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.

Monday, December 20, 2010

Driving to the Conditions

Six years ago on Wednesday afternoon, Deborah Slaght was driving on Highway 24, going home to Simcoe from her job in Brantford when a northbound driver lost control of his vehicle and slid into her lane, resulting in a collision, causing serious and permanent disability, forcing her to change careers (to one within her medical limitations) and changing her life in significant ways forever.

A week and a half ago, the Superior Court released its judgment in the civil action brought by Ms. Slaght against the northbound driver, and also against the owner of the vehicle, awarding more than $100,000.

What happened? In Canada, it's really nothing too surprising: It was snowing, the road surface was slick.

The 24 is an 80 zone for essentially its whole length between Brantford (or rather, the Rest Acres Rd. exit of the 403) and Simcoe, and it isn't uncommon to see people driving well over that limit, even over 100kph. Prior to this collision, Ms. Slaght estimated that she was driving at around 70kph (this seems unlikely, as the driver in front of her claimed to have slowed down from 65 upon concluding that the road surface was too icy); the northbound driver said that he was going at 65kph.

The northbound driver denied liability, presumably arguing that he wasn't actually negligent, and was applying due care. After all, he's going 15kph under the limit; when the law lets him go up to 80kph, what more can he be expected to do?

The Court's answer: Slow down more. Driving at 65 was still too fast under the conditions.

This was a civil action, and so the test for proving negligence is relatively lax - put simply, it's just a question of whether or not he acted as would a reasonably prudent driver under the circumstances. The Court found that a reasonably prudent driver wouldn't have been driving at 65 kph; he lost control of his vehicle because he was traveling at too high a rate of speed for the conditions. The Court doesn't seem to care that he was going less than the speed limit.

And rightly so. An 80kph speed limit isn't permissive; it's prohibitive. What I mean is that the sign saying "80 maximum" doesn't create a freestanding entitlement to drive at 80kph; it only prohibits going faster. Civil liability attaches fairly easily, but even quasi-criminal or criminal charges wouldn't necessarily be out of the question when a driver is going less than the limit. (The test is harder, requiring a 'marked departure' from the standard of the reasonably prudent driver...but saying 'I was under the speed limit' isn't a complete defence.)

This should be a stern reminder to all of us, going into another winter, which so far hasn't been a kind one. It's more important to get there safely than to get there quickly, regardless of where you're going or why. When the road conditions call for it, slow down. As much as is necessary.


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 9, 2010

Avoiding the Contract Pitfalls

I went on at some length about the pitfalls that can defeat the terms of a written contract. A word might still be useful on how to avoid the consideration pitfall.

To deal with this problem at the outset of the employment relationship, I've seen other lawyers suggesting that you advise the employee that the employment relationship is subject to them signing a written contract and accepting its terms, and documenting that the employee was so told.

Not bad, but still not infallible, in my view. I can imagine a number of ways that such a thing might go wrong. (A question as to whether or not the documentation was made contemporaneously, or accurately reflected the conversation; allegations that specific representations were made regarding the contents of contract which might give rise to a misrepresentation cause of action; etc.)

Email is a wonderful thing. Instantaneous, and everyone has it, so much like telephone, but it's pretty much automatically recorded by both the sender and receiver, so more like a letter in that way. Accordingly, in today's day and age, I would advise against making an offer over the phone. Call the candidate to tell her that the offer's coming, certainly, but make the actual offer immediately thereafter by email.

Ideally, you'll have an offer letter which offers employment subject to the terms of the enclosed contract, with instructions that the employee may accept by signing the contract and returning it to a specified person in a specified time frame. There are other ways of doing it, too, depending on circumstances. But there are also a lot of wrong ways.

To deal with the consideration problem in the middle of the employment relationship, give something extra. When it's time to give a raise, or a discretionary bonus, or something else to which the employee isn't already entitled, you can piggyback a contract onto that. As I said, a peppercorn can be consideration - it doesn't have to be a great deal of money, but there has to be something.

There are still risks. You still have to be forthright about what the employee is signing. And if there's low consideration, then there is always the risk of a court finding the deal unconscionable, a shocking abuse of the employer's position of authority, or some such thing. You need to be careful, accordingly. (And it would be a thoroughly terrible idea to give somebody a hundred dollars to sign a contract severely limiting their notice period and then to immediately turn around and fire them.)

And - this actually deals with a separate pitfall which I didn't discuss, known as the "substratum argument" - always have employees confirm the continued effect of the terms of the written contract every time you promote them. The substratum argument is basically that the contract a person signed when starting in the mail room can't still be expected to be effective when he's risen through the ranks to become president of the company. The solution is easy, and it's to make sure that you continue to have him sign new written contracts as he advances. (The advances, remember, can be consideration, if done right.)


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.

How to Make a Written Employment Contract Binding

First off, let me be very clear on one point: I am not talking here about post-employment releases. Those aren't so difficult to make binding, but the analysis is slightly different. What I am talking about here is how to prepare and execute a written employment contract in such a way as to be able to rely on its terms.

