Terminations during the Probationary Period: Three Common Assumptions

Many employers like to take the first few months of a new employee’s employment to decide whether their new hire is the right addition to the team.   Some like to call it a probation, others, a trial or evaluation period. Irrespective of what it is called I have noticed three recurring assumptions about this initial period that are worthy of attention by both employees and employers.   Employers relying on these assumptions may believe themselves better protected against claims for payment of reasonable notice than may in fact be the case. Employees for their part may assume that they have no recourse following a termination during their probation period which again, may not always hold true.

Assumption #1 – An employer can automatically terminate an employee during the first three (3) months of employment without providing the employee notice or pay in lieu.

The right to terminate without notice during the probation period is not automatic. Although the Employment Standards Act, 2000 (“ESA”) stipulates that an employee who is terminated within the first three (3) months of their employment is not entitled to notice or pay in lieu, a court will not simply infer that the employee has agreed to these terms.   Justice Lederman in Easton v. Wilmslow Properties Corp [2001] O.J. No 447 reasoned:

The existence of a probation period is a question of fact in each case. Since it takes away an employee’s usual rights, a probationary period must be expressly agreed to by the employee. It cannot be implied into the relationship…

Assumption #2 – In the absence of a clear probationary period clause, the amount of notice that a short service employee is entitled to receive is necessarily very minimal.  

Some employees who have had their employment terminated within the probation period (and who did not have enforceable probation clauses in their contracts) have been awarded some relatively lengthy notice periods. To give three examples: In the case of Easton, the plaintiff who was terminated after two weeks was awarded three (3) months’ notice because she had left a reasonably secure job to work for the defendant employer.   Likewise, in the case of Rejdak v.The Flight Network, the employee was awarded four (4) months of notice after eleven (11) weeks of work.   Similarly in Deacon v Moxey, 2013 CanLII 54099 (ON SCSM) the employee was awarded three (3) months of notice after working two (2) weeks.

Assumption #3Extending a probation period provides the employer a longer period within which they can terminate the employee without notice.

While an employer can stipulate a longer probation period (i.e. 6 months) in an employment contract, this does not automatically extend the window that an employer can terminate the employee without notice or pay in lieu. Employers will want to ensure that the probation clause is drafted to ensure that there are no violations of the ESA.

Whether you are an employee or an employer, if you have questions about drafting or the enforcement of a probation clause our employment lawyers would be pleased to assist.

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Recent decision on a casual worker’s rights surrounding her pregnancy.

The Supreme Court indicated that women are entitled to preventive withdrawal during pregnancy, even if it is as a substitute teacher for the Commission scolaire des Patriotes.

The Supreme Court indicated that women are entitled to preventive withdrawal during pregnancy, even if it is as a substitute teacher for the Commission scolaire des Patriotes.

On January 23, 2014, the Supreme Court of Canada heard the case of Dionne c. Commission Scolaire des Patriotes.  It is a case coming out of Quebec that touches on the issue of pregnancy-based discrimination and the extension of benefits to vulnerable workers. On May 1, 2014, the Supreme Court of Canada released their judgment. In a unanimous decision, the Supreme Court indicated that women are entitled to preventive withdrawal during pregnancy, even if it is as a substitute teacher for the Commission scolaire des Patriotes. The court found that substitute teachers are workers within the meaning of the Quebec Occupational Health and Safety Act  when they accept a job offer. They are therefore entitled to the same protections as other workers.

BACKGROUND

The appellant, Marilyne Dionne, is a casual substitute teacher who was on the supply teacher list maintained by the respondent school board.  During the 2005-2006 school year she worked 88 days.

Then in the fall of 2006 she discovered she was pregnant.

In Quebec, under that province’s Occupational Health and Safety Act, a pregnant employee who works in an environment that may present a danger either to the expectant mother or her baby may be eligible to go on paid leave during her pregnancy.  The paid leave is covered almost entirely by the CSST (Commission de la Santé et de la sécurité du travail).  In order to obtain this leave a doctor needs to issue a Certificate regarding the protective reassignment of a pregnant worker (“Certificate”) .

In Marilyne’s case she learned that was not immunized against Rubella or Parvovirus B-19 and her  doctor duly issued the certificate which would have, in the ordinary course, made Marilyne eligible for accommodation and if that were not possible, to go on paid leave.

