Ukrainetz Law Corp.

A boutique labour and employment law firm, providing strategic legal representation to unionized and non-unionized employers in the following areas:

· Employee Relations & Human Resources Support

· Review & Development of Contracts, Handbooks & Policies

· Collective Agreement Negotiations, Grievances & Arbitrations

· Tribunal & Board Complaints & Hearings

· Wrongful Dismissal Actions

· Harassment Investigations

· Workshops & Seminars

· Business Sales and Acquisitions

Part III of Three on what business leaders need to think about when considering the restructure of their company.

The Human Rights Code of British Columbia is likely the last thing on an employer’s mind during a restructure, but a Human Rights complaint by demoted, laid off, transferred, dismissed or demoralized employees can be messy and expensive. The Human Rights Tribunal is not where you want to be spending your time and money if if you are in the midst of saving or rebuilding your business.
The Human Rights Code of British Columbia (and for federally regulated employers, the Canadian Human Rights Act) is quasi-constitutional legislation designed to eliminate discrimination. The HRC prohibits an employer from discriminating against an employee on the basis of race, religion, marital or family status, disability, sex, sexual orientation, age or criminal or summary conviction unrelated to employment (which includes charges).

It is a relatively simple exercise for an employee to file a Human Rights complaint with the Tribunal and in most cases, to obtain free representation from a government and foundation funded organization called the Human Rights Coalition.

Once a Human Rights complaint is accepted the process will move forward to a hearing before a “member” (like a judge) who has the authority to order remedies such as reinstatement with or without back pay, wage loss, reimbursement of expenses, injury to dignity damages and/or force an employer to put in place policies or programs. The injury to dignity damages alone can be as high as $35,000. Wage loss awards have no set limit.
There are mediation opportunities along the way, but mediation takes two and if either party is not interested in settling, employers will, in most cases, find themselves facing a long and expensive hearing. To find discrimination, the member only needs to find that one of the characteristics earlier listed was a “factor” in the employer’s decision making. The Human Rights Tribunal is not a level playing field, so can be a very scary place for an employer.

Being a employee with a protected characteristic, such as being the eldest employee, the only gay employee, the only visible minority employee or a disabled employee should not give that employee a higher level of job security than the employee who does not have any of the characteristics protected by Human Rights legislation (eg. a white straight male). But in selecting employees for layoff, demotion, transfer or dismissal, the employer should carefully consider (a) why this employee is being selected; (b) whether the employee’s age, disability etc. is at all influencing the decision; and (c) what information the employer has available to counter any perception that the person’s protected characteristics did factor into the decision to choose this particular employee.

One of the positive outcomes of a restructuring is that a company can use this as an opportunity to keep high performers, but if the low performer is, for example, the oldest worker with the longest service, the employer needs good records, such as performance reviews, meeting notes, coaching letters or disciplinary letters showing they have been open with the employee that lay off or dismissal is a likely outcome of poor performance.

The employee who is in denial may decide that their age was the real reason for the layoff (or at least part of the reason). Even with good records, selecting the employee who is markedly different from the others is risky, but performance management possibly combined with a severance offer and a signed release will provide the employer with protection against a successful Human Rights complaint.

Employers can also protect themselves from Human Rights complaints by having a lay off policy (or more broadly a restructure policy) setting out the criteria the employer will consider in setting out which employees will be affected by the restructure. For example, the employer may say that in determining the order of lay offs, seniority and documented job performance will be the primary considerations. Preferably such a policy will be in place long before the employer actually restructures.

Part II of a Three Part Series

In the February issue I reviewed the common law issues employers should be mindful of in a business restructure. In this article I review the Employment Standards Act (“ESA”) considerations for Employers in a business restructure.

During a business restructure employers are often under tremendous financial pressure and may be tempted to skip or try to get around the ESA’s minimum requirements. Giving in to that temptation can be expensive.

Employees who believe their employer has not met these minimum standards may file complaints. Employers found to have breached the ESA will be ordered to pay wages owed and in most cases, an additional penalty. These mandatory penalties start at $500 for each violation, increase to $2,500 for later violations and top out at $10,000 per violation.

Keep in mind that the ESA sets minimum requirements. If an employment agreement or the common law provides greater protections, the employee may choose to pursue those greater protections in Court. Collective agreements may set different ground rules, so here I will address the ESA in the context of a non-union workplace restructuring.

Layoffs and changes to terms and conditions of employment are common in business restructures. If the ESA isn’t taken into account, the cost of the business restructure may outweigh the benefit.

Under the ESA a “temporary layoff” means “a layoff of up to 13 weeks in any period of 20 consecutive weeks.” So an employer should be safe to lay off an employee and bring them back to work without consequence, as long as the employee is back within 13 weeks of the original layoff date. That unfortunately may not be the case. As a result of some recent developments in the law, a temporary layoff is automatically treated as a termination of employment unless the possibility of a temporary layoff is expressly provided in a contract of employment; is a well known industry practice (e.g. “breakup” during logging); or is agreed to by the employee.

