed that “Parliament remains free to enact any labour relations model it considers appropriate to address the specific context in which members of the RCMP discharge their duties, within the constitutional limits imposed by the guarantee enshrined in s. 2 (d) and s. 1 of the Charter.”
The Court granted Parliament 12 months to address its decision. We will report on Parliament’s measures when they are announced.
We are very happy to announce that Kirsten Hume has joined McCarthy Tétrault’s Vancouver office as counsel in its Labour and Employment group.
Kirsten has a wealth of experience practicing Labour and Employment law and has advised and represented employers on a wide range of employment-related matters, including:
- disability, accommodation and related human rights issues, and defending employers from human rights complaints;
- dismissal of employees, with and without just cause, and representing employers in actions for wrongful and constructive dismissal;
- drafting and preparation of employment agreements, policies and other workplace documents;
- complex jurisdictional issues related to long-term disability and other benefits provided in accordance with collective agreements;
- medical arbitration, litigation and labour relations board applications related to disability benefit entitlement under trusts and collective agreements;
- workers’ compensation issues such as fraudulent claims, changes in industry classification and bullying and harassment;
- injunctions and contempt rulings restraining illegal conduct in labour disputes; and
- workplace investigations into allegations of harassment and defamation.
Kirsten is a regular speaker at industry and continuing legal education conferences, and is co-author of “An Employer’s Guide to Dismissal” (Canada Law Book, 2007) and the periodical “IMPACT Labour Law & Management Practices” (Canada Law Book, 2010-2014).
Kirsten received a BA from the University of Queensland, Australia in 1994 and her LLB from the University of British Columbia in 1998, and was called to the British Columbia bar in 1999.
Please join us in welcoming Kirsten to McCarthy Tétrault’s Vancouver L&E group and stay tuned for her contributions to our various publications and other initiatives.
Our colleague in Ontario, Melissa Kennedy, recently posted a helpful article about establishing, evaluating and managing employees’ work performance. As 2014 draws to a close, revisiting, and potentially, re-evaluating the performance management program in your workplace is a good idea and Melissa’s article is a great place to start. We reproduce her post below:
As we set to embark upon the year’s end, now is an appropriate time to begin goal setting and implementing employee performance objectives for the new year. Establishing clear expectations which are tied to the overall mission and vision of the organization, and which are aligned with and cascaded from senior leadership, will ensure that employees understand their role and value within the organization, and will work to continually motivate them throughout the year.
A performance management program should be proactive and specific. Goals and objectives should be aligned with the individual’s duties; ensuring that they are challenging, but reasonable, and not so overly aggressive that they be unattainable and seemingly discourage and demotivate the employee. Performance management programs provide an appropriate foundation to the organization’s succession planning efforts and oversight of the talent pipeline. Performance objectives can also be tied to the annual merit or variable compensation structure, to further encourage and drive results.
It is important that manager’s continually check in to ensure that employees are on track with meeting the established performance objectives; a good practice is to meet periodically throughout the year and for a formal mid-year review, to determine whether performance is on target to achieve goals and objectives. This proactive approach will ensure that any inefficiencies or shortcomings are met with support, guidance and clear direction; modifying or revising targets, where necessary.
If employee performance is continually of concern and below expectations, it is important to promptly address this with the individual and document accordingly. Where appropriate, the development of a performance improvement plan (PIP) can seek to correct employee behaviour and get them back on track; formal disciplinary action may be necessary in particular circumstances where the employee is not actively participating in improving their performance. Should it be necessary to end the employment relationship, the organization will be in a good position, having demonstrated their due diligence in managing the employee’s performance.
Lack of Warnings about inappropriate online posts was fatal to employer’s case
As more people use social media to communicate in and out of the office, social media posts by employees are increasingly a concern for employers. In a recent case, the International Triathlon Union (“ITU”) dismissed its Senior Manager of Communications, Paula Kim, because of negative posts she made on her personal blog and social media accounts. In Kim v. International Triathlon Union, the British Columbia Supreme Court found there was no just cause for her dismissal because she had not been clearly warned that her communications put her employment in jeopardy.
Ms. Kim was considered the “voice of ITU”. She was responsible for liasing with the media and writing materials for ITU’s website, press releases, newsletter and Facebook account. Ms. Kim also kept a personal blog where she posted about her life, and had two Twitter accounts, one personal and one with the handle “Paula Kim ITU” where she posted about triathlon matters. ITU did not have any social media, communication or internet policies or a written contract with Ms. Kim, but Ms. Kim later stopped using the “Paula Kim ITU” account when requested by ITU.
Ms. Kim’s employment was terminated after she made a series of tweets on her personal Twitter account and wrote a blog post about her manager. Ms. Kim posted several tweets after an ITU-related event, including:
- “I wonder if other IF congresses have as much propaganda as ours…” and
- “surprisingly fun congress after-party last night. probly [sic] only time I’ll see so many Eboard members hungover & lamenting those tequila shots”.
She also wrote a series of tweets during a triathlon event in which she publicly supported some athletes over others, such as:
- “will prob get in trouble for this but i dont care; team tactics failed. the 6 medallists were on podium.” [sic] and
- “all that talk about brownlees intentionally trying for gold all seems a bit arrogant now…because Gomez was solid in silver position”.
The latter tweets resulted in a formal complaint to the ITU by the Chief Executive of the British Triathlon. Other members of the international triathlon community also wrote complaints about Ms. Kim’s unprofessional behaviour and communications. The last straw was a post Ms. Kim made on her personal blog, in which she compared a workplace disagreement with her manager about her annual vacation to abuse she had suffered as a child.
The ITU did not speak with Ms. Kim about the tweets, complaints or blog post. But, shortly after these events, Ms. Kim’s employment was terminated. She was told at the time that she was being dismissed because her communication style was not in line with ITU. However, the ITU later alleged that it had just cause to dismiss Ms. Kim because of her unprofessional and insubordinate social media and blog posts.
The court disagreed. The court found that, even though Ms. Kim was an experienced communications professional, ITU could not establish just cause because it had not given Ms. Kim any clear warnings that her communications were putting her employment in jeopardy. To the contrary, the court noted that Ms. Kim had received mixed messages from the ITU, including an increase in her salary and continuing in her position, even after the controversial posts. The Court said (at para. 221):
…even had I found that the social media posts amounted to an accumulation of misconduct and that the October 5th blog was the tipping point supporting the plaintiff’s termination for cause, I find that ITU cannot rely upon cumulative cause as a ground for the plaintiff’s termination because ITU did not give the plaintiff an “express and clear” warning about her performance relating to the social media posts, and a reasonable opportunity to improve her performance after warning her.
In the absence of just cause for her dismissal, the court awarded Ms. Kim five months’ pay in lieu of notice as damages.
In our view, the lessons for employers from this case are clear:
- Communicate your expectations. Employers should ensure that all employees – even those who ‘should know better’ – understand what is expected of them. This can be done effectively through written policies, such as a social media or similar policy or employee handbook, provisions in the employee’s contract, or through other types of communication and training. If employers do not clearly communicate their expectations for employees’ conduct, especially when such conduct occurs outside of work (such as on personal social media or blogs), it will be more difficult to establish just cause when employees do not meet those expectations.
- Do not ignore a performance problem. If an employer has concerns or receives complaints about an employee’s performance, the employer should address them directly and promptly with the employee, investigate as necessary to find the facts, and, if appropriate, issue clear warnings when an employee’s performance is unacceptable and may lead to his/her termination. You can read more about dismissing an employee for poor performance in our previous post here.