Developments in Employment Law in 2021, and What’s Ahead in 2022

  • February 23, 2022
  • Daria (Dasha) Peregoudova and Jessica Schissler, Aird & Berlis LLP

In this article, we discuss noteworthy developments and trends in employment law from 2021, and what to expect in 2022.

Although the COVID-19 pandemic continued to dominate employment law discourse in 2021, there were several significant statutory and judicial developments, ranging from the expansion of the Bardal factors for assessments of reasonable notice of termination at common law, to punitive and human rights damages awarded to employees as a result of workplace culture issues.  

Working for Workers Act

On December 2, 2021, Bill 27, the Working for Workers Act, officially became law in Ontario. While the Working for Workers Act introduced a number of significant workplace-related changes into law, such as establishing a licensing regime for temporary help agencies and recruiters, and implementing specific employment protections for foreign nationals, the changes that garnered the most attention were the requirement of employers to implement a right-to-disconnect policy, and the prohibition on non-compete agreements, subject to only a few exceptions.

  1. The Right to Disconnect

The embedding of a right to disconnect for employees is not fully surprising, as it follows a long-line of privacy and boundary-setting legal developments in other jurisdictions, particularly Europe.   Ontario will now require employers with twenty-five (25) or more employees as at January 1 of any given year to have a written policy in place for all employees with respect to disconnecting from work by March 1 of that year. For 2022, employers have a “grace period” until June 2, 2022 to determine whether they meet the threshold amount of employees to require such a policy, and prepare and implement it.

At this point in time, no exemptions for certain groups of employees or workplaces have been introduced, and the Working for Workers Act is entirely silent as to the required content of a right to disconnect policy. While we expect that a Regulation may be forthcoming which will provide more guidance, for the time being, employers have a substantial amount of leeway to draft policies that suit the needs of their specific workforces. We expect that employers will use the grace period until June 2022 to gather information on office culture, and give thought on how a right to disconnect policy would optimally operate.

  1. Ban on Non-Competition Agreements and Clauses

Most employment law practitioners are well aware that courts have long scrutinized non-competition agreements, largely viewing them as inequitable due to being a restraint on employee trade and mobility. Applying the same rationale, the Working for Workers Act has amended the Ontario Employment Standards Act, 2000 (the “ESA”) to officially ban non-competition clauses or agreements for Ontario employees, subject only to two exceptions. The use of such clauses will remain permissible for executive (c-suite) level employees, and in the event of a sale of a business where the seller becomes the employee of the purchaser immediately following the sale.

It remains to be seen how these exceptions will be interpreted by Ontario courts. However, a recent decision of the Superior Court of Justice has already confirmed that the statutory prohibition against non-compete provisions will only be applied to contracts entered into after October 25, 2021, when the amendment to the ESA came into effect, and that they are not presumptively unenforceable. However, older agreements and clauses will remain subject to the existing common law principles, including the general presumption of unenforceability.

COVID-19 and the Workplace

  1. Return to “Normal”

Effective January 31, 2022, the Ontario government began the process of gradually easing restrictions in the province pursuant to the amended O. Reg. 364/20: Rules for Areas at Step 3 and at the Roadmap Exit Step. Further, on February 14, 2022, the government announced that it would be substantially accelerate the province’s reopening timeline, with the goal of lifting all capacity limits and mandatory proof of vaccination requirements for businesses on March 1, 2022. Business will remain permitted to implement a proof of vaccination requirement voluntarily. Other protective measures, such as mask/face covering requirements and active/passive screening of patrons will remain in place for the foreseeable future.

While the Roadmap to Reopen is detailed in its approach to public settings, it is silent in regard to a return to the office for Ontario employees. This is somewhat surprising given that O. Reg. 263/20, Rules for Areas in Stage 2 which has been in effect since January 5, 2022, explicitly required all individuals responsible for a business or organization to ensure that any person who performs work for the business or organization conduct that work remotely, unless the nature of their work required them to be on-site.

The pace and nature of the government’s decisions regarding COVID-19 has been frustrating for employers and employees alike. However, the accelerated reopening timeline and commitment to do away with vaccination passports by March 1, 2022 is perhaps the clearest indication from the Ontario government that the province is prepared to allow businesses to make independent decisions as we move forward and out of the pandemic. As such, and in light of the most recent announcement, 2022 will see increased attention on if, how and when employers will return their workforce to in-person operations. There is no doubt that any decision and/or strategy in this regard will take into account that employees have adapted and grown accustomed to a new way of working over the last two years and, as such, will seek continued flexibility.