The ESA also defines a “week of layoff” as a week in which an employee earns less than 50% of his or her regular wages at the regular rate, averaged over the previous eight weeks. So an employee can continue to work, but on a reduced rate, and at the end of 13 weeks may take the position that he or she has been terminated, triggering the employer’s obligation to provide termination pay.
When a layoff becomes a termination, the employer is liable, at a minimum, to provide pay in lieu of notice based on a formula of nil for the first three months’ employment, one week from three months

to the completion of 12 months employment, increasing to two weeks until three years employment has been completed, with one extra week per year of service topping out at eight weeks. This is a minimum, however. Under the common law or an employment agreement an employer may be liable for more.

The ESA also provides that a termination may occur where a condition of employment is substantially altered. So an employer who restructures the business by changing terms or conditions of employment to minimize layoffs, could find itself faced with an ESA complaint seeking termination pay.

Employers who terminate 50 or more employees within a two month period face additional liability. The ESA requires that these employees be given an additional eight to 16 weeks of working notice or pay in lieu (depending on how many over 50 there are). The termination count includes employees on a layoff exceeding 13 weeks in that two month period. So count carefully.

And lastly, directors and officers are liable for up to two months unpaid wages for each employee, which includes termination pay.
The liability for termination pay and/or ESA penalties can be avoided by planning ahead, assessing whether temporary layoffs or permanent layoffs (i.e. terminations) are appropriate, giving working notice of termination of employment and seeking advice from an experienced employment lawyer.

This article is meant for reference only and should not be construed as legal advice.

Part I of a Three Part Series

It goes without saying that a business restructure is going to impact employees, some for the better and some for the worse. The idea isn’t to avoid impact; it is to create an atmosphere where employees don’t see a need to resort to outsiders for protection.

While it is important that employers be aware of the legal claims employees may have in a business restructure, it is equally if not more important to recognize that keeping employees in the dark is an invitation to advance such claims. And a legal claim, even if ultimately unsuccessful, is a cost a business doesn’t need to add to its bottom line. Also, employees aren’t stupid. They will know if a business is facing challenges and if they don’t know what is going on they will look to the rumour mill and to outside sources including unions in an effort to get answers and protect them from the uncertainty. I am not saying that employees should be made fully aware of all aspects of a potential business restructure. Most certainly not. Too much information at the wrong time could backfire the same way not enough information at the right time would. It’s all about balance, knowing what to say when and why.
The three most important legal areas to be mindful of in a business restructure are: the Common Law; Employment Standards legislation and Human Rights legislation. In this article I will address only the Common Law, the law set by the Courts.

The Common Law requires that an employee who is dismissed and who does not have an employment contract which sets out how much written notice of dismissal or pay in lieu which they ought to receive is entitled to reasonable notice of dismissal or pay in lieu. Employees who are short changed their notice are awarded damages to make up the shortfall. The Common Law also says that employees who keep their employment, but face a fundamental change, without sufficient notice, in their position, duties, compensation or other key areas may have a claim for constructive dismissal.

The amount of notice an employee is entitled to have depends on a number of factors, but the most important factors are the employee’s age, length of service, responsibility or specialization of position and the availability of alternate equivalent employment. The notice entitlement can be different for every employee, but it can be as much as 24 months’. That is the case whether the employee is outright dismissed or constructively dismissed. So it is important that employers know what the potential liability is before going ahead with the restructure, not after.
Fortunately for employers, the Common Law does require that the dismissed employee (whether outright or constructively) “mitigate” her damages, so take reasonable steps to reduce the losses. The employee is not entitled to take a holiday, take the employer to court (which isn’t most employees’ ideas of a holiday) and

collect damages for the insufficient notice. The dismissed employee is required by the Courts to look for work and the constructively dismissed employee will have to explain to the judge why it is he chose unemployment over employment.

Employees who quit and sue for constructive dismissal may win the battle but lose the war. The Court may well find that the change to the employee’s job was fundamental, so was a constructive dismissal. But, the Court will also consider whether the employee’s duty to mitigate included staying in the changed job. And the direction coming from the Supreme Court of Canada is that if the employment environment is not humiliating or toxic the employee should stay in the job and look for other work while employed. So it is critical that employees are treated with respect and dignity. The easy way to do that is to involve the employee in the impending change and provide the employee with support to help the employee adapt to the change. If this happens, most employees won’t want to sue and the rare employee who does isn’t likely to win.

So it doesn’t just make sense from a human point of view to treat employees with respect and dignity during a business reorganization, it makes legal sense!

The Human Rights Code of British Columbia is likely the last thing on an employer’s mind, but a Human Rights complaint by demoted, laid off, transferred, dismissed and demoralized employees can be messy, and expensive and the Human Rights Tribunal is not where you want to be spending your time if if you are struggling to save and rebuild your business.

The Human Rights Code of British Columbia (and for federally regulated employers, the Canadian Human Rights Act) is quasi-constitutional legislation designed to eliminate discrimination. The HRC prohibits an employer from discriminating against an employee on the basis of race, religion, marital or family status, disability, sex, sexual orientation, age or criminal or summary conviction unrelated to employment (which includes charges).

