Constructive Dismissal – Employment Law

Date: 28 May, 2015

The Supreme Court of Canada on March 6th, 2015, clarified the law of of wrongful dismissal in the decision of Potter v. New Brunswick Legal Aid Services Commission.

In this case the Board of Directors of the Legal Aid Commission had decided to get rid of its executive director.  While Potter was on sick leave, he was, without any reason, told not to return to work though he would continue to be paid.  After six weeks of not being asked to return, he sued for wrongful dismissal.

The question was, has he been constructively dismissed?  In other words, were the steps and actions taken by his employer, the same as being fired without cause which would give grounds to bring an action for wrongful dismissal?

The court found that he had been constructively dismissed and damages were awarded.

The court found that being paid is not the only benefit of working.  There are other benefits and rewards one receives for working and the court found that removing the benefits derived from performing work amounted to a substantial change in Potter’s employment and in turn, justified a finding of constructive dismissal.

What is the test for constructive dismissal?  (Sorry this is a little technical)

  1. Is the employer’s unilateral change a breach of an express or implied term of the employment contract and if so did the employer substantially alter this essential term of the employment contract?  One must remember that if there is an express or implied term (and most one sided employment contracts do contain this authority), that the employer may make unilateral changes OR if the employee consents, in other words simply goes along and accepts the change, the employee will be found to have agreed and therefore the change is no longer unilateral.  If it is not unilateral, in other words one sided, there is no longer a breach of a contract of employment and as such there is no constructive dismissal.  The change must be detrimental or substantial to the employee.  The court must ask at the time the breach occurred, would a reasonable person in the same situation as the employee, have felt that the essential terms of the contract were being substantially changed?  A minor change is not constructive dismissal.  It does not take a genius to recognize that every case is different and depends upon its individual facts.
  1. Another test as to whether or not constructive dismissal exists is whether the employer intended not to be bound by the contract.  This is an examination of the behaviour of the employer towards the employee.  Is there is a course of conduct pursued by the employer that shows that it had no intention to continue to be bound by an existing employment contract.   An employment contract can simply be an oral or implied one by virtue of the fact that you have been hired.  Alternatively, an employment contract can be a very specific written one.

The court lent much weight to the fact that no explanation or reasonableness was extended to Potter.  Potter was never explained why he was suspended or what indeed was the employer’s intention.  No employer is at liberty to withhold work from an employee either in bad faith or without justification.  An employer cannot suspend an employee without telling them why.  Employers have to show legitimate business reasons.  In essence, the employer must act in good faith which means being honest, reasonable and candid.  Here Potter asked why but was only met with silence.  A deadly step to be taken by an employer.

The court did add some comfort to employers.  If an employee pulls the trigger and fails in his/her claim of constructive dismissal, the employee almost always will be found to have voluntarily quit.  A claim for constructive dismissal is not a simple one and should never be attempted by a person without the benefit of advice from an experienced lawyer in this area.

The Importance of Incorporating Your Business

Date: 06 Mar, 2014

Often clients come to meet me and discuss business opportunities, methods of business registration and the liabilities which they can incur. From the outset of the meeting, I try to establish: the goals of the client, the reason for starting up a business, and the liability exposure that they can undergo on a personal basis. This can mean that their principal residence or home and other assets can be seized by creditors in the event that the business becomes insolvent or bankrupt or if creditors pursue claims for unpaid debts.

There are several methods to register a business. If the client is a sole proprietor, or is partners with one or more individual, then such registration can be completed with the cost of registration very low. Such registration of a name does not protect the use of the name, since only a trademark or copyright agent can complete a registration of such name, process or invention.

By taking this route, the individual(s) are exposed to personal liability. If the individual(s) instructs to incorporate a company, proper NUANS search for names of similar businesses across Canada would be conducted, name approved and then company incorporated. In a limited company, being incorporated, the individual is limited as to liability. However, such individual(s) such as the director(s), officers and/or shareholder(s) of the corporation can be liable for any trust monies unpaid, such as GST, withholding taxes to Canada Revenue Agency, WSIB premiums, sales taxes provincially and if any misdeed occurs, then the corporate veil can be pierced and the individual held liable.