  1. Mandatory Vaccination Policies

In 2021, many employers elected to implement mandatory vaccination policies in response to public health guidance, and in order to meet their general occupational health and safety obligations to maintain safe and healthy workplaces.

Given the timing of the implementation of such policies, and the associated timing of proof of vaccination requirements, most grievances and disagreements stemming from such policies are only now coming to a boiling point. Most guidance to date has been from the unionized sector, where arbitrations tend to be heard faster than matters brought before a court and required to make their way through the court system.

However, one significant decision of the Superior Court dealt with a group of both unionized and non-unionized employees challenging the validity of their employer’s mandatory vaccination policy. In Blake v. University Health Network, 2021 ONSC 7139, the Court dissolved its own prior interim order which maintained the status quo and prevented the employer from dismissing employees involved in the action until a jurisdictional issue was addressed.

The Court stated that as a foundational and general rule, private-sector employees that are not members of a union, and therefore not party to a collective agreement, may be terminated at will in Ontario, so long as appropriate notice or pay in lieu of notice was provided. Accordingly, the Court was unable to see how any non-unionized employee could allege irreparable harm arising from a possible or actual termination of employment. In the Court’s view, money was not only an adequate remedy, but the only remedy in the event of a wrongful termination. 

Notably, this case did not address whether an employee’s non-compliance with a mandatory COVID-19 vaccination policy justifies termination for cause, or constitutes wilful misconduct under the ESA. However, it did utilize first principles of employment law to halt non-unionized employees from being shielded from termination on the basis of purported irreparable harm.

In light of the Ontario government’s recent decision to lift proof of vaccination requirements for businesses on March 1, 2022, as well as new data from public health on the efficacy of vaccines against new variants of COVID-19, employers may find the enforcement of such policies increasingly difficult in the coming months as the balance between ensuring safety, mitigating risk and doing so in a proportional, reasonable matter shifts.  

  1. The End of the IDEL?

Throughout 2021, the once temporary measures introduced by O. Reg. 228/20: Infectious Disease Emergency Leave made under the ESA were extended on several occasions; most recently, to July 31, 2022 when the “COVID-19 Period” will expire for the purposes of the Regulation. Until then, a non-unionized employee whose employer has temporarily reduced or eliminated their hours of work, for reasons related to COVID-19, is still deemed to be on a job-protected infectious emergency leave (“IDEL”) and not laid off or constructively dismissed under the ESA.

As decisions from 2021 have largely confirmed, IDEL does not protect employers against a common law claim of constructive dismissal in the absence of a contractual right to temporarily lay off an employee. For example, Coutinho v. Ocular Health Centre Ltd., 2021 ONSC 3076  and Fogelman v. IFG, 2021 ONSC 4042, both held that the IDEL regulation did not address what constitutes a constructive dismissal at common law, and thus did not interfere with principles of common law constructive dismissal. This is consistent with the Ministry of Labour, Training and Skills Development’s guidance, which specifically states that “these rules affect only what constitutes a constructive dismissal under the ESA. These rules do not address what constitutes a constructive dismissal at common law.”

The above reasoning comes with one notable exception, which is the Court’s decision in Taylor v. Hanley Hospitality Inc. 2021 ONSC 3135. In Taylor, the Court refused to apply the same principle and recognized an inherent unfairness in subjecting employers to wrongful dismissal claims as a result of a government imposing a state of emergency. Accordingly, it was determined that in COVID-19 times, any argument regarding common law layoffs was rendered irrelevant. Taylor has been appealed to the Court of Appeal and is expected to be heard in April 2022, providing what many view as the “final word” on the relationship between IDEL and the common law.

It is not clear whether the Government will once again extend the COVID-19 period for the purposes of the IDEL Regulation, however, given the government’s Step 3 “Roadmap to Reopen” we anticipate that effective July 31, 2022, the ESA rules for temporary layoffs, including the maximum permitted timeframes for such layoffs, will resume. The end of the COVID-19 period would also mean the end of “paid IDEL” under the COVID-19 Putting Workers First Act, which currently requires employers to pay employees the wages they would have earned during the leave, up to a maximum of $200 a day for a total of three days, and be reimbursed through a dedicated program administered by the Workplace Safety and Insurance Board.

