Rocking the boat

Two recent decisions by Ontario courts leave established principles in employment contracts and discrimination unsettled

All aspects of case law, as in employment law, rely on precedents, or established principles that arise out of previous judgments. Precendents are the foundation upon which future decisions are based and referenced, which allows some consistency in the development of where the law stands on issues. Sometimes, if judgments don’t follow precedents, it can be a reflection of the changing times or a re-igniting of a debate on the issue. If this happens, it can mean a period of uncertainty on where the law stands.

Recently, Ontario courts released two decisions that seemed to change the way things were done in two aspects of employment law. One seemed to ignore established principles regarding employment standards minimums in termination provisions, while another saw a court exercising powers regarding human rights issues in employment that were available but had been previously unused.

As we run headlong into 2014, two recent cases decided in 2013 by Ontario courts should be on every employer’s radar.

In the first case — Musoni v. Logitek Technology Ltd. — the Ontario Court of Appeal held that an employment agreement executed six months after an employee started work — without fresh consideration and which contained a termination provision restricting the employee’s notice of termination to 15 days for a without-cause termination — was valid and enforceable.

In the second case, Wilson v. Solis Mexican Foods Inc., the Ontario Superior Court awarded damages for a breach of the Ontario Human Rights Code.

The Musoni decision — employment contracts and employment standards

Bernard Musoni was employed as a customer support agent with Logitek Technology for two-and-one-half years. Six months after he started his employment, he executed an employment agreement which provided that where Logitek decided to terminate his employment on a without-cause basis, his notice of termination would be restricted to 15 days. When Logitek terminated Musoni and provided him with payment representing two weeks’ of his regular salary, Musoni — who represented himself in the case — commenced an action for wrongful dismissal.

Musoni did not allege that the employment agreement was invalid due to the fact that it did not comply with the minimum provisions of the Ontario Employment Standards Act, 2000 (the ESA). In fact, he conceded the employment agreement was valid notwithstanding the lack of fresh consideration and the possible contravention of the ESA, and argued instead that his employment was terminated for improper reasons.

The Ontario Superior Court dismissed Musoni’s argument that his employment was terminated for improper reasons. The trial judge explained that the reasons for dismissal were irrelevant where the termination is without cause and commented that none of the plaintiff’s allegations against Logitek provided a legal footing on which Musoni could base his claim to damages.

Musoni appealed. Again, he was self-represented. The Court of Appeal, in a one-paragraph ruling, dismissed the appeal and upheld the employment contract. It did not address the lack of fresh consideration and the possible contravention of ESA minimums.

The Musoni decision marks a departure from the what has appeared to be settled law, specifically: Where an employee is asked to sign an employment agreement after she has started work, fresh “consideration” must be provided if the new employment agreement will be considered valid; and termination provisions must meet statutory minimums in all circumstances.

Which leads to the inevitable question: What does this mean for employers? The legal answer, as unsatisfying as it may be, is that at this point we simply don’t know. It seems like good news for employers, particularly given that every plaintiff lawyer who finds a technical problem with a termination provision takes the position that the provision is invalid and unenforceable, therefore reverting to reasonable notice at common law despite the existence of a written contract.

However, in November 2013, Musoni filed an application for leave to appeal the Court of Appeal’s decision. Remember that Musoni was self-represented and also that neither court addressed the issue of consideration or compliance with minimum employment standards.

It would be hard to believe the Supreme Court of Canada, if it decides to hear the appeal, won’t delve into these issues and address how they might impact on the facts of the case and, more importantly, the state of the law. They may use this as an example of the perils of self-representation rather than evidence of a jurisprudential shift.

So while this may be — for now — a win for employers, we have yet to see if it stands the test of time and more importantly, the scrutiny of the Supreme Court.

The Wilson decision — discrimination

In wrongful dismissal cases involving discrimination or an allegation of a failure to accommodate, an employee can choose to bring her claim to Ontario’s Human Rights Tribunal, to court, or both, depending on the nature of the claim and scope of the damages. The courts, however, have previously avoided awarding damages under the code.

