3 Key 2024 Labour & Employment Law Learnings
Published:
December 4, 2024
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As 2024 draws to a close, the time is right to look in the rearview mirror and reflect on the key labour and employment law learnings that will leave an impression on your business into 2024.
1. Damages for Manner of Termination Are Wide Awake
In 2023, we noted that more courts seem willing to award higher damages to employees to compensate them for their employer’s bad faith conduct in the manner of termination. That trend continues. For example, in its December 2023 decision in Koshman v. Controlex Corporation, the Ontario Superior Court awarded a dismissed employee:
- 24 months’ notice which, the Court notes, was based in part on employer’s defamatory allegations against the employee which made their re-employment prospects more limited.
- $50,000 aggravated damages on the basis the employer “set out to destroy [the employee’s] reputation” and advanced “groundless allegations” against them later in the course of the proceeding, and ultimately abandoned its defence of the proceeding.
- $50,000 punitive damages for the employer’s conduct leading up to the employment termination and “attempt[s] to destroy his reputation with customers and clients … by making bizarre and defamatory statements …accusing him of criminality and dishonesty, without a shred of justification”, as well as her conduct during the wrongful dismissal legal proceeding, including a baseless counterclaim, maintaining the cause allegation and seeking repayment of the severance paid out at the time of termination.
- Approximately $192,000 for partial indemnity costs because the employer rejected a formal offer of settlement and ignored a notice to admit facts – and full indemnity costs thereafter.
Adding to this risk posed by courts’ renewed willingness to compensate employees for employers’ conduct in the manner of termination is the view of some courts that employees don’t need to present medical evidence to prove they are entitled to aggravated damages. For example, in its 2024 decision in Krmpotic v. Thunder Bay Electronics Limited, the Ontario Court of Appeal decided an employee isn’t required to prove a diagnosable psychological injury with medical evidence to receive an award of aggravated damages for an employer’s bad-faith conduct during the employee’s dismissal or even to show with medical evidence that they are physically incapable of mitigating their damages during a reasonable notice period. This mirrors the view of the British Columbia Court of Appeal in its 2017 decision in Lau v. Royal Bank of Canada. And while technically these decisions bind only lower British Columbia and Ontario courts, the Ontario Court of Appeal in particular is considered highly persuasive authority across Canada.
The learning? It’s now easier than ever for employees to prove they are entitled to aggravated damages for unfair, dishonest or insensitive conduct in the way in which you terminate your employment relationships with employees. Take heed, or it will cost you.
2. COVID Cases Keep On Coming
The COVID Pandemic has been over for some time – but cases arising from it are still coming out of the courts, providing ongoing lessons to employers. Two of the key areas? Frustration of contract and employees’ duty to mitigate their damages upon the termination of their employment.
Frustration of Contract. Frustration permits a party to a contract to set the contract aside where a supervening event results in a fundamental change that renders further performance of the contract either impossible or so radically different from that intended that the contract can be said to no longer exist or be binding. Until COVID, employers typically raised the concept of frustration of contract in the context of a lengthy employee medical leave. But during COVID, some employers “laid off” or terminated employment relationships arguing that due to COVID restrictions, the employment contract was frustrated. As we saw in 2024, some succeeded – and some didn’t. For example:
- In its 2024 decision in Croke v. VuPoint System Ltd., the Ontario Court of Appeal found an employment contract was frustrated when an employee refused to be vaccinated. The employer derived 99% of its revenue from a single customer. That customer implemented a mandatory vaccination policy applicable to all its subcontractors. The employer terminated the employee’s employment when they refused to disclose their vaccination status, rendering the employee ineligible to work for the customer for the foreseeable future. The Court found the customer’s vaccination policy was a supervening event beyond the employer’s control, and the employment contract was frustrated.
- In contrast, in its 2024 decision in Aldergrove Duty Free Shop Ltd. v. MacCallum, the British Columbia Court of Appeal found an employment contract was not frustrated by the closure of the Canada-U.S. land border. The employee was a retail clerk in the employer’s duty-free shop on the Canadian side of the border. The employer laid the employee off when the Canada-U.S. land border closed during COVID, claiming the employment contract was frustrated. The Court, however, disagreed, deciding decreased consumer demand due to COVID did not affect either the employer’s or the employee’s ability to perform their contractual obligations. The employer’s decision to lay the employee off (which amounted to constructive dismissal) was a choice – not an inability to allow the worker to work.
Duty to Mitigate. Dismissed employees have a duty to mitigate their losses resulting from the termination of their employment: to take reasonable steps to find alternate, reasonably comparable employment. There’s no doubt that that was difficult during COVID. Many employers “temporarily laid off” employees during COVID. Courts have confirmed that a temporary layoff even during COVID amounted to constructive dismissal absent a contractual right to do so. However, many of those same employers called those employees back (or technically, offered to re-employ them – on the same terms and conditions. In its 2024 decision in Oakley v. Bounty Print, the Nova Scotia Supreme Court found the constructively dismissed employee’s refusal of that offer amounted to a failure to mitigate his losses – and that, combined with his refusal of another, similar job, caused the Court to reduce damages to the amount he would have received had he accepted these offers of employment.
The learning? COVID decisions continue to deliver important lessons that apply not just during extreme circumstances.
3. Employers’ Duty to Protect Employees from Internet Harassment
It’s well-established that employers have a duty to protect employees from online harassment from other employees as part of their obligation to provide a harassment-free workplace. It’s also well-established that this duty extends to cover online conduct that occurs off-duty and via personal online platforms. But as technology advances, how far into employees’ off-duty lives does that duty reach? Pretty far, it turns out.
In the 2024 case of Amalgamated Transit Union – Local 1587 (Juteram et al) v. The Crown in Right of Ontario (Metrolinx), a group of employees engaged in highly offensive discussions respecting existing and former co-workers via “WhatsApp”, a private, non-public social app. They did so on their personal cell phones while off duty and had no intention to share their discussion beyond their private group. Despite this, the victim received screen shots of the conversation. But while they admittedly suffered distress as a result, they refused to file a formal complaint, which was the trigger for an investigation under the employer’s policy. When the employer found out, it nonetheless undertook an investigation, demanding screen shots from the employees’ private phones under threat of discipline and ultimately dismissed all for sexual harassment. The arbitrator reinstated the employees, finding there was no “complaint” to investigate under the employer’s policy, the employer was in a conflict of interest, it had no authority to intrude on private electronic exchanges unless negotiated and there was no evidence the sexual harassment manifested “negative impact within workplace”. The Ontario Superior Court of Justice, however, disagreed. It confirmed the employer has an obligation under occupational health and safety and human rights legislation to investigate workplace harassment incidents and complaints once it knows of them – even if their own policy says it’s only initiated by a formal complaint and even if the “victim” refuses to participate. The rationale: the employer’s duty to investigate is owed to all employees, not just the “victim”. Noting the harassing content found its way into the workplace despite contrary intentions, the Court found the arbitrator placed too much emphasis on the employees’ privacy rights. The Court also emphasized the importance of avoiding stereotypes, and relying on the fact the victim is sufficiently upset to establish the employer’s obligation to investigate. The Court sent the matter back to arbitration for redetermination in light of its comments.
The learning? Thoroughly investigate all incidents of workplace harassment – internet or not – once you learn about them, no matter how you find out.
Please contact your McInnes Cooper lawyer or any member of our Labour & Employment Law Team @ McInnes Cooper to discuss actioning these 2024 Labour & Employment Law learnings.
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