Most of the written terms of the contract are never really going to matter. The written terms of the employment contract that define the day-to-day relationship between the employer and employee...well, they help to define the relationship at the start, and to develop realistic expectations on the part of all parties, but in many ways the employment relationship is a living relationship that is defined in a de facto way, and not by the agreement made at the beginning.

Where the written employment contract really matters is on termination, because it will often have provisions that define how the employment relationship may be terminated, and other provisions setting out obligations that survive termination.

In particular:

(1) A written employment contract will frequently (and ought to) have a term setting out a formula for the amount of notice of termination, or pay in lieu thereof, and

(2) For some employment relationships, contracts include terms surviving termination including non-disclosure, non-solicitation, and non-competition.

Without an express written term setting out the amount of notice required to terminate the contract, the default is "reasonable notice" at common law, which is usually fairly generous to the employee, often giving significantly more than the statutory minimums.

Likewise, without express restrictive covenants, the implied terms at common law are not generally very favourable to an employer.

The first, and most important, tip that I can give you for getting a written employment contract that actually works is this: Consult a lawyer. Self-promotion aside, it is actually important. Human Resources Professionals and consultants are helpful, and can do a lot of the groundwork, but there are nuances of contract drafting and execution which you need a lawyer's advice to make sure you're getting right.

Here are a few of the pitfalls (not a comprehensive list):

(1) Lack of consideration

This is a big one. In law, in order to have a binding contract, there needs to be "consideration", something of value which each side is agreeing to contribute. If we agree that I will shovel your driveway after every snowfall this winter and get nothing in exchange, then you can't hold me to that - it's not a contract. However, consideration need not necessarily be market value. If our agreement (re driveway shoveling) includes a term that you will provide me with a single peppercorn next fall...put your feet up, because that's a contract. (And no, I'm not actually offering to enter into such a contract.)

So you're wondering how this applies to a written employment contract: Seems a straightforward quid pro quo, no? The employee provides services; the employer provides a remuneration package.

That's how it's supposed to be. The trouble is this: What happens if the employee already has the job, and you're asking him to agree to a variation in its terms?

Remember this: Every employee has an employment contract. If it isn't written, that doesn't mean it's not a contract. And the implied terms of an oral contract at common law give employees a fair bit of protection. So if I already have my job, my oral employment contract, and you as the employer come to me and say "I want you to sign this contract that says that you'll work for me as you're doing, I'll pay you as I'm doing, and I can terminate the contract on a certain amount of notice or pay in lieu thereof"...what am I getting by signing the contract?

Yes, there's a clever answer, which has been repeatedly tried at the Court: By signing the contract, the employee avoided getting fired right then and there. Well, it wouldn't be a 'just cause' termination - the employer can't require the employee to accept such a term in such a way that refusal would be insubordination. It would be termination on notice, as the employer is entitled to do...and remains entitled to do (in theory, more easily) following the execution of the contract, and accordingly has not actually given anything of value.

(In one case, the Ontario Court of Appeal bought an argument of "consideration by forbearing from exercising its right to terminate"; however, in another two subsequent cases, the Court of Appeal made it clear that the earlier decision was rooted in a unique fact that the employer had impliedly promised not to fire in the near future in exchange for the execution of the contract.)

Essentially, what's required when modifying an existing employment contract is "fresh consideration" - something else given in addition to the job that the employee already has.

But this doctrine goes a step further, and doesn't just apply to modifying contracts of people we might think of as 'existing employees'. It also applies to new hires. When an employer brings in a new employee, starts the employee working, and only puts a contract to them later - a day, a week, a month, or a year, whatever - the Courts have consistently held that the terms aren't binding without fresh consideration. That's easy, right? Same analysis as above. But what about signing the contract at the start or even before the start of employment? Picture this:

I interview you. I explain to you the job duties, the hours, the compensation, the reporting structure...then, after the interview, I call you and ask you "When can you start?" Then, on your first day of work, I put you through the usual 'orientation' - reviewing policies, getting payroll matters sorted out, and signing the employment contract.

This isn't unusual. Lots of employers do it this way. (I recall a Small Claims settlement conference when I was on the employee side, and the employer's counsel took the position that I was raising hay about nothing because that is such a common way of doing it.)

The trouble, however, is that the employment contract already exists. I have offered you the job, and you have accepted it. Unless you already knew that you would be required to sign a contract, and/or were aware of the terms that would be in the contract, there's a good chance that the written contract will be set aside without fresh consideration. In one case in particular, the employee even signed the agreement prior to commencing employment, and it was still void for lack of consideration.

And it makes a certain amount of sense: I offered you a job. You thought you knew its terms. Maybe you already quit your old job, or moved cities, to come start employment with me. Suddenly you're in the door, relying on this job for your day-to-day expenses, and I'm saying "Sorry, you don't actually have the job unless you sign this." There's good reason for the Courts to scrutinize such circumstances closely. Note, however, that while quitting an old job or moving might help evidence of the existence of the employment contract, such reliance is not strictly necessary to engage this doctrine.

(2) Illegality of Terms

Well, the employer's not asking the employee to do anything criminal, right? So it's okay? Not that easy. This pitfall usually applies to termination clauses, allowing for termination on a certain amount of notice.

