Good morning. I think we'll begin our program. And hopefully, we have a big group today and everyone will join us. But we'd like to get started because we have a lot of content we'd like to review with you today.
My name is Elisa Scali. I'm a partner with Gowling WLG, practicing in the employment labor and equalities group. And I will be your moderator for today's session.
I'd like to begin by asking everyone to acknowledge and reflect on the fact that as we gather in this virtual space today, the ground beneath our feet, wherever we happen to be, is territory that is belonged and being home to various Indigenous people since time immemorial. We ask you to take this moment to acknowledge the Indigenous and matey communities in your location. I personally am speaking from the Ottawa region, the traditional territory of the Algonquin Anishinaabe nation.
On behalf of the employment labor and equalities group, which I will call ELE for short, I'd like to welcome you to our final webinar of our '22 webinar series, 2022 year in review. We have a panel of experienced Gowling WLG employment lawyers with us today to help us unpack the cases and the legal developments that have most impacted Canadian employers during the last 12 months.
I'd like to introduce you to Andrew Bratt, Neena Gupta, and Mark Josselyn, all partners in our ELE practice group, practicing exclusively in the area of employment law. Andrew works out of our Toronto office and is the leader of our national ELE practice group. Nina works out of our Waterloo office and is the leader of the Waterloo ELE team. Mark is based out of Ottawa with me and he is the leader of our Ottawa ELE team.
As we approach the end of 2022 and prepare for the start of the new year, thought it'd be fun to ask Andrew, Nina, and Mark what their resolutions are for the new year. If you know Mark, he's a huge soccer fan and still plays soccer even at his age. Mark's resolution is to stop betting on the World Cup soccer games. World Cup is not going quite as Mark predicted this year.
Nina lives on a lovely farm outside of the city, and she's enjoyed spending time with her animals. But she's resolved to spend more social time with humans in 2023 COVID permitting. And finally, Andrew, like many of us jumped on the Peloton trend during COVID.
And like many of us, his Peloton has become his most expensive hanger. Andrew's committed to jumping back on that bike, and he hopes to crush his 2022 average of one ride per quarter. I'm in the same boat, Andrew.
So before we begin our program, I just have a few housekeeping items to share with you. The PowerPoint you will see today will be sent to you following the webinar. The webinar is also being recorded. So you will have access to the recorded session following this webinar. It will be posted on our web page.
Also, if you'd like to view our your previous webinars, the link to all of the previous webinars that we've held in 2022 in the Employment Law Group can be found in our chat. Finally, if you have any questions throughout the presentation, please feel free to add them to the Q&A. And we will do our best to address as many of your questions as time permits today.
The presentation today is not intended as legal advice. Because this is high level overview, it's impossible for us to cover all relevant details. For specific advice, please consult qualified legal counsel before making any decisions or taking any action. As things evolve, your best course of action could also evolve. Follow up to date and reliable sources for your information.
So on today's agenda, we have major developments in the law, people behaving badly, COVID 19's impact on the law, the unrelenting attack on termination clauses, the look forward, and Q&A. So let's get started with major developments. In 2002, there were two fairly significant legal developments in Ontario. So significant that we actually dedicated two full webinars to these legal developments.
And I mentioned earlier-- the links to these webinars can be found in the chat. Now Andrew, can you provide us with a brief overview of these developments?
Sure. Thanks, Lisa. And good morning, everyone. Before I do that-- one small correction. My Peloton is, in fact, a very expensive hanger, but it's also my most expensive kid's toy because my kids love the Peloton. I don't know what they do on it, but more than I do.
Anyhow, so as Lisa mentioned, so we've done specific on demand webinars on both the right to disconnect and delete electronic monitoring. So the purpose of the next couple of minutes is not to go through these legislative updates in significant detail. But we would be remiss not to mention them given that the whole purpose of today is to talk about major developments over the past 12 months.
So the right to disconnect was an Amendment to the employment Standards Act, specifically the introduction of section 21.1.2 which effectively requires that employers that have 25 or more employees must, on or before March 1st, have a policy that addresses disconnecting from work. Now the catch phrase, right to disconnect, is actually somewhat misleading and frankly inaccurate because the Employment Standards Act does not create any additional rights. There have been no amendments to the hours of work provisions, there have been no amendments to the overtime provisions.
And so all the headlines that you saw in the media about it now being illegal to contact workers after work or this new right to disconnect is actually frankly not correct. The only requirement is that you have a policy that addresses disconnecting from work. But what's interesting-- I call this legislation meaningless because at the end of the day, the ESA does not specifically say what the policy has to provide.
And so we've seen sort of a wide spectrum. You've got some employers that have said, this is just another piece of legislation, more stuff being thrown at us, we're not going to take this seriously. And they've introduced a policy that really does the bare minimum to comply with the requirements of the act, which is perfectly fine.
And then on the other hand, you've seen some employers who have said, you know what, we're going to use this opportunity to really advance our mental health and wellness platforms, and we're going to use this opportunity to show our people that we really do put our people first, we really do care. And they have created rights even though there's no legal requirement to do so. Both strategies work. But the moral of the story is that the right to disconnect is not, in fact, a right. It's just a requirement that you have a policy addressing what disconnecting from work looks like.
In terms of electronic monitoring-- so this one's a little bit different. Electronic monitoring is not actually defined in the legislation. I will say this that from our perspective, the majority of us have taken a very broad interpretation of what electronic monitoring actually means. And frankly, I think you could take the position that it essentially is any way in which an employer can actually monitor electronic activities of their employees.
And so I think you have to think about this from the perspective of both active and passive monitoring. Active monitoring is pretty obvious. You're looking at your employees emails, you're looking at what they're doing on the internet, on their traffic, you've got a GPS in their truck. Passive monitoring, which I suspect more employers are doing, is when you're creating things like data logs. So for example, every time somebody swipes into the office, you're not necessarily monitoring that and looking at it every day, but you have the ability to go back and look at that data should you need to.
So what does the actual requirement in the Employment Standards Act say? Again, as of January 1st, any employer that has 25 or more employees has to have a written policy in place with respect to electronic monitoring. Unlike the right to disconnect however, this legislation is somewhat more clear in terms of what the policy has to say.
So the first question you have to ask yourself is whether or not you actually monitor your employees electronically. Today's day and age, I think it's pretty hard to imagine a scenario where an employer doesn't do some form of monitoring, be it active or passing. But then most importantly is the policy needs to then say that to describe how and in what circumstances your electronically monitoring and for what purpose.
And we can get into a very lengthy debate, and we do in our other webinar, about what exactly that means. Very, very broadly, I'm of the view that you don't need to provide technical specifications on how you do monitoring. But you should be saying to your employers or to your employees, these are the various forms of communication-- cell phones, computers, GPS is in the truck, whatever it may be, and this is how we monitor it, be it actively or passively. And I think you do have to provide some level of detail much more so than what we just described with the right to disconnect.
Thanks, Andrew. So again, if you want more information on those two major developments, we have two full webinars that provides a lot of detail and is very informative. And you can find the links in the chat.
So in addition to these major legal developments, we had a lot of developments in the case law. And we're going to start with our first topic, people behaving badly. In 2022 we saw, unfortunately, that a common theme in the case law was harassment in the workplace. And Mark, the court recently grappled with the issue of whether harassing behavior was both just cause that common law and willful misconduct under the Employment Standards Act. Can you tell us, Mark, what the court decided in that case and give us a summary of their very interesting analysis?
