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Terminations, Human Rights and Pension and Benefits


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Title: Terminations, Human Rights and Pension and Benefits

Terminations, Human Rights and Pension and
Benefits Whats New?
  • Presented by Stikeman Elliott LLP and the
    Association of Corporate Counsel, Ontario Chapter
  • Thursday, October 28, 2010 Toronto, Ontario

Todays Speakers
  • MODERATOR Lorna Cuthbert Head of Employment,
    Labour Pension Group, Stikeman Elliott,
  • 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

Termination of Employment Recent lessons from
our courts
  • Kathleen Chevalier STIKEMAN ELLIOTT LLP

McKee v. Reids Heritage Homes, 2009 ONCA 916
  • McKee enters into agreement in 1987 with Reids
    Heritage Homes to advertise and sell 69 new homes
    in Guelph, ON
  • Agreement contains exclusivity and termination
  • McKee receives a fixed amount per house sold
  • Reids gives McKee title of Sales Manager
  • McKee still paid per home, and through her
  • McKee hires, trains and manages a team of
  • In 2004, Reids restructures its sales force
  • Reids offers to employ McKee and her sales force
    as direct employees
  • Negotiations break down, McKee sues for wrongful

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
  • Contractors degree of exclusivity may be
    determinative of the issue.
  • Determined that McKee was properly classified as
    an employee, and entitled to 18 months notice

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

Brien (continued)
  • Trial Judge awards 24 months notice and 2 months
    bad faith damages
  • Disregards Briens 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 Briens
    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

Miranda v. Lake Shore Gold Corporation, 2010 ONCA
  • 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 Mirandas 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

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
  • 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

Mathieson v. Scotia Capital Inc., 2008 CanLII
  • Scotia Capital terminated Mathiesons 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
    Mathiesons 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

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
  • 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
    Mathiesons bonuses in prior years, and bonuses
    paid to similar situated employees during the
    notice period

Mathieson (continued)
  • Bad Faith Damages
  • Mathieson argued that but for Scotias 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
    Mathiesons termination
  • Court rejected Mathiesons argument that his 2006
    bonus reduction amounted to bad faith

Merrill Lynch Canada Inc. v. Soost 2010 ABCA 251
  • Merrill Lynch terminated Soost for cause in May
  • 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
  • Trial Judge awards 12 months notice and 1.6
    million in damages
  • Court of Appeal reverses damage award of 1.6
  • 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

Pensions and Benefits A Year in Review
  • New and Proposed Legislation
  • Selected Case Law
  • Andrea Boctor

New and Proposed Legislation - Overview
  • Ontario Pension Reform
  • Bill 236
  • Bill 120
  • Federal Pension Reform
  • Bill C-9
  • Bill C-47
  • Income Tax Act changes to rules on stock option
  • Bill C-47

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
  • Surplus reversion/sharing on plan wind-up and
    partial wind-up

a) Ontario Pension Reform - Bill 236
  • Amends PBA
  • Facilitates the establishment of pension advisory
  • 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

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
  • Entitlement to surplus
  • Limits application of Pension Benefits Guarantee
  • Payment of administration costs from pension fund
  • Expands circumstances in which Superintendent may
    appoint a replacement administrator
  • PBA to be reviewed every 5 years

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
  • DC plans may provide benefits in retirement
    similar to a LIF
  • Distressed plan workout scheme
  • Pension regulator permitted to replace plans
  • Partial wind-up may only be declared by the
  • Immediate vesting
  • New GST/HST rebate system for employer-sponsored
    pension plans

b) Federal Pension Reform - Bill C-47
  • Received second reading on October 7 and 8, 2010
  • Amends the PBSA
  • Establishes negotiated contribution pension
  • 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

c) Income Tax Act Stock option changes
  • Part of Bill C-47
  • Amendments implement March 2010 budget
  • 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
    employers election

Selected Case Law
  • 1. DB to DC Conversion
  • Dawson v. Tolko Industries Ltd., 2010 B.C.S.C.
  • USW, Local 9235 v. St. Marys Cement 2010
    O.L.A.A. 152
  • 2. Administration
  • Smith v. Casco 2010 ONSC 2584
  • 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. Hudsons Bay Company 2010 SCC 34

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
    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

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
  • No decision yet made on the merits of whether TP
    and actuary breached any duty or standard of care

