Employment Law - Nelligan O`Brien Payne

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[ LEGAL ISSUES OF INTEREST TO EMPLOYERS AND EMPLOYEES ]=
Winter 2010
Ontario Court of Appeal affirms
existence of “dependent” contractors
The plaintiff won at trial and the trial judge
awarded damages based upon an 18-month
notice period.
It is well established in employment law that
employees are entitled to reasonable notice
prior to their termination, but independent
contractors are not. There has been some
controversy over whether a third category of
“dependent contractor” exists and, if so,
whether dependent contractors are entitled
to reasonable notice. The Ontario Court of
Appeal recently resolved this controversy in
Ontario, concluding that dependent
contractors did exist and are entitled to
reasonable notice – although such creatures
are rare, and are much more likely to be true
employees.
On appeal, the defendant argued that the
plaintiff was a “dependent contractor”
instead of an employee – meaning that she
was only entitled to the 30 days’ notice set
out in her original contract (a clause that was
void if she was an employee because it
contravened the Employment Standards
Act). The Court of Appeal confirmed that
the intermediate category of “dependant
contractor” did exist, and that they are owed
reasonable notice upon termination.
However, the Court of Appeal also
concluded that the plaintiff was an employee
and not a dependant contractor. The Court
of Appeal stated that the category of
dependant contractor was a “carve out” from
the category of independent contractor. In
other words, the first task of a court is to
apply the normal test for determining
whether a person is an employee or a
contractor. Only if the result of that test is
that the person is a contractor should a court
then consider whether they are an
independent or dependant contractor.
In McKee v. Reid’s Heritage Homes Ltd.1
the plaintiff sold homes for the defendant for
approximately 18 years. When she was first
hired, she signed a contract with a 30-day
notice provision. She was paid a fixed rate
through her corporation for each home sold,
and also had a number of sub-agents whom
she supervised. After the relationship
between the plaintiff and defendant fell apart
in 2005, the plaintiff sued the defendant,
claiming damages for reasonable notice.
1
2009 ONCA 916.
1
Nelligan O'Brien Payne – Employment Law Newsletter
Winter 2010
The Court of Appeal stated that the hallmark
of a dependent contractor was (as you might
expect) dependency or “exclusivity of the
work.” That is also a factor weighing in
favour of the employee category. Despite
the fact that exclusivity is the “hallmark” of
the dependent contractor category, it
continues to be a factor in determining
whether the worker is not a contractor at all,
but rather an employee, in the first-step
analysis.
Employers’ Duty of Good Faith: Barely
Alive or Alive and Well?
In the result, the Court of Appeal concluded
that the trial judge followed the correct legal
test for determining whether a person was an
employee or a contractor, and agreed that
the plaintiff was an employee: she worked
exclusively for the defendant for almost 20
years, the defendant told her when and how
to sell, and the plaintiff’s activity as an
integral part of the defendant’s business.
The fact that she was paid through a
corporation did not make her a contractor,
nor did the fact that she used sub-agents: the
Court of Appeal concluded that was no
different than a middle-manager acting as an
intermediary between subordinate staff and
higher management.
The case involved the termination of a 29year employee, Ms. Brien, from her job as
office manager at the Niagara Motors car
dealership. Ms. Brien experienced
tremendous shock when she was terminated,
since she had never been disciplined and
was never provided with warnings about her
performance. Her termination was a
complete surprise. The dealership told Ms.
Brien in her termination meeting that her
dismissal was the result of her position
being abolished. The dealership, however,
had secretly advertised her position, and
asked Ms. Brien to train her replacement the
following week – after her dismissal.
In its recent decision, Brien v. Niagara
Motors Limited2, the Ontario Court of
Appeal reviewed the duty of employers to
act in good faith at the time of termination.
Despite recent developments in the law,
employers continue to have a duty of good
faith toward employees in the manner of
dismissal.
Only after Ms. Brien commenced court
action, the dealership alleged that she had
performed her duties incompetently and
unprofessionally. It alleged that her
misconduct provided “just cause” for her
termination. The employer also refused to
provide Ms. Brien with a letter of reference
or to assist her in any way with her job
search.