All right. Good morning, everyone. We're starting off with a decision which, quite honestly, a number of us have struggled with. It's the Court of Appeal decision in Render versus ThyssenKrupp Elevator. And it's a decision where the Court of Appeal overturned what the trial judge had done. And the trial judge had decided that the employer had just cause for dismissal.
We were dealing with a long service plaintiff. He was a 30 year manager. And he was fired following a single incident that occurred in the workplace where the plaintiff slapped a female coworker on her buttocks.
And in what some of us are describing as a curious decision, the Court of Appeal found that even though the behavior at common law amounted to enough conduct to deprive the plaintiff of his entitlement to wrongful dismissal damages of the law, he was still entitled to his ESA entitlements. And in that case, it was eight weeks under Section 57 of the act.
Remember that there's a regulation in the Employment Standards Act, it's 28801. And it says that the entitlement to notice or payment in lieu is only eliminated where an employee has been guilty of willful misconduct, disobedience, or willful neglect of duty that is not trivial and has not been condoned by the employer. So here, the Court of Appeal held that the conduct did not rise to the level of willful misconduct. I say this is curious because the finding of the trial judge was that the touching was not accidental.
The Court of Appeal focused on the fact that the conduct was not preplanned but rather done in the heat of the moment. And they went on to say it's not the type of conduct in the circumstances that was intended by the legislature to deprive the employee of his statutory benefits. With the greatest of respect, there are many of us who do not feel that the legislation requires pre-planning in order for the conduct to be willful.
What makes the situation even more problematic from my perspective was the subsequent discussion amongst some of the plaintiff's colleagues after the slap where one asked the slapper what it felt like to touch your ass. And the slapper responded, for $10, you can shake my hand. One would have thought that this is not the sort of behavior that we tolerate in a 2022 workplace.
While the Court of Appeal went through the three part test that we're going to talk about when we get to some of the other case law, they ultimately found that it was a proportionate response to terminate the person at common law. But it, again, didn't rise to the higher level required to disentitle a plaintiff to his statutory entitlements. Andrew, do you have other thoughts?
Yeah, I do. The only thing that I would add is that what struck me when I first read this decision is that it was surprising for all the reasons Marcus described. But from a legal perspective, I wasn't shocked because it's, again, just one more example of how the courts are constantly attacking termination provisions and finding ways to bend over backwards to ensure that people get at least their statutory entitlements. It's just another decision that follows the [inaudible] case which I believe you talked about last year's update.
What I would say, though, is that I'm curious to see what happens in the future in other provinces. And I say that because-- don't quote me on this, but I'm fairly certain that aside from Ontario, there's only one other province that has language in their employment standard statute that refers to something other than cause or just cause. And so I'm curious to know that this distinction that the courts constantly create between the threshold for cause a common law and, in Ontario, willful misconduct-- I don't know that that analysis works in other provinces because they do have legislation that mirrors the common law. So we'll see where that goes.
Thank you, both. But while we're on discussing the decision of Render, we did have a question from one of our attendees. How should an employer deal with a situation where they have flagrant terminal conduct that doesn't amount to willful misconduct under the ESA, and the employer must provide those ESA entitlements? What's the best way to deal with that termination?
I don't know. I think you might still want to terminate for cause and then maybe offer slightly more than the statutory entitlements in exchange for a release on without prejudice basis or pay out the statutory entitlements. I think those are really the two choices. Andrew, Nina?
Oh, go ahead, Andrew.
I was going to say, I agree. I think, also, the one thing to keep in mind is, of course, the message that you're sending to the rest of your employee population. I mean, let's be honest, confidentiality provisions are sometimes worth the paper they're written on, sometimes worth the paper they're written on. And so to the extent that the misconduct is similar to what you just saw in the case that Mark described.
I, as a business owner, would be inclined to fire for cause and roll the dice and take my chances. Then if a court wants to tell me that that's not willful misconduct, which frankly is quite ridiculous, so be it. But I want to send a message, a strong message, to my employee population that this is completely unacceptable, and we're not going to incentivize or reward people for that.
Thank you. Now keeping with the topic of harassment in the workplace-- we see that in many cases where harassment occurs in the workplace, employers may sometimes be faced with claims brought by the employee that has been subject to harassment. We saw two significant cases this year of claims in this context. Mark, can you tell us how the court dealt with the claims and whether employers may potentially be exposed to liability in connection with a workplace harassment?
Yes, you're referring to the Incognito and Skyservices case, another 2022 decision. It's another case involving people behaving badly. And it's particularly informative on the topic of vicarious liability for sexual harassment.
So let me take you through what the allegations were in the plaintiff's statement of claim. As she alleged that throughout her employment, Skyservices encouraged her to expose herself by showing more cleavage and leg, wearing thongs, tight pants, low cut tops to show off her body at all times outside the scope of employment. As she alleges that while they were traveling with colleagues in a vehicle, coworkers aggressively asserted that she exposed sexual parts of her body to them. Then at a Christmas party, she was subjected to multiple sexually explicit comments and remarks regarding her gender and her body.
And as a result of all of these, what she alleges were sexual assaults, sexual intimidation, and sexual harassment, she underwent breast reduction surgery to lessen herself as a target. And after that, a director at Skyservices alleged to have told her that she ruined her body by reducing the size of her breast, calling it a waste. So those were the allegations.
And you need to be aware that there is a section in the Ontario Human Rights code 46.3 which expressly excludes vicarious liability for sexual harassment by an officer or an employee of a corporation and prevents findings of vicarious liabilities against an employer in respect of claims of sexual harassment. There is, at least at this point in time in Ontario, no independent tort of sexual harassment. So note that, in this case, the plaintiff also made a claim of vicarious liability for sexual assault against the employer, and that claim was not challenged by the defendant and it survived the motion to strike. The motion to strike was successful with respect to the claim of vicarious liability for sexual harassment, again, based on Section 46.3 of the code. Andrew, thoughts?
Yeah, so I think, in general, I agree with the no vicarious liability in terms of a sexual harassment claim because inevitably, sexual harassment is outside the scope of your employment. That's not part of what your job is. That being said, I don't think this decision necessarily changes the analysis from a constructive dismissal perspective.
And so I think looking at workplace investigations-- and of course, that's a topic for a different day-- I think what ultimately is going to determine whether or not subjecting somebody to sexual harassment in the workplace is a constructive dismissal is how the employer investigates the allegations and how they address them. So to the extent that the employer takes the allegation seriously, conducts a thorough investigation, comes to a conclusion, and then takes appropriate disciplinary action in the circumstances, I find it hard to believe a court would then say, that's a constructive dismissal.
But if you don't do all that, and you're continuously subjecting the individual to a poisoned or toxic work environment, now I think there's going to be a potential constructive dismissal allegation and a successful claim. And so just because there's no independent [inaudible] of sexual harassment doesn't mean that employers can't face damaging awards or consequences if they are dealing with the sexual harassment allegations in the workplace.
I think that's actually a nice segue into our next case, which is the Morningstar and WSIAT decision. Originally, what happened in that case was the claim by the employee was held to not be something that could go forward in the courts. The WSIAT said that the constructive dismissal, wrongful dismissal claim was inextricably linked to a work related chronic mental stress injury. And that fell within the exclusive scope of the Act Section 13 3 of the WSIA.
And so it wasn't capable of being pursued as a civil action in the court. And the employee applied for reconsideration and also was unsuccessful and then went on to the Divisional Court. And the Divisional Court overturned the decision that barred the bringing of a constructive dismissal claim. So that's what Andrew was just talking about.
