Recent developments in the legal arena:

Ontario's New Employment Standards Act proclaimed into Law

On September 4, 2001, the new Employment Standards Act (“new ESA”) was proclaimed into law. This article describes four changes to this legislation. Generally, each of these statutory requirements is deemed to be included in the terms and conditions of employment for every provincially regulated employee. The new ESA applies to about 90% of employees working in Ontario.

Hours of Work

Under the old ESA, an employee could not be scheduled to work more than 8 in a day or 48 in a week unless the employer obtained the employee’s consent and a permit from the Ministry of Labour. Under the new ESA, however, if an employee agrees, the employer can schedule an employee to work up to 60 hours per week. An employee who agrees to such an extended work week can revoke this agreement by providing the employer with two (2) weeks written notice to the employer.

Overtime Pay

Under the new ESA as under the old ESA, an employee is entitled to receive overtime pay for all hours in excess of 44 in a week. In the past, however, an employer was not permitted to average hours over a period of more than one week for the purpose of calculating overtime pay unless the employer obtained the employee’s consent and a permit from the Ministry of Labour. Under the new ESA, an employee’s hours of work may be averaged over a period of up to 4 weeks for the purpose of calculating overtime pay, if the employee agrees.

Public Holiday Pay

Under the old ESA, many part-time employees were not entitled to receive public holiday pay. For example, an employee was not entitled to public holiday pay unless s/he worked at least 12 days during the 4 weeks immediately proceeding the public holidays. Under the new ESA, most part-time employees are entitled to public holiday pay which is now equal to the employee’s regular wages and vacation pay payable in the four week period prior to the week of the public holiday pay divided by 20.

Emergency Days (New)

Under the new ESA, an employee whose employer regularly employs 50 or more employees is entitled to up to 10 pays unpaid leave for personal illness, injury or medical emergency, or to deal with the personal illness, injury or medical emergency of certain relatives such as a parent, child, grandparent, sibling, or the relative of the employee who is dependant on the employee for care or assistance.

Is dishonesty just cause for termination ?

A recent court case demonstrates yet again that it is generally difficult to prove just cause for termination – especially for long-term employees.

In June 2001, the Supreme Court of Canada (SCC) concluded that just cause for termination exists where dishonesty violates the essential condition of the employment contract, breaches the faith inherent in the work relationship, or is fundamentally or directly inconsistent with the employee’s obligations to his or her employer.

In particular, the SCC directed judges or juries, as the case may be, to decide (1) whether the evidence establishes deceitful conduct on the balance of probability, and (2) if so, whether the nature and degree of the dishonestly warrants dismissal.

In other words, the SCC decided that not all cases of dishonestly amount to just cause.

Whether or not an act of dishonestly amounts to just cause will involve an analysis of the surrounding circumstances, its level of seriousness, and the extent to which it impacted upon the employment relationship.

In 1994, BC Tel fired Martin McKinley, 48 years old, after almost 17 years service while he was on sick leave for high blood pressure. Mr. McKinley worked as Controller, Treasurer & Assistant Secretary to certain BC Tel companies. At trial, BC Tel alleged Mr. McKinley was fired for just cause because he was dishonest about his medical condition and the treatments that were available for it; that is, Mr. McKinley did not disclose to BC Tel that he was medically able to resume work and if necessary he could used beta blockers to control his blood pressure.

In the McKinley case, the SCC concluded that although Mr. McKinley may not have provided full disclosure of all material facts concerning his medical condition to BC Tel there was no basis for interfering with the jury’s verdict that BC Tel did not have just cause to terminate Mr. McKinley’s employment. The British Columbia jury awarded Mr. McKinley 22 months notice, plus 4 additional months notice for bad faith termination.

Anti-Nepotism Policies & Practices

Many employers hire more than one family member. It is often a delicate situation when one but not all of the family members is subsequently terminated. Will there be an adverse reaction by the remaining family members, and if so, are there any restrictions imposed on the employer by law as to how to deal with the remaining family members?

Here is the factual background to a recent case involving this issue.

In September 1990 after years of therapy, an employee’s daughter remembered that her uncle (i.e. her mother’s brother) had sexually assaulted her many years earlier. It turns out that the uncle was the father’s employer. Upon the therapist’s recommendation the daughter decided to confront her uncle. Accordingly on a Friday night, she drove to her uncle’s home with her mother and father. The daughter and her mother went to the front door of the uncle’s home, leaving the father in the car. When the uncle opened the door, the mother and daughter heatedly accused him of the sexual assault.

The following Monday the father showed up to work as usual. The uncle took a work order out of the father’s hand and asked to see him in his office. The father called his wife, the owner’s sister, and the two of them went to the owner’s office. There, the owner/uncle began shouting at the father about his daughter’s accusation and told him he was fired.

Prior to the termination there were no complaints about the father’s work, therefore, no just cause for termination was alleged. The uncle acknowledged that the decision to terminate was based solely on his assessment of his ability to continue to work with the father given the daughter’s accusations.

On these facts, the Ontario Court of Appeal recently decided that the employer improperly terminated the father contrary to the Ontario Human Rights Code; that is, the Employer had violated section 5(1) of the Code because the employee had been discriminated against because of family and marital status. In particular, the court ruled that the employee lost his job based on his presumed inability as a husband and father to be a good employee given his daughter’s sexual assault allegations against his employer.

Departing Employees: How far can an employer go to protect its interest in its customer base?

Generally, employment contracts are written to protect employer interests and minimize the employer’s legal liability. Accordingly, more and more employers are insisting that new hires sign a written employment contract before commencing employment. Drafted properly these contracts can override some of the employee’s common law rights such as the right to reasonable notice of termination, and the right to change significant job duties without notice.

In addition to terms and conditions that apply during employment, employment contracts can also include post-termination obligations which are imposed on an employee which prevent the employee from, among other things: using or disclosing confidential information; soliciting company customers; attempting to entice employees away from the employer; and/or competing with the employer.

A recent Ontario Court of Appeal case again illustrates that the courts are reluctant to enforce non-competition clauses when a less restrictive non-solicitation clause could have been used to protect an employer’s proprietary interests.

In 1993 Dr. Lyons, a dental surgeon who operated a dental practice in Windsor, Ontario hired Dr. Multari as an associate. They entered into a short handwritten employment contract of less than one page which provided, among other things: “Protective Covenant. 3 yrs. – 5 mi.”

About 1 _ years later, Dr. Multari gave six months notice that he was leaving Dr. Lyons employ. About 6 months after his resignation, Dr. Multari opened his own practice with another dentist about 3.7 miles from Dr. Lyons office.

Dr. Lyon commenced a breach of contract action against Dr. Multari. The trial judge upheld the restrictive covenant and fixed damages at $ 70,431.60.

The Court of Appeal overturned the trial judge’s decision and refused to enforce the non-compete clause. In coming to this conclusion, the court stated that:

1. employers in the professions have a proprietary interest in their client base;
2. the five-mile/three-year covenant was reasonable in terms of its temporal and spatial limitations;
3. except in exceptional circumstances, the courts will not enforce a non-competition clause if a non-solicitation clause will adequately protect an employer’s interests

The Court of Appeal stated that this was not an exceptional case. In this regard, the non-competition clause was too broad because, in part, it precluded Dr. Multari from accepting referrals from Windsor dentists who had never referred Dr. Lyons patients or from dentists who had stopped referring patients before Dr. Multari started working for Dr. Lyons. Also, Dr. Multari was a junior associate dentist who only handled the patients that Dr. Lyons assigned to him whereas Dr. Lyons continued to be the principal contact with referring dentists throughout Dr. Multari’s employment.