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The Ontario Human Rights Tribunal recently examined an application before it and an earlier statement of claim made in civil court by the same person, and concluded that the claims were virtually identical. They were based on the same facts, made the same allegations and sought similar remedies. Subsection 34(11) of the Ontario Human Rights Codeprevented the tribunal from hearing the application.

Essentially, the tribunal prevented the duplication of claims in different forums and dismissed the human rights application.

The applicant filed an application with the Human Rights Tribunal, alleging discrimination and reprisal against her employer on the ground of disability and sex. She claimed that her employer treated her unfairly and ultimately dismissed her when she tried to return to work following a short-term disability leave.

Then it became known that the applicant had already made a wrongful dismissal claim in civil court against the employer. Therefore, the employer filed a request with the tribunal that the application be dismissed because there was an ongoing civil court action concerning the exact same matter.

Subsection 34(11) of the Human Rights Code states that a person cannot make an application under the Code if a civil proceeding has been commenced in court, a court has already determined the issue of whether the right was infringed, or the matter has been settled.

The tribunal carefully examined the claims at the tribunal and at court, and concluded that the applicant relied on the identical facts, alleged that the same types of employment-related disability and gender rights were violated, and sought similar remedies.

The tribunal noted that the provision in the Code is there to prevent this kind of duplication from occurring, and the applicant was barred from bringing her application to the tribunal. As a result, the tribunal application was dismissed.

Employers should be aware of this decision. When a claim is brought against them in multiple forums, employers are recommended to be proactive in limiting the duplication of proceedings. As can be seen in this case, a request to dismiss an application at the tribunal is appropriate in situations where the same matter is in progress or has already been dealt with in court. It is important to prevent an employee’s forum-shopping before it gets out of hand and various decisions are made on the same matter. This requires the employer to be aggressive by bringing the request to dismiss before the tribunal as soon as possible.

Christina Catenacci
First Reference Human Resources and Compliance Editor

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Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.

Of course, and unfortunately, this is not always the case in practice. Many people continue to deny others equal treatment, intentionally and not. The case Law Society of Upper Canada v. Selwyn Milan McSween raises the question of whether racism hinders black lawyers’ participation in big law firms in Ontario. I am sure this problem is not exclusive to big law firms or Ontario.

To know what I think about this, read my latest post on Slaw.

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The parties can negotiate a settlement that is based upon some form of salary and benefit continuance or a lump sum payment. In the event of salary continuance, tax withholdings will apply as they would in the normal course when the individual was actively working. However, if a settlement is paid as a lump sum (and this can be divided into several payments), then it can be treated as a retiring allowance under the Income Tax Act, which provides for different tax treatment. Despite the name, a retiring allowance does not only arise in relation to an individual’s retirement; rather, it relates to an amount received by a taxpayer:

(a)  On or after retirement from an office or employment in recognition of long service; or

(b)  In respect of a loss of office or employment (including damages).

The Canada Revenue Agency has clarified that, “where a payment of damages arising from loss of employment includes an amount in respect of the period of reasonable notice, this amount will be considered a retiring allowance.” The withholdings to be applied are as follows:

• For amounts up to $5,000: 10 percent
• For amounts between $5,000 and $15,000: 20 percent
• For amounts over $15,000: 30 percent

(The amounts are different in Quebec.)

It is also important to note that retiring allowances are not subject to withholdings for CPP or EI.

Dismissed employees can avoid tax withholdings altogether if they have retiring allowance amounts paid directly into an RRSP or RPP. For pre-1996 employment, there is an automatic eligibility of $2,000 per year. For pre-1989 employment, there is a further $1,500 per year. In addition, if individuals have room currently available in their RRSPs, they can contribute up to that amount. Employers that are asked to transfer amounts into an individual’s RRSP are required to make reasonable inquiries to confirm that there is sufficient room available.

While it is possible to pay a retiring allowance in several instalments, it is important to distinguish such payments from regular salary continuance. The payments should not be made on the usual payroll schedule, or in similar amounts. Finally, a recent change in procedure provides that retiring allowances are to be reported on T4 slips, rather than T4A slips.