So the Divisional Court went through and basically said the WSIAT misapplied the applicable legal test. So it's very much a technical argument. And they found that there was an error in linking the facts of the case only to a workplace injury, ignoring a viable claim for constructive dismissal, which was separate and apart from any claim of a workplace injury. So the Divisional Court stated any failure to at least consider the type of action and the nature of compensation offered and not offered under the act in a section 31 analysis would appear to involve an unreasonable oversight. This is especially so in the case of damages for constructive dismissal, what Andrew just took you through.
So rather than remaining this back to the WSIAT, the court ordered that the employee be permitted to pursue her constructive dismissal claim and related damages in the Superior Court. So while the decision is important, given the divisional court's conclusion that the plaintiff was not precluded from advancing a civil action for constructive dismissal based on workplace bullying and harassment, it's so also another example of workplace behavior that attracted negative attention from the bench. And what was that behavior? I'll take you through it.
It involved workplace colleagues engaging in a campaign of harassment described as long term cruel and humiliating treatment, which included spraying her with Lysol, covering the seat of her chair with towels and bath mats, alleging that an odor emanated from her. And when she complained to management, the response she got was either indifference or humiliation, suggesting that she use feminine products, shower, and wash her uniform even though the applicant had explained to her manager that she was suffering from a medical condition. She was even required to apologize to one of her abusers and told to work more cohesively with team members.
So after taking a medical leave based on a doctor's recommendation, she was provided with the results of an internal investigation concluding that there had been no harassment and that her colleagues were acting out of concern for her health and safety. So again, another wonderful example of people behaving badly. Nina, over to you.
Yeah, this is a really interesting case on a number of fronts. So the court, the Divisional Court essentially says, constructive dismissal effectively is a different claim than damages for a work related injury, in this case, work related chronic mental illness. What I find very interesting is two things that didn't really come up in the Divisional Court reasons.
One is the whole point of workers' compensation in Canada is essentially a compromise between a worker's right to claim tort damages in court and the worker's need to get essentially benefits in a much more expeditious way. And so when we see constructive dismissal claims, we have the contract claims, which is pay in lieu of notice. But we often have aggravated and punitive damages being claimed. And I'm going to be curious to see whether or not the Superior Court is prepared to award those type of damages which typically have been associated with tort like claims in a constructive dismissal claim that has a worker's compensation element to it.
The other thing that is also important to note that at least in Ontario, WSIB benefits received by an employee can be a credit or offset against damages that would be ordinarily payable by the employer for wrongful dismissal. So there's a lot of questions raised by Morningstar. And so I'm curious to see how these types of cases ultimately get resolved in the next few years.
Well, hopefully, we will see that happen in the next few years. Now, Andrew mentioned the importance of a thorough workplace investigation. Nina, we had a recent decision that highlights the importance of conducting a proper workplace investigation in response to a claim of harassment. Can you take us through that case?
Yes, this is actually quite an unfortunate case. There's a gentleman by the name of Hucsko. He's 62 years old. He works 20 years at a company.
And there's an allegation by a project manager, Samar Niazi, who indicates that on four separate occasions, there was sexualized comments made by Mr. Hucsko. Now to be fair, on the facts, the comments are, I would say, ambiguous and sexualized innuendo. But the employer essentially did the right thing. The employer essentially got an independent investigator to essentially hear from Ms. Niazi and Mr. Hucsko and look at the context.
And the investigator determined that there was a sexualized component and it was a form of sexual harassment. Mr. Hucsko disagreed with the investigators finding and, in fact, when to end request a time for legal advice and legal representation, which he was given. The lawyer responded that Mr. Hucsko disagreed with the investigator's findings and did not actually agree that there was sexual harassment. And although the employee would comply with their corrective actions requested, i.e., commitments regarding future behavior, the employee would not apologize.
That was treated as caused by the employer. This went to a full trial in the local courts in Waterloo region where I'm speaking from. And Justice Taylor at the trial found that the comments did not constitute sexual harassment-- so this was essentially contrary to the workplace investigator's findings-- and that Hucsko was not terminated for cause, but rather for his serious and willful insubordination.
Now it's really interesting because Justice Taylor then went on to say-- something that I found very odd-- which is essentially the employer had a choice. He equated this to a personality conflict where an employer has a choice about which employee they're going to terminate. Unfortunately, as most of us know, if an employee makes a good faith allegation of sexual harassment or workplace misconduct, they are protected from reprisal. So it was not open to the employer to terminate Ms. Niazi.
Anyway, the whole matter-- and Justice Taylor actually awarded damages in favor of Mr. Hucsko. This naturally went to the Court of Appeal. In the court of appeal decision, the Court of Appeal disagreed with the trial judge, agreed with the workplace investigator, and also found that in light of Mr. Hucsko's refusal to apologize for his inappropriate actions quite frankly even after receiving legal advice, the employer really did not have a choice but to terminate Mr. Hucsko.
Now what's very interesting is-- and these are two different panels at two different times. But it's very interesting how, in this case, there was no reference to the ESA minimums, the eight weeks of notice, and the 20 approximately weeks of severance. So none of that.
We saw that in Render which was just covered by Mark Josselyn. None of that was dealt with by this panel of the Court of Appeal. Bottom line-- this case shows what happens when an employer invests in a proper workplace investigation, issues reasonable discipline based upon that investigation, and the employee still disagrees with it and refuses to comply. It's an unusual case where an employer was able to claim costs and make it stick all the way to the Court of Appeal.
And I'll add just very briefly on the back end of that, Nina. I spoke earlier about the three step test that the Court of Appeal goes through. They went through that here.
The first step is to determine the nature and extent of the conduct. And in terms of number one, the court held that the comments here constituted sexual harassment, given that each was based on gender and had an unmistakable sexual connotation. They were unwelcome, and they created a poisoned work environment. That's step one.
Number two, consider the surrounding circumstances. The plaintiff had recently received training on the employer's workplace and harassment policy and knew the comments were unwelcome. And number three, then deciding whether dismissal is warranted, i.e., is dismissal a proportionate response.
And here, what the Court of Appeal said was under the circumstances where he fails to apologize, the employer could have no confidence that this man would not continue to engage in the same type of misconduct in the future. And that justified the dismissal for just cause.
Absolutely, Mark. And this is also an object lesson for employees. I think the outcome would have been very different if Mr. Hucsko had even said, look, I didn't realize that there was a sexualized comment, I see now that it was very, very inappropriate, and I apologize, and I won't do it again. If they've even gone that far, I think we would have had a very different result. What is very, very tragic is Mr. Hucsko died very shortly after the Court of Appeal decision was rendered. So it is a tragedy all around.
That takes me to, well, maybe the flip side of this case, which is Humphrey and Mene. And in Humphrey and Mene, this is an employer who does everything wrong. So you have a situation where Ms. Humphrey, a young woman in her early 30s, is promoted chief operating officer. After two years, she asks for a raise from $90,000 to $165,000. This causes the relationship to go sour.
Unusually, Ms. Humphrey learns that she is no longer the chief operating officer of Mene Inc. because a supplier tells her that they received an email that she no longer works there. Then she tries to get into her email account, and her VPN is not able to do so. She learns that there is an email sent to everyone that she's been suspended pending investigation. And ultimately, the board wait a few recent incidents and decided she was not the right person to serve as COO.
Finally, Ms. Humphrey receives an email from management essentially. After conversations with senior management and an investigation of recent performance, she was essentially removed. She was going to be suspended. And ultimately, she was terminated for cause.
