Did You Know – Carefully Drafted Documentation and Policies Can Protect Your Company from Costly Claims Arising from Involuntary Terminations

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Exiting or laying off employees is never an easy decision or process for an employer. However, once the decision is made, the manner in which the termination occurs and the accompanying paperwork can protect the employer from claims by the employees.

The first step is to review the employment agreements, company policies and practices, legislative requirements and common law obligations. This review will identify what the employer’s obligation is on involuntary termination or layoff to the employees.

Many employers are uncomfortable including language in employment agreements, offer letters or annual compensation statements that address outcomes when an employee leaves the organization involuntarily. Employers prefer to present the positives in hiring documents. But leaving these matters out can result in higher payments and be more costly in employee departures.

The courts have increasingly provided for inclusion of either short-term bonus or long-term incentives in termination payments, even where there is language in plan documents or agreements requiring the employee to be actively employed on the payment date of these incentives. However, there are strategies to limit exposure to higher payouts through careful drafting.

Once the employer has determined its obligations to the employees on the termination or layoff, a well drafted termination or layoff letter and release sets the stage for a properly executed exit process.

Making sure employees are treated well on their departure and the severance or layoff offer is fair protects the employer from claims in the future.

If you haven’t recently reviewed your employment agreements, plan documents and termination documents, our employment lawyers can assist you. As experienced legal counsel, we can help you draft clear and unambiguous language in these documents to protect your company when an involuntary termination or layoff is required.

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After 25 years advising large companies as in-house legal counsel, Carmelle Hunka has joined
Walsh to bring her business and employment law experience and practical approach to our
clients. Carmelle has extensive experience in all areas of employment law including policies and
plan documents, employment agreements, executive compensation including public disclosure,
incentive plans, terminations, human rights matters, ethics and business conduct matters
including investigations and anti-corruption and anti-bribery matters and advising companies
regarding employment law matters in merger and acquisition activity.

Did You Know – Competition Act Amendment

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The Competition Act (Canada) was amended to criminalize wage-fixing as well as non-solicitation
and no-hire agreements (“no-poaching agreements) between employers. This means that it is a
criminal offence for employers to enter into agreements to fix salaries, wages or terms and
conditions of employment, or to refrain from soliciting or hiring another company’s employees.

It is important to note that this amendment applies to communications between employers,
whether competitors or in unrelated businesses. Employers are advised to consider how they
participate in industry benchmarking discussions relating to wages and terms of employment.
Companies are also advised to consider the extent to which they may have any commercial
agreements that contain any wage-fixing or no-poach provisions.

There are some limited exceptions to the application of this amendment including sharing of
information between affiliated entities or situations where the companies can establish that the
agreement is ancillary to a broader or separate legitimate agreement between the parties and the
wage-fixing or no-poach provision is related to and reasonably necessary to give effect to the
legitimate agreement. The Competition Bureau has provided guidance that no-poach provisions
in merger and acquisition (M&A) agreements reasonably necessary to the purchase and sale
agreement may not be covered by the amendment, but there has been no definitive decision in
this regard. As a result, M&A agreements should be reviewed carefully to consider this risk.

This amendment does not apply to non-solicitation or non-competition clauses between an
employer and an employee (or former employee). That said, in Ontario, the Employment
Standards Act (Ontario) has prohibited non-compete restrictions and some non-solicitation
restrictions that have the effect of restricting worker mobility (with some narrow exceptions for
sale of business arrangements and C-Suite employees).

Our employment lawyers are available to discuss this amendment with you and determine any
risks to your business as a result.

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After 25 years advising large companies as in-house legal counsel, Carmelle Hunka has joined
Walsh to bring her business and employment law experience and practical approach to our
clients. Carmelle has extensive experience in all areas of employment law including policies and
plan documents, employment agreements, executive compensation including public disclosure,
incentive plans, terminations, human rights matters, ethics and business conduct matters
including investigations and anti-corruption and anti-bribery matters and advising companies
regarding employment law matters in merger and acquisition activity.

Forced Labour in Supply Chains

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Are you a Canadian-based company that engages in any of the following activities:

• Produces, sells or distributes goods in Canada or elsewhere;
• Imports into Canada goods produced outside Canada; or
• Controls an entity engaged in either of the two abovenoted activities.

Additionally, is your company listed on a stock exchange in Canada, or does your company have
a place of business in Canada, do business in Canada or have assets in Canada, and meet two
of the following three criteria for at least one of its two most recent financial years:

• $20 million or more in assets
• $40 million or more in revenue
• 250 or more employees

If so, did you know that your company has new reporting obligations as of January 1, 2024?

