Terminations, Human Rights
and Pension and Benefits –
What’s New?
Presented by Stikeman Elliott LLP and
the Association of Corporate Counsel, Ontario Chapter
Thursday, October 28, 2010
Toronto, Ontario
STIKEMAN ELLIOTT LLP
www.stikeman.com
Today’s Speakers
MODERATOR
Lorna Cuthbert | Head of Employment,
Labour & Pension Group, Stikeman Elliott, Toronto
PRESENTERS
Kathleen Chevalier | Stikeman Elliott, Toronto
Andrea Boctor | Stikeman Elliott, Toronto
Nancy Ramalho | Stikeman Elliott, Toronto
PANELLISTS
Alison Burton | Senior Counsel, RBC Law Group, Royal Bank of Canada
Marsha Lindsay | Legal Counsel, Purolator Courier Ltd.
Bruce Pollock | Stikeman Elliott, Toronto
STIKEMAN ELLIOTT LLP
www.stikeman.com
Termination of Employment:
Recent lessons from our courts
Kathleen Chevalier
STIKEMAN ELLIOTT LLP
1
STIKEMAN ELLIOTT LLP
www.stikeman.com
McKee v. Reid’s Heritage Homes, 2009 ONCA 916
 McKee enters into agreement in 1987 with Reid’s Heritage Homes to advertise
and sell 69 new homes in Guelph, ON
– Agreement contains exclusivity and termination clause
– McKee receives a fixed amount per house sold
 Reid’s gives McKee title of “Sales Manager”
– McKee still paid per home, and through her corporation
– McKee hires, trains and manages a team of sub-agents
 In 2004, Reid’s restructures its sales force
– Reid’s offers to employ McKee and her sales force as “direct employees”
– Negotiations break down, McKee sues for wrongful dismissal
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McKee (continued)
 Trial judge determined that McKee was an employee
– The 1987 agreement, and hence termination clause, did not govern the
relationship
– Awarded 18 months notice
 Court of Appeal upholds trial decision
– Confirms that an intermediate category of “dependent contractor” exists
– Dependent contractor is a non-employment work relationship that exhibits signs
of economic dependency, manifested by complete or near-complete exclusivity
– Legal principles utilized to distinguish between employees and contractors
apply
– Contractor’s degree of exclusivity may be determinative of the issue.
– Determined that McKee was properly classified as an employee, and entitled to
18 months notice
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Brien v. Niagara Motors Ltd., 2009 ONCA 887
 Brien commenced employment with Niagara Motors in 1978 as a clerk
 Brien resigned her employment in 1982 following birth of her child, returned to
same position at Niagara motors after 8 months
 In 1984 Brien again resigned after the birth of her second child, was invited
back to Niagara Motors as office manager in 1986
 Brien remained in this position until 2003, when she was terminated without
cause and provided with 8 weeks pay in lieu of notice
 Brien commenced claim for wrongful dismissal
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Brien (continued)
 Trial Judge awards 24 months notice and 2 months bad faith damages
– Disregards Brien’s gaps in service
 Court of Appeal upholds continuous service finding, dismisses bad faith damages
– Niagara Motors could not treat Brien as a “new hire” following each absence
– Brien was specifically invited to return to work by Niagara Motors and was treated as if
“she had never left”
– Niagara Motors was required to consider Brien’s entire length of service for purposes of
entitlement upon termination of employment
– Brien could not demonstrate actual compensable damages suffered, therefore bad faith
damage award was dismissed
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Miranda v. Lake Shore Gold Corporation, 2010 ONCA 597
 Miranda became Chief Executive Officer of Lake Shore on July 1, 2007
 On that same date, Miranda executed a Change of Control Agreement
– Agreement entitles Miranda to $175,200 should he cease to be an officer of
Lake Shore, “within six months of the date on which control of the Corporation
changes”
 Lake Shore terminated Miranda’s employment on April 14, 2008
 On June 17, 2008, Hochschild Mining Holdings assumed control of Lake Shore
 Miranda brings application before Superior Court of Justice seeking declaration
that the April 14, 2008 dismissal fell “within 6 months” of the change of control
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Miranda (continued)
 Application Judge held that “within” generally means “since or after”
