Payroll Month in Review – May 2017

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A roundup of new legislation, regulations, government announcements, court cases and arbitration rulings

Case of the Month: Nonpayment of Contractually Required Bonus NOT Constructive Dismissal

Is an employer’s failure to honour a contractual obligation to pay a 6-figure bonus grounds for constructive dismissal? I’ll bet if you polled a group of lawyers, the overwhelming majority would answer YES. And based on previous cases, the smart money going into such a case would be on YES.  But a recent case from Ontario confirms what those lawyers would also be the first to tell you about constructive dismissal: Reliably predicting how a court will rule in any particular case is just about impossible.

THE CASE

What Happened: A real estate management firm paid its CEO 10% of net profits in annual bonuses. For 8 years, all was well. But in year 9, the formula came into question when the firm excluded the proceeds of a lucrative land sale from the CEO’s 2011 bonus, costing him $329,687.  The CEO sued claiming breach of contract and constructive dismissal. The court ruled that while shortchanging him on the bonus was a contract violation, it wasn’t grounds for constructive dismissal. The CEO appealed.

What the Court Decided: The Ontario Court of Appeal upheld the ruling and ordered the CEO to pay the firm $17,000 in legal costs.

How the Court Justified Its Decision:  The bonus dispute was apparently the only problem in an otherwise positive relationship. But even a single act by an employer can amount to constructive dismissal if:

  • It breaches the employment contract; and
  • It substantially alters an essential term of the contract.

As even the firm was willing to acknowledge at this point, not paying $329K+ in bonuses did violate the CEO’s contract. But did it substantially change the essential terms of the CEO’s employment as required by prong 2?

The Court said no.

Changing a bonus from non-discretionary to discretionary is generally the kind of substantial alteration that triggers constructive dismissal. But that’s not what happened in this case.  The firm’s failure to pay the bonus was a one-time situation that didn’t change the bonus formula or the CEO’s basic compensation and duties. The Court noted that during his cross-examination, the CEO himself admitted that he expected to continue being paid bonuses as he had before. Rather than a fundamental alteration of the CEO’s employment, the bonus dispute was a squabble over contract interpretation and how the bonus formula applied to a single transaction, the Court reasoned.

Chapman v. GPM Investment Management, 2017 ONCA 227, March 21, 2017.

WHAT IT MEANS

As with other transgression, an employer’s failure to pay a contractual bonus may or may not be grounds for constructive dismissal. In Chapman, it wasn’t; in other cases, it was.  The moral of Chapman is that each case is different and that situations with seemingly identical facts can have precisely opposite outcomes.

Sometimes, especially in close cases, the ruling is based not just on the unique facts but subtle and subjective dynamics that the court doesn’t acknowledge or even recognize. That might have been why the CEO in Chapman failed where others in similar situations have succeeded. Simply stated, it appears that the CEO rubbed the courts the wrong way. Exhibit A is that he didn’t just lose the case, he also had to pay the firm’s legal costs.

One possible explanation is that the CEO was the aggressor in both the original case and the appeal. As both courts noted, suing wasn’t his only option. From the outset of the dispute, the firm let the CEO know of its willingness to consider dispute resolution alternatives. It was an offer that “a commercially sophisticated party [like the CEO] could have been expected to explore,” according to the Court. Spurning the offer in favour of litigation ended up hurting not just the credibility of the CEO’s constructive dismissal argument but apparently his likeability in the eyes of the judges.

FEDERAL

LAWS & ANNOUNCEMENTS

Human Rights
Apr. 19: According to the Canadian Human Rights Commission 2016 Annual Report, there were 1,394 total employment discrimination complaints during the year. Leading grounds (listed in order): Disability, race, nationality, sex, family status and age. Ontario had the most complaints with 43%, followed BC with 16% and Québec with 11%.

TFWP
Apr. 3: The US temporarily suspended the “premium processing” program for expedited approval of H-1B visas. Impact: Canadians and others seeking temporary foreign worker status in the US under the H-1B program will have to wait longer for visa approval during the at least 6 months that the suspension remains in effect.

Immigration
Apr. 4: The newly tabled federal budget includes 3 measures to help skilled immigrants land jobs faster:

  • Procedural changes to start the foreign credential recognition process before the immigrant arrives in Canada
  • New loans to defray recognition costs like licensing exams and training fees
  • A new pilot program enabling newcomers to get Canadian work experience.