The School Board, however, objected.  They said Marilyne was not an employee; there was no on-going employment contract.  Instead, she is one of hundreds of names on the supply list.  A casual substitute teacher’s contract of employment only lasts as long as the substitute teaching assignment.

Marilyne argued that once she was accepted a supply teaching position, a contract was formed.  She further argued that the School Board’s refusal to conclude the contract with her (because she was pregnant) amounted to pregnancy-based discrimination. The fact that Marilyne exercised her right to protection under the provincial Occupational Health and Safety Act after she accepted the offer of employment should not have allowed the employer to then refuse to conclude a contract with her.

THE DEBATE

The case raises interesting questions about whether provincially-funded programs meant to provide protection to all workers adequately protects more vulnerable workers, such people who are on supply lists or working in other temporary or contract positions.

On the other hand, if casual or temporary workers are considered employees for the purpose of pregnancy-related benefits, it may open the door to claims for other benefits and employment-related protections which may be costly to employers.

THE DECISION AT THE COURT OF APPEAL

To date, all of the lower court decisions concluded that Marilyne was not an employee and was therefore not entitled to receive benefits through the CSST, nor was it possible for the employer to have engaged in employment-related discrimination against a person who was not an employee.

However, Justice D’Alphond from the Court of Appeal has been the lone dissenting voice. In his dissent, he concluded that Marilyne should qualify for benefits as the benefits are meant to be extended to all “workers” not just “employees” under the relevant Quebec legislation. He wrote that the lower court’s finding that a contract of employment was needed in order for the Quebec Charter to apply is wrong in law. To find otherwise would mean that a prospective employer could refuse to hire someone for discriminatory reasons and defend their act of discrimination by saying that there was no employment contract.

He further found that the School Board did discriminate against Marilyne because she was pregnant.  What should have happened, he suggests, was that when the School Board called Marilyne and offered her a position and she accepted but then advised that she was under a medical certificate (due to her pregnancy), the employer should have immediately offered her accommodation.  Instead, the moment she was unable teach in a class (because she was pregnant), the School Board did not conclude its contract with her. This, according to the judge, was discrimination based on a prohibited ground.

To see the Court of Appeal decision see Dionne c. Commission scolaires des Patriotes, 2012 QCCA 609 (CanLii)

THE DECISION AT THE SUPREME COURT OF CANADA

Marilyne appealed the decision, and the Supreme Court of Canada determined that the appeal should be allowed and agreed with Justice D’Alphond’s dissent from the appeal. Justice Abella delivered the decision at the Supreme Court of Canada in Dionne v. Commission scolaire des Patriotes, 2014 SCC 33.

The purpose of the Act respecting occupational health and safety is to ensure the health and safety of workers by protecting them from workplace dangers.  Under the statutory scheme, when a worker relies on the right to refuse unsafe work, any new assignments or temporary withdrawal from the workplace are not seen as an absence from work, they are deemed to be a substitute for the work that the employee would ordinarily be expected to perform but for the danger.  A refusal to perform unsafe work is not a refusal to fulfill the employment contract, it is the exercise of a legislated right.  Workers are thereby protected from having to choose between job security and their health or safety.

Like any other worker entitled to refuse to do unsafe work, a pregnant worker is deemed by the Act to still be “at work” while on reassignment or Preventive Withdrawal.  The Act therefore protects pregnant women in two significant ways:  it protects their health by substituting safe tasks for dangerous ones, and it protects their employment by providing financial and job security.  To confront the discriminatory assumptions which had historically attributed incapacity to work to women who were pregnant, the scheme protects not only their right to work, but to work in a safe environment by deeming them to be as available to work as a non‑pregnant worker.

A contract was formed when D accepted the School Board’s offer to supply teach and therefore became a “worker” in accordance with the definition in the Act.  The legislated right of a pregnant worker to withdraw from an unsafe workplace cannot be used to conclude that her Preventive Withdrawal negates the formation of the contract of employment.  D’s pregnancy was not an incapacity that prevented her from performing the work, it was the dangerous workplace that prevented it.  That triggered her statutory right to reassignment or Preventive Withdrawal.  What prevents the performance of work is the employer’s inability to provide a safe working alternative, not the pregnancy.  To conclude otherwise negates the objectives of the Act and penalizes pregnant women for doing precisely what the legislative scheme mandates: avoiding workplace health risks during pregnancy.

