Thursday, July 21, 2011

Norfolk Law Talk Has Moved!

Or, more to the point, is no longer Norfolk Law Talk. I have relocated out of the Norfolk area, and will soon start working in the GTA. For more information, see the Buchanan Ontario Workplace Law Blog.

Monday, March 7, 2011

When Does Employment End?

An employee is dismissed without just cause, and without notice.

This is a breach of contract. The employer has no right to do so, and so the Court will award damages in the form of pay in lieu of notice.

In the vast majority of cases, this is primarily salary in lieu of notice. Frequently there is some allocation for non-cash benefits that would have been received through the notice period, but this is usually marginal, a small percentage of the overall sum.

Except when we're talking about equities. Stock options, share repurchase agreements, etc. These are the "big money" cases in employment law, because occasionally, as in the case of Love v. Acuity Investment Management Inc. recently before the Court of Appeal, something happens with immense value consequences, such as the value of equities changes dramatically over the course of the notice period.

(Another case from not so long ago involved Research in Motion and a stock option vesting date which occurred during the notice period. The value was in the millions.)

Mr. Love had purchased 2% of the equity in Acuity, paying $360,000, and part of this involved an agreement which allowed Acuity to repurchase the equity at the end of his employment. He was terminated several months later, and Acuity chose to exercise the repurchase option, which at that date had a value of $807,000. In the months following the termination, Acuity continued to grow at an astonishing rate.

Suddenly, salary becomes a very small part of the notice period, as his equity in the company was growing at a pace that created income dwarfing any salary. The further out the notice period extends, the greater his equity. On a six-digit scale. Huge.

One problem: The share repurchase option is triggered at the date at which he ceased to be an employee. So Acuity took the position that the valuation date is the termination date. This, regardless of the fact that it terminated without notice, which it had no right to do.

Love, on the other hand, argued that the employment relationship, at law, terminates at the end of the reasonable notice period, so that should be the valuation date.

That's questionable, too. A bit simplistic, I think. It's a fairer statement of the law to say that an employee is entitled to be compensated for everything he would have received had the employment relationship been continued through the notice period. An important nuance, perhaps.

The Court of Appeal held that the employment actually terminated on the termination date, and that the language of the share repurchase agreement holds up, and so the valuation date is the termination date. This may well be a literally correct interpretation of the repurchase agreement, but it shouldn't be the end of the analysis, given the most fundamental tenets of employment law.

Far be it from me to disagree with the Court of Appeal, but I do. The preferable analysis here is this:

Yes, the employment ended as of the termination date. This did have the effect of triggering Acuity's right to repurchase the shares. And they did so.

But...because the actual termination without notice was a contractual breach, his damages are to be calculated on the basis of what he would have received had actual notice been given - he suffered a compensable loss by losing the entitlement to keep his equity shares until the end of the notice period, and is entitled to be compensated for that loss.

That's my humble view, at least. Given that it conflicts with the views of the Ontario Court of Appeal, however, my view does not reflect the state of the law in Ontario.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Friday, March 4, 2011

Employee Rights - Without A Remedy?

Employers, at least in non-unionized settings, have a great deal of control over the workplace. Yes, there are all sorts of analyses of the limits of an employer's ability to make unilateral changes, reduce pay, demote, suspend, change duties, etc., and the extent to which such actions might breach (and terminate) the employment contract.

But there's a much more fundamental question: What does the employee get if he proves that the employer has, through words or conduct, terminated the employment contract?

And quite often (especially for employees who don't make much money in the first place), the answer is "not much".

And the reason is this: The employer is entitled to terminate the employment relationship at just about any time and for just about any reason (with a few exceptions, as I've discussed before), on provision of reasonable notice or pay in lieu thereof. What constitutes reasonable notice depends on factors including age, length of service, and character of employment.

So a CEO make $250,000 a year, who has been in the job a few years, will have entitlements on termination that will often be in the six-digit range.

But a front-line worker making minimum wage and barely able to feed his family? Even if he's worked for the employer for 25 years, he's unlikely to get more than twelve months notice, which at full time would be in the ballpark of $20,000. Less deductions. With EI payments he's received backed out. And after paying any legal fees necessary to get it...which could well be enough to leave him in the hole overall.

And that's a long service employee. A short service employee is in an even more difficult position, and it will often be very impractical for them to pursue their remedies.

So for the front-line employee whose employer is doing unreasonable things, unless there are human rights implications or violations of the Employment Standards Act or other statutes...if they really need the job, they may have to play nice with the employer, even when the employer is acting outside of his strict contractual rights.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Friday, January 21, 2011

What do you do about a problem manager?