 Court of Appeal determines that “within” means “before or after”
– “within six months” does not require that termination of employment and change
of control occur in any particular order
– Wording of the Agreement did not support the conclusion that Miranda was only
entitled to the payment if his termination followed a change of control
– Purpose of change of control agreement is to ensure loyalty during uncertain
times, and that time period is not limited to events following a change of control,
but also the “period during which the change is being brought about”
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Mathieson v. Scotia Capital Inc., 2008 CanLII 45409
 Scotia Capital terminated Mathieson’s employment and provided 18 months
pay in lieu of notice
– Mathieson was 58 years old and held a senior position with Scotia Capital for
30 years
– Before trial, Scotia Capital increased Mathieson’s notice period to 24 months
 Mathieson commenced an action, seeking:
– Increased bonus amounts for 2006
– An increase of the notice period to 32-36 months
– Damages for bad faith conduct
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Mathieson (continued)
 Trial Judge determined:
– 2006 Bonus
 Evidence demonstrated that poor performers received reduced bonuses in 2006
 Bonus reduction was fair and reasonable, both in criteria utilized and process followed by
Scotia Capital
– Notice Period
 No judicial authority to justify a notice period above 24 months, which was fair and
reasonable in the circumstances
– Bonus During Notice Period
 Mathieson entitled to a pro-rated bonus payment for the notice period
 Amount to be paid based on historical pattern of Mathieson’s bonuses in prior years, and
bonuses paid to similar situated employees during the notice period
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Mathieson (continued)
– Bad Faith Damages
 Mathieson argued that “but for” Scotia’s bad faith termination, he would have
held his position at Scotia Capital until age 70
 Court found that there is no guarantee of employment to a certain age, and as
such “reasonably contemplated” economic damages for any breach are limited
to the common law Bardal notice period
 Bad faith was not present in the manner of Mathieson’s termination
 Court rejected Mathieson’s argument that his 2006 bonus reduction amounted
to bad faith
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Merrill Lynch Canada Inc. v. Soost 2010 ABCA 251
 Merrill Lynch terminated Soost for cause in May 2001
– Soost was 35 years old, held position of high-performing financial advisor and had 3
years of service
– Soost filed an action, claiming damages for wrongful dismissal, general damages and
punitive damages
 Trial Judge awards 12 months notice and $1.6 million in damages
 Court of Appeal reverses damage award of $1.6 million
– Honda v. Keays damages are limited to compensating loss, and are not automatic
enhancements of all wrongful dismissal damages
– Honda damages should only be awarded where employer utilized methods in the
manner of dismissal which are unduly unfair and insensitive, mere sloppy conduct does
not suffice
– Merrill Lynch did not wrongfully allege just cause when Soost was dismissed, had good
faith belief and should not be punished
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Pensions and Benefits:
A Year in Review
 New and Proposed Legislation
 Selected Case Law
Andrea Boctor
STIKEMAN ELLIOTT LLP
2
STIKEMAN ELLIOTT LLP
www.stikeman.com
New and Proposed Legislation - Overview
a)
Ontario Pension Reform
Bill 236
Bill 120
b)
Federal Pension Reform
Bill C-9
Bill C-47
c)
Income Tax Act changes to rules on stock option benefits
Bill C-47
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NEW AND PROPOSED LEGISLATION
a) Ontario Pension Reform - Bill 236
 Received Royal Assent on May 18, 2010
 Not yet proclaimed and regulations yet to come
 Amends the Pension Benefits Act (“PBA”):
– Elimination of partial wind-ups
– Expands the application of “grow-in” benefits
– Immediate vesting
– Clarification and simplification of asset transfers
– Surplus reversion/sharing on plan wind-up and partial wind-up
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NEW AND PROPOSED LEGISLATION
a) Ontario Pension Reform - Bill 236
 Amends PBA:
– Facilitates the establishment of pension advisory committees
– Requires notice of plan amendments be given to plan members