The Fighting Against Forced Labour and Child Labour in Supply Chains Act (Canada) came into effect on January 1, 2024 and imposes an annual reporting obligation on companies engaged in these activities.

Companies are required to file an annual report by May 31 of each year on the steps taken during the previous financial year to prevent and reduce the risk that forced labour or child labour is used by them or in their supply chains. Reporting will include the following:

• the company’s structure, activities and supply chains,
• its policies and due diligence processes in relation to forced labour and child labour,
• steps taken to assess and manage the risk of forced labour or child labour being used,
• the measures taken to remediate any forced labour or child labour,
• the measures taken to remediate the loss of income to the most vulnerable affected families due to measures taken to eliminate the use of forced or child labour,
• the training provided to employees on forced labour and child labour, and
• how the company assesses its effectiveness in ensuring that forced labour and child labour are not being used in its business and supply chains.

The report must be approved by the “governing body” of the company, which is defined as the
body or group of members of the entity with primary responsibility for the governance of the entity.
Reports will be submitted to the Minster of Public Safety and must be made available to the public,
including by publishing the reports in a prominent place on the company’s website. In the case of
entities incorporated under the Canada Business Corporations Act, or under any other Act of
Parliament, the report must also be distributed to each shareholder, along with its financial
statements.

If your company does not meet the threshold to report but supplies goods to companies that do
meet the threshold, you may be subject to inquiry from them regarding your labour practices as a
part of their compliance program.

The lawyers at Walsh LLP can help you and your supply chain and procurement teams navigate
this new reporting requirement and assist you in preparation of your reports for May 31.

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After 25 years advising large companies as inhouse legal counsel, Carmelle Hunka has joined Walsh to bring her business and employment law experience and practical approach to our  clients. Carmelle has extensive experience in all areas of employment law including policies and  plan documents, employment agreements, executive compensation including public disclosure,  incentive plans, terminations, human rights matters, ethics and business conduct matters  including investigations and anti-corruption and anti-bribery matters, and advising companies regarding employment law matters in merger and acquisition activity. 

Carmelle Hunka
Senior Counsel
403.267.8457 • chunka@walshlaw.ca
https://www.walshlaw.ca/practice-area/employment-law/

What’s in a Name? The Alberta Court of King’s Bench Replaces Summary Trial Procedures with a new Streamlined Trial Process

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The new Streamlined Trial Process is an alternative method litigants may use to advance their claims in a more timely, efficient, and potentially more cost-effective way than a traditional trial.

Following review of the little used summary trial procedures, the Alberta Court of King’s Bench issued a Notice to the Profession and Public of a change to the Alberta Rules of Court in December of 2023.¹ This notice states that effective January 1, 2024, the Summary Trial Process will be replaced with the “Streamlined Trial Process”.²

The Summary Trial Process had been scarcely used as it allowed for either party to unilaterally end the process at any time before the summary trial, resulting in uncertainty and inefficiency.³ Further, a Judge could decline to resolve a matter after a Summary Trial, undermining the utility of the process.⁴

Application for the Streamlined Trial Process

To apply for the Streamlined Trial Process, litigants are to file an application requesting a Streamlined Trial Process, and obtain an order permitting the parties to use the process.⁵ The Streamlined Trial Process is available to litigants where “an Action can be fairly and justly resolved by the streamlined process, and that process is proportionate to the importance and complexity of the issues, the amounts involved, and the resources that can reasonably be allocated to resolving the dispute.”⁶

An application for the Streamlined Trial Process can be completed by submitting a written request to the Court with or without consent from all the parties.⁷ The Streamlined Trial Process may also be initiated through a case management process or by the Court, at its own discretion and on its own motion.⁸

The Court has suggested that the following types of actions may be suitable for summary trials:

1. Actions for the recovery of a liquidated sum;
2. Actions for the recovery of real or personal property;
3. Actions that depend primarily on the interpretation of documents;
4. Actions for damages for personal injury where the damage award would likely be under $100,000; and
5. Wrongful dismissal actions.⁹

Streamlined Trial vs a Traditional Trial

A Streamlined Trial is considered a full trial on the merits of the action and the decision the Judge renders is final, but still subject to normal rights of appeal.¹⁰