This question is really two different questions: What should an employee do when his or her supervisor is a nightmare? And what should the employer (i.e. upper management) do when it comes to their attention?

A recent Star article discusses a survey of HR professionals indicating that "bosses from hell" are a big problem. Most employees try to deal with it, look for another job, or just leave. But there are significant legal facets to the problem.

You've heard the term "constructive dismissal". Most employees have heard it, have a vague idea of what it means, but are understandably (and usually rightly) reluctant to put much reliance on it. Nightmare managers can result in a type of constructive dismissal. Or other problems. In fact, it can be a big deal.

Aside from the practical difficulties of having a nightmare manager - lower morale, increased attrition and recruitment costs, possibly lower productivity - such a manager exposes the employer to potentially significant liabilities, and even moreso as our society becomes more sensitive to mental illness.

In 2004, there was a ground-breaking labour arbitration in the TTC: A fellow who had historically been a good employee ended up working under a manager with whom, to put it mildly, there wasn't good chemistry. His performance reviews took a dive, his mental health and personal life suffered; he eventually transferred out to a lower-paying position in the organization. Again, his performance reviews were stellar, he was happy, things were good again...until the manager transferred too, and ended up supervising him again. Suffice it to say that it wasn't a good scenario. Led to debilitating depression and paranoia.

The Arbitrator found that the employer had breached its obligations under the Occupational Health and Safety Act, by creating such a hazard to the employee's health. The Arbitrator imposed onerous obligations on the TTC, even in addition to the financial award.

In the civil litigation field, Shah v. Xerox is the equivalent. The trial was in 1998, and the Court of Appeal dismissed the appeal in 2000. Mr. Shah worked for Xerox for over 12 years, and for most of the time was successful, receiving good performance reviews, bonuses, pay raises. Then a new manager came in, and was extremely and unjustifiably critical of Shah's performance. So Shah resigned, and was found to have been constructively dismissed.

This case was decided before the Supreme Court decided Wallace, which gave rise to a decade-long period in employment law where "bad faith damages" were routinely awarded. Shah-type cases typically attracted Wallace damages; that wouldn't happen now, but there remains the potential for aggravated damages where an employee can show illness or injury resulting from the misconduct.

Another recent shift in the law is Bill 168: Employers now have to have policies in place to deal with harassment, and are more expressly obligated to deal with harassment. (The TTC case used to be exceptional. With Bill 168, it might just become the norm.) There's a flip side to Bill 168, though: If an employer has implemented an anti-harassment policy, it may become more difficult for an employee to claim constructive dismissal on the basis of harassment unless he or she has availed herself of the recourse within the policy first.

A more recent case, Piresferreira v. Ayotte, involved a Bell Mobility employee who was pushed by her manager. She had a long history of good service, but this manager was highly aggressive and intimidating, and had been critical in his reviews of her. The 'push' amounted to constructive dismissal and battery. The trial judge awarded damages in excess of half a million dollars. (!!!) The Court of Appeal agreed that she had been constructively dismissed. found that the trial judge had erred in how it awarded damages, and reduced the award to pay in lieu of notice plus $45,000 for mental suffering due to the manner of her dismissal. The Supreme Court just dismissed an application for leave to appeal, this past week.

Large and small employers alike have problem managers (note the employers involved in the above cases), but a lot of these cases have similar earmarks, similar red flags. When a long-service employee with a solid performance history suddenly starts having performance or disciplinary issues, something's wrong. It could be something in the employee's personal life, and so an employer can't be too invasive in trying to find out what's up, but it could be that something has changed in the employment relationship itself - reporting structure, duties, etc. - and if that's the case, then the performance issues are often going to be the employer's fault. So an employer needs to watch for those red flags, because they might be signalling potential liability.

There should be clear expectations of how managers deal with employees; clear boundaries of unacceptable conduct. Managers can and should be disciplined for mistreating employees.

Sometimes it's just a personality conflict; nothing inherently wrong with what the manager is doing in general terms, but a lack of chemistry means that the employee and manager simply can't work well together. Where possible, this can be resolved by changing the reporting structure in a non-punitive way, which doesn't negatively affect the employee. Where that's impossible, it may be necessary to terminate the employment of either the employee or manager, but remember: A personality conflict is not just cause for termination. The termination must be on notice (or with pay in lieu thereof). Seek legal advice prior to doing so. It will usually be a better idea to terminate on notice early, ending an acrimonious relationship before it becomes toxic, rather than to wait and run the risk of a constructive dismissal claim with a claim for aggravated damages on the side.