The Ontario Employment Standards Act, 2000 provides a formula for statutory minimum entitlements on termination. A clause which provides less than the minimum, therefore, fails.

And it isn't just a bump-up. If the contract says "The employee gets nothing", then the Courts aren't going to look at it and say "Well, clearly the parties intended that the employee would get no more than legally required." No, instead the Court will look at it, strike the clause entirely for illegality, and then look at the contract (which now has no termination clause) and say "Well, I guess we have to imply a termination clause. Reasonable notice it is."

Under the ESA (mind you, this varies by jurisdiction - different formulas for Federal employers and employers in other Provinces), the minimum notice runs as follows:

Length of Service - Minimum Notice
Under 3 months - nothing
3 months but under 1 year - 1 week
1 year but under 3 years - 2 weeks
3 years but under 4 years - 3 weeks
4 years but under 5 years - 4 weeks
5 years but under 6 years - 5 weeks
6 years but under 7 years - 6 weeks
7 years but under 8 years - 7 weeks
8 years or more - 8 weeks

An important note, however, is that even formulaic deficiency can render a clause void. If it doesn't comply with the standards, the clause itself is void ab initio, and is of no force and effect. So let's say a contract says that the employer can fire on provision of 1 month's notice, and the employer fires an employee with between 3 and 4 years of service. The statutory minimum is 3 weeks, right? The contract gives a little bit extra. Doesn't matter. The fact that the provision failed to account for the minimums which the employee would have been owed at 5 years of service or more means that the clause is void entirely. Reasonable notice it is.

Or what happens if you say something like "2 weeks per completed year of service, up to a maximum of 10 weeks"? The formula keys notice to length of service, much like the ESA, and provides a cap in excess of where the stat minimums cap out...should be fine, no? Wait a second, no: Look at the entitlement for employees with more than three months but less than one year: Under the ESA, minimum 1 week, but under the contract, nil. Even if the employee doesn't get fired within the first year, the formulaic deficiency still voids the contractual term entirely. Reasonable notice it is.

Usually, language that keys the formula to the statutory minimums is going to be fine. But even then it has to be carefully drafted: In one case, an employee signed a contract which gave him the greater of the Ontario ESA minimums or four weeks. The employee then transferred to British Columbia, and was later terminated. Because the Ontario formula is different (and in some cases less) than the B.C. formula, and the termination of employment was under B.C. law, the B.C. Court of Appeal found that the clause was formulaically deficient and therefore unenforceable.

So if you specify the Province's laws, you might be in trouble. If you just say "under the applicable Provincial law", that is likely too ambiguous to be enforceable.

Starting to see why you need a lawyer?

(3) Terms are against good public policy

This is one that can apply to restrictive covenants such as non-competition clauses or non-solicitation clauses. Essentially, you can't just make it a term of every employment contract that "You can never compete with us." Restraint of trade is something that the Courts don't like. Telling an employee that he can't continue to work in the industry at all unless it's for you...well, it gives the employer too much power in an already imbalanced power relationship, so there has to be a really good reason to do it.

I'm going to be brief on this, because it really is one that is full of legal nuances, and there's no question at all that you should talk to a lawyer about drafting and executing a restrictive covenant...

...but, put in very simple terms, the employer needs to be able to show that they *need* the term in order to protect a legitimate proprietary interest, and that some lower form of restrictive covenant couldn't provide adequate protection. Usually we're talking about proprietary information (privy to confidential business strategies, research and development, etc.), or proprietary relationships with clients or others. (I trust you to be 'the face of my business'. You're in charge of interacting with all my clients on behalf of the business, and build a relationship for years. Then you decide to start your own competing business. I might have a proprietary interest in those relationships.) Then the question arises as to whether a non-competition clause is necessary, or would a non-solicitation clause do the job? It's really about what is necessary to prevent the employee from being able to unfairly compete.

Beyond that, the employer needs to establish that the terms of the restrictive covenant are geographically and temporally reasonable. "You can't compete with us anywhere, ever" would not be reasonable. But "You can't compete with us in this region, over x period of time"...well, it depends on the circumstances. Some industries are faster moving without real geographical boundaries. So if you're working in the sector, maybe a wider geographical scope might be reasonable, but your proprietary information becomes stale much more quickly, so a shorter temporal scope might be appropriate.

It's all very fact specific. And there's no halfway. Either the clause is valid, or it isn't. Either the terms are reasonable, or it isn't. If it is valid, then the employee (who will usually have been breaching it for a while before there's a judicial interpretation) is in deep trouble. If it's not valid, then the clause fails in its entirety and provides no protection whatsoever to the employer.

Hence why it's important to have a lawyer.


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 8, 2010

The Spectrum of Post-Employment Negotiations

The vast majority of employees are in similar positions in respect of their legal entitlements following termination of employment - they know they have some entitlements; they don't really know the details; and, when fired, their financial security is uncertain and they're understandably reluctant to incur the legal fees associated with obtaining an opinion about their entitlements.