This case clarifies that dependent
contractors exist as a category of law;
however, it also makes it clear that
dependent contractors are a subset of the
contractor category, and that most people
are (and will remain) employees rather than
contractors.
Christopher Rootham
613-231-8311
[email protected]
The trial judge concluded that there was no
“just cause” for her termination. Rather, the
employer was dishonest, misleading and
insensitive at a time when Ms. Brien was
most vulnerable. The court concluded that
the employer acted in bad faith in the
2
2
2009 ONCA 887 (Ont. C.A.).
Nelligan O'Brien Payne – Employment Law Newsletter
manner of Ms. Brien’s dismissal, and
ordered two additional months’ pay to her
award of 24 months’ pay in lieu of notice.
Winter 2010
of good faith in the manner of dismissal
remains alive and well in Ontario.
Craig Stehr
613-231-8208
[email protected]
The Court of Appeal considered, in light of
the Supreme Court’s decision in Honda
Canada v. Keays3, whether Ms. Brien was
entitled to damages resulting from the
employer’s actions. The court affirmed that
employees are entitled to claim mental
distress damages that result from their
employer’s bad faith conduct at the time of
dismissal. The court also agreed that the
dealership’s misconduct could lead to an
award of mental distress damages; however,
the distress that Ms. Brien experienced,
“…was not of the nature and scope to
qualify for compensatory damages…” since
she did not seek any medical or professional
assistance, such as therapy, for her mental
distress. Employees who suffer mental
distress resulting from termination must
therefore be mindful to seek appropriate
professional assistance in order to fully
understand the scope of their suffering. The
court upheld the trial court’s award, but
subtracted the bad faith damages awarded at
trial.
Le Tribunal canadien des droits de la
personne et les frais juridiques? La
Cour d’appel fédérale dit « non ».
La Cour d’appel fédérale a récemment
tranché une question débattue depuis
longtemps. Les trois juges qui ont entendu la
cause ont conclu de façon unanime que le
Tribunal canadien des droits de la personne
n’a pas la compétence d’ordonner qu’une
partie paie les frais juridiques (les dépens)
de l’autre partie en cause.
Dans l’arrêt, Canada c. Mowat et la
Commission canadienne des droits de la
personne4, la Cour d’appel fédérale a
renversé la décision de la Cour fédérale,
laquelle avait décidé, en révision judiciaire,
que la décision du Tribunal canadien des
droits de la personne était raisonnable et que
le Tribunal avait le pouvoir d’accorder des
dépens à la partie gagnante.
The decision is clear: courts require that
employers act in good faith when dismissing
employees, but compensation for a breach of
that obligation requires that the employee
suffer some tangible form of distress. At a
minimum, employers must be candid and
honest when stating the reason for
termination, treat the departing employee
fairly and cooperate with the employee’s
efforts to find alternative employment.
Employers who act otherwise will be liable
to compensate employees for damages,
including mental distress, that result from
their bad faith actions. The employer’s duty
La partie intimée, Madame Donna Mowat,
avait déposé une plainte de discrimination
contre les Forces canadiennes en 1998. Le
Tribunal conclut, en 2005, que seule
l’allégation de harcèlement sexuel avait été
prouvée et accorda à madame Mowat
4 000 $ pour sa souffrance morale relative à
son estime de soi. De plus, le Tribunal statua
que l’article 53(2)(c) de la Loi canadienne
des droits de la personne lui conférait le
pouvoir d’accorder des dépens et donc que
madame Mowat avait droit à 47 000 $ pour
ses frais juridiques. Le Procureur général
3
4
2008 SCC 39 (SCC).
3
2009 FCA 309.
Nelligan O'Brien Payne – Employment Law Newsletter
Winter 2010
demanda une révision judiciaire de la
décision relative aux dépens.
discrimination soient remboursées au
plaignant.
