Top 10 Developments in Canadian Employment and Labour Law in 2019

2019 brought a number of significant developments to employment and labour law in Canada. We have collected and briefly highlighted our picks, in no particular order, for the top 10 developments from across the country.

1. Arbitration Clauses in Employment Contracts
2. No Tort of Harassment In Ontario
3. Courts Continue to Grapple with Termination Clauses
4. Most Provinces Increase the Minimum Wage
5. Amendments to the Canada Labour Code
6. Important Developments in Alberta
7. Legislative Changes in Quebec
8. Pro Rata Bonus Damages
9. Court Recognizes Distinction Between Shareholder Rights and Common Law Wrongful Dismissal Rights
10. Barring Claims for Constructive Dismissal Arising from Mental Distress

1. ARBITRATION CLAUSES IN EMPLOYMENT CONTRACTS

Kicking off our list is the Ontario Court of Appeal’s (Court of Appeal) first decision of 2019: Heller v. Uber Technologies Inc., 2019 ONCA 1.

In this proposed class action, the central claim is that Uber drivers are “employees,” not independent contractors, and are entitled to the rights established under Ontario’s Employment Standards Act, 2000. Before determining that claim, however, the issue before the Court of Appeal was the enforceability of an arbitration clause contained in a services agreement between Uber and its drivers. That clause required the parties to litigate their dispute in the Netherlands. The Court of Appeal found that the arbitration clause was invalid and unenforceable because it sought to “contract out” of the Employment Standards Act, 2000 and, furthermore, was unconscionable.

The Supreme Court of Canada (Supreme Court) heard Uber’s appeal of this case in November 2019 and a decision is pending. We expect that the Supreme Court’s decision will have implications on the enforceability of arbitration clauses in employment contracts going forward, and potentially wider implications for those businesses in the “gig” economy space.

2. NO TORT OF HARASSMENT IN ONTARIO

In Merrifield v. Canada (Attorney General), 2019 ONCA 205, the Court of Appeal confirmed that there is no tort of harassment in Ontario. The Court of Appeal concluded that the law was not sufficiently evolved to recognize a new tort and there was no compelling policy rationale to do so.

This ruling reversed a decision of the lower court, which awarded damages of C$100,000 to the respondent employee, and provided much needed clarity to the law. While harassment is still relevant in other contexts—such as under the Human Rights Code, the Occupational Health and Safety Act and potentially in the context of a claim of constructive dismissal—we now know that in Ontario employees cannot allege an independent claim for damages solely on the basis of alleged harassment.

3. COURTS CONTINUE TO GRAPPLE WITH TERMINATION CLAUSES

The issue of the enforceability of termination clauses in employment contracts has been a perennial “hot topic,” and 2019 was no different.

This past year, in a number of cases, appellate and lower courts continued to strictly scrutinize contractual provisions that attempt to define employees’ rights upon termination, including Andros v. Colliers Macaulay Nicolls Inc., 2019 ONCA 679; Rossman v. Canadian Solar Inc., 2019 ONCA 992; Groves v. UTS Consultants Inc., 2019 ONSC 5605; Cormier v. 1172887 Ontario Limited (St. Joseph Communications), 2019 ONCA 965. These cases confirm that employers should be cautious in drafting these provisions—ideally with the assistance of an employment lawyer—and should assume that the court will critically examine the language for clarity, consistency and compliance with employment standards legislation.

4. MOST PROVINCES INCREASE THE MINIMUM WAGE

Minimum wages increased across many provinces in Canada in 2019.  Minimum wages now range from a low of C$11.32 per hour in Saskatchewan to a high of C$15 per hour in Alberta.

5. AMENDMENTS TO THE CANADA LABOUR CODE

For federally regulated employers, Parliament made numerous amendments to the Canada Labour Code this past year. These include:

  • Vacation entitlement is increased to two weeks after one year of service, three weeks after five years of service and four weeks after ten years of service
  • Various and significant changes to leaves of absence including personal leave, family violence leave, aboriginal practices leave, jury duty leave and the introduction of paid days for bereavement and personal leaves of absence
  • New requirements with respect to hours of work and mandatory medical or nursing breaks
  • For filing complaints: limits on filing multiple complaints on the same issue for recovering unpaid wages, clarified conditions for disclosing a complainant’s name and new rules on the treatment of abandoned complaints
  • Optional banking of lieu time
  • Provisions regarding the refusal of overtime work to deal with family responsibilities and requesting flexible work arrangements

The Government of Canada has summarized a number of these changes.

6. IMPORTANT DEVELOPMENTS IN ALBERTA

In Hall v. Stewart, 2019 ABCA 98, the Alberta Court of Appeal confirmed that a director may be exposed to personal liability for workplace incidents despite the employer having coverage under the Workers’ Compensation Act (Alberta). Specifically, where the director is involved or participated in the events leading to the workplace incident and does not have any corresponding personal workers’ compensation coverage, he or she may be found to be personally liable in tort for any injuries that flow from the incident. In light of this decision, employers and directors should consider obtaining additional workers’ compensation coverage where directors will be involved in or supervise activities on a work site.

