In-Depth Analysis

Employers’ Advisor December 2023

Articles:

  1. Employers Take Note: Increasingly Large Common Law Notice Periods 
  2. New Pay Transparency Legislation in BC and Ontario
  3. Canada Labour Code Amendments Change the Game in Labour Actions

Employers Take Note: Increasingly Large Common Law Notice Periods 

Qasid Iqbal, Sharon Canete

Historically, Ontario courts generally considered twenty-four months to be the maximum length of common law reasonable notice that it would award to employees in wrongful dismissal cases. This twenty-four month cap was typically only exceeded in those cases where exceptional circumstances were present. However, in a string of recent cases, the Ontario courts have awarded reasonable notice periods in excess of twenty-four months. Employers should no longer consider twenty-four months to be the unofficial notice period ceiling, meaning that employers may be exposed to increased amounts of common law damages in wrongful dismissal cases.

Recent Decisions:

In the 2022 decision of Currie v. Nylene Canada, the Ontario Court of Appeal (the “ONCA”) considered the termination of an employee who began working with the employer after leaving high school. The employee had remained in its employ for almost forty years, until she was terminated at the age of 58. She had also acquired highly specialized skills, which the ONCA determined would not be transferable with respect to her pursuits of securing alternative employment. The ONCA upheld the lower court’s award of a twenty-six month reasonable notice period, agreeing that her termination was “equivalent to a forced retirement”.

In the 2023 decision of Milwid v IBM Canada, the trial judge agreed with the employee that his termination amounted to a “forced retirement” given his age and role, as well as the economic circumstances created by the unprecedent COVID-19 pandemic. The employer took the position that since the employee never worked as an executive or directly managed employees, the appropriate reasonable notice period was between twenty to twenty-two months. The lower court disagreed and awarded the employee pay in lieu of twenty-seven months of reasonable notice. While the court considered the effects of the pandemic in its determination of the reasonable notice period, it also commented that the employee would still have been entitled to a twenty-six month reasonable notice period, even in the absence of such considerations.

The result in Milwid was upheld by the ONCA, which further emphasized the employee’s lack of transferrable skills resulting from his exclusive work with the employer’s products. The ONCA agreed that it was also appropriate for the trial judge to consider the “truly exceptional circumstance” of the pandemic in increasing the reasonable notice award from twenty-six to twenty-seven months.

In 2023, the ONCA also upheld the lower court’s decision in Lynch v Avaya Canada Corporation. This decision involved a 63-year old employee with over thirty-eight years of service who was terminated due to a company restructuring. As in the above cases, the ONCA placed emphasis on the fact that the employee’s job was unique and specialized, with his skills being “tailored to and limited by his very specific workplace experience” with the employer. In addition to this, the ONCA noted that the employer had identified the employee as a key performer in one of his latest performance reviews and that there was a lack of comparable employment in the city where the employee lived. Accordingly, the Court determined that these factors justified an award of a thirty month reasonable notice period.

Commentary:

While these cases indicate that the courts still seek to identify “exceptional circumstances” in awarding reasonable notice periods of more than twenty-four months, they also demonstrate that such supposedly “exceptional” circumstances may not be as rare as they once were. Another concern arising out of these cases, and which is expressly referred to in Milwid, is that there is “no absolute upper limit on what constitutes reasonable notice”. Therefore, though reasonable notice awards of up to thirty months have been awarded in 2023, it is yet to be seen whether this, too, will eventually be exceeded.

This trend of increasingly higher reasonable notice awards is another reason employers must ensure that the termination provisions in their employment agreements comply with the Employment Standards Act, 2000. Where termination provisions are valid and enforceable, an employee’s termination entitlements may be limited to their minimum statutory entitlements (or some other agreed-upon amount that may be less than the employee’s potential common law entitlements). The need for employers to define and limit (in an enforceable way) their employees’ entitlements upon termination is becoming all the more important, given courts’ increasing generosity in awarding greater and greater common law entitlements to discharged employees.