It is often possible to make some payments more tax-effective in other ways. First, any money that is paid to reimburse the dismissed employee for legal fees incurred is not counted as income. It is advisable for an employer’s counsel to receive written confirmation that any amounts allocated to this heading do not exceed the actual amount of legal costs incurred by the individual.

Furthermore, where there is a legitimate basis, a portion of the settlement can be allocated toward payment of general damages, which are also not treated as income. Such damages can be based upon, for example, allegations of breaches of the applicable human rights legislation. There must be a legitimate basis for such a claim, and the amounts allocated must be reasonable. It is always open to the CRA to investigate such payments and make its own determination regarding the appropriateness of the allocation.

The other issue that often arises in the settlement of a wrongful dismissal claim is the repayment of employment insurance payment benefits. Section 45 of the Employment Insurance Act requires that a claimant repay employment insurance benefits received when a former employer pays a judgment or settlement in respect of the subject employment. Moreover, section 46 of the Act provides that it is the obligation of the employer to withhold an amount equal to the employment insurance benefits received by the claimant from any judgment toward settlement. Therefore, the employer or payor will have an obligation to make appropriate inquiries in order to determine whether any employment insurance benefits were received, and if so, the amount to be held back for repayment. This often surprises counsel that do not practice regularly in the area of employment law. As a matter of practice, counsel should be clear during the negotiations that any payments discussed will be subject to withholding for repayment of EI benefits.

As we know, the vast majority of disputes arising out of dismissals are resolved. It is important for counsel to understand some of the legal issues that can arise, and ensure that they do not expose their clients to any unnecessary liability.

Stuart Rudner
Miller Thomson LLP

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Permit an entity that accounts for its defined benefit plans using the deferral and amortization approach to carry forward at the date of transition to ASPE any unrecognized actuarial gains and losses and past service costs that were determined previously in accordance with Part V, CICA 3461, Employee Future Benefits, or an equivalent basis of accounting such as Part I, IAS, Employee Benefits.

Deloitte seems to think the amendments will also apply to non-profits under Part III of the Handbook, and that they won’t apply before 2014.

Feel free to let us know how your transition is going!

Adam Gorley
First Reference Internal Controls, Human Resources and Compliance Editor

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On January 31, 2012, The National Occupational Classification (NOC) 2011 was jointly released for free by Statistics Canada and Human Resources and Skills Development Canada (HRSDC). Its organization is based on the dual criteria of Skill Type and Skill Level, supporting more relevant labour market analysis.

As part of NOC 2011, you will find new occupational groups, such as that for Allied primary health practitioners; merging groups where there has been increasing similarity in the job titles and the work performed, such as in combining Administrative clerks and General office clerks into General office support workers; merging groups, particularly in manufacturing, where they have been declining in size; and moving occupational groups or specific job titles to different skill levels to reflect changes in job requirements, as illustrated in the movements of midwives, pharmacy technicians and water and waste treatment plant operators.

In addition, changing terminology, new technology in the workplace and the rise of new specializations have been reflected in the addition of numerous job titles, such as oil and gas contractor, mystery shopper, physician assistant and seismic buried facilities locator. There is also a new variant of the classification to better support the analysis of highly aggregated data.

The NOC will be jointly revised by HRSDC and Statistics Canada every five years to incorporate information on new occupations. Every 10 years, structural changes that affect the coding framework, such as the addition of new classes, will be considered.

Yosie Saint-Cyr
First Reference Human Resources and Compliance Managing Editor

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First, employers must be very careful before commenting on employee chances of getting EI. Although, the EI system provides benefits for millions of Canadians who are without work, recent statistics show that roughly one-third of employee claims for EI benefits are turned down by the EI Commission. The rules around qualifying for EI are very complex. As a result, employers may simply not be in a position to know whether a particular employee’s claim for EI benefits will be successful.