The allegation of cause was actually withdrawn late in the course of litigation. Now finally, the employer tries to deal with something. Says, well, there's a contract which says, I can terminate her on minimum ESA notice. We'll be dealing with ESA notice clauses later in this presentation.
The court looked at the totality of the conduct of the employer not just the way Ms. Mene learned she was no longer the COO, but also the actual communications to everybody that she was being investigated, which, of course, raises inferences of wrongdoing and moral turpitude, but also a history of really abusive nasty emails that management of the senior owner had sent to her and to other employees. In the context of this decision, not only did she get her wrongful dismissal damages, she also got aggravated damages of $50,000 and $25,000 in punitive damages. And punitive damages are extremely rare in our legal system. She also got regular wrongful dismissal damages and costs.
I think this case has two takeaways or two major takeaways. One is you do not engage in scorched Earth litigation tactics and expect the judges not to punish you. And number two is do not make public allegations of misconduct and not be able to make them stick because judges will punish you. So this is a case where I think an arrogant employer did everything wrong, feeling that they could badger an employee into submission and ultimately lost in court and at the Court of Appeal.
Nina, I agree entirely that this is a textbook case in how not to-- you don't assert just cause and then abandon it late in the litigation. Here, the Court of Appeals said that they thought that the employer was trying to punish the plaintiff for her requesting an increase. But the evidence here was just-- it was horrible that the employer advised the other employees that the plaintiff had been suspended pending an investigation into a few things, and that the board had weighed a few recent events and decided that she was not the right person to serve as COO.
And they told other employees that before they terminated her. So everything here that could go wrong went wrong. And you saw it in the result.
Our clients never do that. Right, mark?
Well, now they won't because now they have the groundwork. They know what to do. So moving on to our next topic-- a topic that I think everyone might be sick of talking about-- COVID-19. And we're going to look at the impact on the law.
We saw, as a result of COVID, a lot of individuals lose their job because of COVID, be placed on a temporary leave because of COVID or a leave of absence. And also as vaccination policies started to emerge, we saw employees be placed on leaves of absence or even have their employment terminated because they were not following the vaccine policy. We're seeing cases now on those claims that were made arising out of those layoffs and those leaves of absence, claiming that they were wrongful termination.
So Andrew, did we have any clarity from the court on employers exposure? Is this a termination or not?
So last year at our year interview session, which was just about a year ago, I pretty much promised everybody that by this time this year, we would have an answer. And unfortunately, I was wrong.
So I'm going to back up and set the scene. As everybody recalls, in March of 2020 when the government sort of essentially shut everything down and imposed all sorts of restrictions, a vast majority of Canadian employees were laid off. At the time, we had said to clients, look, prior to COVID, absent of contractual provision that grants you the explicit right to carry out layoffs or absence of industry practice-- you can't do that. It's going to constitute a constructive dismissal or repudiation of the employment contract.
But in March, April, May of 2020, we were also telling clients that while we can only predict what the courts are going to do, one would have hoped that the courts will say, this is a very unique circumstance, this is very different. And in these circumstances where we're dealing with government shutdowns, you've got no choice, and we understand, and it will be acceptable.
Up until recently, the case law was two versus one in favor of it constituting a constructive dismissal. And the one case that essentially sided with the employer was Taylor versus Hanley Hospitality. It was ultimately appealed, it went to the Court of Appeal. We knew the decision was going to be released this year. And that's why I told everybody last year at this time that we should have an answer by now.
Before I tell you what the Court of Appeal said, let me just sort of reset the scene with some of the facts-- Candace Taylor was the assistant manager of the Tim Hortons location in Whitby. The government ordered that restaurants limit their offerings to takeout and delivery during COVID-19. And as a result, Ms. Taylor was laid off on March 27th of 2020 without pay.
What's interesting is that the Tim Hortons location in question was not closed, but they operated it with reduced staffing. So her employer Hanley Hospitality pled that because of the government's declaration of a state of emergency, they really had no choice but to layoff over 50 employees. And it also pled, not surprisingly, that Ms. Taylor was not actually laid off, but as a result of the government's introduction of IDEL, Infectious Disease Emergency Leave, she was on a statutory job protective leave of absence. And specifically, what Hanley Hospitality argued was that IDEL effectively displaced the common law right of action for constructive dismissal. So because you were on IDEL and not laid off pursuant to the Employment Standards Act, that could not constitute a constructive dismissal.
The trial court agreed and said that as a result of section 50.1 of the ESA, it displaced the common law right of action for constructive dismissal. The Court of Appeal allowed the appeal-- so it sided with Taylor. But in doing so, didn't actually deal with the substantive issue of whether or not a layoff or IDEL in the face of a global pandemic and government mandated shutdowns was in fact a constructive dismissal. What the Court of Appeal focused on was a technicality.
And specifically, they said that the motion judge erred in taking judicial notice of the impact that the COVID-19 pandemic and the various emergency measures had on the Tim Hortons location and its business decisions. And so effectively, what the court was saying is you should not have decided this motion on a rule 21 motion which really should only be reserved for cases where no evidence is required and can be decided on the pleadings. In other words, you needed evidence about what the impact on the Tim Hortons location was before you could decide whether or not this was a constructive dismissal.
So the short answer is the Court of Appeal, in my view, took the easy way out, didn't address the issue substantively, dealt with it from a technicality. And so we're still in the same boat that we were in last year at this time.
And I don't know if I have frozen or if I can add something.
We can hear you, Mark.
We can hear you. I do think, however, now he is frozen.
Yes is.
Yeah, why don't we move on to Parmar and Tribe, and then we'll let Mark come in once he dials back in?
Sure. So again, keeping with the topic of updates in terms of COVID-19. So Parmar versus Tribe was a decision that dealt with the infamous mandatory vaccination policies and whether or not employers are legally entitled to place employees on unpaid leaves of absences if they choose for personal reasons to not comply with a mandatory vaccination policy. This decision was actually really important because it's the first trial court decision in the non-unionized context that deals with this exact issue.
Ms. Parmar was a senior finance manager at Tribe Management Inc, which is a property management firm. She claimed that she had been constructively dismissed from her employment because she had been placed on an unpaid leave of absence for refusing to comply with the vaccination policy. What's interesting is that Ms. Parmar was not an anti-vaxxer, but like a lot of people, she had concerns about the long term efficacy of the vaccine. She was worried about potential health implications for certain individuals. And in her mind, there just wasn't enough data, the vaccines were rushed, and she was concerned about what that was going to look like long term.
In response, the employer placed her on a originally on a three month unpaid leave that was subsequently extended and ultimately became indefinite. At no point though did the tribe actually dismiss her. So she was always on an unpaid leave of absence.
Ms. Parmar, unlike a lot of employees in cases that I'm dealing with, actually try to negotiate with the organization different alternatives. She offered to do remote work, she offered to pay for routine testing at her own expense. And the Tribe remained firm and said, nope, there are no exemptions to the policy because this is a personal choice.
The court ultimately agreed that the action that the employer took in these circumstances was reasonable. And what's important is obviously the decision itself, but the rationale behind the decision. Firstly, the court took judicial notice of the dangers of COVID-19 and of the efficacy of the vaccine to reduce the severity of symptoms and bad outcomes. So the court took for granted that without necessarily requiring evidence, that we know what the dangers of COVID-19 and that it's refutable that the vaccine does reduce the severity of symptoms and bad outcomes.