Other Noteworthy Decisions

A number of noteworthy decisions in 2021 related to workplace culture, harassment and gender-related issues, requiring employers to take note of how they address such issues, particularly as public and social policy on such matters actively continues to develop.

  1. ‘Horseplay’ and Workplace Culture Results in Hefty $150,000 Damages Award

In Eynon v. Simplicity Air Ltd., 2021 ONCA 409, the Ontario Court of Appeal heard an appeal from a jury award of $150,000 in punitive damages awarded against the employer where the respondent employee sued for damages suffered as a result of a workplace accident.

The employee had climbed a 14-foot high chain hoist after being challenged by a colleague to do so, eventually losing his footing and severely injuring himself. It was alleged that two of the employee’s supervisors, who were not personally named in the action, had initially laughed at the injured employee and delayed taking him to the hospital to receive treatment.

The jury awarded $150,000 in punitive damages against the employer on the basis that the employer failed to provide proper safety training or documentation to employees and permitted a culture within the workplace whereby employees routinely failed to place adequate importance on best safety practices.

The Court of Appeal upheld the award, stating that the quantum of punitive damages was not irrational or disproportionately large, but appropriate to sanction the employer’s conduct and inability to ensure a safe working environment. This decision, rather significantly, penalized an employer for a culture of disregard for safety in the workplace and amongst employees, indicating that in addition to specific rules or measures, employers must pay special attention to the overall culture of a workplace and whether safety policies and procedures are taken seriously by employees.

  1. Mis-Gendering Grounds for Human Rights Tribunal Award

In EN v. Gallagher’s Bar and Lounge, 2021 HRTO 240, three applicants, each former employees of Gallagher’s Bar and Lounge who identified as non-binary trans persons and used they/them pronouns, collectively alleged that their boss, the owner and manager of the establishment, mis-gendered them throughout their employment and referred to them in passing using a transphobic slur. The applicants further alleged that they were constructively dismissed by virtue of the respondent’s refusal and failure to respond to their concerns appropriately.

The Ontario Human Rights Tribunal held that the applicants did in fact experience adverse treatment in the course of their employment because of their gender identity, gender expression and sex, including the use of a transphobic slur to describe the applicants, continuous mis-gendering and failure to adequately or meaningfully respond to the applicants’ concerns when raised. On the contrary, the respondent was found to have been dismissive, and insinuated that the applicants were being oversensitive. The Tribunal accepted that the applicants felt that they had no choice but to leave the workplace as a result of the respondent’s behaviour, entitling them to compensation for loss of wages and injury to dignity, feelings and self-respect.

In this case, the failure of the respondent to substantively address the concerns of the applicants appeared to weigh heavily on the Tribunal’s decision making. Accordingly, this decision signals a willingness of the Tribunal to penalize an employer who not only participates in or tolerates this type of behaviour, but one that fails to remedy the conduct when given the opportunity.

  1. Employer Faces Concurrent Liability for Compensable Workplace Accident and Wrongful Dismissal  

In Morningstar v. WSIAT, 2021 ONSC 5576, the applicant sought the review of two decisions of the Workplace Safety and Insurance Appeals Tribunal (the “WSIAT”). The decisions had held that the applicant, who claimed workplace harassment and an inadequate employer response to said harassment, was unable to bring a civil claim against the respondent employer for constructive dismissal due to a ruling that the applicant’s civil action was inextricably linked to a compensable accident under the Workplace Safety and Insurance Act (the “WSIA”).

The applicant was a survivor of uterine cancer. From June 2016 onwards she was subjected to prolonged harassment from her colleagues, who alleged that an odour emanated from her, spraying her with Lysol and covering the seat of her chair with towels and bathmats. The applicant complained to the Ontario Ministry of Labour who ordered the employer to conduct a workplace investigation using an external investigator. The investigation confirmed that the applicant’s colleagues and managers had engaged in workplace harassment. The employer, therefore, required the applicant’s harassers to take sensitivity training, but the applicant would still be required to report to the same manager and to continue to work alongside the same group of individuals. When the employer requested that the applicant return to work, the applicant refused and alleged that the employer had constructively dismissed her by failing to take sufficient steps to provide a safe working environment, free of harassment.