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

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
  • Waiver was not the standard form under the PBA
  • Retiree died three years after retirement and
    wife attempted to apply for survivors 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

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 husbands, employer's, and
    plan representatives explanations which were
  • Ontario Divisional Court
  • Upheld lower courts decision
  • Differences in waiver form were fatal to
    employers 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

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

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 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
  • Expands potential ambit of partial wind-up concept

Re Indalex Ltd. (2010), 79 C.C.P.B. 301
  • Indalex received protection from creditors under
  • 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

Burke v. Hudsons Bay Company 2010 SCC 34
  • Hudsons 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 employers plan
  • HBC did not transfer a pro rata share of surplus
  • 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

Burke v. Hudsons 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
  • Reversed decision on surplus transfer issue
  • Supreme Court of Canada (2010)
  • Agreed with Court of Appeal

Update on Human Rights
  • Nancy Ramalho

  • Growing recognition of family status as a ground
    for discrimination
  • Dealing with disability
  • Terminating an employee who is on long term
  • Accessibility for Ontarians with Disabilities Act

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

Johnstone v. Canada Border Services, 2010 CHRT 20
  • Fiona Johnstone, claimed that she was being
    discriminated against on the basis of 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
  • CBSAs 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.

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
  • 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.

Johnstone Tribunals Decision on the Merits
  • It was clear to the Tribunal that the employers
    unwritten policy was
  • discriminatory impeded her ability to receive
    employment-related benefits based on her family
  • 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.

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
  • 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 CBSAs
    willful and reckless behaviour in failing to
    accommodate to Ms. Johnstone and denying it had
    such a duty.

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
  • In the Johnstone case, the Tribunal did
    acknowledge that not every work-life conflict
    would be a human rights issue but still a high
  • 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.

McDonald v. Mid Huron Roofing, 2009 O.H.R.T.D.
No. 1277
  • This decision heard prior to Johnstone - also
    involves the employers obligation to accommodate
    an employees obligations as a parent
  • Harry McDonald had worked for his employer from
    May to October, 2008.
  • During that period, Mr. McDonalds 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
  • 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

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.

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.
    McDonalds 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
  • Employer failed to make such inquiries or allow
    Mr. McDonald to make a proposal for
  • On the above basis, the employer did not fulfill
    its duty to accommodate Mr. McDonald.

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. McDonalds absences sufficient to result
    in undue hardship

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.

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 employers 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. Lis 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.

Li Tribunals 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.

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.

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.

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
  • 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 physicians 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.

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 applicants employment was
    terminated and he brought a claim under the Code.

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 employers failure to
    provide full-time hours, the reduction in pay and
    the reassignment of job duties.

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
    employers 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.

Duliunas Tribunal Decision
  • The reduction in pay
  • The employer argued that due to restructuring in
    the applicants 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.

Duliunas Tribunal Decision
  • The applicants 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 applicants medical
    documentation contributed to some of the
    employers doubt, the reasonable response would
    have been to ask more questions rather than to
    draw false conclusions
  • The employers reassignment was based on
    incorrect information

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 workers needs may
    change over time. Accordingly, the employers
    obligations can change over time as well.
  • Appreciate that more and more accommodation is an
    ongoing evolution that will require time and

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.

Naccarato Courts Decision
  • The Court held
  • the onus was on the employer to prove that the
    contract had become frustrated and that it was
    not the employees onus to provide medical
    evidence with respect to their ultimate
  • 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
    Costcos business as a result of maintaining Mr.
    Naccaratos employment status, such as would be
    found in the case of a senior employee who was
  • 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 .

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

Accessibility for Ontarians with Disabilities Act
  • 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
  • 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.

AODA Employment Standard
  • The proposed employment standard will require
    organizations to
  • deliver accessibility awareness training to
  • 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
    non-workplace injury or illness that uses
    individual accommodation plans, where
  • Regulation was posted for public review until
    October 16, 2010 gone back to committee to
    reflect input received.

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
  • 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.

  • Lorna Cuthbert lcuthbert_at_stikeman.com
  • Kathleen Chevalier kchevalier_at_stikeman.com
  • Andrea Boctor aboctor_at_stikeman.com
  • Nancy Ramalho nramalho_at_stikeman.com
  • Alison Burton alison.burton_at_rbc.com
  • Marsha Lindsay mlindsay_at_purolator.com
  • Bruce Pollock bpollock_at_stikeman.com
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