The State Has No Place In The Bedroom Of The Nation… But Does Your Employer?

termination

In 1968, former Prime Minister Pierre Elliot Trudeau ushered in significant changes to the Criminal Code, which had until then criminalized homosexuality, with the following well-known pronouncement:

There is no place for the state in the bedroom of the nation. What is done in private between two adults does not concern the Criminal Code.

Although the state may be out of the business of regulating the conduct of its citizens in this private sphere, employers appear to be taking a heightened interest in what is going on in the bedrooms and private lives of their employees.

Consider the recent media storm that surrounded the firing of Jian Ghomeshi, the former CBC Radio Host, after allegations of non-consensual and unorthodox sexual practices came to light.  Or the media attention received by Shawn Simoes, the former Hydro One worker who was terminated  after shouting sexual obscenities at a TV reporter at a Toronto FC soccer game.  In the varied reaction to each of these stories, there was an element of surprise that an individual’s conduct in non-work related contexts was not only of immediate concern to their employers, but directly relevant to their continued employment.

These media stories appear to be reflective of wider trends.  Over the past year, individuals whose names have appeared on the Ashley Madison list, employees who have had intimate photos taken of them and people who engage in “non-mainstream” sexual practices have increasingly been seeking legal advice because their off-duty conduct has come to the attention of their employers and they are concerned that their employment could be terminated as a consequence.

In reviewing employment contracts in my own practice, I have noticed an increased focus on employees’ private lives.  On a number of occasions, clients have asked me to review new employment contacts because what could be described as a “morality clause” caught their attention.  These clauses tend to run along the following lines:

The employee recognizes and agrees that at all times his/her conduct and character, both in and out of the workplace, must be in accord with the high standard of moral and ethical character that all employees at Company X abide by.  Consequently, any acts of questionable moral or ethical character could cause the immediate termination of this agreement.

One of the employees who recently consulted me about such a clause pointed out that it was not so long ago that her same-sex relationship could have been captured by such a clause.  Seen in this light, there is a real possibility that including such a morality clause could have the effect not only of alienating prospective employees, but potentially also of leading to claims of discrimination.

Although this flurry of “off-duty conduct” cases may be prompting some employers to think it is necessary to include a morality clause in their standard employment contracts, the case law has, in fact, long-recognized that employers are entitled to terminate an employee for off duty conduct provided they can demonstrate that at least one of the following circumstances applies:  that the employee’s conduct harmed the employer’s reputation or product; that the impugned conduct rendered the employee unable to perform his/her duties satisfactorily; that the employee’s conduct interfered with the employer’s ability to properly carry out its function or efficiently manage its operations and/or workforce; that the employee’s behaviour lead to the refusal, reluctance or inability of other employees to work with him/her; or that the employee has been guilty of a serious breach of the Criminal Code and thus rendering his conduct injurious to the general reputation of the Company and its employees.  These circumstances are set out in the 1967 Ontario decision of Re Millhaven Fibres and Oil, Chemical and Atomic Workers I.U. Loc 9-670, which has been followed in a number of recent “off-duty” conduct cases, including the recent decision in Canadian Union of Public Employees, Local 4400 v Toronto District School Board, 2015 CanLII 24478 (ON LA, http://canlii.ca/t/ghh50).In order to determine whether any of these circumstances apply, it will always be necessary to examine the particular facts and context at issue.

Whether you are an employee or employer, the Employment, Labour and Human Rights lawyers at Mann Lawyers would be pleased to speak to you about any off-duty conduct issue that you might have.

 

 

 

 

 

Suspending an employee indefinitely without pay may amount to constructive dismissal

The Supreme Court of Canada released its decision today in Potter v. New Brunswick Legal Aid Services Commission overturning both the Trial Court and Court of Appeal decisions that David Potter had voluntarily resigned from his position.