– Superintendent powers to supervise pension plans at risk
– Grounds for full wind-up expanded
– Phased retirement
– Terminology changes
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NEW AND PROPOSED LEGISLATION
a) Ontario Pension Reform - Bill 120
 Given second reading on October 25, 2010
 Amends the PBA:
– Adds new types of permissible benefits and pension plans
– Elimination of solvency funding for JSPPs
– Restrictions on contribution holidays
– Use of letters of credit to fund solvency liabilities
– Entitlement to surplus
– Limits application of Pension Benefits Guarantee Fund
– Payment of administration costs from pension fund
– Expands circumstances in which Superintendent may appoint a replacement
administrator
– PBA to be reviewed every 5 years
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NEW AND PROPOSED LEGISLATION
b) Federal Pension Reform - Bill C-9
 Budget bill
 Received Royal Assent on July 12, 2010
 Amends the Pension Benefits Act, 1985 (“PBSA”)
– Full funding on plan termination
– Use of letters of credit to fund solvency liabilities
– DC plans may provide benefits in retirement similar to a LIF
– Distressed plan workout scheme
– Pension regulator permitted to replace plan’s actuary
– Partial wind-up may only be declared by the regulator
– Immediate vesting
– New GST/HST rebate system for employer-sponsored pension plans
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NEW AND PROPOSED LEGISLATION
b) Federal Pension Reform - Bill C-47
 Received second reading on October 7 and 8, 2010
 Amends the PBSA
– Establishes “negotiated contribution pension plans”
– Allows administrator to pay amounts owed to unlocated beneficiaries to a third
party
– Establishes a “safe harbour” for DC plans where employees direct investments
– Establishes rules relating to electronic communications with plan members
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NEW AND PROPOSED LEGISLATION
c) Income Tax Act – Stock option changes
 Part of Bill C-47
 Amendments implement March 2010 budget announcements
 Amends Income Tax Act
– Requires withholding on option benefits
– Eliminates election to defer tax on option benefit (with limited transitional relief)
– Changes rules with respect to “tandem plans” which are cash-settled, by either
eliminating half rate of tax or employer deductibility, at employer’s election
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Selected Case Law
1. DB to DC Conversion
 Dawson v. Tolko Industries Ltd.,
2010 B.C.S.C. 346
 USW, Local 9235 v. St. Marys
Cement [2010] O.L.A.A. 152
2. Administration
 Smith v. Casco 2010 ONSC 2584
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3. Partial Wind-Ups
 Lomas v. Rio Algom Limited, 2010
ONCA 175
 Marino v. Ontario (Superintendent of
Financial Services) (2010), 78
C.C.P.B. 1
4. Insolvency
 Re Indalex Ltd. (2010), 79 C.C.P.B.
301
5. Surplus
 Burke v. Hudson’s Bay Company 2010
SCC 34
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SELECTED CASE LAW
Dawson v. Tolko Industries Ltd., 2010 B.C.S.C. 346
 In 1997, Tolko engaged Towers Perrin (“TP”) to assist in DB to DC conversion
 Services included drafting communications and holding employee seminars
 Employees were offered choice to convert past service DB to DC (the “Offer”)
 Plaintiffs are former employees who terminated employment from 2004 to 2008
 On termination each plaintiff signed a release releasing “agents” of Tolko
 Plaintiffs claimed against Tolko, TP, and lead actuary, but discontinued Tolko claim
 Claim is for:
– Failure to advise plaintiffs of personal considerations which they ought to have had in
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–
–
–
–
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mind when deciding whether or not to accept Offer
Failure to have regard for best interests of plaintiffs in establishing initial account values
Utilization of the wrong discount rate
Negligent misrepresentation in relation to preparation of written materials
Use of unreasonable annuity purchase interest rate in written materials; and
Failure to advise plaintiffs of risks associated with transfer of their DB to DC
ACC CANADA | STIKEMAN ELLIOTT LLP
SELECTED CASE LAW
Dawson v. Tolko Industries Ltd., 2010 B.C.S.C. 346
(continued)
 Proceeding on preliminary issue:
– Did plaintiffs release defendants when they released Tolko and its agents?