Pensions
Apr. 5: OSFI issued revised guidance describing its framework for risk assessment of federally regulated pension plans. As before, the framework stresses early identification of funding problems, prompt communication with plan administrators and intervention to compel corrective measures.

Payroll
Apr.: Certified non-resident employers no longer have to report salary, wages or other remuneration of qualified non-resident employees under certain conditions. Employers who qualify for non-resident certification won’t have to withhold and remit tax on payments to non-resident employees in Canada for a limited who are exempt from Canadian tax under a tax treaty.

CRA Interest Rates
Apr. 1: CRA interest rates for the second quarter of 2017 are unchanged except for the rate on pertinent loans or indebtedness for corporate taxpayers (highlighted):

  • Overdue taxes, CPP contributions and EI premiums: 5%
  • Overpayments (non-corporate taxpayers): 3%
  • Overpayments (corporate taxpayers): 1%
  • Rate on taxable benefits for employees and shareholders from interest-free and low-interest loans: 1%
  • Rate for corporate taxpayers’ pertinent loans or indebtedness: 4.47%

Interest rates on overdue and overpaid remittances:

  • GST: 5%, 1% (corporate taxpayers), 3% (non-corporate)
  • HST: 5%, 1%, 3%
  • Air Traveler’s Security Charge: 5%, 1%, 3%
  • Excise Tax (Non GST): 5%, 1%, 3%
  • Excise Duty (except Brewer Licensees): 5%, 1%, 3%
  • Excise Duty (Brewer Licensees): 3%, N/A, N/A
  • Softwood Lumber Products Export Charge: 5%, 1%, 3%.

Tax Forms
Apr.: New CRA tax forms and publications issued this month:

ALBERTA

LAWS & ANNOUNCEMENTS

Employment Standards
Apr. 18: ESA overhaul continues as the government wrapped up public consultations on maternity, parental, compassionate care, critically ill children and other leaves. Meanwhile, a government Working Group issued recommendations on extending ESA requirements to the agriculture sector:

  • Don’t apply overtime pay requirements to farm and ranch workers
  • Do apply employment records, unpaid leave and termination notice requirements
  • Make family members employed at farms and ranches fully exempt from ESA requirements.

Collective Bargaining
Apr. 19: Bill 7, which would give professors and grad students the right to strike, received second reading and will soon become law. The change is necessary to bring Alberta into line with a recent Supreme Court of Canada decision.

Jobs
Apr. 19: Alberta gets the first shot at Employer Liaison, a new 24 month federal-provincial pilot program to promote hiring Canadians for jobs that are now being filled by temporary foreign workers. The program targets employers in 29 high-wage sectors for which an adequate supply of local Alberta labour supposedly exists.

CASES

Waitress Who Claims Sex Harassment More Believable than Chef Who Denies It
The Alberta Human Rights Tribunal found the 23-year-old waitress who claimed she was repeatedly groped more credible than the chef who vehemently denied the allegations. Although there were gaps and inconsistencies in both accounts, the waitress was “measured,” not prone to exaggeration and willing to admit when she was wrong; by contrast, the chef’s account was “self-serving” and “embellished.” Result: There was enough evidence to go forward with a trial [Mandziak v Taste of Tuscany Ltd., 2017 AHRC 7 (CanLII), March 21, 2017].

BRITISH COLUMBIA

LAWS & ANNOUNCEMENTS

Minimum Wage
Apr.: Reminder: The BC general minimum wage is going up 50¢ to $11.35 on Sept. 15. An identical increase will send the minimum wage for liquor servers to $10.10 per hour.

Discrimination
Apr. 7: Last month, the Assembly tabled a private member bill banning employers from making employees wear high heels. Although the legislature adjourned, the measure proved so popular that the government adopted it as an OHS regulatory change. Sec. 8.22 of the OHS Reg., which requires that footwear be of a “design, construction and material that allows workers to safely perform their work,” now says that employers can’t make workers wear footwear contrary to this standard.

Workplace Safety
Apr. 3: New training requirements for joint health and safety committee members and health and safety representatives took effect (under OHS Reg., Sec. 3.27).

Requirement JHSC Member Health & Safety Rep.
Hours of instruction & training 8 4
Deadline to receive 6 months of membership 6 months of designation
Topics covered ·Member functions & duties

·JHSC procedures

·Incident investigations

·Workplace inspections

·Responding to unsafe work refusals

·Annual JHSC evaluation

·Rep functions & duties

·Incident investigations

·Workplace inspections

·Responding to unsafe work refusals


Workers’ Compensation

May 1: Permanent Disability Evaluation Schedule changes in the Rehabilitation Services & Claims Manual take effect regarding:

  • Guidance on assessing permanent disability awards using the loss of function method; and
  • Conditions for ensuring that PDES reflects best practices for assessment and diagnosis.