Employers, on the other hand, are remarkably varied. Some employers are unsophisticated and have no real sense of their obligations. Some employers think they know their obligations, but are wrong. Some employers know their obligations quite well and are prepared to enter into a reasonable settlement quickly following termination. Some employers know their obligations quite well but nonetheless prefer to force employees to stand on their rights, making only unreasonable offers (if any) counting on the employee's financial hardship to prevent them from moving forward with litigation. Large employers are generally more willing to enter into a reasonable settlement at an early stage, but that's certainly not universal.

It's a real mixed bag, and creates a lot of uncertainty for employees.

The initial offers made by employers on termination, if anything, are almost always very low. It is exceptionally rare that an employee brings me an offer for my review with the result that I can tell the employee, "Yes, that offer is in line with your entitlements." Even then, there are always enhancements to discuss - employers sometimes don't offer a contribution to legal fees (and the ones who are putting a reasonable offer out in the first place are likely to understand the value of the employee obtaining legal advice, and are more likely to pay it), or omit a reference letter, or continuation of some ancillary employment benefit through the notice period like, for example, a company-paid cell phone. But it's a rare case that these minor issues are the only ones that need to be discussed.

On the flip side, employers will occasionally make an "offer" that amounts to a thinly-veiled offer to pay their statutory minimum obligations, in exchange for a full and final release. They ask for a full and final release to be signed, without recommending legal advice, in a short period of time, in exchange for which they will pay an amount equal only to the statutory minimums. Not mentioning, of course, that they will be legally obligated to pay those amounts in short order anyways, regardless of whether or not the release is signed.

The catch, of course, is that a release signed in exchange for only the statutory minimums is unlikely to be legally binding. Some employers don't know that; other employers do, and are counting on the employee to be pressured into signing it, and later convince themselves that it's not worth paying legal fees because they signed the release, so they'll never find out that it's not binding.

Don't get me wrong: I would never advise an employee to sign a document with the expectation that it will not be binding on them. The law is always evolving, and today's trite law is tomorrow's area for groundbreaking jurisprudence. Employees should always obtain legal advice prior to signing a release.

Likewise, employers should want the employee to get legal advice, in the interest of certainty and finality. The last thing an employer wants is to pay out a small settlement, then have the employee come back at them two years later, arguing that the release is unenforceable and alleging that the employer breached its duty of good faith and fair dealing by 'pulling a fast one' with an unconscionable settlement.

I bill by the hour, so my overall bill for an employee will depend significantly on the reasonableness of the position being taken by employers (and the reasonableness of the position being taken by my client...but my clients don't generally want to pay my hourly rate to advance unreasonable positions). If the employer cooperates to find a reasonable middle ground, I've settled matters with total fees as low as the mid-three-digit range. (Usually, that's with uncomplicated fact patterns and low-value files, but the settlements in such cases are often several thousand dollars higher than the initial employer offer.)

On the other hand, if the employer wants to play hardball, we could be talking thousands of dollars, even tens of thousands of dollars in fees, if it has to go very far in litigation.

I try to give the employee as realistic an assessment of the possible and probable outcomes - what they might get and what it might cost - as early as possible in every case, but there's always uncertainty.

The drawback, of course, for an employer taking a hardball position is that, in light of their duty of good faith and fair dealing, it looks bad on them to play hardball, and they just appear to be bullies when taking advantage of their (very real) bargaining power and the vulnerability of a newly unemployed person, and that can impact their liabilities, and also have a dramatic impact on their own legal costs. As a generality, employers pay much more for their legal assistance than do employees. (I make significant effort for both employer and employee clients to keep my fees as low as possible, but there's no denying that employee counsel has to always be cognizant of the cost-sensitivity of its clientele.)

If an employee in Norfolk or surrounding areas is terminated and asked to sign a release (or not), I would strongly encourage them to consult me (or another lawyer experienced in employment law) prior to signing anything, to discuss their entitlements and the consequences of the release, and to develop a cost-effective strategy for obtaining the best possible result from the employer.


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.

Results and accounts differ significantly on a case-by-case basis. In the event that you should contact me to retain my services, the results and accounts delivered in other matters may not be comparable to the results and accounts to be delivered in your matter, and should not be used to inform your expectations for results or fees.

Tuesday, December 7, 2010

Lawyer Shortage in Small Town Ontario

Small town law firms across the Province are struggling to attract lawyers. There are a lot of theories on ‘why’: I recall in law school dealing with a culture of “Bay Street or Bust”, the idea that the sole objective of law school was to land a job in one of the big firms on Bay Street, and that failure to do so meant that you were without options and would suffocate under your mountain of student debt.

True that the Bay Street jobs pay better. Not true that they’re the only viable options. And small town practice, while having a number of differences from big city practice (in the city, you don’t deal with so many agricultural issues, wind farms, oil and gas leases), is no less interesting. Probably more interesting, most of the time.

A recent Lawyers’ Weekly article outlined some of the myths drawing law students to Toronto instead of small town Ontario. This seems a fair assessment to me, and I won’t regurgitate the analysis here, but I will say that it’s missing a major factor: Marketing. The big Bay Street firms have a recruitment cycle, starting with picking up summer students after first or second year of law school, and culminating in recruiting them as associate lawyers. This is how they do most of their recruitment – right out of law schools. They dedicate significant resources to it, because usually they are growing reasonably steadily, and it’s worth developing these students with the expectation that they will pick up all, most, or even just some of the students as lawyers later on.

