Monday, 29 October 2018

Supreme Court Establishes a Duty of Honesty

In Bhasin v. Hrynew, 2014 SCC 71 (CanLII), the Supreme Court recognized a new duty of honesty in contract law, which applies to collective agreements.

The duty of honesty stems from the well-known contractual principle of good faith, a requirement that each party to an agreement to have “appropriate regard” for the interests of the other party. The duty of honesty is exactly what it sounds like – a duty that requires each contracting party to deal honestly with the other in their performance of the contract. The duty of honesty is not a fiduciary duty, which imposes a duty of loyalty to the contracting parties. The Court made this clear at para 86 of the decision:

The duty of honest performance that I propose should not be confused with a duty of disclosure or of fiduciary loyalty. A party to a contract has no general duty to subordinate his or her interest to that of the other party. However, contracting parties must be able to rely on a minimum standard of honesty from their contracting partner in relation to performing the contract as a reassurance that if the contract does not work out, they will have a fair opportunity to protect their interests.

Under the duty of honesty, each party remains free to act in their own self-interest. This means that each party can seek any advantage that may come from the contract, so long as they don’t lie (or intentionally mislead) the other party in managing the contract or its negotiation.

This decision moves the law incrementally forward. The Court summarized the principles, at para 93, as follows:

(1) There is a general organizing principle of good faith that underlies many facets of contract law.

(2) In general, the particular implications of the broad principle for particular cases are determined by resorting to the body of doctrine that has developed which gives effect to aspects of that principle in particular types of situations and relationships.

(3) It is appropriate to recognize a new common law duty that applies to all contracts as a manifestation of the general organizing principle of good faith: a duty of honest performance, which requires the parties to be honest with each other in relation to the performance of their contractual obligations.

Though incremental, the duty of honesty is broadly significant in the sense that it alters the landscape of contractual law in Canada. For instance, it used to be that the requirement for good faith was confined to labour, employment, insurance, franchise and tendering matters. Not so any longer. The duty of honesty is a general doctrine, which means that it now applies to every type of contract, and to every party to the contract, in the country. Parties are able to limit the scope of the duty of honesty by negotiating the degree of honesty required, but the duty will remain and the parties cannot contract out of it completely.

Final Thought

As there is already a well-established duty of good faith in the arbitral case law, this new duty will not change much in the way unions negotiate. It is important to note, however, that the duty underscores the importance of clear communication in negotiating agreements. The employer and the union must each be careful not to intentionally mislead the other party to the negotiation. A party who intentionally misleads the other may find themselves liable in civil damages.



Sunday, 28 October 2018

Ontario PCs take aim at employment and labour reforms

With the introduction of Bill 47, the Making Ontario Open for Business Act, 2018, Premier Ford and the Ontario PCs have proposed legislation that would repeal some of the positive reforms that were won with the former Liberal government’s passage of the Fair Workplaces, Better Jobs Act, 2017 (Bill 148).
The PC government has released a plan on its website, titled “Open for Business: Removing Burdens While Protecting Workers”, which sets out in broad strokes the changes Bill 47 would make to the province’s labour and employment laws. Both the Bill and the plan are deeply troubling. Neither protect workers and, if Bill 47 passes, workers stand to lose a host of protections under both the Employment Standards Act (ESA) and the Labour Relations Act (LRA).
Some of the changes Bill 47 will bring include:

Employment Standards Act
·         Minimum Wage. Bill 47 freezes the minimum wage at $14/hr and prevents the wage from increasing to $15 on January 1, 2019 as stipulated under Bill 148. Worse yet, the wage will remain frozen at $14 until October of 2020! Beginning on October 1 of 2020 the wage will be adjusted annually based on inflation.
·         Equal pay for equal work. Repeals the requirement for employers to provide equal pay for equal work, regardless of whether the employee is part-time or full-time. This, sadly, once again allows employers to pay part-time workers less and provides an incentive for employers to reduce full-time jobs in favour of more part-time, lower-paid, jobs. In addition to harming part-time workers, the proposed legislation would also remove the need to pay casual and temporary employees equal pay for work equal to that of full-time employees.
·         Penalties under the ESA. Repeals the administrative penalties for contraventions of the ESA and decreases the maximum penalties for non-compliance from $350/$700/$1500 to $250/$400/$1000, respectively.
·         Misclassification. While it will remain illegal to misclassify an employee as an independent contractor, Bill 47 repeals the requirement that an employer prove an individual is not an employee when there’s a dispute over the issue. This returns us to a situation where the employer will be more able to misclassify workers as contractors, thereby avoiding the legal rights available to employees.
·         Scheduling. Repeals numerous provisions relating to scheduling that were meant to come into force on January 1, 2019:
o   Repeals the provision that would allow an employee to request changes to schedule or work location after the employee has been with the employer for 3 months;
o   Repeals the provision that an on-call employee must be paid for 3 hours’ work if the employee is not called-in or if the employee works less than 3 hours;
o   The Bill also repeals the provision that an employee is entitled to 3 hours’ pay if their shift is cancelled within 48 hours of the start of the shift; and
o   Repeals the provision that would give workers the right to refuse requests or demands to work or to be on-call on a day they are not scheduled to work or to be on-call with less than 96 hours’ notice.
·         Sick days. Bill 47 amends subsection 15 (7) of the ESA by striking out “personal emergency leave” and substituting “sick leave, family responsibility leave, bereavement leave”. Under Bill 148, workers are granted up to 10 personal emergency leave days a year. Two of these days are paid and employers cannot demand a medical note or evidence of reason for the leave. Bill 47 changes this, allowing workers up to 3 days for personal illness[1], 2 for bereavement[2], and 3 for family responsibilities[3]. None of these days are paid and the employer is entitled require an employee who takes leave to provide evidence that they are entitled to the leave. In most cases it’s likely that such “evidence” will be a medical note from a doctor or hospital. Further, if an employee must take off part of a day it will be considered a whole day of leave for purposes of calculating leave entitlements.
Labour Relations Act
·         Employee lists. Repeals and replaces section 6.1 of the LRA, which permits a trade union to obtain a list of the employees of an employer and certain related information. Under the new section 6.1, if a union obtains an employee list before Bill 47 comes into force, the union must, on or immediately after the day Bill 47 comes into force, destroy the employee list.
·         Certification. Repeals s. 15.2 of the LRA, which allows for card-based certification of workers in home car, building services, and temporary help agencies. These typically vulnerable workers will now need to vote through secret ballot, making the certification process more difficult.
·         Educational Support. Bill 47 repeals s. 16.1 of the LRA, which allows either party to a collective agreement to request from the Minister educational support in the practice of labour relations and collective bargaining.
·         OLRB powers. Repeals the power of the OLRB to review and consolidate newly certified bargaining units with existing bargaining units. The Bill also gives the OLRB the power to review the structure of bargaining units where the existing bargaining units are “no longer appropriate for collective bargaining.”
·         First Agreement. Sections 43 and 43.1 of the LRA currently provide for first collective agreement mediation and mediation-arbitration. Bill 47 repeals and replaces these provisions with a new section providing for first collective agreement arbitration.
·         Enforcement. Bill 47 decreases the maximum fine for offences under the LRA, amending section 104(1)(a) of the Act to reduce maximum fines of individuals from $5000 to $2000. The Bill also amends s. 104(1)(b) of the LRA, which applies to corporations, trade unions, council of trade unions or employers’ organization, substituting a maximum fine of $25,000 down from $100,000.
·         Return-to-work. Bill 47 brings back the sort of return-to-work provisions that were favoured by the Mike Harris PCs. The Bill amends section 80 of the LRA to again impose a six-month limitation on an employee’s right to reinstatement following the start of a strike or lockout. Clearly, this will limit the bargaining power of the unions.
·         Collective Agreements to be made public. Repeals and replaces s. 90 of the LRA so that each party to a collective agreement must file a copy with the Minister after it is made. The Minister will then publish a copy of the collective agreement or otherwise make it available to the public.

And these are just some of the changes proposed by Bill 47. Only in some kind of bizarro world could Bill 47 be viewed as protecting workers. If this is the Ford government’s idea of protecting workers, it’s chilling to think what they’d do if they weren’t protecting workers!

[1] Section 50.2.
[2] Section 50.0.2(2).
[3] Section 50.0.1(2)