It is a relatively simple exercise for an employee to file a Human Rights complaint with the Tribunal and in most cases, to obtain free representation from a government funded organization called the Human Rights Coalition.

Once a Human Rights complaint is accepted the process will move forward to a hearing before a “member” (like a judge) who has the authority to order remedies such as reinstatement with or without back pay, wage loss, reimbursement of expenses, injury to dignity damages and/or force an employer to put in place policies or programs. The injury to dignity damages alone can be as high as $35,000.
There are mediation opportunities along the way, but mediation takes two and if the employee is not interested in settling, employers will, in most cases, find themselves facing a hearing. To find discrimination, the member only needs to find that a characteristic that designates them as someone who might be discriminated against was a “factor” in the employer’s decision making, so the Human Rights Tribunal can be a very scary place for an employer.

Being a employee with a protected characteristic, such as being the eldest employee, the only gay employee, the only non-white employee or a disabled employee should not give that employee a higher level of job security than the employee who does not have any of the characteristics protected by Human Rights legislation (eg. a caucasian male working with mostly caucasian males). But if these employees are chosen for layoff, demotion, transfer or dismissal, the employer should carefully consider (a) why this employee is being selected; (b) whether the employee’s age, disability etc. is at all influencing the decision; and (c ) what information the employer has available to counter any perception that the person’s protected characteristics did factor into the decision to choose this particular employee.

One of the positive outcomes of a restructuring is that a company can use this as an opportunity to keep high performers, but if the low performer is, for example, the oldest worker with the longest service, the employer needs good records, such as performance reviews, meeting notes, coaching letters, disciplinary letters showing they have been open with the employee that lay off or dismissal is a likely outcome of poor performance.

The employee who is in denial may decide that their age was the real reason for the layoff (or at least part of the reason). Even with good records, selecting the employee who is markedly different from the others is risky, but performance management ideally combined with a severance offer and a signed release will provide the employer with the best protection against a Human Rights complaint.

Employers can also protect themselves from Human Rights complaints by: having a lay off policy (or more broadly a restructure policy) setting out the criteria the employer will consider in setting out which employees will be affected by the restructure. For example, the employer may say that in determining the order of lay offs, seniority and documented job performance will be the primary considerations. Preferably such a policy will be in place long before the employer actually restructures.

Veronica Ukrainetz is the principal of Ukrainetz Law Corporation in Vernon, B.C.
This article is meant for reference only and should not be construed as legal advice. Originally published in the Business Examiner.

Mr. Chaisson’s future looked bright.  He had received a job offer from Kellogg, Brown & Root (Canada) Company (KBR) as a receiving inspector at a Syncrude plant in Fort McMurray, Alberta.  His job offer was conditional upon the results of his pre-employment medical and drug screen. Chaisson submitted to the pre-employment medical and drug test and then started work.  Nine days later the results came in. He had tested positive for THC.

Chaisson admitted to using marijuana five days before the drug test. He did not claim to be addicted, nor did KBR think he was addicted. In his nine days at work there was absolutely no concern that Chaisson was influenced by drugs while on the job and his job performance was rated as “above average to outstanding”. Nevertheless, KBR’s pre-employment drug testing policy was a “zero tolerance” policy, so Chaisson’s employment was terminated.

Read the rest of this entry »

The British Columbia Human Rights Tribunal on June 9, 2009 awarded Lynda Kerr, a pharmaceutical sales representative, damages of $387,083.07 plus pre/post judgment interest, and the necessary pension plan adjustments as a result of a four year failure by Boehringer Ingleheim (Canada) Ltd (“BICL”) to accommodate her vision impairment. Kerr v. Boehringer Ingelheim (Canada)(No. 4), 2009 BCHRT 196.

$30,000 of this award was for Injury to Dignity (the highest award to date is $35,000):

Read the rest of this entry »

Alternate Dispute Resolution (“ADR”) is a term applied to resolving a dispute outside of traditional litigation methods. There are many different forms of ADR.

1. MEDIATION

Mediation is a conflict resolution tool involving a neutral third party facilitator whose role is to assist the parties in arriving at their own resolution of the conflict. Mediations are privileged and “without prejudice”: Settlement discussions and mediation efforts cannot be brought into subsequent litigation.

Read the rest of this entry »

Timing is everything … employer found liable for Employment Standards Act Section 64 group termination pay even though employees did not miss a day of work.

A Nanaimo company has been ordered to pay hundreds of thousands of dollars in group termination pay to its former employees, even though the employees did not miss a day of work. The Nanaimo Seniors Village Partnership operated a licensed residential care facility, the Nanaimo Seniors Village. An associated company to the Partnership, the Well-Being Seniors Services Ltd. employed all of the employees providing care services to Village residents. The Partnership decided, for labour relations reasons (that is, to avoid the Health Sector Master Agreement) to contract out to an arms length contractor.

Read the rest of this entry »