This changed in Wilson. Here, the Ontario Superior Court awarded damages under the code for an employer’s decision to terminate an employee based on the employee’s disability. It is an important case, which bears closer scrutiny.

Patricia Wilson worked as a business analyst for Solis Mexican Foods in St. Marys, Ont., for 16 months. She had a positive performance review in November 2010, but in March of 2011, stopped attending work due to a back ailment. At that time, she proposed a gradual return to work, based on the advice of her doctor.

Solis considered the return to work proposal but deemed it unacceptable. Instead, Solis indicated that it would not allow her to return to work unless she was capable of performing full time hours. Wilson’s doctor provided a completed Functional Abilities Form, which suggested that she could return to work on a full-time basis in April if she was accommodated by being allowed to sit, stand and walk for periods of time at the workplace.

Solis considered the return to work proposal but deemed it unacceptable. Instead, Solis indicated that it would not allow her to return to work unless she was capable of performing full time hours. Wilson’s doctor provided a completed Functional Abilities Form, which suggested that she could return to work on a full-time basis in April if she was accommodated by being allowed to sit, stand and walk for periods of time at work. Solis, rather than accommodating Wilson, insisted on there being a “complete recovery” before it would allow her to return to work.

Solis then required Wilson to fill out a second Functional Abilities Form in May, during the time in which it was considering the sale of its New Orleans Pizza division. Ultimately, Wilson’s employment was terminated in May when Solis notified her that her position was “redundant” and there were no “comparable positions.”

Perhaps not surprisingly, the court found the reasons given for termination of Wilson’s employment were hallow and unsubstantiated. It ruled that Wilson’s employment had been terminated in whole or in part because of her disability. The court also found the requirement to fill out a second Functional Abilities Form was “disingenuous” and Wilson was “given the runaround” due to the delay in allowing her to return to work while Solis was considering a sale. Further, the court found no accommodation was offered or, seemingly, even considered.

Despite no oral evidence being led by either party, the court determined the Employee’s statement that she was “shocked, dismayed and angered” by a pre-termination letter provided evidence of the loss relating to feelings, dignity and self-respect. Section 46.1 of the code reads:

“If, in a civil proceeding in a court, the court finds that a party…has infringed a right under Part I of another party…, the court may make…:

1. An order directing the party who infringed…to pay monetary compensation to a party whose right was infringed for loss arising out of the infringement including compensation for injury to dignity, feelings and self-respect.”

Citing Human Rights Tribunal case law, the court also noted that damages should also be awarded to compensate for the loss of being free from discrimination and the experience of victimization. In holding that Solis orchestrated the dismissal and was disingenuous at various times prior to and proceeding termination, the court held that Wilson was entitled to $20,000 in damages under the code. Solis was also ordered to pay Wilson three months for reasonable notice for the wrongful dismissal claim.

Clearly, to an objective observer, these were not facts which supported a view of a compassionate employer, or even one who considered the long-term impact of a decision to insist on a return to full hours. And while it may have been considering a pending sale, it is clear that courts and tribunals will not excuse an employer for not implementing a proper process when considering accommodation as it relates to a disability and return to work.

What is interesting about this case is the court’s willingness to award damages under the code, particularly those designed to compensate for injury to dignity, feelings and self-respect. This willingness may provide employees with a more effective process and remedy where there are allegations against an employer of a breach of the code.

For more information see:

Musoni v. Logitek Technology Ltd., 2013 CarswellOnt 14149 (Ont. C.A.).
• Wilson v. Solis Mexican Foods Inc., 2013 CarswellOnt 13851 (Ont. S.C.J.).

Lorenzo Lisi practises employment and labour law with Aird & Berlis LLP in Toronto. Aird & Berlis can be reached at (416) 863-1500 or www.airdberlis.com. Lorenzo would like to thank Fiona Brown and Meghan Cowan for their assistance in preparation of this article.

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