In any corporation, the appointed person(s) are the director(s) and officers such as President, Secretary and Treasurer and then there are shares to be issued. Most companies incorporated provincially in Ontario are private corporations, and the names of the shareholders are not revealed by any filings with Companies Branch so such shareholders can be withheld from most public inquiry as to ownership of the company. Shares can be issued in varieties such as the voting or Common shares, or shares having some return or restriction, such as Special Shares. There are other options to incorporate on a Federal basis and these can be discussed with the lawyer handling the file.

In each and every instance of either registering an unincorporated entity or an incorporated entity, it is recommended that the clients immediately consult their own Accountant or Tax expert to obtain their own advice as to their tax situation, both in business and on a personal basis since both overlap. In such situations, there may be certain tax and estate planning that are necessary. Of course, with such business registration or incorporation of a company, it is recommended that Wills and Powers of Attorney for Property and for Personal Care/Health Decisions be prepared and executed in view of the requirement for these forms of powers of attorney under the provisions of the Substitute Decisions Act of Ontario in force since 1995 and applicable to all residents in Ontario and others.

With the start up of a business, if there are partners, then the Partnership Act of Ontario applies and a partnership agreement for the parties is strongly recommended to be prepared. In a company, if more than one party is involved, either as director or shareholder, then a Shareholding Agreement is recommended to be prepared and executed at the onset of the business to avoid any later disputes that cannot be settled by mediation or arbitration. Of course all of the above legal work is completed by our firm and costs are set out in our website and can be obtained by the relevant lawyer retained to do such work, either Elliott Dale as senior partner practising since l97l or Steven Klein, associate lawyer with more than l0 years experience in business, corporate, and insolvency practice of law.

What is important to note to all clients is that to run a business is to run a risk and how to minimize such risk to such clientele is the important issue to all clients of Dale Streiman Law LLP. To be a client of Dale Streiman Law is to be an educated client not just in this area of law but we at Dale Streiman Law LLP wish to be helpful in many other areas with 6 lawyers and one associate lawyer able to provide services including a litigation section and with a special emphasis on family law. This latter reference includes rights of spouses in business and shared family assets.

We would be pleased to receive any comments and meet with any prospective clients to educate such clients in any of the above areas of law. Feel free to Contact Us with any inquiries you may have.

Wrongful Dismissal

Date: 06 Mar, 2014

Your termination of employment may be justified if the employee’s behaviour includes verbal threats of violence or physical misdeeds.

In June 2010, the Ontario government changed Ontario’s Occupational Health and Safety Act. These amendments, which are described as Bill 168, place upon the employer a positive duty to deal with workplace violence and harassment. In a recent arbitrator’s award arising from a union grievance procedure, the arbitrator upheld the dismissal of a problematic employee who had over the years displayed anger management problems. There was no history of physical violence, but threats and intimidating behaviour were repeated. The employee who had twenty-eight years of seniority, was terminated by the City of Kingston after a heated discussion with a co-worker and the employee’s union president about the very issue of the employee’s return to work. The employee, who clearly had no control over her behaviour, eventually ended the argument with the union president by making an oblique death threat. The threat was reported to the City’s management team, who investigated. The City came to the conclusion that there was no choice but to terminate the employee who grieved the termination.

The arbitrator concluded that, the Bill 168 amendments to the Occupation Health and Safety Act have changed the law of the workplace in a significant way.It appears that the law of wrongful dismissal has been amended, though it must be interpreted on the facts of each individual case. Termination is not an automatic knee jerk response to every example of violence or threat, but it is to be strongly taken into account in the determination as to whether or not the dismissal is with cause.

The formula that the arbitrator produced and which will be followed closely in wrongful dismissal actions is, to what extent is it likely that this employee if returned to the workplace, can be relied upon to conduct himself or herself in a way that is safe for others? If the employer cannot reasonably fulfil its obligation to provide a safe workplace under the law, the employer’s justification in terminating the loose canon of an employee will be justified.

Dale, Streiman and Kurz LLP regularly provides advice to both employers and employees in a non-union environment on wrongful dismissal matters.

Real Estate Newsletter

Date: 06 Mar, 2014

Why you need to use a lawyer for Real Estate Purchases and Sales:

I often meet with clients to discuss representing them in their purchase and/or the sale of their residences or even commercial properties.

