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Do not pass go: When will breaches of OHS legislation lead to jail time?

Directors should be alert to the fact they can be held personally accountable for a company’s breaches
Employment law
New Mex Canada in Brampton, Ont. Google Street View

By Stuart Rudner and Brittany Taylor

Every Canadian jurisdiction has health and safety legislation in place designed to protect workers from hazards in the workplace. Employers who fail to comply with their obligations pursuant to this legislation expose themselves to significant liability, including hefty fines. However, it is also possible for individuals, including directors, to be held personally liable when a breach occurs.

For example, under the Ontario Occupational Health and Safety Act(OHSA), maximum penalties for contravention are set at $25,000 (per conviction) for an individual and/or up to 12 months’ imprisonment.

The imposition of jail sentences for individuals under health and safety legislation is a fairly rare occurrence, but it does happen. In what circumstances will a fine simply not be enough? When will it be appropriate to sentence a director to jail time for breaches of the applicable health and safety legislation?

This was the question before the Ontario Superior Court of Justice in Ontario (Ministry of Labour) v New Mex Canada Inc. This case arose out of a fatal accident that occurred at the worksite where an employee, who suffered from seizures, tragically fell 12 feet to his death while trying to retrieve merchandise from the warehouse. The employee was not wearing any safety equipment at the time of the accident, and the employer had failed to provide him with any health and safety training.

The employer was charged with two violations of the OHSA relating to its failure to provide information, instruction and supervision to protect the health or safety of a worker, and failing to ensure that the fall protection measures and procedures prescribed by the OHSA and its regulations were carried out. In addition, the company’s two directors were charged with two counts each of failing to take all reasonable care to ensure that the company complied with its obligations under the OHSA. The company, and the directors, plead guilty to all charges.

In determining the appropriate penalty, the Justice of the Peace considered the standard sentencing factors for regulatory offences, including:

•the size of the company involved

the scope of the economic activity in issue

the extent of actual and potential harm to the public

the maximum penalty prescribed by statute

the need to enforce regulatory standards by deterrence.

In addition, the J.P. considered the fact that the company, and the directors, had no prior health and safety convictions. They were remorseful, and took steps to assist the deceased’s family to make funeral arrangements and to receive benefits payments from the WSIB. The company was small, and had lost most of its employees and business following the accident.

Shockingly, the J.P imposed a fine of $250,000 on the company, and, rather than imposing fines on the directors, sentenced each to 25-day jail terms, which was intended to deter others but was also based on her belief that a fine against the directors personally “would only cause more financial hardship”.

The company appealed the amount of the fine and the jail sentences for both directors. The court had no hesitation in altering the sentences, finding that they were “significantly out of the range of sentences regularly imposed by the courts for these types of offences and for these types of offenders”. With respect to the jail terms, the appeal judge noted that the case law demonstrated that significant fines act as enough of a deterrent in these types of cases, and that sentences of incarceration “are more appropriate for defendants with prior convictions for whom fines have not had a deterrent effect”.

The total fine against the company was reduced to $50,000, and the jail terms replaced with individual fines of $15,000 for each director.

Although this case did not result in jail sentences for the individual directors, employers need to be aware of the significant penalties that can accompany a failure to comply with its obligations relating to the health and safety of workers, even for a first offence. Similarly, directors should be alert to the fact that they can be held personally accountable for the company’s breaches.

We often help employers to review their workplaces, implement policies and provide training to employees in order to ensure compliance with the applicable health and safety legislation, and to promote a safe and productive work environment. We can also assist employees who believe that their employer may not be acting in compliance with their obligations or who feel unsafe at work.

Brittany Taylor is an associate at Rudner Law in Toronto.

© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.

Stuart Rudner

Stuart Rudner, Employment Lawyer and MediatorStuart Rudner is the founder of Rudner Law (RudnerLaw.ca), a firm specializing in Employment Law and Mediation. He can be reached at stuart@rudnerlaw.ca, (416) 864-8500 or (905) 209-6999, and you can follow on Twitter @RudnerLaw.
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