 Result:
– No. Release was not specific enough to cover defendants
 No decision yet made on the merits of whether TP and actuary breached any
duty or standard of care
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SELECTED CASE LAW
USW, Local 9235 v. St. Marys Cement [2010] O.L.A.A. 152
 St. Marys converted pension plan from a DB to DC without consultation with the
USW
 Plan was incorporated by reference into the collective agreement
 Plan included a provision that reserved the right to amend the plan to the
employer
 Could St. Marys convert the plan unilaterally?
 Result:
– Yes. Plan was incorporated into collective agreement, including provision in
plan that allowed employer to amend the plan
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SELECTED CASE LAW
Smith v. Casco 2010 ONSC 2584
 Casco retiree elected a life pension with a five year guarantee; his spouse
signed a post-retirement spousal survivor benefit waiver form
 Waiver was not the standard form under the PBA
 Retiree died three years after retirement and wife attempted to apply for
survivor’s pension but was denied due to waiver
 Wife initiated proceedings against administrator of plan for negligent
misrepresentation
 She argued that she signed waiver without reading it carefully; did not
understand implications
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SELECTED CASE LAW
Smith v. Casco 2010 ONSC 2584
(continued)
 Ontario Superior Court of Justice:
– Found in favour of wife
– She had no independent legal advice
– Reasonable to rely on husband’s, employer's, and plan representative’s explanations
which were insufficient
 Ontario Divisional Court:
– Upheld lower court’s decision
– Differences in waiver form were fatal to employer’s appeal
– PBA s. 46(1) created an implied mandatory statutory requirement for waiver to be in a
form approved by the Superintendent
– If this was the case, outcome would have been different
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SELECTED CASE LAW
Lomas v. Rio Algom Limited, 2010 ONCA 175
 1966 - DB pension plan established and funded through trust
 1997 - DC component added to plan
 Allegation that Rio Algom unilaterally amended plan to members’ detriment
 Does court have jurisdiction to compel employer to commence proceedings to
wind-up pension plan pursuant to s. 68(1) of PBA?
 Result:
– Ontario Court of Appeal held it is “plain and obvious” that court does not have
authority to order employer to commence wind-up proceedings
– Statutory scheme must be followed and not circumvented by courts
 Decision has not been appealed
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SELECTED CASE LAW
Marino v. Ontario (Superintendent of Financial Services)
(2010), 78 C.C.P.B. 1
 Reorganization at Hydro One resulted in 126 terminations including 73 middle

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
managers
Superintendent refused to order partial wind-up as 126 was not a “significant” number
What is threshold for when Superintendent may order partial wind-up of pension plan
pursuant to paragraph 69(1)(d) of the PBA?
Grounds for a partial wind-up where significant number of subset of members is
terminated?
Result:
– Court of Appeal held that FST had correctly and reasonably interpreted PBA
– Subset analysis permissible for purposes of ordering partial wind-up
– Significance may be assessed by relative size of number of terminated employees in a
defined subset compared to total active members in that subset
– Expands potential ambit of partial wind-up concept
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SELECTED CASE LAW
Re Indalex Ltd. (2010), 79 C.C.P.B. 301
 Indalex received protection from creditors under CCAA
 CCAA order approved sale of assets
 Two member groups asserted “deemed trust” claims over sale proceeds in respect of
pension deficits
 Do deemed trust provisions of s. 57 apply to funding deficiencies in an on-going plan
and/or deficit on wind-up?