They also noted that the employment contract expressly contemplated adherence to workplace policies and affirmed that-- and I guess this is sort of one of the most important points of the case-- affirm that the Tribe's introduction of the mandatory vaccination policy reflected the prevailing approach at the time and that it struck an appropriate balance between the Tribe's interests, the employees', not Ms. Parmar, but all employee's right to a safe workplace, the client's interests, and the interests of the residents in the properties that the Tribe serviced And so the key here is that it really is all about an appropriate balance between an employer's rights and employees' rights to privacy.
And in saying that, the court specifically noted and accepted that, yes, this was an extraordinary measure for an employer to enact a policy that effectively impacts an employee's bodily integrity. But in the context of the extraordinary health challenges that were posed by the global 19 pandemic, such policies were reasonable. So I think that's critically important given that the vast majority of our clients have introduced mandatory vaccination policies of their own.
The court also said-- and I like this part because I've been making this argument in responses to demand letters for the better part of a year and a half now-- that by introducing a mandatory vaccination policy, you are not forcing someone to inject themselves with a vaccine. What you're saying is you're asking the employee to make a choice between getting vaccinated and continuing to earn an income. There is a difference between saying you must get vaccinated versus we don't care if you get vaccinated, but if you don't, you're going on a leave of absence.
So the key takeaway to Parmer is we'll see if this is followed by other courts in other jurisdictions. It was a BC court. But so far, I think it gives us some indication as to which way the wind is blowing when it comes to the view the courts are going to take on the reasonableness of mandatory vaccination policies in the face of what is obviously extraordinary times.
Yeah. And Andrew, I think what was really interesting in this case-- and it's interesting how cases are often decided on facts that don't seem to be important. The trial judge took a lot of comfort in the fact that Ms. Parmar was a valued employee and that her managers and supervisors really wanted her back, that this was not one of these disguised attempts to try to get rid of an employee that they didn't want. And I think that also formed a psychological context for this decision.
Thank you. I'm going to circle back to Mark in just a second on Taylor because we have him back. But before we leave the vaccination topic, we did have a question from an attendee. Because things have evolved with COVID, the question is, where do we stand now in terms of requiring employees to vaccinate. And can you make it a condition of employment at the recruitment stage?
Yeah, so I think we're in the same boat that we've been in for the better part of a year now, which is that the answer is yes, subject to obviously the duty to accommodate. So we're talking specifically about situations that are non-compliance with mandatory vaccination policies for personal reasons, not because of religion, not because of disability. But the answer is yes.
The one thing I would say is that what we are now seeing are a lot of employers starting to lift or loosen the mandatory vaccination requirement. So you want to stay consistent across the board. If you're not requiring your existing staff to be vaccinated, probably doesn't make a whole lot of sense to require new employees to be vaccinated either. But if you would if you still have your mandatory vaccination policy in place, and you want to make it a term and condition of employment, I don't see any good reason why you can't do that.
All right. Thank you, Andrew. Mark, quickly, do you have some comments on Taylor?
Very quickly. I just want to give a shoutout to an article that was written by Nina earlier this year on that case, Taylor and Hanley, in which she described the decision as a complete non-decision. It's really as Andrew pointed out. It's a technical case basically saying, it ought not to have been decided in a motionless court.
And you can't rely on the lack of a statement. When somebody doesn't reply to a statement of defense, that can't be taken as an admission of an allegation and statement of defense because a reply is not a required pleading. So read Nina's article.
And really, really quickly on that. That may all be true. The court may have been absolutely correct. It still was a cop out in my opinion. They should have used that opportunity to deal with the issue substantively because it obviously was something of public importance.
Thank you. So Andrew, we've had some new case law also on COVID's impact on notice periods that bump up that we talked about. I think we mentioned it last year in our webinar. Where do we stand today?
Yeah, I'm going to be really brief on this one because I know we're running a little bit behind schedule. But when COVID first hit, every demand letter we received talked about my clients in terms of x number of months of severance and a bump up as a result of COVID. Where we are right now and the most recent decision I'm aware of on point is Pavlov versus The New Zealand and Australian Lamb Company is that the COVID bump up is real but it's still really is very fact specific.
And I always look at demand letters with a grain of salt because at the end of the day, it depends on the industry that you're in. If you are a forklift driver in a warehousing operation, arguing that you're never going to secure alternative employment because of COVID, with all due respect, cry me a river. I don't believe that. Obviously, if you were managing a hotel or a restaurant, and you were terminated in the heart of the pandemic, that makes sense.
But really, really quickly on Pavlov, he was a 47-year-old director of marketing and communication with about three years of service. He was terminated on May 28th, 2020. So not right at the outset of the pandemic, but right in that sweet spot where we kind of started to appreciate and accept that this was going to be a long term thing.
Ultimately, Justice Stewart awards from 10 months of reasonable notice. And in the commentary which you can see up on the slide-- I'm not going to read it-- talks about how it was very clear that there was going to be sort of challenges and difficulties securing other employment as a result of the pandemic and that those were foreseeable. And so ultimately, the award of 10 months is made.
But unfortunately, just the story doesn't say what portion of the 10 month award represented the bump up. So moral of the story-- the bump up is real, you can't ignore it. But it really is contextual. It's fact specific. It's not going to apply to every circumstance like plaintiff counsel will have us all believe. But it does need to be taken into account in certain circumstances.
Yeah, there's a recent case that just came out, I'm sure. Similarly, Ms. Williams and Air Canada. We don't have it on the slides, but similar kind of reasoning, a 2020 termination. A 24 year service employee in her early 50s modestly paid.
And ordinarily, we might have thought she would get something like 18 months. But there clearly was a bump up due to the industry, which was the travel industry being so significantly impacted by COVID. And the court went to what is the theoretical cap in Ontario, which is 24 months. And really had some interesting comments about the need for certain employees to retrain and how that may well be in a completely appropriate decision in order to mitigate damages.
So this employee decided that, well, I'm not going to get a job in the travel industry, I need to go back to school and refresh my credentials. And that was approved by the court. A gain in the context of the decimation of the travel industry.
I have to tell you-- I'm a bit of a cynic. We know that in 2021 and 2022, we are in an acute labor shortage. And I wonder if the courts will take judicial notice of that labor shortage in order to shorten notice periods. And I think the answer is, I can see from the smirk on Mark Josselyn's face, is not a hoke. So there you go.
But yes, COVID has played a real significant background in some cases. But these are 2020 terminations that are being adjudicated two years later. Maybe when we do our year end round up next year, we'll see what happens for terminations that are done in the height of the labor shortage.
Thank you, Nina. Moving on to our next topic-- the unrelenting attack on termination clauses. So how do we avoid being, before the court, arguing over reasonable notice?
We have termination provisions which we would hope would be enforceable and would limit and outline the entitlements on termination. But as we see, we have sea of constant attack on termination clauses trying to find them unenforceable for a variety of reasons. And we have a lot of cases to review. And Nina is going to get us started.
Well, just by way of background-- and we reported on Waksdale last year. And it is a case of the Ontario Court of Appeal which essentially states that if your employment agreement states that it has the ability to terminate you for cause without notice or pay in lieu-- and this was a very standard language in employment agreements-- it essentially destroyed or vitiated the entirety of the termination provisions in the agreement, including the without cause provision. So that's the Waksdale decision in a nutshell.
