To wrap up 2021, we have highlighted key developments in Canadian labour and employment law, with a focus on Ontario:

1. Bill 27 – Working for Workers Act: On December 2, 2021, the Ontario government passed the Working for Workers Act, 2021 (the “Act“), which introduces significant changes to Ontario’s employment law, including:
   • A Right to Disconnect from Work Policies: Employers subject to the Employment Standards Act, 2000 (the “ESA“) with 25 or more employees must have a written policy which outlines employees’ right to disconnect from work. The term “disconnecting from work” means not engaging in work-related communications (e.g. emails, calls) and not sending or reviewing any messages, so that employees are free from the performance of work outside of normal working hours. Employers have six months from December 3, 2021 to implement the policy.
   • No Non-Compete Agreements: Employers subject to the ESA are prohibited from entering into non-compete agreements with employees. Non-compete agreements are those that prohibit the employee from working for or running a competitive business after the employment relationship has ended.

There is an exception to the prohibition on non-competition agreements in the event of a sale or lease of a business and for executive-level employees.

This amendment to the ESA is deemed to be in force as of October 25, 2021, and all non-compete agreements entered into before this date will remain unaffected. Non-solicitation, confidentiality, and assignment of intellectual property agreements are still permissible.

The Act brings about a number of additional changes that will be relevant for employers, which are fully summarized here.

2. Ontario severance pay obligations are based on global payroll: In Hawkes v Max Aicher (North America) Limited (“Hawkes”), Ontario’s Divisional Court ruled that the $2.5 million payroll threshold for triggering the severance pay provisions under the ESA are based off of an employer’s global payroll. This means that many employers who were not paying severance pay will now have to do so.

Please see our full blog on the decision here.

3. Constructive dismissal and Infectious Disease Emergency Leave (“IDEL”): There have been three notable decisions on the issue of whether Ontario Regulation 228/20 – Infectious Disease Emergency Leave (“ 228/20“) displaces the common law of constructive dismissal.

By way of background, O. Reg. 228/20 provides that a temporary reduction or elimination of hours during the “COVID-19 period” does not amount to a constructive dismissal, and that employees who were not working during the COVID-19 period were deemed to be on IDEL. This temporary leave of absence was an important tool for employers, since layoffs of more than 13 weeks (or more than 35 weeks in certain situations) would normally amount to a deemed termination and trigger termination and severance pay obligations.

In Coutinho v Ocular Health Centre Ltd., the court determined that O. Reg. 228/20 did not affect the plaintiff’s right to sue for constructive dismissal. For a full summary of the case, please see our blog here.

Then, in Taylor v Hanley Hospitality, the court ruled that Coutinho was wrongly decided and refused to follow it. The court found that the ESA provisions displaced the common law, and to rule otherwise would make the ESA amendments irrelevant, as it would not protect employers from lawsuits.

Finally, in Fogelman v IFG,[1] the court sided with Coutinho and determined that O. Reg. 228/20 did not displace the common law. The court relied on the Ontario Ministry of Labour’s bulletin entitled COVID-19: temporary changes to ESA rules, which states that the new ESA rules do not address what constitutes constructive dismissal at common law.

Currently, the case law is uncertain on the issue of whether employees may bring an action for constructive dismissal for a temporary layoff or reduction in pay during the COVID-19 period. These and future decisions in Ontario may influence the legal landscape in the remaining provinces. There is still a significant risk of liability arising from temporary layoffs. One easy way to mitigate this risk is to include language in employment agreements that allows the employer to temporarily lay off employees.

The COVID-19 period was recently extended to July 30, 2022. For a summary of IDEL and the recent extension of the COVID-19 period, please click here.

4. Mandatory Vaccinations: This has been one of the hottest employment topics of 2021, and that will likely continue into 2022. Some FAQs on the topic include:
   • Can an employer require an employee to receive the COVID-19 vaccine as a condition of new or ongoing employment?
   • Can employers prevent unvaccinated employees from attending the workplace?
   • Are there legal risks if an employer allows non-vaccinated employees from attending the workplace?
   • What exceptions will likely apply under human rights laws to mandatory vaccination policies?
   • What are the privacy implications of implementing a mandatory vaccination policy?