MANITOBA

LAWS & ANNOUNCEMENTS

Immigration
Apr. 7: Skilled workers applying for refugee status eligibility under the provincial nominee program will now have to pay a $500 fee. The tradeoff: The government promises that all applications will be processed within 6 months.

Workplace Safety
Apr. 10: SafeWorkManitoba issued new guidelines telling employers how to investigate and, if necessary, report workplace health and safety incidents.

CASES

Company Fined Nearly $50K for Hot Work Injury
A worker using an acetylene torch to cut a hole in a metal barrel once used to contain flammable substances suffered burns to the face and arm. Cause: The barrel hadn’t been properly purged. Rather than risk a trial, the employer agreed to plead guilty to an OHS violation and pay a $48,750 fine [Maxim Transportation Services Inc., Govt. News Release, Apr. 20, 2017].

NEW BRUNSWICK

LAWS & ANNOUNCEMENTS

Employment Standards
May 5: Public consultations ended on a proposal to make amateur athletes exempt from ESA requirements for:

  • Vacations
  • Paid public holidays
  • Minimum wage
  • Hours of work and weekly rest periods
  • Termination protection.

Collective Bargaining
Apr. 7: After over a year of negotiations, nearly 8,000 teachers across New Brunswick ratified a 5-year collective agreement providing for annual 1% wage increases and non-wage concessions regarding classroom composition including the addition of 250 classroom support teachers.

NEWFOUNDLAND & LABRADOR

LAWS & ANNOUNCEMENTS

Summer Jobs
May 22: This is the last day for students to apply for summer jobs under the Summer Student Employment Program. The 2017 provincial budget includes $1.865 million in SSEP wage subsidies to private and non-profit employers who want to hire high school or secondary students for the summer.

Apprenticeships
Apr.: The government is now providing Apprenticeship Wage Subsidy Program subsidies directly to employers of apprentices seeking journeyperson status. Employers will receive a wage subsidy of 75% for all apprentices in their third and fourth year, up to a maximum of $14 per hour.

NORTHWEST TERRITORIES

LAWS & ANNOUNCEMENTS

Jobs
Apr. 19: The New Building Canada Plan’s Small Communities Fund will provide $3.1 million in joint community-federal funding for 4 infrastructure projects across the Territories.

Recipient Project Community
Contribution
Federal
Contribution
Hamlet of Sachs Harbour New arena facility $164,667 $494,000
Charter Community of Tsiigehtchic Multi-purpose outdoor recreational facility $41,667 $125,000
Hamlet of Ulukhaktok Hamlet office upgrade $186,667 $560,000
Community Government of Behchokǫ̀ 6-Bay Public Works Garage $386,334 $1,159,000

NOVA SCOTIA

LAWS & ANNOUNCEMENTS

Immigration
Apr.: A month after launch, the new Atlantic Immigration Pilot seems to be catching on in Nova Scotia. So far, 120 companies have submitted applications with 12 receiving designation. The program, which is up and running in all 4 Maritime provinces, enables employers to hire skilled immigrants for immediate vacancies.

CASES

Revoking Job Offer of Nurse Who Can’t Work Night Shift = Discrimination
After getting a job offer, a nurse revealed that epilepsy and sleep disorders precluded her from working night shifts. When attempts to reach a resolution failed, the health authority revoked her job offer. While acknowledging its duty to accommodate, the authority claimed undue hardship due to safety, morale and its need for night shift nurses. The Human Rights Commission didn’t buy it. The morale and safety concerns were vague and “speculative.” And fitting the nurse into a day schedule would have been reasonable and not prohibitively expensive [Yuille v Nova Scotia Health Authority, 2017 CanLII 17201, Mar. 17, 2017].

NUNAVUT

LAWS & ANNOUNCEMENTS

Health Insurance
Apr. 18: Nunavut and NWT government insurance will now cover the costs of a non-medical escort for expectant mothers, both Indigenous and non-Indigenous, who have to leave their home communities to give birth.

