November 20, 2009 | Posted by admin
Occassionally, I’ve been fortunate to publish here some very interesting original papers dealing with labour law issues. Here is another one.
This paper comes John McKennirey, who has a very impressive resume. He was the lead Canadian Government negotiator for the NAFTA labour agreement(1994), subsequently the first Executive Director of the NAALC International Secretariat (1995-99), and then later the DG of International Labour Affairs in the Labour Program of HRSDC where he led the negotiation of the Canada-Costa Rica Labour Cooperation Agreement. He also headed up Canada’s role as President of the Inter-American Conference of Labour Ministers (OAS) during key FTAA negotiating years -2001-03, and was later appointed Assistant Deputy Minister of Labour.
He has now left his formal position with the Canadian government and has had some time to reflect on how the traditional approach to linking labour rights and trade agreements has failed. In this short discussion paper, John argues that the objective of trade agreements should be to increase demand in all nations, rather than the present model that revolves largely around protecting first world workers from unfair competition from low wage countries. This new approach requires a rethinking of how trade agreements can increase global demand, and new roles for international development agencies, banks, and possibly a new role for the ILO. This is a timely discussion, given President Obama’s suggestions that it may be time for the NAFTA and the labour side agreement (NAALC) to be reviewed.
Here is John’s paper, entitled “RETHINKING_TRADE_AND_LABOUR”
John welcomes comments and suggestions on the paper and his ideas. He can be reached at: jmckennirey@gmail.com
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November 19, 2009 | Posted by admin
A while back, I mentioned an Ontario Court of Appeal case called Evagalista v. Number 7 Sales as part of my discussion of whether ESA entitlements (like overtime pay) are implied terms of employment contracts. Evagalista was a wrongful dismissal lawsuit. As part of the remedy, the Court ordered the employer to pay the employee statutory vacation pay, even though the time period for claimining that benefit under the ESA had expired (according to the ESA limitation in section 96(3)). The Court ruled that the time periods in the ESA did not apply when the empl0yee claims the ESA benefit in a breach of contract (wrongful dismissal) lawsuit. Admittedly, I wasn’t really sure how the court got to that conclusion unless it was implicitly ruling that the vacation pay entitlements were an implied term of Evagalista’s employment contract.
But one of the benefits of having this blog is that I learn things. For example, one of the lawyers who participated in this lawsuit has clarified the issue for me. The Court in Evagalista accepted that an employee can enforce ESA entitlements without actually filing an ESA complaint, by simply claiming the ESA entitlement in their damages request in a wrongful dismissal complaint. And since the matter is being dealt with in a civil lawsuit, the civil law limitation periods in the Limitations Act apply, and not those in the ESA. That is important because the Limitations Act starts the clock ticking on the 2 year limitation period when the employee first ‘discovers’ the breach of the statute, whereas the ESA limitation period is more direct (a contravention occuring more than 2 years before the claim is filed is void). This seems to allow employees to get around the statutory limitation in the ESA for older claims when they were not aware of their entitlement to the ESA benefit until much later.
So the Court does not appear to be finding that the entitlements under the ESA are implied into employment contracts, but the employee can nevertheless claim those entitlements in a breach of contract lawsuit. This approach does seem to work well with Sections 97 and 98 of the ESA, which prevent employees from proceeding with both an ESA complaint and a lawsuit claiming the same damages. The employee who is prepared to endure the time, trauma, and expense of a wrongful dismissal lawsuit can simply plead their entitlement to ESA benefits in their lawsuit.
I think I get it now. But please do correct me if I am wrong …
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November 18, 2009 | Posted by admin
I’ve discussed the American labor law reform debates, and the proposed Employee Free Choice Act on a number of occasions. That law would allow unions to be certified on the basis of union membership cards rather than a mandatory vote, and would provide for access to first collective agreement arbitration.
The latest version of Just Labour, a free electronic journal produced out of York University, is devoted to the debates over the EFCA, but from a Canadian perspective. This is interesting because many of the opponents of the EFCA in the US have pointed to the Canadian experience with a card-check model to bolster arguments that all hell will break lose if the EFCA becomes law. Canadian scholars scratched their heads at these claims, and have noted that the methodology and assumptions about Canadian law used in these arguments are exaggerated or just plain wrong.
An important example was a paper written by an American economist who works for a corporate consulting company. Anne Layne-Farrar made the odd claim that the Canadian experience proves that “for every 3 percentage points gained in union membership through card checks and mandatory arbitration, the following year’s unemployment rate is predicted to increase by 1 percentage point and job creation is predicted to fall by around 1.5 million jobs.”
Her claims and methodology are taken to task by Canadian economists in several papers in the new Just Labour edition. There are also some nice short papers exploring the Quebec experience and Canadian experience with card-check and first contract arbitration. For labour law students, this collection does a very nice job of summarizing the arguments and drawing together the man studies out there on the differences between the Canadian and American labour law models.
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November 17, 2009 | Posted by admin
There was an interesting wrongful dismissal case out of the Ontario Superior Court recently called Cavaliere v. Corvex Manufacturing. The employee was dismissed for cause (without notice) for engaging in sexual relationships with two subordinates spanning a decade. The employee argued that the relationships were consensual, and therefore the employer did not have cause. It’s a sordid tale, because both the dismissed employee and both women were married, the husband of one of the women worked for the same employer, as did the employee’s daughter, and the activities took place in the workplace, parking lots, and various other compromising situations around a small town.