This summary does not intend to answer all of these questions and the case law on these questions is constantly in flux. Here, we provide a few brief summaries of recent decisions that offer some insight into the issues above.

There have been a couple of decisions regarding the enforceability of mandatory vaccinations in the unionized context:

• In United Food and Commercial Workers Union, Canada Local 333 v. Paragon Protection Ltd.,[2]arbitrator Von Veh upheld an employer’s mandatory vaccination policy. The collective agreement already contained an article requiring employees to be vaccinated if required by the third-party site, which predated the COVID-19 pandemic. Arbitrator Von Veh determined the policy was reasonable, enforceable, and compliant with both of Ontario’s Occupational Health and Safety Act and Human Rights Code.
• In Electrical Safety Authority v. Power Workers Union,[3]the employer implemented a mandatory vaccination policy that required all employees to get vaccinated. The policy provided that failure to comply could result in employees being placed on unpaid leaves of absence, or having their employment terminated. Nothing in the collective agreement specifically addressed the issue of mandatory vaccinations. Arbitrator Stout determined that the mandatory vaccination policy was unreasonable and could not be justified under the circumstances. The vast majority of the work was done remotely and many employees were able to continue doing so. Arbitrator Stout concluded that, when it was not a requirement of being hired and where a reasonable alternative was available (e.g. a vaccinate-or-test policy), disciplining or discharging an employee for failing to be vaccinated was unjust.
• In Ontario Power Generation v. The Power Workers Union,[4]the employer implemented a vaccination policy that required employees to either be vaccinated or participate in bi-weekly rapid antigen testing. Unvaccinated employees had to pay for their tests, were not paid for their time and reporting their tests, and were prohibited from accessing the onsite gym. The penalty for non-participation in the system was a six-week, unpaid leave followed by termination of employment for cause. Arbitrator Murray determined that it may be unreasonable for the employer to terminate employees for cause for failing to be vaccinated, but did not make a specific finding because this was not a cause case. Arbitrator Murray also determined that it was reasonable to test unvaccinated employees and suspend them for refusing to comply with a test-or-vaccinate policy, among other things.
• In Bunge Hamilton Canada, Hamilton, Ontario v United Food and Commercial Workers Canada, Local 175,the employer instituted a mandatory vaccination policy in response to a requirement by the Hamilton Oshawa Port Authority (“HOPA“) that all employees of companies located on HOPA port lands be fully vaccinated. One of the employer’s operations was located on HOPA port lands, and another directly across the street. The employer implemented a mandatory vaccination policy for both sites, which required employees to provide proof of vaccination by a given date or they would be placed on an unpaid leave, and potentially terminated at a later date. The union argued that this violated employees’ personal privacy rights. Arbitrator Herman found that the employer’s vaccination policy was a reasonable exercise of management’s rights given that the employer’s operations required intermingling of employees from both locations. Arbitrator Herman found it was not feasible for the employees to work remotely and that a testing alternative would not comply with the HOPA mandate.

These cases provide some insight, and suggest that arbitrators will scrutinize mandatory vaccination policies and “vaccinate-or-test” policies. Similarly, for non-unionized workplaces, there will be a risk of constructive dismissal claims and discrimination claims to employers who institute mandatory vaccination policies. One easy way to mitigate this risk for non-unionized locations is to include language in new employment agreements that makes employment conditional on full vaccination.