If the economy turns down, no problem, just hire back fewer of the students. Lose part of your recruitment investment, but it’s a manageable loss.

Small firms, on the other hand, have a harder time planning recruitment. Loss of one lawyer is a big portion of your staff; you don’t have the time to recruit a second year law student and wait two more years before he gets called to the Bar. On the other hand, you don’t have the resources to swallow a loss if you pick up more lawyers than you can bear, so investing in a consistent recruitment cycle doesn’t make sense.

So law students get the mistaken impression that there aren’t really jobs in small towns. And don’t look in small towns. So the small town firms that are hiring end up having a hard time attracting candidates.

The consequence is significant to the community. Norfolk isn’t all that small a community, by comparison to a lot of the towns up north, and isn’t nearly as remote. Worst case scenario, people here can go to firms in Brantford or Hamilton if local resources aren’t sufficient. Still, even here, you get a lot of people having a hard time finding a lawyer who can help, between conflicts of interest and workload.

Yes, I'm aware of the perceived irony of a "lawyer shortage"...but if people can’t access legal services, then the justice system becomes pretty empty.

As well, there are a number of retiring lawyers in small communities, including Norfolk. So even maintaining a steady number of lawyers is challenging, but in the long term some growth will be necessary, and it’s hard to get these numbers.

Norfolk firms actually haven’t been doing badly for bringing in new lawyers lately. My firm obviously brought me in at the start of 2010. I’m a newcomer to the County. In June, another local firm brought home a brand new lawyer who grew up here. My understanding is that there are at least two articling students in town right now as well. But we’re no exception in terms of having a retiring demographic. I don’t know the ages of all the lawyers in the area, but I have a sneaking suspicion that a significant proportion of them are 60+, or close to it. (Mind you, lawyers occasionally work into their 70s, but we’ve got some of those, too.)

Then again, we haven’t been doing great, either. I can only point to five private bar lawyers in Norfolk, myself included, who have been practicing law for fewer than ten years. Being a newcomer, I can’t speak much to history, but I’m wise enough to the numbers to think that attrition may be a challenge: With two of us having started here in 2010, two current articling students, and only three others within the last ten years, the numbers suggest that keeping new lawyers may be the challenge. (Indeed, I’m aware of at least one lawyer who recently left for Brantford, and one of last year’s articling students who departed to further her education.)

Here’s what makes this difficulty puzzling: I recently read an article indicating that a survey of this year’s new calls to the bar indicated that nearly half of them had not secured post-call employment. I personally know new lawyers who have been unable to secure any sort of steady employment, at least in part because they are overly limiting their own options in terms of practice area and area of law.

So there is a pool of young talent out there; small towns and small town firms just need to develop strategies to attract and retain these lawyers.


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.

Monday, December 6, 2010

Changes to the Small Claims Court Rules

This just in: Effective January 1, 2011, the Small Claims Court Rules will be amended.

There are a few changes coming, and this isn't a comprehensive examination of them, but some of the big ones involve recovery of legal costs, which I've blogged about before.

Some of the more technical rules are being changed. For example, there used to be a minimum of $500 on the claim in order to trigger certain costs provisions, and that will be gone. Also, there used to be a provision for successful parties to recover up to $50 for preparing and filing the pleadings. This is gone, replaced by a provision allowing the successful party to recover up to $100 for disbursements associated with preparing the pleadings.

Minor points. The 15% cap is still there for representation fees, so allowing representation costs on a less-than-$500 claim means that the successful represented party can go for up to a whopping amount of legal fees still under $75, by default. (By contrast to self-represented litigants, who can get up to $500 for inconvenience.)

Here's a big one, though: There is currently a half-costs rule for "agents" (i.e. paralegals) and students-at-law, so the 15% cap gets reduced by half for non-lawyers. That's gone. As of January 1st, 2011, a paralegal or student-at-law will be capped at 15%, same as lawyers.

Of course, it still has to be a "reasonable" representation fee - there's nothing automatic about 15%. That said, even at paralegal or student-at-law rates, it will be the rare case where 15% of the amount claimed at Small Claims Court is much more than a 'reasonable' representation fee.

This amendment is a coup for paralegals - whereas, in many cases before, a successful litigant would have to swallow a larger amount of legal fees by hiring a paralegal than by hiring a lawyer, now it will be quite the opposite, that a successful party will likely have a larger proportion of their legal fees covered by a cost award.


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.

Having Your Cake and Eating It Too

You may recall back in August I made an entry about a local union decertification case, in which an employee, Mr. Anger, applied to terminate the Union's bargaining rights, and the Union responded by rather cleverly taking the position that nobody was doing bargaining unit work on the day of the Application. For complicated labour relations reasons, in the construction industry, that's the test - only people doing bargaining unit work on the day of the Application are entitled to vote, so if nobody's doing bargaining unit work that day, nobody is entitled to vote, so the Application can't succeed.