 

New Pay Transparency Legislation in BC and Ontario

Sherry Yu

In recent years, the concept of ‘pay transparency’ has caught a wave of popularity that is only continuing to grow. Emboldened by the accessibility and relative anonymity of social media, newer generations of workers have taken to platforms such as TikTok to disclose their salaries and encourage others to do the same.

Legislators have apparently now caught on to this trend, as we are seeing jurisdiction after jurisdiction adopt their own version of pay transparency laws. Currently, the federal Pay Transparency Act applies to all federally-regulated employers, and three of the four maritime provinces (Nova Scotia, Newfoundland and Labrador, and Prince Edward Island) have enacted some form of pay transparency legislation. Two of the newest members to this club are British Columbia and Ontario.          

British Columbia’s Pay Transparency Act

The new BC Pay Transparency Act, (the “Act”) passed into law on May 11, 2023, and according to the BC government, “places new requirements on employers to address systemic discrimination in the workplace.” The new legislation provides for, among other things, the following key items:

  • a requirement that information about pay be included in publicly advertised job postings;
  • a prohibition on seeking pay history information about job applicants;
  • a prohibition on certain types of reprisals by employers against employees;
  • the publication, by specified employers, of annual pay transparency reports; and
  • the designation of a government employee as the director of pay transparency, along with the specification of the responsibilities of that director.

Notably, section 2 of the Act, which requires employers to specify pay information in job postings, came into force on November 1, 2023 and applies to all job postings made in BC (regardless of whether the employer is located in BC). Recent additional guidance from the BC government confirm that acceptable pay information includes specific wage or salary, or an adequately specified range of pay.

Reporting obligations under the Act came into effect for the BC government and the six largest Crown corporations on November 1, 2023, and will come into effect for private employers as follows:

  • November 1, 2024 for employers with 1,000 employees or more;
  • November 1, 2025 for employers with 300 employees or more; and
  • November 1, 2026 for employers with 50 employees or more.

The recent BC Pay Transparency Regulation (the “Regulation”) sets out the information that must be included in pay transparency reports.

Currently, there are no enforcement provisions in the Act or the Regulation, and compliance with the legislation thus far proceeds largely on an honour system, with the ability for the director of pay transparency to receive reports of non-compliance.

Ontario’s Bill 149

In 2018, Ontario attempted to introduce a comprehensive pay transparency statute, but under a new government, these laws never came into force.

Now, in 2023, Ontario has again put forward new legislation relating to pay transparency. Bill 149, tabled on November 14, 2023, proposes to amend the Ontario Employment Standards Act, to require that “publicly advertised job postings” include pay ranges (subject to conditions, limitations, restrictions, or requirements that may yet be prescribed by regulation). Other proposed amendments would require employers to disclose whether their hiring process utilizes artificial intelligence, and ban the inclusion of requirements for Canadian work experience (again, subject to regulation).

Bill 149 is currently in its Second Reading and has been referred to Standing Committee.

Key Takeaways for Employers

Although we note that not all of the pay transparency legislation enacted across the Country are currently in force, including Ontario’s proposed amendments, we think it is safe to say the increasing demand for pay accountability from employers is not dying down any time soon. Pay transparency laws not only impose new legal obligations on employers, but they are also a sign of changing societal norms regarding expectations of employers and the employment relationship. Before, during, and after pay transparency legislation comes into force in your jurisdiction, employers should take care to:

  • review their hiring procedures to ensure that any questions relating to past pay information are removed from screening/interview checklists and job postings are updated to include pay information;
  • conduct a survey of existing salaries and pay grades and evaluate whether any changes need to be made to mitigate exposure from both a compliance standpoint and in terms of employee relations; and
  • if reporting obligations apply, develop record-keeping processes and begin compiling the necessary information for reports.

As this is a rapidly developing area of employment law, we will continue providing updates as they happen. If you have any questions about pay transparency and how it affects your business, please do not hesitate to reach out to a Mathews Dinsdale lawyer.