Condominiums: Such real estate may include a condominium sale which has many issues such as financial status of the condominium corporation, the reserve fund that is required under the provincial legislation of the Ontario Condominium Act and rules and regulations with respect to pets and type of automobiles that may be permitted to park on the designated parking spots, if in a garage in the case of a high rise condominium or in or outside of a garage in a townhouse condominium development. There are a myriad of issues to discuss and the first order of business if I am acting for a Purchaser of such condominium property is to obtain and review the Status Certificate which sets out the Declaration, Bylaws, Rules/Regulations, Financial statements and insurance and other issues.

Then on such purchases as in regular purchase of freehold property, i.e. detached, semi-detached houses, we have to review with the client the layout of the property and in freehold, obtain and review a survey to ensure that the fences are located on the property line, that there are no encroachments or easements that were not disclosed in the Agreement of Purchase and Sale which should have been reviewed in the first instance before such Offer or Agreement is signed. At such time the realtor should have recommended a home inspector and report should have been given with requisite conditional period for approval of such inspection report, financing and solicitor’s approval conditions, if any, should have been waived if the Purchaser were satisfied with the responses and information given for compliance with such conditions.

Manner of Taking Title may be taken in the case of husband and wife, as joint tenants, and that is the normal and usual way of being registered on title so that in the event of death of one of the co-owners, the surviving titled owner will automatically obtain title subject to a survivorship application being registered on the title to the property after the death of the co-owner, In such case and in every real estate transaction, our firm recommends that the client(s) consider preparation of a Last Will and Testament and under the l995 Substitute Decisions Act of Ontario, Powers of Attorney for Property so that the Ontario Government does not assume control of the client’s property in event of his/her disability and also a Power of Attorney for Personal Care and Health including the living will clause for non-rescussitation. These can be discussed at any time. The other manner of holding title is in percentages i.e. tenants in common as opposed to joint ownership with right of survivorship and such undivided interest can be devised or left to family/spouse under a Last Will and Testament.

There are creditor issues and issues under the Family Law Act to discuss with the client. If one spouse is at risk to being sued now or in the future by any creditors either existing at present or in the future, it is recommended to take title in the spouse/partner who is not at such risk but it is prudent to review with your mortgage lender or mortgage broker if that will be permitted and for parties with less than 20% down and CMHC insurance fee is required, the taking of title in one party’s name may not be permitted. Family Law issues: If you are married, the property is the family residence under the Family Law Act and subject to exceptions among others, e.g. if source of funds derived from resources or sale of another property, then this will be a family asset to be divided equally. If the parties buying are common law spouses, then a cohabitation agreement under the Family Law Act deemed a domestic contract, or if married, a Marriage Contract is recommended and one of the Family Law specialists at Dale, Streiman Law LLP (DS) can assist with an interview and instructions can be received and options considered.

Financing: It is important to deal with your financial institution or broker and obtain financing on a purchase with either a variable rate mortgage, fixed rate, with a line of credit or as many banks and other lending institutions offer, a combination of the two. If the sale of the client’s property is later than the purchase, a bridge loan is to be obtained from a bank or other lending institution. These issues are to be reviewed at the early stage of retainer of the real estate specialist at Dale, Streiman Law LLP and estimate for costs for the purchase and other issues will be given. Our Website sets out various estimates for fees and disbursements and you may feel free to discuss same with the real estate practitioners at DS.

For Sales, the client should attend and deliver all documents in his/her possession, the existing transfer/deed, tax bill if not paid through the first mortgagee, house insurance, utility bills, contact and names, addresses of any mortgage to be discharged and it is important at the early stage of retainer of DS’s real estate practitioners to determine if the client is to be charged any penalty and discharge processing fees on the sale and discharge of any existing mortgages. Discharge penalties can usually be 3 months interest penalty or interest rate differential, whichever is the greater. There are techniques that DS has managed to advise clients on how to reduce such mortgage prepayment penalties and waive any discharge processing fees, bridge loan costs and appraisal processing fees. Please feel free to consult one of our practitioners and clerks who would be able to assist you in your questions on any of the above issues raised above.

To be a client of Dale, Streiman Law LLP is to be an educated client not just in this area of law but we at Dale, Streiman Law LLP wish to be helpful in many other areas with 6 lawyers and one associate lawyer able to provide services including litigation area and with a special emphasis on family law. This latter reference includes rights of spouses in business and shared family assets.