The fact that two lower courts concluded that Mr. Potter had resigned while the Supreme Court of Canada disagreed and decided that he had been constructively dismissed is emblematic of how difficult it can be to anticipate whether a constructive dismissal claim will be successful.

The Supreme Court did try to provide some clarity by articulating the following two part test for constructive dismissal:

  1. The court must first identify an express or implied contract term that has been breached
  2. Then the court must determine whether that breach was sufficiently serious to constitute constructive dismissal.

The Supreme Court added however that an employer’s conduct will also constitute constructive dismissal if it more generally shows that the employer did not intend to be bound by the contract. The decision also confirms that courts ought to continue using a ‘flexible approach’ in answering that question. While this flexibility allows courts to assess each case on its facts, I anticipate that this same flexibility will mean employees and their counsel will continue to approach alleging constructive dismissal with some caution.
The decision does however highlight some factors which will weigh in favour of a finding of constructive dismissal, among the ones the Supreme Court of Canada relied on in order to conclude that Potter had been constructively dismissed include:

  1. The employee’s contract did not contain the right (express or implied) to suspend the employee;
  2. Potter was not given any reason for his suspension;
  3. Potter’s suspension was indefinite and he was replaced during the period of suspension; and
  4. Potter did not agree to the change.

To read the full decision please go here.

Employer criminally charged over workplace safety obligation

On January 13, 2014, the Ontario Ministry of Labour released a decision regarding a death due to workplace safety violations. After two directors of the company pleaded guilty to safety violations in the workplace, the Ministry sentenced them to jail and fined the company. This serves as a sobering reminder to employers that they need to be on top of their obligations and responsibilities set out in the Occupational Health and Safety Act. If you would like to have a complete review of your workplace policies to ensure that your company is complying with all its obligations, please don’t hesitate to contact me here.

Here is the entire article published by the Ministry of Labour:

BRAMPTON, ON – New Mex Canada Inc., an importer and retailer of furniture and accessories, has been fined $250,000 and two of its directors, Baldev Purba and Rajinder Saini, have been jailed for 25 days each after pleading guilty to safety violations that led to the death of a warehouse worker. 

On January 18, 2013, a worker was moving merchandise in the workplace at 286 Rutherford Road South in Brampton, using a combination forklift/operator-up platform called an order picker. The order picker had been modified and had an additional platform supported by the forks that was tack-welded to the manufacturer-equipped operator platform. The added platform did not have a guardrail around it and the worker using it was not wearing fall protection or safety shoes.

The worker was found on the floor and was pronounced dead; the cause of death was later determined to be blunt force trauma to the head.

A Ministry of Labour investigation found multiple violations of Ontario’s Occupational Health and Safety Act and of Ontario Regulation 851, which covers industrial workplaces. There had been no health and safety training of the workers in the warehouse and workers indicated that they were not provided with fall protection equipment. Ministry of Labour inspectors saw more health and safety hazards in the workplace after the fatality occurred.

Section 85(a) of Regulation 851 (known as the Industrial Establishments Regulation) requires that workers who may fall more than three metres must wear a safety belt or harness (also known as fall protection equipment). The Occupational Health and Safety Act requires employers to ensure that the safety measures prescribed by Regulation 851 are carried out in the workplace.

Purba and Saini were both charged with failing as  directors of New Mex Canada to take reasonable care that the corporation complied with the Occupational Health and safety Act and with Regulation 851. Both pleaded guilty and each was ordered to serve 25 days in jail by Justice of the Peace C. Jill Fletcher, to be served on weekends. Both were ordered to take a health and safety course within the next 60 days. 

New Mex Canada Inc. pleaded guilty to failing to provide information, instruction and supervision to a worker regarding fall protection and/or working from a height. The company also pleaded guilty to failing as an employer to ensure the safety measures required by law were carried out, and was fined $250,000.

In addition to the fine, the court imposed a 25-per-cent victim fine surcharge as required by the Provincial Offences Act. The surcharge is credited to a special provincial government fund to assist victims of crime.

-Source: Ministry of Labor website

Three new job-protected Leaves of Absence take effect October 29, 2014

Today, three new job protected leaves of absence come into effect under the Employment Standards Act: (1) Family Caregiver Leave, (2) Critically Ill Child Care Leave, and (3) Crime-Related Child Death and Disappearance Leave.

