CURRENT NEWS AND PRACTICAL ADVICE FOR EMPLOYERS JANUARY 22, 2014 Constructive dismissal: In This Issue ASK AN EXPERT: Reclaiming overpayments 2 Should I stay or should I go? • Time allowed to review contract Employee claims becoming commonplace CASES AND TRENDS: No cause where employee’s wife 3 deposited employer’s funds | BY RITU MAHIL | when David Potter was appointed as the CASE IN POINT: Executive Director of New Brunswick Employer not at fault 4 “SHOULD I STAY or should I go?” may be Legal Aid Services Commission. for failure to accommodate the question an employee asks himself During his term, Potter had a number when he faces a diffi cult working en- of complaints made against him by staff YOU MAKE THE CALL: vironment and considers fi ling for con- and his relationship with the commis- Manager or dispatcher? 8 structive dismissal. sion’s board of directors deteriorated. At Constructive dismissal is when an this point, both parties began discussing employer indirectly encourages an em- a mutually acceptable way of bringing ployee to resign by failing to comply his contract to an end. with the employment contract or one- In January 2010, Potter went on sick Angry worker sidedly changing the employment terms leave and was asked not to return until without the employee’s prior consent. further direction from the commission. didn’t have intent It is distinguished from an ordinary His salary and benefi ts were contin- resignation because it is the employer ued. Two months later, he fi led an ac- to quit: Board that initiates changes to the terms and tion against the commission, claiming conditions of the employment contract. he had been “constructively dismissed,” Put bluntly, it is when the employer meaning the commission had effectively AN ONTARIO EMPLOYER has been ordered makes the working conditions com- changed the employment contract with- to fork over termination pay after assum- pletely intolerable for the employee with out providing reasonable notice. ing a worker quit her job following an the intention of “swaying” the employee argument with her boss. to resign instead of outright fi ring him. Rita Oomen worked for Oomen’s Once the employer has changed the It is advisable for an Glass, a supplier of glass products such terms and conditions of the employ- as windows and mirrors to residential ment contract, the employee must fi le employer who is unsure and commercial customers in Kingston, for constructive dismissal within a 90- whether employees Ont. The company was owned by her day time period from when the changes will be recalled to work out cousin, Joe Oomen, and Rita began her took place for the case to be admissible employment there on Dec. 11, 2006. in the courts. The extent of an employ- the various outcomes of the layoff. While employed with her cousin’s er’s failure to meet its contractual obli- company, Rita Oomen had personal gations and time taken to deliberate also problems to deal with, including health affect the likelihood the employee will The commission said claiming con- issues and diffi culties in her relation- win a constructive dismissal case. structive dismissal was incorrect and ship. These problems led to errors that PM40065782 To put this in context, common exam- essentially meant Potter had resigned. cost Oomen’s Glass both money and ples of changes to an employee’s work- The commission subsequently stopped goodwill with its customers. ing conditions include: his salary and benefi ts. At this point, the Joe Oomen discussed these problems • Reduction in the employee’s powers or case went to court. and their effects on the business with duties that involve a signifi cant loss of The court found Potter was not con- Rita, but he chose to continue employ- the employee’s prestige and status as structively dismissed and, by commenc- ing her because she was family. Joe later a result of reorganization in reporting ing legal action, Potter had effectively testifi ed any other employee with similar arrangements. resigned. In October 2013, the Supreme performance issues would have been ter- • Threats of dismissal or demotion and Court of Canada granted a leave of ap- minated earlier. unfair suspensions. peal for the case — it has yet to hand On March 14, 2012, Rita called Joe on • Signifi cant reduction in working hours, down its fi nal decision. the phone. They started to have a heated salary or employee benefi ts. The Potter case demonstrates that em- argument in which they yelled at each For the past two years, the Supreme ployers must exercise caution when dis- other. Two other employees who were in Court of Canada has seen a notable in- missing employees. There can be a fi ne the offi ce overheard the argument and crease in constructive dismissal cases. line between constructive dismissal and testifi ed that, after Rita hung up, she A recent example includes the case of an employee’s resignation. said she was going to quit. One co-work- Potter vs. New Brunswick (Legal Aid Ser- vices Commission), which began in 2006 Continued on page 6 Continued on page 7 January 22, 2014 In MenuPalace.com Corp. v. Saladino, Answer: While there is no hard and fast a deduction from an employee’s wages rule, three business days is generally ac- Ask an for vacation days taken but which had cepted as a fair and reasonable amount not yet been earned did not violate the of time. Expert ESA. The vice-chair explained that s.13 There are a few purposes served by was not intended to prevent an employer giving a potential employee time to re- with Brian from recovering a recent overpayment of view an employment contract. First, and Wasyliw wages, stating: perhaps fundamentally, it’s the fair thing “Section 13 of the act signifi cantly lim- to do. However, it is also wise to do so Sherrard Kuzz, Toronto its when an employer can make a deduc- from a business perspective. Canadian tion from an employee’s wages. How- courts have long recognized the rela- Have a question for our experts? ever, this provision is not so prescriptive tionship between an employer and pro- Email [email protected] that it prevents the employer from sub- spective employee is typically not one of sequently recovering an overpayment of equal bargaining power. As such, if an this nature, provided the deduction oc- employer seeks to rely on the terms of a curs within a reasonable period of time. written employment contract — often at The act is concerned with ensuring that the time of termination — the employer employees are paid all the wages they must demonstrate the contract is lawful Reclaiming overpayments have earned. Section 13 is designed to and the employee entered into it freely, prevent an employer from recovering, voluntarily and with an understanding due to clerical errors through a payroll deduction, amounts of its meaning, having had time to seek that are unrelated to wages. Recovering advice as to its meaning. a recent overpayment of wages, as is the Allowing an employee time to care- Question: If an employee’s paycheque case in this instance, cannot be consid- fully review a contract can be critical to was too much due to a clerical error, can ered a “set-off” or deduction from wages demonstrating the employee either un- the employer reduce the subsequent pay- that is subject to section 13 of the act.” derstood the contract or had the chance cheque to even it out? The employee has Employers should be cautious about to obtain advice as to its meaning. This a set salary and regular pay schedule. applying these principles too broadly. is why it is also often prudent to include A clear mistake due to a clerical error is in the contract a statement that the em- Answer: Yes. In the case of a clerical er- to be distinguished from other circum- ployee was afforded the opportunity to ror, the employer can deduct the over- stances where an employer may wish to and was encouraged to seek indepen- payment from the subsequent pay- make a payroll deduction. For example, dent legal advice. cheque so long as the reconciliation of where an employer decides to pay an em- the overpayment is done within a rea- ployee during a leave of absence when sonable amount of time after discovering not required to do so, the employer can- Extending the probationary the overpayment. not later characterize the payment as an In Ontario, s. 13 of the Employment “overpayment” and deduct the amount period is problematic since Standards Act (ESA) places specifi c limi- from the employee’s wages. employment is continuous while tations on the ability of an employer to Where the issue is not a clerical er- make deductions from employee wages. ror — for example, where a loan to the An employer shall not deduct or with- employee needs to be repaid — then the At a minimum, three business days is hold wages except in the following cir- employer would require a clear written a reasonable time frame for a potential cumstances: as required or authorized acknowledgement from the employee employee to avail herself of the benefi t by statute, pursuant to a court order, or regarding a specifi c amount or formula of a contract review (whether by the with the employee’s written authoriza- to repay the money from wages. Failing employee or with independent coun- tion (including the precise amount or such an acknowledgement, it would be sel). Should an employee wish to sign formula to calculate the amount of the necessary to commence legal proceed- the contract immediately, without the deduction).