The Divisional Court quashed the decisions of the WSIAT, finding that the same facts could support concurrent liability in more than one cause of action and confirming that while the historic trade-off of the WSIA, which prevents workers from suing in a civil context in tort, will generally not prevent a wrongful dismissal action. The Court held that the WSIAT decisions, therefore, failed to consider that the claim for constructive dismissal focused on a different legal relationship than the claim for harassment and provided compensation as damages that were not within the purview of the WSIA.

  1. Sexual Misconduct and Refusal to Apologize Amounts to Just Cause

In Hucsko v. A.O. Smith Enterprises Limited, 2021 ONCA 728, the Court of Appeal considered an earlier decision arising from an employee’s termination for just cause following an investigation into a complaint made by a co-worker of sexual harassment. The investigation revealed that the complaint was substantiated, and the respondent was offered sensitivity training and the opportunity to apologize to the affected co-worker. The respondent completed the sensitivity training, but categorically refused to apologize as required. As a result of the refusal, the employee was terminated for cause. He then commenced an action against the employer, alleging wrongful dismissal.

The trial judge found that the termination for cause was not justified and awarded damages to the employee. However, the Court of Appeal found that the trial judge had erred in determining that the employer did not have just cause. The Court of Appeal emphasized the totality of the circumstances, including the underlying sexual harassment as well as the respondent’s refusal to apologize. In the Court of Appeal’s view, these actions, understood together, led to a complete breakdown of the employment relationship and justified a termination for cause.

Courts often shy away from upholding just cause dismissals, re-affirming the high threshold and burden on employers to demonstrate just cause. However, this decision is significant both for employers who seek to adequately discipline or penalize an employee in such circumstances, and employees who experience adverse treatment without the benefit of an apology or other remedy.

  1. Employee’s Pregnancy Included as a Bardal Factor

In Nahum v. Honeycomb Hospitality Inc., 2021 ONSC 1455, the Ontario Superior Court held that an employee’s pregnancy acted to extend the length of the employee’s reasonable notice period on termination. The Court’s ruling was later upheld by the Divisional Court.

At the time of the subject employee’s dismissal, she was 28 years old and had been employed with the employer for a period of four and a half months. At the time of her termination, she was also five months pregnant. Despite her short service with the employer, the employee argued that her pregnancy should be added to the list of traditional factors courts use to assess reasonable notice, originally set out in Bardal v. Globe & Mail Ltd., 1960 CanLII 294 (ON SC) (commonly known as the “Bardal factors”), and that she was entitled to a prolonged notice period of eight months. The employer disagreed and argued that a two-month notice period was reasonable in light of the employee’s short service.

Ultimately, the Court agreed with the employee and held that it was unreasonable to expect that she would be able to obtain new employment in the two month period following termination given the point in her pregnancy at which she was terminated. Generally speaking, the Court accepted that a person’s pregnancy was likely to increase the amount of time it would take them to secure new employment. Accordingly, a reasonable notice period of five (5) months was deemed appropriate.

Notably, the Court clarified that pregnancy should not function to automatically lengthen the notice period in every case. Like all Bardal factors relevant to an appropriate notice period determination, pregnancy is merely one element which ought to be considered in light of the particular circumstances of a case. The Bardal factor analysis is to be used as a guide, and not as an exhaustive list of considerations.

ABOUT THE AUTHORS

Daria (Dasha) Peregoudova is an associate at Aird & Berlis LLP, and a member of the firm’s Workplace Law and Litigation & Dispute Resolution and Groups. She works with a variety of companies and organizations on various employment-related, ethical and governance matters, including within unionized environments. Dasha has appeared as counsel before various tribunals and all levels of court, including the Supreme Court of Canada.

Dasha is a former Canadian national team athlete and two-time Pan American champion, and brings the same level of focus and competitive energy to helping her clients meet their business objectives. She frequently represents and guides athletes and sport organizations, and is an Adjunct Professor of Sports Law at the University of Western Ontario.

Link to Profile: https://www.airdberlis.com/people/bio/daria-(dasha)-peregoudova

Jessica Schissler is an associate at Aird & Berlis LLP, and a member of the firm’s Workplace Law and Litigation & Dispute Resolution and Groups. Her practice focuses on labour and employment-related matters, such as employment contracts, policies, grievances and collective bargaining, as well as civil and commercial actions involving employment disputes. She also has experience with general litigation, including professional liability disputes.

Link to Profile: https://www.airdberlis.com/people/bio/jessica-schissler

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