 Result:
– Deemed trust under PBA does not apply to solvency deficiency of on-going plan or to
deficit of wound-up plan where all payments due to date have been remitted
– As of wind-up date, no amounts were “due” or “accruing due” - no deemed trust arising
in respect of remaining deficiency
– Leave to appeal granted and will be heard on November 23 and 24
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SELECTED CASE LAW
Burke v. Hudson’s Bay Company 2010 SCC 34
 Hudson’s Bay Company (HBC) operated a contributory DB plan
 As part of a sale of a division, assets and liabilities associated with certain
employees transferred to the purchasing employer’s plan
 HBC did not transfer a pro rata share of surplus assets
 Proceeding commenced by transferred members to require HBC to transfer pro
rata share of surplus to new plan and seeking declaration that HBC improperly
paid expenses from the pension fund and improperly took contribution holidays
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SELECTED CASE LAW
Burke v. Hudson’s Bay Company 2010 SCC 34
 Ontario Superior Court of Justice (2005)
– Rejected claims over the contribution holidays and expenses
– Found in favour of plan members on surplus transfer issue
 Ontario Court of Appeal (2008)
– Upheld decision on contribution holidays and expenses
– Reversed decision on surplus transfer issue
 Supreme Court of Canada (2010)
– Agreed with Court of Appeal
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Update on Human Rights
Nancy Ramalho
STIKEMAN ELLIOTT LLP
3
STIKEMAN ELLIOTT LLP
www.stikeman.com
OVERVIEW
 Growing recognition of family status as a ground for discrimination
 Dealing with disability
 Terminating an employee who is on long term disability
 Accessibility for Ontarians with Disabilities Act (“AODA”)
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Growing Recognition of Family Status
 Family status is an enumerated ground upon which an employer is prohibited
from discriminating
 Recent jurisprudence provides some guidelines to assist in negotiating this
mine field
 In particular, one case has clarified that the definition includes the
responsibilities one has as a result of being a parent
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Johnstone v. Canada Border Services, 2010 CHRT 20
 Fiona Johnstone, claimed that she was being discriminated against on the basis of
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
family status when her employer, Canada Border Services (“CBSA”), failed to
appropriately accommodate her request for more regular hours after the birth of each of
her two children.
Ms. Johnstone was unable to find a day care for her full-time shift work but was able to
arrange for someone to look after her children three days per week.
She proposed to work full-time hours over the three day period where she could
arrange child care.
CBSA’s unwritten policy requires employees who need accommodation in the form of
static shifts to go to part-time hours. In doing so, the employee loses their pension
benefits.
This policy was applied by CBSA unevenly in that employees seeking accommodation
for religious or medical reasons to work part-time in order to receive accommodation.
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Johnstone – Threshold Issue
 The employer argued for a restrictive definition of family status that only
includes the “absolute status of being in a family relationship” and not the
obligations that relate to being a parent.
 The Tribunal found that family status encompasses family and parental
obligations such as childcare.
 The Tribunal found that employers have a duty to assess the circumstances of
employees such as Ms. Johnstone and work together to assist employees with
balancing their family and work obligations, up to the point of undue hardship.
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Johnstone – Tribunal’s Decision on the Merits
 It was clear to the Tribunal that the employer’s unwritten policy was
– discriminatory – impeded her ability to receive employment-related benefits
based on her family status
– arbitrarily applied - it did not apply to all groups the same
 Having established a prima facie case of discrimination, the onus then shifted to
CBSA to show: (1) a bona fide occupational requirement; and (2) that the
necessary accommodation would result in undue hardship to the employer.
 The evidence showed that the employer relied upon its policy and did not even
attempt to consider whether it could accommodate Ms. Johnstone.
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Johnstone - Award
The Tribunal ordered the employer to:
 consult with the Canadian Human Rights Commission to prevent such discrimination in
the future;
 implement a written policy to address requests for accommodation based on family
status within 6 months;
 compensate Ms. Johnstone for all lost wages and benefits (including pension
contributions) back to 2004;
 pay Ms. Johnstone $15,000 in general damages for injury to her confidence and
reputation that resulted from the discrimination; and
 pay Ms. Johnstone $20,000 based on the CBSA’s “willful and reckless” behaviour in
failing to accommodate to Ms. Johnstone and denying it had such a duty.