The Judge finds cause, relying on line of cases ruling that managerial employees have an implied obligation in their employment contracts to ensure that the workplace does not become poisoned due to sexual harassment and to protect the employer from potential legal action for such harassment (including Simpson v. Consumers’ Association). He rejects that argument that the relationships were consensual, because the employees were subordinates and therefore ‘vulnerable’. This conclusion follows notwithstanding the Judge’s finding that (and this is one of the great lines I’ve read in recent Canadian legal jurisprudence):
“The relationship was on its face consensual. Her interest in the affair was based in lust; the basis of his interest may have been the same or otherwise”.
In addition, after the first incident, the employer had given the employee a warning to avoid any sort of relationship with female employees, a warning which the employee ignored by entering into a new affair almost immediately.
The Notice Issue
There’s a couple of other interesting legal points in the case. Even though the judge finds cause (and therefore no notice is required), he goes on to consider what the notice would have been in case he was wrong about there being cause. He finds notice would have been 18 months. The employer argued that the notice amount is set out in the contract, which read: “it is agreed that the your employment may be terminated without just cause by providing you with appropriate notice as outlined in the ESA, plus one additional week’s pay in lieu of notice.”
The Judge ruled that that term was not applicable, because on its face, it only applied when the employer is not alleging cause. Here, the employer did allege cause, and therefore the term does not apply. At best, it is ambiguous as to whether the term applies to a dismissal for alleged cause, and we know from cases like Christensen v. Family Counselling Centre that an ambiguous notice term will not be enforced by the courts. In addition, the Judge noted that even if the contract term was applicable, he would likely have refused to enforce because it was ‘unconscionable’–it had the effect of reducing the notice period from 18 months to 9 weeks notice. That conclusion is questionable (see Lloyd v. Oracle for a discussion of the enforceability of a notice clause that complies with the ESA). The 18 months notice would have been reduced to 6 months, though, because the employee spent twelve months renovating his cottage with his forgiving spouse, rather than looking for a job.
Costs
Finally, I mention the issue of costs, because it is a point I raise with my students about the economics of wrongful dismissal cases. The decision includes a detailed discussion of the costs issue. The employer wins this case, and asks for legal costs. The Judge notes (on p. 17) that the employer’s lawyers billed the employer close to $200,000 to defend the lawsuit. If the employee had won, the damages could have been in the range of $190,000, according to the judge. In other words, the legal costs were slightly greater than the amount the employee was claiming.
The Judge rules that some of the costs on the lawyer’s bill were excessive, including 90 hours of legal research by two articling students at $60 per hour. The judge believes that the legal issues were no so complex that an employment law firm should have needed that much research done. In the end, the Judge orders the plaintiff (the losing employee) to pay $37,000 (out of close to $200,000) towards the employer’s legal bill. That would be on top of the money he had already paid his own lawyer. The employer has to pay the difference between the legal bill (around $200,000) and the $37,000 the employee was ordered to pay.
So you can see the point I make in class: that litigating a wrongful dismissal case is a costly, risky, and (often) economically irrational thing to do.
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November 16, 2009 | Posted by admin
This past summer, Cadillac Fairview, which owns the TD Centre in Toronto, locked out its unionized workers and contracted out their work to a third party contractor. A month or so after that, it decided to terminate the locked out workers and use the contractor instead. The background facts are described in this OLRB decision that involved a variety of preliminary issues surrounding the union’s complaint that the employer has violated the Labour Relations Act. Here is the letter that Cadillac Fairview sent to the terminated workers.
The Labour Relations Act protects workers from discrimination and termination of their employment because they have exercised rights under the Act, such as joining a union and engaging in collective bargaining. The key provisions in this regard are Section 70, 72, and 76. You might think it is pretty straightforward that contracting out the work of unionized workers and firing them all would be discrimination on the basis of union activity. But this is one of those grey areas in the law.
Labour law students in Canada read an OLRB case called Kennedy Lodge, in which the OLRB ruled an employer had not breached the Act by contracting out bargaining unit jobs and dismissing the workers. The Board ruled that an employer can do this as long as its motivation is to avoid the costs associated with a union, and not to punish workers for joining a union and bargaining a collective agreement. The Board found:
The facts of this case do not disclose any desire on the part of the employer to rid itself of union representation of its employees. Rather a legitimate business decision was made which resulted in an annual saving of around $50,000. The fact that the union and the employees were adversely affected does not of itself taint the legitimacy of that decision.
You can imagine that the labour movement thinks that distinction is ridiculous–a decision to fire all of the unionized workers to save costs is a decision to avoid the union.
In this case, Cadillac Fairview is arguing that it sought revisions to the bargaining structure, and other changes, but the union would not budge. It then contracted out the work and found that the new contractor was working out very well, and therefore a decision was made to make the contacting out permanent.
Do you think that Cadillac Fairview should be able to permanently replace the lockout out union members? We will keep an eye out for the decision…
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