The basis for the Union's position is that the employer is based in Tillsonburg, and the Union's certificate of bargaining rights only refers to the Counties of Oxford, Middlesex, Bruce, Elgin, Perth, and Huron. Not Norfolk. And all the work the employer was doing at the time was in Norfolk. So, even though the terms of the collective agreement were being applied, and union dues were being collected, technically that was all voluntary on the employer.

Now, had the employer decided unilaterally to, say, stop collecting Union dues in respect of Norfolk projects, the Union could likely have taken the position that it had been voluntarily recognized as having bargaining rights in Norfolk, and that the employer was estopped from taking a contrary position. So when the employer saw that the Union was taking the position that it didn't have bargaining rights in Norfolk, it took that opportunity to secure a 'with prejudice' admission from the Union that there were no bargaining rights in Norfolk.

On August 30th, therefore, with everyone agreeing that Norfolk wasn't part of the definition of the bargaining unit, the OLRB dismissed Mr. Anger's Application. So Mr. Anger wrote back to them and said something to the effect of, 'Wait, you're saying that all this work I've been doing in Norfolk wasn't unionized? Well, in that case, I want my union dues back retroactively.' That seems a natural position to take - there's a certain logic to it. The Union's saying "We never had bargaining rights in Norfolk." Presumably, if there were a grievance in respect of Norfolk work, that position would mean that they would be unable to represent the employee. Yes, the employer was voluntarily giving the employees wages, etc, in accordance with the collective agreement, but lot's of non-union employers pay wages in accordance with industry standard collective agreements.

So, in respect of work in Norfolk, what was the Union getting paid for? Absolutely understandable for Mr. Anger to ask for his money back.

The OLRB's response, however, was to say (and I'm paraphrasing): "We've already dealt with your Application. We dismissed it. It's over. If you want to bring a new Application, you can. But there's no Application you can bring for a refund of your dues." So the OLRB, for its part, is refusing to do anything on the basis of that letter.

A tricky and unusual fact pattern. It would be interesting to see what Mr. Anger does next.


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, December 3, 2010

The Wrong Reasons to Fire

Dismissed employees frequently call a lawyer (or others) to complain that “I was fired unfairly, even though I didn’t do anything wrong. How can they do that?”

To which my question is always, for more than one reason, “What did they offer you?”

Sometimes you’ll hear people wise in the ways of employment law say something to the effect of “Even without misconduct, an employer can terminate a non-union employee for any reason or no reason at all, on provision of appropriate notice or pay in lieu thereof.”

This is not precisely correct. Close, but not quite.

It is true that an employer does not need “just cause” to terminate an employee’s entitlement. Just cause, being significant misconduct or something comparable, is what allows an employer to terminate without providing notice. The test for just cause is high, though, and is often difficult for the employer to establish.

However, when there isn’t just cause, that doesn’t mean that the employer can’t terminate; it only means that the employer owes notice (how much depends on circumstances).

So it’s true that an employer can fire for no reason, but it isn’t true that the employer can fire for absolutely any reason. There are a handful of reasons that an employer, under Ontario law, cannot terminate the employment of an employee. The following is not necessarily a comprehensive list.

(1) Reprisals for standing on certain rights. If an employer terminates an employee because that employee inquired about rights under certain statutes, or attempted to stand on such rights, or brought proceedings based on alleged infringements of such rights (even if the proceedings are ultimately unsuccessful!), then the termination is illegal and could result in serious repercussions to the employer, including payment of amounts well in excess of the reasonable notice period. Statutes with anti-reprisal provisions include the Employment Standards Act, the Occupational Health and Safety Act, the Human Rights Code, and the Labour Relations Act. The anti-reprisal provisions under the first three are extremely broad, prohibiting any negative action whatsoever against an employee resulting from the employee standing on their rights under those Acts. Under the Human Rights Code, the anti-reprisal provision even covers an employee’s refusal to breach somebody else’s rights; under the OHSA, the anti-reprisal provision applies to the right to refuse unsafe work – even if the work turns out to be safe. Under the ESA, the anti-reprisal provision also covers such things as an employee being eligible to take leave; it’s not illegal to fire a pregnant employee (though it usually looks pretty bad), but it is illegal to fire an employee as a result of pregnancy. The LRA anti-reprisal provisions are a little bit narrower, but prohibit termination because of standing on rights under that Act.

I’ve cast these provisions as being very broad…and they are. However, it should be noted that the reprisal protection will usually only apply to bona fide assertions of right. So if I invoke the right to refuse unsafe work just to get out of work and not because I genuinely believe that it’s actually unsafe, then I risk non-application of the anti-reprisal clause. On the other hand, if I invoke the right to refuse unsafe work genuinely believing that the work is unsafe, and I'm wrong, then the employer retaliating against me for it is still a big problem for them even though I was wrong about the work being unsafe.