CASES

ISIS Facebook Photo Prank Gets First Year Teacher the Axe
As if posting an ISIS execution photo on a community Facebook page wasn’t dumb enough, a first year Nunavut teacher doubled down by altering the photo to superimpose his own smiling face on the victim and the face of his ex-girlfriend, a recent convert to Islam, on the knife-wielding executioner. Predictably, public reaction was less than favorable with some parents keeping their kids home from school. While the school board could have made a strong case for just cause, it didn’t need cause to terminate because the teacher was a probationary employee.

ONTARIO

LAWS & ANNOUNCEMENTS

Minimum Wage
Apr.: The following minimum wage hikes will take effect on Oct. 1:

Minimum Wage Current Hourly Rate Rate as of Oct. 1, 2017
General $11.40 $11.60
Student $10.70 $10.90
Liquor Servers $9.90 $10.10
Hunting & Fishing Guides $56.95 for less than 5 consecutive hours in a day

 

$113.95 for 5 or more hours in a day (whether or not hours are consecutive)

$58 for less than 5 consecutive hours in a day

 

$116 for 5 or more hours in a day (whether or not hours are consecutive)

Homeworkers $12.55 $12.80


Collective Bargaining
Mar. 23: Changes to legislation governing collective bargaining in the education sector took effect designed to:

  • Allow for extension of collective agreements
  • Give more notice of labour disruptions to students and parents
  • Ensure that all education worker unions participate in central bargaining.

Pensions
Apr. 3: If you plan to file a Form 9, make sure you use the revised version of the Actual Information Summary now up on the FSCO website.

MOL Inspections
May 1: The MOL will be carrying out 3 new enforcement blitzes between today and Aug. 31 targeting compliance with:

  • OHS new and young worker requirements in the industrial sector
  • ESA new and young worker rules in food services, drinking places, retail, amusement, gambling and other sectors known to employ young workers
  • ESA hours of work requirements in construction, transportation and warehousing.

Workplace Safety
Apr. 1: The MOL extended the deadline for fall protection training by 6 months to Oct. 1, 2017. Training must be provided to workers working at heights on a “construction project,” i.e., any site where construction work is conducted including a factory, warehouse or other facility not typically thought of as a construction site.

Workplace Injuries
Apr.: Key statistics from the MOL’s new workplace safety Annual Report for the 2015-16 fiscal year:

Metric FY 2015 FY 2014
WSIB allowed lost-time injury claims 51,570 53,688
WSIB allowed no lost-time injury claims 122,133 125,524
Traumatic fatalities 72 81
Traumatic fatality rates 11.34 12.87
WSIB allowed occupational disease fatalities 154 152
Occupational disease fatality rates 24.25 24.15
MOL reported critical injuries 873 1,095


Workers’ Compensation
Apr.: If you got an unfavourable ruling from the WSIB on cost relief for third party motor vehicle accidents outside Ontario, you may want to give it another shot. The WSIB has acknowledged that its policy wasn’t as clear as it should have been and that it’s willing to reconsider its decisions made before Nov. 19, 2014.

CASES

Court Refuses to Bar Random Drug/Alcohol Testing for Transit Workers
The Toronto Transit Commission’s new fitness-for-duty policy included random drug and alcohol testing. The union challenged the policy and asked the court to bar TTC from implementing it until the arbitrator resolved the case. The court refused. Bucking the trend of recent cases, the court ruled that random testing of safety-sensitive transit employees was a legitimate safety measure. And if the arbitrator ultimately decided to strike it down, money damages could make up for any harm done [Amalgamated Transit Union, Local 113 v Toronto Transit Commission, 2017 ONSC 2078 (CanLII), Apr. 3, 2017].

$85,000 for Dismissal that’s Not Just Wrongful but Bad Faith
As if being sexually harassed and fired because of gender wasn’t bad enough, a veteran supervisor got a particularly nasty sendoff. Her boss pressured her into signing a release and warned her about pressing her sex harassment claims. The cherry on the sundae was his reaching into her purse without permission and removing her keys so that her car would be waiting at the front entrance when she left the building. The price tag: $20,000 for sex harassment + $60,000 in Wallace or moral damages—with the court pooh-poohing the employer’s plea to subtract the former from the latter since both awards stemmed from the same conduct [Doyle v. Zochem Inc., 2017 ONCA 130 (CanLII), Feb. 15, 2017].

PRINCE EDWARD ISLAND

LAWS & ANNOUNCEMENTS

Budget 2017
Apr. 7: Items in the newly tabled provincial budget relevant to HR and payroll:

  • 2% increase in Basic Personal Income Tax exemption
  • New $4 million Angel Investment Fund to support local businesses
  • Expansion of Team Seafood job creation program to construction and trucking sectors.