For most employees, the minimum number of insured hours required to qualify ranges between 420 and 700 hours. The actual number depends on three-month average unemployment rates provided by Statistics Canada. Specifically, an average of the monthly unemployment rates for the prior November, December and January sets the number of insured hours required to qualify during February. The unemployment rate that applies to employee EI claims is based on the region where employees live, at the time a claim is established. Since these rates obviously change over time, the minimum insured hours can’t be known in advance. Similarly, an employee could move away from the province where they lived to another province that had a much different unemployment rate. To help with this, the EI Commission does have a website where employees can enter a postal code and see the corresponding insured hours required to establish a claim: http://srv129.services.gc.ca/eiregions/eng/postalcode_search.aspx.

This describes the basic requirements for what are described as regular benefits, meaning the benefits paid to employees who are laid off from their jobs. There are different requirements for what are called special benefits—maternity, parental, sick or compassionate care benefits. For these, the basic rule is that employees need at least 600 insured hours to qualify. But there is a difference between the hours that an employee may need to qualify for sick benefits than for maternity, parental and compassionate care benefits.

For example, an employee who makes a claim for regular benefits based on 500 insured hours, may also qualify on that same claim for an additional 15 weeks of sick benefits. But by contrast, this employee, with only 500 insured hours, would not be eligible for maternity, parental or compassionate care benefits. Similarly, if the employee had had to stop working because of illness or injury, the 600-hour threshold would still apply. It just doesn’t apply to employees who qualify for regular benefits and then make a claim for special benefits, before the regular benefits have run out.

Before describing the variations on these rules, specifically for regular benefits, it’s important to understand the time periods related to an EI claim. When an employee makes a claim for EI benefits, a successful claim results in what is termed the benefit period. The 52 weeks prior to this benefit period is the qualifying period, the period in which employees have to work the hours needed to qualify for benefits. The 52 weeks prior to that in turn is the labour force attachment period. The hours worked in the labour force attachment period influence the hours needed in the qualifying period (see below). For example, if an employee establishes a claim for benefits, starting the week of Sunday, January 22, 2012, the qualifying period runs from Sunday, January 23, 2011, to Saturday, January 21, 2012. Similarly, the labour force attachment period in this situation would run from Sunday, January 24, 2010, to Saturday, January 22, 2011.

There are two different situations under which the insured hours an employee requires for regular benefits can be as much as 1,400 hours. The first is for employees described as new entrants, or re-entrants, to the labour force. A new entrant, or a re-entrant, is a person with less than 490 insured hours in the labour force attachment period. New entrants normally require 910 insured hours to establish a claim for regular benefits. The second situation applies to employees who have been penalized by the EI Commission within the five years prior to applying for regular benefits. The most common reason for which the commission imposes a penalty is failing to report earnings while on EI. Depending on the amount of any penalty imposed, and the number of penalties accumulated, employees, including re-entrants, may be required to have as much as 1,400 insured hours in their qualifying periods. Neither of these situations affects claims for special benefits.

Normally, as described above, the qualifying period runs backward for 52 weeks. However, the qualifying period can be shorter for employees who were terminated for cause or who quit a job, without just cause. In either of these situations, the count of insured hours is reset to zero. For example, if an employee was terminated for cause on January 23, 2012, no insured hours prior to that date can be used to establish a new EI claim. The same applies to employees coming off an EI claim. Any qualifying period for a new claim only runs as far back as the start of a previous claim. For example, an employee established a claim for EI benefits on March 1, 2011. On November 1, 2011, the employee got a new job. If the employee wants to establish a new claim for EI after this, the qualifying period for such a new claim can’t run back past the March 1, 2011 start of the old claim.

The point being that, given the variations in the insured hours needed to establish a claim, employers may simply not have the information needed to offer reliable EI advice to employees. As such, the only advice employers should offer is always to apply for benefits when issued an record of employment. Employees should always file a claim for EI, even if they think they won’t need it. The reason for this is that failing to file a claim on time may reduce the number of weeks for which an employee may be paid EI benefits, and reduce the weekly benefit rate, or may result in the employee completely failing to meet the insured hours required.

