12 key developments in Canadian labour and employment law in 2021 – part 2

Leading employment lawyers detail the biggest changes of the past 12 months

12 key developments in Canadian labour and employment law in 2021 – part 2

by Rhonda B. Levy, Sari Springer, Barry Kuretzky, George Vassos, Monty Verlint, Yusra Siddiquee, and Douglas Sanderson of Littler

Part two of two in HRD’s employment law roundup – please find part one here.

In 2021, Canada saw significant statutory and case law developments in labour and employment law, some of which related to COVID-19.  This Insight provides an overview of key 2021 developments, with links to more detailed articles and commentary.

13.  Hawkes v. Max Aicher (North America) Limited, 2021 ONSC 4290 (Max Aicher), is an important decision of the Ontario Superior Court pertaining to section 64 of the Employment Standards Act, 2000 (ESA), which requires an employer that terminates an employment relationship with an employee to pay minimum ESA severance pay to the employee if the employee was employed by the employer for five years or more, and the employer has a payroll of $2.5 million (CAD) or more. Max Aicher establishes that to make the determination under ESA s. 64, employers must consider the size of their global payroll; if an employer’s payroll in Ontario is less than $2.5 million but its global payroll is $2.5 million or more, the employer will be liable for severance under the ESA. 

14.  In Goruk v. Greater Barrie Chamber of Commerce, 2021 ONSC 5005, the Ontario Superior Court held that a fiduciary employee could be terminated for cause immediately because they conducted themselves dishonestly and/or exercised poor judgment on significant issues, as such behaviour cumulatively amounted to a repudiation of the employment contract.  Notably, each of the employee’s actions did not justify termination for cause on its own; however, a number of such incidents at or around the same time may justify with-cause dismissal when taken as a whole.  Furthermore, Goruk indicates that in circumstances where there are multiple incidents involving the employee’s dishonesty and/or poor judgment, the employer will not be required to provide warnings or engage in progressive discipline before the employee’s job termination, even when the employee is a long-term employee whose employment record has been otherwise perfect. 

15.  On August 31, 2021, Canada’s federal Pay Equity Act (Act) came into force.  The Act creates a proactive pay equity regime within the federal public and private sectors to ensure that federally regulated workplaces provide equal pay to everyone for work of equal value.  Under the Act, the employer is required to proactively analyze its compensation practices to ensure they are equitable and in compliance with the Act.

16.  In Morningstar v. WSIAT, 2021 ONSC 5576 (Morningstar), the Ontario Superior Court of Justice, Divisional Court quashed the portion of the 2020 decision of the Workplace Safety and Insurance Appeals Tribunal (WSIAT) in Decision No. 1227/19, 2019 ONWSIAT 2324, which held that if an employee sustains harm due to harassment and bullying in the workplace, they can make a claim for constructive dismissal only through section 13(4) of Workplace Safety and Insurance Act (WSIA) (which entitles the claimant to benefits under the insurance plan for chronic and traumatic stress). The Divisional Court held that if an employee sustains such harm, they are not required to limit their claims to those they can make through WSIA, and they may also bring a civil claim in constructive dismissal against the employer. 

17.  On October 6, 2021, the Canadian federal government announced that federal public servants in the Core Public Administration, and employees in the federally regulated air, rail and marine transportation sectors, would be subject to mandatory vaccination policies, and travellers using these modes of transportation would be required to be fully vaccinated against COVID-19. A link to a more detailed article is available here.  On December 7, 2021, the federal government announced its intention to make vaccination against COVID-19 mandatory in early 2022 in all federally regulated workplaces.

18.  In Hucsko v. A.O. Smith Enterprises Limited, 2021 ONCA 728, the OCA confirmed that if a properly conducted investigation concludes that an employee has engaged in sexual harassment in the workplace, the employer is entitled to take firm action, which may range in severity and, at its most forceful, include termination of employment for cause.  This finding indicates that corrective action short of dismissal can be an appropriate employer response to workplace sexual harassment. The appropriate disciplinary action is dependent on the context of each case. 