Le juge de la Cour fédérale qui entendit la
cause détermina que la norme de contrôle
judiciaire applicable à cette décision était la
norme de la décision raisonnable. Il conclu
ensuite que l’interprétation donnée à l’alinéa
53(2)(c) de la Loi canadienne des droits de
la personne par le Tribunal était raisonnable.
La Cour prit aussi en considération la
législation et la jurisprudence provinciale.
En Colombie-Britannique, au Manitoba, aux
Territoires du Nord-Ouest, au Nunavut, au
Yukon, en Alberta, au Québec, à l’Ile du
Prince Edouard et à Terre-Neuve la
législation précise explicitement le droit du
Tribunal des droits de la personne
d’accorder des dépens. Par contre, en
Ontario, au Nouveau-Brunswick, en
Nouvelle-Écosse ainsi qu’en Saskatchewan,
la législation ne confère pas se pouvoir au
tribunal des droits de la personne de chacune
de ces provinces. La Loi canadienne des
droits de la personne est donc comparable à
ces dernières législations provinciales. La
Cour a donc conclu qu’il serait absurde de
conclure que la Loi canadienne des droits de
la personne conférait un pouvoir au Tribunal
d’accorder des dépens lorsque le langage
similaire de certaines législations
provinciales ne confère pas ce même
pouvoir.
La Cour d’appel fédérale débuta donc son
analyse de la décision en appel en répétant
l’exercice de la détermination de la norme
de contrôle judiciaire applicable.
Contrairement à la Cour fédérale, la Cour
d’appel conclu que la norme de la décision
correcte devait s’appliquer à la décision du
Tribunal. Au cours de son analyse, madame
la juge Layden-Stevenson expliqua que la
question en cause en était une qui avait une
importance centrale au système judiciaire
canadien et qui devait donc être déterminée
avec certitude et de façon constante.
La Cour se pencha ensuite sur
l’interprétation donnée à l’alinéa 53(2)(c) de
la Loi canadienne des droits de la personne
par le Tribunal. En analysant cette question,
la Cour démontre dans sa décision que le
Tribunal adoptait souvent des approches
différentes relativement aux dépens des
parties. Certaines décisions du Tribunal
statuaient que le Tribunal avait la
compétence d’accorder des dépens tandis
que d’autres décisions faisaient état du
contraire. De même, la jurisprudence de la
Cour fédérale était très contradictoire.
La Cour a donc conclu que le Tribunal
canadien des droits de la personne n’a pas le
pouvoir d’accorder des dépens à un
plaignant ayant gain de cause et qu’il relève
plutôt au Gouvernement fédéral de changer
la Loi canadienne des droits de la personne
s’il tient à ce que le Tribunal ait le pouvoir
d’accorder une telle compensation aux
plaignants. Il reste donc à voir si le
Gouvernement effectuera un changement à
la loi.
Christine Poirier
613-231-8227
[email protected]
La loi comme telle ne contient aucun article
conférant explicitement le pouvoir au
Tribunal d’accorder des dépens. La loi
mentionne seulement le pouvoir du Tribunal
d’ordonner que les dépenses découlant de la
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Nelligan O'Brien Payne – Employment Law Newsletter
Winter 2010
Our Employment Law Practice Group
Janice Payne
Dougald Brown
Steve Waller
Sean McGee
Denise Workun
Ainslie Benedict
Robert Monti
Christopher Rootham
Mark Seebaran
Steven Levitt
Julie Skinner
Ella Forbes-Chilibeck
Craig Stehr
Christine Poirier
Nelligan O’Brien Payne is a multi-service
law firm with offices in Ottawa, Kingston,
Vankleek Hill and Alexandria. Our legal
expertise includes the following key areas:
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Employment Law is not intended to provide
legal advice or opinion as neither can be given
without reference to specific events and
situations.
Questions and comments concerning materials in
this newsletter are welcomed.
Christopher Rootham, Editor,
[email protected].
Copies of this newsletter and other newsletters
are also posted on our Web site at
www.nelligan.ca.
© Copyright 2010 Nelligan O’Brien Payne LLP
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