(2) The termination cannot be discriminatory or harassing on the basis of a prohibited Human Rights Code ground. If I’m fired directly or indirectly because of one of the prohibited Code grounds (think age, race, sex, creed, family status, marital status, place of origin, disability, etc.), that’s usually going to be illegal. There are certain exemptions, both on the basis of exempted organizations and “bona fide occupational requirements”. So the Catholic Church could probably justify refusing to employ somebody as a priest because the person is married, and a transport company could probably justify terminating the employment of a truck driver who became completely blind. But as a generality, such discrimination is problematic. The prohibition applies if the termination was in any small part motivated (directly or indirectly) by unlawful reasons: Even if I can demonstrate that I need to lay somebody off for legitimate business reasons, if my grounds for selecting the subject of the layoff triggers the prohibited grounds, I’m still in trouble.

(3) The termination cannot be as a result of membership in a union or participation in a union organizing campaign. A protection given under the Labour Relations Act. This one sometimes gets muddy: Participating in such a campaign does not guarantee job security, and quite often those who participate in such campaigns already have strained or otherwise weak relationships with the employer. Moreover, participation in such campaigns is usually not all that visible to the employer; these campaigns are carried out in secret. As with all the other protections, the question relates to the motivation of the employer – was the employer’s decision to terminate motivated, in whole or in part, by the prohibited reason? In these cases, it’s often a question of “Did the employer even know about the employee’s participation in the campaign?” As is normal, the onus is upon the employer to disprove the allegations.

Note that, as usual when dealing with Ontario statutes, I’m talking here about provincially-regulated employers (being most Ontario employers, except for certain industries including, among others, telecommunications, aviation, inter-Provincial/international transportation, etc.); the statutes regulating federal employers are somewhat different.

I always recommend that an employee facing dismissal seek legal advice on their entitlements before signing anything. (If you have signed something, I still recommend seeking legal advice. You’d be surprised how often an employer will have an employee sign a release which isn’t binding for one reason or another.)

For employers, I also recommend seeking legal advice when terminating employees, though I go a step further and recommend that employers seek legal advice pertaining to their hiring, employment contracts, and policy development and implementation. It is always much easier to terminate safely (as in, without risking significant liability) if you’ve managed the employment relationship properly from the outset, and when I say ‘the outset’, I mean starting right at the initial recruitment stages.


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 2, 2010

Bill 68 - Chilling Employment Standards Complaints

On October 25th, 2010, Bill 68, the "Open for Business Act" received Royal Assent. The full text can be found here. The Bill amends several statutes, but my interest in it lies in the amendments to the Employment Standards Act, 2000. There's a Ministry Backgrounder that covers that material.

The changes are to the ESA complaint process, and are designed to reduce the Ministry's backlog, which the Financial Post pegged at 14,000 cases in July.

So what are the changes? To boil it down to it's simplest, the Ministry will be able to require complainants to take certain steps before it will investigate their complaints - namely, take it up with the employer first. In addition, the Employment Standards Officers will be tasked with attempting to settle the matter.

Encouraging settlement is a common way of dealing with backlogs. But sometimes, as in this case, it goes too far.

There have been many criticisms of Bill 68 because, firstly, it puts more barriers between an employee and their entitlements and, secondly, workers will be pressured to settle for less than their legal entitlements.

There's likely merit to both criticisms. I discussed earlier the reasons why the actual ESA complaints are likely the tip of the iceberg of ESA breaches: Such a power imbalance exists as to discourage employees from standing on their rights. Additional barriers, requiring employees to stand up to their employers first, may cause some complainants to abandon their complaints. (And that is the consequence; if an employee doesn't take the necessary steps, their complaint will most likely go away.)

In addition, most ESA complaints are questions of liability, not damages. Calculating damages is usually fairly simple arithmetic - do I get time and a half for overtime, or do I not? If the answer's yes, there's seldom much fight in how much that amounts to. (There are exceptions, of course, but it usually is pretty Boolean.) Settlement discussion usually involves compromise on both sides, and means that employees are going to be facing pressure to back off part of their entitlements.

So the backlog is going to be reduced by reducing the number of people who will voice their legitimate complaints, and by pressuring them into taking less than their entitlements early.

I have another objection to the Bill: Encouraging settlement doesn't encourage compliance up front. Telling employers "Most likely, your employees will have to talk to you about alleged breaches first, and you can settle it at that time or later for less than the employee's entitlements"...well, it tells employers that they can disregard their legal obligations right now and deal with it if an issue is ever raised, long before you're exposed to an unfavourable Order. It isn't completely safe, but the probabilities are in the right place for an employer: An Order to Pay has an administrative surcharge, and sometimes ends up being pretty subsantial. It's slightly punitive, and could generate a large expense all at once. Employers want to avoid Orders.

So there's risk. Even if you think you'll get away with a breach, it's costly if you get caught, so it's better to just meet your obligations on an ongoing basis.

On the other hand, if you know that your employee will likely have to talk to you first before an investigation will start, then it's too easy to sit back and wait for that to happen before looking into compliance. And since most employees will never raise an issue, it becomes much easier for the employer to ignore the requirements.


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.

The Employment Standards Enforcement Process

There are changes coming to the Employment Standards complaint enforcement process, with Bill 68. I'll explain the consequences of the changes in another post, and how the changes put employees in a more difficult position, possibly giving employers less incentive to comply with their legal obligations up front. But first I'll explain the process itself.