19.  In Northern Regional Health Authority v. Horrocks, 2021 SCC 42, SCC decided that labour arbitrators have exclusive jurisdiction under labour relations legislation over disputes that arise, in their essential character, from the interpretation, application, or alleged violation of the collective agreement (CA). This presumption of exclusivity will only be rebutted where a competing statutory scheme demonstrates the legislature’s express intention to displace arbitrators’ exclusive jurisdiction by carving into it (e.g., by granting exclusive or concurrent jurisdiction over disputes of a specific nature to a competing tribunal).  The SCC also decided that Manitoba’s Human Rights Code does not expressly displace the exclusive jurisdiction of the labour arbitrator under the Manitoba Labour Relations Act in such cases. As a result, the Manitoba Human Rights Commission has no jurisdiction over such claims.

20.  In United Food and Commercial Workers Union, Canada Local 333 v. Paragon Protection Ltd., an arbitrator in Ontario dismissed a union’s policy grievance and upheld a mandatory COVID-19 vaccination policy on the grounds that it was reasonable and did not breach the CA.  The arbitrator considered the specific language of the CA, which may differ from the language of other CAs.  Despite the uniqueness of the language in the CA, the Paragon award, although non-binding, may provide an indication of the direction arbitrators will be taking on the topic of mandatory COVID-19 vaccination policies in unionized workplaces.  Paragon may also influence judicial decisions that will inevitably be rendered on this topic in the non-unionized context.  However, only two days after the mandatory vaccination policy was upheld in Paragon, such a policy was struck down by a different arbitrator in Electrical Safety Authority and Power Workers’ Union (Authority).  The arbitrator in Authority emphasized that, in assessing the reasonableness of a mandatory vaccination policy, a contextual analysis approach is key. The Authority award opens the possibility that, based on such an analysis, some mandatory vaccination policies may be struck down.

21.  In Ontario Power Generation and The Power Worker Union (OPG), an arbitrator in Ontario considered a policy that provides for a vaccinate-or-test alternative.  Although the award is not binding and other arbitration awards pertaining to such policies are expected, OPG is an influential award that provides encouragement to employers.  OPG indicates that employers that implement vaccinate-or-test policies will be required to pay for the tests; however, they will not be required to compensate employees for time spent administering the test outside working hours. Furthermore, OPG suggests that employers will be permitted to place unvaccinated employees who refuse to test on an unpaid leave of absence.  Moreover, although he was not required to decide this issue, the arbitrator took the opportunity in OPG to provide preliminary encouragement to employers when he stated that an employee’s termination of employment due to their refusal to be tested is “very likely” to be upheld at arbitration. 

22.  On November 19, 2021, in Amalgamated Transit Union, Local 113 v. Toronto Transit Commission and National Organized Workers Union v. Sinai Health System, 2021 ONSC 7658 (TTC/Sinai Decision), the Ontario Superior Court dismissed union applications asking it to grant injunctions restraining the TTC and Sinai from suspending or terminating unvaccinated employees before their mandatory vaccination policies could be challenged in the grievance process.  The court reasoned that there was no gap in the legislative regime that would support the exercise of the court’s residual jurisdiction. The TTC/Sinai Decision confirms that in the unionized context, there is a clear process under the statutory scheme of Ontario’s Labour Relations Act, 1995, which allows a union to challenge a mandatory vaccination policy on an expedited basis, and that unions must challenge mandatory vaccination policies through the labour arbitration process.

23.  On November 24, 2021, British Columbia announced that beginning January 1, 2022, workers covered by the province’s Employment Standards Act (ESA), including part-time, temporary or casual workers, will be eligible to take up to five days of paid sick leave per year for any personal illness or injury, provided they have worked with their employer for at least 90 days. Employers must pay their employees their regular wages for these days, which do not have to be taken consecutively.  As well, on November 26, 2021, the federal government announced that it had introduced Bill C-3, An Act to amend the Canada Labour Code (Bill C-3) for First Reading.  If it is passed as law in its current form after it makes its way through the legislative process, Bill C-3 will amend the CLC to provide 10 days of paid sick leave per year to workers in the federally regulated private sector.

24.  On December 2, 2021, Ontario’s Bill 27, Working for Workers Act, 2021 received Royal Assent and came into force on that day. Among other things, Bill 27 requires specified employers to implement a disconnecting-from-work policy, prohibits certain non-compete agreements, establishes a licensing regime for temporary help agencies and recruiters, and implements certain employment protections for foreign nationals.

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