Editors’ Message

The fall edition of L&E News contains a number of articles on a variety of topics that are timely and relevant to employers. Our articles range from recent legislative changes to the Income Tax Act that may now allow employers to offer tuition assistance to their employees’ children, without tax consequences, to an employer’s ability to waive notice of resignation in Quebec to employees’ rights while on a leave of absence. In addition, we examine the first decision of the Human Rights TribunalofOntarioto consider the new enumerated grounds of discrimination, gender identity and gender expression.

We value your feedback. If you have suggestions, or an issue you would like addressed in a future edition, please feel free to contact us directly.

Announcements

Welcome to Michelle Henry, who has recently rejoined the Toronto L&E group as a partner!

Welcome to Stephanie Young, who has recently joined the Toronto L&E group as an associate!

Welcome to Sharon Borgland, who has recently rejoined the Calgary L&E group as an associate!

L&E@BLG Speaks

Lawyer’s Name

Topic

Date

Lisa Cabel

“Constructive Dismissal” –  Fundamentals of Employment Law YLD Seminar for Ontario Bar Association

September 23, 2013

Duncan Marsden

Training in Banff for Civil Provincial Court judges – “Employment Law Update”

October 1, 2013

Duncan Marsden

BLG Not for Profit Seminar in Calgary – “A Cautionary Tale: Discrimination and Unpaid Work”

October 9, 2013

Duncan Marsden

Vancouver Symposium – “Managing Dr. Jekyll and Mr. Hyde: Dealing with Impaired Employees”

October 30, 2013

Jennifer Fantini

BLG In-House Counsel Professional Development Conference – “Signed, Sealed and Delivered: Tips for Drafting and Implementing Enforceable Employment Agreements”

October 30, 2013

Matt Certosimo and

Duncan Marsden

Webinar “Drug & Alcohol Testing in the Workplace: Did the recent Judgment of the SCC change  things for Canadian Employers?”

November 4, 2013

Kate Dearden (with Sharon Duffy, Toronto Catholic District School Board)

Law Works, Education Institute, Privacy in Canadian Schools, A Legal Update

November 7, 2013

Kate Dearden and

Lisa Cabel

Ontario Hospital Association Principles and Applications of Health Law course,  “Labour and Employment”

November 15, 2013

Hot Off the Press

New Compassionate Care Leave Announced In Alberta

The Province of Alberta is likely to introduce compassionate care leave provisions into its Employment Standards Code in the very near future. The leave is designed to provide up to 8 weeks of unpaid leave for employees to provide care or support to a seriously ill family member if the employee is their primary caregiver. There are likely to be eligibility requirements such as 52 consecutive weeks of employment with the employer and the requirement of a medical certificate proving the illness. We will keep you apprised of the status of this prospective legislation.

Benefits Continuation During Leaves of Absence

Managing employees who are on a leave of absence is often a difficult task for employers. Among other things, employers must understand the contractual, statutory and common law obligations which are owed to such employees, particularly with respect to the protection and continuation of benefits. Employers who fail to meet  their obligations in this regard may find themselves facing grievances, human rights complaints, employment standards complaints or wrongful dismissal claims (in the case of non-unionized workplaces).

This issue was recently considered by the B.C. Court of Appeal in BritishColumbiaTeachers’Federation v.British Columbia Public School Employers’ Association.1 This case involved a grievance brought by a local of the British Columbia Teachers’ Federation (the “Union”)  in which the Union claimed that the Board of Education of School District No. 61 (Greater Victoria) (the “Employer”) had breached the collective agreement when it failed to credit teachers who were on maternity and parental leaves with work experience for the purpose of salary increases.