So we then have a case called Rahman and Cannon Design Architecture. The Ontario Superior Court Justice Dunphy who comes from a commercial law background essentially sought to distinguish Waksdale on the theory that Ms. Rahman was a sophisticated employee and had access to independent legal advice. And therefore, the Waksdale reasoning ought not to apply to her employment agreement and therefore, her termination clause ought to be enforced. That decision, not surprisingly, was taken to the Ontario Court of Appeal. And the Court of Appeal was given an option to revisit Waksdale and determine whether there ought to be any exceptions to Waksdale based on the sophistication of the client and their access to independent legal advice.
The short answer is the Court of Appeals said, no, Waksdale is the law. If you use the phrase cause, and I can terminate you for cause without notice or pay in lieu in Ontario, that clause is unenforceable, and more importantly, your entire termination provisions are unenforceable. So that's Rahman and Cannon Design Architecture. It simply confirms the bad news that we got from the Waksdale Dale decision.
And just add an interesting side note-- that case also went on to deal with the issue of common employers. And so anybody who's interested in that issue, I would recommend this decision. And it also makes reference to the O'Reilly and Clear MRI solutions case on, again, the subject of common employer.
Yeah, so more bad news. Lisa, I think we also have Henderson and Slavkin. Now this is a trial level decision. It's interesting for a number of reasons. But in the Waksdale style context, this is what I'm going to focus on.
So Ms. Henderson worked as a receptionist for two oral surgeons or dental surgeons who were aging and were planning to retire. They provided employment agreements to their employees. There was an ESA only provision in the termination.
Now the termination clause actually was probably permissible under Waksdale. Where the employment agreement had a flaw, however, is there were strong provisions regarding confidentiality and conflict of interest. In those provisions, there was language saying that if you breach confidentiality-- and remember, this is a regulated health care profession. So they have strong confidentiality and privacy requirements-- or if you have a conflict of interest, you can be terminated for cause without notice.
And the presence of that for cause without notice language in a portion of the contract that ostensibly really wasn't dealing with termination was enough to vitiate the termination provisions and, therefore, the common law applied. So not only are we reviewing termination provisions in employment agreements, we're also looking at the entire package-- your confidentiality, your non-disclosure, your intellectual property agreements, perhaps your employment stock option plans, and the short term and long term incentive plans to make sure there is not language regarding termination for cause that could trigger a Waksdale problem. So that's the message of Henderson and Slavkin.
And I'll add that this case has sent a lot of counsel scurrying to review any portion of any employment agreement that contains a termination provision in it.
Absolutely.
Mark, can we have your thoughts on Bryant? That's another case where we're dealing with a termination provision.
And I apologize for turning off my video, but I'm getting a message across my screen, telling me that I'm unstable.
OK, Bryant and Parkland School. We have a contract which stipulated that it could be terminated by the employee by giving the employer 30 days or more prior written notice and by the employer giving the employer 60 days or more written notice. The employees worked primarily in the information technology, and they were terminated without cause, and they each received 60 days notice.
One of the three plaintiffs had been employed for approximately 10 years, I think, and the other two for approximately 15 years. And the chambers judge summarily dismissed the employee's claim for anything beyond the 60 days. This is an Alberta decision. So it was a chambers judge.
But the Alberta Court of Appeal overturned this decision, finding that the termination provision created uncertainty by using the words or more. The Court of Appeal found that any uncertainty ought to be resolved in favor of the employee. And accordingly, the employment contracts contained an implied term that any termination would require reasonable notice and that the assessment of that ought to be referred back to the lower court for determination if the parties cannot agree.
So the key takeaway here is it's another reminder to employers of the importance for clear and unambiguous termination provisions in employment contracts. And employers have to ensure that their termination provisions are in compliance with the minimum standards and principles of interpretation. Andrew?
Yeah, the only thing I would add is that I have absolutely no doubt that this decision would have been the exact same result in Ontario. So notwithstanding it was Alberta. I mean, at the end of the day, if you've got a provision that's ambiguous, a court is going to invalidate it every single time.
I agree.
OK, Battiston, one of our favorite cases. And if I'm not mistaken, I think we talked about Battiston last year at this time as well. But now we have a Court of Appeal decision that we can speak to as well.
So Mr. Battiston-- Mr. Battiston was employed by Microsoft for about 23 years, was terminated without cause in August of 2018 due to concerns over performance. And Microsoft provided Mr. Battiston with a fairly generous severance package that included 23 and 1/2 months of notice. Mr. Battiston rejected the offer and commenced proceedings against Microsoft.
One of the main issues at trial was vesting of stock options. So although Microsoft had offered 23 and 1/2 months of severance, they were trying to enforce a provision in the stock award agreement or the stock option agreement that effectively said, immediately upon termination, all vesting ceases. So any options that were previously awarded that had not yet vested as of the effective termination date, being the final day of employment, are automatically forfeited.
And the trial court ultimately looked at the language in the stock order agreement and found that the language is actually, in their opinion, clear and unambiguous-- which, as a side note, I found kind of surprising only because looking back at that language, I wouldn't have thought that it was sufficiently clear to oust or displace the common law entitlements. But nevertheless, the trial court found that it was-- but ultimately found that these were harsh and oppressive forfeiture provisions. They had not been sufficiently brought to Mr. Battiston's attention notwithstanding that the evidence was clear that he had signed a click through agreement online for the better part of 16 years. So every single year, Microsoft would present the award agreement to Mr. Battiston and all other employees. And you would have to sign off, acknowledging that you received the agreement, you've read the agreement, you understand the terms of the agreement, and you agree to the terms of the agreement.
And so Mr. Battiston did that every year. But his evidence at trial was that I didn't read it because of its length and it was on Microsoft to have brought these oppressive and onerous provisions to my attention. And so the trial court agreed with Mr. Battiston and ultimately awarded him damages in lieu of the 1057 shares that had been awarded that were still unvested.
On appeal to the Ontario Court of Appeal, Microsoft-- sorry-- the Court of Appeal overturned the ruling finding that the trial judge did not address the following facts-- number one, the fact that Mr. Battiston, for 16 years, had expressly agreed to the terms of the agreement, number two-- that Battiston had made a conscious decision not to read the agreement even though he claimed he did by clicking the box, and number three-- that by misrepresenting his agreement to Microsoft, he was actually putting himself in a better position than an employee who didn't misrepresent that they agreed to the terms of the agreement. And therefore, he was taking advantage of his own wrongdoing. And the court didn't want to reward that.
So the Court of Appeal ultimately overturns the decision on the basis that Microsoft did in fact bring these forfeiture provisions to Mr. Battiston's attention and that he had every opportunity to review the agreement. And the fact that he didn't read it was his own problem. He was the author of his own misfortune. Mr. Battiston appealed or trying to appeal, sought leave to appeal to the Supreme Court of Canada and it was denied. And so the Ontario Court of Appeal decision in Battiston, which is somewhat of a breath of fresh air for employers because it sort of swings the pendulum back in favor of employers finally, is, as of right now, it stands, its good law.
The key takeaway, I think, on Battiston though is that I would not get overly optimistic about this decision. I think at the end of the day, it is still critically important that if you're going to rely upon forfeiture provisions that are harsh, that are oppressive, that do try to end entitlements to bonuses or stock options or RSUs on the termination date, you ought to be prepared to make sure that you are bringing those to the attention of your employees. Don't bury it on page 17 of a very lengthy complicated stock award agreement or stock option plan.
You really need to include language in the employment contract ideally that refers to the forfeiture provisions. It needs to be bold and it needs to be at a different font. Do what you need to do. Get employees to initial a box in the right appropriate section of the contract saying, I understand that these provisions disentitle me to certain things upon termination, whatever language you want to use. You want to be able to say, what more could we have done to bring it to the employee's attention.
