Many rulings favoured employers in 2008
Last year was a memorable one on the employment law front, with courts and tribunals at all levels, including the Supreme Court of Canada, weighing in on a number of contentious labour and employment issues. Here’s a look at some of the key developments expected to significantly impact the workplace as we head into 2009.
Wrongful dismissal damages curbed
Employers across the country breathed a collective sigh of relief following the Keays v. Honda Canada Inc. decision, in which the Supreme Court of Canada overturned the largest-ever award of punitive damages in a wrongful dismissal case. The decision also did away with the “Wallace bump-up” — extensions of a reasonable notice period for bad faith conduct during termination. Dismissed employees will now have to prove actual, compensable damages to justify such an award.
The decision also limits the availability of punitive damage awards to exceptional cases, where the employer’s “advertent wrongful acts … are so malicious and outrageous that they are deserving of punishment in their own right.”
In another landmark decision, the top court reaffirmed a dismissed employee’s duty to minimize or mitigate the losses resulting from a dismissal. This could include a requirement to remain at or return to work in appropriate circumstances. For employers, this means potentially more latitude in transitioning out dismissed employees, which will help them avoid paying exorbitant severance packages.
Post-employment competition
The Supreme Court of Canada dealt with departing employees’ obligations to their employer in the case of competitors RBC Dominion Securities and Merrill Lynch, in which RBC investment advisors and support staff not only orchestrated a mass exodus to Merrill Lynch but brought with them records of RBC’s entire client base.
The decision brought both good and bad news for employers. On the positive side, the court held even non-fiduciary employees have a duty to give reasonable notice of resignation and to perform their employment contract in good faith, failing which they could be ordered to compensate the employer for resulting damages or lost profits. The court also held that departing employees have a general duty of confidentiality (although this does not necessarily prevent them from taking their own client contact information, particularly where the client’s interests so indicate).
On the downside, the court held that employees — other than fiduciaries of the company or those with specific contractual restrictions — have no legal duty not to compete unfairly against their former employer, even during the reasonable notice of resignation period. So contractual restrictions, such as non-competition or non-solicitation agreements, could be warranted.
New limits on duty to accommodate employees with disabilities
The Supreme Court of Canada has given employers a break with respect to the duty to accommodate employees with a disability. It confirmed employers do not have to prove an employee with a disability is totally and permanently unfit to work or accommodation is absolutely impossible. Further, employers do not have to implement measures that would fundamentally change working conditions or completely alter the essence of the employment contract.
If, despite the accommodation measures taken by the employer, the employee remains unfit to work for the reasonably foreseeable future, the employer has the right to terminate the employment relationship.
Technology in the workplace
Over the past year, a number of issues have arisen relating to employee use — and misuse — of technology. These issues include:
Employee blogs: In some cases, employee blogs can expose a company to potential claims of defamation, harassment, unauthorized disclosure of confidential information or reputational damage. And an employer can discipline or even fire an employee for blogging, according to an Alberta arbitration decision — if the blogging amounts to serious misconduct that irreparably severs the employment relationship. This could include blogging about protected confidential information or a company’s trade secrets, or offensive, slanderous or defamatory blogging about co-workers, management or the company. An employer can also discipline an employee found blogging on company time, especially if there is a written policy against it.
Personal digital assistants (PDAs): Employers may soon need to rethink the expectation that employees be available via PDAs around the clock. In the United States, legal experts warn they expect a new wave of employee litigation claiming overtime for time spent working on PDAs. It is not inconceivable a similar trend could take hold in Canada.
Rachel Ravary is an associate with McCarthy Tétrault’s labour and employment group in Montreal. She can be reached at [email protected].
Court coverage
Employment law highlights
Canadian HR Reporter and its sister publication, Canadian Employment Law Today, were packed throughout the year with fascinating employment law decisions from coast to coast. Here’s a sampling of stories:
• Who could forget the “Timbit incident?” Tim Hortons was faced with a PR disaster after a worker in London, Ont., was fired for giving a doughnut — valued at 16 cents — to a toddler. (June 2, article 6128.)
• A BC Ferries worker was fired after he put up a poster offering a reward for the first person to hit the company’s CEO in the face with a pie. (March 24, article 5926.)
• Canada Post provided a textbook case on how not to deal with workers with autism. (Nov. 17, article 6500.)
• Class-action lawsuits on unpaid overtime continued to make headlines. A British Columbia court ruled overtime is under the jurisdiction of the province’s employment standards branch, not the courts. (Sept. 8, article 6317.) KPMG announced it was settling its unpaid overtime claim with employees by paying out up to $10 million. (Aug. 14, article 6278.) CN was hit with an overtime lawsuit from present and past first-line supervisors. (March 25, article 5935.) And CIBC — already facing a potential $600-million class-action lawsuit from a teller — was hit with a $360-million claim by white-collar workers, including stock analysts, investment bankers and financial advisors. (Oct. 29, article 6450.)