The commission will generally give an employee 30 days in which to file a claim. During this 30-day period, the commission will gladly backdate any claim to the week an employee became unemployed or was in need of special benefits. However, after these 30 grace days, the commission will object to establishing an EI claim before the week that employees actually file for benefits. After this grace period, each week of delay in filing a claim may shift the qualifying period forward one week. In effect, a week of presumed work at the start of the qualifying period is dropped off, and a week is added at the end, presumably a week with no insurable hours. As a result, each week of delay may reduce the insured hours a person has to qualify for benefits. So the most important message that employers can impart to departing employees is to apply for benefits as soon as possible.

Employees commonly believe they have to have an ROE in hand, before they can apply for benefits. This has never been true and this belief is all the more dangerous now that employers who file ROEs electronically with Service Canada, no longer have to distribute paper copies of the ROE to employees. To avoid employees sitting at home, waiting for an ROE from the employer that will never come, and thereby losing out on EI benefits they would otherwise be entitled to, it’s important for employers to remind departing employees to file prompt EI claims.

Alan McEwen
armcewen@cogeco.ca

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On January 24, 2008, the Supreme Court of Canada refused to hear the case of a British Columbia mother seeking to change the Employment Insurance Act and employment standards legislation to allow maternity leave for adoptive parents. In refusing to hear the case, the Court upheld the 2007 federal Court of Appeal ruling Tomasson v. Canada (Attorney General) that adoptive mothers do not qualify for maternity benefits because they do not undergo the “physiological and psychological experience” of pregnancy and childbirth.

Under employment standards legislation, birth mothers can take a total of 52 weeks of leave when they combine maternity (17 weeks) and parental leave (35 weeks), and are entitled to receive a total of 50 weeks of EI benefits (combination of 15 weeks of maternity and 35 weeks of parental EI benefits) for that period. However, the same benefits are not available to adoptive mothers. Adoptive mothers only receive 37 weeks of parental leave and 35 weeks of EI benefits.

Recently, the media reported that a movement to challenge the law to provide equal EI benefits to adoptive parents is gaining momentum. The discrepancy in the law is something advocates like the Adoption Council of Canada are hoping will be addressed when the House of Commons standing committee on human resources tables a long-awaited report on adoption in the next few weeks.

To understand why the federal government continues to differentiate between birth mothers and adoptive mothers when allocating EI benefits, you need to take a closer look at the Tomasson case.

Federal Court of Appeal ruling: Tomasson v. Canada (Attorney General)

The main issue in this case was whether the provisions of the Employment Insurance Act, which grants maternity benefits only to biological mothers, discriminates against adoptive mothers and violates their rights under section 15(1) of the Canadian Charter of Rights and Freedoms.

The Charter states that:

Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age, or mental or physical disability.

Tomasson argued that the purpose of maternity benefits is to recover from the birth and to bond with the child. She asserted that although she did not need to recover from the birth, she required the time to bond with and attach to the child. She provided evidence regarding the typical attachment process between mother and child, including a child who is adopted early in infancy. Tomasson showed that the process of attachment for children who are adopted early in infancy is similar to that of typical attachment.

The Court stated that the purpose of maternity benefits is:

• To protect women who work from the economic costs of pregnancy and childbirth while they recover from the birth
• To ensure biological mothers experience no disadvantage when they return to the workforce

It is not to encourage bonding or attachment.

The Court also pointed to previous cases stating that it is not necessarily discriminatory to treat biological mothers differently from other parents, including adoptive parents. Although adoptive parents undergo challenges in adopting and caring for their children, these challenges are not as severe and distressing as the physical and psychological challenges facing biological mothers.

The Court applied the test of discrimination and found the following:

• The comparator groups were biological mothers and adoptive mothers
• There was indeed differential treatment between the two groups of mothers within the Employment Insurance scheme
• The differential treatment did not have a purpose or effect that was discriminatory within the meaning of the equality guarantee as set out in the Charter
• It was impossible to find that in enacting maternity benefits provisions in the Act, Parliament demeaned adoptive mothers or cast any doubt on their worthiness as human beings
• In addition, the needs of adoptive parents were accommodated when Parliament enacted parental benefits

Consequently, the distinction in the Employment Insurance provisions was not discriminatory against adoptive parents. In fact, the maternity leave provisions ensure the equality of women who suffer the disadvantage in the workplace due to pregnancy-related matters. The distinction created was legitimate because it sought to accommodate the needs of pregnant women in the workforce as a disadvantaged group. Thus, the distinction did not violate the Charter, and Tomasson’s appeals were dismissed.