The primary difference between a traditional trial process and the Streamlined Trial Process is the form of evidence given to the Court. In a Streamlined Trial Process, evidence is proffered primarily by written affidavits, and affidavit evidence is tested by way of questioning on that affidavit.¹¹ While the Court in a streamlined trial can direct or permit oral (viva voce) evidence, the presumption is that the vast majority of the evidence will be submitted by affidavit.¹² By relying on written evidence, streamlined trials reduce trial hearing time required for hearing direct oral evidence and cross examination, leading to lower costs for litigants, and greater access to justice.¹³

The Streamlined Trial Process also places an obligation on both parties to meet specific deadlines in preparing the evidentiary record to minimize oral evidence and prevent delay.¹⁴

Implications

The Court’s implementation of the Streamlined Trial Process increases a litigant’s options to have their claims fairly and justly resolved in a timely and cost-effective way.¹⁵ While this process is new and how Courts will apply these rules in practice is still uncertain, the amendments are a welcome replacement to the little used summary trial procedures.

Walsh LLP would be pleased to provide further information on how Alberta’s new Streamlined Trial Process may impact your current or future disputes, please reach out to our Litigation Group for more further information.

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1 Notice to the Profession and Public: Streamlined Trial Process – Civil (Non-Family) Actions, Alberta Court of King’s Bench, December 22, 2023 [Notice to the Profession, December 22, 2023].

2 Ibid.

3 Ibid.

4 Ibid.

5 Alberta Rules of Court, AR 124/2010, rule 8.26 [Rules].

6 Ibid. at r 8.25.

7 Ibid. at r 8.26.

8 Ibid. at r 8.26.

9 Notice to the Profession, December 22, 2023, supra note 1.

10 Rules, supra note 6 at r 8.31.

11 Notice to the Profession, December 22, 2023, supra note 1.

12 Ibid.

13 Ibid.

14 Ibid.

15 Rules, supra note 5 at r 1.2(1).

Did You Know – Bonus Season

Did you know .…

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Did you know .…

Employees may be entitled to have bonus compensation included in their termination payments.

Regardless of whether a bonus program is characterized as discretionary, if annual bonus payments are the norm, regardless of performance, the bonus may be considered an integral part of the employee’s compensation and therefore should be included in a termination payment. Employers have sought to address this concern by adding wording in bonus plans and employment agreements requiring the employee to be actively employed on the date the bonus payment is made to be eligible. The courts have addressed this issue. If the notice period extends to or beyond the payment date, the bonus should be included in a termination payment.

Employers can add clear and unambiguous language to their bonus plans to limit or remove the employee’s common law right of payment of bonus in a termination payment.

Express language indicating the employee waives their right to any claim to a bonus, or a portion of it, if their employment is terminated before the payment date of the bonus, even the day immediately before the payment date, may be sufficient to remove this employee right.

Our employment lawyers can review your bonus plan and employment agreements. As experienced legal counsel, we can help you draft clear and unambiguous terms in these documents to protect your company

For more information and insights, please see Carmelle Hunka’s full article, “Bonus Season is Coming: Are You (And Your Documents) Ready?“

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Carmelle has extensive experience in all areas of employment law including policies and plan documents, employment agreements, executive compensation including public disclosure, incentive plans, terminations, human rights matters, ethics and business conduct matters including investigations and anti-corruption and anti-bribery matters, and advising companies regarding employment law matters in merger and acquisition activity.

Carmelle Hunka
Senior Counsel
403.267.8457 • chunka@walshlaw.ca
https://www.walshlaw.ca/practice-area/employment-law/

Bonus Season is Coming: Are You (And Your Documents) Ready?

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Each year companies reward their employees with payments under their “discretionary” bonus  (or short-term incentive) programs. The intent of these programs is to incent and improve  employee performance during the year with the outcome of paying bonuses reflecting annual  performance. 

While most employers characterize bonus programs as discretionary, implementation can result  in these payments becoming an integral element of the employee’s compensation. And this can  become a bone of contention when an employee leaves the organization, whether voluntarily or  involuntarily.  

A carefully drafted bonus program can assist employers in maintaining the discretionary nature of  the programs and protecting the company from larger payouts on termination of employment. 

What’s the issue?

You include wording in your employment agreements and offer letters that your bonus program is  “discretionary”. Your bonus plan goes on to say that employees must be “actively employed” on  the payment date to be eligible for the payment. 

Over the past several years, the courts have been asked to confirm what these terms mean when  employees are terminated and entitled to payment in lieu of notice of termination. Is bonus  included in this payment? 

First, courts will consider whether the bonus program is really discretionary. Has discretion  actually been exercised historically or are payments made each year? Where annual payments  are the norm, it is likely the bonus will be considered an integral part of the employee’s  compensation. And therefore, must be included in a payment in lieu of notice of termination. 