Workplace Safety
Apr. 10: New government guidelines to help employers manage the risks of family violence in the workplace describe what family violence is all about, explain how managers and supervisors should discuss the issue with employees and outline measures to guard against it, including procedures for reporting and notifying the police of threats and incidents.

CASES

Teacher Claims Union Let Her Down but Court Disagrees
A teacher sued her union over its handling of her grievance proceeding. Courts generally don’t second-guess how unions handle individual cases unless they commit egregious mistakes or act in bad faith. The trial court bucked the trend and ruled that the union didn’t adequately represent the teacher, citing 6 transgressions. But the Court of Appeal said the court was wrong and shot down each one of the supposed transgressions. Rather than order a new trial, it decided the case in the union’s favour without need for a retrial [Lanigan v. PEITF, 2017 PECA 3 (CanLII), March 23, 2017].

QUÉBEC

LAWS & ANNOUNCEMENTS

Human Rights
Apr. 17: CNESST issued guidelines to help employers deal with homophobia and sexual identity issues in the workplace. Alas, the guidelines are in French only.

Collective Bargaining
Apr. 5: CUPE members ended their strike against Université Laval. Terms of the new 3-year collective agreement:

  • Wage increases of 1.5% in 2016, 1.75% in 2017 and 2% in 2018
  • Restructuring university DB pension plans in accordance with Bill 13
  • Union agreement to eliminat3 workforce mobility restrictions.

Pensions
Apr. 20: Make sure your pension actuarial valuations for after Dec. 30, 2016 follow the new interest assumption and other actuarial methods set out in Retraite Québec’s revised T1200 Actuarial Information Summary form.

Health Services Fund
May 20: Health Services Fund contributions for employers whose total payroll is $1 million or less will gradually decrease over the next 5 years, starting in 2017. (Employers with payroll between $1 million and $5 million will also get a gradual reduction in their contribution rate):

Employer Sectors Current 2017 2018 2019 2020 2021 and thereafter
Primary & Manufacturing 1.60% 1.55% 1.50% 1.50% 1.50% 1.45%
Service & Construction 2.70% 2.50% 2.30% 2.15% 2.05% 2.00%


Tax Forms

Apr.: It was a lean month for new MRQ forms and publications:

  • FP-159-V, Notice of Objection (GST/HST)
  • CO-1029.8.36.PT-T, Crédit d’impôt relatif aux grands projets de transformation numérique (English courtesy translation)
  • PPA‑120‑V, Notice of Contestation (Act to facilitate the payment of support).

 SASKATCHEWAN

LAWS & ANNOUNCEMENTS

Pay Cuts
Apr. 1: Faced with a $1.3 billion deficit, the government cut public sector wages and cabinet member and MLA salaries by 3.5%. It also sent a letter asking school boards across the province to implement a 3.5% cut in wages and benefits and a 3-year wage freeze. Savings must be via pay cuts, not staff reductions, according to the letter.

CASES

Worker’s Failure to Wear Hardhat Leads to Head Injury, $14K Fine
It’s not all that unusual for a board to slip off a roof at a construction site and conk a worker in the head. That’s why OHS laws require employers to ensure that workers have and use suitable head protection. Unfortunately, the victim in this case wasn’t wearing any head protection and suffered serious injury as a result. The Prince Alberta construction company pleaded guilty to an OHS violation and was fined $14,000 [Danbo Construction, Govt. News Release, Apr. 13, 2017].

YUKON TERRITORY

LAWS & ANNOUNCEMENTS

Employment Standards
Apr. 24: A newly tabled bill would make Yukon the second jurisdiction to make National Aboriginal Day a statutory holiday. Northwest Territories is the other. If adopted in time, the new holiday will kick in on June 21, 2017.

Human Rights
Apr. 25: The gender listed on a birth certificate is a touchy issue for the transgendered. Current rules require individuals to list their birth gender and ban change unless the person has sex change surgery. But like the rest of the country, Yukon is changing the rules via a bill to eliminate the surgery requirement and allow individuals to list a gender-neutral “X” mark in the gender section of their birth certificate. Last month, a bill was tabled to add gender identity and expression to the list of grounds protected from discrimination under human rights law.

Public Health
Apr. 24: Yukon became the latest jurisdiction to extend its youth human papillomavirus immunization to boys. Starting in the 2017-18, free HPV immunization will be available to both boys and girls in Grade 6.