So Battiston is welcome. It's welcome news, it's a breath of fresh air. But I wouldn't necessarily hang my hat on that. It's something you can rely upon. I would still recommend that you be very, very careful when introducing forfeiture provisions into your plans.
I agree with you, Andrew. And despite the fact that Battiston is a breath of fresh air, I still don't think the Court of Appeal actually addressed the underlying issue about whether or not you can contract out of employment standards at minimum protections and changing terms and conditions during the ESA notice period. Sophisticated employers have Canada addendums to their stock option and variable compensation plans if it's an international plan like Microsoft Canada has.
The other thing that they do is they often have slide decks and presentations clearly explaining the forfeiture provisions. So it's very hard for an employee to say, oh, I didn't understand that these were subject to some kind of forfeiture, or I didn't agree because there's collateral information showing. This wasn't hidden. And when they agreed to it, they understood what would happen on termination.
So if any of the listeners are a part of a company that has sophisticated compensation plans like RSUs, employee stock option plans, or complicated long term incentive plans, it is worth reviewing those to make sure they're compliant with Ontario law to make sure that there isn't some kind of either Waksdale challenge to them or quite frankly an argument that they are harsh provisions that were not brought to the attention of the employee. All of us know that the presumption of this court system is that employees will get 100% of what they would be entitled to as if they had worked out the entirety of their common law notice period. That's the starting point. And anything derogate from that, you have to be clear, 16 point bold font initialed, maybe with a PowerPoint deck so that there's no argument that there's some kind of inherent unfairness there.
The last thing I would add on this case is that I actually don't think the trial court got it right when they said that the stock option or the award the language in the award agreement unambiguously excluded Battiston's right to vest after the notice period. I don't know that this necessarily reconciles with what we saw in Paquette versus TeraGo Networks and Mathews versus Oceans. And so to the extent that you want to rely upon Battiston, by all means, go for it. But if a court wants to get around these oppressive provisions, what they're going to do is differentiate your stock award language from Battiston's stock award language and say that it's not unambiguous and that it was not sufficiently clear to out entitlements upon termination or there wasn't a waiver of a claim for damages in lieu of the options that would have vested. So that's why I say I wouldn't necessarily hang my hat on this decision even though it's a repression case.
Yep. So I think our last case law that we're going to be doing is the Bowen case, which is the next slide. And this is actually-- I mean, we included it as a reminder of a common law principle. So this is Mr. Bowen and Mr. Weisblatt. They are highly remunerated portfolio managers at JC Clark, a hedge fund company.
There was a merger. Two years after the merger, they're terminated without cause, and they're given two weeks salary plus $577 for variable compensation in lieu of notice. And that's in accordance with what the employer thinks they're entitled to under the employment agreement.
The real issue in this case was not actually notice. It was actually whether or not they were entitled to any share of what I would call the pool of performance fees. So how do hedge fund portfolio managers get remunerated? It's not their base salary. It's really the share of the pie at the end of the day.
When the employees left or were terminated, because there was a issue as to whether it was a constructive dismissal or a termination or resignation, they sought a share of that pool. The employer said, no, no, no, it is a discretionary allocation of the performance fees. And in my discretion, you who have left are not going to get any of these performance fees.
The Court of Appeal essentially stated the discretionary nature of the performance fee allocation is not unfettered. It has to be bound by some kind of evidence and practice. The Court of Appeal and the trial judge looked at what other portfolio managers received, how they were given a share, they looked at past practices, and how the performance pool had been allocated between the various performance fund managers, and brought in a full right to receive approximately-- I think it was actually-- they got 100 cents on the dollar as to what they had claimed.
The moral of the story is you can have something as an employer that you say is discretionary. But the court will make sure that that discretion is fairly exercised even in favor of departing or terminated employees. So I think that's the message of Bowen and Clark. It's not actually a new law.
There is a case from the late 1980s. Greenberg and Moffett actually comes up with the same decision. Do not exercise your discretion in a way that you cannot objectively justify later on.
Thank you. So we're at the end of 2022, almost, which is surprising and shocking. But we do have something to look forward to, perhaps.
[laughter]
Can we just take a look at briefly what we can expect moving forward into 2023? Nina or Andrew, can you get us started on that?
Sure, I'm not sure it's necessarily something good to look forward to. But looking at my crystal ball, I see more wage and hour lawsuits, potentially class actions. But when I'm trying to predict what's to come, I kind of look at the US because we are, let's say, 5 to 10 years behind the US in certain areas of law.
And in the US, wage and hour class action lawsuits are now withdrawn. I don't know that you're necessarily going to see the class action activity pick up as much in Canada. But I certainly can tell you that I've already started to see wage and hour issues creep into lawsuits.
And by that, I mean either standalone lawsuits over unpaid wages, unpaid overtime or something back to moment, unpaid vacation pay, or more realistically, what you see is at the time of termination, there's a tack on claim for unpaid wages, unpaid overtime, et cetera. What I think you have to keep in mind is that the Employment Standards Act in Ontario and frankly, the Employment Standards Legislation in every single province-- it's archaic legislation. It was drafted on the assumption that everybody works in a factory making widgets. And that is not the case.
It doesn't take into account technological advances. The way in which we work and live today is incredibly different than it was when the ESA was drafted. And so overtime rules don't really work anymore. I mean, everybody is working all of the time remotely on their cell phones. And it's very difficult for employers to keep track of hours of work, for example.
So what I see going forward is more and more claims for unpaid vacation pay. And what I mean by that is specifically vacation pay on public holiday pay, vacation pay on bonuses, vacation pay on commissions. The vast majority of incentive compensation plans that I review don't speak to vacation pay being paid on top of those additional earnings, and it's supposed to be.
I also see over time being a big issue for two reasons. Number one, because for the reasons I just mentioned, which is that it's very difficult to track in today's technological world and also because the Court of Appeal-- I don't have time to get into the details-- recently threw the whole limitation period argument out of whack by effectively suggesting, based on the discoverability principle, that an employee can go back as far as nine years in terms of claiming unpaid overtime. So historically, we always thought that the liability was limited to two years. Now there seems to be some support from the Court of Appeal for employees going back even further.
And so if you terminate somebody today, and they say that for the last 10 years, I've worked overtime, that's a really, really difficult claim to deal with and it can be incredibly expensive. So I think that's the area that I see really picking up as we move forward. And I think it's critically important that you address your overtime practices, your hours of work practices, and your policies, and make sure that they're buttoned up and that you're paying vacation pay appropriately on all compensation, not just on the base compensation.
Andrew, I agree. And I would also say, look at how you record your vacation pay and public holiday pay on pay stubs because the easiest way to actually stop this type of wage and hour litigation is to have pay stubs and pay records that clearly show that you've been tracking and paying it properly. I think we have spoken a lot generically. I do some federal employer work, and I just wanted to remind federal employers that there are some massive changes in the offing.
One is as of December 1, 2020-- sorry-- January 1, 2023, all employees in a federally regulated workplace and who have worked at least 30 days, get three paid sick days, and they accrue one day more each month to a maximum of 10 paid sick days per year. If they don't use up their sick days all in 2023, those carry forward into 2024 and essentially kick start their accrual for 2024. But in any calendar year, it's capped at 10 paid sick days. Obviously, employers can give more. But that needs to be dealt with in your system if you're a federally regulated employer.