Conclusion
Certain groups of individuals can be and are required to be treated differently in order to ensure equality. In this situation, there was a legitimate purpose to the Employment Insurance provisions in order to ensure equality. The test of discrimination was applied; Tomasson was not successful. Consequently, adoptive parents have access to parental benefits, and biological parents have access to both maternity and parental benefits within the Employment Insurance scheme.

Yosie Saint-Cyr
First Reference Human Resources and Compliance Managing Editor

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Undoubtedly, the employee was upset that the employer had simply left the termination letter on the seat of his bus. He read the letter providing him with five weeks’ working notice, drove the bus to the terminal, left work permanently and subsequently sued for wrongful dismissal.

The trial judge found that the five weeks’ notice was found to be inadequate, but the employee had repudiated his employment contract by failing to work after notice was given. As a result, the employee was not entitled to any damages.

However, the Court of Appeal disagreed with the trial judge’s decision and found that the employer breached the employment contract by failing to give adequate notice of termination. Also, this breach gave the employee a cause of action for damages in lieu of reasonable notice.

In light of the circumstances, the period of reasonable notice for which damages could be recoverable was the period of reasonable notice to which the employee was entitled, less the period of notice actually given during which the employee could have and should have worked and been paid.

The Appeal Court made a point of stressing that the employee’s failure to work during the notice period was a repudiation that brought to an end the employment relationship and the ongoing rights and obligations of the parties under it. Yet that repudiation did not take away the employee’s cause of action for damages in lieu of notice or the employer’s right to have the employee’s services during the notice period that was given because those rights had accrued before the repudiation.

Consequently, the employee was awarded five months’ notice after deducting the notice he could have worked and be paid. The Court assessed the typical factors, including the age of the employee (61), the length of his tenure (five years), his work history as a professional forester, and his attempts to find alternative employment after the termination (little success).

Do you agree that employees who leave permanently and who do not work the notice period should still be able to sue for damages for reasonable notice? Do you think it is a reasonable compromise that the amount of notice is reduced by the notice that should have been worked?

Christina Catenacci
First Reference Human Resources and Compliance Editor

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Unfortunately, since the consultation period is over, the draft of the standard is no longer available online. You can still obtain a copy by calling the CSA Standards or any of their partners championing the development of the Standard.

Luckily, Cheryl A. Edwards and Shane Todd from Heenan Blaikie LLP have prepared a very in-depth analysis of the proposed Standard and you can view it here.

According to the Mental Health Commission of Canada, mental illnesses and mental health issues are the leading cause of short- and long- term disability in the country. The cost of dealing with these issues is in the range of $51 billion per year, with almost $20 billion of that amount coming from workplace losses.

Thus, it will be interesting to see how the government, advocacy groups, associations like the CSA, mental health agencies and private sector will assist employers with solutions, resources and tools to deal with this important issue.

Previously posted on Slaw.

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What board of directors couldn’t benefit from “A minute on minutes“—that’s board meeting minutes, get it? David R. Street and Jane Southren outline pros, cons and warnings, from basic to advanced. For example:

• While accuracy is important, you have to have flexibility in deciding what to include
• Record that a decision was made, but do not forget to include the process and discussion surrounding how that decision was ultimately reached
• Consider making it a policy that, upon formal approval, all personal notes of directors made during a meeting are destroyed

Worth a look for boards looking to take a stricter approach to recording meetings. (The article might require free registration.)

I’ve just come upon audio recording systems for board meetings, too, but I’ll leave that to you.

Adam Gorley
First Reference Internal Controls, Human Resources and Compliance Editor

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