 

Canada Labour Code Amendments Change the Game in Labour Actions 

Julian Dickinson

It was no surprise when the Federal Government introduced new amendments to the Canada Labour Code – the Liberals had been promising it since their 2021 election platform – but now that the potential legislative changes have been officially proposed, employers in federally-regulated environments are going to have to learn to play under new rules that are designed to shift more bargaining power to unions in a strike or lockout scenario.

The changes were put to the legislature on November 9, 2023, when Bill C-58 was introduced. The bill seeks to put an end to the long-standing practice of using replacement workers when a work stoppage occurs. As it stands now, an employer has the option to bring in workers from outside the bargaining unit to keep operations going under a strike or lockout, so long as it is not done for the purpose of undermining union activities.

Under the proposed amendments, employers in industries operating under the Canada Labour Code – that is banking, telecommunications, ports and airports, most Crown corporations, and some other businesses – will no longer have the option of using replacement workers and will have to rethink how to maintain operations during a work stoppage.

What does Bill C-58 propose to do?

Bill C-58 amends section 94 of the Code by introducing a number of prohibitions on the use of temporary replacement workers during a strike or lockout.   The specific prohibitions include the following:

(a) No employer will be permitted to have bargaining unit work performed by any employee, manager or confidential employee who was hired after the day on which notice to bargain was given. This suggests that having bargaining unit work performed by employees excluded from the bargaining unit (e.g. managers, confidential employees, etc.) will continue to be permitted so long as those excluded employees were hired before notice to bargain was given.

(b) Contractors and employees of another employer will also be prohibited from performing bargaining unit work during a strike or lockout. However, Bill C-58 includes two exceptions to this prohibition. First, if the employer was using the services of a contractor or another employer’s employee before notice to bargain was given, then those contractors/employees will be able to continue performing those services during the strike or lockout “so long as they do so in the same manner, to the same extent and in the same circumstances as they did before the notice was given.” Second, the prohibition on the use of contractors excludes “dependent contractors.”   The purpose of this exclusion is unclear, and clarification from the government may be needed.

(c) Bargaining unit employees will not be allowed to work during any strike or lockout that involves “the cessation of work by all employees in the bargaining unit,” except if they are required to do so for purposes of maintenance of activities or if it is necessary due to a serious threat to the employer’s business or the life, health or safety of any person. This effectively means that bargaining unit employees will be prohibited from making the decision to cross the picket line and return to their jobs during a full-blown strike or lockout.

The penalties for non-compliance will be steep. Any employer who contravenes the prohibition on temporary replacement workers will be found guilty of an offence and could face a fine of up to $100,000 for each day during which the offence is committed or continued.

What does this mean for Employers moving forward?

The good news for affected employers is that they are not facing a total ban on temporary replacement workers during a strike or lockout. Employers can still bring in certain workers during a work stoppage, and some safeguards are in place, but the federal collective bargaining landscape will nevertheless be significantly affected.

In particular, the proposed change will place more pressure on employers during a work stoppage. This could alter the power balance at the bargaining table as unions are incentivized to strike more quickly and more often. However, it is yet to be seen how the amendments will actually impact labour relations and collective bargaining, as the bill is only at the second reading stage of the parliamentary process and has yet to be approved.

To get a sense of what impact the ban on replacement workers would have on industry, we can look to provincial jurisdictions that have a similar ban in place. Non-federal employers in British Columbia and Quebec have had laws in place for decades banning temporary replacement workers and, while there is no consensus on the specific effects of the laws, some research suggests that these provinces endure significantly more lost working days during work stoppages than other jurisdictions.

In any event, if and when the bill becomes law in Canada, it will be important for employers in federal sectors start to strategize and prepare for the conditions imposed by this legislation. New thinking will be required, and specific planning should be implemented. Lawyers at Mathews Dinsdale can help with the process.

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This newsletter is not intended as legal advice.  Any employer or organization seeking assistance should feel free to contact a Mathews Dinsdale lawyer for assistance.

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