An employee who feels that a manager is acting inappropriately and making the workplace intolerable should seek legal advice prior to taking any steps that may have detrimental consequences to his or her employment.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Tuesday, January 11, 2011

Internet Defamation on the Rise

People think of the internet as an inherently anonymous venue, where they can voice their concerns about issues without attaching their real names to it, and therefore without recourse.

There are ways of tracing internet usage, however, and it's becoming increasingly common to see legal proceedings based on ill-thought-out internet posts. Sometimes a person posts something inherently actionable or criminal, like defamation or threats. Other times a person makes posts which amount to admissions of wrongdoing - see this case, in which a 19-year-old from Vaughan was charged after bragging online about having driving 140kph in a 40 zone in his M5S, under the username "bmw550ifreak". Facebook has also become an interesting issue in some personal injury actions: A person alleges that his injuries have severely impaired his ability to lead a normal life, that he's always miserable, can't leave the house, and never does anything physical anymore...then their Facebook page gets demanded by the insurance company, which reveals a somewhat different picture, between all the status updates and dialogue with friends discussing all his wild adventures.

But what's really taking off is that disgruntled people use the internet as a source of venting. Somebody wronged you, and you see the internet as your way of telling the world about it. Think twice.

Defamation law continues to develop, and is a highly nuanced area of the law, but I think that a good simple rule to follow is this: If you can't say anything nice, or at least provably true, don't say anything at all.

In one recent decision, released last week, a Pelham lawyer sued a former client for libel. This one wasn't limited to the internet - following on the heels of losing his assessment of the lawyer's bill, the client even took out newspaper ads to disseminate disparaging information about the lawyer. The allegations were quite serious, alleging multiple criminal convictions and Law Society discipline including sexual misconduct.

There are a lot of possible defences in defamation actions. When the lawyer sued, the client led the defence of "justification" - basically, he claimed to be justified in saying these things because, he argued, they were true. And they weren't far off of the truth - in fact, the lawyer did have a criminal record, arising from a singular criminal conviction for criminal harassment in 2003. He also had a disciplinary record with the Law Society, one following from the conviction, and two others in 1996 and 2006.

However, there were two major problems with the justification defence: Firstly, the publications alleged "more than one" criminal conviction. There was only one. Secondly, the publications wrongly suggested that the information was current, despite the fact that they were being published in 2008/2009 - essentially, the allegation seemed to be that the lawyer was, at the time of publication of the ads, practicing law despite being on criminal probation.

"Public interest" defences were also led, but failed because a prerequisite for these involves the absence of malice, and it was pretty clear on the facts that the client had ulterior motives for making the posts.

The lawyer won the case, and a significant award of damages was made.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Thursday, December 30, 2010

Varying Wills

At two of my family Christmas gatherings, relatives brought up a recent British Columbia case that's been in the news where a Court varied the terms of a deceased father's will, who left his entire estate to his only son and completely ignored his four surviving daughters.

In life, the father had, to quote the Court, "ruled his family, and especially the women, with an iron fist". (The Court goes on at some length about the harshness and violence of his family's existence.)

His son was "favoured and indulged"; some of his daughters are "demonstrably in need". Ultimately, the Court decided that the fair thing to do was divide the estate five ways, to varying degrees based on need. Part of what factored into the Court's analysis was that the father actually explained in the will why he wasn't leaving anything to the daughters, and the explanations were untrue and irrational, according to the Court.

This has attracted some rather negative attention in the media. Why can't a person do what they want with their estate? We should be able to write out our kids if we want to.

Generally, that attitude is correct, legally. When this was described by my relatives, I had to look it up myself. It was surprising, and I found myself thinking through a lot of different ways that an estate can be distributed aside from the wishes as set out in the will, and wondering which one was present in this case - mind you, I am an Ontario lawyer, and will interpretations are governed by Provincial law, which makes me rather unfamiliar with British Columbia estate law.

As it turns out, the decision was based on a rather unique feature of British Columbia law: The B.C. Wills Variation Act contains provisions that have been interpreted to allow a Court a wide discretion to vary the will in a manner that it deems fair under certain circumstances.

There isn't really an equivalent in Ontario law. Mind you, there are quite a few other ways, some of them similar, and I'm not altogether convinced that a similar (or at least comparable) result couldn't have been obtained in Ontario.

Firstly, look at the overall validity of the will. There are a lot of ways that a will can be invalidated, lack of capacity and undue influence among them. If I'm disinheriting some children for reasons which aren't true, then this can raise questions about capacity and/or undue influence.

