In a recent decision, Modern Cleaning Concept Inc. v. Comité paritaire de l’entretien d’édifices publics de la région de Québec, the majority of the Supreme Court of Canada (“SCC”) held that a cleaner who had a franchise agreement with a cleaning company was actually an employee, not an independent contractor. This “employee” determination, however, was in the context of a very particular legislative regime, which applied to the specific franchise relationship. Since the cleaner offered his cleaning services in public buildings, he was covered by a collective agreement, the Decree respecting building service employees in the Quebec region (“Decree”), which sets out minimum standards in the workplace (wages, hours of work, overtime, etc.) and is governed by the Act respecting collective agreement decrees (“Act”). With the scope of its provisions being “public order”, the Decree can apply to any contract where an individual is in a relationship determined to be that of “employee” within the meaning of the Act. Continue Reading Highest Court Rules Quebec Franchisee Was Employee, Not Independent Contractor, Under Provincial Statute

MEXICO

We’re pleased to share a timely client alert from our colleagues in Mexico on a significant labour reform approved earlier this week by the Mexican Senate. The reform adds new legislative provisions to secure the rights of freedom of organization, freedom of association and collective bargaining, as well as introducing a new labour justice system to expedite all procedures under the Federal Labor Law of Mexico. As such, the reform is likely to have a profound effect on employers in Mexico.

For further background, see our previous client alert and the SHRM article, Mexican Congress Seeks to Reform Employer-Friendly White Unions.

On April 3, 2019, Restoring Ontario’s Competitiveness Act, 2019  (Bill 66) received Royal Assent. Bill 66 amends several pieces of legislation in Ontario. The government has stated that the changes are intended to “lower business costs to make Ontario more competitive” and to “harmonize regulatory requirements with other jurisdictions, end duplication and reduce barriers to investment.”

Changes to the Employment Standards Act (ESA)

As we reported in our earlier post, Bill 66 amends the ESA as follows:

  • No Approvals Needed for Excess Hours/Overtime Averaging: Employers are no longer obliged to obtain the Director of Employment Standards’ approval to make agreements to either: (1) permit employees to exceed 48 hours of work in a work week, or (2) allow averaging of an employee’s hours of work for the purpose of determining entitlement to overtime pay.
  • Changes to Averaging Agreements: Employers may average the employee’s hours of work in accordance with the terms of an averaging agreement between the parties over a period that does not exceed four weeks. Existing overtime averaging agreements in unionized workplaces would continue to be effective until a subsequent collective agreement comes into effect.
  • No Posting of Posters: Employers would no longer be required to post a poster in their workplaces to provide information to employees about the ESA and its regulations. Copies of the most recent poster still need to be provided to employees.

These amendments are in force as of April 3, 2019.

Changes to the Labour Relations Act (LRA)

As we explained previously, the LRA has a unique set of rules for construction industry employers that can entail province-wide, multi-employer collective agreements. Employers subject to this regime whose primary business is not construction may apply to the Ontario Labour Relations Board to be declared a “non-construction employer” under the LRA, relieving them of their obligation to comply with the “construction provisions” of the LRA.

Deemed non-construction employers

Bill 66 amends the definition of “non-construction employer” in the LRA and provides that designated employers will be deemed to be “non-construction employers”, thereby releasing them from labour relations law applicable to the construction sector, including collective agreements negotiated on a sector-wide basis. In some cases, this will enable designated employers to tender construction projects to non-union contractors and/or negotiate agreements specific to the circumstances of their organization.

Designated employers will include municipalities, school boards, hospitals, colleges and universities, as well as the following entities:

  • local boards under the Municipal Act, 2001 or the City of Toronto Act, 2006;
  • local housing corporations under the Housing Services Act, 2011;
  • corporations under the Municipal Act, 2001 or the City of Toronto Act, 2006;
  • district social services administration boards under the District Social Services Administration Boards Act; and
  • public bodies under the Public Service of Ontario Act, 2006.

The government has not yet set the date on which these amendments will come into force.

Opt-out election

Bill 66 also provides that employers that fall within the aforementioned categories are able to “opt-out” of these new rules by filing an election with the Minister. The following conditions must be met for the “opt-out” election to apply:

  • A trade union must represent employees of the employer who are employed/may be employed in the construction industry on April 3, 2019;
  • The election must be made by a person with authority to bind the entity, and the election must be made in writing; and
  • The election must be filed with the Minister within three (3) months of April 3, 2019.

Once an “opt-out” election is made, it is irrevocable. However, this does not preclude an employer from subsequently making an application under section 127.2 of the LRA to declare that a trade union no longer represents those employees of the “non-construction employer” that are employed in the construction industry.

The opt-out election provisions are in force as of April 3, 2019.

We will monitor and report on the timing for the amendments that are still due to come into force.