The matter is further complicated if a portion of the bonus is based on corporate performance and  not employee performance. The corporate portion of the bonus becomes payable on a termination  where corporate targets are being met, regardless of the reason for termination of the employee. Employers seek to address these issues by including language in their bonus plans saying the  employee must be “actively employed” on the date payment is made to receive it. Again, the  courts have interpreted this wording to be insufficient to exclude bonus in a payment in lieu of  termination where the bonus payment would be made during the reasonable notice period.

So, what can companies do? 

The most recent decisions of the courts impose a two-part test to determine if a company has  done enough to preclude damages for bonus from being included in a termination payment. 

First, would the employee have been entitled to the bonus payment as part of their compensation  during the reasonable notice period? 

For example, a 10-year employee is terminated on November 1^st. The reasonable notice period  is determined to be 10 months and bonus is payable on March 31 of each year. In this case, the  employee would be entitled to the bonus payment as it would have been paid during the 10 month notice period, which ends August 31. If the employee had 3 years of employment and the  reasonable notice period is determined to be 4 months, a bonus payment on March 31 would not  be included as March 31 is after the end of the reasonable notice period.  

The second question is, do the terms of the bonus plan or agreement unambiguously limit or  remove the employee’s common law right to payment of the bonus in lieu of working notice? 

This is a more difficult question to answer. The courts have been clear, merely saying an employee  must be actively employed on the payment date is not sufficient to limit or remove the employee’s  right to payment of the bonus on termination. The employer’s obligation is to give notice of  termination and if they had done so, the employee may be actively employed when the payment  date occurs. Recent decisions have found that more language is required in the employment  agreement or bonus plan. 

More specifically, employers are advised to add extra language to their bonus plans stating that  the employees waive their right to any claim to a bonus, or a portion of it, if their employment is  terminated on the day prior to the payment date of the bonus. Another option is to state that active  employment does not include any notice period on termination of employment. 

When making annual bonus payments, employers have the opportunity to clarify the language of  their bonus plans in annual compensation letters, to protect the employer in the event of  termination of their employees. 

Canadian employers are well advised to seek legal advice when drafting bonus plans and entering  into employment agreements. As experienced legal counsel, we can help you draft clear and  unambiguous terms in plan documents and employment agreements and work with you to  determine what, in your specific circumstances, is most effective and enforceable to protect the  company. 

Before you make your bonus payments for the 2023 performance year, our employment lawyers  are ready and available to work with you. 

Sources: 
Matthews v. Ocean Nutrition Canada Ltd. (SCC, 2020) 
Paquette v. TeraGo Networks Inc. (ONCA, 2016) 

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After 25 years advising large companies as inhouse legal counsel, Carmelle Hunka has joined Walsh to bring her business and employment law experience and practical approach to our  clients. Carmelle has extensive experience in all areas of employment law including policies and  plan documents, employment agreements, executive compensation including public disclosure,  incentive plans, terminations, human rights matters, ethics and business conduct matters  including investigations and anti-corruption and anti-bribery matters, and advising companies regarding employment law matters in merger and acquisition activity. 

Carmelle Hunka
Senior Counsel
403.267.8457 • chunka@walshlaw.ca
https://www.walshlaw.ca/practice-area/employment-law/

An Injection of Clarity: A Look at Recent Employment Law Decisions Regarding Mandatory Mask and Vaccination Policies

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Introduction

Over the last three years, everyone has used the word “unprecedented” an unprecedented number of times. A once-in-a-century pandemic will do that. But as we move beyond the emergency phase of the pandemic and into a more stable sort of normal, precedent has started to build around the policies and actions of the last few years, specifically COVID-related corporate policies regarding mandatory vaccination and mask wearing.

This shift from the urgent, medical perspective to a legal one can be confusing – and we predict that in the coming months there will be a growing amount of focus and legal scrutiny put on these policies. With that in mind, let’s take a look at recent decisions from the Courts in Alberta and British Columbia regarding mandatory masking and vaccination policies (“MVP”), constructive dismissal and what you need to know as a business leader.

Mandatory Masking Policies

While mask mandates seem to be behind us, the debate continues and has made its way into our courts. In the recent case of Benke v Loblaw Companies Limited, the Alberta Court of King’s Bench was asked to decide whether placing an employee on unpaid leave because of the employee’s refusal to wear a mask without a medical justification constituted constructive dismissal. Ultimately, the Court held that the employee’s inability to work was a consequence of a voluntary choice that he made, and therefore the employee was not constructively dismissed. In other words, the only thing standing in the way of the employee working was the employee’s own decision.