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Johnstone – Lessons Learned
 In this case, the Tribunal has reiterated the duty of an employer to work with employees
to assist them in establishing a work/life balance.
 Important to note that in 1993, a predecessor to the CBSA had been involved in the
Brown case where the Tribunal ordered them to:
– “prevent similar events from recurring through recognition and policies that would
acknowledge family status to be interpreted as involving ‘a parent's rights and duty to
strike a balance [between work obligations and child rearing] coupled with a clear duty
on the part of any employer to facilitate and accommodate that balance’”
 In the Johnstone case, the Tribunal did acknowledge that not every work-life conflict
would be a human rights issue but still a high threshold.
 Ensure your unwritten policies are not applied differently to other groups and audit your
workplace to ensure that, as an employer, you are fulfilling your duty.
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McDonald v. Mid Huron Roofing, [2009] O.H.R.T.D. No. 1277
 This decision – heard prior to Johnstone - also involves the employer’s obligation to
accommodate an employee’s obligations as a parent
 Harry McDonald had worked for his employer from May to October, 2008.
 During that period, Mr. McDonald’s spouse was going through a difficult pregnancy –
involved attending numerous medical appointments and was hospitalized several times.
 Mr. McDonald took both paid and unpaid time off to attend some of these appointments
with her.
 He always followed the appropriate request and approval processes of the company for
taking days off.
 When his son was born, prematurely, he took a week off of work but was told that after
he came back he would no longer be permitted to take time off.
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McDonald – Facts
(continued)
 A few weeks later, he needed to take his son to a medical appointment during
work hours because his wife was quite ill and was in the emergency ward.
 Mr. McDonald told his supervisor that he had to deal with a medical emergency
that would take up to an hour.
 His supervisor told the applicant that if he was not back in 20 minutes, he would
be fired, which he was. On the same day, the applicant asked his supervisor for
his job back and was denied.
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McDonald – Tribunal Decision
 Refusing to allow Mr. McDonald to take the time off work to take his son to his medical
appointment was discrimination based on Mr. McDonald’s family status.
 Tribunal pointed to the following facts:
– Employer knew about the family situation.
– As a result of this knowledge, the employer had a duty to determine what
accommodation was needed and whether it could be provided without undue hardship.
– Employer failed to make such inquiries or allow Mr. McDonald to make a proposal for
accommodation.
 On the above basis, the employer did not fulfill its duty to accommodate Mr. McDonald.
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McDonald – Undue Hardship
 The Tribunal held that accommodating Mr. McDonald would not have resulted in undue
hardship
 Tribunal acknowledged that:
– the employee had already taken 14-16 days off during his five months of employment
– the employer did show that it was difficult to replace Mr. McDonald when he was absent
and that his absences resulted in inconvenience, frustration and even some cost to his
employer
 Notwithstanding the above, the Tribunal held that there was insufficient evidence that
the employer was experiencing any concrete losses as a result of Mr. McDonald’s
absences sufficient to result in undue hardship
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McDonald - Award
 The Tribunal awarded Mr. McDonald:
– $3,500 for lost wages for the eight weeks during which he was out of work
– general damages of $20,000 for loss arising from the infringement of his rights
under the Human Rights Code
 In making the award for general damages, the Tribunal relied upon evidence
that Mr. McDonald had “suffered considerable loss of self-respect, dignity and
confidence” and that he became depressed for some time after he lost his job.
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Li v. Novopharm Ltd. [2009] O.H.R.T.D. No.879
 Mr. Li made a complaint alleging that his employer discriminated against him based on
his disability and on his family status.
 His allegations regarding family status relate to his employer’s cell phone use policy.
 His employer did not allow warehouse employees to carry personal cell phones and
they were required to leave their cell phones in their lockers. Cell phones would only be
used on their time and outside of the work area.
 In October 2005, Mr. Li’s father was dying and his mother felt unable to call him at work
due to her inability to speak English. Mr. Li wanted to be able to carry his personal cell
phone with him while he was working, so that he could receive calls from his mother.