The Supreme Court of Canada will decide if an employee is entitled to payments owed in the event of a corporate acquisition despite the fact that the employee resigned over a year before the triggering event. On January 31, 2019, the SCC granted leave to appeal in Matthews v. Ocean Nutrition Canada Limited. The employee asserts that he is entitled to over $1 million in profits following the acquisition of his former employer – even though he had resigned 13 months before the transaction. If the SCC decides in the employee’s favour, employers may face more challenges (and increased litigation) when seeking to enforce limiting clauses in employment agreements. Continue Reading Supreme Court to Decide if Bad Faith Employer Conduct Nullifies Limit on Incentive Compensation

The range of potential sanctions under Ontario’s Occupational Health and Safety Act are vast and, on its surface, potentially ominous for even the most minor of OHSA infractions. Companies in non-compliance with a health or safety requirement are seemingly at the mercy of the Ministry as to whether they prosecute (in addition to orders and penalties) and, if so, whether they pursue fines or even (gulp) incarceration.

Whereas the range of fines for various types of breaches and resulting harms are somewhat predictable, the circumstances where a Court will take the extraordinary step of ordering jail time has been somewhat of a black box. The recent decision from the Ontario Court of Appeal, Ontario (Labour) v. New Mex Canada Inc., may have changed this. Continue Reading Only Willful OHSA Breaches Warrant Jail Time?

After-acquired cause, by definition, arises when an employer discovers just cause for termination after the employee has been dismissed on a without cause basis. This begs the question: Can an employer assert after-acquired cause when it has reason to suspect just cause prior to the termination, but proceeds on a without cause basis due to the employee’s representations of innocence? The Ontario Court of Appeal has answered affirmatively. Continue Reading After-Acquired Cause: Employer’s Due Diligence Pays Off

Surprisingly, evidently not. Briefly the facts in Plate v. Atlas Copco Canada Inc., 2019 ONCA 196: an Executive in the role of Vice President Global Strategic Customers was terminated for just cause grounded in a decades-long defrauding of the company and its benefits provider in conspiracy with the latter’s consultant, to the extent of over $20,000,000, over a million of which resulted to the Executive personally. His argument that he was a bystander incidentally enriched to the knowledge of the employer failed, conviction entered, no appeal pursued.

In the course of the criminal process the Court readily found that the Executive was a “fiduciary”, a formidable position of trust: the duty of replete fidelity, selfless devotion to the “beneficiary” (here the employer), compelling so-called “righteousness” behaviour. Continue Reading Tangled Weeds: Fiduciary Status in a Criminal Fraud Not Determinative in Employment Litigation?

Faith-based, as in “good faith”, that is.

Not that long ago the Supreme Court installed “good faith” as core to the fabric of contractual relations in Canada whether commercial or employment, whether ostensibly arms-length as “independent contractor” or employment per se. Implying a duty to act fairly in contract is not foreign to other jurisdictions— it is foundational to EU legal principals and long-since present in the Restatements of US law.

Here, not so much. In the 60s Ontario Justice Goodman enthused about incorporation of “good faith” as a distinct implied term of contract; alas conservative sentiment rendered that distillation jurisprudential ‘moonshine’. Some 50 years on Bhasin v. Hrynew (2014) refined that elixir into single malt: the SCC aspirationally confirmed that we all gotta have ‘faith’.

While it remains difficult to be ‘sort-of pregnant’, good faith became operational but not as an independent “cause of action”. But as an influencer of import in contractual relations, it has certainly come of age: Mohamed v. Information Systems Architects Inc., 2018 ONCA 428. Continue Reading Faith-based Conscientious Contracting: Pratfalls of Fixed Term Employment-Like Contractual Relations

Employers commonly receive calls from Employment Insurance (EI) Officers seeking clarification of the information provided by the employer in a Record of Employment (ROE). The clarification or confirmation typically relates to the employee’s first / last day worked, insurable hours, insurable earnings and / or the reason for issuing the ROE (Block 16).

Employers who are asked to speak to their reason for issuing the ROE should pause and consider what, if any, information to share with the EI Officer. Employers should also carefully consider what steps to take upon receipt of correspondence from the EI Officer or the Canada Employment Insurance Commission (Commission). Continue Reading Discussions with EI Officers: Employers Should Tread Carefully

Successor rights are a long standing fixture in Ontario’s labour relations legislation. Generally speaking, under s. 69 of the Labour Relations Act (LRA), the purchaser of a business effectively steps into the seller’s shoes for the purpose of labour relations and becomes bound by any collective agreement that the seller is party to, unless the Ontario Labour Relations Board (OLRB) declares otherwise. The same principle applies where the business is leased, transferred or otherwise disposed of. The fundamental purpose of s. 69 of the LRA is to preserve the bargaining rights of the Union. The idea is that once the Union has been recognized with respect to a particular business, the Union may pursue that bargaining right when all or part of the business is sold.

Whether successor rights extend to the context of court-appointed receiverships had been an unsettled area. Recently, the OLRB determined that a court-appointed receiver that actively operated the debtor’s business through its agent was a successor employer for the purpose of s. 69 of the LRA: United Food and Commercial Workers International Union, Local 175 v Rose of Sharon (Ontario) Community cob as Rose of Sharon Korean Long-Term Care Home, 2018 CanLII 32988 (Rose of Sharon). We outline key aspects of the OLRB’s decision below. Continue Reading Ready to Bargain with the Union? Court-Appointed Receivers at Heightened Risk of Successor Employer Determination