Under the collective agreement, teachers were paid based on salary grids. A teacher was entitled to advance one increment in his or her salary grid for each year of teaching experience. The collective agreement described limited circumstances in which a teacher who was absent from work could be credited with teaching experience for the purpose of advancing to the next increment in the salary grid to earn the wage increase. However, those circumstances did not include absences while an employee was on maternity or parental leave. With respect to those types of absences, the collective agreement simply indicated that teachers were entitled to pregnancy and parental leave in accordance with the B.C. Employment Standards Act (the “ESA”).

At first instance, the arbitrator held that teachers were not entitled to be credited for teaching experience while on maternity or parental leave, and accordingly, were not entitled to advance to the next step of the salary grid. In his reasoning, the arbitrator took the view that the increments in the salary grids were intended to reflect the value and reward of actual teaching experience and professional development and not simply to reflect the passage of time and length of service of an employee. The arbitrator also considered s. 56 of the ESA, which addresses benefits and entitlements while employees are on one of the statutorily protected leaves of absence. The arbitrator noted that under s. 56(1) of the ESA, employment was deemed continuous for the purpose of specific benefits (namely vacation, pension, medical or other plans beneficial to the employee) while s. 56(3) provided that employees were entitled to wage increases which they  would have been entitled to had the leave not been taken. The arbitrator found this distinction was significant, concluding that the ESA only deemed employment to be continuous for the purpose of the specific benefits listed in s. 56(1) and in particular, did not deem employment to be continuous for the purpose of teaching experience (and therefore the consequent salary increases).

The B.C. Court of Appeal held that the arbitrator erred by interpreting the collective agreement to ascertain that the intention of the parties was to credit teachers with incremental steps within each category on the basis of actual teaching experience, and then utilizing that intention when interpreting s. 56(3) of the ESA. This, in the Court of Appeal’s view, caused the arbitrator to reach an unduly narrow interpretation of s. 56(3).

The Court of Appeal explained that the ordinary and plain meaning of s. 56(3) made clear that an employee on leave is entitled, upon his or her return, to any increase in wages to which he or she would have been entitled had the leave not been taken. In the Court of Appeal’s view, there was no basis for making a distinction between wages earned through actual work and wages earned through length of service. As the Court of Appeal explained, if, by continuing to work, an employee would have received an increase in wages through a credit of an incremental step, then the employee is entitled to the same increase if he or she took a leave of absence under the ESA rather than if the employee continued to work.

Determining which benefits may continue while an employee is on a leave of absence can be a complicated issue which, depending on the circumstances, may require an employer to consider statutes governing employment standards, as well as contractual obligations contained in a collective agreement or contract of employment. Employers should always exercise caution when discontinuing or limiting the benefits of an employee who is on a leave of absence.

 


1 2013 BCCA 179.

Gender Identity and Gender Expression: New Prohibited Grounds of Discrimination Considered By Tribunal

Gender identity and gender expression were added as protected grounds of discrimination under the Human Rights Code (the “Code”) by Ontario’s Bill 33, which came into force on June 19, 2012. The Human Rights Tribunal’s decision in Vanderputten v. Seydaco Packaging Corp 1 is the first to interpret how gender identity and gender expression are treated in the workplace.

Before analyzing this decision, it is important to understand the scope of “gender identity”. Gender identity is linked to an individual’s intrinsic sense of self, and particularly, the sense of being male or female. Gender identity may or may not conform to a person’s birth-assigned sex. The personal characteristics that are associated with gender identity include self-image, physical and biological appearance, expression, behaviour and conduct, as they relate to gender. For non-transgendered people, their identity will reflect their sex at birth. However, insisting that transgendered individuals be treated in accordance with their birth gender for all purposes is discriminatory because it fails to take into account their lived gender identity.