Mr. Li alleged that any failure to allow him to do this was discrimination based on family
status.
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Li – Tribunal’s Decision
 The Tribunal held that the policy was developed for safety reasons and was not in any
way targeted towards Mr. Li.
 There was no adverse effect discrimination.
 While the applicant's inability to carry his personal cell phone around with him was
perhaps an inconvenience, it did not reach the level of an exclusion, restriction,
obligation or penalty.
 There was also evidence that the employer had agreed to allow Mr. Li carry his
personal cell phone in his pocket and set on vibrate, so that he could know if his mother
was trying to reach him and then request a break to call her back.
 Tribunal held that there was no violation on the basis of his family status.
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Li – Lessons Learned
 In order to amount to adverse effect discrimination, there must be some
exclusion, restriction, obligation or penalty imposed upon a person or group
because of a prohibited ground.
 Look at the effect of the policy.
 In this case, this would be no different than an employee who wanted to speak
to their lawyer about their house closing.
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Dealing with Disability
 The decision in Duliunas v. York-Med Systems Inc. is an example of the
importance of following your own policies and procedures and when
restructuring a workforce, treating a disabled employee like other able bodied
employees to the extent possible.
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Duliunas v. York-Med Systems Inc. [2010] O.H.R.T.D. No. 1393
 Mr. Duliunas began working as a technical service representative in January 2003.
 Mr. Duliunas was diagnosed with depression and anxiety in March 2006.
 He took a month of disability leave in March 2006.
 In March 2007 he went off again.
 From the end of May to July 2007, he was on the company's short-term disability program.
 He was approved to return to full-time employment on February 1, 2008 on a part-time basis and
without the ability to drive.
 In late February he was offered a new position at part-time hours (two days per week), and would
receive a reduction in pay.
 Based on the physician’s RTW schedule, the applicant would be ready to work full-time hours at
the end of June.
 In late August, the company advised he could return three days a week but that he would be
monitored for attendance.
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Duliunas – Facts (continued)
 Throughout this time, the applicant consistently requested full-time hours and
was refused.
 In September, in response to yet another request for full-time hours, the
employer offered him a new employment contract which provided that after 30
days, the parties would discuss the possibility of full-time hours.
 The applicant refused to sign the contract, objecting to the fact that the new
contract did not guarantee a return to full-time work.
 As a result, the applicant’s employment was terminated and he brought a claim
under the Code.
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Duliunas – Tribunal Decision
 Tribunal held that the employer failed to accommodate Mr. Duliunas for a
number of reasons and that his refusal to sign the contract was entirely
reasonable.
 The Tribunal focused on the employer’s failure to provide full-time hours, the
reduction in pay and the reassignment of job duties.
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Duliunas – Tribunal Decision
 In terms of the request for full-time hours:
– By beginning of July, the applicant was fit to return to work.
– While the Tribunal acknowledged that the employer’s policy mandated a
gradual return to full-time hours, it found that there was no explanation why
after four months the applicant was still working only two days per week with no
prospect for full-time hours.
– Tribunal found that the employer failed to follow its own policy.
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Duliunas – Tribunal Decision
 The reduction in pay
– The employer argued that due to restructuring in the applicant’s absence it
could not maintain his previous salary level.
– The evidence showed that the applicant was the only member of his former
department who was not given an option to either retain their position or make a
lateral move to another department with their former salary.
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Duliunas – Tribunal Decision
 The applicant’s reassignment to another position
– the employer was concerned about the episodic nature of the illness and made
some assumptions based on unclear medical evidence
– while the Tribunal acknowledged that the lack of clarity in some of the
applicant’s medical documentation contributed to some of the employer’s doubt,
the reasonable response would have been to ask more questions rather than to
draw false conclusions
– The employer’s reassignment was based on incorrect information
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Duliunas – Lessons Learned
 Follow your own policies and procedures – be prepared to defend your
inconsistencies
 The struggle of making the right decision based on the information received
– Tribunal stated that employers necessarily assume some risk of uncertainty
when it comes to the future health of their staff, and that the nature of many
disabilities is that they can be episodic, meaning that the worker’s needs may
change over time. Accordingly, the employer’s obligations can change over
time as well.