Specifically, the Court found that putting the employee on unpaid leave did not amount to constructive dismissal for two primary reasons:

1. The Mask Policy was neither a substantial change nor breach in the employment contract
   
2. While unpaid leave is a substantial change in the employment contract, the employee was choosing not to work so it was reasonable for the employer not to pay them.

While we surely haven’t seen the end of challenges to mask mandates and policies, the Court in Benke was clear in this case: in the absence of any proof that an employee is exempt from a mask policy on any of the acceptable grounds (ie, medical or religious), then there is no discrimination in the enforcement of an employer’s masking policy and an employee’s refusal would make repudiating the employment contract or unpaid leave justified.

Mandatory Vaccine Policies

Unlike masking mandates, many mandatory vaccine policies (“MVPs”) are still in effect – and have also started to have their day in court. We’ll no doubt continue to see additional cases, but last year’s Parmar v Tribe Management Inc, 2022 BCSC 1675. case provides an instructive example of what to expect moving forward. Ultimately, the British Columbia Supreme Court decided that the specific employee making the complaint was not constructively dismissed – but also found the MPVs must be decided on a case-by-case basis.

While the case-by-case ruling may seem vague, there are very clear factors the support the upholding of the validity of a MVP:

1. At the time of enactment of the MVP, was the employer relying on recommendations, information or orders from the Provincial Government, Federal Government, Public Health Officer’s, the Centre for Disease Control or other reputable agencies which would lead the employer to concluding that MVP’s were required to maintain a safe workspace?
2. Did the MVP apply to all employees, contractors and visitors who entered the workplace?
3. Was a MVP necessary for the employer to comply with their statutory obligations to protect the health and safety of all employees?
4. Did the policy contemplate exemptions on legitimate medical or religious grounds?

On the other side, there are also very clear factors that suggest the MVP is unreasonable:

1. Provisions of the MVP allowed for discipline, up to and including discharge, of employees who decided to remain unvaccinated;
2. The MVP applied to unvaccinated employees who worked exclusively from home where there was no reasonable expectation of them returning to the workplace; and
3. The MVP applied to employees who worked exclusively outside.
   

Ongoing Considerations

Just when you thought we’d moved from the unprecedented to the beginning of precedent, everything could change again. The current Premier of Alberta, Danielle Smith, has made numerous comments about protecting the rights of the unvaccinated and suggested future legislative efforts to do so. Should any future legislation be passed to do such a thing, the law as it relates to everything we’ve covered here may be subject to change through further judicial consideration and challenges.

The Bottom Line

The last few years have been a challenge for everyone in many different ways, but just as things are beginning to feel “normal” again, the legal system is also beginning to grapple with the polices borne of the pandemic. Right now, one thing is clear: each case involving an employee claiming constructive dismissal due to the enactment of an MPV or mask policy must be analyzed on its specific facts – but the precedents will only grow and provide more clarity in the future.

As more employees begin to return to the office and pandemic policies evolve, issues related to the pandemic and measures taken to keep your workplace safe will surely continue arise – and that’s where we come in. Our team is experienced in handling all employments matters and together, we can help safeguard your business from any employment claims.

Feel free to get in touch with any questions you may have about COVID-19 policies, employment law or anything else you may need by calling our office at (403) 267-8400.

Cody Olson joins Walsh LLP

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We are excited to announce that Cody Olson will be joining Walsh LLP as an Associate primarily located in our new Claresholm office.

Cody has worked to build his practice in Claresholm for the last few years and previously worked in litigation/arbitration with a large national firm in both Calgary and Qatar.

We are excited to draw on Cody’s experience and deep connection to the Claresholm community to provide even better advice and solutions to our clients.

Robert Stemp joins Walsh LLP

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Please join us in welcoming Robert Stemp as the newest member of our Corporate Commercial team here at Walsh LLP!

Bob brings more than 40 years of practice and has extensive experience with commercial real estate transactions and banking as well as foreclosure and debtor-creditor matters.

We are excited to draw on Bob’s wide range of knowledge and experience to provide even better advice and solutions to our clients.

Brendan Hill has been called to the Bar

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Walsh LLP is proud to announce that Brendan Hill has been called to the Bar! Congratulations Brendan! A life long dream has now become a reality with hard work and determination! Brendan will continue with Walsh as an Associate and we are very excited to join him on his journey, we know that you will have a long and rewarding career!