We have been actively following the progress of Bill 21, the Employment Standards Amendment Act (Leaves to Help Families), 2013, since March 2013 when I wrote about what job protections are available when a family member gets sick and you need to take leave from work, and again when I wrote in September 2013 about how the Bill passed second reading.

What you need to know about the 3 new leaves:

The new leaves of absence allows caregivers to focus their attention on what matters most: providing care and support to their loved ones without the fear of losing their job.

The existing Family Medical Leave

The act builds on the existing Family Medical Leave under the ESA: if a family member is terminally ill, an employee is entitled to 8 weeks of job-protected unpaid leave. An employee who takes Family Medical Leave is also eligible to apply for up to 6 weeks of Compassionate Care Benefits under the Federal Employment Insurance Act.

What has been added to the existing Family Medical Leave policy?

The new leaves of absence add additional unpaid job-protected leave for caregivers by offering:

  • Family Caregiver Leave: up to 8 weeks of unpaid, job-protected leave for employees to provide care and support to a family member with a serious medical condition.
  • Critically Ill Child Care Leave: up to 37 weeks of unpaid, job-protected leave to provide care to a critically ill child.
  • Crime-Related Child Death and Disappearance Leave: up to 52 weeks of unpaid, job-protected leave for parents of a missing child and up to 104 weeks of unpaid, job-protected leave for parents of a child that has died as a result of a crime.

What this means for Employers:

Employers need to ensure that contracts with employees and workplace policies are updated to reflect the new changes.

What this means for Employees:

If you provide care and support to a family member with a serious medical condition or a critically ill child, or are the parents of a missing child or a child that has died as a result of a crime, the new leaves of absence apply to you. If your employer has not helped you understand the new policies and how they effect you, you should seek legal advice to make sure that your employer is complying with the new policy.

“Waiving” Goodbye: Can an employer waive the employee’s notice of resignation without paying any indemnity?

The Supreme Court of Canada is hearing a case today that could represent significant change for employers.

The Supreme Court of Canada is hearing a case today that could represent significant change for employers.

The Supreme Court of Canada is scheduled to hear the case of Asphaltes Desjardins c. Commission des norms du travail, 2013 QCCA 484 today, March 28, 2014. This case could represent significant change for employers in terms of employee resignations and notice period payments.

THE FACTS

This Quebec matter involved a gentleman by the name of Mr. Guay who worked for Ashphalte Desjardins Inc. (“Ashphaltes”) between the years of 1994 and 2008.  Mr. Guay initially worked as a surveyor and then became project manager. His duties included supervising and managing tenders; he had access to information Ashphaltes considered confidential.

On Friday February 15, 2008, Mr. Guay provided his employer with a letter of resignation which stated that he intended that his last day of work would be March 7 of that year.  The three weeks’ notice was, according to Mr. Guay, to help transition his responsibilities to his successor.  Mr. Guay disclosed that he intended to work for one of the respondent’s competitors.

When Asphaltes was unable to convince Mr. Guay to stay, it decided to terminate his employment immediately without providing any pay in lieu of notice.  Proceedings were started against Asphaltes.

THE LEGAL ISSUE

The central question before the court was whether an employer can waive the employee’s notice of resignation without paying any indemnity.

Until this decision, the case law in Ontario and Quebec suggests that when an employer receives a resignation, if they induce the employee to leave before their proposed resignation date, the employee will be considered “dismissed,” and the employer would have to pay severance.

In the present case, two out of the three Quebec Court of Appeal judges concluded that since the termination was initiated by Mr. Guay, the employer did not have a duty to pay severance or any other form of compensation.  In other words, the employer could waive the notice period without paying any indemnity. 

IMPACT ON EMPLOYERS

If the Quebec Court of Appeal decision is confirmed, this will represent a significant change for employers.  It would mean that employers could accept their employee’s resignation and send them home immediately without having to pay the employee during the notice period. For employers in a competitive market and who do not want the soon to be competing employee having continued access to their confidential information during the notice period, this decision may be particularly welcome.

IMPACT ON EMPLOYEES

For employees, this decision could represent a difficult change.  There is a duty on employees to provide reasonable notice of resignation.   An employee who, in good faith, finds a new job and negotiates a later start date may find themselves without work and without income if the employer waives the notice.