 Appreciate that more and more accommodation is an ongoing evolution that will
require time and resources.
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Terminating an employee on long term disability
Naccarato v. Costco Wholesale Canada Ltd. [2010] O.J. NO. 2565 (June 15, 2010)
 Mr. Naccarato was employed by Costco for over 17 years in various clerical roles
 Initially went on long-term disability on or about July, 2002.
 In January 2007, his physician advised the company that he was still very depressed,
that another psychiatrist was being sought for further treatment and that he was unable
to predict when Mr. Naccarato might return to his job
 Mr. Naccarato was dismissed for alleged cause of frustration of his employment
contract, following a long-term disability leave totalling nearly five years.
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Naccarato – Court’s Decision
 The Court held:
– the onus was on the employer to prove that the contract had become frustrated and that
it was not the employee’s onus to provide medical evidence with respect to their ultimate
prognosis.
– the prognosis “did not support a finding that there was no reasonable likelihood of Mr.
Naccarato returning to work in the reasonably foreseeable future.”
– there no evidence of hardship or disruption to Costco’s business as a result of
maintaining Mr. Naccarato’s employment status, such as would be found in the case of
a senior employee who was irreplaceable.
– the provision of short and long term benefits by Costco to Mr. Naccarato meant that
illness (even a long term illness) was reasonably contemplated under the employment
contract .
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Naccarato – Lessons Learned
 As employer counsel, we can take the following from this decision:
– 5 years not enough – the onus is on the employer that there is no possibility
that the individual will ever be in a position to return to work
– The door is left open to argue that this threshold might be lower if the employee
is a more senior employee
– We should rethink our long term disability policies and whether they can play a
role in reducing this liability
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Accessibility for Ontarians with Disabilities Act (AODA)
 AODA establishes accessibility standards to be followed by businesses and
organizations in Ontario to identify, remove and prevent barriers to accessibility.
 There are currently five standards that were identified:
– customer service;
– employment;
– information and communications;
– public transportation; and
– built environment.
 Standards regarding customer service came into effect on January 1, 2008 with
a deadline of January 1, 2010 for public sector organizations and January 1,
2012 for private sector and non-profit organizations.
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AODA – Employment Standard
 The proposed employment standard will require organizations to:
deliver accessibility awareness training to employees;
accommodate persons with disabilities in the recruitment process;
develop individual accommodation plans for employees with disabilities, upon request;
deliver individualized workplace emergency information to employees with disabilities;
take into account the accommodation needs of employees with disabilities in existing performance
management, career development and redeployment processes; and
– develop procedures for return-to-work of employees who are absent from work due to a nonworkplace injury or illness that uses individual accommodation plans, where appropriate.
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 Regulation was posted for public review until October 16, 2010 – gone back to committee to
reflect input received.
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AODA - Enforcement
 If a Director deems that a person or organization has failed to file an accessibility report,
or failed to provide the director with requested reports or information, it can make an
order that the person or organization do any or all of the following:
– File an accessibility report that complies with the requirements of the Act within the time
specified in the order.
– Provide the Director with such reports or information as may be required within the time
specified in the order.
– Pay an administrative penalty.
 Non-compliance with an order is an offence, which upon conviction leaves the
convicted person or corporation liable for a fine of not more than $50,000 (person) or
$100,000 (corporation) for each day or part of a day on which the offence occurs or
continues to occur.
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QUESTIONS & ANSWERS
Lorna Cuthbert
lcuthbert@stikeman.com
Kathleen Chevalier
kchevalier@stikeman.com
Andrea Boctor
aboctor@stikeman.com
Nancy Ramalho
nramalho@stikeman.com
Alison Burton
alison.burton@rbc.com
Marsha Lindsay
mlindsay@purolator.com
Bruce Pollock
bpollock@stikeman.com
STIKEMAN ELLIOTT LLP
www.stikeman.com