5. Pay Equity: There have been two important updates in the world of pay equity: 1) the federal Pay Equity Act (the “Act“) came into force on August 31, 2021, and 2) the Ontario Court of Appeal determined that employers who achieve pay equity using the “proxy method” have an ongoing obligation to revisit male comparators from the proxy employer.
   • The Act outlines a pay equity framework for federally-regulated employers with at least 10 employees. Workplaces subject to the Act must regularly assess their compensation practices to ensure men and women are receiving equal pay for equal work. This is done primarily through establishing and maintaining a pay equity plan and increasing the compensation of predominantly female job classes that receive less pay than their male counterparts.
   • In Ontario Nurses’ Association v Participating Nursing Homes, the court concluded that the process of maintaining pay equity when using a proxy includes the ongoing obligation to monitor the male comparator. In a two-part blog post series, we first discussed pay equity maintenance generally, which can be found here, and how the Court’s decision affects pay equity maintenance obligations, which can be found here.
6. The tort of internet harassment: The Ontario Superior Court recognized a new tort of internet harassment. In Caplan v. Atas, the court held that the defendant’s actions against the plaintiffs constituted harassment when they falsely alleged online that the plaintiffs committed pedophilia and professional misconduct. The court held that a finding of defamation alone was insufficient to stop the defendant from continuing to engage in online harassment. As such, the court adopted the tort of internet harassment, drawing from U.S. case law and establishing the following elements: “the defendant maliciously or recklessly engages in communications and conduct so outrageous in character, duration, and extreme in danger, so as to go beyond all possible bounds of decency and tolerance, with the intent to cause fear, anxiety, emotionally upset or to impugn the dignity of the plaintiff, and the plaintiff suffers such harm”. Individuals experiencing online harassment, including employers, may now obtain relief for the misconduct, including a permanent injunction, ancillary orders or findings of fact, and monetary relief.
7. Right to sue under WSIB: In Morningstar v. WSIAT, the Ontario Divisional Court overturned the decisions of the Workplace Safety and Insurance Appeals Tribunal (the “WSIAT“) and held that an employee can in fact sue for constructive dismissal if s/he suffers chronic mental stress from a poisoned work environment.
8. Forfeiting stock option grants upon termination: In Battiston v Microsoft Canada Inc. (ONCA), the Ontario Court of Appeal overturned a lower court decision where an employee was awarded damages in lieu of stock options that never vested, despite an enforceable termination language in the stock awards agreement.

In the initial decision, the Ontario Superior Court of Justice determined that Battiston was entitled to the vesting of his previously awarded but unvested stock options, despite a stock award agreement that unambiguously excluded Battiston’s right to vest the award after termination. The court found the agreement was harsh and oppressive, and Microsoft did not do enough to bring the termination clause to Battiston’s attention. We summarized this decision in our Top 10 Canadian Labour & Employment Law Developments of 2020, which can be found here.

The decision was overturned on appeal. The Ontario Court of Appeal determined that the trial judge erred in concluding that Battiston had not received notice regarding the termination provisions of the stock award. The court found that Battiston made a conscious decision not to read the agreement, and by misrepresenting to Microsoft that he did and then later making a claim for the awards, he was taking advantage of his own wrong.

9. Uber drivers certified as a class action: In Heller v Uber, the Ontario Superior Court certified a class action involving Uber drivers who were seeking a declaration that they are employees and are therefore entitled to damages for alleged breaches of contract and the ESA. This is despite that fact that Uber’s contracts include an arbitration clause and a class action waiver, which requires their drivers to resolve disputes with Uber through arbitration, and limits fees to the filing fees of local courts.

The court did not rule on the validity of the class action waiver because this was a certification hearing, but it suggested that there was a serious issue as to whether the plaintiffs received sufficient notification of the class action waiver. The court also declined to certify aggregate damages as a common law issue, because the Class Proceedings Act is a procedural statute, and did not create a new type of damages. Finally, the court refused to certify the negligence claim and the claim for unjust enrichment as a common issue.

This comes on the tail winds of the decision from the Supreme Court of Canada in 2020, which ruled that the arbitration provision in Uber’s service contracts was unenforceable. This is an important decision because it addresses whether employment status can be treated as a common issue in class actions, the impact of class action waiver language and arbitration clauses, and the availability of aggregate damages.

10. Ontario’s Court of Appeal clarifies the law regarding common employer doctrine: In O’Reilly v ClearMRI Solutions Ltd., the Ontario Court of Appeal stated that a corporation is not a common employer just because it is owned, controlled, or affiliated with another corporation. There must be evidence that shows there was an intention to create an employee/employer relationship between the individual and the related corporation. To determine whether there was an intention to contract, courts must objectively look at the parties’ conduct and assess how it would appear to a reasonable person: does their conduct suggest that they intended to enter into an employment contract with each other? The parties’ subjective thoughts are irrelevant, so is a written agreement. What is relevant is conduct that reveals effective control over the employee, including the selection of employees, payment of remuneration, and making hiring or termination decisions.

This is a favorable decision for employers, and one for businesses to make note of when establishing and maintaining operations in Ontario. A full summary of the case can be found on our blog here.