Terminations, Human Rights and Pension and Benefits

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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, 2010Toronto, Ontario

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Todays Speakers

• MODERATORLorna Cuthbert Head of Employment,
  Labour Pension Group, Stikeman Elliott,
  Toronto
• PRESENTERSKathleen Chevalier Stikeman Elliott,
  TorontoAndrea Boctor Stikeman Elliott,
  TorontoNancy Ramalho Stikeman Elliott, Toronto
• PANELLISTSAlison Burton Senior Counsel, RBC
  Law Group, Royal Bank of CanadaMarsha Lindsay
  Legal Counsel, Purolator Courier Ltd.Bruce
  Pollock Stikeman Elliott, Toronto

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Termination of Employment Recent lessons from
our courts

• Kathleen ChevalierSTIKEMAN ELLIOTT LLP

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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
  clause
• McKee receives a fixed amount per house sold
• Reids 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, Reids restructures its sales force
• Reids 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
• 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

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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 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

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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 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

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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 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

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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
  Mathiesons 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 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

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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

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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
  benefits
• Bill C-47

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a) Ontario Pension Reform - Bill 236
NEW AND PROPOSED LEGISLATION

• 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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a) Ontario Pension Reform - Bill 236
NEW AND PROPOSED LEGISLATION

• 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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a) Ontario Pension Reform - Bill 120
NEW AND PROPOSED LEGISLATION

• 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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b) Federal Pension Reform - Bill C-9
NEW AND PROPOSED LEGISLATION

• 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 plans
  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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b) Federal Pension Reform - Bill C-47
NEW AND PROPOSED LEGISLATION

• 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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c) Income Tax Act Stock option changes
NEW AND PROPOSED LEGISLATION

• 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
  employers 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

• 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

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Dawson v. Tolko Industries Ltd., 2010 B.C.S.C. 346

SELECTED CASE LAW

• 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

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Dawson v. Tolko Industries Ltd., 2010 B.C.S.C.
346 (continued)
SELECTED CASE LAW

• 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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USW, Local 9235 v. St. Marys Cement 2010
O.L.A.A. 152
SELECTED CASE LAW

• 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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Smith v. Casco 2010 ONSC 2584
SELECTED CASE LAW

• 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 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

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Smith v. Casco 2010 ONSC 2584 (continued)
SELECTED CASE LAW

• 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
  insufficient
• 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
  different

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Lomas v. Rio Algom Limited, 2010 ONCA 175
SELECTED CASE LAW

• 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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Marino v. Ontario (Superintendent of Financial
Services) (2010), 78 C.C.P.B. 1
SELECTED CASE LAW

• 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
  subset
• Expands potential ambit of partial wind-up concept

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Re Indalex Ltd. (2010), 79 C.C.P.B. 301
SELECTED CASE LAW

• 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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Burke v. Hudsons Bay Company 2010 SCC 34
SELECTED CASE LAW

• 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
  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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Burke v. Hudsons Bay Company 2010 SCC 34
SELECTED CASE LAW

• 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

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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 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.
• 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.

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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 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
  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 CBSAs
  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 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
  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.
  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
  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.

44
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

45
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.

46
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.

47
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.

48
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.

49
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.

50
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 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.

51
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.
  

52
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.

53
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.

54
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.

55
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

56
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
  resources.

57
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.

58
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
  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
  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
  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 .

59
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

60
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.

61
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
  non-workplace injury or illness that uses
  individual accommodation plans, where
  appropriate.
• Regulation was posted for public review until
  October 16, 2010 gone back to committee to
  reflect input received.

62
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.

63
QUESTIONS ANSWERS

• Lorna Cuthbert lcuthbert_at_stikeman.com
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• 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