In Vanderputtenv.Seydaco Packaging Corp., the applicant, Maria Vanderputten (“Vanderputten”), worked for the corporate respondent, Seydaco Packaging Corp. (“Seydaco”). During the time she worked there, she transitioned from living as a man to living as a woman, started the process of sex reassignment and developed female breasts.Vanderputten filed a human rights application alleging that she was subjected to workplace harassment, a poisoned work environment and a gender related incident with another co-worker, the individual respondent, Gerry Sanvido, which she alleged all played a role in her dismissal in violation of ss. 5(1) and (2) of the Code. The respondents denied the allegations and argued that the applicant was treated appropriately; they considered her to be a man and treated her like other men until Seydaco received medical or legal documentation that she was a woman. They further alleged that her dismissal was solely related to her attitude, involvement in workplace conflicts, and insubordination.

There was evidence of several incidents and issues that arose in the workplace, some of which were:

  • At  the  beginning  of  her  transition  from living as a man to living as a woman, Vanderputten told several female co- workers that she was in the process of transition and that in the future, she would use the women’s washroom. She was told by the respondent that she would not be able to use the washrooms until she could prove she was female, but that this issue would be dealt with once she had completed her transition;
  • Vanderputten requested to change her shift times to avoid changing with men, but was not permitted to do so; and
  • Vanderputten was regularly subjected to name calling such as “faggot”, “fruitcake”, “fag”.

In 2012, Vanderputten was dismissed following an altercation with a co-worker during which she allegedly threw a skid at him. She alleges that the co-worker had called her an “asshole”, a “faggot” and that there was “nothing she could do” about  the teasing. Both Vanderputten and the co-worker were suspended for the altercation. Vanderputten was later dismissed for insubordination, responding in an aggressive manner and failing to improve her behaviour after the numerous chances had been given.

The adjudicator found that Vanderputten was a transgendered employee and that she had been subjected to a poisoned work environment through, among other things, name-calling, harassing comments about her gender identity and derogatory postings on bulletin boards. Seydaco was specifically criticized for: (a) insisting on describing the employee as male, both orally and in writing; (b) failing to consider, explore or implement any solutions that would have allowed the employee privacy while changing; and (c) failing to investigate and respond reasonably to her allegations of harassment. The adjudicator awarded general damages in the amount of $22,000 ($21,000 against Seydaco and $1,000 against the co-worker) for injury to Vanderputten’s dignity, feelings, and self-respect. The award amount had already taken into consideration Vanderputten’s aggressive, inappropriate and insubordinate behaviour in the workplace, which sometimes played a role in the altercations. The adjudicator further awarded Vanderputten eight months’ pay in lieu of notice.

The adjudicator made several useful comments in deciding this application. He noted that “treating people equally does not always mean treating them the same. The Code and the concept of equality require adapting to difference. This case is about what is required of an employer in a case where an employee’s gender identity does not conform to traditional social norms”.2 He further noted that in this case “insisting that the employee be treated in the same manner as men until her transition was fully complete was discrimination. It failed to take into account the employee’s needs and identity. The insistence that a person be treated in accordance with the gender assigned at birth for  all employment purposes is discrimination because it fails to treat that person in accordance with their lived and felt gender identity.”3

The lesson is simple: Employers cannot ignore issues of gender identity and gender expression. They should educate themselves and their staff when faced with these situations. Furthermore, employers should take all reasonable steps to prevent incidents of harassment and a poisoned work environment from developing.

Although this decision does not address the use of washroom facilities or change rooms, the adjudicator commented that the issues involved in addressing transitions in the workplace may be complex, in particular regarding the use of washrooms and locker rooms. These issues may require a balancing and reconciling of various rights and interests. This decision also makes it clear that the protection provided by the Code is not meant to suggest that a transgendered person must necessarily be treated in exactly the same manner as others with their lived gender. It remains to be seen how future decisions will interpret how gender identity and gender expression are to be treated in the workplace in different circumstances.

 


1 Vanderputten v. Seydaco Packaging Corp., 2012 HRTO 1977 (CanLII).
2 Ibid., at para. 59.
3 Ibid.,at para. 66.

Quebec Law: A Quebec Decision Addresses an Employer’s Ability to Waive Notice of Resignation

The March 2013 Quebec Court of Appeal decision of Asphalte Desjardins v Commission des Normes du Travail is a game-changer for employers and employees alike. Employers are no longer bound by the notice period given to them by employees who resign, thus removing their obligation to pay the employee for the duration of the notice period.