The other topic I want to flag-- and it could be its own seminar-- but is pay equity. And federally regulated employers who have at least 10 employees are required to comply with pay equity. Those obligations differ depending on the size of your workplace. If you have at least 10 employees, however, you should have provided a notice, November 1, 2021, which is over a year ago, that there is an obligation to provide a pay equity plan. And larger employers need to establish a pay equity committee and unionized workplaces need to work with their union on pay equity.
Just a couple of deadlines. And it may seem like a long time-- September 3, 2024, is the drop dead deadline for having a pay equity plan and making sure that your pay practices are fully pay equity compliant. However, there are earlier deadlines or interim deadlines regarding how much notice you may need to give to your workforce or the Pay Equity Committee regarding the draft plan. So all I'm saying-- every single pay equity consultant I know is very busy. You might want to actually deal actively with pay equity in 2023 so you're not behind the eight ball in 2024.
Thanks.
And now it's over to me, Mark, still unstable, to deal with the third of our look forward topics. And its workplace investigations, which is actually responsive to one of the questions in our Q&A, which is why so many workplace investigations. And what I'll say is when we went into the first lockdown in 2020, many HR professionals and employment law lawyers, including us, thought that one of the byproducts of having everyone working remotely might be a reduction in the number of complaints about behavior in the workplace and the need for workplace investigations.
Turns out we couldn't have been more wrong. And I suspect that having people siloed in their basement for 2 and 1/2 years did not make them the best versions of themselves. And the erosion of everyone's resiliency resulted in a lot of what we would call suboptimal behavior and perhaps some exaggerated responses to the same, all of which has apparently created an uptick in the number of workplace complaints to the point that most of you on this call are experiencing real difficulty in retaining your favorite workplace investigators in a timely fashion.
All the investigators I know are out of control busy. And in fact, one well known firm that used to have 14 lawyers doing employment law and workplace investigations is now 50% larger practicing exclusively in workplace investigations and training. So they've literally bet the farm on this not being a passing phase, but rather a complete sea change.
The time has come for organizations to get used to this new reality to familiarize their HR departments with the requirement of this onslaught of workplace investigations which, under the legislation, must be done in-- the investigation has to be appropriate in the circumstances. So what's appropriate is, of course, going to change from investigation to investigation. But at a minimum, the investigator needs to be a properly trained individual in terms of best practices, procedural fairness, how to conduct an investigation.
There are any number of organizations that provide such training, including our firm. But the time is now because the complaints seem to be coming in at a rate that is growing exponentially. And if you need further incentive, any number of cases where large damages were awarded when the investigation was flawed, I want to just refer you to the most recent example that I saw just two weeks ago, November 21st, 2022. It's called Lyons versus The Deputy Head Correctional Services of Canada where the Federal Public Sector Labor Relations and Employment Board punished an employer for falsely accusing the griever of being a drug mule and acting on the allegation without any evidence. The employer terminated the griever without ever fully presenting the allegation to the griever or giving her an opportunity to respond to the case that was being made against her. And the board awarded [audio out]
I think we might have lost Mark. Now he's left us hanging. What did they award? All right, we will get back to Mark. I think he'll probably sign back on. And he can finish summarizing that most recent decision.
But while we're waiting for him to sign back on, I think maybe what we'll do is answer a few questions that we did receive from some of the attendees. I'll start with this one question-- employees working fully remote for now are being asked to return to the office either full time or hybrid, part time basis. Can they refuse? Who'd like to take? Nina, do you want to--
Sure. So it's a contextual analysis. So if they were sent home to work after having had a full time office job, like many of our employees at Gowlings, I think it is arguable that attendance at the office was, in fact, part of their employment contract, it was not intended to be and not stipulated to be a remote or full time remote position.
We do actually have to accommodate though. And I still get requests for accommodation because people are still struggling with things like childcare, the number of days that children are sick and then generously give their germs to their parents and caregivers, and also elder care responsibilities. So accommodation doesn't go away. But I do think you can say, it is a contractual requirement for you to come back to the office.
Now I'm not recommending that we do an Elon Musk in this regard. We are in a battle for talent. So you may have to compromise and figure out something that works. But yes, from a legal perspective, you can ask them to come back to work. But do so in a way that looks compassionate.
We've decided we've seen cases where courts punish people, punish employers who are being difficult. Now let's say you hired somebody during the pandemic. I mean, it's over 2 and 1/2 years. And they were always a remote worker.
And now you're telling them, by the way, we want you to come back to the office. I think at that point in time, you are changing their contractual terms and conditions of employment. And if you're going to do that, you risk constructive dismissal.
So there's a protocol, including giving notice of the change, adequate notice to the employee. And you'll talk to your employment lawyer as to what that might be given the employee and their position. And give them notice that this will change.
I can tell you-- the forcing people back to the office is one of the most significant reasons why people quit and go elsewhere. So be careful. There's not just legal consequences, but also retention consequences to forcing people back to work in the office.
Now just the example you used about new employees-- if the employer had the foresight and advised the employee that they will be working remotely, but that's temporary because of COVID, then we shouldn't have an issue with bringing them back.
Yeah, I would still act humanely because we have seen how courts don't like pushy employers. But yes, I believe that if you got good legal advice input that was just temporary and the expectations will come back to the office, absolutely. I think you're in a very strong legal position.
--subject always, of course, the human rights accommodation issues. And I think that one issue that you are either already seeing or undoubtedly will see as employers try to require employees to return to work is that some employees who want to be opportunistic will find reasons why they are medically incapable of returning to work five days a week. And so I think you'll have to-- at that point, you'll engage in interactive process to accommodate, et cetera. But I think that's what we're going to start to see going forward is a lot of those kinds of claims.
Yeah, I'm seeing a lot of those claims. Recent one with somebody who had no problems attending the office five days a week during her probation period. And then all of a sudden, when she passes her probation period, says, oh, this has caused so much stress and physical damage to me, I need to work permanently full time at home.
And doctors are overwhelmed. And many doctors-- those are self-reported symptoms. And so doctors will simply confirm that which the employees are self-reporting. They have no choice that they are entitled to believe their patients. And so it puts the employer in a very difficult position.
I've also seen one where I have severe anxiety overcommuting to work on the subway.
Yeah.
Notwithstanding that I've been doing it for the past 20 years. So yeah, these claims are-- they're endless.
I notice that Mark's not there. And I'm wondering if I might-- in terms of the decision that we were left hanging on, if I might add it. The Federal Public Service Labor Relations and Employment Board slammed the Correctional Service of Canada for essentially terminating somebody on essentially an unsubstantiated rumors of the employee being a drug mule.
It was $135,000 as aggravated damages for psychological harm and-- wait, that's not all-- $175,000 as punitive damages with simple interest. And this isn't the compensatory wrongful dismissal back pay order. These are the extra amounts that the correctional services was ordered to pay due to their failure to investigate properly and essentially deal with the rumors of the employee being a drug mule properly.
Thanks, Nina. I think Mark is desperately trying to log back in. But I don't think he's going to be able to do that. So I would like to just close by thanking Nina, Andrew, and Mark for a wonderful presentation.
We hope that everyone found it to be informative and useful. We hope you're all looking at your employment agreements to make sure those termination provisions are enforceable. Your feedback on these webinars is very important to us. So if you could take a moment to complete our survey, if you could just scan the QR code that you see on your screen, we would be most appreciative.
And I'd like to wish everyone a wonderful holiday coming up. Again, it's hard to believe we're at the end of 2022. We have enjoyed providing you with these webinars in 2022, and we will do it again in 2023. So we really hope you'll be able to join us. Happy holidays everyone.
Thanks, everybody. Happy holidays.