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To ring in the New Year, we highlight the ten most significant developments in Canadian labour and employment law in 2019.

  1. Courts grapple with whether to award incentive payments during the termination notice period.  The courts have continued to struggle with the issue of whether, and to what extent, incentive payments (e.g. bonuses) are due to employees during their termination notice period (Dawe v. The Equitable Life Insurance Company of Canada, 2019 ONCA 512; O’Reilly v. IMAX Corp., 2019 ONCA 991).  In Ocean Nutrition Canada Ltd. v. Matthews, 2018 NSCA 44 (“Ocean v. Matthews“), the Nova Scotia Court of Appeal decided that, where incentive plan language is sufficiently clear, it is inappropriate to award a long term incentive payment that would have accrued during the termination notice period.  The Supreme Court of Canada (“SCC”) granted leave to appeal in Ocean v. Matthews and is expected to release a key decision on this in 2020.
  2. Federal government introduces major changes to the Canada Labour Code. The federal government passed legislation introducing several amendments to the Canada Labour Code. These changes were enacted through Bill C-63, Budget Implementation Act, 2017, No. 2, and Bill C-86, Budget Implementation Act, 2018, No. 2. Notable changes enacted to the Canada Labour Code include amendments to hours of work, the termination notice period and vacation entitlements.
  3. Serious debate continues regarding the legality of reducing or eliminating employment benefits for seniors. In Barker v. Molson Coors Breweries, 2019 BCHRT 192, the British Columbia Human Rights Tribunal (“Tribunal”) held that the decision to provide reduced benefits to employees over the age of 65 under an employer-sponsored benefit plan was not contrary to the British Columbia Human Rights Code.  However, the Tribunal expressly declined to consider whether the scheme was contrary to s. 15 of the Charter of Rights and Freedoms (for lack of jurisdiction), and expressed serious concerns about whether the scheme was constitutional in light of the decision in Talos v. Grand Erie District School Board, 2018 HRTO 680.
  4. Employees claiming damages for workplace mental health may be barred from civil claims.  In Morningstar v. Hospitality, 2019 ONWSIAT 2324, the Ontario Workplace Safety and Insurance Appeals Tribunal (“WSIAT”) decided that an employee in Ontario was barred from pursuing a civil claim of constructive dismissal against a former employer.  The employee alleged that she had suffered chronic mental stress caused by (among other things) workplace bullying and harassment. WSIAT held that the worker’s claim was within the jurisdiction of the Workplace Safety and Insurance Act, 1997, SO 1997, c 16, Sch A, and that the civil action was therefore statute barred.
  5. Inability to monitor residual impairment from medical cannabis may constitute undue hardship. In IBEW v. Lower Churchill, 2019 CarswellNfld 63, the Newfoundland and Labrador Supreme Court confirmed that the employer’s inability to measure residual impairment arising from the use of medical cannabis outside of work hours may constitute undue hardship in a safety-sensitive workplace. Employers must continue to carefully evaluate the duty to accommodate on a case-by-case basis, and in doing so, should consider the available testing technologies and technical limitations.
  6. Enforceability of arbitration clauses under scrutiny.  In Heller v. Uber Technologies Inc., 2019 ONCA 1, the Ontario Court of Appeal held that an arbitration clause included in contracts between Uber and its drivers was invalid and unenforceable.  Under the arbitration clause, the parties were required to mediate and arbitrate their contractual disputes in the Netherlands.  Based on the presumption that Uber drivers are employees of Uber, the Court of Appeal found that the arbitration clause was unenforceable insofar as it sought to contract out of Ontario’s Employment Standards Act, 2000 (“ESA”).
  7. Ontario Court of Appeal refuses to recognize the tort of harassment (for the time being). The Ontario Court of Appeal in Merrifield v. Canada (Attorney General), 2019 ONCA 205, declined to recognize the tort of harassment. In overturning the lower court’s decision, the Court of Appeal stated that employees may still bring claims against employers and/or individuals for alleged mental distress arising out of harassment under the tort of intentional infliction of mental suffering. However, the Court did not rule out the possibility of recognizing the tort of harassment in future cases.
  8. Notable legislative developments of 2019. Employment standards legislation was amended in many jurisdictions in 2019.  Most jurisdictions increased their minimum wage.  British Columbia, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, and the federal government also introduced a new leave for domestic violence. Changes were made to the Employment Insurance Act, SC 1996, c 23, increasing the number of weeks of parental benefits available to parents who share parental obligations. Parents are now entitled to share either 40 weeks or 69 weeks of benefits (depending on the benefit level they select) but neither parent may individually receive more than 35 weeks or 61 weeks of benefits (respectively).
  9. Distinction Between Shareholder and Employee Upheld. In Mikelsteins v. Morrison Hershfield Limited, 2019 ONCA 515, the Ontario Court of Appeal reversed a decision in which an employee was awarded “share bonuses” that would have been payable during the termination notice period.  The Court of Appeal held that this award incorrectly conflated compensation due under the employment contract with awards provided under a Shareholders’ Agreement.  Under the Shareholders’ Agreement in issue in this case, the “share bonus” was unrelated to the shareholder’s contributions as an employee.  Nevertheless, this decision confirms that it is possible, in some circumstances, to reduce or eliminate an employee’s shareholder entitlements during the termination notice period, and is an important consideration for employers who are implementing or amending equity-based incentive plans.
  10. Ontario introduces legislation limiting compensation increases in the public sector. Under Bill 124, Protecting a Sustainable Public Sector for Future Generations Act, 2019, the Ontario government limited increases in compensation to public sector employees over a three-year “moderation period”. During the moderation period, salary rate increases for employees in the public sector are capped at 1% per 12-month period. Furthermore, incremental increases to the aggregate “total compensation” (e.g. salary, bonus, benefits) provided to employees in each defined group are capped at 1%.