Alberta’s Open for Business Act (Bill 2) was introduced on May 27, 2019, and made a number of changes to the Employment Standards Code (Alberta) and its regulations. Notably, Bill 2: (i) enabled employers to provide one hour of paid time off for each hour of overtime worked, as employers were previously required to provide 1.5 hours of paid time off for each hour of overtime worked; (ii) required employees to have worked for their employer for 30 days in the 12 months preceding a general holiday before they become eligible for general holiday pay; (iii) created a distinction between regular and non-regular days of work for the purpose of calculating general holiday pay; and (iv) decreased minimum wage to C$13 per hour for certain employees who are 17 years of age or under.

7. LEGISLATIVE CHANGES IN QUEBEC

We highlight below several important legislative developments in Quebec in 2019.

Amendments to the Act respecting labour standards (ARLS)

Significant changes were made to the ARLS in 2019, including changes to the minimum vacation entitlements, the length of authorized leaves of absences, the staggering of work hours and to the limitation period for psychological harassment complaints, which is now two years instead of 90 days after the last occurrence of harassment. While the majority of those changes to the ARLS came into force on January 1, 2019, some changes were already applicable as of June 11, 2018.

In addition to those changes, new provisions pertaining to personnel placement agencies and temporary foreign worker recruitment agencies were introduced in the ARLS on January 1, 2020. For more information regarding these changes, please see the Gazette Officielle du Québec, November 27, 2019, Vol. 151, No. 48.

Modifications to the Quebec Pay Equity Act and Regulation Respecting the Report on Pay Equity

Significant modifications were made to the Quebec Pay Equity Act on April 10, 2019, including that pay adjustments are now payable as of the date of the event leading to the adjustment. For more information, please see An Act to amend the Pay Equity Act mainly to improve the pay equity audit process, SQ 2019, c 4.

  • Changes were also made to the Regulation respecting the report on pay equity (Regulation), which came into effect on October 24, 2019. The Regulation now requires employers to produce a pay equity report at the following interval:
  • Annually, until they declare that they have completed the initial pay equity exercise
  • Subsequently, when they carry out the pay equity audit within their enterprise (every five years)
  • Consequently, employers who have completed their initial pay equity exercise no longer have to produce an annual pay equity report until their next audit.

8. PRO RATA BONUS DAMAGES

In Andros v. Colliers Macaulay Nicolls Inc., 2019 ONCA 679, the Court of Appeal concluded that the employee, Andros, was entitled to damages for a portion of his bonus despite that he had not completed the full bonus year. The employer argued that the notice period applicable to Andros ended before the actual bonus payout date, and, therefore, that he should not be entitled to any bonus amount. The Court of Appeal disagreed, finding that the key question was whether the bonus was “earned” during the notice period, not when the amount earned would have been received, and upheld a pro rata bonus damages award to the employee.

In light of this decision, employers in Ontario should be aware that, absent clear contractual language providing otherwise, dismissed employees may be entitled to a pro rata share of their bonus if it is earned within the notice period.

9. COURT RECOGNIZES DISTINCTION BETWEEN SHAREHOLDER RIGHTS AND COMMON LAW WRONGFUL DISMISSAL RIGHTS

Also of note in 2019 case law is the Court of Appeal’s decision in Mikelsteins v. Morrison Hershfield Limited, 2019 ONCA 515. In that decision, the lower court determined that the dismissed employee was entitled to hold shares of the employer’s parent corporation until the end of the 26-month reasonable notice period, and thereby to benefit from the increase in value of those shares during that period and an applicable “share bonus.”

The Court of Appeal overturned the lower court, finding that the employee’s shareholder entitlements were governed by a shareholders’ agreement, and not under common law employment principles that typically apply to benefits, bonuses and other integral aspects of employees’ compensation. It was the separate shareholders’ agreement that determined the employee’s rights with respect to his shares, not wrongful dismissal law.

Mikelsteins has sought leave to appeal the decision to the Supreme Court.

10. BARRING CLAIMS FOR CONSTRUCTIVE DISMISSAL ARISING FROM MENTAL DISTRESS

Rounding out our list is a decision from Ontario’s Workplace Safety and Insurance Appeals Tribunal (Tribunal) in Morningstar v. Hospitality, 2019 ONWSIAT 2324. As with Merrifield v. Canada, this decision may have important consequences for claims arising from alleged workplace harassment.

The employee started a lawsuit against her former employer and claimed damages for constructive dismissal as a result of alleged bullying, harassment and a poisoned work environment. The Tribunal found that the employee’s claims flowed directly from her allegations of harassment and bullying in the workplace, which she said caused her to suffer chronic mental distress. The Tribunal found that, under the Workplace Safety and Insurance Act, 1997, the employee’s lawsuit was statute barred in its entirety. The employee’s allegations were “inextricably linked” to her alleged workplace injuries. In these particular circumstances, her right to pursue a civil case against her former employer was taken away.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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