UP FOR DISCUSSION

If employees began to feel they may be “penalized” for giving notice, will they cease giving advance notice of their departure?

We will follow up when the Supreme Court renders its decision.

Holiday Party Survival Guide for Employees and Employers

T’is the season of office holiday parties! Office parties can be a great opportunity for employees to get to know one another socially and for employers to thank their employees for their contribution to the business. Or… they can be disastrous.

A review of some recent court decisions highlights that holiday party festivities can sometimes lead to unintended consequences.. Here are a few tips and key cases that can help employers limit their legal liability surrounding holiday party problems, and how employees can keep behavior in check:

TIPS FOR OFFICE HOLIDAY PARTY SURVIVAL

Employers

  • Try to avoid offering an open bar to your employees; they generally result in excessive drinking.
  • Ensure that there is plenty of food and water being served throughout the night.
  • Provide your employees with alternative transportation home from the office party, such as taxi chits.
  • Try to host your event off-site, such as a restaurant or conference space. The staff at the venue will be trained on how to handle drunken patrons and can manage water and food distribution adequately.
  • If possible, also try to provide employees with alternative accommodations if they have to travel far. Hotels typically offer blocks of rooms at discounted prices for events taking place in their facilities.
  • Make sure that whoever is serving alcohol at the party is licensed to serve.

Employees

  • Don’t drink so much that you lose your ability to make smart decisions while in the company of colleagues and employers.
  • Know that you are still expected to adhere to office policies, even at after-hours functions.
  • Try to keep your stories and jokes office-appropriate; avoid using foul language and making dirty or off-colour jokes.
  • Make sure that what you wear is still moderately office-appropriate.
  • Try not to gossip or speak negatively about your job or your colleagues.

RECENT CASE LAW EXAMPLES

Unwanted Closeness on the Dance Floor

In 2013, a complainant in British Columbia alleged that during two consecutive staff Christmas parties, she was assaulted on the dance floor by work colleagues who sought to include her in some rather up-close and personal dancing. This incident was among a few that she raised in support of her claim for harassment in the work place. [Kaferv. Sleep Country (BCHRT 137)]

Physically Threatening and Making Sexually Inappropriate Comments to Colleagues

In 2011, an employee (the plaintiff) got intoxicated at his office holiday party and proceeded to physically threaten his colleagues. The following Monday, he was fired due to his behavior at the party. He claimed that he was wrongfully dismissed from his employment following that fateful holiday party because the employer knew he was an alcoholic, which is a disability recognized under the Human Rights Code.  The Human Rights Tribunal decided that there was insufficient evidence that the employer did know that he was an alcoholic and so denied the claim.

The judgment suggested, however, that if an employee is a known alcoholic and acts inappropriately at an office party, an employer may find themselves being sued for discrimination if they fire the employee over their drunken conduct at the party.  [Huffman v. Mitchell Plastics (a division of Ultra Manufacturing Ltd.), 2011 HRTO 1745]

Drinking and Driving

The risk to employers who have employees drive home after drinking at the holiday party can be significant.  A court in BC ruled that the employer (Nike) was liable for the injuries suffered by their employee after he drove his car into a ditch and suffered significant injuries.  The plaintiff argued that Nike was responsible because they had served the plaintiff and his colleagues alcohol, did not monitor his consumption and then allowed the employee to drive home when he was impaired.  Jacobsen v. Nike Canada Ltd., 1996 CanLII 3429 (BC SC)

Loss of Benefits

In another unusual case, one woman’s dance moves at the staff holiday party led her employer (who was obviously unmoved by the holiday spirit) to claim that she should have her Wage Loss Benefits discontinued after she was seen on the dance floor bending her knees. It was therefore claimed she was able to return to work.  [WCAT-2008-01181 (Re), 2008 25463 (BC WCAT)]

How enforceable are non-competition and non-solicitation agreements in employment contracts?

Non-competition and non-solicitation agreements can put employees in a real bind. But are they enforceable?

Non-competition and non-solicitation agreements can put employees in a real bind. 