We would be pleased to receive any comments and meet with any prospective clients to educate such clients in any of the above areas of law.

Summary Judgment Motions in civil matters

Date: 06 Mar, 2014

The government and the courts have been striving with limited success to reduce legal fees and to shorten the court process.

There has been available for a long time, the ability of a litigant* to bring a motion for summary judgment. It gives any party to a civil litigation action, the opportunity to ask the court before trial, to make a final decision on all or part of a law suit. As an example, a frivilous lawsuit brought with no foundation could be successfully defended at an early stage by bringing a motion for summary judgment seeking to have the Plaintiffs case dismissed. Alternatively, a Plaintiff who has a rock solid case, such as the collection of debt to which only a paper thin defence filed solely to delay matters has been filed. In those circumstances, a party can ask the court in the context of a motion for summary judgment, to grant a Judgment on a motion (almost always based solely upon written material and argument by lawyers), rather than at trial.

Recently, Rule 20 of the Rules of Civil Procedure was dramatically changed and the Ontario Court of Appeal recently released its decision in five cases heard simultaneously. All of these cases dealt with the court’s interpretation of the new Rule 20. The test that the court imposed as to whether or not a motion for summary judgment should be granted, turned upon the phrase, the full appreciation test, expanded by the court asking, can the full appreciation of the evidence and issues as required to make dispositive findings be achieved by way of summary judgment or can this full appreciation only be achieved by way of summary judgment or can this full appreciation only be achieved by way of a trial?

To clarify a not particularly clear direction, would the motion judge be satisfied that there is no need for this matter to proceed onto trial, that the judge feels that he or she has all of the facts and a solid understanding of a case that does not require the time and expense of a trial.While summary judgment motions have existed for a long time, the recent rule change and the Court of Appeal’s decision, generally referred to as Combined Air Mechanical Services Inc. v. Flesch, represents a fresh page in this evolving area of law.

Dale Streiman Law LLP has appeared numerous times, both prosecuting and defending motions for summary judgment

WRONGFUL DISMISSAL IS THE RULE OF THUMB MADE OUT OF PLASTER OR STEEL?

Date: 06 Mar, 2014

Wrongful Dismissal, which is discussed elsewhere on this site, is the judge made law that is superimposed upon the Employment Standards Act. It deals with the situation of an employee who is dismissed without cause and what compensation they should receive as a result.The question becomes what reasonable notice should the employee have received at the end of their contract of employment in such an event. The contract is almost always unspoken and unwritten.

The practical starting point or rule of thumb widely discussed by both lawyers and courts is the equivalent of one month’s pay for each year of service.The formula indeed is not a formula as is set out in virtually every court decision on point including the Supreme Court of Canada in Honda Canada Inc. v. Keays.

The courts on one hand, steadfastly hold that there is no such rule of thumb but rather state that the question of what is reasonable notice is to be decided on a case by case point, examining all of the factors in determining appropriate pay in lieu of notice. Those factors include seniority of the employee, their responsibilities, the job market, efforts to find a new job and the age of the employee.However, time after time when one examines the fact situations being fed in to a careful analysis of all court decisions relating to wrongful dismissal, the rule of thumb seems to be transformed from plaster to steel.For a very long time, the upper reach of such pay in lieu of notice has been 24 months. There have been some adjustments when the court wishes to penalize a particularly bad employer who has engaged in such foul behavior as falsely accusing an employee of theft.

In the recent decision of the Ontario Superior Court in Abrahim v. Sliwin, Superior Court Justice Douglas Grey firstly denied the existence of the rule of thumb and then made a decision which was in essence the equivalent of applying the rule of thumb of one month’s pay for each year of service. Interestingly, Justice Grey made the non binding comment that he might have broken the 24 months ceiling had he been so asked.

This is an excellent example in exposing the difference between the severance and termination pay one is entitled to under the Employment Standards Act and the wrongful dismissal damages one is entitled to under the very same circumstances. The judge made law evolves with time and its only real boundaries are those imposed by the judges themselves with one eye towards any governing legislation. Conversely the Employment Standards Act is enacted, made by the provincial legislature, and is literally a predictable formula.

Dale Streiman Law LLP, has been providing assistance for many years to its clients both, employers and employees in determining what is an appropriate notice period and assisting in the appropriate method of terminating employees so as to minimize such payments.