Secondly, and more broadly, there are a series of situations in which a person can be elevated to the position of creditor of the estate, and thus have a claim with priority over beneficiaries. It doesn't vary the terms of the will, but rather requires the payment of the claim prior to the distribution of assets to beneficiaries:

(1) Spousal election under the Family Law Act: A spouse can elect to take what she would have received upon divorce (i.e. equalization of the matrimonial property) rather than taking under the will. Thus, you can't meaningfully disinherit your spouse. (Formal separation agreements can and should displace this right of election. Spouses also have other rights in terms of the matrimonial home, etc., and dependant's rights - see below.)

(2) Dependants' claims: Dependant spouses, children (even adult children), or others can make claims against the estate.

(3) Other existing legal liabilities: This is where we really start getting into considerations potentially relevant to this fact-pattern. If you're an existing creditor, you become a creditor of the estate. If there are contractual liabilities which arise, those fall to the estate. If the deceased committed torts, then - with certain limitations - the victims of those torts can sue the estate for compensation. It seems that there were torts committed against some of the daughters in this case...It's hard to say what effect the passage of time may have had in this case, but violence towards children tends to draw a more relaxed application of the Limitations Act than is often applicable.

(4) Beneficial entitlements: In Ontario this could plausibly have created a very substantial claim by at least one of the daughters against the estate. If I perform significant services for aging relatives - taking care of their property, and of them personally, etc. - without compensation, then I may be able to make what is referred to as an "unjust enrichment" argument, saying that I am entitled to be compensated for the value of the services I provided.

In other Ontario, the law is that you have to take care of all your legal (and equitable) obligations first. Your entitlement to will away your assets as you please is otherwise unlimited - assuming you have capacity - but will always be subject to the prior satisfaction of any debts you may have.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Wednesday, December 29, 2010

Another Note About Road Safety

I had an experience on Christmas morning that makes me comment again about road safety. I was driving to Brantford on Cockshutt Road, and had a near-miss at Concession 10 Townsend Road with a minivan proceeding eastbound through the intersection. Essentially, he stopped at the stop sign (or came close, I'm not sure), then either didn't look both ways, or thought that it was a four-way stop (incorrectly) and failed to gauge my speed, and he proceeded through.

I didn't have a stop sign, and Cockshutt is an 80 zone at that point, so I was moving at a good clip. By the time I realized that he was going, I had just enough time to swerve to hug the right side of the intersection. Pretty sure he would have hit me had I gone straight.

Either he was completely oblivious to my presence (which would show a remarkable lack of attentiveness - these are straight roads with no vision obstructions, and I was right there), or he thought I was going to stop. Which is also pretty absurd...even if he thought I had a stop sign, even a brief glance at me should have told him that I was going too fast to stop in time.

Remember: Defensive driving isn't just a good idea; it's a legal obligation. So there are a couple of lessons to take from this.

Firstly, if you're not familiar with the intersection, pay very close attention to the stop sign. If it's an all-way stop, the sign will indicate it. Pretty important to know if traffic coming from either side has to stop or can normally just go through at a high speed. This was the minivan driver's first mistake, I think.

Secondly, look carefully at approaching traffic, even if you think that the intersection is an all-way stop. Ground-view, gauge it's speed...if the vehicle is close enough to matter, you should be able to determine if it's planning to stop at the intersection. This minivan driver didn't have the right of way, but even if he had, saying "I had the right of way" doesn't necessarily take away from his failure to keep a proper lookout and, more importantly, doesn't bring back people who may have been killed. (Minivan, Christmas morning, chances are that there were kids in that vehicle. It's an appalling lack of caution.)

The previous evening, I had been taking back roads home near Hamilton, and stopped at a four-way stop. I knew it was a four-way stop, but there was a vehicle approaching from my right that I wasn't sure was going to stop. I paused for long enough to be sure that he was going to stop. (He did, as happens the vast majority of the time...but occasionally people do blow through stop signs.) My passenger even felt the need to tell me that he had to stop - my response being that I knew that he had to, but wanted to make sure that he would.

The third lesson to take from it is that attention to the road is paramount, whether you're the one with the stop sign or without. I had very little time to react, just enough time to turn aside. I know my car's limitations well enough to know how much I can swerve safely, I knew that the road conditions were dry (and had already picked my speed accordingly), and the maneouver was an automatic reaction to a hazard. Had I allowed myself to be distracted, it could have had tragic results. Again, the fact that I had the right of way wouldn't make it any less tragic. People sometimes don't pay attention to the road, whether it's because they're talking on the phone, eating, doing make-up, reading(!), or searching the floor of the vehicle for something (I once had an oncoming car come into my lane when I could see the driver doing just that...I was able to avoid him, but imagine had I been doing something similar). You need to pay enough attention to not only avoid creating hazards, but also to make sure that you're able to respond to hazards as they arise.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.