It is common for clients to seek advice about the legality of non-competition and non-solicitation clauses (sometimes referred to as “restrictive covenants”) in their employment contracts.   For someone who has recently lost their job, the idea of having to sit on the bench for months or face risking a law suit can present a serious dilemma.

On the other hand, employers often share key confidential information with their employees and trust them with their clients, product and know-how, so if the employment relationship is terminated, they understandably want to put conditions in the employment contract in an attempt to bring a reasonable level of protection to their commercial interests.

So what is the difference between a non-competition agreement and a non-solicitation agreement? Are these agreements actually enforceable? What if the agreement has to do with the sale of a business?

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The Difference Between Non-Competition and Non-Solicitation:
Non-Competition:

A clause in an agreement stating that the employee agrees not to work for or start a business that is similar to their employers.

Example Situation: if a hairstylist worked for a salon for a number of years and learned all the tricks of the trade, then left the salon to open up her own salon down the street.

Non-Solicitation:

A clause in an agreement stating that the employee agrees not to approach employees of the company and encourage them to leave the employer for new job opportunities, or approach clients of the company for their business.

Example Situation: if that same hairstylist opens her new salon, tries to persuade her old co-workers to start working for her, and contacts clients of her old salon to convince them to bring their business to her new salon.

Are Non-Competition and Non-Solicitation Clauses Enforceable?
  • Generally, non-competition clauses in regular employment relationships are difficult to enforce in Ontario.  Employers and employees alike may be better served by giving serious consideration to whether such a clause should even be included in an employment contract at all.
  • However, non-solicitation clauses may be enforceable, but need to be clear, unambiguous, and reasonable in light of the employee’s position, knowledge and responsibilities.
  • From the commercial perspective, non-competition clauses that are included in employment contracts made in the context of the sale of a business will be presumably enforceable (more on this later).

As a general rule, the courts in Canada have considered clauses which restrict a former employee from working in their chosen field as contrary to public policy. The reason is that stopping someone from competing interferes with individual liberty and restricts open competition. Consequently, non-competition clauses included in regular employment contracts are difficult to enforce.

What a court is more likely to do in regular employment situations is to enforce a non-solicitation agreement, which is designed to prevent a former employee from contacting the company’s clients and employees for a defined period of time after the employment.

What makes a Non-Competition or Non-Solicitation Agreement Enforceable?

Whether it is a non-competition clause or a non-solicitation clause, one of the key questions a court will try to answer before determining if it is enforceable is “how reasonable is the restriction?”  Three main questions that factor into determining how reasonable the agreement is include[1]:

1.      What is the geographic scope?   

Anywhere in the world” is too broad, and is less likely to be considered a reasonable geographic scope than one with a limited radius.

Interestingly, while a non-competition agreement must be geographically limited, a non-solicitation agreement may not need to be geographically limited to be valid. Due to new technological developments and social media, customers are no longer limited geographically, and the Supreme Court of Canada has recently concluded that geographical limitations in non-solicitation agreements have generally become obsolete.[2]

2.      How long is the restriction meant to last? 

It would not be reasonable to prevent a former employee from competing indefinitely. There needs to be an end date for when the agreement expires. Each situation will be different, but generally the shorter the restriction period, the more likely it will be to resist scrutiny. Six months will seem more reasonable than five years.

3.      What is the scope of the prohibited activity?   

Is the person restricted from working for a specific list of competitors, or does the clause try to stop the employee from working for “any businesses competitive with the employer or that of any of its subsidiaries and affiliates”? This might be too broad to be considered reasonable. The purpose of allowing restrictive covenants is to protect legitimate business interests only.

What about Non-Competition and Non-Solicitation Agreements involving the Sale of a Business?
Commercial Context vs. Employment Context

The law differentiates between how enforceable these agreements are within a general employment context (the relationship between an employer and employee), and the commercial context (one that arises in connection with the sale of a business).  This distinction was emphasized in the Supreme Court of Canada case: Payette v. Guay. Payette was concerned about the how enforceable the a non-compete clause was in the sale of a business.  Justice Wagner wrote that:

The criteria for analyzing restrictive covenants to be reasonable will be much broader in the commercial context than in the context of employment.  I am therefore of the opinion that, in the commercial context, a restrictive covenant is lawful unless it can be established on a balance of probabilities that its scope is unreasonable.   (emphasis added)

In other words, restrictive covenants born in the commercial context will be presumed to be enforceable.  This stands in direct contrast to the standard employment context we have been talking about, which places the onus of demonstrating that the restriction is reasonable on the party who is trying to have the agreement enforced (usually the employer).