The facts of this case are simple and not uncommon. Mr. Guay, who worked intermittently for Asphalte Desjardins for approximately four years, provided his employer with a resignation letter and a three week notice period. The employer decided to waive the notice period provided by Mr. Guay once it had accepted his resignation.

Prior to this case, parties took for granted that, at minimum, the notice required by the Act Respecting labour standards (the “Act”) could not be waived by the employer. Faced with a resigning employee that an employer did not want on the premises, the employer had to pay the employee’s salary that would have been earned during the notice period.

In Asphalte Desjardins, the Court held that the employer did not have to pay Mr. Guay three  weeks of his salary, as sections 82 and 83 of the Act provides for notice or an indemnity in lieu of notice (which varies depending on an employee’s years of service) to employees whose employment is being terminated unilaterally by an employer and not in the case of a resignation.

Justice Bich, writing for the majority, held that the reasonable notice provision stipulated in article 2091 of the Civil Code of Quebec (“CCQ”) is to the benefit of the person receiving the notice. This is due notably to the fact that resiling from a contract is a unilateral act and because the purpose of article 2091 CCQ is to protect the rights of the co-contracting party. In other words, an employer has no other choice but to accept an employee’s resignation and its right to receive such notice. With this contractual framework in mind, Justice Bich concluded that if an employer decides to waive the notice period that accompanies an employee’s resignation, the employer is not required to pay the employee for the remainder of the notice period.

This conclusion was reached after an analysis that favoured a contractual approach rather than one predicated on the protection of workers’ rights. The Court focused on the ultimate consequence of a resignation and decided that since the contractual relationship between the employer and employee would terminate at the end of the notice period, the employer’s renunciation of the notice would not change the fact that the relationship was, for all intents and purposes, terminated. Justice Bich rejected the idea that such an immediate end of the employment relationship before the end of the notice period would constitute a termination of employment by the employer, and which would entitle the employee to reasonable notice or indemnity in lieu of notice pursuant to the relevant provisions of the Act.

Justice Bich held that such an interpretation of article 2091 CCQ did not contradict sections 82 and 83 of the Act. The latter are public-interest provisions intended to ensure that employees receive a minimal degree of protection in cases in which the termination of their employment contract is imposed on them by their employer.

While there has been a motion for leave to appeal submitted to the Supreme Court of Canada, the current state of the law in Quebec is that an employer may waive the notice provided by an employee and cease paying their wages at the time of the waiver.

Practically speaking, in the event that the Supreme Court overturns the Court of Appeal’s decision, an employer will be on the hook for unpaid wages in cases where it waived the notice provided by an employee who resigned and the employee files a complaint under the Act within the required one (1) year time frame.

It may therefore be prudent to continue to pay an employee the minimum amounts pursuant to the Act, during their notice period, until the Supreme Court renders its decision, if it indeed grants the leave for appeal. The decision on the motion for leave to appeal is expected in the next six months. We will keep you apprised of the progress of this case as it proceeds.

 

How You Can Provide Tuition Assistance to Your Employees’ Children Without Tax Consequences to Your Employees

Despite challenging economic times, many corporations across Canada remain committed to advancing employee education through tuition reimbursement policies. These types of policies help companies to retain talent and lower the risk of attrition. Some companies also extend tuition assistance to their employees’ spouses and dependent children. This assistance ranges from full to partial reimbursement of private school or post-secondary tuition fees. The assisting company usually covers the cost of tuition only, while the employee or family member of the employee remains responsible for paying any non-instructional fees and purchasing books and other supplies.