Most people are aware of the existence of the Employment Standards Act, 2000, and of the availability of a complaints process to the Ministry of Labour. I have the impression that many employees think that a complaint to the MoL is sort of like a complaint to the police - i.e. that there's a certain moral aspect to it but, even if something happens, the complainant gets no real benefit from it, and is open to reprisal from the subject of the complaint.

Quite the contrary: For most matters, a complaint by an employee to the Employment Standards branch of the MoL initiates a legal proceeding against the employer - it is much like suing the employer, but the process is different (easier, more cost-effective) than that of the courts. If the complaint is well-founded, the complainant can expect to be compensated for losses suffered by reason of the employer's breaches of the statute.

Several caveats:
(1) The Employment Standards complaint process, for most matters (but with some exceptions), caps recovery at $10,000.00.
(2) The Employment Standards complaint process cannot compensate a complainant for wrongs other than breaches of the ESA. If the employer isn't paying wages as required, the Ministry can remedy that. If the employer is paying wages, but the rate of pay is below the applicable minimum wage, the Ministry can remedy that. But if the complaint is of some other unfairness, discrimination in breach of the Human Rights Code, etc., which isn't captured by the ESA, then the remedy for that lies elsewhere (Courts, the Human Rights Tribunal, or whatever other tribunal might be applicable under the circumstances).
(3) In circumstances such as dismissal, where your ESA entitlement (i.e. to termination pay) might be less than your 'common law' entitlement, the Ministry can only compensate you for the ESA minimum, and you cannot subsequently sue in Court for the rest of your common law entitlement.

Caveats aside, the Employment Standards complaints process does have its uses, especially if you're still employed with the employer: Inquiring about your rights, or initiating/participating in a complaint under the ESA (among other things), triggers an anti-reprisal clause in the ESA. If the employer takes a negative action against the employee because, for example, the employee filed a complaint, then the employer can be in quite a lot of trouble for that.

I know what you're thinking: "Okay, so I make a complaint against my employer, and my employer then fires me because of some trumped up disciplinary allegation. How can I ever prove that it was really because of my complaint?"

Herein lies the beauty - or the terror, depending on your perspective - of the provision: The onus isn't on the employee to prove reprisal. If an employee brings a reprisal complaint against the employer, it's on the employer to disprove the allegations. And if the termination (or other negative conduct) followed on the heels of some sort of Employment Standards complaint, it's a hard onus for the employer to meet.

And it isn't just termination that can offend the anti-reprisal provision. Anything from disciplining a late employee to declining a short-notice vacation request can put an employer in a difficult position defending against reprisal allegations from an employee who has brought an Employment Standards complaint - even if the complaint itself turns out to be without merit.

Mind you, there are ways for an employer to protect itself from reprisal complaints. It involves implementing and consistently following policies and procedures for discipline and other discretionary matters. Retaining a qualified lawyer (such as myself :) or a qualified Human Resources consultant to help develop these policies and procedures can put an employer in a much stronger position. This has to be pre-emptive, though, implemented before you run into other Employment Standards problems, in order to be really useful. The idea is that, if you refuse that short-notice vacation request to an employee who previously brought a complaint against you, and the employee brings a reprisal complaint as a result, you want to be able to point to a long consistent pattern of refusing vacation requests with too little notice.

Also, as another peripheral note, ESA minimum entitlements are not subject to mitigation. Meaning: If an employee gets fired, and finds a new job the next day, the employee can still pursue the statutory minimum termination pay.

So, put briefly, here's how the process works:

Employee files a complaint. Complaint gets assigned to an Employment Standards Officer. The Officer then contacts the employee and employer and investigates the complaint. At the end of the investigation, the Officer either finds merit to the complaint and issues an Order to Pay against the Employer, or doesn't and declines to issue an Order.

The unsuccessful party can choose to apply for review to the Ontario Labour Relations Board, and gets a hearing de novo there. (i.e. a full new hearing of all the evidence, without reference to the evidence before the Officer.) Matters will frequently go to that level. There is the availability of judicial review to a Court beyond that level, but that's more expensive, more complicated, and often more difficult. (Essentially, at the Divisional Court you're not arguing directly the merits of the complaint, but rather you're arguing that the OLRB made a mistake. And the Courts like to defer to tribunals like the OLRB, if they can find a reason to.)

I've seen a lot of employers get away with breaching the ESA for long periods of time, for several reasons, most of which are related to the natural imbalance of power and sophistication between the employee and employer:
(1) Employees may not know their rights;
(2) Employees may be conflict-averse and prefer positive relations with the employer rather than getting their rights respected;
(3) Employees may be worried about job security (unaware, or not, of the anti-reprisal provision);
(4) Employees may be unaware of the recourse available through the complaint process, and can't afford to get legal advice on the point (indeed, frequently the cost of a lawyer is prohibitive to an employee with a legitimate ESA complaint); or
(5) Even an employee aware of their rights and recourse may be intimidated by the prospect of initiating legal proceedings against the employer.

So I would suggest that it is a fair inference that the actual complaints that go to the Ministry are just the tip of the iceberg on the actual violations of the ESA in the Province.

Tomorrow: Why Bill 68 will aggravate this disparity.


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.