[1] Elsley v. J.G. Collins Ins. Agencies Ltd., [1978] 2 S.C.R. 916

[2] Payette v. Guay inc., 2013 SCC 45

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Colleen Hoey is an Ottawa-based lawyer practicing in the areas of Employment Law, Human Rights Law, and Civil Litigation at Mann & Partners, LLP. The articles on this blog are not intended to provide legal advice. Should you require legal advice, please contact Mann & Partners, LLP at 613-722-1500 or fill out our form to be contacted within 24 hours.

Companies will be fined under Criminal Code if found liable for worker injury or death

Metron Construction plead guilty to the deaths of 4 workers in 2009. Credit: Carlos Osorio / Toronto Star File Photo

Metron Construction plead guilty to the deaths of 4 workers in 2009. Credit: Carlos Osorio / Toronto Star File Photo

Workers safety is paramount – see the below article written by  Lisa Stam on her blog “Employment and Human Rights Law in Canada” for a breakdown of a recent decision by the Ontario Court of Appeal regarding the safety of workers:

Criminal Code Convictions for Worker Safety

Yesterday, the Ontario Court of Appeal tripled the fine awarded against a construction company that failed to ensure the safety of its workers:  R v Metron Construction.

Facts

In the late afternoon of December 24, 2009, five workers who were restoring the concrete balconies of a high rise in Toronto fell from a fourteenth floor swing stage platform. Four of the five workers died, the fifth worker who survived suffered serious permanent injuries. The sixth worker – the only one who was properly attached to a safety line – did not fall and survived uninjured.

Details of the original judgment are set out in the July 2012 trial judgment of R v Metron Construction Corporation.

Criminal Conviction – Trial Judge

The company was the first in Ontario to be charged and convicted under the new Criminal Code provisions that make it a criminal offence to direct a worker to perform a task without taking reasonable steps to prevent bodily harm to that worker. See sections 217.1, 219 and 22.1(b) of the Criminal Code for the specific provisions upon which the crown relied.

The trial judge fined the company $200,000 plus the Victim Fine Surcharge of 15% or $30,000, which was over 3 times the net earnings of the business in its last profitable year. The trial judge concluded that the penalty was “the appropriate disposition in this case and should send a clear message to all businesses of the overwhelming importance of ensuring the safety of workers whom they employ.”

Court of Appeal Triples the Fine

Yesterday, the Court of Appeal tripled the penalty, fining the company $750,000. The Crown had sought a fine of $1 million, arguing that the court should not restrict itself to the range of penalties under the Occupational Health and Safety Act. The Court agreed with the merits of that argument:

[87] Section 718.1 of the Code states that “a sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender”. A range of sentences established under the OHSA regulatory regime does not reflect the gravity of the offence of criminal negligence causing death. The OHSA cases that attracted fines of between $115,000 and $450,000 and that were relied upon by the sentencing judge are of limited assistance.

The Court also concluded that the penalty for such a serious offence with such a tragic consequence must be increased to ensure deterrence:

[115] A sentence consisting of a fine of $200,000 fails to convey the need to deliver a message on the importance of worker safety. Indeed, some might treat such a fine as simply a cost of doing business. Workers employed by a corporation are entitled to expect higher standards of conduct than that exhibited by the respondent. Denunciation and deterrence should have received greater emphasis. They did not. The sentence was demonstrably unfit.

The Court of Appeal has sent a very clear message to employers: worker safety is paramount, and companies will pay dearly under the Criminal Code if found liable for worker injury or death.

-Article written by Lisa Stam.

Colleen Hoey is an Ottawa-based lawyer practicing in the areas of Employment Law, Human Rights Law, and Civil Litigation at Mann & Partners, LLP. The articles on this blog are not intended to provide legal advice. Should you require legal advice, please contact Mann & Partners, LLP at 613-722-1500 or fill out our form to be contacted within 24 hours.