Historically, the Canada Revenue Agency (the “CRA”) treated tuition assistance for an employee’s family member as a taxable benefit to the employee and required the company to attribute a fair market value (FMV) to this benefit. The CRA’s position was successfully challenged in a recent court case,1 and is also overruled in certain circumstances by a legislative change to the Income Tax Act (Canada) (ITA) enacted on June 26, 2013.2 The legislative amendment provides that if four specific conditions are met, free or discounted tuition for an employee’s family member is not subject to tax in the hands of the employee. This means that if you provide the family members of your employees with free or reduced tuition assistance and the conditions for the application of the exemption are met, you will not need to  include the amount of the assistance in the employee’s T4 as taxable income. Instead, you will report the FMV of this benefit as a bursary on a T4A slip for the family member. If the family member in turn meets certain criteria, then this benefit might be excluded from tax altogether.3

In order for your employees to benefit from this new exemption, you will need to ensure that four requirements are met. First, the tuition assistance benefit you provide must be enjoyed by an individual other than your employee. For instance, if you provide your employee with tuition assistance for job-related courses then this exemption will not apply (and your employee will have to include a taxable benefit in his/her income). Determining who has received or enjoyed the benefit of your company’s tuition assistance program is a factual question that requires an examination of specific facts and circumstances.

Second, the tuition assistance benefit must be provided under a structured program to further education. This means that the benefit should  arise from a documented program that is designed to assist the employee’s family members to further their education and explicitly provides free or reduced tuition to accomplish this goal. Employer programs aimed at assisting an employee with family financial obligations will not qualify. Again, determining whether this condition is satisfied will depend on the particular facts and circumstances of the program.

Third, the employee and the employer must deal with each other at arm’s length. The ITA provides rules that determine whether persons are considered to deal with each other at arm’s length.4 For example, if the employee is also  an owner or controlling shareholder of the employer then the tuition assistance exemption will not apply.

Fourth, the tuition assistance benefit must not  be a substitute or replacement for any of your employee’s compensation or employment benefits. This means that the free or reduced tuition assistance must not be a negotiated term of employment or provided to employees as an optional benefit that can be substituted for another employment benefit.

If you want to establish, or already have, a tuition assistance program for family members of your employees, qualifying for this new legislative exemption means that your employees will pay less income tax as the tuition assistance benefit will not have to be included in their taxable income. You can take advantage of this new exemption by ensuring that you develop and maintain a properly documented company tuition assistance program that meets the four requirements of the exemption. In doing so, it is important to be aware that factors such as offering different levels of family tuition assistance depending on the status of the employee (for example, full or part-time, management or administrative staff) may increase the risk that the CRA will consider the tuition assistance to be employee compensation that must be included in your employees’ income. We have experience in setting up tuition assistance programs and would be pleased to provide you with a simple solution that will not only further the education of your employees’ family members but also meet the requirements of the tuition assistance exemption.

 

* The authors would like to thank Anila Dumont (Summer Student) for her assistance withthis article.


1 [Bartley and DiMaria, [2009] 2 CTL 73 (FCA).
2 See subparagraph 6(1)(a)(vi) of the ITA. The provision applies retroactively to October 30, 2011.
3 Subparagraph 56(3)(a)(ii) of the ITA provides an exemption, which among other things, excludes from taxable income the full  amount of a scholarship, fellowship or bursary received in connection with the taxpayer’s enrolment in an elementary or secondary school  educational  program.
4 Specifically, under subsection 251(1) of the ITA, non-arm’s length relationships will be determined by looking at whether or not individuals are related, whether or not there is a beneficial interest present (for instance, as between a taxpayer and a personal trust) and whether or not, as a question of fact, persons not related to each other are at a particular time dealing with each other at arm’s length.

Authors

Jennifer M. Fantini 
JFantini@blg.com
604.640.4247

Naomi Calla 
NCalla@blg.com
416.367.6129

Natasha Miklaucic 
NMiklaucic@blg.com
416.367.6233

Other Authors

Jacquie Dagher
Maria Valente-Fernandes